[Congressional Record Volume 140, Number 145 (Friday, October 7, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. SPECTER (for himself, Ms. Moseley-Braun, and Mr. Wofford):
  S. 2535. A bill to promote a new urban agenda, and for other 
purposes; to the Committee on Banking, Housing, and Urban Affairs.


                      new urban agenda act of 1994

  Mr. SPECTER. Madam President, I have asked for 15 minutes this 
morning in morning business to talk about two subjects. First, to offer 
a resolution acknowledging the efforts of the Schindler Project to 
educate high school seniors about the horrors of Nazism and the 
Holocaust against Jewry and to enable our youth to bring those lessons 
to bear on contemporary society. And also to offer legislation entitled 
``The New Urban Agenda Act of 1994.''
  The legislation which I am proposing today is an effort to deal with 
the problems of the cities of America. It follows recommendations made 
by the distinguished mayor of Philadelphia, Edward G. Rendell, who 
worked on these issues in collaboration with the mayors and the League 
of Cities. Working with Mayor Rendell, we have fashioned this 
legislation which we are proposing at this time so that our colleagues 
in the Senate and those in the House, as well, will be in a position to 
study this legislation in the course of the several months between now 
and the 104th Congress when we will be reintroducing it and pressing 
it.
  I offer this legislation on behalf of the distinguished Senator from 
Illinois, Senator Carol Moseley-Braun. It will be introduced 
contemporaneously in the House of Representatives today by Congressman 
Christopher Shays of Connecticut.
  Madam President, the cities are in urgent need of assistance. The 
thrust of this legislation is to help the cities of America without the 
expenditure of Federal Funds but in very carefully targeted ways where 
existing Federal funds are spent on purchases or on establishment of 
Federal facilities or on foreign aid funds which should be redeemed in 
cities and in a variety of other ways without impacting on the Federal 
budget and without spending more Federal money in light of the very 
grave restraints there are on the deficit and on the national debt.
  This legislation is being introduced, Madam President, as part of a 
larger legislative program which I have authored and which I intend to 
introduce to try to help the cities.
  It may well be, Madam President, that America has given up on its 
cities. That is a stark statement but it is one which I believe may be 
true; that America has given up on its cities. There are many who do 
not know of city life, who are far removed from the cities and would 
not be expected to have any key interest in what goes on in the big 
cities of America.
  I cite my own boyhood experience illustratively: Born in Wichita, KS, 
raised in Russell, KS, a small town of 5,000 people on the plains of 
Kansas, where there is not much knowledge of what goes on in 
Philadelphia, PA, my home, or the big cities in your State of 
California, Los Angeles, San Francisco, or Chicago.
  Those big cities are alien to people in much of America. But there is 
a growing understanding that the problems of America are created, or at 
least the small towns are very much affected, by the problems of the 
big cities.
  If you take the Bloods and the Crips gangs from Los Angeles, CA, they 
are all over America. They are in Lancaster, PA, in Des Moines, IA, and 
all over America. If you take a town like Williamsport, PA, there is an 
influx from the criminal element from New York City and Philadelphia; 
if you take Midwestern towns, from Chicago, from Denver, from the big 
cities.
  The cities are causing an enormous amount of problems for a wide 
variety of reasons which can I cannot cover in the course of these 
brief few moments that I have allotted to me this morning.

  In the cities themselves, there is really an attitude of despair, an 
attitude of grimness. The metropolitan areas, the suburban areas 
significantly bypass the problems of the cities, as well.
  There are corridors coming into Philadelphia on the Schuylkill 
Expressway, or on the rapid transit, to save passage from the suburbs 
into the city, for major financial and commercial centers, banks, 
insurance companies, brokerage houses, and law firms.
  The only time, other than the business day would be, perhaps, to come 
in for the baseball game when there are baseball, football or 
basketball games, or the opera. And there are blinders, without really 
focusing on the problems of the major cities. And that picture is 
duplicated around the country.
  I believe there are ways to assist the cities. Mayor Rendell has come 
up with this legislative package which has a great many good ideas. One 
of the elements is to require that a percentage of Government purchases 
will be directed into distressed urban areas, enterprise zones or 
empowerment zones. Foreign aid funds ought to be redeemed in a certain 
percentage, 15 percent, in those zones. When the Federal Government 
seeks to expand facilities, build new centers, precedence--priority 
should be given for the location of those facilities in the urban 
areas.
  There should be a recommitment to the Historical Rehabilitation Tax 
Credit, which produce an enormous number of jobs. The relatively small 
losses in taxes would be more than offset by the jobs which would be 
created, people taken off of the welfare rolls and put on the 
payrolls--additional city taxes, State taxes, and Federal taxes.
  I might say parenthetically, Madam President, the Office of 
Management and Budget, I think, needs a revision of its analysis of 
economic impact to credit those gains as well as always to figure the 
costs when the budget implications are considered.
  The cities ought to be relieved of the unfunded Federal mandates. On 
this subject I take my hat off to my distinguished colleague, Senator 
Dirk Kempthorne, who has pending legislation, a major bill which was 
tied up on the Senate floor last night. But we really ought to stop a 
practice coming out of Washington, DC, of telling everyone else what to 
do and telling them to pay for it. That goes for cities; it goes for 
States. It it is a matter which the Federal Government thinks ought to 
be attended to, then we really ought to find the funding sources for 
it. If it is worthwhile doing we ought to find a way to pay for it. We 
ought not to impose those mandates on cities or States without their 
acquiescence.
  This legislation has provisions for housing block grants, to allow 
local governments to use the funds as they see it, without all the 
Federal red tape.
  Also, a curious provision on arbitrage costs. The law now requires 
taxes to be paid on interest earned in excess of the interest which is 
paid. I shall not delve into that except to say it is complicated and 
it costs more money to administer than it gains for the Federal 
Government in taxes.
  Another provision exempts municipalities under certain appropriate 
circumstances for limitations for obligations on waste cleanup, where 
there would not be any impact on the obligation of others to have the 
cleanup--those who caused it--but would enable the municipality to take 
over land which is now not being used and to put it to productive use.
  This legislation, I think would be a very significant first step in 
helping the cities help themselves.
  Madam President, I have sought recognition to express my concern with 
the plight of our Nation's cities and Washington's apparent increasing 
neglect of them. To commence an effort to turn this situation around, I 
am introducing legislation today that will begin to force us to address 
the continuing decay and decline of our Nation's cities, and to do so 
without the use of massive Federal outlays. If we are to really address 
the very serious issues that we face--jobs, teenage pregnancy, welfare 
reform, and other pressing issues--we cannot give up on our cities. In 
my judgment, the revitalization of our cities is critical to our 
domestic peace and international prosperity.
  I commend the mayor of Philadelphia, Edward Rendell, for his efforts 
to revitalize America's cities and his proposal called a New Urban 
Agenda, which is the basis for much of this legislation. I also want to 
make mention of my colleague in the House of Representatives who is 
very familiar with the plight of urban America and who will be 
introducing companion legislation in the House: Congressman Christopher 
Shays of Connecticut. Representative Shays is cochairman of the House 
urban caucus, and has introduced a legislative package called the Urban 
Marshall Plan containing eight different bills designed to combat the 
decay of our cities.
  As a Philadelphia resident, I have firsthand knowledge of the growing 
problems that plague our cities. I have long supported a variety of 
programs to assist our cities such as increased funding for community 
development block grants and legislation to establish enterprise and 
empowerment zones. To encourage similar efforts, in April of this year 
I took the opportunity as a U.S. Senator to host my Republican 
colleagues on a visit to explore urban problems in my hometown. We 
talked with people who want to obtain work, but opportunities are few; 
we saw a crumbling infrastructure and its impact on residents and 
businesses; we were reminded of the devastating effect that the loss of 
inner city businesses and jobs has had on our neighborhoods in 
America's cities.
  Historically, cities have been the center of commerce and culture. 
Surrounding communities have relied on a thriving, growing economy in 
our metropolitan areas to provide jobs and opportunities. Over the past 
several decades, however, America's cities have struggled with the loss 
or exodus of businesses and industry. The resultant tax base shrinkage 
causes enormous budget problems for city governments. Across the 
country, cities such as New York, Los Angeles, and the District of 
Columbia have experienced the flight of major industries to the 
suburbs.
  As a result, city residents who remain are faced with dwindling 
opportunities leading to welfare dependence and unemployment 
assistance. The Federal Government has attempted to revitalize our 
ailing urban infrastructure by providing Federal funding for transit 
and sewer systems, roads and bridges. Federal assistance for urban 
areas, however, has become increasingly scarce as we grapple with the 
Nation's deficit and debt. Therefore, we must find alternatives to 
reinvigorate our Nation's cities so they can once again be economically 
productive areas providing promising opportunities for residents and 
neighboring areas.
  The New Urban Agenda legislation encompasses six initiatives that, if 
passed, would help to revitalize American cities through the use of tax 
incentives and the easing of Federal regulations.
  First, recognizing that the Federal Government is the Nation's 
largest purchaser of goods and services, this legislation would require 
that no less than 15 percent of Government purchases be made from 
businesses and industries within designated urban empowerment zones and 
enterprise communities. Similarly, it would require that not less than 
15 percent of foreign aid funds be redeemed through purchases of 
products manufactured in urban empowerment zones and enterprise 
communities. I presented this idea to Treasury Secretary Bentsen at a 
March 22, 1994, Foreign Operations Subcommittee on Appropriations 
hearing. The Secretary responded favorably.
  I have also written to several mayors across the country regarding 
this concept. By letter dated July 28, 1994, Miami Mayor Stephen P. 
Clark responded: ``Miami's selection as a procurement center for 
foreign aid would be a natural complement to our status as the Business 
Capital of the Americas.'' Miami has a wide range of businesses, such 
as high-technology firms and medical equipment manufacturers that would 
benefit from this provision. And by letter dated April 6, 1994, 
Harrisburg, Pennsylvania Mayor Stephen R. Reed wrote:

       Many of our existing businesses would no doubt seize upon 
     the opportunity to broaden their market by engaging in export 
     activity triggered by foreign aid vouchers * * * Therefore, 
     in brief, we believe the voucher proposal has considerable 
     merit and that this city would benefit from the same.

  I ask unanimous consent that on executive summary and a copy of my 
letter and the letters from Mayor Clark and Mayor Reed be included in 
the Record at the end of my statement.
  The PRESIDING OFFICER. Without objection, it is so ordered. [See 
exhibit 1.]
  Mr. SPECTER To further enhance job opportunities within our urban 
centers, this legislation contains Mayor Rendell's recommendation that 
manufacturing technology outreach centers called for in the National 
Competitiveness Act be located in the urban zones. These proposals do 
not require new expenditures of Federal funds. Instead, these proposals 
would require that a minimum amount of existing Government procurement 
and foreign aid monies be used to spur economic activity within urban 
areas.
  The second major provision of this bill would commit the Federal 
Government to play an active role in restoring the economic health of 
our cities by encouraging the location, or relocation, of Federal 
facilities in urban areas. To accomplish this, all Federal agencies 
would be required to prepare and submit to the President an urban 
impact statement detailing the impact that relocation or downsizing 
decisions would have on the affected city. Presidential approval would 
be required to place a Federal facility outside an urban area, or to 
downsize a city based agency.
  The third critical component of this bill would revive and expand 
Federal tax incentives that were eliminated or restricted in the Tax 
Reform Act of 1986. These provisions offer meaningful incentives to 
business to invest in our cities. I am calling for the restoration of 
the historic rehabilitation tax credit which support inner city 
revitalization projects. According to information provided by Mayor 
Rendell, there were 8,640 construction jobs involved in 356 projects in 
Philadelphia from 1978 to 1985 stimulated by the historic 
rehabilitation tax credit. In Chicago, 302 projects prior to 1985 
generated $524 million in investment and created 20,695 jobs. In St. 
Louis, 849 projects generated $653 million in investment and created 
27,735 jobs. Nationally, according to National Park Service estimates 
for the 16 years before the 1986 Act, the historic rehabilitation tax 
credit stimulated $16 billion in private investment for the 
rehabilitation of 24,656 buildings and the creation of 125,306 homes 
which included 23,377 low- and moderate-income housing units. The 
enactment of the Tax Act of 1986, and the drastic limitations placed on 
the utilization of the historic rehabilitation tax credit, dramatically 
reduced the pool of private investment capital available for 
rehabilitation projects. In Philadelphia, projects dropped from 356 to 
11 by 1988 from 1985 levels. During the same period, investments 
dropped 46 percent in Illinois and 92 percent in St. Louis.

  Another tool, is to expand authorization of commercial industrial 
development bonds. Under the Tax Reform Act of 1986 authorization for 
commercial industrial bonds was permitted to expire. Consequently, 
private investment in cities declined. For instance, according to Mayor 
Rendell, from 1986--the last year commercial development bonds were 
permitted--to 1987, the total number of city supported projects in 
Philadelphia was reduced by more than half. Industrial development or 
private activity bonds encourage private investment by allowing, under 
certain circumstances, tax-exempt status for projects where more than 
10 percent of the bond proceeds are used for private business purposes. 
The availability of tax-exempt commercial industrial development bonds 
will encourage private investment in cities, in particular in the 
construction of sports, convention and trade show facilities; free 
standing parking facilities owned and operated by the private sector; 
air and water pollution facilities owned and operated by the private 
sector, and industrial parks. The bill I am introducing would allow 
this. It would also increase the small issue exemption, which means a 
way to help finance private activity in the building of manufacturing 
facilities, from $10 million to $50 million to allow increased private 
investment in our cities.
  Finally, a minor change in the Federal Tax Code related to arbitrage 
rebates on municipal bond interest earnings could free additional 
capital for infrastructure and economic development by cities. 
Currently, municipalities are required to rebate to the Federal 
Government any arbitrage--a financial term meaning interest earned in 
excess of interest paid on the debt--earned from the issuance of tax-
free municipal bonds. Furthermore, I am informed that compliance, or 
the cost for consultants to perform the complicated rebate 
calculations, is actually costing municipalities more than the actual 
rebate owed to the government.
  A fourth element of this bill is the elimination of unfunded Federal 
mandates. I am a cosponsor of legislation, S. 993, introduced by my 
colleague from Idaho, Senator Kempthorne, that would eliminate unfunded 
Federal mandates. The language of S. 993 as introduced is written into 
this legislation. In Senator Kempthorne's home State of Idaho, the city 
of Boise had to cover over $3 million for eight mandates in fiscal year 
1993, according to a report done by the accounting firm of Price 
Waterhouse for the U.S. Conference of Mayors. I am informed that six 
Pennsylvania cities: Allentown, Altoona, Philadelphia, Pittsburgh, 
Wilkes-Barre, and York faced 10 unfunded Federal mandates that cost 
them a collective total of $17 million for fiscal year 1993. In 
Philadelphia alone, it will cost city taxpayers approximately $140 
million to comply with the worthwhile goals of the Americans with 
Disabilities Act [ADA]. This is three times the amount the city 
budgeted for street resurfacing and reconstruction in fiscal year 1994.
  All over the country the story is the same. In California, a total of 
54 cities had to cover a grand total $948.3 million in unfunded Federal 
mandates, with Los Angeles paying almost $582 million, according to the 
report done for the Conference of Mayors. In Texas, 27 cities had to 
cover $316 million in unfunded mandates, with Houston covering $154 
million. New York State had nine cities working to find $517 million 
and New York City was $475 million of that total. Illinois, in fiscal 
year 1993, had 22 cities facing a total of $88 million, with Chicago 
comprising $70 million of that number.
  Individual cities are facing incredible financial burdens from 
unfunded Federal mandates as the Conference of Mayor's report shows. 
Atlanta, GA had to pay for nine unfunded Federal mandates--totaling 
almost $50 million--taking much needed funds from infrastructure 
projects, an overburdened criminal justice system, and housing 
programs. Phoenix, AZ has had to raise consumer's sewage and water 
rates to cover the costs of unfunded Federal mandates, almost $36 
million, along with curtailing almost of the city's service 
departments. The release from Federal mandates would allow Houston, TX 
to allocate $154 million more for the maintenance of city property and 
public safety. The U.S. Conference of Mayors report presents similar 
facts on 314 cities. It is critical that as legislators we financially 
back the laws we write, or otherwise provide the appropriate assistance 
so that municipalities can comply.
  A fifth provision of this legislation provides needed reforms to 
regulations concerning affordable housing. This legislation changes the 
section 8 rental subsidies--from 15 to 50 percent--to provide increased 
assistance for renters in urban areas, and to make Federal dollars go 
further. There is also language in the bill to study streamlining 
Federal housing program assistance to urban areas into block grant form 
so that municipal agencies can better serve local residents. Finally, I 
have improved the circumstances of public housing tenants by 
encouraging the location of newly built units on the lots of demolished 
older housing and allowing the original residents to move into the new 
units. This provision will contribute to community stability and 
promote urban renewal.
  Lastly, the development of urban areas can be accelerated by being 
more realistic on environmental factors on urban land. Provisions in 
this legislation will encourage the redevelopment of industrial sites 
by cities, without fear of incurring liability as ``potentially liable 
parties'' under Superfund laws, by providing a ``governmental 
exception.'' This measure also contains a provision for a pilot 
powerplant designed to burn solid waste and create inexpensive energy 
for energy intensive industries. Such a plant will create jobs and help 
provide a solution for cities to deal with their treatment of waste.
  Mr. President, this effort to help our cities is good public policy. 
I am introducing this bill at this time so that my colleagues have an 
opportunity to review and consider it between Congresses. I urge the 
input of my colleagues on this pressing matter. The plight of our 
cities is of extreme concern to me. During the 104th Congress I intend 
to press ahead with this and other legislation with the ultimate goal 
of restoring the former vitality of our cities which can only help make 
our country stronger and more competitive.
  I ask unanimous consent to place additional material in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                               Exhibit 1

  Executive Summary of Senator Specter's New Urban Agenda Act of 1944

       A. Promotes Urban Economic Development through Empowerment 
     and Enterprise Zones. Requires a portion of federal and 
     foreign aid purchases, (not less than 15 percent) and commits 
     the government to purchase recycled products, from businesses 
     operating in the urban zones. The proposed Manufacturing 
     Technology Outreach centers would also be located in the 
     zones. Legislation to implement these centers, the National 
     Competitiveness Act (S. 4/H.R. 820), is currently in 
     conference.
       B. Locating/Relocating Federal Facilities in Distressed 
     Urban Areas. Requires an urban impact statement, with 
     Presidential approval, that details the impact on cities of 
     agency downsizing or relocation. Under the bill, a 
     ``distressed urban area'' follows HUD's definition, namely 
     any city having a population of more than 100,000.
       C. Revives and Expands Federal Tax Incentives. Expands the 
     Historic Rehabilitation Tax Credit reduced in 1986. It would 
     restore the issuance of tax-free industrial development 
     bonds, and would allow cities to keep arbitrage earned from 
     the issuance of tax-free municipal bonds. Currently, local 
     governments are required to rebate to the federal government 
     arbitrage earned from the issuance of tax-free municipal 
     bonds, and often spend more on compliance than on the actual 
     rebate.
       D. Eliminate Unfunded Federal Mandates. Incorporates 
     languages of S. 993. Six Pennsylvania cities faced 10 
     mandates that cost them a total of $17 million in FY93; for 
     instance it will cost Philadelphia $140 million to comply 
     with the ADA in FY94. In FY93, California had 54 cities 
     covering $948.3 million in unfunded mandates, with Los 
     Angeles paying almost $582 million. Texas had 27 cities 
     facing a $316 million shortfall with Houston paying $154 
     million. New York had 9 cities paying $517 million with New 
     York City making up $475 million of the total. Illinois had 
     22 cities covering $88 million with Chicago comprising $70 
     million of that number.
       E. Lifts Federal Restrictions on Community-Based Housing 
     Development. The Section 8 rent subsidies allocated to 
     specific affordable housing developments would be raised from 
     15 percent to 50 percent. To boosts the efficiency of 
     regional housing authorities, a study would be done to 
     streamline current and future housing programs into ``block 
     grants.'' The bill would also allow the reconstruction of new 
     units on demolished sites, and relocate the original tenants 
     to the newly constructed units.
       F. Address Urban Environmental Challenges. Promotes the 
     ability of cities to redevelop contaminated industrial sites, 
     and order a study to find a speedier remediation process for 
     those sites that would qualify. The bill also establishes a 
     pilot power plant designed to give energy intensive industry 
     a place to dispose solid waste and get inexpensive 
     electricity. This provision would provide a pilot for the 
     development of a comprehensive national strategic energy 
     intensive industry initiative.
                                  ____



                                                  U.S. Senate,

                                   Washington, DC, March 29, 1994.
     Hon. Stephen R. Reed,
     Mayor, Harrisburg, PA.
       Dear Stephen, I was interested to read in the Washington 
     Post on March 20, 1994, of Philadelphia Mayor Rendell's 
     interest in requiring some amount of foreign aid to be issued 
     in vouchers ``redeemable only in distressed cities.'' I 
     raised this idea with Secretary of Treasury Bentsen at a 
     hearing before the Foreign Operations Subcommittee on 
     Appropriations on Tuesday, March 22, 1994. I agree that we 
     must look for innovative ways to make cities attractive 
     investment opportunities for the businesses of the future. 
     Foreign aid vouchers could play an effective role in 
     accomplishing this objective.
       In order to flesh out this foreign aid proposal in more 
     detail, I am interested in your views on whether this would 
     be an effective tool in attracting investment capital to 
     cities. If you could have someone on your staff help us 
     identify which business activities and services in Harrisburg 
     could be useful in extending foreign assistance, I would be 
     very appreciative. This information will help me in pursuing 
     this idea in my capacity as a member of the Foreign 
     Operations Subcommittee.
       I look forward to working with you on this important 
     matter. Please have you staff contact Morrie Ruffin (202 224-
     9016) of my staff with any information that could be useful 
     in this endeavor.
           Sincerely,
                                                    Arlen Specter.
                                  ____



                                                  U.S. Senate,

                                   Washington, DC, March 31, 1994.
     Hon. Steve Clark,
     Mayor, Miami, FL.
       Dear Mayor Clark: I was interested to read in the 
     Washington Post on March 20, 1994, of Philadelphia Mayor 
     Rendell's interest in requiring some amount of foreign aid to 
     be issued in vouchers ``redeemable only in distressed 
     cities.'' I raised this idea with Secretary of Treasury 
     Bentsen at a hearing before the Foreign Operations 
     Subcommittee on Appropriations on Tuesday, March 22, 1994. I 
     agree that we must look for innovative ways to make cities 
     attractive investment opportunities for the businesses of the 
     future. Foreign aid vouchers could play an effective role in 
     accomplishing this objective.
       In order to flesh out this foreign aid proposal in more 
     detail, I am interested in your views on whether this would 
     be an effective tool in attracting investment capital to 
     cities. If you could have someone on your staff help us 
     identify which business activities and services in Harrisburg 
     could be useful in extending foreign assistance, I would be 
     very appreciative. This information will help me in pursuing 
     this idea in my capacity as a member of the Foreign 
     Operations Subcommittee.
       I look forward to working with you on this important 
     matter. Please have you staff contact Morrie Ruffin (202 224-
     9016) of my staff with any information that could be useful 
     in this endeavor.
       My best.
           Sincerely,
                                                    Arlen Specter.
                                  ____

                                              Office of the Mayor,


                                       The City of Harrisburg,

                                    Harrisburg, PA, April 6, 1994.
     Hon. Arlen Specter,
     Washington, DC.
       Dear Senator Specter: This is to acknowledge and thank you 
     for your correspondence, which I was pleased to receive on 
     April 4, 1994, regarding the suggestion by the Mayor of 
     Philadelphia that a portion of foreign aid be issued in the 
     form of vouchers that would be redeemable only in distressed 
     cities.
       The concept has considerable merit and we would support 
     such. The key to such a voucher provision having a measurable 
     and nearly immediate impact in urban communities would be for 
     a proper and clearly stated definition of the words 
     ``distressed cities.'' At a minimum, such a definition should 
     stipulate that eligible cities would be those with 15% or 
     more of its households living at or below the Federal poverty 
     income level.
       I suspect that most cities would be able to benefit by such 
     a voucher program. It would redirect investment, development 
     and growth forces into such cities since foreign aid vouchers 
     would represent a far less speculative venture and, in some 
     cases, a literally guaranteed opportunity.
       In the case of the City of Harrisburg, there are few areas 
     of products and services which could not be provided. Many of 
     our existing businesses would no doubt seize upon the 
     opportunity to broaden their market by engaging in export 
     activity triggered by foreign aid vouchers. Our 
     infrastructure is sufficient to also accommodate additional 
     growth of existing and new businesses and industries.
       Therefore, in brief, we believe the voucher proposal has 
     considerable merit and that this City would benefit from the 
     same.
       I appreciate your affording us this opportunity to express 
     an opinion on the subject.
       With warmest personal regards, I am
           Yours sincerely,
                                                  Stephen R. Reed,
                                                            Mayor.
                                  ____



                                                City of Miami,

                                         Miami, FL, July 28, 1994.
     Hon. Arlen Specter,
     Washington, DC.
       Dear Senator Specter: On behalf of the City of Miami, thank 
     you for including our community in your and Mayor Rendell's 
     proposal to require some amount of foreign aid to be issued 
     in vouchers, which can be redeemed in distressed cities 
     throughout the country. The initiative set forth in Mayor 
     Rendell's New Urban Agenda, will benefit Greater Miami/Dade 
     County, should our application for Empowerment Zone or 
     Enterprise Community status be successful. Miami's selection 
     as a procurement center for foreign aid would be a natural 
     complement to our status as the Business Capital of the 
     Americas.
       My staff and The Beacon Council, Greater Miami/Dade 
     County's economic development organization, have been working 
     for the past several months with Doug Troutman of your staff 
     to determine which business activities and services in Miami 
     could be useful in extending foreign assistance. Toward this 
     end, Mr. Troutman has been extremely helpful in providing 
     further background information to assist our efforts. We look 
     forward to working with you and your staff further on this 
     important issue.
       On behalf of our community, thank you for involving Miami 
     in this significant project.
           Sincerely,
                                                 Stephen P. Clark,
                                                            Mayor.
      By Mr. DANFORTH (for himself, Ms. Moseley-Braun, and Mr. 
        Domenici):
  S. 2536. A bill to encourage the furnishing of health care services 
to low-income individuals by exempting health care professionals from 
liability for negligence for health care services provided without 
charge, except in cases of gross negligence or willful misconduct, and 
for other purposes; read the first time.


                the charitable medical care act of 1994

 Mr. DANFORTH. Mr. President, Senator Moseley-Braun and I are 
introducing today a bill that we hope will give some needed 
reinforcement to free clinics and volunteers in every community 
providing charitable medical services to those who cannot afford to pay 
for medical care. We have called this bill the Charitable Medical Care 
Act of 1994 and its purpose is to expand the concept of the good 
Samaritan laws, giving immunity from civil liability for care rendered 
in emergency situations, to encompass charitable medical care provided 
without charge.
  There are over 170 free clinics across our country, as well as 
countless volunteers that provide care to those without means to pay. 
Over time, it is my hope that we will find ways to expand health 
insurance coverage to all. But until we reach that goal, and probably 
continuing even after that, these clinics and volunteers are badly 
needed and wonderful examples of the giving elements of the medical 
community. We need their contribution and they deserve our support.
  A major concern that free clinics have identified--and one that they 
believe is an obstacle to achieving greater participation by health 
professionals--is the concern for an increased malpractice exposure for 
those who volunteer to provide such services. While lawsuits against 
free clinics and other volunteer health professionals have been rare, 
the complexities of malpractice insurance in those settings and the 
perception that there is higher risk of suit in such settings make this 
a formidable barrier to participation.
  Virginia passed legislation to provide immunity from negligence for 
health professionals who give free services and the free clinics there 
have found it to be a tremendous boost to their participation rates. I 
am inserting in the Record an article written by a physician who is the 
chairman of Medical Services at the Bradley Free Clinic of Roanoke, VA. 
His article provides a good overview of the services provided by free 
clinics and the need for this legislation. It is my hope that in 
passing this bill, we will help health care volunteers and the clinics 
in which they serve.
  I also want to acknowledge the initiative of Sister Christine Bowman 
from the Saint Therese Medical Center in Waukegan, IL, in bringing this 
issue to our attention and in her tireless efforts to support and move 
forward with this legislation.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                 Care for the poor? We found a solution

                      (By Kevin C. Kelleher, M.D.)

       One way or another, there will apparently be changes in our 
     health-care system. But how soon or how comprehensive, no one 
     really knows. Meanwhile, a lot of people, including many of 
     the working poor, don't have health insurance and can't 
     afford adequate care. In my opinion, the medical profession 
     should be doing something about that now, without waiting for 
     the government to act.
       What we can do right away, in many communities and for 
     hardly any money, is set up free clinics. The idea isn't new 
     or revolutionary. In fact, free clinics are already working--
     some for more than 18 years--in at least 120 places, 
     according to the Free Clinic Foundation of America. They're 
     an interim solution, but also adaptable to whatever major 
     reform comes along.
       I'm chairman of medical services at the Bradley Free Clinic 
     of the Roanoke Valley, in Roanoke, Va., established in 1974. 
     Patients there get more than $2 of services for every dollar 
     donated to us. In 1991 along, we collected more than $380,000 
     in cash contributions, which went toward 6,000 patient visits 
     and some 11,000 prescriptions.
       These patients aren't getting low-quality medicine, either. 
     We provide all of their primary care, including lab tests, X-
     rays, dental care, and free medications. (Try finding dental 
     care and prescriptions in a typical universal-coverage 
     proposal.) In addition, specialists volunteer to treat 
     patients in-office or at the clinic.
       In some respects, clinic care goes beyond that provided to 
     insured patients. At our free clinic, we give patients more 
     training in basic self-care and hygiene than most insured 
     people get.
       More important, free clinics can link with social services 
     that help provide such things as drug treatment, prenatal 
     care, and teen counseling. Private practices rarely have the 
     time or staff to do this.
       Our local hospitals and medical societies endorse us, and 
     we have the financial support of area businesses and 
     charitable organizations such as United Way. We've even 
     received some grant money from national corporations.
       We also enjoy backing from pharmaceutical companies and 
     medical- and dental-equipment suppliers. One dental firm 
     donated nearly $100,000 in X-ray equipment on the condition 
     that we let its salespeople bring clients in to observe the 
     technology in action.
       Word of our success has spread. We've helped start 10 other 
     clinics in six states, from Illinois to Mississippi. And you 
     can imagine my surprise when we got an inquiry from the 
     former Soviet Union. Health-care consultants from nine 
     African nations visited our clinic last year and left with 
     much-needed insight into caring for the poor.


                    Legal worries are not a problem

       Community-minded doctors and businesses have been the back-
     bone of our clinic, but state legislators made it possible 
     for us to donate our time. That's because doctors who work at 
     free clinics in Virginia are shielded against malpractice 
     suits. The legislation, enacted in 1978, was recently amended 
     to include retired physicians who volunteer, and specialists 
     who use their own offices to see clinic patients.
       With such protection, it would be easy to drop our guard. 
     But we follow the same protocols at the clinic as we do with 
     our private patients, including quality-review checks. 
     Volunteer nurses continually monitor records and keep tabs on 
     outcomes. This is important because patients are likely to 
     see a different physician on each visit. Our statistics tell 
     us the clinic doctors are treating the same problems--and 
     getting the same good results--that we already see in our 
     private practices. The only difference is that patients 
     aren't charged anything.
       We've adopted a few other policies to head off problems: 
     Abusive or intoxicated patients are discharged for good. 
     Also, we don't dispense controlled substances. Prescriptions 
     for scheduled drugs are filled at cost by local pharmacists, 
     or gratis if patients truly can't afford them.
       Although we'll see anyone in an emergency, every patient 
     who uses the clinic is screened for need at the first visit. 
     Unemployment isn't a prerequisite. In fact, 60 percent of our 
     patients have jobs. The rest are on fixed incomes, 
     temporarily out of work, or Medicare-eligible without Part B 
     coverage.
       Clinic patients appreciate our services so much that 
     they're careful not to abuse them, as they might be tempted 
     to do under an entitlement program. (Still, some ``free'' 
     clinics in other areas of the country charge nominal fees for 
     visits and prescriptions, to guard against abuses.)
       Our rules are seldom broken, and we've never been sued. 
     When times are tough, patients are grateful for free care. 
     Several years ago, for instance, one unemployed cardiac 
     patient wrote a letter praising use to former President 
     Ronald Reagan. The commendation we got back from the Gipper 
     hangs in or waiting room.
       Some patients take such pride in the clinic that they also 
     volunteer their time--an hour or two each month to do filing, 
     housekeeping, of landscaping. Others sit with patients and 
     take down the information we use to screen each person for 
     need.
       Today, 120 physicians--one-third of the doctors in 
     Roanoke--work at the clinic (each averaging two to three 
     hours a week) or take referrals in their own offices. Even 
     the doctors who don't see patients at the clinic appreciate 
     the importance of what we're doing: In 1991, 128 non-
     participating physicians made contributions to our fund 
     drives.
       Additional services at the clinic are contributed by more 
     than 100 pharmacists, nurses, front-desk staffers, lab 
     technicians, dentists and hygienists.
       We're all kept hopping when the clinic opens at 5:30 p.m. 
     Three or four physicians are on duty, and each of us usually 
     sees 25 to 30 patients a night. Patients understand there may 
     be a long wait, but eventually gets seen. (We make 
     appointments only for physicals.) Most of us don't leave 
     until 10 p.m., and occasionally later.
       In response to the demand for our services, the clinic grew 
     from 2,500 square feet of donated space in 1974 to 7,000 
     square feet in a new building today. An architectural firm 
     drew up the plans for free, and local builders supplied much 
     of the materials at cost. The rest of the money came from 
     corporate grants and donations.
       We now have nine modern, well-equipped exam rooms and four 
     dental stations. That's quite a difference from our 
     beginnings on the creaky first floor of an old house, with 
     $250 in the bank and shower curtains separating the exam 
     areas. We had one doctor and one nurse then.


                      get your clinic started--now

       If you want to start such a clinic, plenty of assistance is 
     available. Here in Ronoake, we established the Free Clinic 
     Foundation of America to help create new facilities and 
     support existing ones. We've put together a ``how-to'' 
     handbook as well as a national directory listing 120 free 
     clinics. With more funding, physician participation, and 
     community interest, many other clinics can be set up.
       Our foundation will work for congressional legislation, 
     federal grant money, and funding from private sources to 
     create as many as 24 new clinics a year over the next three 
     years, each treating about 4,000 to 6,000 patients. This is a 
     start, but hundreds more free clinics would be needed to 
     extend basic coverage to most of the nation's medically 
     indigent.
       To encourage doctors to participate in our proposed 
     national network for free clinics, we need more protection 
     against malpractice suits. Last spring, I met with the staff 
     of Rep. John D. Dingell (D-Mich.) to present a version of 
     Virginia's Volunteer Clinic Act. The bill would provide the 
     same malpractice immunity we enjoy in Virginia to all doctors 
     who donate their services to free clinics. But, as with any 
     proposed legislation, it may be several years before it 
     becomes law. Meanwhile, the need for such clinics isn't 
     likely to diminish anytime soon.
                                 ______

      By Mr. DANFORTH:
  S. 2537. A bill to regulate interstate commerce by providing uniform 
principles to address the multiple imposition of punitive damages, and 
for other purposes; to the Committee on the Judiciary.


             MULTIPLE PUNITIVE DAMAGES FAIRNESS ACT OF 1994

  Mr. DANFORTH. Mr. President, I introduce the Multiple Punitive 
Damages Fairness Act of 1994. This legislation is intended to reform 
abusive punitive damages awards by disallowing the repeated sanction of 
punitive damages against the same defendant for one act. By doing so, 
this bill protects the due process rights of corporate defendants as 
well as the rights of injured plaintiffs to be compensated, rather than 
see money which is rightfully theirs be distributed as a windfall.
  I believe that punitive damages can be a valuable deterrent and 
punishment. However, like any sanction, they must be applied with sound 
judgment. For example, in the Civil Rights Act of 1991, I supported and 
pushed for the expansion of punitive damages to cases involving 
intentional discrimination against women, the disabled and religious 
minorities. It is important that perpetrators of such harms be required 
to do more than simply supply backpay and reinstatement. But I 
supported the caps that were placed on these damages because unlimited 
and disproportionate punishment is pointlessly destructive.
  The Multiple Punitive Damages Fairness Act which I introduce today is 
also designed to bring some modicum of fairness to the awarding of 
punitive damages. Specifically, the bill establishes the general rule 
that punitive damages may only be awarded once for harms based on a 
single act or course of conduct. There are two exceptions to this rule. 
First, when there is new evidence of additional wrongful behavior by 
the defendant. Second, if a court determines in a pretrial hearing that 
prior punitive damages were not high enough to punish the defendant or 
deter the behavior.
  With the exception of those lawyers who reap the windfall millions 
from repeat punitive damages, nobody seriously argues that repeatedly 
punishing the same company for one act makes sense or benefits society. 
On the contrary, out of control punitive awards have had a debilitating 
effect on many vital high-technology and health-related industries.
  And this bill does not adversely impact the rights of plaintiffs to 
be fully and fairly compensated for any and all harms. On the contrary, 
my bill protects the rights of future plaintiffs to collect by 
preventing defendants' assets from being needlessly squandered.
  My bill only limits repeated punitive awards and punitive damages do 
not compensate victims for their loss. Both economic and noneconomic 
harm are taken care of through compensatory damage awards. Punitive 
damages are permitted only in order to deter the wrongdoer from 
repeating the wrongful act and to deter others from taking similar 
actions. Thus, there can be no credible argument that stopping 
redundant punitive damages harms victims.

  The concept of punitive damages was first articulated in England in 
1763. At that time, these damages were referred to as ``exemplary 
damages.'' According to former Attorney General Griffin Bell, these 
awards were designed to compensate the victim for nonphysical injuries 
and to punish the wrongdoer. The typical punitive damages claim arose 
from an isolated incident involving two parties in which one party's 
honor was called into question. Since one's honor was highly valued and 
its injury was not usually included in compensatory damages, the 
concept of exemplary damages was established.
  Between 1763 and the 1960's, the awarding of noneconomic damages 
became more commonplace as a way to compensate a victim for nonphysical 
injuries. During the 20th century, however, punitive damages became 
divorced from the concept of compensation. They became a weapon to 
punish and deter wrongdoers.
  Prior to 1970, punitive or exemplary damages were not commonly 
awarded. Then, in the mid-1970's, there was an explosion of lawsuits in 
which plaintiffs sought punitive damages. With the increase in 
applications came a destructive increase in the amounts of the awards. 
The Institute for Civil Justice, in a study of 24,000 punitive damage 
cases, found that between 1965 and 1969 the average sum awarded was 
$43,000. But, between 1980 and 1984, the inflation-adjusted amounts 
averaged $729,000--a jump of 1,500 percent.
  During this period when punitive damage awards were exploding, many 
of the academics following the issue criticized their expansion. 
Professor John Jeffries of the University of Virginia stated that 
``punitive damages are out of control.'' Dean Dorsey D. Ellis at 
Washington University in St. Louis stated that the punitive damage 
``process currently in place in most jurisdictions contributes 
substantially to the misallocation of resources and is so lacking in 
fundamental fairness that it denies defendants, especially 
institutional defendants, the due process required by the Constitution 
and embedded in our legal system.''
  Criticism of punitive damages has not been limited to individual 
academics. The American College of Trial Lawyers and the American Law 
Institute each have noted the need for punitive damage reform. The 
American College of Trial Lawyers, half defense counsel and half 
plaintiffs' attorneys, has made the following observation: ``* * * 
awards often bear no relation to deterrence and merely reflect a jury's 
dissatisfaction with a defendant and a desire to punish, often without 
regard to the true harm threatened by a defendant's conduct.'' The 
American Law Institute has stated that ``[u]nlike other aspects of tort 
damages, there is serious debate, both scholarly and political, about 
whether any punitive component of a tort award is legitimate, as well 
as sharp controversy about how much to award in this category.''
  Ultimately, this skepticism about punitive damages has reached the 
highest court in the land. In 1991, the Supreme Court in Pacific Mutual 
Life Insurance Co. versus Haslip, expressed concern about punitive 
damages that run wild and can offend the due process clause of the 
Constitution. Again, in two more recent cases, TXO Production Corp. 
versus Alliance Resources Corp. (1993) and Honda Motor Co. versus Oberg 
(1994), the Supreme Court has expressed strong concern with respect to 
unbridled punitive damages procedures and awards. Unfortunately, the 
Court has remained unable to articulate a solution. I ask that a 
National Law Journal article describing the Court's most recent 
treatment of the punitive damages issue be included in the Record at 
the close of my remarks.
  As the last part of the article suggests, the problem addressed by my 
bill, that of multiple punishments for the same act, is one which will 
require some resolution soon. This is logical. The most blatant 
circumstance for constitutional and public policy objections to 
punitive damages is where they are awarded over and over without limits 
for cases arising out of a single act or course of conduct. Not only is 
it arbitrary and fundamentally unfair to punish someone many times for 
a single conduct, but repetitive punitive damages awards can strip a 
corporate defendant of its assets or insurance coverage. This hurts 
defendant but it also hurts plaintiffs by awarding a windfall to 
earlier claimant until the coffers are empty.

  What do we say to subsequent defendants who have valid claims for 
compensation? Sorry, we tell them. You get nothing for your suffering. 
You can't recover your medical bills or lost wages. You missed the 
gravy train. Someone else already won the sweepstakes. So, Mr. 
President, plaintiffs and defendants are losing.
  And Congress alone is responsible to remedy this problem which has 
frustrated courts and commentators alike. State and lower Federal 
courts are powerless. As one frustrated Federal Judge wrote in 1989 in 
Juzwin versus Amtorg:

       [T]his court does not have the power or the authority to 
     prohibit subsequent awards in order courts, notwithstanding 
     its opinion that such subsequent awards violate the due 
     process rights of the defendants. . . . Until there is 
     uniformity either through Supreme Court decision or national 
     legislation, this court is powerless to fashion a remedy that 
     will protect the due process rights of the defendant or other 
     defendants similarly situated.

  Other courts have sent the same message. A Federal District Court in 
New York wrote ``[t]here must * * * be some limit, either as a matter 
of policy or as a matter of due process, to the amount of times 
defendants may be punished for a single transaction.'' (In re Agent 
Orange Prod. Liab. Litig., 1983.)
  State legislatures cannot provide a remedy. A recent study by tort 
scholars at the American Law Institute concluded that ``single-state 
action * * * is an ineffectual response to the problem [of multiple 
punitive damages] because one state cannot control what happens in 
other jurisdictions. In fact, the State that acts alone may simply 
provide some relief to out-of-state manufacturers at the expense of its 
own citizen-victims, a situation that hardly provides much law reform 
incentive for state legislators.'' (The American Law Institute, 
``Enterprise Responsibility for Personal Injury--Reporters' Study,'' 
Vol. II (1991).)
  A Federal solution is the only remedy to the unfairness of multiple 
punitive damages awards. The Third Circuit Court of Appeals summed it 
all up when they wrote that ``[u]nquestionably, a national 
solution is needed.'' (Dunn verses Hovic, 1992). The bill I introduce 
today will uniformly and effectively protect claimants from the risk 
that corporate defendants are unfairly stripped of their ability to pay 
damages. At the same time, this bill will address legitimate due 
process concerns which arise when a business is punished repeatedly and 
without limit for just one wrongful act.
  I urge my colleagues to consider the merits of this very reasonable 
measure and take it up in the next Congress.
  Mr. President, I ask unanimous consent that the text of the bill and 
an article be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2537

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Multiple Punitive Damages 
     Fairness Act''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents of this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Findings.
Sec. 4. Purpose.
Sec. 5. Definitions.
Sec. 6. General rule.
Sec. 7. Applicability; preemption; jurisdiction of Federal courts.
Sec. 8. Effective date.

     SEC. 3. FINDINGS.

       The Congress finds the following:
       (1) Multiple or repetitive imposition of punitive damages 
     for harms arising out of a single act or course of conduct 
     may deprive a defendant of all of the assets or insurance 
     coverage of the defendant, and may endanger the ability of 
     claimants to receive compensation for basic out-of-pocket 
     expenses and damages for pain and suffering.
       (2) The detrimental impact of multiple punitive damages 
     exists even in cases that are settled, rather than tried, 
     because the threat of punitive damages being awarded results 
     in a settlement that provides for a higher award amount than 
     would ordinarily be obtained. To the extent that this premium 
     exceeds what would otherwise be a fair and reasonable 
     settlement for compensatory damages, assets that could be 
     available for satisfaction of future compensatory claims are 
     dissipated.
       (3) Fundamental unfairness results when anyone is punished 
     repeatedly for what is essentially the same conduct.
       (4) Federal and State appellate and trial judges, and well-
     respected commentators, have expressed concern that multiple 
     imposition of punitive damages may violate constitutionally 
     protected rights.
       (5) Multiple imposition of punitive damages may be a 
     significant obstacle to global settlement negotiations in 
     repetitive litigation.
       (6) Limiting the imposition of multiple punitive damages 
     awards would facilitate the resolution of mass tort claims 
     involving thousands of injured claimants.
       (7) Federal and State trial courts cannot provide solutions 
     to problems caused by the multiple imposition of punitive 
     damages because they lack the power or authority to prohibit 
     subsequent awards in other courts.
       (8) Individual State legislatures can create only a partial 
     remedy to address problems caused by the multiple imposition 
     of punitive damages, because each State lacks the power to 
     control the imposition of punitive damages in other States.

     SEC. 4. PURPOSE.

       The purpose of this Act is to provide a fair and balanced 
     resolution to the problem of multiple imposition of punitive 
     damages in interstate commerce.

     SEC. 5. DEFINITIONS.

       As used in this Act--
       (1) the term ``punitive damages'' means damages awarded 
     against any person or entity to punish or deter such person 
     or entity, or others, from engaging in similar behavior in 
     the future;
       (2) the term ``specific findings of fact'' are findings in 
     written form focusing on specific behavior of a defendant 
     that demonstrates a conscious, flagrant, indifference to the 
     safety or welfare of the claimant; and
       (3) the term ``claimant'' means--
       (A) any person who brings a civil action and any person on 
     behalf of whom such action is brought;
       (B) if such action is brought through or on behalf of an 
     estate, the term includes the claimant's decedent; and
       (C) if such action is brought through or on behalf of a 
     minor or incompetent, the term includes the claimant's parent 
     or guardian.

     SEC. 6. GENERAL RULE.

       (a) General Rule.--Except as provided in subsection (b), 
     punitive damages shall be prohibited in any civil action in 
     Federal or State court in which such damages are sought 
     against a defendant based on the same act or course of 
     conduct for which punitive damages have already been awarded 
     against such defendant.
       (b) Circumstances for Award.--
       (1) Substantial new evidence.--If the court determines in a 
     pre-trial hearing that the claimant will offer new and 
     substantial evidence of previously undiscovered, additional 
     wrongful behavior on the part of the defendant, other than 
     the injury to the claimant, the court may award punitive 
     damages in accordance with subsection (c).
       (2) Insufficient award.--If the court determines in a pre-
     trial hearing that the amount of punitive damages previously 
     imposed were insufficient to either punish the defendant's 
     wrongful conduct or to deter the defendant and others from 
     similar behavior in the future, the court may award punitive 
     damages in accordance with subsection (c).
       (c) Limitations on Award.--A court awarding punitive 
     damages pursuant to subsection (b) shall--
       (1) make specific findings of fact on the record to support 
     the award;
       (2) reduce the amount of the punitive portion of the damage 
     award by the sum of the amounts of punitive damages 
     previously paid by the defendant in prior actions based on 
     the same act or course of conduct; and
       (3) prohibit disclosure to the jury of the court's 
     determination and action under this subsection.

     SEC. 7. APPLICABILITY; PREEMPTION; JURISDICTION OF FEDERAL 
                   COURTS.

       (a) Applicability to Punitive Damages Actions.--
       (1) In general.--Except as provided in paragraph (2), this 
     Act shall apply to any civil action brought on any theory 
     where punitive damages are sought based on the same act or 
     course of conduct for which punitive damages have already 
     been awarded against the defendant.
       (2) Statutory exception.--This Act shall not apply to any 
     civil action involving damages awarded under any Federal or 
     State statute that prescribes the amount of punitive damages 
     to be awarded.
       (b) Preemption.--Except as provided in subsection (a)(2), 
     this Act shall supersede any Federal or State law regarding 
     recovery for punitive damages.
       (c) Jurisdiction of Federal Courts.--The district courts of 
     the United States shall not have jurisdiction over any civil 
     action pursuant to this Act based on sections 1331 or 1337 of 
     title 28, United States Code.

     SEC. 8. EFFECTIVE DATE.

       (a) In General.--This Act shall take effect on the date of 
     its enactment.
       (b) Pending Actions.--This Act shall apply to--
       (1) any civil action pending on the date of enactment of 
     this Act; and
       (2) any civil action commenced on or after such date, 
     including any action in which the harm or the conduct which 
     caused the harm occurred prior to such date.
                                  ____


             [From the National Law Journal, Aug. 1, 1994]

                                 Torts

             (By Sheila L. Birnbaum and J. Russell Jackson)

       On June 24, near the end of its term, the U.S. Supreme 
     Court rendered its decision in Honda Motor Co. v. Oberg\1\ a 
     products liability case involving a constitutional challenge 
     to a punitive damages award. The 7-2 decision is a high-water 
     mark in the recent Supreme Court decisions on the subject, as 
     it represents the largest number of justices agreeing that 
     punitive damages awards may violate due process. The case is 
     almost certain to spawn numerous constitutional challenges to 
     punitive damages awards in products liability litigation, as 
     it reaffirms the viability of due process challenges to 
     punitive damages and reserves for another day the question of 
     ``the character of the standard that will identify 
     unconstitutionally excessive awards.''
---------------------------------------------------------------------------
     Footnotes at end of article.
---------------------------------------------------------------------------
       To understand the significance of Oberg fully, one must 
     review the two Supreme Court decisions that affirmed punitive 
     damages awards in the face of due process challenges. In 
     Pacific Mutual Life Insurance Co. v. Haslip,\2\ the court 
     affirmed a punitive damages award in an insurance fraud case. 
     The justices explained that punitive damages awards could 
     violate due process, but they refused to declare what minimum 
     procedures are required to keep a state punitive damages 
     award from being constitutionally impermissible.
       The Haslip court merely held that Alabama's procedures 
     governing punitive damages awards did not violate due 
     process. The procedures approved by the court included jury 
     instructions that limit the jury's discretion in awarding 
     punitive damages, substantive trial court review of the 
     verdict and substantive appellate review of the verdict.
       The Haslip court also declared that a punitives award 
     should bear ``some reasonable relationship to compensatory 
     damages,'' and that the approximate 4-to-1 ratio in that case 
     of punitive damages to compensatory damages ``may be close to 
     the line of constitutional propriety.''
       The lack of a well-defined constitutional standard in 
     Haslip led to some confusion among courts and litigants about 
     the boundaries of due process in punitive damages procedures. 
     Some courts established more rigorous procedures in light of 
     Haslip.\3\ Others upheld punitive damages schemes by finding 
     that Haslip did not establish the bare minimum of process due 
     to defendants.\4\
       Court watchers waited expectantly for guidance when the 
     court rendered its decision last summer in TXO Production 
     Corp. v. Alliance Resources Corp.\5\ In TXO, an intentional 
     tort case involving slander of title to land, the court 
     affirmed the constitutionality of a punitive damages award 
     that was 526 times the amount of the compensatory damages 
     award.
       The TXO court did not articulate a clear standard for 
     evaluating whether the $10 million punitive damages award 
     comported with due process. A majority of the TXO court 
     agreed that punitive awards must comport with due process, 
     with a plurality requiring such awards to be procedurally 
     fair and noting that ``concerns of reasonableness probably 
     enter into the constitutional calculus.''
       The dissent in TXO attacked the plurality for summarily 
     reaffirming the notion that there are constitutional limits 
     to punitives awards and ``abandon[ing] all pretense of 
     providing further instruction.'' Justice Anthony M. Kennedy, 
     in his concurrence, complained that the plurality's 
     ``reasonableness'' standard was unclear. Justice Antonin 
     Scalia, in another concurrence, accused the plurality of 
     leaving the door open to the assertion of a standardless 
     substantive due process right.
       Oberg is the first case in which the court has overturned a 
     punitive damages award for failure to comply with due 
     process, and it represents the first real attempt by the 
     court to begin sketching the boundaries of due process with 
     respect to punitive damages.
       The facts in Oberg are somewhat unusual, which means the 
     holding will have little direct effect on the punitive 
     damages schemes of most states. The principles articulated by 
     the court, however, lay important groundwork for future 
     constitutional challenges to punitive damages awards.
       The defendant in Oberg had been found liable in a products 
     liability suit for $735,512.31 in compensatory damages and $5 
     million in punitive damages. The defendant sought post-
     verdict review of the punitives award in the trial court and 
     on appeal. The Oregon Supreme Court declined to review the 
     award, relying on a 1910 amendment to the Oregon Constitution 
     that prohibits judicial review of the amount of punitive 
     damages awarded by a jury ``unless the court can 
     affirmatively say there is no evidence to support the 
     verdict.'' Oregon appears to be the only state to prohibit 
     judicial review of punitive damages awards.
       The Oregon Supreme Court, according to the U.S. Supreme 
     Court's opinion, refused to ``interpret Haslip to hold that 
     an award of punitive damages, to comport with the 
     requirements of the Due Process Clause, always must be 
     subject to a form of post-verdict or appellate review that 
     includes the possibility of remittitur.''
       The Oregon court was confident that the Oregon punitive 
     damages scheme comported with due process, as it provided for 
     very detailed jury instructions with substantive criteria and 
     required that the plaintiff prove entitlement to punitive 
     damages by clear and convincing evidence. The scheme also 
     allowed courts to reverse punitive awards when there was no 
     evidence to support liability for punitive damages. 
     Additionally, Oregon law required the trial judge to 
     determine that a prima facie case for punitive damages had 
     been presented before evidence of the defendant's wealth 
     could be submitted to the jury.
       The safeguards of the Oregon scheme did not comport with 
     due process, the Supreme Court held. The ``decision to punish 
     a tortfeasor by means of an exaction of exemplary damages is 
     an exercise of state power that must comply with the Due 
     Process Clause of the Fourteenth Amendment.''
       The justices held that judicial review must cover more than 
     whether there is evidence to support liability for any award 
     of punitive damages. Due process requires a judicial review 
     of the propriety of the amount of punitive damages awarded. 
     As the court explained:
       ``Oregon, unlike the common law, provides no assurance that 
     those whose conduct is sanctionable by punitive damages are 
     not subjected to punitive damages of arbitrary amounts. What 
     we are concerned with is the possibility that a guilty 
     defendant may be unjustly punished; evidence of guilt 
     warranting some punishment is not a substitute for evidence 
     providing at least a rational basis for the particular 
     deprivation of property imposed by the State to defer future 
     wrongdoing.''
       The analysis the Oberg court used in arriving at its 
     conclusion that the punitives award violated due process is 
     telling. It reflects more of the historical approach 
     advocated by Justice Scalia than the procedural due process 
     analysis that Justice Sandra Day O'Connor has advocated.
       In Haslip, the majority failed to articulate the standard 
     it used to evaluate whether the punitive award comported with 
     due process. Justice Scalia, in his Haslip concurrence, 
     advocated a primarily historical analysis: ``If the 
     government chooses to follow a historically approved 
     procedure, it necessarily provides due process, but if 
     chooses to depart from historical practices, it does not 
     necessarily deny due process.''
       Justice O'Connor, in her Haslip dissent, had proposed 
     different criteria, based on the Supreme Court's landmark 
     1976 procedural due process decision in Mathews v. 
     Eldridge.\6\ In her view, the court should look at three 
     factors in evaluating punitive awards: ``(1) the private 
     interest at stake; (2) the risk that existing procedures will 
     wrongly impair this private interest, and the likelihood that 
     additional safeguards can effect a cure; and (3) the 
     governmental interest in avoiding these additional 
     procedures.''
       The Supreme Court's decision in Oberg focused almost 
     exclusively on the fact that judicial review of the amount of 
     punitive damages awards has a long historical basis. The 
     court relied on English cases from the 18th century, U.S. 
     common-law decisions from the 19th century treatises to 
     conclude that ``judicial review of the size of punitive 
     damages awards has been a safeguard against excessive 
     verdicts for as long as punitive damages have been awarded.'' 
     Modern practice, the court stated, ``is consistent with these 
     earlier authorities.''
       Perhaps most interesting was the court's pronouncement that 
     ``abrogation of a well-established common law protection 
     against arbitrary deprivations of property raises a 
     presumption that its procedures violate the Due Process 
     Clause.''
       Because the Oregon procedure departed from ``traditional'' 
     procedure without providing substitute safeguards, the court 
     concluded that it violated due process. As Justice Scalia 
     elaborated in his concurrence, ``The deprivation of property 
     without observing (or providing a reasonable substitute for) 
     an important traditional procedure for enforcing state-
     prescribed limits upon such deprivation violates the Due 
     Process Clause.''
       Justice Ruth Bader Ginsburg, joined by Chief Justice 
     William H. Rehnquist, criticized in her dissent the 
     majority's reliance on history as the standard for due 
     process, and she took issue with conclusions the majority 
     drew about historical procedures. She noted that the majority 
     ``barely acknowledges the large authority exercised by 
     American juries in the 18th and 19th centuries.'' Juries 
     usually had the power to determine both law and fact, she 
     observed, and common-law courts ``reviewed punitive damage 
     verdicts extremely deferentially, if at all.''\7\
       Two aspects of the Oberg opinion ensure that there will be 
     future due process challenges to punitives awards. First, the 
     court stated in strong terms its concern about the potential 
     for unfairness that is inherent in punitive damages awards. 
     Second, it recognized that historical change may require 
     adaptation of punitives standards that were satisfactory at 
     one point in history.
       The court warned, ``Punitive damages pose an acute danger 
     of arbitrary deprivation of property. Jury instructions 
     typically leave the jury with wide discretion in choosing 
     amounts, and the presentation of evidence of a defendant's 
     net worth creates the potential that juries will use their 
     verdicts to express biases against big business, particularly 
     those without strong local presences.''
       The Oberg court also encouraged future challenges by 
     reserving the question of what standard identifies a 
     constitutionally excessive punitives award and by discussing 
     the effect of historical change on the constitutional 
     analysis. The court recognized that not all change from 
     historical procedures would violate due process, because the 
     law must respond to changes in society. The court cited as an 
     example the expansion of the notion of personal jurisdiction 
     in the 1945 case International Shoe Co. v. Washington,\8\ 
     which developed as a new business entity, the corporation, 
     whose ability to conduct business without physical presence 
     had created new problems not envisioned by rules developed in 
     another era,'' as well as to the ``dramatic improvements in 
     communication and transportation that made litigation in a 
     distant forum less onerous.''
       The fact of historical change will play prominently in the 
     analysis of future punitive damages challenges. Modern 
     products liability litigation bears little resemblance to 
     tort litigation of the 18th and 19th centuries. Defendants in 
     some jurisdictions are now held liable for punitive damages 
     based on underlying strict liability theories that, by their 
     very terms, may ignore traditional notions of fault. This 
     represents a sharp break from the past.
       Moreover, the development of sophisticated mass production 
     processes and the emergence of national and international 
     corporations make it increasingly likely that a defendant may 
     be held liable for punitive damages in numerous different law 
     suits for the same course of conduct: marketing a single type 
     of product. The potential for arbitrariness in awards of this 
     type is magnified by the fact that in many jurisdictions--as 
     was the case in Oberg--the jury may base its award in part on 
     the net worth of the defendant.
       Thus, a products liability defendant may be subject to 
     numerous punitive damages awards for the same conduct, with 
     each award being intended to punish the defendant fully on 
     the basis of the defendant's net worth. This, too, appears to 
     be at odds with the historical application of punitive 
     damages.
       Basing multiple punitive damages awards on a defendant's 
     net worth is seen to prejudice large corporate defendants in 
     particular. One commentator\9\ has posited this example: 
     Company A is 10 times larger than Company B. Both make the 
     same type of product, and both have identical management and 
     costs, so that Company A's annual net profit is 10 times 
     larger than company B's. If each is sued for product defects 
     at the same rate, Company A will pay 10 times more in 
     compensatory awards each year than Company B.
       But the punitives awards against the larger company are 
     exponentially higher than those against the smaller company, 
     even though they are premised on the same misconduct. Because 
     each punitive award is based on the company's net worth, each 
     award Company A pays already will be 10 times more than 
     Company B's. If it pays 10 times as many awards, at the end 
     of each year Company A will have paid 100 times the punitive 
     damages than Company B did. This, it may be argued, is the 
     sort of arbitrariness inherent in modern punitive damages 
     awards that violates due process.
       The Supreme Court has not yet been confronted with 
     challenges, such as the examples given above, that go to the 
     heart of products liability litigation. It seems clear that 
     in the wake of Oberg, such challenges will be made, and that 
     given the court's concern about arbitrary punitives awards, 
     the court may well decide to hear them.


                               footnotes

     (\1\) 1994 WL 276687 (U.S., June 24, 1994).
     (\2\) 111 S. Ct. 1032 (1991).
     (\3\) See, e.g., Johnson v. Hugo's Skateway, 974 F.2d 1408 
     (4th Cir. 1992); Mattison v. Dallas Carrier Corp., 947 F.2d 
     95 (4th Cir. 1991); Garnes v. Fleming Landfill Inc., 413 
     S.E.2d 897 (W.Va 1991).
     (\4\) See, e.g., Dunn v. Hovic, 1 F.3d 1371 (3d Cir.), cert. 
     denied, 114 S. Ct. 650 (1993).
     (\5\) 113 S. Ct. 2711 (1993).
     (\6\) 424 U.S. 319 (1976).
     (\7\) Although it might seem surprising that justice Scalia 
     voted with the majority given the historical overlay that 
     Justice Ginsburg crafted in her dissent, his position was 
     consistent with his dissent in TXO, in which he said, ``To 
     say (as I do) that `procedural due process' requires judicial 
     review of punitive damages awards for reasonableness is not 
     to say that there is a federal constitutional right to a 
     substantively correct `reasonableness' determination.''
     (\8\) 326 U.S. 310 (1945).
     (\9\) Malcolm W. Wheeler, ``A Proposal for Further Common Law 
     Development of the Use of Punitive Damages in Modern Product 
     Liability Litigation,'' 40 Ala. L. Rev. 919 (1989).
                                 ______

      By Mr. MURKOWSKI (for himself and Mr. Stevens):
  S. 2539. A bill to provide for the settlement of certain claims under 
the Alaska Native Claims Settlement Act, and for other purposes; to the 
Committee on Energy and Natural Resources.


                the landless natives land allocation act

   Mr. MURKOWSKI. Mr. President, I introduce S. 2539, the 
Landless Native Land Allocation Act of 1994. I am joined by Senator Ted 
Stevens in introducing this important legislation.
  This legislation is intended to provide entitlements pursuant to the 
Alaska Native Claims Settlement Act [ANCSA] for five southeastern 
Alaska Native communities, namely Haines, Ketchikan, Petersburg, 
Tenakee, and Wrangell. These five communities were inadvertently and 
unfairly left off the list of Native communities eligible for ANCSA 
benefits at the time of its enactment in 1971. The facts and 
circumstances do not justify this omission and I call for Congress to 
rectify the situation.
  Mr. President, as many members of this body know, ANCSA was enacted 
to recognize and settle the aboriginal claims by Alaska Natives to the 
lands they had lived on and used for hundreds of years.
  In passing ANCSA, Congress created a settlement mechanism that called 
for the establishment of Native corporations to receive and manage the 
$1 billion and 44 million acres awarded under the Act. Congress 
intended these corporations to be the vehicles through which Alaska 
natives could use their settlement resources to integrate into the non-
Native economy. In many cases Native corporations have established 
businesses, effectively managed their resources, and prospered 
financially. Furthermore, Native corporations have served an important 
role as stewards of the ANCSA lands. These lands are an essential 
element of the traditional Native culture and way of life.
  The five Native communities of Haines, Ketchikan, Petersburg, 
Tanakee, and Wrangell inexplicably were not listed under ANCSA as 
communities eligible to form village or urban corporations. This 
omission occurred despite the five communities comprising over 20 
percent of the southeast Alaska regional corporation's shareholders and 
displaying historic cultural and traditional Alaska Native qualities.
  For two decades, the five communities have attempted to appeal their 
omission from the ANCSA list of eligible Native communities. Such 
attempts have yet to find success as ANCSA does not provide southeast 
Native communities with the same right to eligibility determinations 
enjoyed by villages in other areas of Alaska. This lack of evenhanded 
treatment is unexplained in the Act or legislative record.
  As a result of the unclear history surrounding the eligibility 
determination of the five communities, Congress, in 1993, directed the 
Secretary of the Interior to prepare a report examining whether it had 
inadvertently denied ANCSA eligibility to the five communities of 
Haines, Ketchikan, Petersburg, Tenakee, and Wrangell. A thorough review 
of ANCSA and its legislative history provides the basis for the report.
  Published in February, 1994, the report finds that the five 
communities do not differ significantly from southeast Alaska native 
communities that were permitted to form village or urban corporations 
under ANCSA. The five are similar to other southeast Alaska communities 
in the percentage of natives residing in the communities as well as 
historic native use and occupation of the land in and around the 
communities.
  Furthermore, the report indicates that the omission of the five 
communities from ANCSA is not clearly explained in any provision of 
ANCSA or in the accompanying conference report.
  Mr. President, the report examines many other comparisons of the five 
communities with eligible southeast Native communities. Based on the 
overall data, it is apparent that Congress inadvertently omitted the 
five communities from ANCSA eligibility. If there are reasons for this 
omission, they are not clearly explained or evidenced in the record and 
thus should be given no weight. Therefore, Congress should act to 
rectify the inequity suffered by the five communities for the last two 
decades by providing them the right to incorporate and receive benefits 
under ANCSA.
  Specifically, S. 2539 would allow the five communities to incorporate 
as village corporations under ANCSA. These newly created corporations 
will be known as Landless Village Corporations. Each Native member of 
the five communities will be issued shares of stock in their respective 
Landless Village Corporation in proportion to the amount of shares they 
hold in Sealaska Corporation.

  The Landless Village Corporations will be allowed to select certain 
public lands and receive from the Secretary of the Interior a patent 
for the surface rights thereto pursuant to ANCSA. As provided for in 
ANCSA, the Native regional corporation for southeast Alaska will 
receive the subsurface rights of the selected lands. Eligible public 
lands will include all public land in southeast Alaska excluding: (i) 
conservation system units, (ii) lands within the Tongass National 
Forest Land Management Plan timber base, (iii) lands withdrawn for 
national defense purposes, (iv) lands selected by Regional, Village or 
Urban Corporations pursuant to ANCSA; and, (v) lands selected pursuant 
to the Alaska Statehood Act.
  The number of acres of and a Landless Village Corporation may select 
will be based on the number of Natives enrolled to it. This population 
based method is the same method used by most village corporations under 
ANCSA and will best provide the Landless Village Corporations with an 
equitable settlement. It will result in the corporations being allowed 
to select from three to seven townships each.
  It is well know that the lumber mills of southeast Alaska and the 
people who work for them have suffered significant economic hardship 
because of Forest Service timber policies aimed at reducing timber 
sales in southeast. Therefore, in order to support the sagging economy 
of southeastern Alaska, it will be required that timber harvested from 
lands selected by the Landless Village Corporations be processed in 
southeastern Alaska.
  While I realize that there is no time for the 103d Congress to 
consider this legislation at this late date in the session, much work 
has gone into the development of this bill and I believe it is 
important that it receive the distinction of being introduced. I 
introduced this legislation at the request of my constituents in 
southeast Alaska and have developed this bill in close consultations 
with their representatives.
  I intend to introduce this legislation next year and seek a hearing 
before the Senate Energy and Natural Resources Committee. Introduction 
in this Congress will provide the concepts in this bill with important 
public exposure that will serve to interested parties and enhance the 
opportunity for constructive public comment as we work to produce a 
fair settlement with broad public support.
  Therefore, Mr. President, I ask my colleagues to support me in this 
effort to provide these Native communities in southeast Alaska with 
their just ANCSA entitlement and I look forward to their 
cooperation.
                                 ______

      By Mr. MURKOWSKI (for himself and Mr. Stevens):
  S. 2542. A bill to require the Secretary of the Interior to carry out 
an expedited negotiated settlement of the land rights of the owners of 
patented and unpatented mining claims within Denali National Parks, AK, 
and for other purposes; to the Committee on Energy and Natural 
Resources.


                        DENALI MINING CLAIMS ACT

 Mr. MURKOWSKI. Mr. President, I introduce the Denali Mining 
Claims Act of 1994. Last November, I held an oversight hearing in 
Anchorage focusing on the difficult is that many Alaskan miners face 
when their claims are surrounded by Federal lands. Over 20 miners 
testified that Government regulations and procedures prevented them 
from mining their land even though they were promised continued access 
and use when the Alaska National Interest Lands Conservation Act was 
passed in 1980.
  Mr. President, the legislation I am introducing today should help 
resolve many of the inholding problems within Denali National Park and 
Preserve. When Denali was expanded by ANILCA, the Kantishna Hills 
Mining District and two others were surrounded by Federal lands. At 
that time there were over 250 claims in the Kantishna area. Since 1980 
the effect of litigation relating to the management of such mining 
claims has resulted in the cessation of all significant mining 
operations in the Denali area. ANILCA specifically allowed for mining 
in Kantishna, yet the National Park Service has literally vetoed all 
attempts to mine within the area.
  I would prefer that these miners be permitted to mine their claims, a 
right statutorily preserved under ANILCA, however, I recognize that the 
National Park Service does not support mining in Denali and will 
continue to delay and deny plans of operation submitted in accordance 
with established guidelines.
  To resolve this dispute, my bill directs the Park Service to enter 
into good faith negotiations with individuals who have patents or 
mining claims that they wish to sell in an attempt to find a reasonable 
way to compensate people for valuable claims or land that they are 
prevented from using. If good faith negotiations fail, my bill provides 
two additional options: A miner can choose to receive an offer of a 
fixed price per acre based upon a 1983 congressionally mandated study 
of the value of the claims, or the Secretary of Interior will use the 
Federal court system to institute a takings procedure. This bill 
provides three options to create as much flexibility as possible in the 
process.
  Should negotiations between the Park Service and claims owner fail, 
the Park Service would be required and the land owner allowed to make a 
statement to Congress giving their reasons for the failure to reach an 
acceptable compromise. If a fixed price per acre is used to set a fair 
price, the valuation would vary depending upon the status of the claim 
and whether it had direct road access and/or a view of Denali itself. 
The final option would be use of the court system in a takings 
procedure.
  Mr. President, previous attempts by the National Park Service to set 
a fair price on the value of mineral claims in Denali Park and Preserve 
have resulted in heated disputes over valuations and the length of time 
required to reach an agreement. My legislation would provide a balanced 
approach to determining mineral and land values within a reasonable 
time frame. It would do so using a fixed process including good-faith, 
full disclosure negotiations. If a mining claim holder choose not to 
participate in this process, there would be no penalty.
  Mr. President, I realize this legislation will not be acted on before 
the adjournment of this Congress. I am introducing this bill now to 
give interested parties an opportunity to comment upon it. It is my 
intention to reintroduce this bill at the beginning of the next 
Congress and work toward its passage.
                                 ______

      By Mr. CRAIG:
  S. 2544. A bill to amend the Fair Labor Standards Act of 1938 to 
adjust the maximum hour exemption for agricultural employees, and for 
other purposes; to the Committee on Labor and Human Resources.


                   fair labor standards act amendment

 Mr. CRAIG. Mr. President, I am introducing a bill today, which 
this body previously approved as an amendment to the first bill 
amending the Fair Labor Standards Act [FLSA] that the Senate passed in 
1989. This bill would solve a problem with the interpretation of a 
provision of the FLSA, clarifying that the maximum hour exemption for 
agricultural employees applies to water delivery organizations that 
supply 90 percent or more of their water for agricultural purposes.
  This would restore an exemption that was always intended by Congress. 
The Department of Labor has interpreted current law to require that 100 
percent of water delivered by a qualified delivery organization must be 
used for agricultural purposes. Thus, if even a negligible amount of 
water ends up being used for road watering, lawn and garden irrigation, 
stock consumption, or construction, for example, delivery organizations 
are assessed severe penalties.
  The exemption for overtime pay requirements was placed in the FLSA to 
protect the economies of rural areas. Irrigation has never been, and 
can not be, a 40-hour-per-week undertaking. During the summer, water 
must be managed and delivered continually. Later in the year, following 
the harvest, the work load is light, consisting mainly of maintenance 
duties.
  Winter compensation and time off traditionally have been the method 
of compensating for longer summer hours. Without this exemption, 
delivery organizations are forced to lay off their employees in the 
winter. Therefore, my bill would benefit farmers and employees, who 
would continue to earn a year-round income.
  I realize that it is late in the legislative season in the 103d 
Congress and action on this legislation is not likely this year. 
However, I am introducing the bill at this time to make my colleagues 
aware of my intention to pursue this matter in the 104th Congress, and 
will reintroduce similar legislation on the first day of that Congress.
  I ask unanimous consent that a copy of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2544

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

     SECTION 1. AMENDMENT TO THE FAIR LABOR STANDARDS ACT OF 1938.

       Section 13(b)(12) of the Fair Labor Standards Act of 1938 
     (29 U.S.C. 213(b)(12)) is amended by inserting after 
     ``water'' the following: ``, at least 90 percent of which is 
     ultimately delivered''.
                                 ______

      By Mr. FEINGOLD:
  S. 2545. A bill to provide for home community-based services for 
individuals and disabilities; read the first time.


                   home and community-based services

 Mr. FEINGOLD. Mr. President, I am pleased to introduce 
legislation to reform fundamentally the way we provide long-term care 
in this country.
  Though it is now apparent that we will not be voting on comprehensive 
health care reform in this Congress, we must not wait to renew our 
efforts. We should begin now, and universal coverage should again be 
our goal.
  This legislation does not attempt to reform our health care system in 
any comprehensive way, but it does serve to resume the debate, and can 
be a first step in the effort to pursue universal coverage.
  The measure I introduce today establishes a system of consumer-
oriented, consumer-directed home and community-based long-term care 
services for individuals with disabilities of any age.
  It is similar in large part to the excellent long-term care proposal 
included in President Clinton's health care reform bill, as well as to 
the provisions establishing home and community long-term care benefits 
in the versions of the President's bill that came out of the Senate 
Committee on Labor and Human Resources and the Senate Committee on 
Finance--provisions which had, in both cases, strong bipartisan 
support.
  The legislation also provides for a hospital--long-term care link 
program, identical to legislation I introduced on S. 52, on the first 
day for introduction of bills in the 103d Congress.
  The hospital link program is based on our experiences in Wisconsin 
where such an initiative has helped direct individuals needing long-
term care services out of hospitals, and back to their own homes and 
communities. The hospital discharge is a critical point of embarkation 
into the long-term care system for many, and this program helps ensure 
that those who leave a hospital in need of long-term care can receive 
needed services where they prefer them--in their own homes.
  Mr. President, a key feature of this proposal that was not included 
in the other long-term care proposals I mentioned is a provision that 
allows States to channel any savings this program generates in Medicaid 
funded long-term care services, institutional or home and community-
based, back into this more flexible program.
  In the long run, it is this provision that will result in helping to 
realize significant savings from a system that currently diverts the 
vast majority of its resources into expensive institutional settings.
  Mr. President, though I am convinced that long-term care reform can 
result in substantial savings to taxpayers--and this has been our 
experience in Wisconsin--this measure does not depend on hypothetical 
savings for funding. This measure includes funding provisions 
consisting of specific cuts within the health care system, scored by 
the Congressional Budget Office to reduce Federal spending under 
Medicare.
  Included in these proposed spending cuts is a provision that reduces 
the subsidy we give to the wealthiest Medicare beneficiaries through 
the Part B premium. The provision would peg the part B premium to 
income, reducing the taxpayer subsidy for individuals with income over 
$100,000 and couples with income over $125,000. The subsidy would be 
completely phased out for individuals with income over $125,000, and 
couples with income over $150,000.
  Other savings are generated from a 10 percent home health copayment 
applied to individuals with incomes over 150 percent of poverty--still 
only half the copayment charged on other Medicare services; modifying 
the routine cost limits for home health services; correcting an anomaly 
in the formula for certain outpatient services; and continuing the 
reduction in the inpatient hospital capital reimbursement formula.
  Over the 5 fiscal years for which we have estimates, the proposal 
actually generates savings in each year, producing a total of $6.1 
billion in deficit reduction over that time.
  This must be the approach we adopt, even for those proposals which 
experience shows will result in savings. By including funding 
provisions in this long-term care reform measure, we ensure that any 
additional savings produced by these reforms will only further reduce 
the budget deficit.
  Mr. President, I am proud to note that, like the President's initial 
long-term care proposal and the provisions reported out of the two 
Senate Committees, this legislation has its roots in Wisconsin's own 
Community Options Program, known as COP--a program for which I was 
privileged to advocate and help develop during my 10 years as chair of 
the Wisconsin Senate Aging Committee.
  With the end of the 103d Congress upon us, and our efforts to achieve 
comprehensive health care reform set aside, at least for the remainder 
of this session, long-term care reform generally, and this proposal in 
particular, can serve to renew the best parts of the health care 
debate.
  In part, we saw this potential in the efforts of the two Senate 
committees charged with primary oversight of health care reform. Both 
reported out proposals that included language very much like this 
legislation, and in each case, that language has strong bipartisan 
support.
  Beyond that, this proposal can be adopted independently of the 
comprehensive reform that has been unable to attract a majority of 
Members. It is my hope that the momentum generated by reforming long-
term care will help advance the push for comprehensive health care 
reform.
  In the respect, Mr. President, though it can be considered apart from 
the remainder of health care reform, long-term care reform contains the 
important elements around which a consensus might develop for a more 
general health care bill. This means that not only can it proceed apart 
from comprehensive reform I strongly support, it can serve to 
reinitiate the push for broader changes.
  Home and community-based long-term care reform can be the building 
block of health care reform.
  This proposal will not interrupt my own efforts to push for those 
elements of health care reform that can deliver needed services and 
contain costs. To the contrary, it can accomplish both.
  Mr. President, I have spoken with nearly every Member of the Senate 
about our experience in Wisconsin with long-term care reform, and I 
hope to have reached all 100 Members, including new members, by early 
next year. The Wisconsin experience is especially relevant, because, as 
a State, we have faced many of the same problems that continue to face 
the Nation as whole in long-term care.

  In the early 1980's, Wisconsin's Medicaid nursing home bed use was 
soaring, as was the daily cost of a nursing home bed. Long-term care 
consumers had little choice but to enter an institution, or go without 
services. There was almost a complete absence of community- or home-
based long-term care services for people in need of support. With the 
rare exception of a few older disabled with sufficient resources to 
create their own system of in-home supports, many were forced to enter 
nursing homes who would have liked to have remained in their own home 
or community.
  Mr. President, there are many compelling reasons to reform our long-
term care system. Over the past year and a half, I have detailed many 
of them on this floor: an exploding population of the very old the 
largest group of long-term care consumers; the relative shrinking 
population of caregivers; the growing need of family caregivers to 
leave the workplace just to provide a loved one with long-term care; 
and, the enormous and rapidly increasing expense to the taxpayer of 
institutional settings.
  But, Mr. President, as with health care reform overall, I view long-
term care reform first and foremost as a matter of simple humanity.
  Chuck McLaughlin, of Black River Falls, WI, administers COP for 
Jackson County. He testified before a Senate Special Committee on Aging 
field hearing that I chaired about what that lack of choice meant to 
many disabled, especially elderly disabled, before Wisconsin 
implemented its reforms.
  McLaughlin noted that though some ``eventually adjusted to leaving 
their home and entering the nursing home, others never did.'' Although 
McLaughlin noted he had no hard empirical evidence to document the 
fact, he said he ``saw people who simply willed their own death because 
they saw no reason to continue living. These were people who were 
literally torn from familiar places and familiar people. People who had 
lost the continuity of their lives an the history that so richly made 
them into who they were now. People who had nurtured and sustained 
their communities which in turn provided them with positive status in 
that community. These people were truly uprooted and adrift in an alien 
environment lacking familiar sights, sounds, and smells. Many of them 
simply chose not to live any longer. While the medical care they 
received was excellent, they were more than just their physical bodies. 
Modern medicine has no treatment for a broken spirit.''
  For many, the current long-term care system is so inflexible as to be 
inhumane. Even if there were no other reason to reform the system, this 
would be reason enough.
  Mr. President, earlier this year I issued a report reviewing the 
long-term care provisions in President Clinton's health care reform 
legislation and offering some modifications to those provisions based 
on our experience in Wisconsin. In that report, I noted that Chuck 
McLaughlin's eloquent comments on the importance of community were not 
only relevant, even central, to the discussion of long-term care, but 
that community must also be the focus of our efforts in many other 
areas of our lives as Americans and citizens of the world.
  More often than not the critical problems we face stem from a failure 
of community or a lack of adequate community-based supports--for 
example jobs and economic development, housing, crime, and education. 
These and other important issues are usually confronted by policymakers 
at a distance--from Washington, DC or from State capitals--essentially 
from the top down.
  Too often we have tried to solve these challenges, including the 
challenge of long-term care, by imposing a superior vision from above. 
This approach has led to inflexible systems that cannot react to 
individual needs, but rather end up trying to fit the problem to their 
own structure.

  This fundamental weakness is often enough to undermine even the 
sometimes huge amounts of money that we send along to implement the 
problem solving. It also limits the kinds of creative approaches those 
who are on the ground may see as useful and necessary.
  Mr. President, just as we have a need to reinvent Government to 
respond more efficiently to our country's needs and our national 
deficit, we need also to reinvent community to allow flexible 
approaches to problems, and to allow those in the community to exercise 
their judgment as to how best solve problems.
  A great strength of the Wisconsin long-term care reforms, and 
especially the home and community-based benefit on which this 
legislation is based, is that it is focused on the needs of the 
individual. Eligibility is based on disability, not age, and services 
are centered around the particular needs of an individual rather than 
the perceived needs of a group.
  The approach this legislation takes is not only appropriate, but 
integral to the nature of long-term care.
  Mr. President, of the many misconceptions about long-term care, and 
about programs providing long-term care services, the most common may 
be that long-term care is purely an elderly issue. Though it is true 
that the elderly make up the largest part of the population needing 
long-term care services, long-term care is an issue facing millions of 
younger Americans. Approximately 1 million children have severe 
disabilities that require long-term care services. And over and above 
those individuals needing assistance for long-term disabilities, long-
term care is a problem facing millions more who are the family members 
of those needing services.
  Beyond the wide variety of ages among those needing long-term care 
services, there is a diversity of needs. From families that have a 
loved one afflicted with Alzheimer's disease, to individuals with 
cerebral palsy, however well intentioned, no one set of services will 
address the individual needs of long-term care consumers.
  Rather than trying to fit all of those needing long-term care 
services into one set of services, this legislation lets case managers, 
working with long-term care consumers and their families, determine 
just what services are needed and preferred.
  Mr. President, as I noted earlier, the failure to enact comprehensive 
reform will not interrupt my own efforts to advocate and push 
individual reforms that respond to the needs of people and that can 
help save our health care system money.
  In home and community-based long-term care reform, we can achieve 
both.
  For taxpayers in Wisconsin, COP has saved hundreds of millions of 
dollars that would otherwise have been spent on more expensive 
institutional care.
  During the 1980's, while the rest of the country was experiencing a 
24-percent increase in Medicaid nursing home bed use, in Wisconsin, 
thanks to COP and other long-term care reforms, Medicaid nursing home 
bed use actually dropped by 19 percent. In a recent talk, Governor 
Tommy Thompson noted that COP saves Wisconsin taxpayers about $25 
million every year.
  At the same time, COP has provided an alternative that allows the 
consumer to participate in determining the plan of care and in the 
execution of that plan.
  But, Mr. President, at the Federal level we are behind Wisconsin and 
other States in reforming long-term care. Despite the creation of 
community-based Medicaid waiver programs, consumers are, for the most 
part, faced with few alternatives.
  In describing the situation facing many elderly disabled prior to the 
establishment of COP in Wisconsin, Chuck McLaughlin testified before 
our field hearing that he recalled thinking that when he went to a 
grocery store there was incredible choice. He noted that there was an 
entire aisle for various types of pet food.

       But when elderly people encountered frailty and the loss of 
     independence, there were basically no choices for them. It 
     seemed a sad reality that society was doing a much better job 
     at providing meal diversity to cats and dogs than we were 
     doing at offering choices to humans facing frailty.

  Mr. President, that is the plight of many needing long-term care 
today. The disabled of all ages have few options. And those that they 
do have are expensive for them, for their families, and for taxpayers.
  This proposal will begin to provide the flexibility that state and 
local government needs to provide consumer-oriented and consumer-
directed services.
  Mr. President, I want to emphasize that I will continue to strive for 
comprehensive health care reform, reform that establishes universal 
coverage--guaranteed coverage that can never be taken away.
  This legislation by itself will not achieve that coverage, but it can 
be an important first step to achieving it.
  More importantly, long-term care reform is necessary for its own 
sake. The 10 million individuals, and their families, who need long-
term care today foreshadow a need that will expand as our population 
ages.
  Nearly every American lacks long-term care security. Only the very 
will off are not exposed to the risk of financial devastation that can 
accompany a long-term disability.
  Now is the time to begin putting a structure in place that builds on 
the informal family supports, that provides the needed consumer-
oriented and consumer-directed services, and that will save taxpayers 
money.
  Mr. President, I ask unanimous consent that the text of the bill, 
along with a summary of the legislation, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2545

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Home and 
     Community-Based Services for Individuals with Disabilities 
     Act of 1994''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

    TITLE I--HOME AND COMMUNITY-BASED SERVICES FOR INDIVIDUALS WITH 
                              DISABILITIES

Sec. 102. State programs for home and community-based services for 
              individuals with disabilities.
Sec. 103. State plans.
Sec. 104. Individuals with disabilities defined.
Sec. 105. Home and community-based services covered under State plan.
Sec. 106. Cost sharing.
Sec. 107. Quality assurance and safeguards.
Sec. 108. Advisory groups.
Sec. 109. Payments to States.
Sec. 110. Appropriations; allotments to States.
Sec. 111. Federal evaluations.
Sec. 112. Information and technical assistance grants relating to 
              development of hospital linkage programs.

               TITLE II--PROVISIONS RELATING TO MEDICARE

Sec. 201. Recapture of certain health care subsidies received by high-
              income individuals.
Sec. 202. Imposition of 10 percent copayment on home health services 
              under medicare.
Sec. 203. Reduction in payments for capital-related costs for inpatient 
              hospital services.
Sec. 204. Elimination of formula-driven overpayments for certain 
              outpatient hospital services.
Sec. 205. Reduction in routine cost limits for home health services.
    TITLE I--HOME AND COMMUNITY-BASED SERVICES FOR INDIVIDUALS WITH 
                              DISABILITIES

     SEC. 102. STATE PROGRAMS FOR HOME AND COMMUNITY-BASED 
                   SERVICES FOR INDIVIDUALS WITH DISABILITIES.

       (a) In General.--Each State that has a plan for home and 
     community-based services for individuals with disabilities 
     submitted to and approved by the Secretary under section 
     103(b) may receive payment in accordance with section 109.
       (b) Entitlement to Services.--Nothing in this title shall 
     be construed to create a right to services for individuals or 
     a requirement that a State with an approved plan expend the 
     entire amount of funds to which it is entitled under this 
     title.
       (c) Designation of Agency.--Not later than 6 months after 
     the date of enactment of this Act, the Secretary shall 
     designate an agency responsible for program administration 
     under this title.

     SEC. 103. STATE PLANS.

       (a) Plan Requirements.--In order to be approved under 
     subsection (b), a State plan for home and community-based 
     services for individuals with disabilities must meet the 
     following requirements:
       (1) State maintenance of effort.--
       (A) In general.--A State plan under this title shall 
     provide that the State will, during any fiscal year that the 
     State is furnishing services under this title, make 
     expenditures of State funds in an amount equal to the State 
     maintenance of effort amount for the year determined under 
     subparagraph (B) for furnishing the services described in 
     subparagraph (C) under the State plan under this title or the 
     State plan under title XIX of the Social Security Act.
       (B) State maintenance of effort amount.--
       (i) In general.--The maintenance of effort amount for a 
     State for a fiscal year is an amount equal to--

       (I) for fiscal year 1996, the base amount for the State (as 
     determined under clause (ii)) updated through the midpoint of 
     fiscal year 1996 by the estimated percentage change in the 
     index described in clause (iii) during the period beginning 
     on October 1, 1994, and ending at that midpoint; and
       (II) for succeeding fiscal years, an amount equal to the 
     amount determined under this clause for the previous fiscal 
     year updated through the midpoint of the year by the 
     estimated percentage change in the index described in clause 
     (iii) during the 12-month period ending at that midpoint, 
     with appropriate adjustments to reflect previous 
     underestimations or overestimations under this clause in the 
     projected percentage change in such index.

       (ii) State base amount.--The base amount for a State is an 
     amount equal to the total expenditures from State funds made 
     under the State plan under title XIX of the Social Security 
     Act during fiscal year 1994 with respect to medical 
     assistance consisting of the services described in 
     subparagraph (C).
       (iii) Index described.--For purposes of clause (i), the 
     Secretary shall develop an index which reflects the projected 
     increases in spending for services under subparagraph (C), 
     adjusted for differences among the States.
       (C) Medicaid services described.--The services described in 
     this subparagraph are the following:
       (i) Personal care services (as described in section 
     1905(a)(24) of the Social Security Act).
       (ii) Home or community-based services furnished under a 
     waiver granted under subsection (c), (d), or (e) of section 
     1915 of such Act.
       (iii) Home and community care furnished to functionally 
     disabled elderly individuals under section 1929 of such Act.
       (iv) Community supported living arrangements services under 
     section 1930 of such Act.
       (v) Services furnished in a hospital, nursing facility, 
     intermediate care facility for the mentally retarded, or 
     other institutional setting specified by the Secretary.
       (2) Eligibility.--
       (A) In general.--Within the amounts provided by the State 
     and under section 109 for such plan, the plan shall provide 
     that services under the plan will be available to individuals 
     with disabilities (as defined in section 104(a)) in the 
     State.
       (B) Initial screening.--The plan shall provide a process 
     for the initial screening of an individual who appears to 
     have some reasonable likelihood of being an individual with 
     disabilities. Any such process shall require the provision of 
     assistance to individuals who wish to apply but whose 
     disability limits their ability to apply. The initial 
     screening and the determination of disability (as defined 
     under section 104(b)(1)) shall be conducted by a public 
     agency.
       (C) Restrictions.--
       (i) In general.--The plan may not limit the eligibility of 
     individuals with disabilities based on--

       (I) income;
       (II) age;
       (III) residential setting (other than with respect to an 
     institutional setting, in accordance with clause (ii)); or
       (IV) other grounds specified by the Secretary;

     except that through fiscal year 2004, the Secretary may 
     permit a State to limit eligibility based on level of 
     disability or geography (if the State ensures a balance 
     between urban and rural areas).
       (ii) Institutional setting.--The plan may limit the 
     eligibility of individuals with disabilities based on the 
     definition of the term ``institutional setting'', as 
     determined by the State.
       (D) Continuation of services.--The plan must provide 
     assurances that, in the case of an individual receiving 
     medical assistance for home and community-based services 
     under the State medicaid plan under title XIX of the Social 
     Security Act as of the date a State's plan is approved under 
     this title, the State will continue to make available (either 
     under this plan, under the State medicaid plan, or otherwise) 
     to such individual an appropriate level of assistance for 
     home and community-based services, taking into account the 
     level of assistance provided as of such date and the 
     individual's need for home and community-based services.
       (3) Services.--
       (A) Needs assessment.--Not later than the end of the second 
     year of implementation, the plan or its amendments shall 
     include the results of a statewide assessment of the needs of 
     individuals with disabilities in a format required by the 
     Secretary. The needs assessment shall include demographic 
     data concerning the number of individuals within each 
     category of disability described in this title, and the 
     services available to meet the needs of such individuals.
       (B) Specification.--Consistent with section 105, the plan 
     shall specify--
       (i) the services made available under the plan,
       (ii) the extent and manner in which such services are 
     allocated and made available to individuals with 
     disabilities, and
       (iii) the manner in which services under the plan are 
     coordinated with each other and with health and long-term 
     care services available outside the plan for individuals with 
     disabilities.
       (C) Taking into account informal care.--A State plan may 
     take into account, in determining the amount and array of 
     services made available to covered individuals with 
     disabilities, the availability of informal care. Any 
     individual plan of care developed under section 105(b)(1)(B) 
     that includes informal care shall be required to verify the 
     availability of such care.
       (D) Allocation.--The State plan--
       (i) shall specify how services under the plan will be 
     allocated among covered individuals with disabilities,
       (ii) shall attempt to meet the needs of individuals with a 
     variety of disabilities within the limits of available 
     funding,
       (iii) shall include services that assist all categories of 
     individuals with disabilities, regardless of their age or the 
     nature of their disabling conditions,
       (iv) shall demonstrate that services are allocated 
     equitably, in accordance with the needs assessment required 
     under subparagraph (A), and
       (v) shall ensure that--

       (I) the proportion of the population of low-income 
     individuals with disabilities in the State that represents 
     individuals with disabilities who are provided home and 
     community-based services either under the plan, under the 
     State medicaid plan, or under both, is not less than,
       (II) the proportion of the population of the State that 
     represents individuals who are low-income individuals.

       (E) Limitation on licensure or certification.--The State 
     may not subject consumer-directed providers of personal 
     assistance services to licensure, certification, or other 
     requirements which the Secretary finds not to be necessary 
     for the health and safety of individuals with disabilities.
       (F) Consumer choice.--To the extent feasible, the State 
     shall follow the choice of an individual with disabilities 
     (or that individual's designated representative who may be a 
     family member) regarding which covered services to receive 
     and the providers who will provide such services.
       (4) Cost sharing.--The plan shall impose cost sharing with 
     respect to covered services in accordance with section 106.
       (5) Types of providers and requirements for 
     participation.--The plan shall specify--
       (A) the types of service providers eligible to participate 
     in the program under the plan, which shall include consumer-
     directed providers of personal assistance services, except 
     that the plan--
       (i) may not limit benefits to services provided by 
     registered nurses or licensed practical nurses; and
       (ii) may not limit benefits to services provided by 
     agencies or providers certified under title XVIII of the 
     Social Security Act; and
       (B) any requirements for participation applicable to each 
     type of service provider.
       (6) Provider reimbursement.--
       (A) Payment methods.--The plan shall specify the payment 
     methods to be used to reimburse providers for services 
     furnished under the plan. Such methods may include 
     retrospective reimbursement on a fee-for-service basis, 
     prepayment on a capitation basis, payment by cash or vouchers 
     to individuals with disabilities, or any combination of these 
     methods. In the case of payment to consumer-directed 
     providers of personal assistance services, including payment 
     through the use of cash or vouchers, the plan shall specify 
     how the plan will assure compliance with applicable 
     employment tax and health care coverage provisions.
       (B) Payment rates.--The plan shall specify the methods and 
     criteria to be used to set payment rates for--
       (i) agency administered services furnished under the plan; 
     and
       (ii) consumer-directed personal assistance services 
     furnished under the plan, including cash payments or vouchers 
     to individuals with disabilities, except that such payments 
     shall be adequate to cover amounts required under applicable 
     employment tax and health care coverage provisions.
       (C) Plan payment as payment in full.--The plan shall 
     restrict payment under the plan for covered services to those 
     providers that agree to accept the payment under the plan (at 
     the rates established pursuant to subparagraph (B)) and any 
     cost sharing permitted or provided for under section 106 as 
     payment in full for services furnished under the plan.
       (7) Quality assurance and safeguards.--The State plan shall 
     provide for quality assurance and safeguards for applicants 
     and beneficiaries in accordance with section 107.
       (8) Advisory group.--The State plan shall--
       (A) assure the establishment and maintenance of an advisory 
     group under section 108(b), and
       (B) include the documentation prepared by the group under 
     section 108(b)(4).
       (9) Administration and access.--
       (A) State agency.--The plan shall designate a State agency 
     or agencies to administer (or to supervise the administration 
     of) the plan.
       (B) Coordination.--The plan shall specify how it will--
       (i) coordinate services provided under the plan, including 
     eligibility prescreening, service coordination, and referrals 
     for individuals with disabilities who are ineligible for 
     services under this title with the State medicaid plan under 
     title XIX of the Social Security Act, titles V and XX of such 
     Act, programs under the Older Americans Act of 1965, programs 
     under the Developmental Disabilities Assistance and Bill of 
     Rights Act, the Individuals with Disabilities Education Act, 
     and any other Federal or State programs that provide services 
     or assistance targeted to individuals with disabilities, and
       (ii) coordinate with health plans.
       (C) Administrative expenditures.--Effective beginning with 
     fiscal year 2004, the plan shall contain assurances that not 
     more than 10 percent of expenditures under the plan for all 
     quarters in any fiscal year shall be for administrative 
     costs.
       (D) Information and Assistance.--The plan shall provide for 
     a single point of access to apply for services under the 
     State program for individuals with disabilities. 
     Notwithstanding the preceding sentence, the plan may 
     designate separate points of access to the State program for 
     individuals under 22 years of age, for individuals 65 years 
     of age or older, or for other appropriate classes of 
     individuals.
       (10) Reports and information to secretary; audits.--The 
     plan shall provide that the State will furnish to the 
     Secretary--
       (A) such reports, and will cooperate with such audits, as 
     the Secretary determines are needed concerning the State's 
     administration of its plan under this title, including the 
     processing of claims under the plan, and
       (B) such data and information as the Secretary may require 
     in a uniform format as specified by the Secretary.
       (11) Use of state funds for matching.--The plan shall 
     provide assurances that Federal funds will not be used to 
     provide for the State share of expenditures under this title.
       (12) Health care worker redeployment.--The plan shall 
     provide for the following:
       (A) Before initiating the process of implementing the State 
     program under such plan, negotiations will be commenced with 
     labor unions representing the employees of the affected 
     hospitals or other facilities.
       (B) Negotiations under subparagraph (A) will address the 
     following:
       (i) The impact of the implementation of the program upon 
     the workforce.
       (ii) Methods to redeploy workers to positions in the 
     proposed system, in the case of workers affected by the 
     program.
       (C) The plan will provide evidence that there has been 
     compliance with subparagraphs (A) and (B), including a 
     description of the results of the negotiations.
       (13) Terminology.--The plan shall adhere to uniform 
     definitions of terms, as specified by the Secretary.
       (b) Approval of Plans.--The Secretary shall approve a plan 
     submitted by a State if the Secretary determines that the 
     plan--
       (1) was developed by the State after a public comment 
     period of not less than 30 days, and
       (2) meets the requirements of subsection (a).

     The approval of such a plan shall take effect as of the first 
     day of the first fiscal year beginning after the date of such 
     approval (except that any approval made before January 1, 
     1996, shall be effective as of January 1, 1996). In order to 
     budget funds allotted under this title, the Secretary shall 
     establish a deadline for the submission of such a plan before 
     the beginning of a fiscal year as a condition of its approval 
     effective with that fiscal year. Any significant changes to 
     the State plan shall be submitted to the Secretary in the 
     form of plan amendments and shall be subject to approval by 
     the Secretary.
       (c) Monitoring.--The Secretary shall annually monitor the 
     compliance of State plans with the requirements of this title 
     according to specified performance standards. In accordance 
     with section 109(e), States that fail to comply with such 
     requirements may be subject to a reduction in the Federal 
     matching rates available to the State under section 109(a) or 
     the withholding of Federal funds for services or 
     administration until such time as compliance is achieved.
       (d) Technical Assistance.--The Secretary shall ensure the 
     availability of ongoing technical assistance to States under 
     this section. Such assistance shall include serving as a 
     clearinghouse for information regarding successful practices 
     in providing long-term care services.
       (e) Regulations.--The Secretary shall issue such 
     regulations as may be appropriate to carry out this title on 
     a timely basis.

     SEC. 104. INDIVIDUALS WITH DISABILITIES DEFINED.

       (a) In General.--For purposes of this title, the term 
     `individual with disabilities' means any individual within 
     one or more of the following categories of individuals:
       (1) Individuals requiring help with activities of daily 
     living.--An individual of any age who--
       (A) requires hands-on or standby assistance, supervision, 
     or cueing (as defined in regulations) to perform three or 
     more activities of daily living (as defined in subsection 
     (d)), and
       (B) is expected to require such assistance, supervision, or 
     cueing over a period of at least 90 days.
       (2) Individuals with severe cognitive or mental 
     impairment.--An individual of any age--
       (A) whose score, on a standard mental status protocol (or 
     protocols) appropriate for measuring the individual's 
     particular condition specified by the Secretary, indicates 
     either severe cognitive impairment or severe mental 
     impairment, or both;
       (B) who--
       (i) requires hands-on or standby assistance, supervision, 
     or cueing with one or more activities of daily living,
       (ii) requires hands-on or standby assistance, supervision, 
     or cueing with at least such instrumental activity (or 
     activities) of daily living related to cognitive or mental 
     impairment as the Secretary specifies, or
       (iii) displays symptoms of one or more serious behavioral 
     problems (that is on a list of such problems specified by the 
     Secretary) which create a need for supervision to prevent 
     harm to self or others; and
       (C) who is expected to meet the requirements of 
     subparagraphs (A) and (B) over a period of at least 90 days.
     Not later than 2 years after the date of enactment of this 
     Act, the Secretary shall make recommendations regarding the 
     most appropriate duration of disability under this paragraph.
       (3) Individuals with severe or profound mental 
     retardation.--An individual of any age who has severe or 
     profound mental retardation (as determined according to a 
     protocol specified by the Secretary).
       (4) Young children with severe disabilities.--An individual 
     under 6 years of age who--
       (A) has a severe disability or chronic medical condition 
     that limits functioning in a manner that is comparable in 
     severity to the standards established under paragraphs (1), 
     (2), or (3), and
       (B) is expected to have such a disability or condition and 
     require such services over a period of at least 90 days.
       (5) State option with respect to individuals with 
     comparable disabilities.--Not more than 2 percent of a 
     State's allotment for services under this title may be 
     expended for the provision of services to individuals with 
     severe disabilities that are comparable in severity to the 
     criteria described in paragraphs (1) through (4), but who 
     fail to meet the criteria in any single category under such 
     paragraphs.
       (b) Determination.--
       (1) In general.--In formulating eligibility criteria under 
     subsection (a), the Secretary shall establish criteria for 
     assessing the functional level of disability among all 
     categories of individuals with disabilities that are 
     comparable in severity, regardless of the age or the nature 
     of the disabling condition of the individual. The 
     determination of whether an individual is an individual with 
     disabilities shall be made by a public or nonprofit agency 
     that is specified under the State plan and that is not a 
     provider of home and community-based services under this 
     title and by using a uniform protocol consisting of an 
     initial screening and a determination of disability specified 
     by the Secretary. A State may not impose cost sharing with 
     respect to a determination of disability. A State may collect 
     additional information, at the time of obtaining information 
     to make such determination, in order to provide for the 
     assessment and plan described in section 105(b) or for other 
     purposes.
       (2) Periodic reassessment.--The determination that an 
     individual is an individual with disabilities shall be 
     considered to be effective under the State plan for a period 
     of not more than 6 months (or for such longer period in such 
     cases as a significant change in an individual's condition 
     that may affect such determination is unlikely). A 
     reassessment shall be made if there is a significant change 
     in an individual's condition that may affect such 
     determination.
       (c) Eligibility Criteria.--The Secretary shall reassess the 
     validity of the eligibility criteria described in subsection 
     (a) as new knowledge regarding the assessments of functional 
     disabilities becomes available. The Secretary shall report to 
     the Congress on its findings under the preceding sentence as 
     determined appropriate by the Secretary.
       (d) Activity of Daily Living Defined.--For purposes of this 
     title, the term `activity of daily living' means any of the 
     following: eating, toileting, dressing, bathing, and 
     transferring.

     SEC. 105. HOME AND COMMUNITY-BASED SERVICES COVERED UNDER 
                   STATE PLAN.

       (a) Specification.--
       (1) In general.--Subject to the succeeding provisions of 
     this section, the State plan under this title shall specify--
       (A) the home and community-based services available under 
     the plan to individuals with disabilities (or to such 
     categories of such individuals), and
       (B) any limits with respect to such services.
       (2) Flexibility in meeting individual needs.--Subject to 
     subsection (e)(2), such services may be delivered in an 
     individual's home, a range of community residential 
     arrangements, or outside the home.
       (b) Requirement for Needs Assessment and Plan of Care.--
       (1) In general.--The State plan shall provide for home and 
     community-based services to an individual with disabilities 
     only if the following requirements are met:
       (A) Comprehensive assessment.--
       (i) In general.--A comprehensive assessment of an 
     individual's need for home and community-based services 
     (regardless of whether all needed services are available 
     under the plan) shall be made in accordance with a uniform, 
     comprehensive assessment tool that shall be used by a State 
     under this paragraph with the approval of the Secretary. The 
     comprehensive assessment shall be made by a public or 
     nonprofit agency that is specified under the State plan and 
     that is not a provider of home and community-based services 
     under this title.
       (ii) Exception.--The State may elect to waive the 
     provisions of clause (i) if--

       (I) with respect to any area of the State, the State has 
     determined that there is an insufficient pool of entities 
     willing to perform comprehensive assessments in such area due 
     to a low population of individuals eligible for home and 
     community-based services under this title residing in the 
     area, and
       (II) the State plan specifies procedures that the State 
     will implement in order to avoid conflicts of interest.

       (B) Individualized plan of care.--
       (i) In general.--An individualized plan of care based on 
     the assessment made under subparagraph (A) shall be developed 
     by a public or nonprofit agency that is specified under the 
     State plan and that is not a provider of home and community-
     based services under this title, except that the State may 
     elect to waive the provisions of this sentence if, with 
     respect to any area of the State, the State has determined 
     there is an insufficient pool of entities willing to develop 
     individualized plans of care in such area due to a low 
     population of individuals eligible for home and community-
     based services under this title residing in the area, and the 
     State plan specifies procedures that the State will implement 
     in order to avoid conflicts of interest.
       (ii) Requirements with respect to plan of care.--A plan of 
     care under this subparagraph shall--

       (I) specify which services included under the individual 
     plan will be provided under the State plan under this title,
       (II) identify (to the extent possible) how the individual 
     will be provided any services specified under the plan of 
     care and not provided under the State plan,
       (III) specify how the provision of services to the 
     individual under the plan will be coordinated with the 
     provision of other health care services to the individual, 
     and
       (IV) be reviewed and updated every 6 months (or more 
     frequently if there is a change in the individual's 
     condition).

     The State shall make reasonable efforts to identify and 
     arrange for services described in subclause (II). Nothing in 
     this subsection shall be construed as requiring a State 
     (under the State plan or otherwise) to provide all the 
     services specified in such a plan.
       (C) Involvement of individuals.--The individualized plan of 
     care under subparagraph (B) for an individual with 
     disabilities shall--
       (i) be developed by qualified individuals (specified in 
     subparagraph (B));
       (ii) be developed and implemented in close consultation 
     with the individual (or the individual's designated 
     representative); and
       (iii) be approved by the individual (or the individual's 
     designated representative).
       (c) Requirement for Care Management.--
       (1) In general.--The State shall make available to each 
     category of individuals with disabilities care management 
     services that at a minimum include--
       (A) arrangements for the provision of such services, and
       (B) monitoring of the delivery of services.
       (2) Care management services.--
       (A) In general.--Except as provided in subparagraph (B), 
     the care management services described in paragraph (1) shall 
     be provided by a public or private entity that is not 
     providing home and community-based services under this title.
       (B) Exception.--A person who provides home and community-
     based services under this title may provide care management 
     services if--
       (i) the State determines that there is an insufficient pool 
     of entities willing to provide such services in an area due 
     to a low population of individuals eligible for home and 
     community-based services under this title residing in such 
     area; and
       (ii) the State plan specifies procedures that the State 
     will implement in order to avoid conflicts of interest.
       (d) Mandatory Coverage of Personal Assistance Services.--
     The State plan shall include, in the array of services made 
     available to each category of individuals with disabilities, 
     both agency-administered and consumer-directed personal 
     assistance services (as defined in subsection (h)).
       (e) Additional Services.--
       (1) Types of services.--Subject to subsection (f), services 
     available under a State plan under this title may include any 
     (or all) of the following:
       (A) Homemaker and chore assistance.
       (B) Home modifications.
       (C) Respite services.
       (D) Assistive devices, as defined in the Technology Related 
     Assistance for Individuals with Disabilities Act.
       (E) Adult day services.
       (F) Habilitation and rehabilitation.
       (G) Supported employment.
       (H) Home health services.
       (I) Transportation.
       (J) Any other care or assistive services specified by the 
     State and approved by the Secretary that will help 
     individuals with disabilities to remain in their homes and 
     communities.
       (2) Criteria for selection of services.--The State electing 
     services under paragraph (1) shall specify in the State 
     plan--
       (A) the methods and standards used to select the types, and 
     the amount, duration, and scope, of services to be covered 
     under the plan and to be available to each category of 
     individuals with disabilities, and
       (B) how the types, and the amount, duration, and scope, of 
     services specified, within the limits of available funding, 
     provide substantial assistance in living independently to 
     individuals within each of the categories of individuals with 
     disabilities.
       (f) Exclusions and Limitations.--A State plan may not 
     provide for coverage of--
       (1) room and board,
       (2) services furnished in a hospital, nursing facility, 
     intermediate care facility for the mentally retarded, or 
     other institutional setting specified by the Secretary, or
       (3) items and services to the extent coverage is provided 
     for the individual under a health plan or the medicare 
     program.
       (g) Payment for Services.--In order to pay for covered 
     services, a State plan may provide for the use of--
       (1) vouchers,
       (2) cash payments directly to individuals with 
     disabilities,
       (3) capitation payments to health plans, and
       (4) payment to providers.
       (h) Personal Assistance Services.--
       (1) In general.--For purposes of this title, the term 
     `personal assistance services' means those services specified 
     under the State plan as personal assistance services and 
     shall include at least hands-on and standby assistance, 
     supervision, cueing with activities of daily living, and such 
     instrumental activities of daily living as deemed necessary 
     or appropriate, whether agency-administered or consumer-
     directed (as defined in paragraph (2)). Such services shall 
     include services that are determined to be necessary to help 
     all categories of individuals with disabilities, regardless 
     of the age of such individuals or the nature of the disabling 
     conditions of such individuals.
       (2) Consumer-directed.--For purposes of this title:
       (A) In general.--The term `consumer-directed' means, with 
     reference to personal assistance services or the provider of 
     such services, services that are provided by an individual 
     who is selected and managed (and, at the option of the 
     service recipient, trained) by the individual receiving the 
     services.
       (B) State responsibilities.--A State plan shall ensure that 
     where services are provided in a consumer-directed manner, 
     the State shall create or contract with an entity, other than 
     the consumer or the individual provider, to--
       (i) inform both recipients and providers of rights and 
     responsibilities under all applicable Federal labor and tax 
     law; and
       (ii) assume responsibility for providing effective billing, 
     payments for services, tax withholding, unemployment 
     insurance, and workers' compensation coverage, and act as the 
     employer of the home care provider.
       (C) Right of consumers.--Notwithstanding the State 
     responsibilities described in subparagraph (B), service 
     recipients, and, where appropriate, their designated 
     representative, shall retain the right to independently 
     select, hire, terminate, and direct (including manage, train, 
     schedule, and verify services provided) the work of a home 
     care provider.
       (3) Agency administered.--For purposes of this title, the 
     term `agency-administered' means, with respect to such 
     services, services that are not consumer-directed.

     SEC. 106. COST SHARING.

       (a) No Cost Sharing for Poorest.--
       (1) In general.--The State plan may not impose any cost 
     sharing for individuals with income (as determined under 
     subsection (d)) less than 150 percent of the official poverty 
     level (referred to in paragraph (2)) applicable to a family 
     of the size involved.
       (2) Official poverty level.--The term `applicable poverty 
     level' means, for a family for a year, the official poverty 
     line (as defined by the Office of Management and Budget, and 
     revised annually in accordance with section 673(2) of the 
     Omnibus Budget Reconciliation Act of 1981) applicable to a 
     family of the size involved.
       (b) Sliding Scale for Remainder.--
       (1) Required coinsurance.--The State plan shall impose cost 
     sharing in the form of coinsurance (based on the amount paid 
     under the State plan for a service)--
       (A) at a rate of 10 percent for individuals with 
     disabilities with income not less than 150 percent, and less 
     than 175 percent, of such official poverty line (as so 
     applied);
       (B) at a rate of 15 percent for such individuals with 
     income not less than 175 percent, and less than 225 percent, 
     of such official poverty line (as so applied);
       (C) at a rate of 25 percent for such individuals with 
     income not less than 225 percent, and less than 275 percent, 
     of such official poverty line (as so applied);
       (D) at a rate of 30 percent for such individuals with 
     income not less than 275 percent, and less than 325 percent, 
     of such official poverty line (as so applied);
       (E) at a rate of 35 percent for such individuals with 
     income not less than 325 percent, and less than 400 percent, 
     of such official poverty line (as so applied); and
       (F) at a rate of 40 percent for such individuals with 
     income equal to at least 400 percent of such official poverty 
     line (as so applied).
       (2) Required annual deductible.--The State plan shall 
     impose cost sharing in the form of an annual deductible--
       (A) of $100 for individuals with disabilities with income 
     not less than 150 percent, and less than 175 percent, of such 
     official poverty line (as so applied);
       (B) of $200 for such individuals with income not less than 
     175 percent, and less than 225 percent, of such official 
     poverty line (as so applied);
       (C) of $300 for such individuals with income not less than 
     225 percent, and less than 275 percent, of such official 
     poverty line (as so applied);
       (D) of $400 for such individuals with income not less than 
     275 percent, and less than 325 percent, of such official 
     poverty line (as so applied);
       (E) of $500 for such individuals with income not less than 
     325 percent, and less than 400 percent, of such official 
     poverty line (as so applied); and
       (F) of $600 for such individuals with income equal to at 
     least 400 percent of such official poverty line (as so 
     applied).
       (c) Recommendation of the Secretary.--The Secretary shall 
     make recommendations to the States as to how to reduce cost-
     sharing for individuals with extraordinary out-of-pocket 
     costs for whom the cost-sharing provisions of this section 
     could jeopardize their ability to take advantage of the 
     services offered under this title. The Secretary shall 
     establish a methodology for reducing the cost-sharing burden 
     for individuals with exceptionally high out-of-pocket costs 
     under this title.
       (d) Determination of Income for Purposes of Cost Sharing.--
     The State plan shall specify the process to be used to 
     determine the income of an individual with disabilities for 
     purposes of this section. Such standards shall include a 
     uniform Federal definition of income and any allowable 
     deductions from income.

     SEC. 107. QUALITY ASSURANCE AND SAFEGUARDS.

       (a) Quality Assurance.--
       (1) In general.--The State plan shall specify how the State 
     will ensure and monitor the quality of services, including--
       (A) safeguarding the health and safety of individuals with 
     disabilities,
       (B) setting the minimum standards for agency providers and 
     how such standards will be enforced,
       (C) setting the minimum competency requirements for agency 
     provider employees who provide direct services under this 
     title and how the competency of such employees will be 
     enforced,
       (D) obtaining meaningful consumer input, including consumer 
     surveys that measure the extent to which participants receive 
     the services described in the plan of care and participant 
     satisfaction with such services,
       (E) establishing a process to receive, investigate, and 
     resolve allegations of neglect and/or abuse,
       (F) establishing optional training programs for individuals 
     with disabilities in the use and direction of consumer 
     directed providers of personal assistance services,
       (G) establishing an appeals procedure for eligibility 
     denials and a grievance procedure for disagreements with the 
     terms of an individualized plan of care;
       (H) providing for participation in quality assurance 
     activities, and
       (I) specifying the role of the long-term care ombudsman 
     (under the Older Americans Act of 1965) and the Protection 
     and Advocacy Agency (under the Developmental Disabilities 
     Assistance and Bill of Rights Act) in assuring quality of 
     services and protecting the rights of individuals with 
     disabilities.
       (2) Issuance of regulations.--Not later than 1 year after 
     the date of enactment of this Act, the Secretary shall issue 
     regulations implementing the quality provisions of this 
     subsection.
       (b) Federal Standards.--The State plan shall adhere to 
     Federal quality standards in the following areas:
       (1) Case review of a specified sample of client records.
       (2) The mandatory reporting of abuse, neglect, or 
     exploitation.
       (3) The development of a registry of provider agencies or 
     home care workers and consumer directed providers of personal 
     assistance services against whom any complaints have been 
     sustained, which shall be available to the public.
       (4) Sanctions to be imposed on States or providers, 
     including disqualification from the program, if minimum 
     standards are not met.
       (5) Surveys of client satisfaction.
       (6) State optional training programs for informal 
     caregivers.
       (c) Client Advocacy.--
       (1) In general.--The State plan shall provide that the 
     State will expend the amount allocated under section 
     110(b)(2) for client advocacy activities. The State may use 
     such funds to augment the budgets of the long-term care 
     ombudsman (under the Older Americans Act of 1965) and the 
     Protection and Advocacy Agency (under the Developmental 
     Disabilities Assistance and Bill of Rights Act) or may 
     establish a separate and independent client advocacy office 
     in accordance with paragraph (2) to administer a new program 
     designed to advocate for client rights.
       (2) Client advocacy office.--
       (A) In general.--A client advocacy office established under 
     this paragraph shall--
       (i) identify, investigate, and resolve complaints that--

       (I) are made by, or on behalf of, clients; and
       (II) relate to action, inaction, or decisions, that may 
     adversely affect the health, safety, welfare, or rights of 
     the clients (including the welfare and rights of the clients 
     with respect to the appointment and activities of guardians 
     and representative payees), of--

       (aa) providers, or representatives of providers, of long-
     term care services;
       (bb) public agencies; or
       (cc) health and social service agencies;
       (ii) provide services to assist the clients in protecting 
     the health, safety, welfare, and rights of the clients;
       (iii) inform the clients about means of obtaining services 
     provided by providers or agencies described in clause (i)(II) 
     or services described in clause (ii);
       (iv) ensure that the clients have regular and timely access 
     to the services provided through the office and that the 
     clients and complainants receive timely responses from 
     representatives of the office to complaints; and
       (v) represent the interests of the clients before 
     governmental agencies and seek administrative, legal, and 
     other remedies to protect the health, safety, welfare, and 
     rights of the clients with regard to the provisions of this 
     title.
       (B) Contracts and arrangements.--
       (i) In general.--Except as provided in clause (ii), the 
     State agency may establish and operate the office, and carry 
     out the program, directly, or by contract or other 
     arrangement with any public agency or nonprofit private 
     organization.
       (ii) Licensing and certification organizations; 
     associations.--The State agency may not enter into the 
     contract or other arrangement described in clause (i) with an 
     agency or organization that is responsible for licensing, 
     certifying, or providing long-term care services in the 
     State.
       (d) Safeguards.--
       (1) Confidentiality.--The State plan shall provide 
     safeguards which restrict the use or disclosure of 
     information concerning applicants and beneficiaries to 
     purposes directly connected with the administration of the 
     plan.
       (2) Safeguards against abuse.--The State plans shall 
     provide safeguards against physical, emotional, or financial 
     abuse or exploitation (specifically including appropriate 
     safeguards in cases where payment for program benefits is 
     made by cash payments or vouchers given directly to 
     individuals with disabilities). All providers of services 
     shall be required to register with the State agency.
       (3) Regulations.--Not later than January 1, 1996, the 
     Secretary shall promulgate regulations with respect to the 
     requirements on States under this subsection.
       (e) Specified Rights.--The State plan shall provide that in 
     furnishing home and community-based services under the plan 
     the following individual rights are protected:
       (1) The right to be fully informed in advance, orally and 
     in writing, of the care to be provided, to be fully informed 
     in advance of any changes in care to be provided, and (except 
     with respect to an individual determined incompetent) to 
     participate in planning care or changes in care.
       (2) The right to--
       (A) voice grievances with respect to services that are (or 
     fail to be) furnished without discrimination or reprisal for 
     voicing grievances,
       (B) be told how to complain to State and local authorities, 
     and
       (C) prompt resolution of any grievances or complaints.
       (3) The right to confidentiality of personal and clinical 
     records and the right to have access to such records.
       (4) The right to privacy and to have one's property treated 
     with respect.
       (5) The right to refuse all or part of any care and to be 
     informed of the likely consequences of such refusal.
       (6) The right to education or training for oneself and for 
     members of one's family or household on the management of 
     care.
       (7) The right to be free from physical or mental abuse, 
     corporal punishment, and any physical or chemical restraints 
     imposed for purposes of discipline or convenience and not 
     included in an individual's plan of care.
       (8) The right to be fully informed orally and in writing of 
     the individual's rights.
       (9) The right to a free choice of providers.
       (10) The right to direct provider activities when an 
     individual is competent and willing to direct such 
     activities.

     SEC. 108. ADVISORY GROUPS.

       (a) Federal Advisory Group.--
       (1) Establishment.--The Secretary shall establish an 
     advisory group, to advise the Secretary and States on all 
     aspects of the program under this title.
       (2) Composition.--The group shall be composed of 
     individuals with disabilities and their representatives, 
     providers, Federal and State officials, and local community 
     implementing agencies. A majority of its members shall be 
     individuals with disabilities and their representatives.
       (b) State Advisory Groups.--
       (1) In general.--Each State plan shall provide for the 
     establishment and maintenance of an advisory group to advise 
     the State on all aspects of the State plan under this title.
       (2) Composition.--Members of each advisory group shall be 
     appointed by the Governor (or other chief executive officer 
     of the State) and shall include individuals with disabilities 
     and their representatives, providers, State officials, and 
     local community implementing agencies. A majority of its 
     members shall be individuals with disabilities and their 
     representatives. The members of the advisory group shall be 
     selected from the those nominated as described in paragraph 
     (3).
       (3) Selection of members.--Each State shall establish a 
     process whereby all residents of the State, including 
     individuals with disabilities and their representatives, 
     shall be given the opportunity to nominate members to the 
     advisory group.
       (4) Particular concerns.--Each advisory group shall--
       (A) before the State plan is developed, advise the State on 
     guiding principles and values, policy directions, and 
     specific components of the plan,
       (B) meet regularly with State officials involved in 
     developing the plan, during the development phase, to review 
     and comment on all aspects of the plan,
       (C) participate in the public hearings to help assure that 
     public comments are addressed to the extent practicable,
       (D) report to the Governor and make available to the public 
     any differences between the group's recommendations and the 
     plan,
       (E) report to the Governor and make available to the public 
     specifically the degree to which the plan is consumer-
     directed, and
       (F) meet regularly with officials of the designated State 
     agency (or agencies) to provide advice on all aspects of 
     implementation and evaluation of the plan.

     SEC. 109. PAYMENTS TO STATES.

       (a) In General.--Subject to section 103(a)(9)(C) (relating 
     to limitation on payment for administrative costs), the 
     Secretary, in accordance with the Cash Management Improvement 
     Act, shall authorize payment to each State with a plan 
     approved under this title, for each quarter (beginning on or 
     after January 1, 1996), from its allotment under section 
     110(b), an amount equal to--
       (1)(A) with respect to the amount demonstrated by State 
     claims to have been expended during the year for home and 
     community-based services under the plan for individuals with 
     disabilities that does not exceed 20 percent of the amount 
     allotted to the State under section 110(b), 100 percent of 
     such amount; and
       (B) with respect to the amount demonstrated by State claims 
     to have been expended during the year for home and community-
     based services under the plan for individuals with 
     disabilities that exceeds 20 percent of the amount allotted 
     to the State under section 110(b), the Federal home and 
     community-based services matching percentage (as defined in 
     subsection (b)) of such amount; plus
       (2) an amount equal to 90 percent of the amount 
     demonstrated by the State to have been expended during the 
     quarter for quality assurance activities under the plan; plus
       (3) an amount equal to 90 percent of amount expended during 
     the quarter under the plan for activities (including 
     preliminary screening) relating to determination of 
     eligibility and performance of needs assessment; plus
       (4) an amount equal to 90 percent (or, beginning with 
     quarters in fiscal year 2004, 75 percent) of the amount 
     expended during the quarter for the design, development, and 
     installation of mechanical claims processing systems and for 
     information retrieval; plus
       (5) an amount equal to 50 percent of the remainder of the 
     amounts expended during the quarter as found necessary by the 
     Secretary for the proper and efficient administration of the 
     State plan.
       (b) Federal Home and Community-Based Services Matching 
     Percentage.--In subsection (a), the term `Federal home and 
     community-based services matching percentage' means, with 
     respect to a State, the State's Federal medical assistance 
     percentage (as defined in section 1905(b) of the Social 
     Security Act) increased by 15 percentage points, except that 
     the Federal home and community-based services matching 
     percentage shall in no case be more than 95 percent.
       (c) Payments on Estimates with Retrospective Adjustments.--
     The method of computing and making payments under this 
     section shall be as follows:
       (1) The Secretary shall, prior to the beginning of each 
     quarter, estimate the amount to be paid to the State under 
     subsection (a) for such quarter, based on a report filed by 
     the State containing its estimate of the total sum to be 
     expended in such quarter, and such other information as the 
     Secretary may find necessary.
       (2) From the allotment available therefore, the Secretary 
     shall provide for payment of the amount so estimated, reduced 
     or increased, as the case may be, by any sum (not previously 
     adjusted under this section) by which the Secretary finds 
     that the estimate of the amount to be paid the State for any 
     prior period under this section was greater or less than the 
     amount which should have been paid.
       (d) Application of Rules Regarding Limitations on Provider-
     Related Donations and Health Care Related Taxes.--The 
     provisions of section 1903(w) of the Social Security Act 
     shall apply to payments to States under this section in the 
     same manner as they apply to payments to States under section 
     1903(a) of such Act.
       (e) Failure to Comply with State Plan.--If a State 
     furnishing home and community-based services under this title 
     fails to comply with the State plan approved under this 
     title, the Secretary may either reduce the Federal matching 
     rates available to the State under subsection (a) or withhold 
     an amount of funds determined appropriate by the Secretary 
     from any payment to the State under this section.

     SEC. 110. APPROPRIATIONS; ALLOTMENTS TO STATES.

       (a) Appropriations.--
       (1) Fiscal years 1996 through 2004.--Subject to paragraph 
     (5)(C), for purposes of this title, the appropriation 
     authorized under this title for each of fiscal years 1996 
     through 2004 is the following:
       (A) For fiscal year 1996, $1,800,000,000.
       (B) For fiscal year 1997, $3,500,000,000.
       (C) For fiscal year 1998, $5,800,000,000.
       (D) For fiscal year 1999, $7,300,000,000.
       (E) For fiscal year 2000, $10,000,000,000.
       (F) For fiscal year 2001, $15,700,000,000.
       (G) For fiscal year 2002, $22,800,000,000.
       (H) For fiscal year 2003, $30,700,000,000.
       (I) For fiscal year 2004, $34,600,000,000.
       (2) Subsequent fiscal years.--For purposes of this title, 
     the appropriation authorized for State plans under this title 
     for each fiscal year after fiscal year 2004 is the 
     appropriation authorized under this subsection for the 
     preceding fiscal year multiplied by--
       (A) a factor (described in paragraph (3)) reflecting the 
     change in the consumer price index for the fiscal year, and
       (B) a factor (described in paragraph (4)) reflecting the 
     change in the number of individuals with disabilities for the 
     fiscal year.
       (3) CPI increase factor.--For purposes of paragraph (2)(A), 
     the factor described in this paragraph for a fiscal year is 
     the ratio of--
       (A) the annual average index of the consumer price index 
     for the preceding fiscal year, to--
       (B) such index, as so measured, for the second preceding 
     fiscal year.
       (4) Disabled population factor.--For purposes of paragraph 
     (2)(B), the factor described in this paragraph for a fiscal 
     year is 100 percent plus (or minus) the percentage increase 
     (or decrease) change in the disabled population of the United 
     States (as determined for purposes of the most recent update 
     under subsection (b)(3)(D)).
       (5) Additional funds due to medicaid offsets.--
       (A) In general.--Each participating State must provide the 
     Secretary with information concerning offsets and reductions 
     in the medicaid program resulting from home and community-
     based services provided disabled individuals under this 
     title, that would have been paid for such individuals under 
     the State medicaid plan. At the time a State first submits 
     its plan under this title and before each subsequent fiscal 
     year (through fiscal year 2004), the State also must provide 
     the Secretary with such budgetary information (for each 
     fiscal year through fiscal year 2004), as the Secretary 
     determines to be necessary to carry out this paragraph.
       (B) Reports.--Each State with a program under this title 
     shall submit such reports to the Secretary as the Secretary 
     may require in order to monitor compliance with subparagraph 
     (A). The Secretary shall specify the format of such reports 
     and establish uniform data reporting elements.
       (C) Adjustments to appropriation.--
       (i) In general.--For each fiscal year (beginning with 
     fiscal year 1996 and ending with fiscal year 2004) and based 
     on a review of information submitted under subparagraph (A), 
     the Secretary shall determine the amount by which the 
     appropriation authorized under subsection (a) will increase. 
     The amount of such increase for a fiscal year shall be 
     limited to the reduction in Federal expenditures of medical 
     assistance (as determined by Secretary) that would have been 
     made under title XIX of the Social Security Act but for the 
     provision of home and community based services under the 
     program under this title.
       (ii) Annual publication.--The Secretary shall publish 
     before the beginning of such fiscal year, the revised 
     appropriation authorized under this subsection for such 
     fiscal year.
       (D) Construction.--Nothing in this subsection shall be 
     construed as requiring States to determine eligibility for 
     medical assistance under the State medicaid plan on behalf of 
     individuals receiving assistance under this title.
       (b) Allotments to States.--
       (1) In general.--The Secretary shall allot the amounts 
     available under the appropriation authorized for the fiscal 
     year under paragraph (1) of subsection (a) (without regard to 
     any adjustment to such amount under paragraph (5) of such 
     subsection), to the States with plans approved under this 
     title in accordance with an allocation formula developed by 
     the Secretary which takes into account--
       (A) the percentage of the total number of individuals with 
     disabilities in all States that reside in a particular State;
       (B) the per capita costs of furnishing home and community-
     based services to individuals with disabilities in the State; 
     and
       (C) the percentage of all individuals with incomes at or 
     below 150 percent of the official poverty line (as described 
     in section 106(a)(2)) in all States that reside in a 
     particular State.
       (2) Allocation for client advocacy activities.--Each State 
     with a plan approved under this title shall allocate one-half 
     of one percent of the State's total allotment under paragraph 
     (1) for client advocacy activities as described in section 
     107(c).
       (3) No duplicate payment.--No payment may be made to a 
     State under this section for any services provided to an 
     individual to the extent that the State received payment for 
     such services under section 1903(a) of the Social Security 
     Act.
       (4) Reallocations.--Any amounts allotted to States under 
     this subsection for a year that are not expended in such year 
     shall remain available for State programs under this title 
     and may be reallocated to States as the Secretary determines 
     appropriate.
       (5) Savings due to medicaid offsets.--
       (A) In general.--Except as provided in subparagraph (B), 
     from the total amount of the increase in the amount available 
     for a fiscal year under paragraph (1) of subsection (a) 
     resulting from the application of paragraph (5) of such 
     subsection, the Secretary shall allot to each State with a 
     plan approved under this title, an amount equal to the 
     Federal offsets and reductions in the State's medicaid plan 
     for such fiscal year that was reported to the Secretary under 
     subsection (a)(5), reduced or increased, as the case may be, 
     by any amount by which the Secretary determines that any 
     estimated Federal offsets and reductions in such State's 
     medicaid plan reported to the Secretary under subsection 
     (a)(5) for the previous fiscal year were greater or less than 
     the actual Federal offsets and reductions in such State's 
     medicaid plan.
       (B) Cap on state savings allotment.--In no case shall the 
     allotment made under this paragraph to any State for a fiscal 
     year exceed the product of--
       (i) the Federal medical assistance percentage for such 
     State (as defined under section 1905(b) of the Social 
     Security Act); multiplied by
       (ii)(I) for fiscal year 1996, the base medical assistance 
     amount for the State (as determined under subparagraph (C)) 
     updated through the midpoint of fiscal year 1996 by the 
     estimated percentage change in the index described in section 
     103(a)(1)(B)(iii) during the period beginning on October 1, 
     1994, and ending at that midpoint; and

       (II) for succeeding fiscal years, an amount equal to the 
     amount determined under this clause for the previous fiscal 
     year updated through the midpoint of the year by the 
     estimated percentage change in such index during the 12-month 
     period ending at that midpoint, with appropriate adjustments 
     to reflect previous underestimations or overestimations under 
     this clause in the projected percentage change in such index.

       (C) Base medical assistance amount.--The base medical 
     assistance amount for a State is an amount equal to the total 
     expenditures from Federal and State funds made under the 
     State plan under title XIX of the Social Security Act during 
     fiscal year 1994 with respect to medical assistance 
     consisting of the services described in section 103(a)(1)(C).
       (c) State Entitlement.--This title constitutes budget 
     authority in advance of appropriations Acts, and represents 
     the obligation of the Federal Government to provide for the 
     payment to States of amounts described in subsection (a).

     SEC. 111. FEDERAL EVALUATIONS.

       (a) In General.--Not later than December 31, 2001, December 
     31, 2004, and each December 31 thereafter, the Secretary 
     shall provide to Congress analytical reports that evaluate--
       (1) the extent to which individuals with low incomes and 
     disabilities are equitably served;
       (2) the adequacy and equity of service plans to individuals 
     with similar levels of disability across States;
       (3) the comparability of program participation across 
     States, described by level and type of disability; and
       (4) the ability of service providers to sufficiently meet 
     the demand for services.
       (b) Geriatric Assessments.--Not later than 18 months after 
     the date of enactment of this Act, the Secretary shall report 
     to Congress concerning the feasibility of providing 
     reimbursement under health plans and other payers of health 
     services for full geriatric assessment, when recommended by a 
     physician.

     SEC. 112. INFORMATION AND TECHNICAL ASSISTANCE GRANTS 
                   RELATING TO DEVELOPMENT OF HOSPITAL LINKAGE 
                   PROGRAMS.

       (a) Findings.--Congress finds that--
       (1) demonstration programs and projects have been developed 
     to offer care management to hospitalized individuals awaiting 
     discharge who are in need of long-term health care services 
     that meet individual needs and preferences in home and 
     community-based settings as an alternative to long-term 
     nursing home care or institutional placement; and
       (2) there is a need to disseminate information and 
     technical assistance to hospitals and State and local 
     community organizations regarding such programs and projects 
     and to provide incentive grants to State and local public and 
     private agencies, including area agencies on aging, to 
     establish and expand programs that offer care management to 
     individuals awaiting discharge from acute care hospitals who 
     are in need of long-term care so that services to meet 
     individual needs and preferences can be arranged in home and 
     community-based settings as an alternative to long-term 
     placement in nursing homes or other institutional settings.
       (b) Dissemination of Information, Technical Assistance, and 
     Incentive Grants to Assist in the Development of Hospital 
     Linkage Programs.--Part C of title III of the Public Health 
     Service Act (42 U.S.C. 248 et seq.) is amended by adding at 
     the end thereof the following new section:

     ``SEC. 327B. DISSEMINATION OF INFORMATION, TECHNICAL 
                   ASSISTANCE AND INCENTIVE GRANTS TO ASSIST IN 
                   THE DEVELOPMENT OF HOSPITAL LINKAGE PROGRAMS.

       ``(a) Dissemination of Information.--The Secretary shall 
     compile, evaluate, publish and disseminate to appropriate 
     State and local officials and to private organizations and 
     agencies that provide services to individuals in need of 
     long-term health care services, such information and 
     materials as may assist such entities in replicating 
     successful programs that are aimed at offering care 
     management to hospitalized individuals who are in need of 
     long-term care so that services to meet individual needs and 
     preferences can be arranged in home and community-based 
     settings as an alternative to long-term nursing home 
     placement. The Secretary may provide technical assistance to 
     entities seeking to replicate such programs.
       ``(b) Incentive Grants to Assist in the Development of 
     Hospital Linkage Programs.--The Secretary shall establish a 
     program under which incentive grants may be awarded to assist 
     private and public agencies, including area agencies on 
     aging, and organizations in developing and expanding programs 
     and projects that facilitate the discharge of individuals in 
     hospitals or other acute care facilities who are in need of 
     long-term care services and placement of such individuals 
     into home and community-based settings.
       ``(c) Administrative Provisions.--
       ``(1) Eligible entities.--To be eligible to receive a grant 
     under subsection (b) an entity shall be--
       ``(A)(i) a State agency as defined in section 102(43) of 
     the Older Americans Act of 1965; or
       ``(ii) a State agency responsible for administering home 
     and community care programs under title XIX of the Social 
     Security Act; or
       ``(B) if no State agency described in subparagraph (A) 
     applies with respect to a particular State, a public or 
     nonprofit private entity.
       ``(2) Applications.--To be eligible to receive an incentive 
     grant under subsection (b), an entity shall prepare and 
     submit to the Secretary an application at such time, in such 
     manner and containing such information as the Secretary may 
     require, including--
       ``(A) an assessment of the need within the community to be 
     served for the establishment or expansion of a program to 
     facilitate the discharge of individuals in need of long-term 
     care who are in hospitals or other acute care facilities into 
     home and community-care programs that provide individually 
     planned, flexible services that reflect individual choice or 
     preference rather than nursing home or institutional 
     settings;
       ``(B) a plan for establishing or expanding a program for 
     identifying individuals in hospital or acute care facilities 
     who are in need of individualized long-term care provided in 
     home and community-based settings rather than nursing homes 
     or other institutional settings and undertaking the planning 
     and management of individualized care plans to facilitate 
     discharge into such settings;
       ``(C) assurances that nongovernmental case management 
     agencies funded under grants awarded under this section are 
     not direct providers of home and community-based services;
       ``(D) satisfactory assurances that adequate home and 
     community-based long term care services are available, or 
     will be made available, within the community to be served so 
     that individuals being discharged from hospitals or acute 
     care facilities under the proposed program can be served in 
     such home and community-based settings, with flexible, 
     individualized care which reflects individual choice and 
     preference;
       ``(E) a description of the manner in which the program to 
     be administered with amounts received under the grant will be 
     continued after the termination of the grant for which such 
     application is submitted; and
       ``(F) a description of any waivers or approvals necessary 
     to expand the number of individuals served in federally 
     funded home and community-based long term care programs in 
     order to provide satisfactory assurances that adequate home 
     and community-based long term care services are available in 
     the community to be served.
       ``(3) Awarding of grants.--
       ``(A) Preferences.--In awarding grants under subsection 
     (b), the Secretary shall give preference to entities 
     submitting applications that--
       ``(i) demonstrate an ability to coordinate activities 
     funded using amounts received under the grant with programs 
     providing individualized home and community-based case 
     management and services to individuals in need of long term 
     care with hospital discharge planning programs; and
       ``(ii) demonstrate that adequate home and community-based 
     long term care management and services are available, or will 
     be made available to individuals being served under the 
     program funded with amounts received under subsection (b).
       ``(B) Distribution.--In awarding grants under subsection 
     (b), the Secretary shall ensure that such grants--
       ``(i) are equitably distributed on a geographic basis;
       ``(ii) include projects operating in urban areas and 
     projects operating in rural areas; and
       ``(iii) are awarded for the expansion of existing hospital 
     linkage programs as well as the establishment of new 
     programs.
       ``(C) Expedited consideration.--The Secretary shall provide 
     for the expedited consideration of any waiver application 
     that is necessary under title XIX of the Social Security Act 
     to enable an applicant for a grant under subsection (b) to 
     satisfy the assurance required under paragraph (1)(D).
       ``(4) Use of grants.--An entity that receives amounts under 
     a grant under subsection (b) may use such amounts for 
     planning, development and evaluation services and to provide 
     reimbursements for the costs of one or more case mangers to 
     be located in or assigned to selected hospitals who would--
       ``(A) identify patients in need of individualized care in 
     home and community-based long-term care;
       ``(B) assess and develop care plans in cooperation with the 
     hospital discharge planning staff; and
       ``(C) arrange for the provision of community care either 
     immediately upon discharge from the hospital or after any 
     short term nursing-home stay that is needed for recuperation 
     or rehabilitation;
       ``(5) Direct services subject to reimbursements.--None of 
     the amounts provided under a grant under this section may be 
     used to provide direct services, other than case management, 
     for which reimbursements are otherwise available under title 
     XVIII or XIX of the Social Security Act.
       ``(6) Limitations.--
       ``(A) Term.--Grants awarded under this section shall be for 
     terms of less than 3 years.
       ``(B) Amount.--Grants awarded to an entity under this 
     section shall not exceed $300,000 per year. The Secretary may 
     waive the limitation under this subparagraph where an 
     applicant demonstrates that the number of hospitals or 
     individuals to be served under the grant justifies such 
     increased amounts.
       ``(C) Supplanting of funds.--Amounts awarded under a grant 
     under this section may not be used to supplant existing State 
     funds that are provided to support hospital link programs.
       ``(d) Evaluation and Reports.--
       ``(1) By grantees.--An entity that receives a grant under 
     this section shall evaluate the effectiveness of the services 
     provided under the grant in facilitating the placement of 
     individuals being discharged from hospitals or acute care 
     facilities into home and community-based long term care 
     settings rather than nursing homes. Such entity shall prepare 
     and submit to the Secretary a report containing such 
     information and data concerning the activities funded under 
     the grant as the Secretary determines appropriate.
       ``(2) By secretary.--Not later than the end of the third 
     fiscal year for which funds are appropriated under subsection 
     (e), the Secretary shall prepare and submit to the 
     appropriate committees of Congress, a report concerning the 
     results of the evaluations and reports conducted and prepared 
     under paragraph (1).
       ``(e) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section, 
     $5,000,000 for each of the fiscal years 1994 through 1996.''.
               TITLE II--PROVISIONS RELATING TO MEDICARE

     SEC. 201. RECAPTURE OF CERTAIN HEALTH CARE SUBSIDIES RECEIVED 
                   BY HIGH-INCOME INDIVIDUALS.

       (a) In General.--Subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new part:

  ``PART VIII--CERTAIN HEALTH CARE SUBSIDIES RECEIVED BY HIGH-INCOME 
                              INDIVIDUALS

``Sec. 59B. Recapture of certain health care subsidies.

     ``SEC. 59B. RECAPTURE OF CERTAIN HEALTH CARE SUBSIDIES.

       ``(a) Imposition of Recapture Amount.--In the case of an 
     individual, if the modified adjusted gross income of the 
     taxpayer for the taxable year exceeds the threshold amount, 
     such taxpayer shall pay (in addition to any other amount 
     imposed by this subtitle) a recapture amount for such taxable 
     year equal to the aggregate of the Medicare part B recapture 
     amounts (if any) for months during such year that a premium 
     is paid under part B of title XVIII of the Social Security 
     Act for the coverage of the individual under such part.
       ``(b) Medicare Part B Premium Recapture Amount for Month.--
     For purposes of this section, the Medicare part B premium 
     recapture amount for any month is the amount equal to the 
     excess of--
       ``(1) 200 percent of the monthly actuarial rate for 
     enrollees age 65 and over determined for that calendar year 
     under section 1839(a)(1) of the Social Security Act, over
       ``(2) the total monthly premium under section 1839 of the 
     Social Security Act (determined without regard to subsections 
     (b) and (f) of section 1839 of such Act).
       ``(c) Phase-in of Recapture Amount.--
       ``(1) In general.--If the modified adjusted gross income of 
     the taxpayer for any taxable year exceeds the threshold 
     amount by less than $25,000, the recapture amount imposed by 
     this section for such taxable year shall be an amount which 
     bears the same ratio to the recapture amount which would (but 
     for this subsection) be imposed by this section for such 
     taxable year as such excess bears to $25,000.
       ``(2) Joint returns.--If a recapture amount is determined 
     separately for each spouse filing a joint return, paragraph 
     (1) shall be applied by substituting `$50,000' for `$25,000' 
     each place it appears.
       ``(d) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Threshold amount.--The term `threshold amount' 
     means--
       ``(A) except as otherwise provided in this paragraph, 
     $100,000,
       ``(B) $125,000 in the case of a joint return, and
       ``(C) zero in the case of a taxpayer who--
       ``(i) is married (as determined under section 7703) but 
     does not file a joint return for such year, and
       ``(ii) does not live apart from his spouse at all times 
     during the taxable year.
       ``(2) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income--
       ``(A) determined without regard to sections 135, 911, 931, 
     and 933, and
       ``(B) increased by the amount of interest received or 
     accrued by the taxpayer during the taxable year which is 
     exempt from tax.
       ``(3) Joint returns.--In the case of a joint return--
       ``(A) the recapture amount under subsection (a) shall be 
     the sum of the recapture amounts determined separately for 
     each spouse, and
       ``(B) subsections (a) and (c) shall be applied by taking 
     into account the combined modified adjusted gross income of 
     the spouses.
       ``(4) Coordination with other provisions.--
       ``(A) Treated as tax for subtitle f.--For purposes of 
     subtitle F, the recapture amount imposed by this section 
     shall be treated as if it were a tax imposed by section 1.
       ``(B) Not treated as tax for certain purposes.--The 
     recapture amount imposed by this section shall not be treated 
     as a tax imposed by this chapter for purposes of 
     determining--
       ``(i) the amount of any credit allowable under this 
     chapter, or
       ``(ii) the amount of the minimum tax under section 55.
       ``(C) Treated as payment for medical insurance.--The 
     recapture amount imposed by this section shall be treated as 
     an amount paid for insurance covering medical care, within 
     the meaning of section 213(d).''
       (b) Transfers to Federal Supplementary Medical Insurance 
     Trust Fund.--
       (1) In general.--There are hereby appropriated to the 
     Federal Supplementary Medical Insurance Trust Fund amounts 
     equivalent to the aggregate increase in liabilities under 
     chapter 1 of the Internal Revenue Code of 1986 which is 
     attributable to the application of section 59B(a) of such 
     Code, as added by this section.
       (2) Transfers.--The amounts appropriated by paragraph (1) 
     to the Federal Supplementary Medical Insurance Trust Fund 
     shall be transferred from time to time (but not less 
     frequently than quarterly) from the general fund of the 
     Treasury on the basis of estimates made by the Secretary of 
     the Treasury of the amounts referred to in paragraph (1). Any 
     quarterly payment shall be made on the first day of such 
     quarter and shall take into account the recapture amounts 
     referred to in such section 59B(a) for such quarter. Proper 
     adjustments shall be made in the amounts subsequently 
     transferred to the extent prior estimates were in excess of 
     or less than the amounts required to be transferred.
       (c) Reporting Requirements.--
       (1) Paragraph (1) of section 6050F(a) of the Internal 
     Revenue Code of 1986 (relating to returns relating to social 
     security benefits) is amended by striking ``and'' at the end 
     of subparagraph (B) and by inserting after subparagraph (C) 
     the following new subparagraph:
       ``(D) the number of months during the calendar year for 
     which a premium was paid under part B of title XVIII of the 
     Social Security Act for the coverage of such individual under 
     such part, and''.
       (2) Paragraph (2) of section 6050F(b) of such Code is 
     amended to read as follows:
       ``(2) the information required to be shown on such return 
     with respect to such individual.''
       (3) Subparagraph (A) of section 6050F(c)(1) of such Code is 
     amended by inserting before the comma ``and in the case of 
     the information specified in subsection (a)(1)(D)''.
       (4) The heading for section 6050F of such Code is amended 
     by inserting ``and medicare part b coverage'' before the 
     period.
       (5) The item relating to section 6050F in the table of 
     sections for subpart B of part III of subchapter A of chapter 
     61 of such Code is amended by inserting ``and Medicare part B 
     coverage'' before the period.
       (d) Waiver of Certain Estimated Tax Penalties.--No addition 
     to tax shall be imposed under section 6654 of the Internal 
     Revenue Code of 1986 (relating to failure to pay estimated 
     income tax) for any period before April 16, 1997, with 
     respect to any underpayment to the extent that such 
     underpayment resulted from section 59B(a) of the Internal 
     Revenue Code of 1986, as added by this section.
       (e) Clerical Amendment.--The table of parts for subchapter 
     A of chapter 1 of the Internal Revenue Code of 1986 is 
     amended by adding at the end thereof the following new item:

``Part VIII. Certain health care subsidies received by high-income 
              individuals.''

       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1994.

     SEC. 202. IMPOSITION OF 10 PERCENT COPAYMENT ON HOME HEALTH 
                   SERVICES UNDER MEDICARE.

       (a) In General.--
       (1) Part a.--Section 1813(a) of the Social Security Act (42 
     U.S.C. 1395e(a)) is amended by adding at the end the 
     following new paragraph:
       ``(5)(A) The amount payable for a home health service 
     furnished to an individual under this part shall be reduced 
     by a copayment amount equal to 10 percent of the average 
     nationwide per visit cost for such a service furnished under 
     this title (as determined by the Secretary on a prospective 
     basis for services furnished during a calendar year).
       ``(B) Subparagraph (A) shall not apply to individuals whose 
     family income does not exceed 150 percent of the official 
     poverty line (referred to in section 1905(p)(2)) for a family 
     of the size involved.''.
       (2) Part b.--
       (A) In general.--Section 1833(b) of the Social Security Act 
     (42 U.S.C. 1395l(b)) is amended by adding at the end the 
     following new sentence: ``If the total amount of the expenses 
     incurred by an individual as determined under the preceding 
     provisions of this subsection include expenses for a home 
     health service, such expenses shall be further reduced by a 
     copayment amount equal to 10 percent of the average 
     nationwide per visit cost for such a service furnished under 
     this title (as determined by the Secretary on a prospective 
     basis for services furnished during a calendar year). The 
     preceding sentence shall not apply to individuals whose 
     family income does not exceed 150 percent of the official 
     poverty line (referred to in section 1905(p)(2)) for a family 
     of the size involved.''.
       (B) Conforming amendment.--Section 1833(a)(2) of the Social 
     Security Act (42 U.S.C. 1395l(a)(2)) is amended--
       (i) in subparagraph (A), by striking ``to home health 
     services,'' and by striking the comma after ``opinion)'';
       (ii) in subparagraph (D), by striking ``and'' at the end;
       (iii) in subparagraph (E), by striking the semicolon at the 
     end and inserting ``; and''; and
       (iv) by adding at the end the following new subparagraph:
       ``(F) with respect to any home health service--
       ``(i) the lesser of --

       ``(I) the reasonable cost of such service, as determined 
     under section 1861(v), or
       ``(II) the customary charges with respect to such service,

     less the amount a provider may charge as described in clause 
     (ii) of section 1866(a)(2)(A), or
       ``(ii) if such service is furnished by a public provider of 
     services, or by another provider which demonstrates to the 
     satisfaction of the Secretary that a significant portion of 
     its patients are low-income (and requests that payment be 
     made under this clause), free of charge or at nominal charges 
     to the public, the amount determined in accordance with 
     section 1814(b)(2).''.
       (3) Provider charges.--Section 1866(a)(2)(A)(i) of the 
     Social Security Act (42 U.S.C. 1395cc(a)(2)(A)(i)) is 
     amended--
       (A) by striking ``deduction or coinsurance'' and inserting 
     ``deduction, coinsurance, or copayment''; and
       (B) by striking ``or (a)(4)'' and inserting ``(a)(4), or 
     (a)(5)''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to home health services furnished on or after 
     January 1, 1995.

     SEC. 203. REDUCTION IN PAYMENTS FOR CAPITAL-RELATED COSTS FOR 
                   INPATIENT HOSPITAL SERVICES.

       (a) PPS Hospitals.--
       (1) Reduction in base payment rates for pps hospitals.--
     Section 1886(g)(1)(A) of the Social Security Act (42 U.S.C. 
     1395ww(g)(1)(A)) is amended by adding at the end the 
     following new sentence: ``In addition to the reduction 
     described in the preceding sentence, for discharges occurring 
     after September 30, 1995, the Secretary shall reduce by 7.31 
     percent the unadjusted standard Federal capital payment rate 
     (as described in 42 CFR 412.308(c), as in effect on the date 
     of the enactment of the Home and Community-Based Services for 
     Individuals with Disabilities Act of 1994) and shall reduce 
     by 10.41 percent the unadjusted hospital-specific rate (as 
     described in 42 CFR 412.328(e)(1), as in effect on the date 
     of the enactment of the Home and Community-Based Services for 
     Individuals with Disabilities Act of 1994).''.
       (2) Reduction in update.--Section 1886(g)(1) of the Social 
     Security Act (42 U.S.C. 1395ww(g)(1)) is amended--
       (A) in subparagraph (B)(i)--
       (i) by striking ``and (II)'' and inserting ``(II)'', and
       (ii) by striking the semicolon at the end and inserting the 
     following: ``, and (III) an annual update factor established 
     for the prospective payment rates applicable to discharges in 
     a fiscal year which (subject to reduction under subparagraph 
     (C)) will be based upon such factor as the Secretary 
     determines appropriate to take into account amounts necessary 
     for the efficient and effective delivery of medically 
     appropriate and necessary care of high quality;'';
       (B) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (C) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C)(i) With respect to payments attributable to portions 
     of cost reporting periods or discharges occurring during each 
     of the fiscal years 1996 through 2003, the Secretary shall 
     include a reduction in the annual update factor established 
     under subparagraph (B)(i)(III) for discharges in the year 
     equal to the applicable update reduction described in clause 
     (ii) to adjust for excessive increases in capital costs per 
     discharge for fiscal years prior to fiscal year 1992 (but in 
     no event may such reduction result in an annual update factor 
     less than zero).
       ``(ii) In clause (i), the term `applicable update 
     reduction' means, with respect to the update factor for a 
     fiscal year--
       ``(I) 4.9 percentage points; or
       ``(II) if the annual update factor for the previous fiscal 
     year was less than the applicable update reduction for the 
     previous year, the sum of 4.9 percentage points and the 
     difference between the annual update factor for the previous 
     year and the applicable update reduction for the previous 
     year.''.
       (b) PPS-Exempt Hospitals.--Section 1861(v)(1) of the Social 
     Security Act (42 U.S.C. 1395x(v)(1)) is further amended by 
     adding at the end the following new subparagraph:
       ``(T) Such regulations shall provide that, in determining 
     the amount of the payments that may be made under this title 
     with respect to the capital-related costs of inpatient 
     hospital services furnished by a hospital that is not a 
     subsection (d) hospital (as defined in section 1886(d)(1)(B)) 
     or a subsection (d) Puerto Rico hospital (as defined in 
     section 1886(d)(9)(A)), the Secretary shall reduce the 
     amounts of such payments otherwise established under this 
     title by 15 percent for payments attributable to portions of 
     cost reporting periods occurring during each of the fiscal 
     years 1996 through 2003.''.

     SEC. 204. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS FOR 
                   CERTAIN OUTPATIENT HOSPITAL SERVICES.

       (a) Ambulatory Surgical Center Procedures.--Section 
     1833(i)(3)(B)(i)(II) of the Social Security Act (42 U.S.C. 
     1395l(i)(3)(B)(i)(II)) is amended--
       (1) by striking ``of 80 percent''; and
       (2) by striking the period at the end and inserting the 
     following: ``, less the amount a provider may charge as 
     described in clause (ii) of section 1866(a)(2)(A).''.
       (b) Radiology Services and Diagnostic Procedures.--Section 
     1833(n)(1)(B)(i)(II) of the Social Security Act (42 U.S.C. 
     1395l(n)(1)(B)(i)(II)) is amended--
       (1) by striking ``of 80 percent''; and
       (2) by striking the period at the end and inserting the 
     following: ``, less the amount a provider may charge as 
     described in clause (ii) of section 1866(a)(2)(A).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to services furnished during portions of cost 
     reporting periods occurring on or after July 1, 1994.

     SEC. 205. REDUCTION IN ROUTINE COST LIMITS FOR HOME HEALTH 
                   SERVICES.

       (a) Reduction in Update To Maintain Freeze in 1996.--
       (1) In general.--Section 1861(v)(1)(L)(i) of the Social 
     Security Act (42 U.S.C. 1395x(v)(1)(L)(i)) is amended--
       (1) in subclause (II), by striking ``or'' at the end;
       (2) in subclause (III), by striking ``112 percent,'' and 
     inserting ``and before July 1, 1996, 112 percent, or''; and
       (3) by inserting after subclause (III) the following new 
     subclause:
       ``(IV) July 1, 1996, 100 percent (adjusted by such amount 
     as the Secretary determines to be necessary to preserve the 
     savings resulting from the enactment of section 13564(a)(1) 
     of the Omnibus Budget Reconciliation Act of 1993),''.
       (2) Adjustment to limits.--Section 1861(v)(1)(L)(ii) of the 
     Social Security Act (42 U.S.C. 1395x(v)(1)(L)(ii)) is amended 
     by adding at the end the following new sentence: ``The effect 
     of the amendments made by section 205(a)(1) of the Home and 
     Community-Based Services for Individuals with Disabilities 
     Act of 1994 shall not be considered by the Secretary in 
     making adjustments pursuant to this clause.''.
       (b) Basing Limits in Subsequent Years on Median of Costs.--
       (1) In general.--Section 1861(v)(1)(L)(i) of the Social 
     Security Act (42 U.S.C. 1395x(v)(1)(L)(i)), as amended by 
     subsection (a), is amended in the matter following subclause 
     (IV) by striking ``the mean'' and inserting ``the median''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to cost reporting periods beginning on or after 
     July 1, 1997.
                                  ____


              Summary of Long-Term Care Reform Legislation


                                overall

       The measures establishes a new home and community-based 
     long-term care program to persons of all ages. The program 
     would provide funds to States in the form of a block grant, 
     matched by State funds, on a voluntary basis. Federal and 
     State financial participation is capped, and the program 
     would not constitute an entitlement to individuals. In 
     particular, neither States nor the Federal government would 
     be required to spend anymore than set forth by this measure.


                              eligibility

       Those meeting any of the following criteria would be 
     eligible for the program:
       (1) Individuals requiring assistance with three or more 
     activities of daily living.
       (2) Individuals with severe mental retardation.
       (3) Individuals with severe cognitive or mental impairment.
       (4) Children, under 6, with severe disabilities.
       In addition, States could set aside up to 2% of their 
     program funding for individuals who may not meet any one of 
     the above criteria, but who have a disability of comparable 
     level of severity.


                                services

       States participating in the program would be required to 
     provide assessment, plan of care, personal assistance, and 
     case management services. In addition, states may also offer 
     homemaker services, home modifications, respite, assistive 
     devices, adult day care, habilitation/rehabilitation, 
     supported employment home health care, and any other service 
     at State discretion.


                      federal allotment to states

       The total Federal allotment to States under this program 
     would be:
       (A) for fiscal year 1996, $1,800,000,000;
       (B) for fiscal year 1997, $3,500,000,000;
       (C) for fiscal year 1998, $5,800,000,000;
       (D) for fiscal year 1999, $7,300,000,000;
       (E) for fiscal year 2000, $10,000,000,000;
       (F) for fiscal year 2001, $15,700,000,000;
       (G) for fiscal year 2002, $22,800,000,000;
       (H) for fiscal year 2003, $30,700,000,000; and
        (I) for fiscal year 2004, $34,600,000,000.
       Thereafter, the total Federal allotment would be increased 
     by factors relating to inflation, and the change in the 
     number of disabled.
       In addition, States would be allowed to capture any 
     Medicaid savings generated by the new benefit, and apply that 
     savings to their program.

                       Copayments and Deductibles

       The program includes a sliding scale payment schedule for 
     eligible individuals based on income. Individuals with 
     incomes below 150% of poverty would have no copayment or 
     deductible. Above 150% of poverty, copayments and deductibles 
     would range from 10% and $100 respectively for those with 
     incomes between 150% and 175% of poverty, up to 40% and $600 
     respectively for those with incomes above 400% of poverty.

                   Hospital/Home & Community Linkage

       The program includes a hospital/home and community-based 
     long-term care linkage program, to establish and expand State 
     run programs designed to help facilitate the placement of 
     individuals in need of long-term health care services into 
     home- and community-based settings rather than institutional 
     settings. This provision authorizes up to $5 million per year 
     for three years.

                           Funding Provisions

       The measure includes the following modifications to 
     Medicare:
       Applies an income test to Medicare Part B premiums for 
     individuals with incomes over $100,000 and couples with 
     incomes over $125,000, increasing to 100% of Medicare costs 
     for individuals with incomes over $125,000 and couples with 
     incomes over $150,000.
       Applies a 10% copayment to home health services for 
     individuals with incomes over 150% of poverty.
       Modifies aggregate cost limits for home health agencies.
       Eliminates formula-driven overpayments to hospitals for 
     certain outpatient services.
       Modifies reimbursement for inpatient-related capital 
     costs.
                                 ______

      By Mr. FORD:
  S. 2546. A bill to enhance the safety of air travel through a more 
effective Federal Aviation Administration, and for other purposes; to 
the Committee on Commerce, Science, and Transportation.


                   faa independent establishment act

  Mr. FORD. Mr. President, today I am introducing a bill to make the 
FAA an independent Federal agency. Over the past year, there has been 
much discussion as to what should, must, or needs to be done with the 
FAA. Much of the debate has been over the form of the organization. 
This has prevented us from beginning any sort of meaningful discussion 
about the substance of the problems and how to continue to provide a 
safe and efficient air transportation system.
  We must begin the process of talking to the users of the system to 
hear their concerns and needs for the future. We must begin to talk to 
the controllers and employees of the FAA to hear their concerns and 
needs for the future. We must continue to recognize the needs of the 
airports, and the important role they play in facilitating the air 
transportation system.
  We also must begin the process of talking to the administration. I 
caution all of the interested parties to recognize the bill that I have 
introduced as a means to begin the hard work of determining what is 
needed for the entire FAA to move forward and continue to provide a 
safe and efficient air transportation system. All parties to these 
discussions must understand that there are limits on what is doable. 
The bill introduced in not by any means a final product. Instead, I 
view the bill as a first step in a long process, a process that will 
take the entire aviation community time to address. Congressman 
Oberstar and I earlier this year, in response to the administration's 
proposal to create a corporation, indicated our strong opposition to 
such a proposal. I know all concerned are aware of our views, and we 
now need to focus our sights on the potential problems down the road, 
and how to address those needs.
  The question of how we provide and set the stage for air 
transportation in the future is critical to our economy, critical to 
our childred, and critical to all of us that fly. We all are aware that 
airports and aviation are a key component in opening up business 
opportunities, generating jobs, and invigorating communities. I have 
seen first hand the impact one airline company can have on a community. 
UPS came to Louisville a number of years ago, and along came a host of 
other companies seeking to utilize their delivery services. A similar 
positive situation has occurred in Northern Kentucky when Delta 
established a hub at the Cincinnati-Northern Kentucky International 
Airport.
  We also know that travel and tourism is the number one industry in 
this country, generating more than $740 billion in direct and indirect 
expenditures in the United States per year. The industry directly 
accounts for more than 5.1 million jobs. Our airports, airlines, 
airline employees, air traffic controllers, and general aviation 
community work hard to ensure that the system is safe and that travel 
and tourism continue. We must support their efforts.

  That support must focus on how best to revamp the FAA, how to 
modernize the air traffic control system, and how to increase capacity 
of our Nation's airports. The FAA has done a credible job over the 
years in making the system safe. The criticisms of the FAA generally 
have focused on their inability to modernize the system. After the 
controller strike in 1981, Congress was promised a plan, the National 
Air Space Plan, to modernize the system over 10 years at a cost of $12 
billion. That blueprint quickly became fodder for much criticism. The 
original plan was overly ambitious, and made too many promises. There 
were very few details in the NAS plan when it was authorized by the 
Congress. I recognize that modernization of a fail proof system takes 
time--it is not as easy as merely buying a computer at a store and 
plugging it in. Thorough testing and validation must occur--the 
machines must work virtually error free.
  The FAA also knows that it must deliver the modernization package. 
Too much time and money has been lost. I also want to point out that it 
appears that much of what needs to occur at the FAA is beginning to 
happen. Whether you agree with the FAA or not on its decision to cut 
the microwave landing system or move forward with the advanced 
automation system [AAS], the fact is that the Administrator and Deputy 
Administrator have recognized that it is important to decide, and not 
merely continue to pour money into dry holes. The FAA recently stated 
that ``[r]esponsibility, authority, and accountability are key elements 
to the success of the ATC automation program''. I agree and urge the 
FAA to take their own words to heart. The FAA also recognized that its 
``[f]ailure to manage risks was a primary contributing factor to the 
unacceptable cost growth and schedule delays''. Again, I agree with 
FAA. Much scrutiny of the AAS program has led to these realizations. 
These are not factors that one can readily legislate, but rather 
factors that the FAA has now recognized and addressed.
  I also want to point our that the recent passage of S. 1587, the 
Federal Acquisition Streamling Act, provided the entire FAA with 
significant relief from the procurement laws, something the 
administration has sought. In talking to procurement specialists, one 
thread appears to be that the laws are not the problem, but rather how 
the FAA carries out its procurement activities.
  We also simply cannot afford to have an aviation transportation 
system that is not capable of providing sufficient airport capacity to 
meet future demands. Administrator Hinson recently indicated that 
airport capacity is the No. 1 priority for the agency. With the 
projected growth in traffic, airports must be able to handle all of the 
passengers--simply put, there is much that can be done to increase air 
space capacity. New approach procedures, precision runway monitors, and 
dual and triple independent approaches all can be used to increase 
capacity. Yet, 15 of the 33 high-volume airports have only one runway. 
Technology alone will not solve the problem.
  We all know that the FAA is the premier aviation agency in the world. 
Yet, airport delays continue to be a problem. Some two-thirds of those 
delays are weather-related, and as much as I would like to be able to 
change the weather, Congress simply does not have that power. We can, 
though, work to figure out how to get new radars installed more quickly 
and efficiently. We can work to figure out what systems can be 
purchased off the shelf to provide weather-related information. We also 
must ensure that our hardworking controllers have the tools needed to 
safely guide aircraft, that power failures not occur, that ASR-9's work 
properly, and all of the host of hardware used to meter the system 
continue to function properly.
  These types of problems are not a function of whether or not the FAA 
is a corporation, independent, or a part of the DOT. However, these 
issues need to be addressed. the FAA just submitted a master plan on 
its air traffic control automation program. Over the years, Congress 
has seen many of these sorts of documents. The plan submitted needs to 
be thoroughly reviewed and discussed. Does it get us to where we want 
to be at the end of the decade? Will we be able to provide a more 
efficient system? I appreciate the Administrator's diligence in 
submitting the plan, and it is clear that this year has been a 
different one at the FAA than those in the past. A thorough examination 
and revalidation of its mission and its programs has occurred. Again, 
the examination of the AAS program has served all of us well. I look 
forward to working with the administration further on its modernization 
efforts.

  Over the years, the FAA has received more than its fair share of 
Federal funding. This past year, its funding declined--primarily as a 
result of cuts in the airport improvement program. The administration 
and Congress must work together to fully fund and needs of the FAA. The 
airlines and airports must work together to increase the spending out 
of the trust fund. They must come to the hill and make the case for 
full funding. We all know that unlike the vast majority of programs 
under the Transportation Department, the FAA is funded through user 
fees. Either we have got to make folks understand the real need for 
those dollars, or cut the fees collected.
  I want to work with the airlines, the unions, the airports, the 
general aviation community, State aviation officials, and the General 
Accounting Office to craft a workable bill to move the agency forward 
as a Federal Agency. I know I share a common desire with the 
administration to see that the skies remain safe, that the system 
remains efficient, and that the FAA has the ability to do its job. I 
also want to work with the administration, and I look forward to their 
imput.
  We have spent more of the year arguing over the need for a 
corporation. Through a series of statements and discussions, the 
administration is well aware of congressional opposition to the plan. 
We now must step back and recognize what is in all of our and the user' 
best interests. There is the promise that much of what all of us seek 
can be achieved and I hope the administration recognizes and takes 
advantage of this opportunity.
  Mr. President, I ask unanimous consent that the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2546

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Federal Aviation 
     Administration Independent Establishment Act of 1994''.
       This Act may be cited as the ``Federal Aviation 
     Administration Independent Establishment Act of 1994''.

     SEC. 2. FINDINGS.

       The Congress finds that--
       (1) the civil aviation industry in the United States has 
     experienced an unprecedented period of rapid development and 
     expansion over the past decade;
       (2) the Federal Aviation Administration, an administration 
     within the Department of Transportation, has been charged by 
     the Congress with the responsibility for overseeing the safe 
     operation of this essential segment of the national economy;
       (3) the Federal Aviation Administration operates the most 
     efficient air traffic control system in the world;
       (4) the Federal Aviation Administration must be able to 
     move forward with its plans to modernize the air 
     transportation network in an efficient and cost effective 
     manner to reduce delays, provide more direct routing of 
     aircraft, and facilitate the use of satellite technology;
       (5) funds must be collected from all of the users of the 
     air transportation system on an equitable basis and those 
     funds must be spent on improving the safety and efficiency of 
     the air transportation system;
       (6) the ability to expand capacity of the air traffic 
     control system depends on a complex set of variables and the 
     Federal Aviation Administration must have sufficient funds, 
     resources and appropriate personnel to manage the future air 
     traffic control system;
       (7) the ability to expand capacity of the air traffic 
     control system is highly dependent upon sufficient runway and 
     airport capacity, and as such, Congress must ensure that 
     appropriate funds are provided to fund the airport 
     improvement program.
       (8) the Federal Aviation Administration must oversee the 
     growth and development of the entire air transportation 
     system, and coordinate and facilitate research, development, 
     implementation and installation of new technology, new 
     runways and new airports; and
       (9) the Federal Aviation Administration must coordinate its 
     modernization plans with the ultimate users of the systems 
     and seek input from the users and air traffic controllers, on 
     how best to proceed with modernization efforts;
       (10) the importance of the airport and airway system to our 
     national defense and the need for a working relationship 
     between civil and military aviation necessitates the 
     continued highly successful relationship and cooperative 
     efforts between the Federal Aviation Administration and the 
     Department of Defense;
       (11) to assure air safety through the continued 
     modernization and expansion of the Nation's system of 
     airports and airways, the Federal Aviation Administration 
     must continue to emphasize research and development projects; 
     and
       (12) if the Federal Aviation Administration is provided 
     with greater autonomy and consistent leadership, it can be 
     expected to exercise vigorously its prerogatives with the 
     direction and guidance of the President and under the ongoing 
     oversight of the Congress.

     SEC. 3. DEFINITIONS.

       For the purposes of this Act--
       (1) the term ``Administration'' means the Federal Aviation 
     Administration established under section 4; and
       (2) the term ``Administrator'' means the Administrator of 
     the Federal Aviation Administration appointed under section 
     5(a).

     SEC. 4. ESTABLISHMENT.

       There is established as an independent establishment of the 
     Government the Federal Aviation Administration. The 
     Administration shall succeed the Federal Aviation 
     Administration of the Department of Transportation in 
     existence on the day before the effective date set forth in 
     section 28(a).

     SEC. 5. OFFICERS.

       (a) The Administration shall be administered by an 
     Administrator, who shall be appointed by the President to a 
     5-year term of office, by and with the advice and consent of 
     the Senate. Under the supervision and direction of the 
     President, the Administrator shall carry out all functions 
     transferred to the Administrator by this Act and shall have 
     authority and control over all personnel, programs, and 
     activities of the Administration. The Administrator may be 
     removed by the President for neglect of duty or malfeasance 
     in office. The Administrator shall be compensated at the rate 
     prescribed for level I of the Executive Schedule pay rates.
       (b) There shall be in the Administration a Deputy 
     Administrator, who shall be appointed by the Administrator. 
     The Deputy Administrator shall perform such functions, 
     duties, and powers as the Administrator shall prescribe. The 
     Deputy Administrator shall act for and perform the functions 
     of the Administrator when the Administrator is absent or 
     unable to serve, or when the office of the Administrator is 
     vacant. The Deputy Administrator shall be compensated at the 
     rate prescribed for level II of the Executive Schedule pay 
     rates.
       (c) There shall be in the Administration a maximum of 8 
     Assistant Administrators, who shall be appointed by the 
     Administrator. The Assistant Administrators shall perform 
     such functions as the Administrator shall prescribe. The 
     Administrator shall designate the order in which the 
     Assistant Administrators shall act for and perform the 
     functions of the Administrator when the Administrator, or in 
     the Administrator's place the Deputy Administrator, is absent 
     or unable to serve, or when the offices of the Administrator 
     and the Deputy Administrator are vacant. An Assistant 
     Administrator shall be compensated at the rate prescribed for 
     level IV in the Executive Schedule pay rates.
       (d) There shall be in the Administration a Chief Counsel, 
     who shall be appointed by the Administrator. The Chief 
     Counsel shall be the chief legal officer for all legal 
     matters arising from the conduct of the functions of the 
     Administration. The Chief Counsel shall be compensated at the 
     rate prescribed for level IV of the Executive Schedule pay 
     rates.
       (e) There shall be in the Administration an Inspector 
     General appointed in accordance with the Inspector General 
     Act of 1978, approved October 12, 1978 (5 App. U.S.C.). The 
     Inspector General shall be compensated at the rate prescribed 
     for level IV of the Executive Schedule pay rates.
       (f)(1) Each of the officers referred to in this section 
     must be a citizen of the United States. The Administrator 
     must be a civilian.
       (2) Such officers may not have a pecuniary interest in, or 
     own stock in or bonds of, an aeronautical enterprise, or 
     engage in another business, vocation, or employment.

     SEC. 6. POWERS.

       (a) The Administration shall be responsible for the 
     exercise of all powers and the discharge of all duties of the 
     Administration.
       (b) In carrying out the functions of the Administration 
     under this Act, the Administrator shall be governed by all 
     applicable statutes, including the policy standards set forth 
     in Subtitle VII of Title 49 United States Code.
       (c) Nothing in this Act shall be construed to limit in any 
     manner the authority of the Administrator to promote safety 
     by establishing and administering accident prevention 
     programs, encouraging airport development, educating the 
     public on the importance of aeronautics, and encouraging the 
     adoption of worldwide safety standards.
       (d) Decisions of the Administrator made pursuant to the 
     exercise of the functions enumerated in Subtitle VII of Title 
     49, United States Code, shall be administratively final, and 
     appeals as currently authorized by law shall be taken 
     directly to the National Transportation Safety Board or to 
     any court of competent jurisdiction, as appropriate.

     SEC. 7. TRANSFERS AND INCIDENTAL PROVISIONS.

       (a) The following are transferred to the Administration:
       (1) All functions vested by law in the Federal Aviation 
     Administration of the Department of Transportation or its 
     Administrator, and all functions vested by law in the 
     Secretary of Transportation or the Department of 
     Transportation which are administered through the Federal 
     Aviation Administration, including those exercised under 
     Subtitle VII of Title 49, United States Code, except for 
     those functions exercised under section 40104 of title 49, 
     United States Code, relative to fostering the development of 
     civil aeronautics and air commerce, and exercised by the 
     Secretary of Transportation under Part A, Subpart II 
     (Economic Regulation) of such Subtitle.
       (2) The functions of the Department of Transportation or 
     the Federal Aviation Administration of the Department of 
     Transportation necessary and appropriate for the performance 
     of the functions transferred by paragraph (1) of this 
     subsection.
       (3) So much of the personnel, property, records, funds, 
     accounts, and unexpended balances of appropriations, 
     allocations, and other moneys of the Department of 
     Transportation as are employed, used, held available, or to 
     be made available in connection with the functions 
     transferred by paragraphs (1) and (2) of this subsection.
       (b) The personnel transferred under this section shall be 
     so transferred without reduction in classification or 
     compensation, except that after such transfer, such personnel 
     shall be subject to changes in classification or compensation 
     in the same manner, to the same extent, and according to the 
     same procedure, as provided by law.
       (c) The Administrator shall exercise all functions 
     transferred by subsection (a) of this section and any other 
     function vested in the Federal Aviation Administration or the 
     Administrator of the Federal Aviation Administration by and 
     law enacted on or after the date of enactment of this Act. 
     The Administrator may from time to time make such provisions 
     as the Administrator shall deem appropriate authorizing the 
     performance by any other officer, employee, or office of the 
     Administration of such functions.

     SEC. 8. DEVELOPMENT PLAN.

       The Administrator shall prepare a 3-year development plan 
     outlining goals and objectives for personnel, technology, and 
     regulation in such areas as air traffic control, aviation 
     standards, airport security, airport and airway development, 
     and research and development. The plan shall, not later than 
     January 1, 1996, be submitted to the Committee on Commerce, 
     Science, and Transportation of the Senate and the Committee 
     on Public Works and Transportation in the House of 
     Representatives, and updated plans shall be so submitted 
     every 3 years thereafter.

     SEC. 9. RULES; REGULATIONS.

       (a) In the performance of the functions of the 
     Administrator and the Administration, the Administrator is 
     authorized to make, promulgate, issue, rescind, and amend 
     rules and regulations. The promulgation of such rules and 
     regulations shall be governed by the provisions of chapter 5 
     of title 5, United States Code.
       (b) The Administrator shall consider comments and 
     recommendations submitted by the Secretary of Transportation 
     in response to any notice of proposed rulemaking by the 
     Administrator, and shall address the comments raised by the 
     Secretary during the course of the rulemaking, providing an 
     explanation of any decision not to adopt a recommendation by 
     the Secretary.

     SEC. 10. DELEGATION.

       Except as otherwise provided in this Act, the Administrator 
     may delegate any function to such officers and employees of 
     the Administration as the Administrator may designate, and 
     may authorize such successive redelegations of such functions 
     in the Administration as may be necessary or appropriate. No 
     delegation of functions by the Administrator under this 
     section or under any other provision of this Act shall 
     relieve the Administrator of responsibility for the 
     administration of such functions.

     SEC. 11. PERSONNEL AND SERVICES.

       (a) In the performance of the functions of the 
     Administrator and in addition to the officers provided for by 
     section 5, the Administrator is authorized to appoint, 
     transfer, and fix the compensation of such officers and 
     employees, including attorneys, as may be necessary to carry 
     out the functions of the Administrator and the 
     Administration. Except as otherwise provided by law, such 
     officers and employees shall be appointed in accordance with 
     the civil service laws and compensated in accordance with 
     title 5, United States Code.
       (b) The Administrator is authorized to obtain the services 
     of experts and consultants in accordance with section 3109 of 
     title 5, United States Code.
       (c) The Administrator is authorized to pay transportation 
     expenses, and per diem in lieu of subsistence expenses, in 
     accordance with chapter 57, of title 5, United States Code.
       (d) The Administrator is authorized to utilize, on a 
     reimbursable basis, the services of personnel of any Federal 
     agency.
       (e)(1)(A) The Administrator is authorized to accept 
     voluntary and uncompensated services without regard to the 
     provisions of section 1342 of title 31, United States Code, 
     if such services will not be used to displace Federal 
     employees employed on a full-time, part-time, or seasonal 
     basis.
       (B) The Administrator is authorized to accept volunteer 
     service in accordance with the provisions of section 3111 of 
     title 5, United States Code.
       (2) The Administrator is authorized to provide for 
     incidental expenses, including transportation, lodging, and 
     subsistence for such volunteers.
       (3) An individual who provides voluntary services under 
     this subsection shall not be considered a Federal employee 
     for any purpose other than for purposes of chapter 81 of 
     title 5, United States Code, relating to compensation for 
     work injuries, and chapter 171 of title 28, United States 
     Code, relating to tort claims.
       (f)(1) The Administrator is authorized to grant to any 
     employee of the Administration an incentive allowance of not 
     to exceed 20 percent of the basic pay of the employee if 
     necessary to provide safe and efficient service in major 
     facilities which the Administrator finds--
       (A) are critical to the national airspace system;
       (B) have been chronically understaffed; or
       (C) are in remote or high cost locations.
       (2) An incentive allowance may be granted under paragraph 
     (1) only of--
       (A) the Administrator transmits a full written explanation 
     of the proposed allowance and the reasons therefor, including 
     the basis for each required determination and finding, to the 
     Committee on Commerce, Science, and Transportation of the 
     Senate and the Committee on Public Works and Transportation 
     of the House of Representatives; and
       (B) the 60-day period immediately following the 
     transmission of such written explanation has expired.
       (g) The Administrator shall study ways to compensate or 
     otherwise provide additional incentives to encourage 
     employees to seek, accept, and remain in supervisory and 
     managerial positions, including compensation opportunities 
     that are at least as substantial as those available to 
     employees in nonsupervisory and nonmanagerial positions of 
     comparable grades within the General Schedule. The 
     Administrator shall, not later than 6 months after the 
     effective date of this section, report to Congress on the 
     results of such study, including any recommendations for 
     legislative action.

     SEC. 12. CONTRACTS.

       The Administrator is authorized to enter into and perform 
     such contracts, leases, cooperative agreements, or other 
     transactions as may be necessary to carry out the functions 
     of the Administrator and the Administration. The 
     Administrator may enter into such contracts, leases, 
     agreements, and transactions with any Federal agency or any 
     instrumentality of the United States, or with any State, 
     territory, or possession, or with any political subdivision 
     thereof, or with any person, firm, association, corporation, 
     or educational institution, on such terms and conditions as 
     the Administrator may consider appropriate. The authority of 
     the Administrator to enter into contracts and leases under 
     this section shall be to such extent or in such amounts as 
     are provided in appropriation Acts.

     SEC. 13. FINANCE AND BUDGET.

       (a)(1) There is established in the Treasury of the United 
     States a trust fund to be known as the ``Aviation Trust Fund 
     Account'', consisting of such amounts as may be appropriated 
     or credited to the Aviation Trust Fund Account as provided in 
     this subsection and section 9502(a) of the Internal Revenue 
     Code of 1986 (26 U.S.C. 9502(a)), as amended by paragraph (2) 
     of this subsection.
       (2) There are appropriated to the Aviation Trust Fund 
     Account amounts determined by the Secretary of the Treasury 
     to be equivalent to those taxes described in section 9502(b) 
     of the Internal Revenue Code of 1986 (26 U.S.C. 9502(b)) 
     received after September 30, 1995.
       (3) There are authorized to be appropriated to the Aviation 
     Trust Fund Account such additional sums as may be required to 
     make the expenditures referred to in paragraph (5) of this 
     subsection.
       (4) The Secretary of the Treasury shall invest such portion 
     of the Aviation Trust Fund Account as is not, in the 
     Secretary's judgment, required to meet current withdrawals. 
     The interest on, and the proceeds from, any such investments 
     shall be credited to and form a part of the Aviation Trust 
     Fund Account.
       (5) Amounts in the Aviation Trust Fund Account shall be 
     available, without further appropriation, for making 
     expenditures after October 1, 1995, to meet those obligations 
     of the United States incurred by the Administration--
       (A) under subtitle VII of title 49, United States Code; or
       (B) for administrative expenses attributable to the 
     activities described in subparagraphs (A) and (B).
       (2)(A) Section 9502(a) of the Internal Revenue Code of 1986 
     (26 U.S.C. 9502(a)) is amended by inserting immediately 
     before the period at the end the following: ``, except that 
     the interest and proceeds received after October 1, 1995, as 
     a result of Trust Fund investments under section 9602(b) 
     shall be credited to the Aviation Trust Fund Account 
     established by section 14 of the Federal Aviation 
     Administration Independent Establishment Act of 1994.''.
       (B) Section 9502(b) of the Internal Revenue Code of 1986 
     (26 U.S.C. 9502(b)) is amended by striking ``January 1, 
     1991'' each place it appears and inserting in lieu thereof 
     ``October 1, 1995''.
       (C) Section 9502(d) of the Internal Revenue Code of 1986 
     (26 U.S.C. 9502(d)) is amended--
       (1) in paragraph (2) by inserting ``and before October 1, 
     1995,'' immediately after ``August 31, 1982,''; and
       (2) in paragraph (3) by inserting ``and before October 1, 
     1995'' immediately after ``August 31, 1982''.
       (D) Section 9502 of the Internal Revenue Code of 1986 (26 
     U.S.C. 9502) is amended by adding at the end the following 
     new subsection:
       ``(e) Termination of Airport and Airway Trust Fund.--The 
     Airport and Airway Trust Fund shall terminate on October 1, 
     1996, and all amounts in such Trust Fund shall be transferred 
     upon termination to the Aviation Trust Fund Account 
     established by section 14 of the Federal Aviation 
     Administration Independent Establishment Act of 1994.''.
       (b) Notwithstanding any other provision of law, the 
     receipts and disbursements of the Aviation Trust Fund Account 
     shall not, for any fiscal year--
       (1) be counted in calculating the deficit under section 
     3(6) of the Congressional Budget and Impoundment Control Act 
     of 1974 (2 U.S.C. 622(6)) for purposes of comparison with the 
     maximum deficit amount under the Balanced Budget and 
     Emergency Deficit Control Act of 1985;
       (2) be counted in calculating the excess deficit for 
     purposes of sections 251 and 252 of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 (2 U.S.C. 901 and 902); 
     or
       (3) be subject to sequestration or reduction under such 
     sections 251 and 252.
       (c)(1) Each year the Administrator shall prepare a budget 
     for the Administration, which shall contain estimates of the 
     financial condition and operations of the Administration for 
     the current and ensuing four fiscal years, and the actual 
     condition and results of operations for the last completed 
     fiscal year. Such budget shall be submitted to the Office of 
     Management and Budget, under such rules and regulations as 
     the President may establish as to the date of submission, the 
     form and content, the classification of data, and the manner 
     in which such reports shall be prepared and presented. The 
     budget shall identify separately the programs, projects, and 
     activities determined by the Administrator to be appropriate 
     for obligation from the Trust Fund pursuant to the provisions 
     of this section. The budget submission shall also include a 
     statement of income and expenses, and analysis of surplus or 
     deficit, and any other such supplementary information as is 
     necessary or desirable to make known about the financial 
     condition and operations of the Administration. The annual 
     budget shall be included in the budget submitted by the 
     President pursuant to chapter 11 of title 31, United States 
     Code.
       (2) For fiscal years beginning after September 30, 1995, 
     the Director of the Office of Management and Budget, after 
     consulting with the Director of the Congressional Budget 
     Office and the Joint Committee on Taxation, shall prepare an 
     estimate of revenues and receipts that will be appropriated 
     or credited to the Aviation Trust Fund Account established by 
     subsection (a) of this section. In no event shall 
     expenditures authorized by the Administrator for any fiscal 
     year exceed the amount of such revenues and receipts 
     estimated for that year pursuant to this subsection.
       (3) In the budget prepared pursuant to paragraph (1) of 
     this subsection, the Administrator shall identify all 
     expected expenditures from the Aviation Trust Fund Account by 
     program, project, or activity.
       (4) The Administrator shall report to the appropriate 
     committees of the Senate and House of Representatives by 
     April 15 of each year on any changes in planned expenditures 
     from the Aviation Trust Fund Account for the upcoming fiscal 
     year pursuant to paragraph (3) of this subsection. Consistent 
     with the provisions of this section, the Administrator may 
     thereafter modify the report and shall advise in writing the 
     appropriate committees of the Senate and House of 
     Representatives regarding any such modification.
       (d)(1) In preparing the budget report pursuant to 
     subsection (c) of this section and in approving for 
     expenditures from the Aviation Trust Fund Account for 
     programs, projects, and activities under this section, the 
     Administrator shall--
       (A) approve for obligation capital projects in amounts up 
     to the limit of authorizations provided by law, and
       (B) from available funds not obligated under subparagraph 
     (A), approve for obligation non-capital activities authorized 
     by law.
       (2) The budgetary resources available for obligation for 
     each fiscal year after September 30, 1995, from the Aviation 
     Trust Fund Account shall be obligated in accordance with the 
     most recent report of the Administrator pursuant to 
     subsections (c) and (d) of this section.
       (e) For fiscal years beginning after September 30, 1995, 
     committees in the Senate and House of Representatives with 
     jurisdiction to authorize and appropriate new budget 
     authority for programs of the Administration shall authorize 
     and appropriate such new budget authority for periods of two 
     fiscal years.

     SEC. 14. USE OF FACILITIES.

       With their consent, the Administrator may, with or without 
     reimbursement, use the services, equipment, personnel, and 
     facilities of Federal agencies and other public and private 
     agencies, and may cooperate with other public and private 
     agencies and instrumentalities in the use of services, 
     equipment, personnel, and facilities. The head of each 
     Federal agency shall cooperate fully with the Administrator 
     in making the services, equipment, personnel, and facilities 
     of the Federal agency available to the Administrator. The 
     head of a Federal agency is authorized, notwithstanding any 
     other provision of law, to transfer to or to receive from the 
     Administration, without reimbursement, supplies and equipment 
     other than administrative supplies or equipment.

     SEC. 15. ACQUISITION AND MAINTENANCE OF PROPERTY.

       (a) The Administrator is authorized--
       (1) to acquire (by purchase, lease, condemnation, or 
     otherwise), construct, improve, repair, operate, and 
     maintain--
       (A) air traffic control facilities and equipment;
       (B) research and testing sites and facilities; and
       (C) such other real and personal property (including office 
     space and patents), or any interest therein within and 
     outside the continental United States, as the Administrator 
     considers necessary;
       (2) to lease to others such real and personal property; and
       (3) to provide by contract or otherwise for eating 
     facilities and other necessary facilities for the welfare of 
     employees of the Administration at its installations and to 
     purchase and maintain equipment for such facilities.
       (b) Title to any property or interest therein acquired 
     pursuant to this section shall be in the United States.
       (c) The authority granted by subsection (a) shall be 
     available only with respect to facilities of a special 
     purpose nature which the Administrator determines cannot 
     readily be reassigned from similar Federal activities and are 
     not otherwise available for assignment to the Administration 
     by the Administrator of General Services.
       (d) The authority of the Administrator to enter into 
     contracts and leases under this section shall be to such 
     extent or in such amounts as are provided in appropriation 
     Acts.

     SEC. 16. FACILITIES AT REMOTE LOCATIONS.

       (a) The Administrator is authorized to provide, construct, 
     or maintain for employees and their dependents stationed at 
     remote locations as necessary and when not otherwise 
     available at such remote locations--
       (1) emergency medical services and supplies;
       (2) food and other subsistence supplies;
       (3) meeting facilities;
       (4) audiovisual equipment, accessories, and supplies for 
     recreation and training;
       (5) reimbursement for food, clothing, medicine, and other 
     supplies furnished by such employees in emergencies for the 
     temporary relief of distressed persons;
       (6) living and working quarters and facilities; and
       (7) transportation for school-age dependents of employees 
     to the nearest appropriate educational facilities.
       (b) The furnishing of medical treatment under subsection 
     (a)(1) and the furnishing of services and supplies under 
     subsection (a)(2) shall be at prices reflecting reasonable 
     value as determined by the Administrator.
       (c) Proceeds derived from reimbursements under this section 
     shall be deposited in the Treasury and may be withdrawn by 
     the Administrator to pay directly the cost of work or 
     services provided under this section, to repay or make 
     advances to appropriations of funds which do or will bear all 
     or a part of such cost, or to refund excess sums when 
     necessary, except that such payments may be credited to a 
     service or working capital fund otherwise established by law, 
     and used under the law governing such funds if the fund is 
     available for use by the Administrator for performing the 
     work or services for which payment is received.

     SEC. 17. ADVISORY COMMITTEE.

       (a) There is established an advisory committee which shall 
     be known as the Federal Aviation Advisory Committee 
     (hereafter in this section referred to as the ``Advisory 
     Committee'').
       (b) The Advisory Committee shall consist of 5 members, who 
     shall consist of--
       (1) the Secretary of Transportation (who shall serve as 
     Chairman);
       (2) 2 members appointed by the Chairman and Ranking 
     Minority Member of the Committee on Commerce, Science, and 
     Transportation of the Senate; and (3) 2 members appointed by 
     the Chairman and Ranking Minority Member of the Committee on 
     Public Works and Transportation of the House of 
     Representatives.
       (c) Each individual appointed under subsection (b)(2) and 
     (3) as a member of the Advisory Committee shall be 
     knowledgeable about matters involving aviation.
       (d) The Advisory Committee shall provide advice and counsel 
     to the Administrator on issues which affect or are affected 
     by the operations of the Administration.
       (e) Members of the Advisory Committee, including 
     replacement members appointed to fill a vacancy, shall be 
     appointed to serve until the Advisory Committee is terminated 
     pursuant to subsection (h).
       (f) Each member of the Advisory Committee shall be paid 
     actual travel expenses, and per diem in lieu of subsistence 
     expenses when away from his or her usual place of residence, 
     in accordance with section 5703 of title 5, United States 
     Code.
       (g) The Administrator shall make available to the Advisory 
     Committee such staff, information, and administrative 
     services and assistance as may reasonably be required to 
     enable the Advisory Committee to carry out its 
     responsibilities under this section.
       (h) The Advisory Committee shall cease to be in effect on 
     the date that is 2 years after the effective date of this 
     section.

     SEC. 18. TRANSFERS OF FUNDS FROM OTHER FEDERAL AGENCIES.

       The Administrator is authorized to accept transfers from 
     other Federal agencies to funds which are available to carry 
     out functions transferred by this Act to the Administrator or 
     functions assigned by law to the Administrator on or after 
     the date of enactment of this Act.

     SEC. 19. SEAL OF ADMINISTRATION.

       The Administrator shall cause a seal of office to be made 
     for the Administration of such design as the Administrator 
     shall approve. Judicial notice shall be taken of such seal.

     SEC. 20. STATUS OF ADMINISTRATION UNDER CERTAIN LAWS.

       For purposes of section 551 of title 5, United States Code, 
     the Administration is an agency. For purposes of chapter 9 of 
     such title, the Administration is an independent regulatory 
     agency.

     SEC. 21. SAVINGS PROVISIONS.

       (a) All orders, determinations, rules, regulations, 
     permits, contracts, certificates, licenses, and privileges--
       (1) which have been issued, made, granted, or allowed to 
     become effective by the President, any Federal department or 
     agency or official thereof, or by a court of competent 
     jurisdiction, on or after the date of enactment of this Act, 
     in regard to functions which are transferred under this Act 
     to the Administration, and
       (2) which are in effect at the time of the effective date 
     set forth in section 28(a), shall continue in effect 
     according to their terms until modified, terminated, 
     superseded, set aside, or revoked in accordance with law by 
     the President, the Administrator or other authorized 
     officials, a court of competent jurisdiction, or by operation 
     of law.
       (b) The provisions of this Act shall not affect any 
     proceedings or any application for any license, permit, 
     certificate, or financial assistance pending at the time of 
     the effective date set forth in section 28(a); and such 
     proceedings and applications, to the extent that they relate 
     to functions so transferred, shall be continued. Orders shall 
     be issued in such proceedings, appeals shall be taken 
     therefrom, and payments shall be made pursuant to such 
     orders, as if this Act had not been enacted; and orders 
     issued in any such proceeding shall continue in effect until 
     modified, terminated, suspended, or revoked by a duly 
     authorized official, by a court of competent jurisdiction, or 
     by operation of law. Nothing in this subsection shall be 
     deemed to prohibit the discontinuance or modification of any 
     such proceeding under the same terms and conditions and to 
     the same extent that such proceeding could have been 
     discontinued or modified if this Act had not been enacted.
       (c)(1) The provisions of this Act shall not affect suits 
     commenced prior to the effective date set forth in section 
     28(a).
       (2) In all such suits, proceedings shall be had, appeals 
     taken, and judgments rendered in the same manner and effect 
     as if this Act had not been enacted.
       (d) In any case involving one or more officers required by 
     this Act to be appointed by and with the advice and consent 
     of the Senate who shall not have entered upon office on the 
     effective date set forth in section 28(a), the President may 
     designate any officer whose appointment was required to be 
     made by and with the advice and consent of the Senate, and 
     who was such an officer immediately prior to the effective 
     date set forth in section 28(a), to act in such office until 
     the office is filled as provided in this Act. While so 
     acting, any such person shall receive compensation at the 
     rates provided by this Act of the respective office in which 
     he or she acts.

     SEC. 22. LAWS AND REGULATIONS.

       Except to the extent otherwise provided in this Act, all 
     laws, rules, and regulations in effect and applicable to the 
     Federal Aviation Administration of the Department of 
     Transportation and to the Administrator of such 
     Administration on the date immediately preceding the 
     effective date set forth in section 28(a) shall, on and after 
     such effective date, be applicable to the Federal Aviation 
     Administration and the Administrator established by this Act, 
     until such law, rule, or regulation is repealed or otherwise 
     modified or amended.

     SEC. 23. AMENDMENT TO INSPECTOR GENERAL ACT OF 1978.

       Section 2 of the Inspector General Act of 1978, approved 
     October 12, 1978 (5 App. U.S.C.) is amended by inserting 
     ``Federal Aviation Administration,'' immediately after 
     ``Veterans' Administration,''.

     SEC. 24. AMENDMENTS TO GENERAL SCHEDULE.

       (A) Section 5312 of title 5, United States Code, is amended 
     by adding at the end the following:
       ``Administrator, Federal Aviation Administration.''.
       (b) Section 5313 of title 5, United States Code, is amended 
     by striking ``Administrator, Federal Aviation 
     Administration.'' and inserting in lieu thereof the 
     following: ``Deputy Administrator, Federal Aviation 
     Administration.''.
       (c) Section 5315 of title 5, United States Code, is amended 
     by striking ``Deputy Administrator, Federal Aviation 
     Administration.'' and inserting in lieu thereof the 
     following: ``Assistant Administrators, Federal Aviation 
     Administration (8).
       ``Chief Counsel, Federal Aviation Administration.''.
       (d) Section 5316 of title 5, United States Code, is amended 
     by adding at the end the following:
       ``Inspector General, Federal Aviation Administration.''.

     SEC. 25. EFFECTIVE DATES.

       The provisions of this Act shall take effect upon the 
     expiration of the 180-day period following the date of 
     enactment of this Act.
                                 ______

      By Mr. SIMON:
  S. 2547. A bill to amend title I of the Employee Retirement Income 
Security Act of 1974, to improve enforcement of such title by adding 
certain provisions with respect to the auditing of employee benefit 
plans, and for other purposes; to the Committee on Labor and Human 
Resources.


                  ERISA AUDIT IMPROVEMENT ACT OF 1994

 Mr. SIMON. Mr. President, I introduce the ERISA Audit 
Improvement Act of 1994. Congress passed ERISA in 1974 in order to 
protect the interest of participants and beneficiaries for the purposes 
of protecting the interests of participants and beneficiaries of 
employee benefit plans. This bill proposes to improve ERISA 
enforcement.
  Over the last several years, both Congress and the inspector 
general's office at the Department of Labor have become increasingly 
concerned over the Department of Labor's oversight of ERISA. In 
response, this new legislation offers a common sense approach to 
ensuring its implementation. It calls for the law to be amended on 
three fronts: Limited-scope audits, peer review requirements, 
compliance audits, and the reporting of crimes and intentional 
misstatements. These proposals are offered without imposing 
unreasonable burdens on plan sponsors. As enunciated by D. George Bell, 
the former Assistant Secretary for Pension and Welfare Benefits at the 
Department of Labor under the Bush administration, ``The goal is to 
strike a balance between the interests of plan sponsors on the one hand 
and participants and beneficiaries on the other.''
  I understand that those in the accounting profession have raised 
concerns regarding the proposed reporting requirements and potential 
liability. I intend to work with accountants and accounting firms to 
address those concerns, while still protecting the interests of 
beneficiaries and the public-at-large.
  American workers who participate and benefit from pension plans 
deserve the protection that ERISA requires. This legislation helps to 
accomplish this goal. I ask for unanimous consent that a brief summary 
of the bill be included in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  ERISA Audit Improvement Act of 1994


                            Section 1: Title

                Section 2: Repeal of Limited Scope Audit

       Under current law, ERISA plan auditors are permitted to 
     exclude plan assets when they are invested in regulated 
     institutions such as banks, insurance companies or similar 
     entities pursuant to the so-called ``limited scope 
     exemption''. Section 2 amends ERISA to require the inclusion 
     of plan assets which are held by these institutions within 
     the accountant's audit of the plan. This requirement does not 
     necessarily mean that the plan's accountant will duplicate 
     the work of the bank or insurance company's accountant. It is 
     expected that the ERISA plan accountant will rely on the 
     reports of the financial institution which speak to the 
     reliability of the audit.


                         Section 3: Peer Review

       There is no external quality control review requirement for 
     public accountants who perform ERISA audits under current 
     law. Section 3 amends ERISA to require that public 
     accountants participate in an external quality control review 
     of the accountant's practices relevant to employee benefit 
     plans. This provision will be effective three years after 
     enactment to provide the profession with sufficient time to 
     prepare for this requirement.


                 Section 4; Reporting of Certain Events

       Under current law, there is not duty for an ERISA plan 
     administrator or an accountant to disclose to the Secretary 
     information indicating that a crime or intentional 
     misstatement may have occurred. Section 4 creates a reporting 
     process whereby an accountant who learns of certain crimes is 
     required to notify the plan administrator within 5 days. If 
     the plan administrator does not notify the Secretary of Labor 
     within that time frame, the accountant is required to provide 
     notice to the Secretary.
       If the accountant has reason to believe that the plan 
     administrator may have been involved in the crime, then the 
     accountant shall notify the Secretary directly.
                                 ______

      By Mr. DODD (for himself and Mr. D'Amato):
  S. 2548. A bill to amend the Federal Deposit Insurance Act to exclude 
certain bank products from the definition of a deposit; to the 
Committee on Banking, Housing, and Urban Affairs.


              BANK INSURANCE FUND AND DEPOSITOR PROTECTION

 Mr. DODD. Mr. President, I introduce the Bank Insurance Fund 
and Depositor Protection Act of 1994. Sponsoring this legislation with 
me is my colleague, Senator Alfonse D'Amato, the ranking member of the 
Senate Banking Committee.
  The Bank Insurance Fund and Depositor Protection Act of 1994 is 
simple and straightforward. It prohibits Federal deposit insurance 
coverage for a new financial product that recently emerged from a small 
corner of the retail banking world. This first of its kind product, 
called a retirement CD, has been been cleverly constructed to receive 
both the benefits of Federal deposit insurance and tax deferral.
  Earlier this year, the Office of the Comptroller of the Currency 
[OCC] and the Federal Deposit Insurance Corporation [FDIC] sanctioned 
the sale of the retirement CD by Blackfeet National bank, a small 
national bank in Montana. In separate letters dated May 12, 1994, the 
FDIC and the OCC stated that they had no objection to the sale of the 
retirement CD by Blackfeet. I would note that the Internal Revenue 
Service has not issued a similar opinion on the tax status of the 
retirement CD.
  At this time, Blackfeet is the only insured depository institution 
going forward with the sale of the retirement CD to consumers. However, 
it is my understanding that approximately eight other institutions have 
signed licensing agreements to sell the retirement CD and may begin 
offering the product within the next few weeks. Many others are 
carefully examining the retirement CD with an eye towards offering it 
at some time in the future.
  Mr. President, as it is currently structured, the retirement CD is 
not an appropriate product to be covered by Federal deposit insurance. 
The retirement CD raises significant policy issues related to consumer 
protection, safety and soundness, regulatory control, and competitive 
equity. I believe that if it is allowed to proliferate as it is 
currently structured, the retirement CD could have a tremendously 
negative impact on consumer confidence in our financial institutions 
and on the stability of our deposit insurance system.
  I have described in detail most of my concerns about the retirement 
CD in a June 20, 1994, letter than I and several of my Banking 
Committee colleagues sent to the OCC and the FDIC. I would like to 
include that letter along with the regulators' responses in the Record.
  I will not reiterate all the concerns described in that letter, but 
will briefly mention a couple of the more troubling issues that arise 
in connection with the retirement CD.
  First, there is enormous potential for customer confusion about the 
retirement CD's terms and conditions. This product is not a plain 
vanilla certificate of deposit, it is not a simple annuity. It is a 
complex newfangled hybrid that has both CD and annuity features.
  The retirement CD pays a fixed rate of interest for up to 5 years, 
after which the rate is adjusted at the sole discretion of the bank. 
This rate is never supposed to fall below 3 percent. Interest ceases to 
be posted upon maturity. The customer may withdraw up to two-thirds of 
the balance at maturity, and the remainder will be disbursed in fixed 
periodic payments for life, incorporating the imputed interest rate.
  Consumers must understand that the interest rate is set at the sole 
discretion of the bank. While there is a 3 percent floor during the 
period when interest accrues, there is no similar threshold during the 
payout phase. This raises the prospect that a customer may not know 
what the imputed rate is tied to, and that the bank could offer a fixed 
payout at an extremely unfavorable rate.
  Second, a consumer must understand that this retirement CD, unlike 
traditional certificates of deposit, contains a component that is not 
FDIC insured. FDIC insurance only applies to the balance that is not 
withdrawn at maturity, less the full dollar amount of any payments 
received. If a bank that issues a retirement CD fails at a point when 
the customer had already received the full value of the account through 
lump-sum distribution and monthly payments, the FDIC would neither 
insure nor continue to pay the monthly payments for the rest of the 
customer's life. This is the case despite the fact that the promotional 
material claims to guarantee payments for life.
  Mr. President, the OCC and the FDIC share many of my concerns about 
the likelihood of customer confusion, the existence of misleading 
marketing information, and the impact of this product on bank safety 
and soundness. They outlined these concerns in their respective no 
objection letters I referred to earlier. However, the regulators chose 
not to prevent Blackfeet from going forward with the issuance of the 
retirement CD, as long as the bank complied with a lengthy list of 
conditions.

  Mr. President, I think this was ill-advised. There is already strong 
evidence of substantial customer confusion regarding the insurance 
status of non-deposit investment products like mutual funds and annuity 
products being sold by banks and other insured depository institutions. 
These products are much less complex than the retirement CD. The 
regulators themselves have helped to collect compelling evidence about 
the ongoing problem of customer confusion. At a time when we are 
wrestling with how to eliminate this problem, I find it difficult to 
understand why the regulators gave their stamp of approval to the sale 
of this new complex product which can only make a bad situation worse.
  Mr. President, for this and many other reasons, the retirement CD as 
it's currently structured should not be offered by banks to the public. 
The legislation I am introducing today will exclude the retirement CD 
from the definition of a deposit under the Federal Deposit Insurance 
Act. The retirement CD will therefore not be covered by Federal deposit 
insurance.
  The legislation does not prohibit banks from offering the retirement 
CD. It simply denies the product deposit status under the Federal 
Deposit Insurance Act.
  The legislation is not intended to eliminate existing levels of 
deposit insurance coverage to deposit accounts established in 
connection with certain individual retirement accounts, Keogh plans, 
eligible deferred compensation plans, pension plans, or similar 
employee benefit plans which may be maintained at an insured depository 
institution. This legislation eliminates Federal deposit insurance 
coverage for products which expose the issuing insured depository 
institution, and ultimately the deposit insurance funds, to liabilities 
that are annuity contracts and are tax deferred under section 72 of the 
Internal Revenue Code of 1986.
  The provisions of this act do not apply to any liability which is not 
an annuity contract, whether or not tax deferred under section 72 of 
the Internal Revenue Code. For example, a liability other than an 
annuity contract which is part of an individual retirement account 
would not be affected by the provisions of this act even though the tax 
liability is deferred under section 72 of the Internal Revenue Code of 
1986 because section 408(d) of the code incorporates section 72 only by 
reference.
  Mr. President, the retirement CD may be cleverly packaged. It may be 
a tempting new business opportunity for the banking industry. But 
because it raises serious public policy concerns that have not been 
fully explored, it must not be provided the protection of the Federal 
safety net--at least until it is more closely examined by Congress, the 
banking regulators, and the Internal Revenue Service. I hope that the 
Banking Committee will hold hearings on this matter early next year.
  I ask unanimous consent that the Bank Insurance Fund and Consumer 
Protection Act of 1994 be printed in the Record along with the three 
letters.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2548

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Bank Insurance Fund and 
     Depositor Protection Act of 1994''.

     SEC. 2. DEFINITION OF DEPOSIT.

       Section 3(l)(5) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(l)(5)) is amended--
       (1) in subparagraph (A), by striking ``and'' at the end;
       (2) in subparagraph (B), by striking the period at the end 
     and inserting ``; and ''; and
       (3) by adding at the end the following new subparagraph:
       ``(C) any liability of an insured depository institution 
     that arises under an annuity contract, the income on which is 
     tax deferred under section 72 of the Internal Revenue Code of 
     1986.''.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by section 2 shall apply to any 
     liability of an insured depository institution that arises 
     under an annuity contract issued on or after October 6, 1994.
                                  ____

         Comptroller of the Currency, Administrator of National 
           Banks,
                                  Washington, DC, August 18, 1994.
     Hon. Christopher J. Dodd,
     Committee on Banking, Housing, and Urban Affairs, U.S. 
         Senate, Washington, DC.
       Dear Senator Dodd: I am responding to your June 20, 1994, 
     letter addressed jointly to me and Andrew C. Hove, Acting 
     Chairman, Federal Deposit Insurance Corporation (``FDIC''), 
     concerning our recent letters to the Blackfeet National Bank 
     (the ``Bank'') regarding its new Retirement CD. I appreciate 
     this opportunity to address the concerns expressed in your 
     letter relating to this bank product. Since your letter was 
     also signed by them, we have sent identical responses to 
     Senators Bryan, D'Amato and Faircloth.
       Your letter states you are troubled that the OCC ``would 
     react favorably to a product with such enormous ramifications 
     for the banking system, the Bank Insurance Fund, the 
     insurance industry--and, most importantly, for the consumers 
     of financial products--without consultation with Congress and 
     without requesting more specific commitments and information 
     from American Deposit Corp. or Blackfeet.''
       Please be assured that during the OCC's review of the 
     Bank's November 8, 1993, letter in which the Bank informed us 
     of its intention to market the Retirement CD, our staff had 
     numerous telephone conversations with blackfeet and its legal 
     counsel, and did request a substantial amount of additional 
     information. On the basis of that information and our own 
     research, we found no reason in law or supervisory policy to 
     prohibit the offering of this product. Accordingly, we issued 
     our no-objection letter to the Bank. Our administrative 
     process does not routinely involve consultation with 
     Congress. However, we are available to discuss the Blackfeet 
     matter with you and the members of your staff at your 
     convenience.


                     1. Consumer Protection Issues

       The consumer protection issues generally arise from the mix 
     of features that comprise the Retirement CD, and the ability 
     of the Bank to explain and of consumers adequately to 
     understand this combination of features. You are concerned 
     that the product's structure may prevent consumers from fully 
     comprehending how the product works, its interest rate 
     structure and the extent to which the product is covered by 
     FDIC insurance. In addition, your letter indicates that 
     consumers may not be able to understand a product that is 
     called a certificate of deposit but contains a non-FDIC 
     insured component. Moreover, you ask whether we believe that 
     the Retirement CD, which contains variable interest rates, 
     tax benefits, and partial FDIC-insured deposit status, will 
     create substantially greater confusion than nondeposit 
     investment products.
       The OCC is concerned about any bank product that 
     potentially may confuse customers. I understand your concern 
     that the combination of certain attributes of the Retirement 
     CD, including variable interest rates, tax benefits, partial 
     FDIC-insured deposit status presents complications and could 
     create customer confusion. We fully agree that it is 
     important customers not misunderstand the nature of financial 
     products offered to them. This is a problem to which we and 
     the other federal banking agencies have been sensitive in our 
     evaluation of bank sales of all types of nondeposit 
     investments products. While the Retirement CD's complexities 
     do not present a legal basis for preventing its offer and 
     sale by the Bank, they do raise supervisory concerns. In 
     response to those concerns we imposed conditions on the 
     operation of Bank sales programs to address the potential 
     problem of customer confusion.
       Our legal review of the Retirement CD rested upon an 
     analysis of the powers of national banks to engage in the 
     business of banking. We concluded that offering the product 
     represents the exercise by the Bank of its express 
     authorizations to receive deposits and enter into contracts, 
     coupled with its powers to incur liabilities and fund its 
     operations. By offering the Retirement CD, the Bank is 
     engaging in the business of banking, an activity federal law 
     authorizes it to undertake.
       The Bank did not seek and the OCC did not issue a formal 
     approval of the product. Because offering the Retirement CD 
     lies within the business of banking, the Bank does not need 
     specific OCC approval to offer the product. Even so, the Bank 
     may not ignore safety and soundness and customer protection 
     concerns when it actually sells the product. We therefore 
     advised the Bank that the OCC would not object to the 
     offering of the Retirement CD only if the Bank met certain 
     supervisory and consumer protection related conditions.
       To address consume-related concerns, our letter cautioned 
     the Bank that the OCC expects it accurately to represent the 
     ``product's risks and economics, deposit insurance status and 
     tax treatment in dealing with actual and prospective 
     customers.'' We also stipulated twelve conditions that 
     concern adequate disclosure and customer protection. Among 
     these conditions are requirements that the Bank--(1) take 
     steps to assure that its representations to customers 
     regarding the FDIC insured status of the product are fair and 
     accurate (condition #6); (2) make specific disclosures 
     concerning the tax aspects of the product (conditions #9-10); 
     (3) adequately explain the product's mechanics and economics 
     (condition #12); (4) properly explain the calculation of the 
     applicable interest rate (condition #13); and (5) implement 
     an appropriate training program for personnel who will be 
     involved in marketing the product, OCC examiners will 
     periodically evaluate the Bank's compliance with these 
     conditions.
       In addition to the conditions detailed to our letter 
     concerning disclosures, we informed the Bank that the 
     Interagency Statement on Retail Sales of Nondeposit 
     Investments Products, NR 94-21 (February 17, 1994) is 
     applicable to the non-FDIC insured portion of the product. We 
     have also advised the Bank of the applicability of 12 U.S.C. 
     Sec. 4301 et seq. and 12 C.F.R. Sec. 230 et seq. (Truth in 
     Savings).
       You also set forth your understanding that during the 
     payout phase of the Retirement CD there will be no minimum 
     imputed interest rate, similar to the three percent floor in 
     the accumulation phase. This is not our understanding. The 
     Bank has represented to us that at the end of the 
     accumulation phase, a monthly payment amount is calculated 
     for the depositor based primarily on three elements--(1) the 
     balance left in the account after the depositor has made any 
     withdrawals; (2) an imputed interest rate that cannot be 
     below three percent; and (3) the depositor's life expectancy. 
     Once the payment amount is determined, it remains fixed for 
     life of the depositor. Thus, there is a minimum imputed 
     interest rate of three percent used in calculating the 
     monthly payments.
       Another concern expressed in your letter relates to the 
     fact that FDIC insurance only applies to the balance 
     (principal plus accrued interest) that is left in the account 
     at the end of the accumulation phase. Your concern is that 
     depositors may not understand that if the Bank fails after 
     the depositor has received payments equal to this balance, 
     the FDIC would neither insure, nor continue to pay, the 
     monthly payments for the rest of the customer's life. We 
     addressed this specific concern in condition #6 of our letter 
     where we directed the Bank to take steps to assure that 
     representations to customers concerning the FDIC insured 
     status of the product are fair and accurate, and that any 
     limitations on FDIC insurance are conspicuously indicated.
       You also expressed concern that the Bank's promotional 
     materials contained the phrase ``guaranteed payments for 
     life.'' This language was contained in an early draft of the 
     Bank's materials, and we strongly objected to it. (See 
     condition #8 in our letter.) The phrase has been deleted from 
     the current draft promotional materials and the term 
     ``guaranteed'' now is used only with respect to the three 
     percent guaranteed minimum interest rate. We are discussing 
     use of the term in this context with the Bank's counsel to 
     make sure its use is not confusing to investors.
       Finally as to consumer issues, you point out an apparent 
     discrepancy between our letter and the FDIC's with respect to 
     the time at which consumers may select from various options 
     for repayment. The FDIC's letter states the selection is made 
     ``upon opening the account'' whereas our letter states the 
     selection is made ``on the maturity date.'' The depositor is 
     actually allowed to select the terms for repayment on either 
     date. We viewed the maturity date as the most effective time 
     for this selection, and that is why we used that date in our 
     letter. However, the FDIC is correct in stating that 
     depositors may make their selections upon opening the 
     account.


                          2. Regulatory Issues

       You state that annuities are currently subject to state 
     regulations enforced by state insurance officials, and note 
     that it is unclear if state insurance regulatory requirements 
     will apply to the Retirement CD. In addition, you believe 
     that customers should know whether state regulations apply to 
     the product. If they do not, you suggest we consider whether 
     banks and bank regulators currently have the ability or 
     resources to safeguard these accounts, and what policies and 
     procedures are necessary to train Bank personnel about 
     annuities and appropriate sales practices.
       Our legal analysis and conclusions to date have been 
     limited to a determination of the Bank's authority to conduct 
     the business of banking under the National Bank Act. State 
     regulatory officials may conclude that state insurance laws 
     also apply to the Retirement CD or any other activity which 
     we interpret as being authorized by the National Bank Act. 
     Such a conclusion, however, does not affect our 
     interpretation of that Act. The applicability of any 
     particular state law to the Retirement CD will have to be 
     reviewed on a case by case basis.
       We believe the OCC has the expertise fully to examine and 
     evaluate Bank practices to mitigate the risks associated with 
     the Retirement CD. The most significant concerns associated 
     with the Retirement CD, in our view, relate to liquidity and 
     funding. Written procedures and formal training presently 
     available to, and extensively used by, OCC examiners address 
     a variety of issues relevant to the supervision of bank 
     obligations, including the evaluation of bank liquidity and 
     funding issues. In the event additional guidance of training 
     is necessary, it will be provided to examiners.
       Condition #15 of our no-objection letter specifically 
     requires the Bank to implement a program for training 
     personnel who will be involved in marketing the Retirement 
     CD. The training program must ensure a thorough understanding 
     of the product so that customer questions are answered 
     properly, and investment risks are adequately conveyed. The 
     OCC has focused, and will continue to focus, on the Bank's 
     training efforts in this regard, as well as its other efforts 
     to mitigate the risks associated with the product.


                     3. Safety and Soundness Issues

       You state that offering the Retirement ED is tantamount to 
     acting as an underwriter of an annuity. The risks associated 
     with the product you believe are much greater to the Bank 
     than a traditional deposit. This risk you state comes from 
     the ``unprecedented and inappropriate risk'' a bank assumes 
     by agreeing to make a fixed payout for the life of a 
     customer. You are also troubled that the OCC ``requires no 
     showing that the bank has the capability to quantify or 
     manage this long-term liability of unknown proportions.''
       Our letter to the Blackfeet National Bank prescribed 
     conditions for the Bank, including the need for Bank 
     expertise in designing and implementing product controls and 
     systems to mitigate the risks associated with the product. We 
     directed the Bank to pay particular attention to adequate 
     planning for the use of funds generated from the product, 
     accurate estimation of product payouts, and proper design 
     of internal controls. Additionally, we required that the 
     Bank adequately manage its funding sources for the payout 
     obligations that will arise from the Retirement CD, 
     considering the financial risks associated with the 
     product.
       We directed the Bank to take appropriate steps to deal with 
     the risks it will assume by offering the Retirement CD and 
     required the Bank to furnish us with a detailed business 
     plan. The OCC will review the business plan and will evaluate 
     the manner in which the Bank utilizes funds received from the 
     Retirement CD and funds these obligations.
       We believe these steps adequately and responsibly address 
     the supervisory concerns you have expressed with the payment 
     risks associated with the Retirement CD. As with any bank 
     product, we will continue to review the Bank's implementation 
     of these procedures and evaluate the Bank's effectiveness in 
     dealing with the risks associated with the product. Should we 
     determine at any point that the Bank is materially not in 
     compliance with these requirements, we would direct it to 
     cease offering the product until it took appropriate 
     corrective actions.


                     4. Competitive Equality Issues

       You state your belief that the proliferation of the 
     Retirement CD will result in an unfair competitive advantage 
     for banks over annuity products offered by insurance 
     companies. Given the wide and growing range of products that 
     could be viewed as competitive in this area, and 
     uncertainties as to the popularity of the product, it is hard 
     to tell whether any competitive advantage will actually be 
     present. But the potential for competitive implications does 
     not affect the Bank's legal authority to offer the product.
       I hope this letter addresses the questions and concerns you 
     expressed in your letter concerning the Blackfeet Retirement 
     CD. Should you have any questions or need any additional 
     information, please let me know.
           Sincerely,
                                                 Eugene A. Ludwig,
                                      Comptroller of the Currency.
                                  ____

                                                   Federal Deposit


                                        Insurance Corporation,

                                     Washington, DC, July 8, 1994.
     Hon. Christopher J. Dodd,
     Committee on Banking, Housing and Urban Affairs, U.S. Senate, 
         Washington, DC.
       Dear Senator Dodd: Thank you for your letter concerning the 
     Retirement CD, a produce developed by American Deposit 
     Corporation which is being offered by Blackfeet National 
     Bank, Browning, Montana. Your letter expresses reservations 
     regarding the Federal Deposit Insurance Corporation's 
     position, as expressed in our Legal Division's May 12, 1994 
     advisory opinion. We appreciate the opportunity to address 
     your concerns. Similar letters will be sent to Senators 
     D'Amato, Bryan and Faircloth.
       Your primary concern is the ``consumer protection 
     implications of the Retirement CD.'' The FDIC shares your 
     concern that potential customers not be misled with regard to 
     the workings of and the federal deposit insurance coverage 
     afforded to the Retirement CD. That is precisely why the 
     advisory opinion discusses these issues in such detail. The 
     advisory opinion expressly states that the ``FDIC therefore 
     strongly believes that all promotional materials, 
     advertisements, agreements and other customer materials 
     concerning the Retirement CD should clearly and conspicuously 
     state that the lifetime monthly annuity payments are not 
     guaranteed by the FDIC.'' The opinion then goes on to 
     discuss, in great detail, the Legal Division's concerns 
     regarding the customer promotional materials which it 
     reviewed, including explicit suggestions to revise certain 
     portions of the text which were found to be inaccurate and 
     possibly misleading. The advisory opinion also states that 
     the offering bank should follow the applicable provisions of 
     the ``Interagency Statement on Retail Sales of Nondeposit 
     Investment Products.''
       Your letter questions whether (i) state insurance laws and 
     regulations apply to the Retirement CD and (ii) a national 
     bank may offer this type of product. Our advisory opinion 
     makes it quite clear that since the FDIC was addressing these 
     questions as insurer, not as the primary federal regulator of 
     Blackfeet National Bank, the only questions considered by the 
     Legal Division were whether the Retirement CD is a 
     ``deposit'' as that term is defined in section 3(l) of the 
     FDI Act and, if so, the extent to which it is insured by the 
     FDIC. Thus, the FDIC did not consider and has taken no 
     position on these other issues. Your letter also asserts 
     that the FDIC has ``sanctioned'' and ``reacted favorably'' 
     to the Retirement CD. While the FDIC has determined that 
     the Retirement CD is a ``deposit'' as that term is defined 
     in the FDI Act and, therefore, is entitled to a certain 
     level of deposit insurance coverage, the advisory opinion 
     explicitly provides that it ``should in no way be 
     represented or construed as an endorsement or approval by 
     the FDIC of this product.''
       You suggest in your letter that the regulators seem 
     uncertain about how the Retirement CD works since the FDIC's 
     and OCC's descriptions of the choice of payout options differ 
     slightly. While our advisory opinion does state that the 
     customer chooses his/her payout option when the account is 
     opened, it goes on to explain that this election may be 
     changed at any time up until thirty days prior to the 
     maturity date. Thus, the FDIC and OCC share a common 
     understanding of the product's parameters.
       Section 11(a)(1)(A) of the FDI Act requires the FDIC to 
     insure the deposits of all insured depository institutions. 
     Since our staff determined that the Retirement CD qualifies 
     as a deposit--to the extent described in the advisory 
     opinion--we are required by law to insure it. In making its 
     determination, the Legal Division considered all applicable 
     statutory factors. The FDI Act does not require, or even 
     permit, the FDIC to consider the ``ramifications for the . . 
     . insurance industry.''
       If you have any further questions or need any additional 
     information, please let us know.
           Sincerely,
                                              Andrew C. Hove, Jr.,
                                                  Acting Chairman.
                                  ____

         U.S. Senate, Committee on Banking, Housing, and Urban 
           Affairs,
                                    Washington, DC, June 20, 1994.
     Hon. Eugene Ludwig,
     Comptroller of the Currency,
     Washington, DC.
     Hon. Andrew C. Hove,
     Acting Chairman, Federal Deposit Insurance Corporation, 
         Washington, DC.
       Dear Mr. Ludwig and Chairman Hove: We are following with 
     great interest and concern the efforts of the Blackfeet 
     National Bank (``Blackfeet'') of Browning, Montana to offer 
     to the general public a new ``Retirement CD.'' We are 
     disappointed that the OCC and the FDIC, by separate 
     correspondence dated May 12, 1994, have in effect sanctioned, 
     with certain conditions, plans to market and offer this 
     Retirement CD investment product.
       We are very troubled that the OCC and FDIC would react 
     favorably to a product with such enormous ramifications for 
     the banking system, the Bank Insurance Fund, the insurance 
     industry--and, most importantly, for the consumers of 
     financial products--without consultation with Congress and 
     without requesting more specific commitments and information 
     from American Deposit Corp. or Blackfeet.
       The Retirement CD product raises a number of significant 
     concerns which we have detailed below. We strongly believe 
     these matters need to be thoroughly addressed by the 
     regulators and Congress before this investment product is 
     offered to the public.


                     1. Consumer Protection Issues

       The OCC and FDIC letters clearly indicate that both 
     regulators have rather significant reservations about the 
     consumer-protection implications of the Retirement CD. Both 
     letters contain suggestions or conditions aimed at ensuring 
     customer understanding and adequate disclosure. This insured 
     deposit product combines features of both certificates of 
     deposit and annuities, and it is enormously complex. 
     Consumers may not fully comprehend how it works, the interest 
     rate structure or the extent of FDIC insurance coverage.
       The Retirement CD will pay a fixed rate of interest for up 
     to five years, after which the rate becomes adjustable until 
     the agreed-upon maturity date. The only assurance given to 
     the consumers with respect to this variable interest rate is 
     that it will be at least 3 percent. Upon maturity, the 
     customer may withdraw up to two-thirds of the account 
     balance, and the remainder of the account will be dispersed 
     for life in fixed payments. These periodic payments 
     incorporate an imputed interest rate. The consumer must 
     understand that the interest rate, during much of the 
     accumulation period (prior to the agreed-upon maturity date) 
     and all of the payout phase, will be determined at the sole 
     discretion of the bank. Furthermore, as we understand this 
     product during the payout phase, there will be no minimum 
     imputed interest rate, similar to the three percent floor in 
     the accumulation phase. This raises an ominous prospect: that 
     a customer will not know exactly what the ``imputed'' rate is 
     keyed to and that the bank could offer a fixed payout at an 
     extremely unfavorable rate.
       As we understand the product, FDIC insurance would only 
     apply to the balance (principal plus accrued interest) that 
     was not withdrawn on the date of maturity, less the full 
     dollar amount of any payments received during the pay-out 
     period. Therefore, a customer would have to understand that 
     if the bank were to fail at a point when the customer had 
     already received the full value of the account through lump-
     sum distribution and monthly payments, the FDIC would neither 
     insure, nor continue to pay, the monthly payments for the 
     rest of the customer's life.
       The OCC and the FDIC have expressed consumer protection 
     concerns with respect to depository institution sales of 
     uninsured non-deposit investment products, such as mutual 
     fund shares. There is evidence that banking consumers do not 
     always understand the simple fact that some of the products 
     that banks offer are not FDIC-insured. With respect to the 
     Retirement CD, we are concerned that consumers will not be 
     able to fully-understand that a product that is called a 
     ``certificate of deposit''--a traditional insured deposit 
     product--contains a component that is not FDIC-insured 
     (although we understand that the promotional materials 
     misleadingly ``guarantee'' payments for life).
       Even the regulators seem somewhat uncertain about how the 
     Retirement CD works. The respective letters from the OCC and 
     the FDIC differ in their descriptions of one of the most 
     important basic terms of the product--mainly, at what point 
     the payout is agreed to. The OCC letter states, ``[o]n the 
     maturity date the customer will select from various options 
     for repayment'' (p. 2, emphasis added). The FDIC letter 
     states, ``[u]pon opening the account, the customer also 
     chooses his/her payout options'' (p. 1-2, emphasis added). If 
     the regulators are confused, certainly the potential for 
     consumer confusion is enormous.
       We must ask this question: Do the regulators honestly 
     believe that this product--that contains variable interest 
     rates, certain tax benefits, and partial FDIC-insured deposit 
     status--will not create substantially greater confusion that 
     non-deposit investment products?


                          2. Regulatory Issues

       Annuities are currently subject to state regulations 
     enforced by state insurance officials. It is unclear if state 
     insurance regulatory requirements will apply to the 
     Retirement CD. Both customers and the bank should know this. 
     If state regulations do not apply, it should be determined 
     whether banks and bank regulators currently have the ability 
     or resources to safeguard these accounts, and what policies 
     and procedures are necessary to train bank personnel about 
     annuities and about appropriate sales practices.


                     3. Safety and Soundness Issues

       Blackfeet and other banks that may offer the Retirement CD 
     clearly will be acting as an underwriter of what is 
     essentially an annuity. Although clever lawyering has gained 
     this annuity product designation as a ``deposit'', it poses 
     much greater risk to the bank than a traditional deposit. 
     National banks will be assuming an unprecedented and 
     inappropriate risk as a result of having to make a fixed 
     payout for the life of a customer. Ultimately, these payments 
     could exceed the consumer's balance on deposit at maturity. 
     While the OCC suggests that Blackfeet's business plan should 
     indicate how it will manage the risk associated with the 
     annuity payment, the OCC requires no specific showing that 
     the bank has the capability to quantify or manage this long-
     term liability of unknown proportions.
       This ``deposit'' is structured so that at the date of 
     maturity, the bank must determine the fixed lifetime payout 
     for the customer using a complex and not entirely-discernible 
     process to achieve a proper rate of return. The Congress has 
     opted not to authorize banks to assume the type of risk 
     Blackfeet would assume in offering the Retirement CD. The OCC 
     and the FDIC seem willing to disregard this consistent record 
     of Congressional reluctance to allow federally-insured 
     depository institutions to engage in such high-risk 
     activities. The OCC and FDIC also seem too willing to take it 
     on faith that a small national bank (armed with a software 
     program) will have the business acumen and operational know-
     how to handle the risk of underwriting this annuity product.


                     4. Competitive Equality Issues

       The proliferation of the Retirement CD will produce an 
     unfair competitive advantage for banks. It is reasonable to 
     expect that consumers will be drawn to a tax-deferred annuity 
     that also offers federal deposit insurance. By allowing 
     national banks to underwrite, market and sell a tax-deferred 
     annuity that is FDIC-insured, the FDIC is granting a 
     substantial competitive advantage over similar annuity 
     products that do not come with a government guarantee.
       In expanding future opportunities for all financial service 
     providers and consumers, the Federal government's goal should 
     be to encourage competition on a free and fair basis. Balance 
     sheet strength, customer service and other market-determined 
     characteristics, not market-distorting government guarantees, 
     should determine success. Given the recent savings and loan 
     crisis, and the regulators' concerns over the abuse of 
     deposit insurance, it would seem ill-advised to extend the 
     reach of the federal safety net to a product that raises so 
     many regulatory, competitive and consumer protection 
     concerns.
       The OCC and the FDIC have made it very clear that when 
     given the opportunity, they will usually take the most 
     expansive and creative view of bank powers under current law. 
     We strongly support the view that, to the maximum extent 
     possible, an explicit statutory mandate must exist before the 
     regulators authorize expanded powers for banks, or any other 
     financial intermediaries. For this reason, we continue to 
     support comprehensive modernization of our entire financial 
     system. Until this can be accomplished by Congress, we urge 
     the OCC and FDIC to balance the proclivity to expand bank 
     powers through regulatory channels against the legitimate 
     public policy concerns of consumer protection, safety and 
     soundness, and competitive equality. Products that raise 
     serious public policy concerns deserve great scrutiny, 
     regardless of how cleverly they are packaged or how 
     attractive they may be to the banking industry. The 
     Retirement CD is clearly one such product.
       We do not share your view that this product, as it is 
     currently structured, is an appropriate product for national 
     banks to offer to retail customers. Therefore, we are 
     developing, and will soon introduce, legislation to prohibit 
     the sale of this investment product. Pending consideration of 
     this legislation by Congress, we urge the OCC and the FDIC to 
     reconsider their respective positions on the Retirement CD.
           Sincerely,
     Christopher J. Dodd.
     Richard H. Bryan.
     Alfonse M. D'Amato.
     Lauch Faircloth.

 Mr. D'AMATO. Mr. President, I am pleased to cosponsor the Bank 
Insurance Fund and Depositor Protection Act of 1994 with my 
distinguished colleague from Connecticut, Senator Dodd. This bill makes 
a necessary and important refinement to our banking laws. This bill 
would clarify the definition of a deposit in the Federal Deposit 
Insurance Act to make clear that certain annuity products are not FDIC-
insured deposits. This legislation would provide necessary guidance to 
the banking regulators, make the law more precise, and protect the bank 
insurance fund from potential unquantifiable losses.
  Mr. President, recently there has been a lot of marketing hype about 
a new investment product--the retirement CD. This product will operate 
much like a traditional annuity, but will be underwritten by a bank 
under the rubric of certificate of deposit. In short, a federally-
insured hybrid investment vehicle--and a potential roll-of-the-dice 
with Uncle Sam's implicit backing. The Comptroller of the Currency and 
the FDIC will permit this so-called CD to be offered to depositors, 
with FDIC protection, under current law. Senator Dodd and I, along with 
several of our colleagues on the Senate Banking Committee, wrote to the 
OCC and the FDIC to express our concern about this product, a product 
that would be marketed with the market-enhancing lure of FDIC 
insurance.
  This bill has been refined in an attempt to avoid any undesired 
effect on standard deposit products that banks commonly offer today. 
For instance, qualified plans and individual retirement accounts are 
not intended to be covered by this legislation, to the extent that they 
do not generate depository institution liabilities that constitute 
annuity contracts. This is so even if the depository institution 
liability has tax-deferred status under section 72 of the Internal 
Revenue Code.
  Again, I support this bill with the hope that it will protect 
consumers of financial products, safeguard FDIC funds, and promote 
safe-and-sound banking practices.
                                 ______

      By Mr. LEVIN (for himself, Mr. Durenberger, Mr. Graham, Mr. 
        Bingaman, Mr. Kohl, and Mr. Feingold):
  S. 2549. A bill to amend the National Trails System Act to expand 
Federal authority relating to land acquisition for the majority of the 
trails, and for other purposes; to the Committee on Energy and Natural 
Resources.


                 NATIONAL TRAILS SYSTEM ACT AMENDMENTS

 Mr. LEVIN. Mr. President, today I am introducing a bill to 
correct a problem with the National Trails System Act. I am pleased to 
be joined by Senators Durenberger, Graham, Bingaman, Kohl, and 
Feingold, in sponsoring this bill.
  The bill removes the current statutory prohibition on the Federal 
Government's ability to acquire lands or interest in lands from willing 
sellers for seven national trails. This puts these trails on equal 
footing with the Appalachian Trail, and nine other national trails, 
where acquisition is allowed. But, this bill explicitly states that any 
acquisition would require the consent of the owner of the land. The 
affected trails are the Continental Divide National Scenic Trail, the 
North Country National Scenic Trail, the Ice Age National Scenic Trail, 
the Oregon National Historic Trail, the Mormon Pioneer National 
Historic Trail, the Lewis and Clark National Historic Trail, or the 
Iditarod National Historic Trail.
  Providing the Federal Government with acquisition authority to 
purchase land from willing sellers for these trails will help address 
increasing development pressures that threaten the long-range 
continuity of the National System in many areas. With voluntary 
acquisition as an additional tool, the Federal Government can more 
efficiently participate in the trail building process, and direct 
resources toward protecting vulnerable trail segments.
  The bill does not mandate or provide funds for acquisition. It simply 
authorizes acquisition from willing sellers, subject to appropriations.
  Mr. President, this country's scenic beauty and precious natural 
resources deserve protection. I am committed to that effort, and 
believe that a strong and extensive National Trails System is an 
important component of it. This bill will help bring us closer to 
achieving that goal.
                                 ______

      By Mr. KERRY (for himself and Mr. Stevens):
  S. 2538. A bill to amend the Magnuson Fishery Conservation and 
Management Act, and for other purposes; to the Committee on Commerce, 
Science, and Transportation.


                       sustainable fisheries act

  Mr. KERRY. Mr. President, on March 1, 1977 the United States Fishery 
Conservation and Management Act of 1976 was signed into law in response 
to an urgent threat to the valuable living marine resources of our 
coastal waters. At that time, the threat to our domestic fisheries came 
in the form of an efficient and aggressive state-of-the-art foreign 
fishing fleet that was operating within sight of our shores and 
displacing our domestic fishermen and processors. In response, 
Congress, led by Senator Warren Magnuson, passed the Fishery 
Conservation and Management Act establishing a 200-mile fishery 
conservation zone and asserting United States management authority over 
fish within the conservation zone, as well as over anadromous species 
such as salmon throughout their migratory range. In honor of Senator 
Magnuson's leadership, in 1980 the act was officially retitled the 
Magnuson Fishery Conservation and Management Act.
  The Magnuson Act succeeded--it limited the operation of foreign 
fishing vessels and processors and encouraged the development of the 
U.S. domestic fishing fleet and processing industry. In 1993, U.S. 
commercial fishermen landed over 10 billion pounds of fish, producing 
$3.4 billion in dockside revenues. By weight of catch, the United 
States is now the world's sixth largest fishing nation. The United 
States is also the top seafood exporter, with exports valued at $3.1 
billion in 1993.
  However, we have succeeded too well in some ways and today there is 
another threat to our coastal fisheries. This time it comes not from 
abroad but from ourselves. Since the implementation of the Magnuson 
Act, the number of commercial groundfish vessels in New England has 
increased by 70 percent, and the number of fishermen has risen by 130 
percent. Although fish and shellfish are renewable resources, they are 
not unlimited. In several U.S. fisheries, a pattern has been repeated: 
Fishermen, lured by the promise of large and lucrative harvests, enter 
a fishery when fish populations are abundant. As the fishery develops, 
larger boats often replace small boats, the number of boats increases, 
and new technologies are continually introduced to improve each 
vessel's fishing power and efficiency. In several U.S. fisheries, these 
trends have been bolstered by government policies, including tax 
incentives and Federal loan guarantees, designed to stimulate 
development of the domestic fishing industry. The result is that the 
harvesting capacity in many fisheries has outpaced the capacity of the 
fisheries to renew themselves. U.S. fisheries also have suffered from 
destruction of essential habitat, destructive fishing practices, and 
water pollution.

  The key to the success of the Magnuson Act is the ability of the 
eight regional fisheries management councils established under the act 
to work with the National Marine Fisheries Service to manage the 
fisheries on a regional level while meeting the national standards set 
forth in the Act. The Councils have made a substantial effort to manage 
the nation's fisheries--as of September 1, 1993, 33 fishery management 
plans are in effect with several others in development. However, their 
success in managing the nation's fisheries has been mixed. Critics 
charge that since the enactment of the Magnuson Act, the councils have 
sometimes reacted to developments in fisheries rather than anticipating 
problems--even when looming problems are apparent. In addition, the 
complexity of the process has impeded the council response, often 
exacerbating the problem. In many instances, minor management actions 
could have been taken sooner to avoid the need for more dramatic 
measures later. In some regions, including parts of the Northwest, the 
Council members are no longer perceived as stewards of the public 
resource, providing fair and balanced representation, but are seen as 
protectors of special economic interests. The Magnuson Act requires 
that Council members be knowledgeable or experienced with regard to the 
conservation and management, or the recreational or commercial harvest, 
of the fishery resources within their geographic area of 
responsibility. However, this requirement has created situations in 
which Council members may have personal or financial interests in a 
fishery they are responsible for managing.
  In fact, despite the work of the Councils, problems continue to exist 
in varying degrees in many regions. These include: continued 
overfishing; lack of coordination between Councils and the Federal 
Government; lack of accountability; inconsistency in State and Federal 
management measures; and adoption of unenforceable management measures.
  The collapse of the traditional New England groundfish stocks of cod, 
haddock, and yellowtail flounder unfortunately is an example of what 
happens when the fisheries management process fails. The commercial 
fishing industry in Massachusetts was a $300 million industry in 1990. 
by 1993, revenues had dropped to almost $232 million, and this year 
revenues are certain to be much lower. In 1993, the decline of these 
valuable fish stocks necessitated a substantial amendment to the 
fisheries management plan for these stocks in an effort to eliminate 
overfishing by cutting in half fishing mortality over the next 5 to 7 
years. The initiation of regulations necessary to rebuild the fishery 
has had significant economic impact on the lives of those in coastal 
communities throughout New England. The latest reports from the 
National Marine Fisheries Service indicate that the situation is even 
worse than predicted, and the New England Council is now  considering 
even more drastic measures. This is a dire situation with potentially 
disastrous economic and social impacts on the historic fishing 
communities of New England. I believe it must be addressed and 
reversed. The bill I am introducing today should have this effect.

  Over the last 2 years, the Commerce Committee has conducted a series 
of hearings here in Washington and in fishing communities around the 
U.S. coast. We have reviewed comments from members of the fishing 
industry, the administration, conservation groups, and other public 
interest groups. This has been a bipartisan effort. I have worked 
closely with the senior Senator from Alaska. We and our colleagues 
share the desire to ensure plentiful yields of fish for years to come. 
The bill that I am introducing today is an effort to address the 
existing problems of the fisheries management process. Even though I do 
not anticipate it can be passed during the very few days remaining 
before this Congress concludes its work, I think it is important to 
present it now to permit interested persons to voice any concerns they 
may have about its provisions so these can be considered and addressed 
if appropriate, thereby enabling us to move forward with expedience 
when the new Congress convenes next year.
  I recognize that this bill is ambitious in scope. However, the 
fisheries of the United States are at a crossroads and significant 
action is required to remedy our fisheries management problems and 
preserve the way of life of our fishing communities. Fish on the dinner 
table is something that many Americans may have taken for granted in 
the past; but unless we take steps to ensure that these resources are 
conserved, they will not be there for future generations. I hope my 
colleagues will join me in committing themselves to passing legislation 
in the next year to ensure that the fisheries of the United States once 
again will be bountiful and sustainable.
  I want to thank the distinguished chairman of the Commerce Committee, 
Senator Stevens and his staff, and the staff of the majority and the 
minority, for their assistance in the preparing this bipartisan bill 
for introduction today. I also want to express special appreciation to 
Penny Dalton of the Commerce Committee's National Ocean Policy Study 
Majority Staff, Mara Brown, a fellow on the Committee staff, Steve 
Metruck, a fellow in my office, Trevor McCabe and John Moran of the 
Commerce Committee's National Ocean Policy Study Minority Staff, Jim 
Sartucci, a fellow on the Minority Staff and Earl Comstock of Senator 
Stevens' staff for the many hours of collaborative work they invested 
in the drafting of this bill.
  I ask unanimous consent that the statement of Senator Stevens, 
followed by a summary of the bill's principal provisions and the bill 
itself, appear in the Record following my remarks.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2358

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the 
     ``Sustainable Fisheries Act''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                  TITLE I--CONSERVATION AND MANAGEMENT

Sec. 101. Amendment of the Magnuson Fishery Conservation and Management 
              Act.
Sec. 102. Findings; purposes; and policy.
Sec. 103. Definitions.
Sec. 104. Authorization of appropriations.
Sec. 105. Highly migratory species.
Sec. 106. Foreign fishing.
Sec. 107. Permits for foreign fishing.
Sec. 108. Large-scale driftnet fishing.
Sec. 109. National standards.
Sec. 110. Regional fishery management councils.
Sec. 111. Fishery management plans.
Sec. 112. Plan review and implementation.
Sec. 113. Ecosystem management.
Sec. 114. State jurisdiction.
Sec. 115. Prohibited acts.
Sec. 116. Civil penalties and permit sanctions.
Sec. 117. Enforcement.
Sec. 118. North Pacific fisheries conservation.
Sec. 119. Transition to sustainable fisheries.

               TITLE II--FISHERY MONITORING AND RESEARCH

Sec. 201. Change of title.
Sec. 202. Registration and data management.
Sec. 203. Data collection.
Sec. 204. Observers wages as maritime liens.
Sec. 205. Fisheries research.
Sec. 206. Incidental harvest research.
Sec. 207. Repeal.
Sec. 208. Clerical amendments.

             TITLE III--FISHERIES STOCK RECOVERY FINANCING

Sec. 301. Short title.
Sec. 302. Fisheries stock recovery refinancing.
Sec. 303. Federal financing bank relating to fishing vessels and 
              fishery facilities.
Sec. 304. Fees for guaranteeing obligations.
Sec. 305. Sale of acquired collateral.

                TITLE IV--ATLANTIC TUNAS CONVENTION ACT

Sec. 401. Short title.
Sec. 402. Research and monitoring activities.
Sec. 403. Advisory committee procedures.
Sec. 404. Regulations.
Sec. 405. Fines and permit sanctions.
Sec. 406. Authorization of appropriations.
Sec. 407. Report.
                  TITLE I--CONSERVATION AND MANAGEMENT

     SEC. 101. AMENDMENT OF MAGNUSON FISHERY CONSERVATION AND 
                   MANAGEMENT ACT.

       Except as otherwise expressly provided, whenever in this 
     title an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of the Magnuson Fishery Conservation and 
     Management Act (16 U.S.C. 1801 et seq.).

     SEC. 102. FINDINGS; PURPOSES; AND POLICY.

       Section 2 (16 U.S.C. 1801) is amended--
       (1) by striking subsection (a)(2) and inserting the 
     following:
       ``(2) Certain stocks of fish have declined to the point 
     where their survival is threatened, and other stocks of fish 
     have been so substantially reduced in number that they could 
     become similarly threatened as a consequence of (A) increased 
     fishing pressure, (B) the inadequacy of fishery resource 
     conservation and management practices and controls, or (C) 
     direct and indirect habitat losses which have resulted in a 
     diminished capacity to support existing fishing levels.'';
       (2) by inserting ``to facilitate long-term protection of 
     essential fish habitats,'' in subsection (a)(6) after 
     ``conservation,'';
       (3) by adding at the end of subsection (a) the following:
       ``(9) One of the greatest long-term threats to the 
     viability of commercial and recreational fisheries is the 
     continuing loss of marine, estuarine, and other aquatic 
     habitats on a national level. Habitat considerations should 
     receive increased attention for the conservation and 
     management of fishery resources of the United States.'';
       (4) by inserting ``in a non-wasteful manner'' in subsection 
     (b)(6) after ``such development''; and
       (5) by adding at the end of subsection (b) the following:
       ``(7) to promote the protection of essential fish habitat 
     in the review of projects conducted under Federal permits, 
     licenses, or other authorities that affect or have the 
     potential to affect such habitat.''.

     SEC. 103. DEFINITIONS.

       Section 3 (16 U.S.C. 1802) is amended--
       (1) by redesignating paragraphs (2) through (32) as 
     paragraphs (3) through (33) respectively, and inserting after 
     paragraph (1) the following:
       ``(2) The term `bycatch' means fish which are harvested by 
     a fishing vessel, but which are not sold or kept for personal 
     use, including, but not limited to, economic and regulatory 
     discards.'';
       (2) by redesignating paragraphs (7) through (33) (as 
     redesignated) as paragraphs (9) through (35), respectively, 
     and inserting after paragraph (6) (as redesignated) the 
     following:
       ``(7) The term `economic discards' means fish which are the 
     target of a fishery, but which are not retained by the 
     fishing vessel which harvested them because they are of an 
     undesirable size, sex or quality, or for other economic 
     reasons.
       ``(8) The term `essential fish habitat' means any area 
     essential to the life cycle of a stock of fish, or to the 
     production of maximum sustainable yield of one or more 
     fisheries managed under this Act.'';
       (3) by redesignating paragraphs (12) through (35) (as 
     redesignated) as paragraphs (13) through (36), respectively, 
     and inserting after paragraph (11) (as redesignated) the 
     following:
       ``(12) The term `fishery dependent community' means a 
     community which is substantially dependent on the harvest of 
     fishery resources to meet social and economic needs.'';
       (4) by redesignating paragraphs (19) through (36) (as 
     redesignated) as paragraphs (20) through (37), respectively, 
     and inserting after paragraph (18) (as redesignated) the 
     following:
       ``(19) The term `individual transferable quota' means a 
     revocable Federal authorization to harvest or process a 
     quantity of fish under a unit or quota share that represents 
     a percentage of the total allowable catch of a stock of fish, 
     that may be received or held by a specific person or persons 
     for their exclusive use, and that may be transferred in whole 
     or in part by the holder to another person or persons for 
     their exclusive use.'';
       (5) by redesignating paragraphs (22) through (37) (as 
     redesignated) as paragraphs (23) through (38), respectively, 
     and inserting after paragraph (21) (as redesignated) the 
     following:
       ``(22) The term `limited access system' means any system 
     for controlling fishing effort which includes such measures 
     as license limitations, individual transferable quotas, and 
     non-transferable quotas.'';
       (6) by striking ``Pacific Marine Fisheries Commission'' in 
     paragraph (23), as redesignated, and inserting ``Pacific 
     States Marine Fisheries Commission'';
       (7) by striking paragraph (27), as redesignated, and 
     inserting the following:
       ``(27) The term `optimum', with respect to the yield from a 
     fishery, means the amount of fish which--
       ``(A) will provide the greatest overall benefit to the 
     Nation, with particular reference to food production and 
     recreational opportunities, and taking into account the 
     protection of marine ecosystems;
       ``(B) is prescribed on the basis of the maximum sustainable 
     yield from a fishery, as modified by any relevant social, 
     economic, or ecological factor; and
       ``(C) provides for the rebuilding of an overfished fishery 
     to a level consistent with producing the maximum sustainable 
     yield.'';
       (8) by redesignating paragraphs (28) through (38) (as 
     redesignated) as paragraphs (29) through (39), respectively, 
     and inserting after paragraph (27) (as redesignated) the 
     following:
       ``(28) The terms `overfishing' and `overfished' mean a 
     level or rate of fishing mortality that jeopardizes the 
     capacity of a fishery to produce the maximum sustainable 
     yield on a continuing basis.'';
       (9) by redesignating paragraphs (30) through (39) (as 
     redesignated) as paragraphs (31) through (40), respectively, 
     and inserting after paragraph (29) (as redesignated) the 
     following:
       ``(30) The term `regulatory discards' means fish caught in 
     a fishery which fishermen are required by regulation to 
     discard whenever caught, or are required by regulation to 
     retain but not sell.'';
       (10) by striking ``for which a fishery management plan 
     prepared under title III or a preliminary fishery management 
     plan prepared under section 201(h) has been implemented'' in 
     paragraph (38), as redesignated, and inserting ``regulated 
     under this Act'';and
       (11) by redesignating paragraph (40), as redesignated, as 
     (41), and inserting after paragraph (39) the following:
       ``(40) The term `vessel subject to the jurisdiction of the 
     United States' has the same meaning as in section 3(c) of the 
     Maritime Drug Law Enforcement Act (46 U.S.C. App. 
     1903(c)).''.

     SEC. 104. AUTHORIZATION OF APPROPRIATIONS.

       The Act is amended by inserting after section 3 the 
     following:

     ``SEC. 4. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to the Secretary 
     for the purposes of carrying out the provisions of this Act, 
     not to exceed the following sums (of which 15 percent in each 
     fiscal year shall be used for enforcement activities):
       ``(1) $102,000,000 for fiscal year 1993;
       ``(2) $106,000,000 for fiscal year 1994;
       ``(3) $143,000,000 for fiscal year 1995;
       ``(4) $147,000,000 for fiscal year 1996;
       ``(5) $151,000,000 for fiscal year 1997;
       ``(6) $155,000,000 for fiscal year 1998; and
       ``(7) $159,000,000 for fiscal year 1999.''.

     SEC. 105. HIGHLY MIGRATORY SPECIES.

       Section 102 (16 U.S.C. 1812) is amended by striking 
     ``promoting the objective of optimum utilization'' and 
     inserting ``promote the achievement of optimum yield''.

     SEC. 106. FOREIGN FISHING.

       Section 201 (16 U.S.C. 1821) is amended--
       (1) by inserting a comma and ``or is approved under section 
     204(b)(6)(A)(ii)'' before the semicolon in subsection (a)(1);
       (2) by striking ``(g)'' in subsection (a)(2) and inserting 
     ``(f)'';
       (3) by striking ``(i)'' in subsection (c)(2)(D) and 
     inserting ``(h)'';
       (4) by striking ``, including any regulations promulgated 
     to implement any applicable fishery management plan or any 
     preliminary fishery management plan'' in subsection (c); and
       (5) by striking subsection (f) and redesignating 
     subsections (g), (h), (i), and (j) as (f), (g), (h), and (i), 
     respectively.

     SEC. 107. PERMITS FOR FOREIGN FISHING.

       (a) So much of section 204(b) (16 U.S.C. 1824(b)) as 
     precedes paragraph (2) is amended to read as follows:
       ``(b) Applications and Permits.--
       ``(1) Eligibility.--
       ``(A) Each foreign nation with which the United States has 
     entered into a governing international fishery agreement 
     shall submit an application to the Secretary of State each 
     year for a permit for each of its fishing vessels that wishes 
     to engage in fishing described in subsection (a).
       ``(B) An owner of a vessel, other than a vessel of the 
     United States, who wishes to engage in the transshipment at 
     sea of fish products in the exclusive economic zone or within 
     the boundary of any State, may submit an application to the 
     Secretary each year for a permit for a vessel belonging to 
     that owner, whether or not such vessel is subject to an 
     international fishery agreement described in section 201(b) 
     or (c).
       ``(C) No permit issued under this section may be valid for 
     longer than a year. Section 558(c) of title 5, United States 
     Code, does not apply to the renewal of any such permit.''.
       (b) Section 204(b)(4) (16 U.S.C. 1824(b)(4)) is amended--
       (1) by inserting ``(A)'' after the caption;
       (2) by inserting ``submitted under paragraph (1)(A)'' after 
     ``any application'';
       (3) by redesignating subparagraphs (A), (B), and (C) as 
     clauses (i), (ii), and (iii), respectively; and
       (4) by inserting at the end thereof the following:
       ``(B) Upon receipt of any application submitted under 
     paragraph (1)(B) which complies with the requirements of 
     paragraph (3), the Secretary shall promptly transmit copies 
     of the application or summary as indicated under 
     subparagraphs (A)(ii) and (iii), and shall also promptly 
     transmit such application or summary to States bordering the 
     exclusive economic zone where such transhipment is proposed 
     to occur.''.
       (c) Section 204(b)(5) (16 U.S.C. 1824(b)(5)) is amended by 
     striking ``under paragraph (4)(C)'' and inserting ``submitted 
     under paragraph (1)''.
       (d) Section 204(b)(6) (16 U.S.C. 1824(b)(6)) is amended--
       (1) by striking ``transmitted under paragraph (4)(A)'' and 
     inserting ``submitted under paragraph (1)(A)'' in 
     subparagraph (A);
       (2) by inserting ``(i)'' before ``After'' in subparagraph 
     (A); and
       (3) by inserting before subparagraph (B) the following:
       ``(ii) In the case of any application submitted under 
     paragraph (1)(B), the Secretary, after taking into 
     consideration any comments submitted by the Council under 
     paragraph (5) or any affected State, may approve the 
     application upon determining that the activity described in 
     the application will be in the interest of the United States 
     and will meet the applicable requirements of this Act, and 
     that the owners or operators have agreed to comply with 
     requirements set forth in section 201(c)(2) and have 
     established any bonds or financial assurances that may be 
     required by the Secretary; or the Secretary may disapprove 
     all or any portion of the application.''.
       (e) Section 204(b)(8) (16 U.S.C. 1824(b)(8)) is amended--
       (1) by inserting a comma and ``or the agent for the foreign 
     vessel owner for any application submitted under paragraph 
     (1)(B)'' before the semicolon at the end of subparagraph (A); 
     and
       (2) by inserting ``and any affected State'' before the 
     period at the end of subparagraph (C).
       (f) Section 204(b)(9) (16 U.S.C. 1824(b)(9)) is amended--
       (1) by inserting ``paragraph (1)(A) of'' after ``by a 
     foreign nation under'';
       (2) by inserting ``(A)'' after the heading in paragraph 
     (9); and
       (3) by adding at the end thereof the following:
       ``(B) If the Secretary does not approve any application 
     submitted by a foreign vessel owner under paragraph (1)(B) of 
     this subsection, the Secretary shall promptly inform the 
     vessel owner of the disapproval and the reasons therefore. 
     The owner, after taking into consideration the reasons for 
     disapproval, may submit a revised application under this 
     subsection.''.
       (g) Section 204(b)(11) (16 U.S.C. 1824(b)(11)) is amended--
       (1) by inserting ``(A)'' after the paragraph heading,
       (2) by inserting ``submitting an application under 
     paragraph (1)(A)'' after ``If a foreign nation''; and
       (3) adding at the end thereof the following:
       ``(B) If the vessel owner submitting an application under 
     paragraph (1)(B) notifies the Secretary of acceptance of the 
     conditions and restrictions established by the Secretary 
     under paragraph (7), and upon payment of the applicable fees 
     established pursuant to paragraph (10) and confirmation of 
     any bonds or financial assurances that may be required for 
     such transhipment of fish, the Secretary shall thereupon 
     issue a permit for the vessel.''.
       (h) Section 204 (16 U.S.C. 1824) is amended by adding at 
     the end thereof the following:
       ``(d) Prohibition on Permit Issuance.--Notwithstanding any 
     other provision of this Act, the Secretary is prohibited from 
     issuing, before December 1, 1999, any permit to authorize the 
     catching, taking, or harvesting of Atlantic mackerel or 
     Atlantic herring by foreign fishing vessels within the 
     exclusive economic zone. This subsection shall not apply to 
     permits to authorize foreign fish processing vessels to 
     process Atlantic mackerel or Atlantic herring harvested by 
     fishing vessels of the United States.''.

     SEC. 108. LARGE-SCALE DRIFTNET FISHING.

       (a) Section 206(e) (16 U.S.C. 1826(e)) is amended by 
     striking paragraphs (3) and (4), and redesignating paragraphs 
     (5) and (6) as (3) and (4), respectively.
       (b) Section 206(f) (16 U.S.C. 1826(f)) is amended by 
     striking ``(6)'' and inserting ``(4)''.

     SEC. 109. NATIONAL STANDARDS.

       (a) Paragraph (1) of section 301(a) (16 U.S.C. 1851(a)) is 
     amended to read as follows:
       ``(1) Conservation and management measures shall prevent 
     overfishing and rebuild overfished fishery resources while 
     achieving, on a continuing basis, the optimum yield from each 
     fishery.''.
       (b) Section 301(a)(5) (16 U.S.C 1851(a)(5)) is amended by 
     striking ``promote'' and inserting ``consider''.
       (c) Section 301(a) (16 U.S.C. 1851(a)) is amended by adding 
     at the end thereof the following:
       ``(8) Conservation and management measures shall take into 
     account the importance of the harvest of fishery resources to 
     fishery dependent communities.''.

     SEC. 110. REGIONAL FISHERY MANAGEMENT COUNCILS.

       (a) Section 302(a) (16 U.S.C. 1852(a)) is amended--
       (1) by inserting ``(1)'' after the subsection heading;
       (2) by redesignating paragraphs (1) through (7) as 
     subparagraphs (A) through (H);
       (3) by striking ``section 304(f)(3)'' wherever it appears 
     and inserting in lieu thereof ``paragraph (3)'';
       (4) by striking paragraph (1)(F), as redesignated, and 
     inserting the following:
       ``(F) Pacific Council.--The Pacific Fishery Management 
     Council shall consist of the States of California, Oregon, 
     Washington, and Idaho and shall have authority over the 
     fisheries in the Pacific Ocean seaward of such States. The 
     Pacific Council shall have 13 voting members, including 7 
     appointed by the Secretary in accordance with subsection 
     (b)(2) (at least one of whom shall be appointed from each 
     such State), and including one appointed from an Indian tribe 
     with Federally recognized fishing rights from California, 
     Oregon, Washington, or Idaho in accordance with subsection 
     (b)(5).'';
       (5) by indenting the sentence at the end thereof and 
     inserting ``(2)'' in front of ``Each Council'', and by 
     inserting ``The Secretary shall establish the boundaries 
     between the geographical areas of authority of adjacent 
     Councils.'' after ``authority.''; and
       (6) by adding at the end the following:
       ``(3) The Secretary shall have authority over any highly 
     migratory species fishery that is within the geographical 
     area of authority of more than one of the following Councils: 
     New England Council, Mid-Atlantic Council, South Atlantic 
     Council, Gulf Council, and Caribbean Council.''.
       (b) Section 302(b) (16 U.S.C. 1852(b)) is amended--
       (1) by striking subparagraph (C) of subsection (b)(1) and 
     inserting the following:
       ``(C) The members required to be appointed by the Secretary 
     in accordance with subsections (b)(2) and (5).'';
       (2) by redesignating paragraph (5) as paragraph (6), and 
     inserting after paragraph (4) the following:
       ``(5)(A) The Secretary shall appoint to the Pacific Fishery 
     Management Council one representative of an Indian tribe with 
     Federally recognized fishing rights from California, Oregon, 
     Washington, or Idaho, from a list of not less than 3 
     individuals submitted by the tribal governments. The 
     representative shall serve for a term of 3 years and may not 
     serve more than 3 consecutive terms. The Secretary, in 
     consultation with the Secretary of the Interior and tribal 
     governments, shall establish by regulation the procedure for 
     submitting lists under this subparagraph.
       ``(B) Representation shall be rotated among the tribes 
     taking into consideration--
        ``(i) the qualifications of the individuals on the list 
     referred to in subparagraph (A),
        ``(ii) the various treaty rights of the Indian tribes 
     involved and judicial cases that set forth how those rights 
     are to be exercised, and
        ``(iii) the geographic area in which the tribe of the 
     representative is located.
       ``(C) A vacancy occurring prior to the expiration of any 
     term shall be filled in the same manner set out in 
     subparagraphs (A) and (B), except that the Secretary may use 
     the list from which the vacating representative was 
     chosen.''; and,
       (3) by striking ``subsection (b)(2)'' in paragraph (6), as 
     redesignated, and inserting ``subsections (b)(2) and (5)''.
       (c) Section 302(e) (16 U.S.C. 1852(e)) is amended by adding 
     at the end the following:
       ``(5) At the request of any voting member of a Council, the 
     Council shall hold a roll call vote on any matter before the 
     Council. The official minutes and other appropriate records 
     of any Council meeting shall identify all roll call votes 
     held, the name of each voting member present during each roll 
     call vote, and how each member voted on each roll call 
     vote.''.
       (d) Section 302(g) (16 U.S.C. 1852(g)) is amended by 
     redesignating paragraph (4) as (5), and by inserting after 
     paragraph (3) the following:
       ``(4) The Secretary shall establish advisory panels to 
     assist in--
       ``(A) the collection and evaluation of information relevant 
     to the development of or amendment to any fishery management 
     plan under section 303(e)(2); and
       ``(B) carrying out the purposes of section 303(f).''.
       (e) Section 302(h) (16 U.S.C. 1852(h)) is amended--
       (1) by striking ``section 304(f)(3)'' in paragraphs (1) and 
     (5) and inserting ``subsection (a)(3)''; and
       (2) by striking ``204(b)(4)(C)'' in paragraph (2) and 
     inserting ``204(b)(4)(A)(iii)''.
       (f) Section 302(i) (16 U.S.C. 1852(i)) is amended to read 
     as follows:
       ``(i) Negotiated Conservation and Management Measures.--
       ``(1) Acting through the Secretary, a Council may, on its 
     own or at the request of the Secretary, establish a 
     negotiation panel to assist in the development of specific 
     conservation and management measures for a fishery under 
     authority of such Council. In making the decision to 
     establish such panel, the Council shall consider whether--
       ``(A) there are a finite number of identifiable interests 
     that will be significantly affected by the development of 
     such measures;
       ``(B) there is a reasonable likelihood that a negotiation 
     panel can be convened with a balanced representation of 
     persons who--
       ``(i) can adequately represent the interests identified 
     under subparagraph (A); and
       ``(ii) are willing to act in good faith to reach a 
     consensus on the development of a such measures;
       ``(C) there is reasonable likelihood that a negotiation 
     panel will contribute to the development of such measures 
     within a fixed period of time; and
       ``(D) the process under this subsection will not 
     unreasonably delay the development of any conservation and 
     management measure or its submission to the Secretary.
       ``(2) If the Council decides to establish a negotiation 
     panel it shall notify all identifiable interests of its 
     intention to convene such panel at least 30 calendar days 
     prior to the appointment of members. Such notification shall 
     be published in accordance with subsection (j)(2)(C) of this 
     section and shall include--
       ``(A) a description of the subject and scope of the 
     measures to be developed and the issues to be considered;
       ``(B) a list of interests likely to be significantly 
     affected by the measures to be developed;
       ``(C) a list of the persons proposed to represent such 
     interests, the person or persons proposed to represent the 
     Council, and the person or persons proposed to be nominated 
     as facilitator;
       ``(D) an explanation of how a person may apply or nominate 
     another person for membership on the negotiation panel; and
       ``(E) a proposed agenda and schedule for completing the 
     work of the negotiation panel.
       ``(3) No more than 45 calendar days after providing this 
     notification the Council shall make appointments to the 
     negotiation panel in such a manner as to achieve balanced 
     representation of all significant interests to the 
     conservation and management measures. Such interests shall 
     include, where appropriate, representatives from the fishing 
     industry, consumer groups, the scientific community, tribal 
     organizations, conservation organizations and other public 
     interest organizations, and Federal and State fishery 
     managers.
       ``(4) Each negotiation panel established under this section 
     shall attempt to reach a consensus concerning specific 
     conservation and management measures and any other issue such 
     panel determines is relevant to such measures. The Council, 
     to the maximum extent possible consistent with its legal 
     obligations, will use the consensus of the negotiation panel, 
     with respect to such measures, as the basis for the 
     development of the conservation and management measures to be 
     adopted by the Council or submitted by the Council to the 
     Secretary in accordance with this Act.
       ``(5) The person or persons representing the Council on a 
     negotiation panel shall participate in the deliberations and 
     activities of such panel with the same rights and 
     responsibilities as other panel members, and shall be 
     authorized to fully represent the Council in the discussions 
     and negotiations of such panel.
       ``(6) Any facilitator nominated by the Council to a 
     negotiation panel must be approved by the panel by consensus. 
     If the panel does not approve a facilitator nominated by the 
     Council the panel shall select by consensus another person to 
     serve as facilitator. No person appointed by the Council to 
     the negotiation panel to represent any intereston the Council 
     may serve as facilitator or otherwise chair such panel.
       ``(7) A facilitator approved or selected by a negotiation 
     panel shall--
       ``(A) chair the meetings of such panel in an impartial 
     manner;
       ``(B) impartially assist the panel members in conducting 
     discussions and negotiations; and
       ``(C) manage the keeping of any minutes or records, (except 
     that any personal notes and materials of the facilitator or 
     the panel members shall not be subject to disclosure, except 
     upon order of a court).
       ``(8) A negotiation panel may adopt any additional 
     procedures for the operation of the negotiation panel not in 
     conflict with those specified in this section.
       ``(9) At the conclusion of the negotiation process, if the 
     negotiation panel reaches a consensus on proposed 
     conservation and management measures, such panel shall 
     transmit to the Council, and present to the Council at the 
     next scheduled meeting of the Council, a report containing 
     the proposed conservation and management measures. If the 
     negotiation panel does not reach consensus on proposed 
     conservation and management measures, such panel shall 
     transmit to the Council, and present to the Council at the 
     next scheduled meeting of the Council, a report specifying 
     its recommendations and describing the areas in which the 
     negotiation panel reached consensus and the areas in which 
     consensus was not achieved. The negotiation panel may include 
     in a report any other information or materials that such 
     panel considers appropriate. Any panel member may include, as 
     an addendum to the report, additional information or 
     materials.
       ``(10) A negotiation panel shall terminate upon approval by 
     the Secretary of the conservation and management measures 
     recommended by the Council on the basis of the report by the 
     panel, unless the Council in consultation with the panel, or 
     the panel itself specifies an alternative termination date.
       ``(11) For the purposes of this subsection--
       ``(A) The term `negotiation panel' means an advisory panel 
     established by a Council under section (g)(2) to assist in 
     the development of specific conservation and management 
     measures through the process established under this 
     subsection.
       ``(B) The term `consensus' means general but not unanimous 
     concurrence among the interests represented unless such 
     panel--
       ``(i) agrees by consensus to define such term to mean a 
     unanimous concurrence; or
       ``(ii) agrees by consensus upon another specified 
     definition.
       ``(C) The term `facilitator' means a person experienced or 
     trained in group mediation and negotiation who impartially 
     aids in the discussions and negotiations among the members of 
     a negotiation panel.
       ``(D) The term `interest' means, with respect to this 
     subsection, multiple persons or parties who have a similar 
     point of view or which are likely to be affected in a similar 
     manner.''.
       (g) Section 302(j) (16 U.S.C. 1852(j)) is amended--
       (1) by deleting ``of the Councils'' in paragraph (1) and 
     inserting ``established under subsection (g)''; and
       (2) by deleting ``of a Council:'' in paragraph (2) and 
     inserting ``established under subsection (g):''.
       (3) by adding at the end of paragraph (2)(C): ``Interested 
     persons may propose to modify the published agenda of a 
     meeting by submitting to a Council, panel or committee within 
     14 calendar days of the published date of the meeting a 
     notice containing a written description of the proposed 
     modification signed by not less than two Council members.'';
       (4) by adding the following at the end of paragraph (2)(D): 
     ``All written data submitted to a Council by an interested 
     person shall include a statement of the source and date of 
     such information. Any oral or written statement shall include 
     a brief description of the qualifications and interests of 
     the person in the subject of the oral or written 
     statement.'';
       (5) by amending paragraph (2)(E) to read as follows:
       ``(E) Detailed minutes of each meeting of the Council shall 
     be kept and shall contain a record of the persons present, a 
     complete and accurate description of matters discussed and 
     conclusions reached, and copies of all statements filed, 
     issued, or approved by the Council. The Chairman shall 
     certify the accuracy of the minutes of each meeting and 
     submit a copy thereof to the Secretary. The minutes shall be 
     made available to any court of competent jurisdiction.''; and
       (6) by striking ``303(d)'' in paragraph (2)(F) and 
     inserting ``402(b)''.
       (g) Section 302(k) (16 U.S.C. 1852(k)) is amended--
       (1) by inserting ``and recusal'' in the subsection heading;
       (2) by striking paragraph (1) and inserting the following:
       ``(1) For the purposes of this subsection--
       ``(A) the term `affected individual' means an individual 
     who--
       ``(i) is nominated by the Governor of a State for 
     appointment as a voting member of a Council in accordance 
     with subsection (b)(2); or
       ``(ii) is a voting member of a Council appointed under 
     subsection (b)(2); and
       ``(B) the term `designated official' means a person with 
     expertise in Federal conflict-of-interest requirements who is 
     designated by the Secretary, with the concurrence of the 
     Council, to attend Council meetings and make determinations 
     under paragraph (7)(B).'';
       (3) by striking ``(1)(A)'' in paragraph (3)(A) and 
     inserting ``(1)(A)(i)'';
       (4) by striking ``(1)(B) or (C)'' in paragraph (3)(B) and 
     inserting ``(1)(A)(ii)'';
       (5) by striking ``(1)(B) or (C)'' in paragraph (4) and 
     inserting ``(1)(A)(ii)'';
       (6)(A) by striking ``and'' at the end of paragraph (5)(A);
       (B) by striking the period at the end of paragraph (5)(B) 
     and inserting a semicolon and the word ``and''; and
       (C) by adding at the end of paragraph (5) the following:
       ``(C) be kept on file by the Secretary for use in reviewing 
     determinations under paragraph (7)(B) and made available for 
     public inspection at reasonable hours.'';
       (7) by striking ``(1)(B) or (C)'' in paragraph (6) and 
     inserting ``(1)(A)(ii)'';
       (8) by redesignating paragraph (7) as (8) and inserting 
     after paragraph (6) the following:
       ``(7)(A) An affected individual required to disclose a 
     financial interest under paragraph (2) shall not vote on a 
     Council decision which would have a significant and 
     predictable effect on such financial interest. A Council 
     decision shall be considered to have a significant and 
     predictable effect on a financial interest if there is a 
     close causal link between the Council decision and an 
     expected benefit, shared only by a minority of persons within 
     the same industry sector or gear group, to the financial 
     interest. An affected individual who may not vote may 
     participate in Council deliberations relating to the decision 
     after notifying the Council of the voting recusal and 
     identifying the financial interest that would be affected.
       ``(B) At the request of an affected individual, or at the 
     initiative of the appropriate designated official, the 
     designated official shall make a determination for the record 
     whether a Council decision would have a significant and 
     predictable effect on a financial interest.
       ``(C) Any Council member may submit a written request to 
     the Secretary to review any determination by the designated 
     official under subparagraph (B) within 10 days of such 
     determination. Such review shall be completed within 30 days 
     of receipt of the request.
       ``(D) Any affected individual who does not participate in a 
     Council decision in accordance with this subsection shall 
     state for the record how he or she would have voted on such 
     decision if he or she had voted.
       ``(E) If the Council makes a decision before the Secretary 
     has reviewed a determination under subparagraph (C), the 
     eventual ruling may not be treated as cause for the 
     invalidation or reconsideration by the Secretary of such 
     decision.
       ``(F) No later than December 1, 1995, the Secretary, in 
     consultation with the Councils, shall issue guidelines with 
     respect to voting recusals under subparagraph (A) and the 
     making of determinations under subparagraph (B).''; and
       (9) by striking ``(1)(B) or (C)'' in paragraph (8), as 
     redesignated, and inserting ``(1)(A)(ii)''.

     SEC. 111. FISHERY MANAGEMENT PLANS.

       (a) Section 303(a) (16 U.S.C. 1853(a)) is amended--
       (1) by striking paragraph (6) and inserting the following:
       ``(6) consider and provide for, after consultation with the 
     Coast Guard and persons participating in the fishery,--
       ``(A) safety of life and property at sea;
       ``(B) temporary adjustments regarding access to the fishery 
     for vessels otherwise prevented from harvesting because of 
     weather or other ocean conditions affecting the safe conduct 
     of the fishery (except that any such adjustment shall not 
     adversely affect conservation efforts in other fisheries or 
     discriminate among participants in the affected fishery), and
       ``(C) enforcement measures (including an estimate of the 
     resources necessary for effective implementation of such 
     measures).'';
       (2) by striking paragraph (7) and inserting the following:
       ``(7) facilitate the protection of essential fish habitat 
     by--
       ``(A) summarizing available information on the significance 
     of such habitat to the fishery and the effects of changes to 
     such habitat on the fishery; and
       ``(B) identifying Federal actions that should be considered 
     to promote the long-term protection of essential fish 
     habitats.'';
       (3) by striking ``and'' at the end of paragraph (8);
       (4) by striking the period at the end of paragraph (9) and 
     inserting a semicolon; and
       (5) by adding at the end the following:
       ``(10) specify objective and measurable criteria for 
     classifying when the fishery to which the plan applies would 
     be or is overfished, with an analysis of how the criteria 
     were determined and the relationship of the criteria to the 
     reproductive potential of stocks of fish in that fishery;
       ``(11) assess the level of bycatch occurring in the 
     fishery, and to the extent practicable, assess and specify 
     the effect of the fishery on stocks of fish to which the plan 
     does not apply, but which are associated with the ecosystem 
     of the fishery; and
       ``(12) to the extent practicable, minimize mortality caused 
     by economic and regulatory discards in the fishery.''.
       (b) Section 303(b) (16 U.S.C. 1853(b)) is amended--
       (1) by striking paragraph (6) and inserting the following:
       ``(6) establish a limited access system for the fishery in 
     order to achieve optimum yield if--
       ``(A) in developing such system, the Council and the 
     Secretary take into account present participation in the 
     fishery, historical fishing practices in and dependence on 
     the fishery, the economics of the fishery, the capability of 
     fishing vessels used in the fishery to engage in other 
     fisheries, the cultural and social framework relevant to the 
     fishery and fishery dependent communities, and any other 
     relevant considerations; and
       ``(B) in the case of any system that provides for 
     individual transferable quotas, such system also complies 
     with the guidelines and fee requirements established under 
     section 303(f);''; and
       (2) by striking ``and'' at the end of paragraph (9);
       (3) by striking the period at the end of paragraph (10) and 
     inserting a semicolon and ``and''; and
       (4) by adding at the end the following:
       ``(11) include, consistent with the other provisions of 
     this Act, conservation and management measures that provide a 
     harvest preference or other incentives for fishing vessels 
     within each gear group that employ fishing practices 
     resulting in lower levels of bycatch.''.
       (c) Section 303 (16 U.S.C. 1853) is amended by striking 
     subsection (c) and all thereafter and inserting the 
     following:
       ``(c) Regulations to Implement a Fishery Management Plan.--
     Proposed regulations which the Council deems necessary or 
     appropriate for the purposes of implementing a fishery 
     management plan or amendment to a plan may be submitted to 
     the Secretary for action under section 304--
       ``(1) simultaneously with submission of the plan or 
     amendment to the Secretary for action under section 304; or
       ``(2) at any time after the plan or amendment is approved.
       ``(d) Fisheries Under Authority of More Than One Council.--
       ``(1) Except as provided in section 302(a)(3), if any 
     fishery extends beyond the geographical area of authority of 
     any one Council, the Secretary may--
       ``(A) designate which Council shall prepare the fishery 
     management plan for such fishery and any amendment to such 
     plan, as well as any proposed regulations for such fishery; 
     or
       ``(B) require that the plan, amendment, and proposed 
     regulations be prepared jointly by the Councils concerned.
       ``(2) No jointly prepared fishery management plan, 
     amendment, or proposed regulations may be submitted to the 
     Secretary unless approved by a majority of the voting 
     members, present and voting, of each Council concerned.
       ``(e) Preparation by the Secretary.--
       ``(1) The Secretary shall prepare a fishery management plan 
     with respect to any fishery (other than a fishery to which 
     section 302(a)(3) applies), or any amendment to any such 
     plan, in accordance with the national standards, the other 
     provisions of this Act, and any other applicable law, if--
       ``(A) the appropriate Council fails to develop and submit 
     to the Secretary, after a reasonable period of time, a 
     fishery management plan for such fishery, or any necessary 
     amendment to such plan, if such fishery requires conservation 
     and management and the Secretary provides written notice to 
     the Council of the need for such conservation and management;
       ``(B) the Secretary disapproves or partially disapproves 
     any such plan or amendment, or disapproves a revised plan or 
     amendment, and the Council involved fails, after a reasonable 
     period of time, to take final action on a revised or further 
     revised plan or amendment, as the case may be; or
       ``(C) the Secretary determines that the appropriate Council 
     has failed to take sufficient action on a fishery management 
     plan, a plan amendment or proposed regulations to rebuild an 
     overfished fishery pursuant to section 305(b) within 1 year 
     after determining that such fishery is overfished.
       ``(2) The Secretary shall prepare a fishery management plan 
     with respect to any highly migratory species fishery to which 
     section 302(a)(3) applies that requires conservation and 
     management, or any amendment to any such plan, in accordance 
     with the national standards, the other provisions of this 
     Act, and any other applicable law. In preparing and 
     implementing any such plan or amendment, the Secretary 
     shall--
       ``(A) conduct public hearings, at appropriate times and in 
     appropriate locations in the geographical areas concerned, so 
     as to allow interested persons an opportunity to be heard in 
     the preparation and amendment of the plan and any regulations 
     implementing the plan;
       ``(B) consult with and consider the comments and views of 
     affected Councils, as well as commissioners and advisory 
     groups appointed under Acts implementing relevant 
     international fishery agreements pertaining to highly 
     migratory species;
       ``(C) establish an advisory panel under section 302(g) for 
     each fishery management plan to be prepared under this 
     paragraph, which shall consist of a balanced number (but not 
     less than seven) of representatives who are knowledgeable and 
     experienced with respect to the fishery concerned selected 
     from among members of advisory groups appointed under Acts 
     implementing relevant international fishery agreements 
     pertaining to highly migratory species and other interested 
     parties;
       ``(D) evaluate the likely effects, if any, of conservation 
     and management measures on participants in the affected 
     fisheries and minimize, to the extent practicable, any 
     disadvantage to United States fishermen in relation to 
     foreign competitors;
       ``(E) with respect to a highly migratory species for which 
     the United States is authorized to harvest an allocation or 
     quota or fishing mortality level under a relevant 
     international fishery agreement, provide fishing vessels of 
     the United States with a reasonable opportunity to harvest 
     such allocation, quota, or fishing mortality level;
       ``(F) review, on a continuing basis (and promptly whenever 
     a recommendation pertaining to fishing for highly migratory 
     species has been made under a relevant international fishery 
     agreement), and revise as appropriate, the conservation and 
     management measures included in the plan;
       ``(G) diligently pursue, through international entities 
     (such as the International Commission for the Conservation of 
     Atlantic Tunas), comparable international fishery management 
     measures with respect to fishing for highly migratory 
     species; and
       ``(H) ensure that conservation and management measures 
     adopted under this paragraph--
       ``(i) promote international conservation of the affected 
     fishery;
       ``(ii) take into consideration traditional fishing patterns 
     of fishing vessels of the United States and the operating 
     requirements of the fisheries; and
       ``(iii) are fair and equitable in allocating fishing 
     privileges among United States fishermen and not have 
     economic allocation as the sole purpose.
       ``(3) In preparing any plan or amendment under this 
     subsection, the Secretary shall consult with the Secretary of 
     State with respect to foreign fishing and with the Secretary 
     of the department in which the Coast Guard is operating with 
     respect to enforcement at sea.
       ``(4) The Secretary may not include in any fishery 
     management plan, or any amendment to any such plan, prepared 
     by the Secretary under paragraph (1), a provision 
     establishing a limited access system, unless such system is 
     first approved by a majority of the voting members of each 
     appropriate Council.
       ``(f) Individual Transferable Quotas.--
       ``(1) The Secretary may not approve a fishery management 
     plan that includes individual transferable quotas until the 
     Secretary has promulgated guidelines under paragraph (2). 
     Thereafter, the Secretary may approve a fishery management 
     plan or amendment that includes individual transferable 
     quotas only if the plan or amendment is consistent with the 
     guidelines promulgated under paragraph (2).
       ``(2) The Secretary shall promulgate, after consultation 
     with the Councils and public notice and comment, mandatory 
     guidelines for the establishment of any individual 
     transferable quota system. The guidelines shall--
       ``(A) ensure that any individual transferable quota 
     system--
       ``(i) is consistent with the requirements for limited 
     access systems under section 303(b)(6),
       ``(ii) promotes conservation,
       ``(iii) requires collection of fees from holders of 
     individual transferable quotas under section 304(f(2),
       ``(iv) provides for the fair and equitable allocation of 
     fishing privileges, and facilitates a reduction in excessive 
     fishing capacity in the fishery;
       ``(v) establishes a national lien registry system for the 
     identification, perfection, determination or lien priorities, 
     and nonjudicial foreclosure of encumbrances or individual 
     transferable quotas; and
       ``(vi) facilitates a reduction in excessive fishing 
     capacity in the fishery;
       ``(B) address the characteristics of fisheries that are 
     relevant to the design of suitable individual transferable 
     quota systems, the nature and extent of the privilege 
     established under an individual transferable quota system, 
     factors in making initial allocations and determining 
     eligibility for ownership of individual transferable quotas, 
     limitations on the consolidation of individual transferable 
     quotas, and methods of providing for new entrants, including, 
     in fisheries where appropriate, mechanisms to provide a 
     portion of the annual harvest for entry-level fishermen or 
     small vessel owners who do not hold invididual transferrable 
     quotas;
       ``(C) provide for effective monitoring and enforcement of 
     individual transferable quota systems, including providing 
     for the inspection of fish harvested under such systems 
     before the fish is transported beyond the geographic area 
     under a Council's jurisdiction or the jurisdiction of the 
     United States;
       ``(D) provide for appropriate penalties for violations of 
     individual transferable quota systems, including the 
     revocation of individual transferable quotas for such 
     violations; and
       ``(E) include recommendations for potential management 
     options related to individual transferable quotas, including 
     the authorization of individual units or quotas that may not 
     be transferred by the holder, and the use of leases or 
     auctions by the Federal government in the establishment or 
     allocation of individual transferable or nontransferable 
     units or quotas.
       ``(3) Any fishery management plan which includes individual 
     transferable quotas that the Secretary approved on or before 
     June 30, 1994, shall be amended by June 30, 1997, to be 
     consistent with this subsection and any other applicable 
     provisions of this Act.
       ``(4) No later than 60 days after the date of enactment of 
     the Sustainable Fisheries Act, the Secretary shall establish 
     an advisory panel on individual transferable quotas under 
     section 302(g)(3) which shall be comprised of fishery 
     scientists and representatives of the Councils, 
     representatives of affected States and fishery dependent 
     communities, fishery participants and conservation 
     organizations. Such advisory panel shall provide 
     recommendations on the guidelines required under paragraph 
     (2), a list of all United States fisheries that may be suited 
     for the development of limited access systems that include 
     individual transferable quotas, and other information as the 
     Secretary or the advisory panel deem appropriate.
       ``(5) An individual transferable quota does not constitute 
     a property right. Nothing in this section or in any other 
     provision of law shall be construed to limit the authority of 
     the Secretary to terminate or limit such individual 
     transferable quota at any time and without compensation to 
     the holder of such quota. The term `holder of an individual 
     transferable quota' includes, (A) fishing vessel owners, 
     fishermen, crew members or other citizens of the United 
     States, and (B) United States fish processors.''.

     SEC. 112. PLAN REVIEW AND IMPLEMENTATION.

       Section 304 (16 U.S.C. 1854) is amended to read as follows:

     ``SEC. 304. PLAN REVIEW AND IMPLEMENTATION.

       ``(a) Action by the Secretary After Receipt of Plan.--
       ``(1) Upon transmittal by the Council to the Secretary of a 
     fishery management plan, or amendment to such plan, the 
     Secretary shall--
       ``(A) immediately commence a review of the management plan 
     or amendment to determine whether it is consistent with the 
     national standards, the other provisions of this Act, and any 
     other applicable law; and
       ``(B) immediately publish in the Federal Register a notice 
     stating that the plan or amendment is available and that 
     written data, views, or comments of interested persons on the 
     document or amendment may be submitted to the Secretary 
     during the 60-day period beginning on the date the notice is 
     published.
       ``(2) In undertaking the review required under paragraph 
     (1), the Secretary shall--
       ``(A) take into account the data, views, and comments 
     received from interested persons;
       ``(B) consult with the Secretary of State with respect to 
     foreign fishing; and
       ``(C) consult with the Secretary of the department in which 
     the Coast Guard is operating with respect to enforcement at 
     sea and to fishery access adjustments referred to in section 
     303(a)(6).
       ``(3) The Secretary shall approve, disapprove, or partially 
     approve a plan or amendment within 30 days of the end of the 
     comment period under paragraph (1) by written notice to the 
     Council. A notice of disapproval or partial approval shall 
     specify--
       ``(A) the applicable law with which the plan or amendment 
     is inconsistent;
       ``(B) the nature of such inconsistencies; and
       ``(C) recommendations concerning the actions that could be 
     taken by the Council to conform such plan or amendment to the 
     requirements of applicable law.
       ``(4) If the Secretary disapproves or partially approves a 
     plan or amendment, the Council may submit a revised plan or 
     amendment to the Secretary for review under this subsection.
       ``(b) Action on Regulations.--
       ``(1) Upon transmittal by the Council to the Secretary of 
     proposed regulations prepared under section 303(c), the 
     Secretary shall immediately initiate an evaluation of the 
     proposed regulations to determine whether they are consistent 
     with the fishery management plan, this Act and other 
     applicable law. Within 15 days of initiating such evaluation 
     the Secretary shall make a determination and--
       ``(A) if that determination is affirmative, the Secretary 
     shall publish such regulations, with such technical changes 
     as may be necessary for clarity and an explanation of those 
     changes, in the Federal Register for a public comment period 
     of 15 to 60 days; or
       ``(B) if that determination is negative, the Secretary 
     shall notify the Council in writing of the inconsistencies 
     and provide recommendations on revisions that would make the 
     proposed regulations consistent with the fishery management 
     plan, this Act, and other applicable law.
       ``(2) Upon receiving a notification under paragraph (1)(B), 
     the Council may revise the proposed regulations and submit 
     them to the Secretary for reevaluation under paragraph (1).
       ``(3) The Secretary shall promulgate final regulations 
     within 30 days after the end of the comment period under 
     paragraph (1)(A). The Secretary shall consult with the 
     Council before making any revisions to the proposed 
     regulations, and must publish in the Federal Register an 
     explanation of any differences between the proposed and final 
     regulations.
       ``(c) Definition.-- For purposes of subsections (a) and 
     (b), the term `immediately' means on or before the 5th day 
     after the day on which a Council transmits to the Secretary a 
     plan, amendment, or proposed regulation that the Council 
     characterizes as final.
       ``(d) Secretarial Plan Review.--
       ``(1)(A) Whenever, under section 303(e), the Secretary 
     prepares a fishery management plan or amendment, the 
     Secretary shall immediately--
       ``(i) for a plan or amendment prepared under section 
     303(e)(1), submit such plan or amendment to the appropriate 
     Council for consideration and comment;
       ``(ii) publish in the Federal Register a notice stating 
     that the plan or amendment is available and that written 
     data, views, or comments of interested persons on the plan or 
     amendment may be submitted to the Secretary during the 60-day 
     period beginning on the date the notice is published.
       ``(B) Whenever a plan or amendment is submitted under 
     subsection (1)(A)(i), the appropriate Council must submit its 
     comments and recommendations, if any, regarding the plan or 
     amendment to the Secretary before the close of the 60-day 
     period referred to in subparagraph (A)(ii). After the close 
     of such 60-day period, the Secretary, after taking into 
     account any such comments and recommendations, as well as any 
     views, data, or comments submitted under subparagraph 
     (A)(ii), may adopt such plan or amendment.
       ``(2) The Secretary may propose regulations in the Federal 
     Register to implement any plan or amendment prepared by the 
     Secretary. The comment period on proposed regulations shall 
     be 60 days, except that the Secretary may shorten the comment 
     period on minor revisions to existing regulations.
       ``(3) The Secretary shall promulgate final regulations 
     within 30 days after the end of the comment period under 
     paragraph (3). The Secretary must publish in the Federal 
     Register an explanation of any substantive differences 
     between the proposed and final rules. All final regulations 
     must be consistent with the plan, with the national standards 
     and other provisions of this Act, and with any other 
     applicable law.
       ``(e) Judicial Review.--
       ``(1) Regulations promulgated by the Secretary under this 
     Act and actions described in paragraph (2) shall be subject 
     to judicial review to the extent authorized by, and in 
     accordance with, chapter 7 of title 5, United States Code, if 
     a complaint for such review is filed within 30 days after the 
     date on which the regulations are promulgated or the action 
     is published in the Federal Register, as applicable; except 
     that--
       ``(A) section 705 of such title is not applicable, and
       ``(B) the appropriate court shall only set aside any such 
     regulation or action on a ground specified in section 
     706(2)(A), (B), (C), or (D) of such title.
       ``(2) The actions referred to in paragraph (1) are actions 
     that are taken by the Secretary under regulations which 
     implement a fishery management plan, including but not 
     limited to actions that establish the date of closure of a 
     fishery to commercial or recreational fishing.
       ``(3) (A) Notwithstanding any other provision of law, the 
     Secretary shall file a response to any complaint filed in 
     accordance with paragraph (1) not later than 45 days after 
     the date the Secretary is served with that complaint, except 
     that the appropriate court may extend the period for filing 
     such a response upon a showing by the Secretary of good cause 
     for that extension.
       ``(B) A response of the Secretary under this paragraph 
     shall include a copy of the administrative record for the 
     regulations that are the subject of the petition.
       ``(4) Upon a motion by the person who files a complaint 
     under this subsection, the appropriate court shall assign the 
     matter for hearing at the earliest possible date and shall 
     expedite the matter in every possible way.
       ``(f) Establishment of Fees.--
       ``(1) The Secretary shall by regulation establish the level 
     of any fees that are authorized to be charged pursuant to 
     section 303(b)(1). The Secretary may enter into a cooperative 
     agreement with the States concerned under which the States 
     administer the permit system and the agreement may provide 
     that all or part of the fees collected under the system shall 
     accrue to the States. The level of fees charged under this 
     paragraph shall not exceed the administrative costs incurred 
     in issuing the permits.
       ``(2)(A) Notwithstanding paragraph (1), the Secretary shall 
     collect a fee from each person holding an individual 
     transferable quota pursuant to a limited access system 
     established under section 303(b)(6). Fees assessed under this 
     paragraph shall be sufficient to recover the cost of managing 
     the fishery to which the quota applies, including reasonable 
     costs for salaries, training, data analysis and other costs 
     directly related to fishery management and enforcement, up 
     to--
       ``(i) four percent annually of the value of fish harvested 
     or processed in that year under the individual transferable 
     quota; and
       ``(ii) an additional 1 percent of the value of fish 
     authorized to be harvested or processed for that year under 
     the individual transferable quota to be assessed on a person 
     receiving an initial quota or transferring a quota.
       ``(B) The Secretary, in consultation with the Councils, 
     shall promulgate regulations, prescribing the method of 
     determining the value of fish authorized to be taken, the 
     amount of each fee, and the method of collecting fees. Fees 
     collected under this paragraph shall meet the requirements of 
     section 9701(b) of title 31, United States Code. Fees 
     collected under this paragraph shall be an offsetting 
     collection and shall be available only to the Secretary for 
     the purposes of administering and implementing this Act in 
     the region in which the fees were collected.
       ``(C) Persons holding individual transferable quota 
     pursuant to limited access systems established in the surf 
     clam and ocean quahog fishery or in the wreckfish fishery are 
     exempt from the collection of fees under this paragraph for a 
     period of 5 years from the date of enactment of the 
     Sustainable Fisheries Act.
       ``(g) Effect of Certain Laws on Certain Time 
     Requirements.--The Secretary shall comply with any applicable 
     provisions of chapter 35 of title 44, United States Code, 
     chapter 6 of title 5, United States Code, and Executive Order 
     Numbered 12866, dated September 30, 1993, within the time 
     limitations specified in subsections (a) and (b).
       ``(h) Responsibility of the Secretary.--The Secretary shall 
     have general responsibility to carry out the provisions of 
     this Act. The Secretary may promulgate such regulations, in 
     accordance with section 553 of title 5, United States Code, 
     as may be necessary to discharge such responsibility.''.

     SEC. 113. ECOSYSTEM MANAGEMENT.

       Section 305 (16 U.S.C. 1855) is amended to read as follows:

     ``SEC. 305. ECOSYSTEM MANAGEMENT.

       ``(a) Report on Status of Fisheries.--The Secretary shall 
     report annually to the Congress and the Councils on the 
     status of fisheries within each Council's geographical area 
     of authority and identify those fisheries that are 
     approaching a condition of being overfished or are 
     overfished. For those fisheries managed under a fishery 
     management plan, the status shall be assessed using the 
     criteria for overfishing specified by the appropriate Council 
     under section 303(a)(10). A fishery shall be classified as 
     approaching a condition of being overfished if, based on 
     trends in fishing effort, fishery resource size, and other 
     appropriate factors, the Secretary estimates that the fishery 
     will become overfished within two years. Any fishery 
     determined to be a commercial fishery failure under section 
     316, shall be deemed to be overfished for the purposes of 
     subsections (a) and (b).
       ``(b) Fishery Recovery Effort.--
       ``(1) The Council shall take immediate action to prepare a 
     fishery management plan, a plan amendment, or proposed 
     regulations for fisheries under such Council's authority--
       ``(A) to prevent overfishing of a fishery from occurring 
     whenever such fishery is classified under subsection (a) as 
     approaching an overfished condition, or
       ``(B) to stop overfishing of a fishery whenever such 
     fishery is classified under subsection (a) as overfished, and 
     to rebuild affected stocks of fish.
       ``(2) The Council shall submit a fishery management plan, 
     amendment or proposed regulations required under paragraph 
     (1) to the Secretary within 1 year from the date of 
     transmittal of the report on the status of stocks under 
     subsection (a). For a fishery that is overfished, such 
     fishery management plan, amendment or proposed regulations 
     shall specify a time period for stopping overfishing and 
     rebuilding the fishery. The time period shall be as short as 
     possible, taking into account the status and biology of the 
     overfished stock of fish, the needs of fishery-dependent 
     communities, and the interaction of the overfished stock of 
     fish within the marine ecosystem. The time period may not be 
     more than 10 years, except under extraordinary circumstances.
       ``(3) During the development of a fishery management plan, 
     a plan amendment, or proposed regulations under this 
     subsection, the Council may request that the Secretary 
     promulgate emergency regulations under subsection (e)(2) to 
     reduce overfishing. Any request by the Council under this 
     paragraph shall be deemed an emergency.
       ``(c) Fish Habitat--
       ``(1) The Secretary, in cooperation with the Councils and 
     the Secretary of the Interior, after notice and public 
     comment, shall identify the essential fish habitat for each 
     fishery for which a fishery management plan is in effect. The 
     identification shall be based on the description of essential 
     fish habitat contained in the plan.
       ``(2) Each Council shall--
       ``(A) notify the Secretary regarding, and may comment on 
     and make recommendations concerning, any activity undertaken, 
     or proposed to be undertaken, by any Federal or State agency 
     that, in the view of the Council, may have an adverse effect 
     on essential fish habitat of a fishery under its authority; 
     and
       ``(B) comment on and make recommendations to any Federal or 
     State department or agency concerning any such activity that, 
     in the view of the Council is likely to substantially affect 
     the habitat of an anadromous fishery resource under its 
     jurisdiction.
       ``(3) If the Secretary receives information from a Council 
     or determines from other sources that an action authorized, 
     funded, carried out, or proposed to be carried out by any 
     Federal agency may result in the destruction or adverse 
     modification of any essential fish habitat identified under 
     paragraph (1), the Secretary shall comment on and make 
     recommendations to the Federal agency concerning that action.
       ``(4) Within 45 days after receiving a comment or 
     recommendation under paragraphs (2) or (3) from a Council or 
     the Secretary, a Federal agency shall provide a detailed 
     response, in writing, to the commenting Council and the 
     Secretary regarding the matter. The response shall include a 
     description of measures being considered by the agency for 
     avoiding, mitigating, or offsetting the impact of the 
     activity on such habitat. In the case of a response that is 
     inconsistent with a recommendation from any Council or the 
     Secretary, the Federal agency shall explain its reasons for 
     not following the recommendations.
       ``(d) Gear Evaluation and Notification of Entry.--
       ``(1) Each Council shall submit to the Secretary by June 1, 
     1995, information describing (A) all fishing technologies 
     employed under such Council's authority; and (B) all 
     fisheries under the authority of such Council. The Secretary 
     shall compile such information, along with information to 
     comply with both (A) and (B) for fisheries to which section 
     302(a)(3) applies.
       ``(2) By July 15, 1995, the Secretary shall publish a 
     proposed list of all technologies and fisheries, for each 
     Council and for fisheries to which section 302(a)(3) applies, 
     in the Federal Register for a public comment period of not 
     less than 60 days. The Secretary shall include with such list 
     specific guidelines for determining when a technology or 
     fishery is sufficiently different from those listed as to 
     require notification under paragraph (3). Within 30 days 
     after the close of the public comment period the Secretary 
     shall publish in the Federal Register a final list (including 
     the guidelines), after taking into account any public comment 
     received.
       ``(3) Beginning on the date that is 180 days after the date 
     of the publication of the final list required under paragraph 
     (2), no person or vessel shall employ a fishing technology or 
     engage in a fishery that is not included on the final list 
     for the appropriate Council or for fisheries to which section 
     302(a)(3) applies without first giving 90 days advance 
     written notice of the intent to employ such unlisted 
     technology or engage in such unlisted fishery to the 
     appropriate Council, or the Secretary with respect to a 
     fishery to which section 302(a)(3) applies. Such notice shall 
     be by first class mail, return receipt requested, and shall 
     include information on the use of the unlisted technology in 
     other fisheries, if any, and a detailed description, 
     including drawings, maps or diagrams if appropriate, of the 
     unlisted technology or unlisted fishery which such person or 
     vessel seeks to employ or engage in.
       ``(4) A Council may submit to the Secretary amendments to 
     the final list published under paragraph (2) to reflect any 
     substantial changes in the fishing technologies employed or 
     fisheries engaged in under the authority of such Council. The 
     Secretary may submit any amendments for fisheries to which 
     section 302(a)(3) applies. The Secretary shall publish any 
     such amendments in the Federal Register as proposed 
     amendments (along with any proposed revisions to the 
     guidelines) to the final list for a public comment period of 
     not less than 60 days. Within 45 days of the close of the 
     comment period, the Secretary shall publish a revised final 
     list incorporating such proposed amendments, after taking 
     into account any public comments received.
       ``(5) A Council may request the Secretary to promulgate 
     emergency regulations under subsection (e) prohibiting any 
     persons or vessels from employing an unlisted technology or 
     engaging in an unlisted fishery if the appropriate Council, 
     or the Secretary for fisheries to which section 302(a)(3) 
     applies, determines that use of such technology or entry into 
     such fishery would compromise the effectiveness of 
     conservation and management efforts under this Act.
       ``(6) If, after providing the notice required under 
     paragraph (3), no emergency regulations are implemented under 
     paragraph (5), the person or vessel submitting notice under 
     paragraph (3) may, after the required 90 day period has 
     lapsed, employ the unlisted technology or enter the unlisted 
     fishery to which such notice applies. The signed return 
     receipt shall constitute adequate evidence of the submittal 
     of such notice and the date upon which the 90-day period 
     begins.
       ``(7) A violation of this subsection shall be considered a 
     violation of section 307, punishable under section 308.
       ``(e) Emergency Actions.--
       ``(1) If the Secretary finds that an emergency exists 
     involving any fishery, he may promulgate emergency 
     regulations necessary to address the emergency, without 
     regard to whether a fishery management plan exists for such 
     fishery.
       ``(2) If a Council finds that an emergency exists involving 
     any fishery within its jurisdiction, whether or not a fishery 
     management plan exists for such fishery--
       ``(A) the Secretary shall promulgate emergency regulations 
     under paragraph (1) to address the emergency if the Council, 
     by unanimous vote of the voting members of the Council, 
     requests the taking of such action; and
       ``(B) the Secretary may promulgate emergency regulations 
     under paragraph (1) to address the emergency if the Council, 
     by less than a unanimous vote, requests the taking of such 
     action.
       ``(3) Any emergency regulation which changes an existing 
     fishery management plan shall be treated as an amendment to 
     such plan for the period in which such regulation is in 
     effect. Any emergency regulation promulgated under this 
     subsection--
       ``(A) shall be published in the Federal Register together 
     with the reasons therefor;
       ``(B) shall, except as provided in subparagraph (C), remain 
     in effect for not more than 180 days after the date of 
     publication, and may be extended by publication in the 
     Federal Register for an additional period of not more than 
     180 days, provided the public has had an opportunity to 
     comment on the emergency regulation, and, in the case of a 
     Council recommendation for emergency regulations, the Council 
     is actively preparing a fishery management plan, amendment, 
     or proposed regulations to address the emergency on a 
     permanent basis;
       ``(C) that responds to a public health emergency may remain 
     in effect until the circumstances that created the emergency 
     no longer exist, provided that the Secretary of Health and 
     Human Services concurs with the Secretary's action and the 
     public has an opportunity to comment after the regulation is 
     published;
       ``(D) that reduces overfishing may be approved without 
     regard to the requirements of section 301(a)(1); and
       ``(E) may be terminated by the Secretary at an earlier date 
     by publication in the Federal Register of a notice of 
     termination, except for emergency regulations promulgated 
     under paragraph (2) in which case such early termination may 
     be made only upon the agreement of the Secretary and the 
     Council concerned.
       ``(4) The Secretary may, pursuant to guidelines established 
     by a Council in a fishery management plan, close or restrict 
     a particular fishery covered by such fishery management plan 
     in order to prevent overfishing or reduce bycatch. Any such 
     guidelines shall specify appropriate means for providing 
     timely notice to fishermen of any closure or restriction. In 
     exercising the authority granted under this paragraph, the 
     Secretary shall not be required to provide an opportunity for 
     notice and comment if such closure or restriction is done in 
     accordance with the fishery management plan guidelines and 
     does not extend beyond the end of the current fishing period 
     established for that fishery by the fishery management 
     plan.''.

     SEC. 114. STATE JURISDICTION.

       (a) Section 306(b) (16 U.S.C. 1856(b)) is amended by adding 
     at the end the following:
       ``(3) If the State involved requests that a hearing be held 
     pursuant to paragraph (1), the Secretary shall conduct such 
     hearing prior to taking any action under paragraph (1).''.
       (b) Section 306(c)(1) (16 U.S.C. 1856(c)(1) is amended--
       (1) by striking ``and'' in subparagraph (A);
       (2) by striking the period at the end of subparagraph (B) 
     and inserting a semicolon and the word ``and''; and
       (3) by inserting after subparagraph (B) the following:
       ``(C) the owner or operator of the vessel submits reports 
     on the tonnage of fish received from U.S. vessels and the 
     locations from which such fish were harvested, in accordance 
     with such procedures as the Secretary by regulation shall 
     prescribe.''.

     SEC. 115. PROHIBITED ACTS.

       (a) Section 307(1)(J)(i) (16 U.S.C. 1857(1)(J)(i)) is 
     amended by striking ``American Lobster Fishery Management 
     Plan, as implemented by'' and ``, or any successor to that 
     plan, implemented under this title''.
       (b) Section 307(1)(L) (16 U.S.C. 1857(1)(L)) is amended to 
     read as follows:
       ``(L) to forcibly assault, resist, oppose, impede, 
     intimidate, sexually harass, or interfere with any observer 
     on a vessel under this Act, or any data collector employed by 
     or under contract to the National Marine Fisheries 
     Service;''.
       (c) Section 307(1)(M) (16 U.S.C. 1857(1)(M)) is amended to 
     read as follows:
       ``(M) to engage in large-scale driftnet fishing on a vessel 
     of the United States or a vessel subject to the jurisdiction 
     of the United States upon the high seas beyond the exclusive 
     economic zone of any nation or within the exclusive economic 
     zone of the United States. Any vessel that is shoreward of 
     the outer boundary of the exclusive economic zone of the 
     United States or beyond the exclusive economic zone of any 
     nation, and that has onboard gear that is capable of use for 
     large-scale driftnet fishing, shall be presumed to be engaged 
     in such fishing, but that presumption may be rebutted; or''.
       (d) Section 307(2)(A) (16 U.S.C. 1857(2)(A)) is amended to 
     read as follows:
       ``(A) in fishing within the boundaries of any State, 
     except--
       ``(i) recreational fishing permitted under section 201(i),
       ``(ii) fish processing permitted under section 306(c), or
       ``(iii) transshipment at sea of fish products within the 
     boundaries of any State in accordance with a permit approved 
     under section 204(b)(6)(A)(ii);''.
       (e) Section 307(2)(B) (16 U.S.C. 1857(2)(B)) is amended by 
     striking ``201(j)'' and inserting ``201(i)''.
       (f) Section 307(3) (16 U.S.C. 1857(3)) is amended to read 
     as follows:
       ``(3) for any vessel of the United States, and for the 
     owner or operator of any vessel of the United States, to 
     transfer at sea directly or indirectly, or attempt to so 
     transfer at sea, any United States harvested fish to any 
     foreign fishing vessel, while such foreign vessel is within 
     the exclusive economic zone or within the boundaries of any 
     State except to the extent that the foreign fishing vessel 
     has been permitted under section 204(b)(6)(B) or section 
     306(c) to receive such fish;''.
       (g) Section 307(4) (16 U.S.C. 1857(4)) is amended by 
     inserting ``or within the boundaries of any State'' after 
     ``zone''.

     SEC. 116. CIVIL PENALTIES AND PERMIT SANCTIONS.

       (a) The first sentence of section 308(b) (16 U.S.C. 
     1858(b)) is amended to read as follows: ``Any person against 
     whom a civil penalty is assessed under subsection (a), or 
     against whom a permit sanction is imposed under subsection 
     (g) (other than a permit suspension for nonpayment of penalty 
     or fine), may obtain review thereof in the United States 
     district court for the appropriate district by filing a 
     complaint against the Secretary in such court within 30 days 
     from the date of such order.''.
       (b) Section 308(g)(1)(C) (16 U.S.C. 1858(g)(1)(C)) is 
     amended by striking the matter from ``(C) any'' through 
     ``overdue'' and inserting the following: ``(C) any amount in 
     settlement of a civil forfeiture imposed on a vessel or other 
     property, or any civil penalty or criminal fine imposed on a 
     vessel or owner or operator of a vessel or any other person 
     who has been issued or has applied for a permit under any 
     marine resource law enforced by the Secretary, has not been 
     paid and is overdue,''.
       (c) Section 308(16 U.S.C. 1858) is amended by inserting at 
     the end thereof the following:
       ``(h) After deduction for any administrative or enforcement 
     costs incurred, all funds collected under this section shall 
     be deposited in a separate account of the Ocean Conservation 
     Trust Fund established under section 315.''.

     SEC. 117. ENFORCEMENT.

       (a) Section 311(e)(1) (16 U.S.C. 1861(e)(1)) is amended--
       (1) by striking ``fishery'' each place it appears and 
     inserting ``marine'';
       (2) by inserting ``of not less than 20 percent of the 
     penalty collected'' after ``reward'' in subparagraph (B), and
       (3) by striking subparagraph (E) and inserting the 
     following:
       ``(E) claims of parties in interest to property disposed of 
     under section 612(b) of the Tariff Act of 1930 (19 U.S.C. 
     1612(b)), as made applicable by section 310(c) of this Act or 
     by any other marine resource law enforced by the Secretary, 
     to seizures made by the Secretary, in amounts determined by 
     the Secretary to be applicable to such claims at the time of 
     seizure; and''.
       (b) Section 311(e)(2) (16 U.S.C. 1861(e)(2)) is amended to 
     read as follows:
       ``(2) Any person found in an administrative or judicial 
     proceeding to have violated this Act or any other marine 
     resource law enforced by the Secretary shall be liable for 
     the cost incurred in the sale, storage, care, and maintenance 
     of any fish or other property lawfully seized in connection 
     with the violation.''.
       (c) Section 311 (16 U.S.C. 1861) is amended by 
     redesignating subsection (f) as subsection (h), and by 
     inserting the following after subsection (e):
       ``(f) Annual Report on Enforcement.--Each year at the time 
     the President's budget is submitted to the Congress, the 
     Secretary and the Secretary of the Department in which the 
     Coast Guard is operating shall, after consultation with the 
     Councils, submit a report on the effectiveness of the 
     enforcement of fishery management plans and regulations to 
     implement such plans under the jurisdiction of each Council, 
     including--
       ``(1) an analysis of the adequacy of federal personnel and 
     funding resources related to the enforcement of fishery 
     management plans and regulations to implement such plans; and
       ``(2) recommendations to improve enforcement that should be 
     considered in developing amendments to plans or to 
     regulations implementing such plans.
       ``(g) Fishermen's Information Networks.--The Secretary, in 
     consultation with the Secretary of the department in which 
     the Coast Guard is operating, shall conduct a program to 
     encourage the formation of volunteer networks, to be 
     designated as Fishermen's Information Networks, to advise on 
     and assist in the monitoring, reporting, and prevention of 
     violations of this Act.''.

     SEC. 118. NORTH PACIFIC FISHERIES CONSERVATION.

       Section 313 (16 U.S.C. 1862) is amended--
       (1) by striking ``research plan'' in the section heading 
     and inserting ``conservation''; and
       (b) by adding at the end the following:
       ``(f) Reduction of Waste.--
       ``(1) No later than January 1, 1996, the North Pacific 
     Fishery Management Council shall include in each fishery 
     management plan under its jurisdiction conservation and 
     management measures, including fees or other incentives, to 
     reduce bycatch in each fishery. Notwithstanding section 
     304(d), in implementing this subsection the Council may 
     recommend, and the Secretary may approve and implement any 
     such recommendation, consistent with the other provisions of 
     this Act, a system of fees to provide an incentive to reduce 
     bycatch, and, in particular, economic and regulatory 
     discards. Any such system of fees or incentives shall be fair 
     and equitable to all fishermen and United States fish 
     processors, and shall not have economic allocation as its 
     sole purpose.
       ``(2) Not later than January 1, 1997, the North Pacific 
     Fishery Management Council shall recommend, and the Secretary 
     may approve and implement any such recommendation, consistent 
     with the other provisions of this Act, conservation and 
     management measures to ensure total catch measurement in each 
     fishery under the Council's jurisdiction. Such conservation 
     and management measures shall ensure the accurate enumeration 
     of target species, economic discards, and regulatory 
     discards.
       ``(3) Beginning on January 1, 1998, such conservation and 
     management measures shall include an allocation preference to 
     fishing and processing practices within each gear group that 
     result in the lowest levels of economic discards, processing 
     waste, regulatory discards, and other bycatch. In determining 
     which practices shall be given priority, the reduction of 
     economic discards shall be given the greatest weight, 
     followed by processing waste (where applicable), regulatory 
     discards and other bycatch, in that order.
       ``(4) In determining the level of target species catch, 
     economic discards, regulatory discards, other bycatch, and 
     processing waste, the Council and Secretary shall base such 
     determinations on observer data or the best available 
     information.
       ``(5) In the case of fisheries occurring under an 
     individual transferable quota system under the jurisdiction 
     of the North Pacific Fishery Management Council after January 
     1, 1998--
       ``(A) the Council shall designate non-target species, 
     bycatch species, and regulatory discards for each such 
     fishery;
       ``(B) the Council may not recommend, and the Secretary may 
     not approve, any assignment or allocation of individual 
     transferable quotas for regulatory discards, or non-target 
     species for those fisheries, other than for each individual 
     fishing season on an annual basis pursuant to subparagraph 
     (C) of this subsection; and
       ``(C) the allocation preference required under paragraph 
     (3) shall be implemented by giving priority in the allocation 
     of quotas for regulatory discards and non-target species and 
     to fishing practices that result in the lowest levels of 
     economic discards, regulatory discards, processing waste, and 
     other bycatch.
       ``(6) Nothing in this section shall be construed to 
     preclude the North Pacific Fishery Management Council from 
     allocating a portion of any quota for a directed fishery for 
     use as bycatch in another fishery or fisheries, if the 
     Council determines such allocation is necessary to prosecute 
     a fishery, after taking into account the requirements of this 
     section regarding reduction of bycatch and processing waste.
       ``(g) Full Retention and Full Utilization.--
       ``(1) The North Pacific Fishery Management Council shall, 
     consistent with the other provisions of this Act, submit to 
     the Secretary by January 1, 1997, a plan to phase-in by 
     January 1, 2000, to the maximum extent practicable, fishery 
     management plan amendments to require full retention by 
     fishing vessels and full utilization by United States fish 
     processors of all fishery resources, except regulatory 
     discards, caught under the jurisdiction of such Council if 
     such fishery resources cannot be quickly returned alive to 
     the sea with the expectation of extended survival.
       ``(2) The plan shall include conservation and management 
     measures to minimize processing waste and ensure the optimum 
     utilization of target species, including standards setting 
     minimum percentages of target species harvest which must be 
     processed for human consumption.
       ``(3) In determining the maximum extent practicable, the 
     North Pacific Fishery Management Council shall consider--
       ``(A) the state of available technology;
       ``(B) the extent to which species brought on board can be 
     safely returned alive, with the expectation of extended 
     survival, to the sea;
       ``(C) the extent to which each species is fully utilized as 
     a target species by United States fishermen;
       ``(D) the impact of different processing practices on the 
     price paid to fishermen and processors;
       ``(E) the nature and economic costs of each specific 
     fishery; and
       ``(F) the effect of a full retention or full utilization 
     requirement in a given fishery on other fisheries when 
     compared with the beneficial effect of reducing economic 
     discards and processing waste.
       ``(4) Notwithstanding section 304(f), the North Pacific 
     Fishery Management Council may propose, and the Secretary may 
     approve and implement any such recommendation, consistent 
     with the other provisions of this Act, a system of fines or 
     other incentives to implement this section. Any such fines or 
     incentive system shall be fair and equitable to all fishing 
     vessels and United States fish processors, and shall not have 
     economic allocation as its sole purpose.
       ``(h) Regulatory Discards.--
       ``(1) Regulatory discards shall not be considered an 
     economic discard for purposes of this section, however, the 
     North Pacific Fishery Management Council shall seek to reduce 
     the incidental catch of regulatory discards to the maximum 
     extent practicable while allowing for the prosecution of 
     fisheries under its jurisdiction.
       ``(2) Not later than January 1, 1996, the North Pacific 
     Fishery Management Council shall propose, and the Secretary 
     may approve and implement any such recommendation, consistent 
     with the other provisions of this Act, for each groundfish 
     fishery under the Council's jurisdiction, conservation and 
     management measures to reduce the incidental harvest of 
     regulatory discards to the minimum level necessary to 
     prosecute directed fisheries for designated target species, 
     and to otherwise meet the requirements of this section. 
     Notwithstanding section 304(f), such conservation and 
     management measures may include a system of fines, caps, or 
     other incentives to reduce the incidental harvest of 
     regulatory discards. Any system of fines or incentives under 
     this section shall be fair and equitable to all fishing 
     vessels and United States fish processors, and shall not have 
     economic allocation as its sole purpose.
       ``(3) The North Pacific Fishery Management Council shall 
     establish for each fishery which incidentally harvests 
     regulatory discards under the Council's jurisdiction a cap 
     which prevents such regulatory discards from being overfished 
     or from being placed in risk of being overfished. Upon 
     reaching such cap, the commercial fishery in which such 
     regulatory discards are incidentally caught shall be closed 
     for that season.
       ``(i) Observer Program.--
       ``(1) Beginning January 1, 1996, the North Pacific Fishery 
     Management Council shall require under the authority granted 
     to it by subsection (a)--
       ``(A) 100 percent observer coverage on all fishing vessels 
     which can safely accommodate an observer or observers, and at 
     all United States fish processors, and
       ``(B) for vessels which cannot safely accommodate an 
     observer, statistically reliable sampling of a fishing 
     vessel's effort in each fishery in which that fishing vessel 
     participates,

     when such vessel or processor is fishing in a fishery under 
     the North Pacific Fishery Management Council's jurisdiction. 
     In implementing subparagraph (A) the North Pacific Fishery 
     Management Council shall require that more than one observer 
     be stationed on a fishing vessel or at a United States fish 
     processor whenever the Council determines that more than one 
     such observer is necessary to accurately monitor that vessel 
     or processor's operation.
       ``(2) Observers stationed on fishing vessels or at United 
     States fish processors under the authority of this section 
     shall be paid by the Secretary using funds deposited in the 
     North Pacific Fishery Observer Fund. Such payment shall not 
     make an observer an employee of the Federal Government, 
     unless such observer is otherwise employed by an agency of 
     the United States.
       ``(3) Failure to pay the fee established by the North 
     Pacific Fishery Management Council under subsection (a) shall 
     be a considered a violation of section 307, punishable under 
     section 308. Any fines collected pursuant to the authority 
     granted by this subsection shall be deposited in the North 
     Pacific Fishery Observer Fund account in the United States 
     Treasury, and shall remain available until expended under the 
     terms of that fund.
       ``(4) Notwithstanding sections 304(f) and subsection (b), 
     the Secretary is authorized to recover from vessels 
     participating in a fishery under an individual fishing quota 
     regime or other limited access program established by the 
     North Pacific Fishery Management Council, the full cost of 
     any observers stationed on such vessel (including all costs 
     for salaries, expenses, equipment, food and lodging, 
     transportation, insurance, and analysis of observer data, 
     plus reasonable costs for training and administrative 
     overhead). Each participant in an individual fishing quota 
     regime shall only be required to contribute the same 
     proportion of the costs as that participant's quota shares 
     represent to the total number of quota shares in such regime. 
     To the extent that the costs recovered under this paragraph 
     exceed the fee established by the Council under subsection 
     (b), the Secretary shall deduct any payment by a vessel under 
     subsection (b) from the amount owed by such vessel under this 
     paragraph. The Secretary shall deposit any fees collected 
     under this paragraph in the North Pacific Fishery Observer 
     Fund account in the United States Treasury.
       ``(j) Industry Assistance.--
       ``(1) The Secretary shall submit a plan by June 1, 1995, to 
     the Committee on Commerce, Science, and Transportation of the 
     Senate and the Committee on Merchant Marine and Fisheries of 
     the House of Representatives to develop jointly with industry 
     accurate methods of weighing the fish harvested by U.S. 
     fishing vessels in fisheries under the jurisdiction of the 
     North Pacific Fishery Management Council. Such plan shall 
     include methods for assessing contributions from industry to 
     fund such development, as well as recommendations from the 
     Secretary concerning the level of funds needed to 
     successfully implement the plan in Fiscal Year 1996.
       ``(2) The Secretary shall submit by January 1, 1995, to the 
     Committee on Commerce, 1995, to the Committee on Commerce, 
     Science, and Transportation of the Senate and the Committee 
     on Merchant Marine and Fisheries of the House of 
     Representatives a plan to develop markets and harvesting and 
     processing techniques for arrowtooth flounder. The Secretary 
     shall include in such plan recommendations concerning the 
     level of funds needed to successfully implement the plan in 
     Fiscal Year 1996.
       ``(3) For fiscal years 1995, 1996, 1997, and 1998, $50,000 
     is authorized to be appropriated for the purposes of 
     implementing paragraph (1), and $250,000 is authorized to be 
     appropriated for programs to implement paragraph (2).
       ``(k) Definition.--For the purposes of this section, 
     `processing waste' means that portion of a fish which is 
     processed and which could be used for human consumption or 
     other commercial use, but which is not so used.''.

     SEC. 119. TRANSITION TO SUSTAINABLE FISHERIES.

       (a) The Act is amended by adding at the end of title III 
     the following:

     ``SEC. 315. TRANSITION TO SUSTAINABLE FISHERIES.

       ``(a) Sustainable Development Strategy.--
       ``(1) At the discretion of the Secretary or at the request 
     of the Governor of an affected State or a fishery dependent 
     community, the Secretary, in consultation with the Councils 
     and Federal agencies, as appropriate, may work with regional 
     authorities, affected States, fishery dependent communities, 
     the fishing industry, conservation organizations, and other 
     interested parties, to develop a sustainable development 
     strategy for any fishery classified as overfished under 
     section 305(a) or determined to be a commercial fishery 
     failure under section 316.
       ``(2) Such sustainable development strategy shall--
       ``(A) take into consideration the economic, social, and 
     ecological factors affecting the fishery and provide 
     recommendations for addressing such factors in the 
     development of a fishery recovery effort under section 
     305(b);
       ``(B) identify Federal and State programs which can be used 
     to provide assistance to fishery dependent communities during 
     development and implementation of a fishery recovery effort;
       ``(C) develop a balanced and comprehensive long-term plan 
     to guide the transition to a sustainable fishery, identifying 
     alternative economic opportunities and establishing long-term 
     objectives for the fishery including vessel types and sizes, 
     harvesting and processing capacity, and optimal fleet size;
       ``(D) establish procedures to implement such a plan and 
     facilitate consensus and coordination in regional decision-
     making; and
       ``(E) include any program established under subsection (b) 
     to reduce the number of vessels or level of capital 
     investment in the fishery.
       ``(2) Report.--The Secretary shall complete and submit to 
     the Congress a report on any sustainable development strategy 
     developed under this section.
       ``(b) Buy-out Program.--
       ``(1) The Secretary, in consultation with the appropriate 
     Council, may develop and implement a buy-out program for 
     fishing vessels or permits in a fishery for the purpose of 
     reducing the number of fishing vessels and fishing effort in 
     such fishery, if the Secretary, with the concurrence of the 
     majroity of the voting members of such Council, determines 
     that a buy-out program is necessary for the development and 
     implementation of a fishery recovery effort under section 
     305(b).
       ``(2) Any buy-out program developed or implemented in a 
     fishery shall--
       ``(A) require a fishery management plan to be in place for 
     such fishery that is adequate to limit access to the fishery 
     and prevent the replacement of fishing effort removed by the 
     buy-out program;
       ``(B) require fishing vessels or permits acquired under 
     such program to be disposed of in a manner ensuring that such 
     vessels or permits do not re-enter the fishery or contribute 
     to excess fishing effort in other fisheries;
       ``(C) establish criteria for determining types and numbers 
     of vessels which are eligible for participation in such 
     program consistent with--
       ``(i) any strategy developed under subsection (a);
       ``(ii) the requirements of applicable fishery management 
     plans; and
       ``(iii) the need to minimize program costs;
       ``(D) establish procedures (such as submission of owner bid 
     under an auction system or fair market-value assessment) to 
     be used in determining the level of payment for fishing 
     vessels or permits acquired under the program; and
       ``(E) identify Federal and non-Federal mechanisms for 
     funding the buy-out program, consistent with paragraphs (3) 
     and (4).
       ``(3) The Federal share of the cost of a buy-out program 
     implemented under this section shall not exceed 50 percent of 
     the cost of that program. Such Federal share may be provided 
     from monies made available under subsection (d)of this 
     section, section 316(b) of this Act, or under section 2(b) of 
     the Act of August 11, 1939 (15 U.S.C. 713c-3(b)).
       ``(4) Notwithstanding section 305(f)(1), the Secretary, 
     with the concurrence of a majority of the voting members of 
     the affected Council, may establish a fee system to collect 
     those funds required for the non-Federal share of such 
     program that are not available from other non-Federal 
     sources. Under such fee system, the Secretary may assess an 
     annual fee on holders of fishing permits in the fishery for 
     which the buy-out program is established which may not exceed 
     5 percent annually of the value of the fish harvested under 
     the fishing permit. Assessments may not be used to pay any 
     costs of administrative overhead or other costs not directly 
     incurred in carrying out the specific buy-out program under 
     which they are collected and shall be deposited in the Ocean 
     Conservation Trust fund established under subsection (d).
       ``(5)(A) Upon completion of a proposal for a buy-out 
     program (including any fee system to be established under 
     this subsection), the Secretary shall immediately--
       ``(i) submit the proposed program and regulations necessary 
     for its implementation to the appropriate Council for 
     consideration and comment;
       ``(ii) publish in the Federal Register a notice stating 
     that the proposed program and regulations are available and 
     that written data, views, or comments of interested persons 
     on the proposed program and regulations may be submitted to 
     the Secretary during the 60-day period beginning on the date 
     the notice is published.
       ``(B) During the 60-day public comment period--
       ``(i) the Secretary shall conduct a public hearing in each 
     State affected by the proposed buy-out program; and
       ``(ii) the appropriate Council shall submit its comments 
     and recommendations, if any, regarding the proposed program 
     and regulations.
       ``(C) Within 45 days after the close of the public comment 
     period, the Secretary, in consultation with the affected 
     Council, shall analyze the public comment received and 
     publish a final buy-out program and regulations for its 
     implementation. The Secretary shall include an explanation of 
     any substantive differences between the proposed and final 
     program and regulations.
       ``(c) Task Force.--The Secretary shall establish a task 
     force to assist in the development of a sustainable 
     development strategy or a buy-out program under this section. 
     Such task force shall, at a minimum, consist of members of 
     the affected communities and individuals with expertise in 
     fishery management and conservation, economics, and 
     sociology. Members of the task force are authorized to 
     receive per diem and travel expenses consistent with section 
     302 of this Act.
       ``(d) Ocean Conservation Trust Fund.--There is established 
     in the Treasury an Ocean Conservation Trust Fund. The Fund 
     shall be available, without appropriation or fiscal year 
     limitation, only to the Secretary for the purpose of carrying 
     out the provisions of this section subject to the 
     restrictions of this Act. This fund shall consist of all 
     monies deposited into it in accordance with this section and 
     section 308(h). Sums in the Fund that are not currently 
     needed for the purpose of this section shall be kept on 
     deposit or invested in obligations of, or guaranteed by, the 
     United States.

     ``SEC. 316. FISHERIES DISASTER RELIEF.

       ``(a) Determination of Failure.--At the discretion of the 
     Secretary or at the request of the Governor of an affected 
     State or a fishery dependent community, the Secretary shall 
     determine whether there is a commercial fishery failure due 
     to a fishery resource disaster as a result of--
       ``(1) natural causes;
       ``(2) man-made causes beyond the control of fishery 
     managers to mitigate through conservation and management 
     measures; or
       ``(3) undetermined causes.
       ``(b) Economic Assistance.--
       ``(1) Upon the determination under subsection (a) that 
     there is a commercial fishery failure, the Secretary is 
     authorized to make sums available to be used by the affected 
     State, fishery dependent community, or by the Secretary in 
     cooperation with the affected State or fishery dependent 
     community for--
       ``(A) assessing the economic and social effects of the 
     commercial fishery failure; and
       ``(B) any activity that the Secretary determines is 
     appropriate to restore the fishery or prevent a similar 
     failure in the future and to assist a fishery dependent 
     community affected by such failure.
       ``(2) Before making funds available for an activity 
     authorized under this section, the Secretary shall make a 
     determination that such activity will not expand the size or 
     scope of the commercial fishery failure into other fisheries 
     or other geographic regions.
       ``(c) Federal Cost-sharing.--The Federal share of the cost 
     of any activity carried out under the authority of this 
     section shall not exceed 75 percent of the cost of that 
     activity.
       ``(d) Authorization of Appropriations.--There are 
     authorized to be appropriated to the Secretary such sums as 
     are necessary for each of the fiscal years 1995, 1996, 1997, 
     1998 and 1999, provided that such sums are designated by 
     Congress as an emergency requirement pursuant to section 
     251(b)(2)(D)(i) of the Balanced Budget and Emergency Deficit 
     Control Act of 1985.''.
       (b) Conforming Amendment.--Section 2(b)(1)(A) of the Act of 
     August 11, 1939 (15 U.S.C. 713c-3(b)(1)(A)) is amended--
       (1) by striking ``and'' at the end of clause (ii); and
       (2) by adding at the end the following new clause:
       ``(iii) to fund the Federal share of a buy-out program 
     established under section 315(b) of the Magnuson Fishery 
     Conservation and Management Act.''.
               TITLE II--FISHERY MONITORING AND RESEARCH

     SEC. 201. CHANGE OF TITLE.

       The heading of title IV (16 U.S.C. 1881 et seq.) is amended 
     to read as follows:
             ``TITLE IV--FISHERY MONITORING AND RESEARCH''.

     SEC. 202. REGISTRATION AND DATA MANAGEMENT.

       Title IV (16 U.S.C. 1881 et seq.) is amended by inserting 
     after the title heading the following:

     ``SEC. 401. REGISTRATION AND DATA MANAGEMENT.

       ``(a) Standardized Fishing Vessel Registration and Data 
     Management System.--The Secretary shall, in cooperation with 
     the Secretary of the department in which the Coast Guard is 
     operating, the States, the Councils, and Marine Fisheries 
     Commissions, develop recommendations for implementation of a 
     standardized fishing vessel registration and data management 
     system on a national or regional basis. The proposed system 
     shall be developed after consultation with interested 
     governmental and nongovernmental parties and shall--
       ``(1) be designed to standardize the requirements of vessel 
     registration and data collection systems required by this 
     Act, the Marine Mammal Protection Act (16 U.S.C. 1361 et 
     seq.), and any other marine resource law implemented by the 
     Secretary;
       ``(2) integrate programs under existing fishery management 
     plans into a nonduplicative data collection and management 
     system;
       ``(3) avoid duplication of existing state, tribal, or 
     federal systems (other than a federal system under paragraph 
     (1)) and rely, to the maximum extent practicable, on 
     information collected from existing systems;
       ``(4) provide for implementation through cooperative 
     agreements with appropriate state, regional, or tribal 
     entities;
       ``(5) establish standardized units of measurement, 
     nomenclature, and formats for the collection and submission 
     of information;
       ``(6) minimize the paperwork required for vessels 
     registered under the system;
       ``(7) include all species of fish within the geographic 
     areas of authority of the Councils and all fishing vessels, 
     except for private recreational fishing vessels used 
     exclusively for pleasure; and
       ``(8) prescribe procedures necessary to ensure the 
     confidentiality of information collected under this section.
       ``(b) The registration and data management system should, 
     at a minimum, obtain the following information for each 
     fishing vessel--
       ``(1) the name and official number or other identification, 
     together with the name and address of the owner or operator 
     or both;
       ``(2) vessel capacity, type and quantity of fishing gear, 
     mode of operation (catcher, catcher processor or other), and 
     such other pertinent information with respect to vessel 
     characteristics as the Secretary may require;
       ``(3) identification of the fisheries in which the fishing 
     vessel participates;
       ``(4) estimated amounts of fish caught, and processed (if 
     applicable) in each fishery; and
       ``(5) the geographic area of operations and the season or 
     period during which the fishing vessel operates.
       ``(c) The registration and data management system should, 
     at a minimum, provide basic fisheries performance data for 
     each fishery, including--
       ``(1) the number of vessels participating in the fishery;
       ``(2) the time period in which the fishery occurs;
       ``(3) the approximate geographic location, or official 
     reporting area where the fishery occurs;
       ``(4) a description of fishery gear used in the fishery, 
     including the amount of such gear and the appropriate unit of 
     fishery effort;
       ``(5) catch and ex-vessel value of the catch for each stock 
     of fish in the fishery; and
       ``(6) the amount and types of economic and regulatory 
     discards, and an estimate of any other bycatch.
       ``(d) Public Comment.--On or before December 1, 1995, the 
     Secretary shall publish in the Federal Register for a 60-day 
     public comment period, a proposal that would provide for 
     implementation of a standardized fishing vessel registration 
     and data collection system that meets the requirements of 
     subsections (a) through (c). The proposal shall include--
       ``(1) a description of the arrangements for consultation 
     and cooperation with the department in which the Coast Guard 
     is operating, the States, the Councils, Marine Fisheries 
     Commissions, the fishing industry and other interested 
     parties; and
       ``(2) proposed regulations and legislation necessary to 
     implement the proposal.
       ``(e) Congressional Transmittal.--On or March 1, 1996, the 
     Secretary, after consideration of comments received under 
     subsection (b), shall transmit to the Committee on Commerce, 
     Science, and Transportation of the Senate and the Committee 
     on Merchant Marine and Fisheries of the House of 
     Representatives a proposal for implementation of a national 
     fishing vessel registration system that includes--
       ``(1) any modifications made after comment and 
     consultation;
       ``(2) a proposed implementation schedule; and
       ``(3) recommendations for any such additional legislation 
     as the Secretary considers necessary or desirable to 
     implement the proposed system.
       ``(f) Report to Congress.--By March 1, 1996, the Secretary 
     shall report to Congress on the need to include private 
     recreational fishing vessels used exclusively for pleasure 
     into a national fishing vessel registration and data 
     collection system. In preparing its report, the Secretary 
     shall cooperate with the Secretary of the department in which 
     the Coast Guard is operating, the States, the Councils, and 
     Marine Fisheries Commissions, and consult with governmental 
     and nongovernmental parties.''.

     SEC. 203. DATA COLLECTION.

       Section 402 is amended to read as follows:

     ``SEC. 402. DATA COLLECTION.

       ``(a) Council Requests.--If a Council determines that 
     additional information and data (other than information and 
     data that would disclose proprietary or confidential 
     commercial or financial information regarding fishing 
     operations or fish processing operations) would be beneficial 
     for developing, implementing, or revising a fishery 
     management plan or for determining whether a fishery is in 
     need of management, the Council may request that the 
     Secretary implement a data collection program for the fishery 
     which would provide the types of information and data (other 
     than information and data that would disclose proprietary or 
     confidential commercial or financial information regarding 
     fishing operations or fish processing operations) specified 
     by the Council. The Secretary shall approve such a data 
     collection program if he determines that the need is 
     justified, and shall promulgate regulations to implement the 
     program within 60 days after such determination is made. If 
     the Secretary determines that the need for a data collection 
     program is not justified, the Secretary shall inform the 
     Council of the reasons for such determination in writing. The 
     determinations of the Secretary under this subsection 
     regarding a Council request shall be made within a reasonable 
     period of time after receipt of that request.
       ``(b) Confidentiality of Information.--Any information 
     submitted to the Secretary by any person in compliance with 
     any requirement under this Act shall be confidential and 
     shall not be disclosed if disclosure would significantly 
     impair the commercial interests of the person from whom the 
     information was obtained, except--
       ``(1) to Federal employees and Council employees who are 
     responsible for fishery management plan development and 
     monitoring;
       ``(2) to State employees pursuant to an agreement with the 
     Secretary that prevents public disclosure of the identity or 
     business of any person;
       ``(3) when required by court order;
       ``(4) when such information is used to verify catch under 
     an individual transferable quota system; or
       ``(5) unless the Secretary has obtained written 
     authorization from the person submitting such information to 
     release such information and such release does not violate 
     other requirements of this subsection.

     The Secretary shall, by regulation, prescribe such procedures 
     as may be necessary to preserve such confidentiality, except 
     that the Secretary may release or make public any such 
     information in any aggregate or summary form which does not 
     directly or indirectly disclose the identity or business of 
     any person who submits such information. Nothing in this 
     subsection shall be interpreted or construed to prevent the 
     use for conservation and management purposes by the 
     Secretary, or with the approval of the Secretary, the 
     Council, of any information submitted in compliance with 
     regulations promulgated under this Act.
       ``(c) Restriction on Use of Certain Data.--
       ``(1) The Secretary shall promulgate regulations to 
     restrict the use, in civil enforcement or criminal 
     proceedings under this Act, the Marine Mammal Protection Act 
     of 1972 (16 U.S.C. 1361 et seq.), or the Endangered Species 
     Act (16 U.S.C. 1531 et seq.), of information collected by 
     voluntary fishery data collectors, including sea samplers, 
     while aboard any vessel for conservation and management 
     purposes if the presence of such a fishery data collector 
     aboard is not required by any of such Acts or regulations 
     thereunder.
       ``(2) The Secretary may not require the submission of a 
     Federal or State income tax return or statement as a 
     prerequisite for issuance of a Federal fishing permit until 
     such time as the Secretary has promulgated regulations to 
     ensure the confidentiality of information contained in such 
     return or statement, to limit the information submitted to 
     that necessary to achieve a demonstrated conservation and 
     management purpose, and to provide appropriate penalties for 
     violation of such regulations.''.

     SEC. 204. OBSERVERS.

       Title IV of the Act (16 U.S.C. 1882) is amended by adding 
     the following new section 403:

     ``SEC. 403. OBSERVERS.

       ``(a) Guidelines for Carrying Observers.--Within one year 
     of the date of enactment of the Sustainable Fisheries Act, 
     the Secretary shall promulgate regulations, after notice and 
     public comment, for fishing vessels that are required to 
     carry observers. The regulations shall include guidelines for 
     determining--
       ``(1) when a vessel is not required to carry an observer on 
     board because the facilities of such vessel for the 
     quartering of an observer, or for carrying out observer 
     functions, are so inadequate or unsafe that the health or 
     safety of the observer or the safe operation of the vessel 
     would be jeopardized; and
       ``(2) actions which vessel owners or operators may 
     reasonably be asked to take to render such facilities 
     adequate and safe.
       ``(b) Training.--The Secretary, in cooperation with State 
     programs and the National Sea Grant College Program, shall--
       ``(1) establish programs to ensure that each observer 
     receives adequate training in collecting and analyzing data 
     necessary for the conservation and management purposes of the 
     fishery to which such observer is assigned; and
       ``(2) require that an observer demonstrate competence in 
     fisheries science and statistical analysis at a level 
     sufficient to enable such person to fulfill the 
     responsibilities of the position.
       ``(c) Wages as Maritime Liens.--Claims for observers' wages 
     shall be considered maritime liens against the vessel and be 
     accorded the same priority as seamen's liens under admiralty 
     and general maritime law.''.

     SEC. 205. FISHERIES RESEARCH.

       Section 404 is amended to read as follows:

     ``SEC. 404. FISHERIES RESEARCH.

       ``(a) In General.--The Secretary shall initiate and 
     maintain, in cooperation with the Councils, a comprehensive 
     program of fishery research to carry out and further the 
     purposes, policy, and provisions of this Act. Such program 
     shall be designed to acquire knowledge and information, 
     including statistics, on fishery conservation and management 
     and on the economics of the fisheries.
       ``(b) Strategic Plan.--Within one year after the date of 
     enactment of the Sustainable Fisheries Act, and at least 
     every 3 years thereafter, the Secretary shall develop and 
     publish in the Federal Register a strategic plan for 
     fisheries research for the five years immediately following 
     such publication. The plan shall--
       ``(1) identify and describe a comprehensive program with a 
     limited number of priority objectives for research in each of 
     the areas specified in subsection (c);
       ``(2) indicate the goals and timetables for the program 
     described in paragraph (1); and
       ``(3) provide a role for commercial fishermen in such 
     research, including involvement in field testing.
       ``(c) Areas of Research.--The areas of research referred to 
     in subsection (a) are as follows:
       ``(1) Research to support fishery conservation and 
     management, including but not limited to, research on the 
     economics of fisheries and biological research concerning the 
     abundance and life history parameters of stocks of fish, the 
     interdependence of fisheries or stocks of fish, the 
     identification of essential fish habitat, the impact of 
     pollution on fish populations, the impact of wetland and 
     estuarine degradation, and other matters bearing upon the 
     abundance and availability of fish.
       ``(2) Conservation engineering research, including the 
     study of fish behavior and the development and testing of new 
     gear technology and fishing techniques to minimize bycatch 
     and any adverse effects on essential fish habitat and promote 
     efficient harvest of target species.
       ``(3) Information management research, including the 
     development of a fishery information base and an information 
     management system that will permit the full use of data in 
     the support of effective fishery conservation and management.
       ``(d) Public Notice.--In developing the plan required under 
     subsection (a), the Secretary shall consult with relevant 
     Federal, State, and international agencies, scientific and 
     technical experts, and other interested persons, public and 
     private, and shall publish a proposed plan in the Federal 
     Register for the purpose of receiving public comment on the 
     plan. The Secretary shall ensure that affected commercial 
     fishermen are actively involved in the development of the 
     portion of the plan pertaining to conservation engineering 
     research. Upon final publication in the Federal Register, the 
     plan shall be submitted by the Secretary to the Committee on 
     Commerce, Science, and Transportation of the Senate and the 
     Committee on Merchant Marine and Fisheries of the House of 
     Representatives.''.

     SEC. 206. INCIDENTAL HARVEST RESEARCH.

       Section 405 is amended to read as follows:

     ``SEC. 405. INCIDENTAL HARVEST RESEARCH.

       ``(a) Within 9 months after the date of enactment of the 
     Sustainable Fisheries Act, the Secretary shall, after 
     consultation with the Gulf of Mexico Fishery Management 
     Council and South Atlantic Fishery Management Council, 
     conclude the collection of data in the program to assess the 
     impact on fishery resources of incidental harvest by the 
     shrimp trawl fishery within the authority of such Councils. 
     Within the same time period, the Secretary shall make 
     available to the public aggregated summaries of data 
     collected prior to June 30, 1994 under such program.
       ``(b) The program concluded pursuant to subsection (a) 
     shall provide for the identification of stocks of fish which 
     are subject to significant incidental harvest in the course 
     of normal shrimp trawl fishing activity.
       ``(c) For stocks of fish identified pursuant to subsection 
     (b), with priority given to stocks which (based upon the best 
     available scientific information) are considered to be 
     overfished, the Secretary shall conduct--
       ``(1) a program to collect and evaluate data on the nature 
     and extent (including the spatial and temporal distribution) 
     of incidental mortality of such stocks as a direct result of 
     shrimp trawl fishing activities;
       ``(2) an assessment of the status and condition of such 
     stocks, including collection of information which would allow 
     the estimation of life history parameters with sufficient 
     accuracy and precision to support sound scientific evaluation 
     of the effects of various management alternatives on the 
     status of such stocks; and
       ``(3) a program of data collection and evaluation for such 
     stocks on the magnitude and distribution of fishing mortality 
     and fishing effort by sources of fishing mortality other than 
     shrimp trawl fishing activity.
       ``(d) The Secretary shall, in cooperation with affected 
     interests, commence a program to design and evaluate the 
     efficacy of technological devices and other changes in 
     fishing technology for the reduction of incidental mortality 
     of nontarget fishery resources in the course of shrimp trawl 
     fishing activity which are designed to be inexpensive to 
     operate and which cause insignificant loss of shrimp. Such 
     program shall take into account local conditions and include 
     evaluation of any reduction in incidental mortality, as well 
     as any reduction or increase in the retention of shrimp in 
     the course of normal fishing activity.
       ``(e) The Secretary shall, within one year of completing 
     the programs required by this subsection, submit a detailed 
     report on the results of such programs to the Committee on 
     Commerce, Science, and Transportation of the Senate and the 
     Committee on Merchant Marine and Fisheries of the House of 
     Representatives.
       ``(f) Any measure implemented under this Act to reduce the 
     incidental mortality of nontarget fishery resources in the 
     course of shrimp trawl fishing shall, to the extent 
     practicable,--
       ``(1) apply to such fishing throughout the range of the 
     nontarget fishery resource concerned; and
       ``(2) be implemented first in those areas and at those 
     times where the greatest reduction of such incidental 
     mortality can be achieved.''.

     SEC. 207. REPEAL.

       Section 406 (16 U.S.C. 1882) is repealed.

     SEC. 208. CLERICAL AMENDMENTS.

       The table of contents is amended by striking the matter 
     relating to title IV and inserting the following:

``Sec. 315. Transition to sustainable fisheries.
``Sec. 316. Fisheries disaster relief.
``TITLE IV--FISHERY MONITORING AND RESEARCH
``Sec. 401. Registration.
``Sec. 402. Data collection.
``Sec. 403. Observers.
``Sec. 404. Fisheries research.
``Sec. 405. Incidental harvest research.''.
             TITLE III--FISHERIES STOCK RECOVERY FINANCING

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``Fisheries Stock Recovery 
     Financing Act''.

     SEC. 302. FISHERIES STOCK RECOVERY REFINANCING.

       Title XI of the Merchant Marine Act, 1936 (46 U.S.C. 1271 
     et seq.), is amended by adding at the end the following new 
     section:
       ``Sec. 1111. (a) Pursuant to the authority granted under 
     section 1103(a) of this title, the Secretary shall, under 
     such terms and conditions as the Secretary shall prescribe by 
     regulation, guarantee and make commitments to guarantee the 
     principal of, and interest on, obligations which aid in 
     refinancing, in a manner consistent with the reduced cash 
     flows available to obligors because of reduced harvesting 
     allocations during implementation of a fishery recovery 
     effort, existing obligations relating to fishing vessels or 
     fishery facilities. Guarantees under this section shall be 
     subject to all other provisions of this title not 
     inconsistent with the provisions of this section. The 
     provisions of this section shall, notwithstanding any other 
     provisions of this title, apply to guarantees under this 
     section.
       ``(b) Obligations eligible to be refinanced under this 
     section shall include all obligations which financed or 
     refinanced any expenditures associated with the ownership or 
     operation of fishing vessels or fishery facilities, including 
     but not limited to expenditures for reconstructing, 
     reconditioning, purchasing, equipping, maintaining, 
     repairing, supplying, or any other aspect whatsoever of 
     operating fishing vessels or fishery facilities, excluding 
     only such obligations--
       ``(1) which were not in existence prior to the time the 
     Secretary approved a fishery recovery effort eligible for 
     guarantees under this section and whose purpose, in whole or 
     in part, involved expenditures which resulted in increased 
     vessel harvesting capacity; and
       ``(2) as may be owed by an obligor either to any 
     stockholder, partner, guarantor, or other principal of such 
     obligor or to any unrelated party if the purpose of such 
     obligation had been to pay an obligor's preexisting 
     obligation to such stockholder, partner, guarantor, or other 
     principal of such obligor.
       ``(c) The Secretary shall refinance up to 100 percent of 
     the principal of, and interest on, such obligations, but, in 
     no event, shall the Secretary refinance an amount exceeding 
     75 percent of the unencumbered (after deducting the amount to 
     be refinanced by guaranteed obligations under this section) 
     market value, as determined by an independent marine 
     surveyor, of the fishing vessel or fishery facility to which 
     such obligations relate plus 75 percent of the unencumbered 
     (including but not limited to homestead exemptions) market 
     value, as determined by an independent marine surveyor, of 
     all other supplementary collateral. The Secretary shall do so 
     regardless of--
       ``(1) any fishing vessel or fishery facility's actual cost 
     or depreciated actual cost; and
       ``(2) any limitations elsewhere in this title on the amount 
     of obligations to be guaranteed or such amount's relationship 
     to actual cost or depreciated actual cost.
       ``(d) Obligations guaranteed under this section shall have 
     such maturity dates and other provisions as are consistent 
     with the intent and purpose of this section (including but 
     not limited to provisions for obligors to pay only the 
     interest accruing on the principal of such obligations during 
     the period in which fisheries stocks are recovering, with the 
     principal and interest accruing thereon being fully amortized 
     between the date stock recovery is projected to be completed 
     and the maturity date of such obligations).
       ``(e) No provision of section 1104A(d) of this title shall 
     apply to obligations guaranteed under this section.
       ``(f) The Secretary shall neither make commitments to 
     guarantee nor guarantee obligations under this section 
     unless--
       ``(1) the Secretary has first approved the fishery recovery 
     effort, for the fishery in which vessels eligible for the 
     guarantee of obligations under this section are participants; 
     and
       ``(2) the Secretary has considered such factors as--
       ``(A) the projected degree and duration of reduced 
     fisheries allocations;
       ``(B) the projected reduction in fishing vessel and fishery 
     facility cash flows;
       ``(C) the projected severity of the impact on fishing 
     vessels and fishery facilities;
       ``(D) the projected effect of the fishery recovery effort;
       ``(E) the provisions of any related fishery management plan 
     under the Magnuson Fishery Conservation and Management Act 
     (16 U.S.C. 1801 et seq.); and
       ``(F) the need for and advisability of guarantees under 
     this section;
       ``(3) the Secretary finds that the obligation to be 
     guaranteed will, considering the projected effect of the 
     fishery recovery effort involved and all other aspects of the 
     obligor, project, property, collateral, and any other aspects 
     whatsoever of the obligation involved, constitute, in the 
     Secretary's opinion, a reasonable prospect of full repayment; 
     and
       ``(4) the obligors agree to provide such security and meet 
     such other terms and conditions as the Secretary may, 
     pursuant to regulations prescribed under this section, 
     require to protect the interest of the United States and 
     carry out the purpose of this section.
       ``(g) All obligations guaranteed under this section shall 
     be accounted for separately, in a subaccount of the Federal 
     Ship Financing Fund to be known as the Fishery Recovery 
     Refinancing Account, from all other obligations guaranteed 
     under the other provisions of this title and the assets and 
     liabilities of the Federal Ship Financing Fund and the 
     Fishery Recovery Refinancing Account shall be segregated 
     accordingly.
       ``(h) For the purposes of this section, the term `fishery 
     recovery effort' means a fishery management plan, amendment, 
     or regulations required under section 305(b) of the Magnuson 
     Fishery Conservation and Management Act (16 U.S.C. 1854(b)) 
     to rebuild a fishery which the Secretary has determined to be 
     a commercial fishery failure under section 316 of such 
     Act.''.

     SEC. 303. FEDERAL FINANCING BANK RELATING TO FISHING VESSELS 
                   AND FISHERY FACILITIES.

       Section 1104A(b)(2) of the Merchant Marine Act, 1936 (46 
     U.S.C. 1274(b)(2)), is amended by striking ``Provided, 
     further, That in the case of a fishing vessel or fishery 
     facility, the obligation shall be in an aggregate principal 
     amount equal to 80 percent of the actual cost or depreciated 
     actual cost of the fishing vessel or fishery facility, except 
     that no debt may be placed under this proviso through the 
     Federal Financing Bank:'' and inserting the following: 
     ``Provided, further, That in the case of a fishing vessel or 
     fishery facility, the obligation shall be in an aggregate 
     principal amount not to exceed 80 percent of the actual cost 
     or depreciated actual cost of the fishing vessel or fishery 
     facility, and obligations related to fishing vessels and 
     fishery facilities under this title shall be placed through 
     the Federal Financing Bank unless placement through the 
     Federal Financing Bank is not reasonably available or 
     placement elsewhere is available at a lower annual effective 
     yield than placement through the Federal Financing Bank:''.

     SEC. 304. FEES FOR GUARANTEEING OBLIGATIONS.

       Section 1104A(e) of the Merchant Marine Act, 1936 (46 
     U.S.C. 1274(e)), is amended to read as follows:
       ``(e)(1) The Secretary is authorized to fix a fee for the 
     guarantee of obligations under this title. Obligors shall pay 
     all such fees to the Secretary when moneys are first advanced 
     under guaranteed obligations and at least 60 days prior to 
     each anniversary date thereafter. All such fees shall be 
     computed and shall be payable to the Secretary under such 
     regulations as the Secretary may prescribe.
       ``(2) For fishing vessels and fishery facilities, such fee 
     shall--
       ``(A) if the obligation will not be purchased by the 
     Federal Financing Bank, be in an amount equal to 1 percent 
     per year of the average principal amount of the obligation 
     outstanding (unless such obligation is issued under section 
     1111 of this title, in which case such fee shall be 1 and 
     one-half percent per year of such average principal amount; 
     and
       ``(B) if the obligation will be purchased by the Federal 
     Financing Bank, be in an amount equal to 2 percent per year 
     of the average principal amount of the obligation outstanding 
     (unless such obligation is issued under section 1111 of this 
     title, in which case such fee shall be 2 and one-half percent 
     per year of such average principal amount), less any fee the 
     Federal Financing Bank customarily charges for its services 
     with respect to federally guaranteed obligations purchased by 
     it and less the amount, if any, by which the interest rate on 
     such obligation (which shall be fixed at the time the Federal 
     Financing Bank commits to purchase such obligation) exceeds 
     the current new issue rate on outstanding marketable 
     obligations of the United States of comparable maturity.
       ``(3) For everything other than fishing vessels and fishery 
     facilities, such fee shall--
       ``(A) if the security for the guarantee of an obligation 
     under this title relates to a delivered vessel, not be less 
     than one-half of 1 percent per year nor more than 1 percent 
     per year of the average principal amount of such obligation 
     outstanding, excluding the average amount (except interest) 
     on deposit in an escrow fund created under section 1108 of 
     this title; and
       ``(B) if the security for the guarantee of an obligation 
     under this title relates to a vessel to be constructed, 
     reconstructed, or reconditioned, not be less than one-quarter 
     of 1 percent per year nor more than one-half of 1 percent per 
     year of the average principal amount of such obligation 
     outstanding, excluding the average amount (except interest) 
     on deposit in an escrow fund created under section 1108 of 
     this title. For the purposes of this subsection, if the 
     security for the guarantee of an obligation under this title 
     relates both to a delivered vessel or vessels and to a vessel 
     or vessels to be constructed, reconstructed, or 
     reconditioned, the principal amount of such obligation shall 
     be prorated in accordance with regulations prescribed by the 
     Secretary. The regulations to be prescribed by the Secretary 
     under this subsection shall provide a formula for determining 
     the creditworthiness of obligors under which the most 
     creditworthy obligors pay a fee computed on the lowest 
     allowable percentage and the least creditworthy obligors pay 
     a fee which may be computed on the highest allowable 
     percentage (the range of creditworthiness to be based on 
     obligors which have actually issued guaranteed 
     obligations).''.

     SEC. 305. SALE OF ACQUIRED COLLATERAL.

       Section 1104A(a)(3) of the Merchant Marine Act, 1936 (46 
     U.S.C. 1274(a)(3)), is amended by inserting after 
     ``financing'' the following: ``(without requiring subsidy 
     cost ceiling or other authorization under the Federal Credit 
     Reform Act of 1990)''.
                TITLE IV--ATLANTIC TUNAS CONVENTION ACT

     SEC. 401. SHORT TITLE.

       This title may be cited as the ``Atlantic Tunas Convention 
     Authorization Act of 1994''.

     SEC. 402. RESEARCH AND MONITORING ACTIVITIES.

       (a) Report to Congress.--The Secretary of Commerce shall, 
     within 90 days after the date of enactment of this Act, 
     submit a report to the Committee on Commerce, Science, and 
     Transportation of the Senate and the Committee on Merchant 
     Marine and Fisheries of the House of Representatives--
       (1) identifying current governmental and nongovernmental 
     research and monitoring activities on Atlantic bluefin tuna 
     and other highly migratory species;
       (2) describing the personnel and budgetary resources 
     allocated to such activities; and
       (3) explaining how each activity contributes to the 
     conservation and management of Atlantic bluefin tuna and 
     other highly migratory species.
       (b) Research and Monitoring Program.--Section 3 of the Act 
     of September 4, 1980 (16 U.S.C. 971i) is amended--
       (1) by amending the section heading to read as follows:

     ``SEC. 3. RESEARCH ON ATLANTIC HIGHLY MIGRATORY SPECIES.'';

       (2) by striking the last sentence;
       (3) by inserting ``(a) Biennial Report on Bluefin Tuna.--'' 
     before ``The Secretary of Commerce shall''; and
       (4) by adding at the end the following:
       ``(b) Highly Migratory Species Research and Monitoring.--
       ``(1) Within 6 months after the date of enactment of the 
     Atlantic Tunas Convention Authorization Act of 1994, the 
     Secretary of Commerce, in cooperation with the advisory 
     committee established under section 4 of the Atlantic Tunas 
     Convention Act of 1975 (16 U.S.C. 971b) and in consultation 
     with the United States Commissioners on the International 
     Commission for the Conservation of Atlantic Tunas (referred 
     to elsewhere in this section as the `Commission') and the 
     Secretary of State, shall develop and implement a 
     comprehensive research and monitoring program to support the 
     conservation and management of Atlantic bluefin tuna and 
     other highly migratory species that shall--
       ``(A) identify and define the range of stocks of highly 
     migratory species in the Atlantic Ocean, including Atlantic 
     bluefin tuna; and
       ``(B) provide for appropriate participation by nations 
     which are members of the Commission.
       ``(2) The program shall provide for, but not be limited 
     to--
       ``(A) statistically designed tagging studies;
       ``(B) genetic and biochemical stock analyses;
       ``(C) population censuses carried out through aerial 
     surveys of fishing grounds;
       ``(D) adequate observer coverage and port sampling of 
     commercial and recreational fishing activity;
       ``(E) collection of comparable real-time data on commercial 
     and recreational catches and landings through the use of 
     permits, logbooks, landing reports for charter operations and 
     fishing tournaments, and programs to provide reliable 
     estimates of the catch by private anglers;
       ``(F) studies of the life history parameters of Atlantic 
     bluefin tuna and other highly migratory species;
       ``(G) integration of data from all sources and the 
     preparation of data bases to support management decisions; 
     and
       ``(H) other research as necessary.''.

     SEC. 403. ADVISORY COMMITTEE PROCEDURES.

       Section 4 of the Atlantic Tunas Convention Act of 1975 (16 
     U.S.C. 971b) is amended--
       (1) by inserting ``(a)'' before ``There''; and
       (2) by adding at the end the following:
       ``(b)(1) A majority of the members of the advisory 
     committee shall constitute a quorum, but one or more such 
     members designated by the advisory committee may hold 
     meetings to provide for public participation and to discuss 
     measures relating to the United States implementation of 
     Commission recommendations.
       ``(2) The advisory committee shall elect a Chairman for a 
     2-year term from among its members.
       ``(3) The advisory committee shall meet at appropriate 
     times and places at least twice a year, at the call of the 
     Chairman or upon the request of the majority of its voting 
     members, the United States Commissioners, the Secretary, or 
     the Secretary of State.
       ``(4)(A) The Secretary shall provide to the advisory 
     committee in a timely manner such administrative and 
     technical support services as are necessary for the effective 
     functioning of the committee.
       ``(B) The Secretary and the Secretary of State shall 
     furnish the advisory committee with relevant information 
     concerning fisheries and international fishery agreements.
       ``(5) The advisory committee shall determine its 
     organization, and prescribe its practices and procedures for 
     carrying out its functions under this Act, the Magnuson 
     Fishery Conservation and Management Act (16 U.S.C. 1801 et 
     seq.), and the Convention. The advisory committee shall 
     publish and make available to the public a statement of its 
     organization, practices, and procedures.''.

     SEC. 404. REGULATIONS.

       Section 6(c)(3) of the Atlantic Tunas Convention Act of 
     1975 (16 U.S.C. 971d(c)(3)) is amended by adding ``or fishery 
     mortality level'' after ``quota of fish'' in the last 
     sentence.

     SEC. 405. FINES AND PERMIT SANCTIONS.

       Section 7(e) of the Atlantic Tunas Convention Act of 1975 
     (16 U.S.C. 971(e)) is amended to read as follows:
       ``(e) The civil penalty and permit sanctions of section 308 
     of the Magnuson Fishery Conservation and Management Act (16 
     U.S.C. 1858) are hereby made applicable to violations of this 
     section as if they were violations of section 307 of that 
     Act.''.

     SEC. 406. AUTHORIZATION OF APPROPRIATIONS.

       Section 10 of the Atlantic Tunas Convention Act of 1975 (16 
     U.S.C. 971h) is amended to read as follows:

       ``AUTHORIZATION OF APPROPRIATIONS.

       ``Sec. 10. There are authorized to be appropriated to carry 
     out this Act, including use for payment of the United States 
     share of the joint expenses of the Commission as provided in 
     article X of the Convention, the following sums:
       ``(1) For fiscal year 1994, $2,750,000, of which $50,000 
     are authorized in the aggregate for the advisory committee 
     established under section 4 and the species working groups 
     established under section 4A, and $1,500,000 are authorized 
     for research activities under this Act.
       ``(2) For fiscal year 1995, $4,000,000, of which $62,000 
     are authorized in the aggregate for such advisory committee 
     and such working groups, and $2,500,000 are authorized for 
     such research activities.
       ``(3) For fiscal year 1996, $4,000,000 of which $75,000 are 
     authorized in the aggregate for such advisory committee and 
     such working groups, and $2,500,000 are authorized for such 
     research activities.''.

     SEC. 407. REPORT.

       The Atlantic Tuna Convention Act of 1975 (16 U.S.C. 971 et 
     seq.) is amended by adding at the end thereof the following 
     new section:

       ``ANNUAL REPORT.

       ``Sec. 11. By April 1, 1995, and annually thereafter, the 
     Secretary of Commerce shall prepare and transmit to Congress 
     a report, that--
       ``(1) details for the 10-year period the catches and 
     imports to the United States of highly migratory species 
     (including tunas, swordfish, marlin and sharks) from nations 
     fishing on Atlantic stocks of such species that are subject 
     to management by the International Commission for the 
     Conservation of Atlantic Tunas;
       ``(2) identifies those fishing nations whose harvests are 
     incompatible with existing international conservation and 
     management programs;
       ``(3) for those nations whose harvests are determined to be 
     incompatible under paragraph (2), certifies pursuant to 
     section 8 of the Fishermen's Protective Act (22 U.S.C. 1978) 
     that such nations are conducting fishing operations in a 
     manner which diminishes the effectiveness of an international 
     fishery conservation and management regime; and
       ``(4) describes reporting requirements established by the 
     Secretary to ensure that imported fish products are in 
     compliance with all international management measures, 
     including minimum size requirements, established by the 
     Commission and other international fishery organizations to 
     which the United States is a party.''.

     Summary of Major Provisions--Sustainable Fisheries Act of 1994

       The Sustainable Fisheries Act amends the Magnuson Fishery 
     Conservation and Management Act to extend the authorization 
     of appropriations through 1999, strengthen conservation 
     efforts and rebuild depleted fisheries. Major provisions 
     include the following:


                         FISHERIES CONSERVATION

       Preventing overfishing and rebuilding depleted fisheries. 
     The bill would require the Councils to define overfishing in 
     each fishery management plan. It also calls for an annual 
     report by the Secretary of Commerce (Secretary) on the status 
     of fisheries under each Council and identification of 
     fisheries that are overfished or approaching an overfished 
     condition. A Council would have one year to come up with a 
     plan to stop overfishing and rebuild the fishery, and the 
     Secretary would be required to step in if the Council fails 
     to act. While a plan is under development, interim measures 
     to reduce overfishing could be implemented as emergency 
     measures. To deal with the socioeconomic issues associated 
     with rebuilding the fishery, the Secretary would work with 
     the states and local communities to develop a sustainable 
     development strategy.
       Habitat protection. The Secretary would be required to 
     identify essential habitat for all fisheries under 
     management, based on information provided by the Councils. 
     The bill also would expand the existing authority of the 
     Councils and the Secretary to comment and make 
     recommendations to Federal agencies concerning actions that 
     would affect essential fish habitat. In addition, the 
     Secretary and the Councils would develop and publish a list 
     of fisheries and approved gear for each fishery. Ninety days 
     prior to using a new gear type or expanding into a new 
     fishery, a fisherman would be required to provide a Council 
     with notice and the opportunity to take emergency action to 
     restrict such gear or fishery.
       Bycatch and waste reduction. The bill defines categories of 
     bycatch and requires any fishery management plan developed by 
     a Council or the Secretary to (1) assess the level of bycatch 
     occurring in each fishery, including the effect of a fishery 
     on other stocks of fish in the ecosystem; and (2) minimize, 
     to the extent practicable, mortality caused by waste and 
     discards of unusable fish. In addition, the bill would 
     encourage plans to provide incentives for fishing vessels 
     within each gear group to reduce bycatch. Finally, provisions 
     are included to establish specific timetables for reducing 
     waste and promoting full utilization in the North Pacific 
     fisheries.


                           MANAGEMENT PROCESS

       Streamlining the approval process for plans and 
     regulations. The bill simplifies and tightens the approval 
     process for fishery management plans and regulations.
       Council procedures and conflicts of interest. The bill 
     proposes a number of changes to increase Council 
     accountability, requiring that (1) a Council member be 
     recused from voting on a Council decision ``which would have 
     a significant and predictable effect'' on any financial 
     interest; (2) each Council keep detailed minutes of each 
     Council meeting, including a complete and accurate 
     description of discussions and conclusions; (3) each Council 
     record all roll call votes; and (4) with advance notice and 
     member concurrence, each Council consider additional agenda 
     items at meetings. The bill also establishes procedures for 
     appointing a treaty tribe representative to the Pacific 
     Council.
       Individual transferable quotas (ITQS). The bill prohibits 
     the Secretary from approving ITQ programs until guidelines 
     are established to deal with ITQ-related issues such as 
     initial allocation, eligibility for participation, 
     consolidation, and access by entry-level fishermen. To cover 
     management costs of an ITQ program, the Secretary would be 
     authorized to establish an annual fee of up to four percent 
     of the value of fish harvested or processed, and an 
     additional one percent transfer fee. A 5-year fee exemption 
     is provided in the existing programs for the surf clam and 
     ocean quahog fishery and the wreckfish fishery. The bill also 
     clarifies that ITQs do not convey a property right and are 
     subject to termination at any time.
       Scientific basis for management. The bill includes several 
     provisions to improve monitoring and data collection for 
     fisheries management: (1) development (in cooperation with 
     the states and the Councils) of a federal plan for a 
     standardized vessel registration and data management system 
     to ensure the availability of basic fisheries data; (2) 
     establishment of an observer training and education program 
     and regulations for vessels that carry observers, including 
     protection from sexual harassment; and (3) an expanded 
     research program to provide better biological information and 
     to study the effects of fishing on the marine ecosystem.
       Enforcement. The bill would (1) establish voluntary 
     fishermen's networks to promote compliance with fishery 
     regulations; (2) require an annual report analyzing the 
     adequacy and effectiveness of enforcement efforts; (3) 
     encourage a reward of not less than 20 percent of any penalty 
     assessed for information leading to an enforcement action; 
     (4) require that fishery management plans identify needed 
     enforcement.


                  transition to sustainable fisheries

       Fisheries disaster relief. At the discretion of the 
     Secretary or at the request of an affected State or 
     community, the Secretary would (1) determine whether there is 
     a commercial fishery failure; and (2) make relief funds 
     available to the affected State or community, with the 
     Federal cost-share not to exceed 75 percent.
       Vessel or permit buy-out. As part of a sustainable 
     development strategy and to limit effort in an overfished 
     fishery, the Secretary would be authorized to develop and 
     implement a vessel or permit buy-out program requiring that 
     (1) a fishery management plan is in place that limits access 
     to the fishery and prevents replacement of fishing effort 
     that is bought out; (2) vessels or permits acquired under the 
     buy-out program cannot re-enter the fishery or contribute to 
     excess fishing effort in other fisheries; and (3) criteria 
     are established to determine types and numbers of vessels 
     which are eligible for participation. The bill specifies that 
     the Federal share of a buy-out program may not exceed 50 
     percent of the program costs. Working with the Council, the 
     Secretary would be authorized to establish a fee system to 
     collect the non-Federal share of funds for the program. 
     Annual fees could not exceed 5 percent of the value of fish 
     harvested in the fishery and would be deposited into a newly 
     established Ocean Conservation Trust fund.
       Vessel refinancing. The bill would amend Title XI of the 
     Merchant Marine Act of 1936 to provide for a fisheries stock 
     recovery refinancing program under the Fishing Vessel 
     Obligation Guarantee Program. For those fisheries in which a 
     fishery recovery effort is under way, the Secretary would be 
     authorized to refinance vessel mortgages, providing for an 
     extended repayment schedule (including interest-only 
     payments) that reflects reduced vessel income due to stock 
     rebuilding restrictions.


                        international management

       Highly migratory species. The bill would require the 
     Secretary to establish advisory panels for development of 
     fishery management plans under the Magnuson Act for Atlantic 
     tuna and other highly migratory species. It also amends the 
     Atlantic Tunas Convention Act to (1) extend the authorization 
     of appropriations; (2) make penalties and permit sanctions 
     consistent with the Magnuson Act; (3) establish advisory 
     committee procedures and expand research efforts; (4) require 
     an annual report on international trade activities and 
     calling for trade sanctions on nations that fail to comply 
     with ICCAT.

  Mr. STEVENS. Mr. President, I am pleased to introduce this bill with 
Senator Kerry to improve and reauthorize the Magnuson Fishery 
Conservation and Management Act.
  Over the past 2 years, the Commerce Committee has held hearings in 
Massachusetts and Alaska, as well as numerous hearings here in 
Washington, DC.
  Since the last time we revised the Magnuson Act in 1990, the act has 
been successful in many of the ways we intended.
  However, it is clear from our review that the act needs fine turning 
in places, and major improvements in other areas.
  This bill includes;
  First, significant new mandates to reduce waste in U.S. fisheries;
  Second, new conflict-of-interest and recusal requirements for 
regional Fishery Management Council members, as well as other reforms 
to the Council process; and
  Third, the creation of guidelines for individual transferable quotas, 
or ITQs, to help define and clarify these new management tools.
  In addressing these and other issues, Senator Kerry and I 
incorporated many of the suggestions from our colleagues on the 
Commerce Committee and fishermen in our home states, as well as from 
the administration, industry groups, conservation groups, and various 
members of both the House and Senate.
  We hope the bill we introduce today will provide a solid foundation 
on which to build a consensus for the reauthorization of the Magnuson 
Act in the 104th Congress.


                            WASTE REDUCTION

  This bill incorporates virtually all of the operative provisions of 
S. 2022, a bill I introduced earlier this year to address the problems 
of fishery waste in the North Pacific.
  The bill we are introducing today includes specific definitions of 
``bycatch,'' ``economic discards'' and ``regulatory discards'' (which 
we in the North Pacific call prohibited species) in order to clearly 
delineate between specific types of waste which may require different 
solutions.
  The bill requires each Council to assess bycatch and to minimize the 
mortality caused by economic and regulatory discards in each fishery 
which is managed by that Council.
  For the North Pacific, the bill also requires the Council to 
incorporate provisions in its fishery management plans to reduce 
bycatch, economic and regulatory discards, as well as to reduce 
``processing waste'' and to achieve full retention and full utilization 
by specific dates.
  These are the same mandates for the North Pacific and the same basic 
definitions as those that I included in S. 2022 earlier this year.
  This bill directs the Council to take additional steps to ensure that 
the valuable fishery resources off Alaska are available for future 
generations.
  In addition to the provisions from my earlier bill, we have also 
included a definition of ``overfishing.''
  This bill requires each Council to include in each fishery management 
plan specific criteria for determining when a fishery under that 
Council's jurisdiction is overfished or is approaching such a 
condition. The intent of this provision is to get the Councils to 
establish a mechanism to provide sufficient warning so that preventive 
measures can be put in place before any additional fisheries become 
overfished.
  The Secretary of Commerce (Secretary) will use the criteria to report 
to Congress (and back to the Councils) on the fisheries within each 
Council's geographical area that are overfished or approaching a 
condition of being overfished.
  Each Council will have one year to submit appropriate fishery 
management plans, amendments or regulations to prevent the overfishing 
of fisheries approaching that condition, and to stop overfishing and 
begin to rebuild fisheries that are already overfished.
  If the Council fails to take action to begin this process within one 
year, the Secretary will be required to prepare an appropriate fishery 
management plan or plan amendment.
  We know from current National Marine Fisheries Service data that our 
fisheries in Alaska are not overfished.
  I have included these provisions to make sure Alaska's fisheries 
remain healthy for generations to come.


                             council reform

  This bill includes measures to reform the Council process, perhaps 
the most difficult issue we've dealt with in this reauthorization 
process.
  Our bill would prevent Council members from voting on certain matters 
that benefit them financially, but does not require such widespread 
recusal by Council members that the Councils would be rendered 
ineffective.
  I still believe in the basic goal Senator Magnuson and I had for the 
original Act--that the Councils should be made up of the people 
directly affected by fishery management decisions.
  Senator Kerry and I have incorporated valuable portions of other 
proposals, including the administration's proposal (which was based on 
the existing Alaska Board of Fisheries recusal process) and Senator 
Breaux's proposal in the recusal section of our bill.
  This bill requires Council members to recuse themselves from voting 
on Council decisions that would have a ``significant and predictable 
effect'' on their financial interests.
  A Council decision would be considered to have a ``significant and 
predictable effect'' if there is ``a close causal link between the 
Council decision and an expected benefit, shared only by a minority of 
persons within the same industry sector or gear group, to the financial 
interest'' of the Council member.
  This language will prevent Council members from voting on decisions 
benefitting only themselves or a minority in their gear group, but will 
not prevent them from expressing views or from voting on most matters 
on which they have expertise.
  The Secretary, with the concurrence of the Council, will select a 
``designated official'' with Federal conflict-of-interest experience to 
attend Council meetings and make determinations regarding the financial 
interests of members.
  These determinations will occur at the request of the affected 
Council member or at the initiative of the designated official.
  Any Council member can ask for a review by the Secretary of a 
determination, but this review will not be treated as cause for the 
invalidation or reconsideration by the Secretary of a Council decision.
  This bill also increases Council reporting requirements, and includes 
a provision to require a roll call vote for the record at the request 
of any Council member.


                                 itq's

  This bill establishes a definition and sets out general requirements 
for any individual transferable quota [ITQ] systems.
  The bill prohibits the Secretary from approving any more ITQ plans 
until ITQ guidelines are completed.
  Under this bill, the Secretary would be required to convene an 
advisory panel within 60 days to provide recommendations for the ITQ 
guidelines.
  The guidelines would be required to, among other things:
  First, provide for the fair and equitable allocation of fishing 
privileges;
  Second, provide for the collection of fees of up to four percent 
annually of the value of the fish harvested or processed under an ITQ, 
and an additional one percent of the value of fish harvested or 
processed by a person receiving an initial quota or transferring a 
quota;
  Third, address methods for providing for new entrants, including, in 
fisheries where appropriate, mechanisms to provide a portion of the 
annual harvest for entry-level fishermen or small vessel owners who do 
not hold an ITQ; and
  Fourth, provide requirements for the effective monitoring and 
enforcement of ITQ systems, and provide for penalties, including the 
revocation of fishing privileges under ITQ systems.
  This bill clearly states that an ITQ does not constitute a property 
right, and that no provision of law shall be construed to limit the 
ability of the Secretary to terminate or limit an ITQ at any time and 
without compensation.
  The bill also specifies that holders of an ITQ may include fishing 
vessel owners, fishermen, crew members or other citizens of the United 
States, as well as United States fish processors.
  By requiring the ITQ guidelines to provide for the fair and equitable 
allocation of fishing privileges, we mean for the Councils and 
Secretary to fairly and equitably allocate fishing privileges among all 
of the potential holders of ITQs if the potential holders have 
historically participated in the fishery.
  The bill provides for increased fees to be assessed on any ITQ in 
order to, among other things, allow the Secretary to recoup the 
increased enforcement costs of ITQ systems, and to extract from ITQ 
holders an increased rent commensurate with the increased privilege 
received from ITQs.
  The bill requires existing ITQ plans to come into compliance with 
these ITQ guidelines by June 30, 1997.


                            other provisions

  I will briefly mention some of the other improvements to the Magnuson 
Act included in our bill.
  The bill simplifies the review process by the Secretary of fishery 
management plans and amendments by eliminating a preliminary evaluation 
required under current law.
  The bill also provides a framework for Secretarial review of proposed 
regulations, providing the councils and with greater certainty that 
proposed regulations and regulatory amendments will be implemented in a 
timely manner.
  There are provisions providing for the increased protection of 
fishery habitat essential to the life cycles of fish stocks.
  The bill also defines the term, ``fishery dependent community'' for 
purposes of its use in the Magnuson Act as part of a new national 
standard and for purposes of defining who is eligible for programs 
included in new sections 315 and 316 of the Magnuson Act.
  A new national standard is added to the Magnuson Act which requires 
all Councils ``to take into account the importance of the harvest of 
fishery resources to fishery dependent communities'' in recommending 
conservation and management measures under each fishery management 
plan.
  This new standard has been included in the bill as a means of 
ensuring that all of the Councils consider measures like the closure of 
the Gulf of Alaska pollock fishery to certain vessels, community 
development quotas, and the allocation of Pacific whiting to shore 
plants that have already been included in fishery management plans by 
the North Pacific Council and the Pacific Council in order to address 
the needs of certain fishery dependent communities.
  Another provision requires consideration be given to fishery 
dependent communities in developing any limited access systems, 
including ITQ systems.
  By including these new provisions we intend to increase the Councils' 
consideration of the needs of coastal communities dependent on fishery 
resources.
  In addition, the bill contains important new sections authorizing 
vessel and permit buy-back programs, and providing authorization for 
emergency funding for fishery failures which affect fishery dependent 
communities.
  Funding for buy-back programs could be self-financed at up to 5 
percent of the value of the fishery, but we also authorize the use of 
certain Federal funding for buy-outs and emergencies under certain 
circumstances.
  These new measures will provide a relief mechanism for fisheries when 
factors beyond the control of the Council result in a fishery failure, 
and will provide an additional tool to address overcapitalization 
problems.
  I look forward to working with Senator Kerry and our colleagues on 
the Commerce Committee on this legislation over the fall, and hope to 
reintroduce this bill as early in the session of Congress as possible.
                                 ______

      By Mr. D'AMATO (for himself and Mr. Moynihan):
  S. 2541. A bill to amend the Age Discrimination in Employment Act of 
1967 to protect elected judges against discrimination based on age; to 
the Committee on Labor and Human Resources.


                   Age Discrimination Act Amendments

  Mr. MOYNIHAN. Mr. President, I join my colleague from New York in 
introducing this important piece of legislation which would correct an 
anomaly in the Age Discrimination in Employment Act of 1967 relating to 
the mandatory retirement of elected judges. Today, many able jurists in 
my State are unjustly prevented from serving on the bench past the page 
of 70. This simple legislation would eliminate this vestige of age 
discrimination by allowing these judges to determine at their own will 
when they should retire.
  Mr. President, I might remind the Senate that there are more than a 
dozen distinguished Members of this body over the age of 70, and a few 
others well on their way. The Senate benefits from their wisdom and 
experience much the same as my State would profit from the sagacity of 
our elder jurists.
  I urge my colleagues to support this bill.
                                 ______

      By Mr. ROTH:
  S. 2552. A bill to amend the Internal Revenue Code for 1986 to deny 
the earned income credit to illegal aliens and to prevent fraudulent 
claims for the earned income credit; to the Committee on Finance.


                  THE ILLEGAL ALIEN CREDIT DENIAL ACT

 Mr. ROTH. Mr. President, I am introducing a bill today that is 
part of what will be a bigger plan to overhaul problems in the earned 
income tax credit, as well as problems with our immigration laws.
  As many now know, President Clinton's 1993 tax increase also included 
a plan that will approximately double the cost to the government of 
what is primarily an outlay program of the Federal Government--the 
earned income tax credit, or EITC. Under prior law, the program cost 
about $10 billion annually, but under the new legislation passed last 
year, we will soon be spending about $20 billion annually.
  Earlier this year, in response to an inquiry from Delaware, I asked 
the Internal Revenue Service what their estimate of noncompliance in 
the EITC was, and what kind of resources they were committing to 
resolving problems. They responded that noncompliance, including 
outright fraud, was ``between 30 percent and 40 percent nationally''. 
In other words, about $8 billion annually is being lost to fraud and 
other noncompliance in the EITC program--this is about $40 billion over 
a 5 year period--a massive problem.
  I immediately called for a full scale investigation of the EITC 
program by the General Accounting Office. They have been working on my 
request for several months, and I expect to have a great many possible 
reforms as a result of their work with my staff and me on this issue. 
Already, I have a legislative proposal that surely every American can 
agree on.
  Under current law, there is no requirement that EITC claimants must 
be legal residents of this country. When we are spending $20 billion 
annually on a program, and we have a large Federal deficit, I cannot 
understand how we can afford to spend scarce resources on people that 
should not even be in this country. My proposal is very simple. It 
would simply deny the EITC for any illegal alien. In addition, it would 
provide procedures so that the Treasury Secretary would no longer 
supply temporary social security numbers.
  As a result of the Secretary temporarily assigning social security 
numbers, I believe that a significant number of illegal aliens and 
ineligible recipients do receive a large amount of EITC money. 
Currently, a claimant often files for the EITC and either leaves the 
social security number (taxpayer identification number--TIN) blank, or 
writes in Sec. 205(c). I asked why any one would write in Sec. 205(c), 
and I learned that many tax preparers do this because it is the section 
of the social security law that states that you do not qualify for a 
social security number. Often, it is believed, these claimants can not 
get a TIN because they are illegal. This must be stopped.
  Only the Social Security Administration should be allowed to issue 
social security numbers, and under my bill, that is what will happen. 
When the EITC is claimed in the future, without a social security 
number, then the Treasury Secretary will refer those taxpayers to 
Social Security to first get a number assigned. My bill provides for an 
expedited process so that those who are legally allowed to claim the 
credit are not burdened by these new rules.
  It seems only to be good government for us to set out procedures so 
that we can cut waste and abuse in this program. It is clear that 
undeserving individuals often try to game the tax system so that they 
can claim a new cash benefit from the government. On the House side, 
hearings have been held showing that the electronic refund system is 
being gamed by using the EITC to cheat the government out of millions 
and millions of dollars. I have no doubt that some of this is being 
done by illegal aliens.
  We know there is a significant amount of revenue to be raised by my 
legislation. I hope we will move early next year to enact this bill, 
and move forward with more EITC reforms to improve the program and make 
it more efficient. I hope my colleagues will join me in this effort.
  I would ask that a copy of my bill be included in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2552

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Illegal Alien Credit Denial 
     Act.''

     SEC. 2. DENIAL OF EARNED INCOME CREDIT TO ILLEGAL ALIENS.

       (a) In General.--Paragraph (1) of section 32(c) of the 
     Internal Revenue Code of 1986 (defining eligible indi vidual) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(E) Exception for illegal aliens.--The term `eligible 
     individual' does not include any individual who is an illegal 
     alien as of the close of the taxable year.''
       (b) Illegal Alien Defined.--Section 32(c) of the Internal 
     Revenue Code of 1986 (relating to definitions and special 
     rules) is amended by adding at the end the following new 
     paragraph:
       ``(4) Illegal alien.--
       ``(A) In general.--The term `illegal alien' means an 
     individual who is not--
       ``(i) a citizen or national of the United States, or
       ``(ii) an alien permanently residing in the United States 
     under color of law.
       ``(B) Alien permanently residing in the united states under 
     color of law.--For purposes of subparagraph (A), the term 
     `alien permanently residing in the United States under color 
     of law' means an alien lawfully admitted for permanent 
     residence (within the meaning of section 101(a)(20) of the 
     Immigration and Nationality Act), and includes any of the 
     following:
       ``(i) An alien who is admitted as a refugee under section 
     207 of the Immigration and Nationality Act.
       ``(ii) An alien who is granted asylum under section 208 of 
     such Act.
       ``(iii) An alien whose deportation is withheld under 
     section 243(h) of such Act.
       ``(iv) An alien who is admitted for temporary residence 
     under section 210, 210A, or 245A of such Act.
       ``(v) An alien who has been paroled into the United States 
     under section 212(d)(5) of such Act for an indefinite period 
     or who has been granted extended voluntary departure as a 
     member of a nationality group.
       ``(vi) An alien who is the spouse or unmarried child under 
     21 years of age of a citizen of the United States, or the 
     parent of such a citizen if the citizen is over 21 years of 
     age, and with respect to whom an application for adjustment 
     to lawful permanent residence is pending.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable beginning after December 31, 1993.

     SEC. 3. VERIFICATION OF IDENTITY OF INDIVIDUALS CLAIMING 
                   EARNED INCOME CREDIT.

       (a) In General.--Section 32 of the Internal Revenue Code of 
     1986 (relating to earned income credit) is amended by adding 
     at the end the following new subsection:
       ``(k) Verification of Taxpayer Identification Numbers.--No 
     credit shall be allowed under subsection (a) to any taxpayer 
     unless the Secretary has verified that the taxpayer 
     identification numbers of the taxpayer and any qualifying 
     children set forth on the return claiming the credit are 
     valid.''
       (b) Expedited Procedures.--The Secretary of the Treasury 
     and the Secretary of Health and Human Services shall 
     establish procedures under which--
       (1) the taxpayer identification numbers of individuals 
     claiming the earned income credit under section 32 of the 
     Internal Revenue Code of 1986 are verified, and
       (2) the issuance of taxpayer identification numbers to 
     individuals claiming such credit and entitled to such numbers 
     is expedited.
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1994.
                                 ______

      By Mrs. BOXER:
  S. 2553. A bill to amend the Endangered Species Act of 1973 to 
authorize the Secretary of the Interior to enter into cooperative 
agreements with States and political subdivisions of States to provide 
assistance for habitat acquisition to carry out conservation plans, and 
for other purposes; to the Committee on Environment and Public Works.


    THE FEDERAL-STATE COOPERATION ACQUISITION ASSISTANCE ACT OF 1994

 Mrs. BOXER. Mr. President, I am pleased today to introduce the 
Cooperative Planning Assistance Act of 1994.
  This legislation will help local governments in California, and 
throughout the country, meet the goals of the Endangered Species Act by 
supporting their habitat conservation efforts. Moreover, by supporting 
these efforts, this bill will reinforce the partnership between local, 
State, and Federal governments that is so crucial to the future success 
of the Endangered Species Act.
  I strongly believe in the goals of the Endangered Species Act. I also 
believe that the act must be made to work for people as well as the 
plants and animals it is designed to protect. Unfortunately, the act's 
species-by-species focus has often led to redundant, inefficient, and 
onerous preservation measures.
  Several southern Californian counties, including Riverside, San 
Diego, and Orange, have taken the lead in developing a way out of this 
species-by-species trap. They have taken the practical step of 
developing habitat conservation plans to map the most important habitat 
for a group of species. They then use these plans to balance 
development and conservation by preserving some habitat while clearing 
the way for development on other land.
  It is disappointing however, that these counties, and other local 
governments across the country, have had to go it alone. The Federal 
Government has provided very little direct support for these innovative 
efforts. The legislation I am introducing today will give these local 
planning efforts a significant shot of Federal support and encourage 
their use elsewhere.
  The Cooperative Planning Assistance Act of 1994 would amend the 
Endangered Species Act to allow the Secretary of the Interior to pay 
the interest on certain local government land acquisition debt. Under 
this legislation, local governments who take on debt to purchase 
habitat under a conservation plan can ask the Secretary of the Interior 
to enter into an agreement. Under the terms of such an agreement, the 
local government would retain responsibility for payment of that debt's 
principal, while the Federal Government would take on the associated 
interest payments. The bill would leave the decision on whether to 
enter into such an agreement largely within the discretion of the 
Interior Secretary.
  This legislation ensures that debt serviced under its authority only 
be used for habitat conservation under a federally approved habitat 
conservation plan. It also provides that if a local government defaults 
on a loan, it must pay the Federal Government back for any interest 
payments made on its behalf. Finally, the bill would give the Federal 
Government the opportunity to assume ownership of the land for 
conservation purposes once the habitat acquisition debt had been paid 
off.
  I strongly believe that both California's and the Nation's biological 
diversity are tied to our long-term economic future. It is crucial that 
we develop long-range strategies for preserving natural diversity. 
These strategies must focus on habitat, rather than species, and 
prevent species from reaching threatened status. Since local 
governments have taken the lead in implementing such an approach on the 
ground, I feel that the Federal Government has the obligation to 
support that leadership. It is time for the Federal Government to begin 
to meet this obligation. I urge my colleagues' support for this 
legislation.
  Mr. President, I ask unanimous consent that a copy of this 
legislation be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2553

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Cooperative Planning 
     Assistance Act of 1994''.

     SEC. 2. ASSISTANCE FOR HABITAT ACQUISITION.

       Section 10 of the Endangered Species Act of 1973 (16 U.S.C. 
     1539) is amended by adding at the end the following new 
     subsection:
       ``(k) Assistance for Habitat Acquisition.--
       ``(1) In general.--In accordance with this subsection, the 
     Secretary may enter into a cooperative agreement with a 
     State, political subdivision of a State, or group of States 
     or political subdivisions of a State (referred to in this 
     subsection as an `entity') to provide assistance for the 
     acquisition of habitat required to carry out a conservation 
     plan approved pursuant to subsection (a)(2), including 
     assisting the entity with meeting the requirement of 
     subsection (a)(2)(B)(iii).
       ``(2) Cooperative agreements.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary may pay to an entity that is a party to a 
     cooperative agreement under paragraph (1), the full amount of 
     interest on--
       ``(i) a loan obtained by the entity;
       ``(ii) a bond issued by the entity; or
       ``(iii) any other debt instrument that the Secretary 
     determines to be appropriate;
     that is approved by the Secretary before entering into the 
     cooperative agreement.
       ``(B) Conditions for entering into cooperative 
     agreements.--
       ``(i) In general.--Subparagraph (A) shall apply only in the 
     case of a loan, bond, or other debt instrument that is used 
     solely to cover the cost of acquisition of habitat identified 
     in a conservation plan approved by the Secretary pursuant to 
     subsection (a)(2).
       ``(ii) Demonstration of ability to repay.--Before entering 
     into a cooperative agreement with the Secretary under this 
     subsection, the entity that is a party to the cooperative 
     agreement shall demonstrate, to the satisfaction of the 
     Secretary, the ability of the entity to repay the amount of 
     principal of the debt incurred through the debt instrument--

       ``(I) in a timely manner; and
       ``(II) from a source, other than the general tax revenue of 
     the entity, that is dedicated to the repayment of the amount 
     of principal of the debt.

       ``(C) Factors.--In making a determination whether to enter 
     into a cooperative agreement under this subsection, the 
     Secretary may take into consideration--
       ``(i) the number of species for which the approved 
     conservation plan under subsection (a)(2) was developed;
       ``(ii) the quantity of habitat that will be preserved under 
     the conservation plan;
       ``(iii) the history of the commitment of the entity that 
     intends to enter into a cooperative agreement to conserve 
     habitat;
       ``(iv) the participation of diverse interests, including 
     government, business, environmental and landowner interests, 
     in the planning process that produced the approved 
     conservation plan;
       ``(v) the amount of funds other than the funds obtained 
     through the debt instrument under the cooperative agreement 
     that the entity has expended or will expend to set aside and 
     preserve habitat;
       ``(vi) the likelihood of success of the conservation plan; 
     and
       ``(vii) such other factors as the Secretary considers to be 
     appropriate.
       ``(3) Conditions during cooperative agreements.--
       ``(A) In general.--The conditions described in this 
     paragraph shall apply to a cooperative agreement entered into 
     under this subsection.
       ``(B) Payment of interest.--The sole obligation to be paid 
     by the Secretary pursuant to the cooperative agreement shall 
     be the interest on the debt described in paragraph (2). The 
     Secretary shall pay the interest at the time the interest 
     becomes due.
       ``(C) Payment of principal.--The entity that is a party to 
     the cooperative agreement shall pay the amount of principal 
     of the debt described in paragraph (2) in the manner 
     described in paragraph (2)(B)(ii).
       ``(D) Effect of default on payment of principal.--If the 
     entity that is a party to the cooperative agreement defaults 
     on the payment of an amount of principal of the debt 
     described in paragraph (2) and the default continues for a 
     period of 2 years or more--
       ``(i) the obligation of the Secretary to pay interest shall 
     terminate; and
       ``(ii) the defaulting entity shall be required to repay the 
     Secretary all interest payments made pursuant to the terms of 
     the cooperative agreement.
       ``(E) Conveyance to the united states.--On full payment of 
     the debt described in paragraph (2), and at the request of 
     the Secretary, the habitat purchased by the entity with funds 
     obtained through the debt instrument pursuant to the 
     cooperative agreement shall be conveyed to the United States 
     pursuant to paragraph (4).
       ``(4) Conveyance to the secretary.--
       ``(A) Right of secretary.--The Secretary shall have the 
     right to assume ownership of the real property purchased as 
     habitat as described in paragraph (3)(E) at such time as--
       ``(i) the purchase of habitat financed through a debt 
     instrument that is the subject of a cooperative agreement 
     under this subsection has been carried out; and
       ``(ii) the debt incurred for the purchase of the habitat 
     has been paid in full.
       ``(B) Transfer.--If the Secretary exercises the authority 
     described in subparagraph (A)--
       ``(i) the entity shall transfer title to the property to 
     the Secretary; and
       ``(ii) the use of the property shall be dedicated to the 
     protection of species and the preservation of any wilderness 
     areas of the property.''.
                                 ______

      By Mr. PELL:
  S. 2554. A bill to establish the position of United States Special 
Envoy for Tibet, and for other purposes; to the Committee on Foreign 
Relations.


                  THE TIBET SPECIAL ENVOY ACT OF 1994

  Mr. PELL. Mr. President, I sent to the floor for consideration a bill 
that would establish the position of United States Special Envoy for 
Tibet within the Department of State.
  President Clinton, at the time of his decision in May to delink trade 
and human rights, acknowledged that among the areas he had sought 
improvement by the Chinese Government with regard to its human rights 
record, Tibet stood out as the one area where China had made no 
progress.
  I believe the President and his emissaries made a strong effort to 
promote negotiations between the Dalai Lama and his representatives and 
senior representatives of the Chinese Government on the future of 
Tibet. I recognize the emphasis they put on this important issue, and I 
commend their commitment to continue to seek new ways, in consultation 
with the Congress, to pursue this issue with the Chinese. It is in this 
spirit of working together, that I introduce legislation that would 
establish the position of United States Special Envoy for Tibet.
  In spite of President Clinton's commitment to the issue of Tibet, I 
recall how difficult it was to engage previous administrations in 
serious, knowledgeable discussions on Tibet and how the Congress and 
the administration were unable to pursue a foreign policy that 
reflected mutual concerns about China's policies in Tibet, the Dalai 
Lama, or the survival of Tibetan culture.
  A Special Envoy for Tibet would ensure that this important element of 
United States-China relations was continually reflected in policy 
discussions on a senior level. Moreover, it would assure that the same 
administration official would be available to the Congress for 
consultation on a thorough and consistent basis. As it stands now, the 
Tibet brief is juggled around with the effect that no single official 
has command of the intricate and strategic understandings of this 
issue.
  Mr. President, I am aware that the creation of a new position at the 
State Department is a matter for careful consideration, and I look 
forward to discussing this posting with my colleagues. However, if the 
administration is indeed committed to having the Chinese end human 
rights abuses in Tibet and engage in good faith negotiations with the 
Dalai Lama, a Special envoy could be one very useful and effective 
tool.
                                 ______

      By Mr. DeCONCINI:
  S. 2555. A resolution to establish Cooperative Units of Research in 
Infectious Disease [CURID] to evaluate the potential etiology of 
chronic inflammatory diseases with emphasis upon arthritis and chronic 
lung disease; to the Committee on Labor and Human Resources.


      THE COOPERATIVE UNITs OF RESEARCH IN INFECTIOUS DISEASES ACT

 Mr. DeConcini. Mr. President, I introduce the cooperative 
units of research in infectious diseases bill. This proposed 
legislation addresses the need for a new approach to research in 
chronic diseases of possible infectious etiology.

  I believe that one of the Federal Government's best investments is 
the commitment of funds to biomedical research. The National Institutes 
of Health is rightfully a source of great national pride.
  In the past decade, tremendous strides have been made in the 
biomedical research field. While we still have not been able to unlock 
the mystery of Acquired Immune Disease Syndrome [AIDS], the intensive 
research into the cause of this terrible disease has produced powerful 
new technology for detection of infectious agents and increased our 
understanding of the potential role they may play in chronic diseases 
like rheumatoid arthritis and chronic lung disease.
  For example, we have advanced our understanding of how the body's 
defense mechanisms function as well as learned that the final outcome 
of an infection is influenced by both the genetic background of the 
patient and genetic composition of the infecting agent. This new 
knowledge is quickly changing the traditional way in which chronic 
diseases have been viewed. Researcher are beginning to believe that 
numerous chronic diseases of humans for which the causes are now 
unknown may be triggered by an infectious agent.
  Recent animal model research data suggest that some cases of 
rheumatoid arthritis, juvenile arthritis, and reactive arthritis may 
have infectious origins. I understand that results from antibiotic 
treatment trials in humans also indicate this may be true but we need 
not only more research but coordinated research to determine if chronic 
illnesses like arthritis, chronic lung disease and certain forms of 
coronary artery disease are caused by infectious agents. In the event 
that the research establishes infectious agents as the cause of these 
diseases, more successful therapy protocols can be designed.
  The bill I am proposing would provide authority to the National 
institutes of Health and the Centers for Disease Control and Prevention 
to support collaborative research groups using intramural and 
extramural scientists. These research groups would be composed of 
researchers who are highly skilled in clinical and epidemiological 
investigation. This approach will ensure a coordinated investigative 
effort by the research groups into single chronic disease entities.
  A need for an indepth long-term approach to exploring the role of 
infectious agents is crucial to ensure that all potential causes of 
these debilitating diseases, which rob millions of people of the most 
productive periods of their lives, are investigated. We need to take 
all steps possible to prevent the 1994 National Centers for Disease 
Control and Prevention forecasts, that by the year 2020, 54.9 million 
people will suffer from arthritis, from becoming a reality. We need to 
take steps which may help us to slow today's alarming rate of increase 
of asthma in all age groups and eliminate chronic lung disease from the 
top 10 leading causes of death for adults.
  I urge my colleagues to consider the new approach to chronic disease 
research proposed by this bill.

                          ____________________