[Congressional Record Volume 141, Number 31 (Thursday, February 16, 1995)]
[Senate]
[Pages S2823-S2889]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Ms. SNOWE:
  S. 427. A bill to amend various acts to establish offices of women's 
health within certain agencies, and for other purposes; to the 
Committee on Labor and Human Resources.


                 the women's health offices act of 1995

 Ms. SNOWE. Mr. President, today I am introducing legislation 
to focus attention on the special health needs of women by establishing 
offices of Women's Health within the Office of the Assistant Secretary 
for Health, the Centers for Disease Control, the Agency for Health Care 
Policy and Research, the Health Resources and Services Administration, 
and the Food and Drug Administration.
  The directors of these offices of women's health will assess the 
current level of activity regarding women's health within their 
respective agencies, established short-range and long-range goals and 
objectives for women's health, identify projects in women's health that 
should be conducted or supported, consult with health professionals, 
nongovernmental organizations, consumer organizations, and other 
appropriate groups on their agency's women's health policies, and 
coordinate agency activities on women's health.
  Congress has already taken a first step in recognizing that women's 
unique health needs should be addressed separately. In the 103d 
Congress, the 1993 NIH revitalization bill established an Office of 
Woman's Health within the National Institutes of Health. We must build 
upon that progress in the 104th Congress.
  For too long, women have been systematically excluded from medical 
research studies, received less aggressive treatment for heart disease 
and other serious ailments, and lacked access to important preventive 
services. By statutorily establishing offices of Women's Health in 
Federal agencies which research and disseminate information about 
health, we ensure that women's needs and concerns will be given the 
consideration they deserve.
                                 ______

      By Mr. ROTH (for himself, Mr. Baucus, Mr. Biden, Mrs. Boxer, Mr. 
        Feingold, Mr. Dodd, Mr. Harkin, Mr. Jeffords, Mr. Kerry, Mr. 
        Lautenberg, Mr. Leahy, Mr. Lieberman, Mrs. Murray, Mr. Pell, 
        and Mr. Wellstone):
  S. 428. A bill to improve the management of land and water for fish 
and wildlife purposes, and for other purposes; to the Committee on 
Environment and Public Works.


              the fish and wildlife management act of 1995

 Mr. ROTH. Mr. President, I read recently that ``the best thing 
we have learned from nearly 500 years of contact with the American 
wilderness is restraint,'' the need to stay our hand and preserve our 
precious environment 
[[Page S2824]] and future resources rather than destroy them for 
momentary gain.
  With this in mind, I offer legislation today that designates the 
coastal plain of Alaska as wilderness area. At the moment this area is 
a national wildlife refuge, one of our beautiful and last frontiers. By 
changing its designation, Mr. President, we can protect it forever.
  And I can't stress how important this is.
  The Alaskan wilderness area is not only a critical part of our 
earth's ecosystem--the last remaining region where the complete 
spectrum of arctic and subarctic ecosystems comes together--but it is a 
vital part of our national consciousness. It is a place we can cherish 
and visit for our soul's good. It offers us a sense of well-being and 
promises that not all dreams have been dreamt.
  The Alaskan wilderness is a place of outstanding wildlife, wilderness 
and recreation, a land dotted by beautiful forests, dramatic peaks and 
glaciers, gentle foothills, and undulating tundra. It is untamed--rich 
with caribou, polar bear, grizzly, wolves, musk oxen, Dall sheep, 
moose, and hundreds of thousands of birds--snow geese, tundra swans, 
black brant, and more. In all, about 165 species use the coastal plain. 
It is an area of intense wildlife activity. Animals give birth, nurse 
and feed their young,
 and set about the critical business of fueling up for winters of 
unspeakable severity.

  The fact is, Mr. President, there are parts of this Earth where it is 
good that man can come only as a visitor. These are the pristine lands 
that belong to all of us. And perhaps most importantly, these are the 
lands that belong to our future.
  Considering the many reasons why this bill is so important, I came 
across the words of the great western writer, Wallace Stegner. 
Referring to the land we are trying to protect with this legislation, 
he wrote that it is ``the most splendid part of the American habitat; 
it is also the most fragile.'' And we cannot enter ``it carrying habits 
that [are] inappropriate and expectations that [are] surely 
excessive.''
  The expectations for oil exploration in this pristine region are 
excessive. There is only a one-in-five chance of finding any 
economically recoverable oil in the refuge. And if oil is found, the 
daily production of 400,000 barrels per day is less than .7 percent of 
world production--far too small to meet American's energy needs for 
more than a few months.
  In other words, Mr. President, there is much more to lose than might 
ever be gained by tearing this frontier apart. Already, some 90 percent 
of Alaska's entire North Slope is open to oil and gas leasing and 
development. Let's keep this area as the jewel amid the stones.
  What this bill offers--and what we need--is a brand of pragmatic 
environmentalism, an environmental stewardship that protects our 
important wilderness areas and precious resources, while carefully and 
judiciously weighing the short-term desires or our country against its 
long-term needs.
  together, we need to embrace environmental policies that are workable 
and pragmatic, policies based on the desire to make the world a better 
place for us and for future generations. I believe a strong economy, 
liberty, and progress are possible only when we have a healthy planet--
only when resources are managed through wise stewardship--only when an 
environmental ethic thrives among nations and only when people have 
frontiers that are untrammeled and able to host their fondest 
dreams.
                                 ______

      By Mr. BRYAN (for himself and Mr. Reid):
  S. 429. A bill to amend the Nuclear Waste Policy Act of 1982 to allow 
commercial nuclear utilities that have contracts with the Secretary of 
Energy under section 302 of that act to receive credits to offset the 
cost of storing spent fuel that the Secretary is unable to accept for 
storage on and after January 31, 1998; to the Committee on Energy and 
Natural Resources.


         the independent spent nuclear fuel storage act of 1995

  Mr. BRYAN. Mr. President, I rise today to introduce again legislation 
I have introduced in each of the past two Congresses, the Independent 
Spent Nuclear Fuel Storage Act.
  As many of my colleagues are aware, since 1987, contrary to Nevada 
State law, and against the wishes of the vast majority of Nevadans, 
Nevada has been the sole site considered for the ultimate disposal of 
the United States' high-level nuclear waste.
  Today, in spite of the expenditure of billions of dollars, the Yucca 
Mountain site is no closer to accepting waste from our Nation's nuclear 
reactors than it was 13 years ago, when the Nuclear Waste Policy Act of 
1982 was enacted.
  I strongly oppose the purely political decision made by Congress in 
1987 to identify Yucca Mountain as the sole site to be characterized 
for a permanent repository. Now that the permanent repository program 
is an obvious failure, with the Department of Energy saying there is no 
hope of opening any type of storage facility before 2010, the nuclear 
power industry and its allies have conceived a new strategy.
  Contrary to all objective scientific judgment, and general common 
sense, the nuclear industry's new effort is to instruct the DOE to 
build an interim storage facility at the Yucca Mountain site. As 
offensive as the 1987 act, commonly referred to in Nevada as the 
``screw Nevada bill,'' was, the new effort of the nuclear power 
industry is even more of an outrage to Nevadans.
  The nuclear power industry's newest proposal is nothing less than a 
direct assault on the health and safety of Nevadans. Frustrated by its 
inability to overcome the insurmountable safety concerns raised in 
relation to a permanent repository, the industry is now seeking to 
circumvent the objections of credible, objective scientists to a 
permanent repository at Yucca Mountain.
  I am convinced, like many others, that any centralized interim 
storage facility will become the de facto permanent repository.
  Funding for an interim storage program will necessarily come at the 
expense of the permanent repository program. The expression ``out of 
sight, out of mind'' could not be truer. Once the waste is removed from 
the reactor sites, the nuclear industry's commitment to finding a 
permanent solution to the waste problem will vanish. And since it is 
the nuclear power industry's obsession with moving this waste off the 
reactor sites that drives the Federal Civilian Nuclear Waste Program, 
the Federal commitment to permanent storage will vanish as well.
  The nuclear power industry as much as concedes this--every version of 
their interim storage legislation I am aware of provides for licensing 
the interim site for 100 years, subject to renewal.
  The permanent repository program is a failure. The nuclear power 
industry and its advocates, including the Department of Energy, have 
created a program which was bound to fail. Careless science, poor 
management, unreasonable deadlines and timetables, and the ill-fated 
decision to pursue only one site for characterization, thus leaving the 
program with no options or alternatives, have all contributed to the 
failure of the program.
  The industry's suggestion to build an interim storage facility in 
Nevada is simply one more in a long series of irresponsible and ill-
founded proposals by the nuclear power industry to solve their high 
level waste problem at the expense of the health and safety of all 
Nevadans.
  I will concede that the nuclear power industry has a waste problem. I 
strongly object, however, to the industry's solution, which is simply 
to send their problem, their waste to Nevada.
  The question arises, do we need a centralized interim storage site? 
If we are truly talking about interim storage, the answer is obviously 
no.
  A few nuclear utilities, looking at the future uncertainty of the 
Federal nuclear waste program, have done the responsible thing and 
built interim dry cask storage at the reactor site. In dry cask 
storage, spent fuel assemblies are removed from the reactor pools and 
stored in various systems of canisters, casks, and concrete shells.
  I recently visited one of these dry cask storage facilities, at 
Calvert Cliffs in Maryland, and, I must say, I was impressed by the 
simplicity and efficiency of the spent fuel management operation. It is 
a responsible action taken by the industry, and I commend their example 
to others. The Calvert 
[[Page S2825]] Cliffs dry cask storage program provides a reasonable 
solution to the interim storage problem, the spent fuel is stored on 
site, where security and safety precautions already exist, until a safe 
plan for the long-term disposition of the waste can be finalized.
  A centralized interim storage facility is simply not needed, or 
desirable. The original Nuclear Waste Policy Act recognized this fact, 
and placed restrictions on the DOE's authority to accept responsibility 
for interim storage. The nuclear power industry, faced with the reality 
of the failure to build a permanent repository at Yucca Mountain, is 
now engaged in yet another exercise of political muscle with one 
purpose: to make Nevada the final destination for their toxic and 
highly dangerous waste.
  Even if we concede, which we do not, that there is a need for a 
centralized interim storage facility, there is no defensible reason to 
site the facility in Nevada. A simple look at a map easily shows that 
Nevada is one of the least central sites to store nuclear waste. The 
great majority of the reactor sites producing high-level waste are east 
of the Mississippi--93 reactors out of the U.S. total of 118.
  Shipping thousands of tons of high level waste to Nevada will create 
dramatic threats to the safety of communities throughout the United 
States. An analysis of one proposal supported by the nuclear power 
industry reveals that interim storage in Nevada will require 15,000 
shipments by rail and truck through 43 States to begin as early as 1998 
and continue for 30 years.
  Interim storage in Nevada is not the answer to the nuclear power 
industry's waste problem. The responsible answer to the waste problem, 
if the nuclear utilities choose to continue to run their reactors, is 
on-site, dry cask storage.
  Unfortunately, most nuclear utilities appear to be unwilling
   to develop dry cask storage facilities for a variety of reasons, 
both political and financial.

  There is not much we can do about the local political opposition 
faced by utilities. The utilities, and communities, that benefited from 
the operation of the powerplant should bear responsibility for their 
own waste. High-level waste storage is not popular, and there are 
political costs to the utilities for living up to their 
responsibilities.
  Asking Nevada to solve the political problems in the communities they 
serve places the nuclear utilities on completely indefensible ground. 
The outright hypocrisy of the nuclear power industry's advocates, and 
their shameless attempts to exert political influence to solve complex 
scientific and environmental problems, has created an atmosphere of 
complete distrust and antagonism for the industry in Nevada.
  There are also financial barriers to on-site, dry cask storage. 
Ratepayers have been making contributions to the nuclear waste trust 
fund with the exception that the Federal Government will dispose of 
their nuclear waste. I am somewhat sympathetic to the ratepayers' 
concerns. The Federal disposal program is a failure.
  The civilian nuclear waste program has been so poorly managed, and so 
misguided, that Congress has had good reason not to release the full 
balance of the trust fund to the program. The ratepayers deserve some 
financial relief while the Federal Government attempts to meet its 
obligations, and while the utilities invest the needed capital to store 
their own waste.
  The legislation I am introducing today recognizes the nuclear power 
industry's need for interim storage, as well as the financial impact on 
ratepayers caused by delays in the repository program. The legislation 
provides credits against utilities' payments to the nuclear waste trust 
fund for costs incurred for on-site, dry cask storage.
  The legislation provides an equitable solution to a difficult 
problem. It recognizes the financial contributions of the utilities' 
ratepayers to the trust fund, and recognizes the reality that a 
permanent repository will not be available to meet the needs of the 
nuclear power industry.
  Mr. President, together with their advocates in Congress and the 
Department of Energy, the nuclear power industry has spared no expense 
or effort in moving its waste to Nevada. I have attempted to fight the 
industry at every turn.
  I hope that Congress will not take the failure of the permanent 
repository program as a signal to bow to the nuclear power industry 
once again, and accelerate plans to store nuclear waste in Nevada, but 
instead to take this opportunity to find an equitable solution to a 
difficult problem which does not threaten the health and safety of 
future generations of Nevadans.
  I urge my colleagues to support the legislation I am introducing 
today.
                                 ______

      By Ms. SNOWE:
  S. 430. A bill to amend title XIX of the Social Security Act to 
require States to adopt and enforce certain guardianship laws providing 
protection and rights to wards and individuals subject to guardianship 
proceedings as a condition of eligibility for receiving funds under the 
Medicaid Program, and for other purposes; to the Committee on Finance.


            the guardianship rights and responsibilities act

 Ms. SNOWE. Mr. President, today I am introducing the 
Guardianship Rights and Responsibilities Act of 1995, which establishes 
a bill of rights for adults who, because of physical or mental 
incapacity, become wards of the courts.
  Wards are individuals whose legal rights, decisionmaking authority 
and possessions have been transferred to the control of a guardian or 
conservator based on a judgment that the person is no longer capable of 
handling these affairs. This legal system severely limits an 
individual's personal autonomy and has considered problems and 
widespread abuses. Horror stories abound about guardians who force 
unnecessary nursing home care, embezzle assets, or otherwise abuse 
their wards.
  The Guardianship Rights and Responsibilities Act of 1995 would 
require States to adopt and enforce laws to provide basic protection 
and rights to wards as a condition of receiving Federal Medicaid funds. 
It would assure due process protections such as counsel, the right to 
be present at their proceedings and to appeal decisions. Also required 
would be: clear and convincing evidence to determine the need for a 
guardianship; adequate court monitoring; and standards, training and 
oversight for guardians.
  This legislation will help to protect the most vulnerable elderly and 
disabled from exploitation, and will help to assure them the highest 
possible autonomy. I hope my colleagues will join me in supporting this 
bill.
                                 ______

      By Ms. SNOWE:
  S. 431. A bill to amend the Magnuson Fishery Conservation and 
Management Act to authorize the Secretary of Commerce to prepare 
fishery management plans and amendments to fishery management plans 
under negotiated rulemaking procedures, and for other purposes; to the 
Committee on Commerce, Science, and Transportation.
  S. 432. A bill to amend the Magnuson Fishery Conservation and 
Management Act to require the Secretary of Commerce to prepare 
conservation and management measures for the northeast multispecies--
groundfish--fishery under negotiated rulemaking procedures, and for 
other purposes; to the Committee on Commerce, Science, and 
Transportation.


            negotiated rulemaking for fisheries legislation

 Ms. SNOWE. Mr. President, as many stories in the national 
media have reported, the New England groundfish industry is now facing 
the most difficult challenges in its long history. Scientists report 
that once plentiful stocks of cod, haddock, flounder, and other fish 
species have reached historic lows. In response to these stock 
assessments, the New England Fishery Management Council has approved 
severe restrictions on fishing that will probably force many fishermen 
out of business. These restrictions include a 5-year program to cut 
fishing efforts in half, mandatory use of large-mesh nets, a moratorium 
on new entrants into the fishery, and the emergency closure of large 
areas on the George's Bank fishing grounds off Massachusetts.
  Most fishermen in Maine recognize that the groundfish stocks are low 
and that effective conservation measures are needed to help rebuild the 
fishery. But too many fishermen also believe that the specific program 
approved by the council will not succeed at restoring groundfish 
populations, and will place unnecessary economic burdens on 
[[Page S2826]] working fishermen. In their view, the council, despite 
public hearings, dismissed too many of their recommendations despite 
the fact that they and others before them have been fishing the waters 
off New England for three centuries. In short, they have no support for 
or confidence in the council-developed management program under which 
they must operate.
  The success of any regulatory program depends in large part on the 
confidence of the regulated community that the action takes their views 
into account, will achieve its ends, and is sensible and necessary. I 
am introducing legislation today that aims to restore the confidence of 
New England fishermen in the
 credibility of the Federal fisheries management process by giving them 
and other citizens with an interest in fisheries the ability to 
participate directly in that process.

  My bills bring the concept of negotiated rulemaking or regulatory 
negotiation to fisheries management. The concept was established in 
Federal law by the negotiated Rulemaking Act of 1990. Under negotiated 
rulemaking, representatives of all stakeholder groups involved in a 
dispute negotiate directly on the regulatory solution with the aid of a 
professional facilitator. It provides a collaborative, consensus-based 
dispute resolution tool that agencies can use to develop potentially 
controversial regulations. If the negotiating group can reach 
consensus, then the agency can propose the agreement as a new 
regulation or rule. Negotiated rulemaking has been used--sometimes 
successfully, sometimes unsuccessful--by other Federal agencies, and it 
is time that this tool be made available in the fisheries management 
process.
  The first bill that I have introduced today gives the Secretary of 
Commerce explicit authority to use negotiated rulemaking to develop 
fishery management plans or plan amendments. Under the Magnuson Act, 
the Secretary can only submit management plans or plan amendments under 
limited circumstances which preclude his flexibility in using this 
important tool effectively. Also, negotiated rulemaking is specifically 
used to develop rules, but fishery management plans are not technically 
rules. My bill removes these potential obstacles and clears the way for 
the Secretary to use this dispute resolution tool on controversial 
issues.
  The second bill directs the Secretary to use negotiated rulemaking in 
the specific case of the New England groundfish fishery. Alternative 
dispute resolution is used more and more commonly in lieu of the 
traditional adversarial regulatory process, and I believe that it 
should be tried in the case of the New England groundfish issue.
  These bills do not directly affect any existing fisheries management 
programs, or impose new management measures. They only offer an 
alternative route for devising plans that will restore fish stocks off 
the coast of New England and other parts of the country. They could 
lead to new management measures that not only do a better job of 
rebuilding fish stocks, but do so in a manner that minimizes the 
economic impact on fishermen and coastal communities, and in a manner 
that gains the confidence and support of most fishermen. Surely, given 
the extremely high stakes in an area like New England these days, we 
must explore every opportunity, every possibility, for achieving such 
critically important results.
                                 ______

      By Mr. KERRY:
  S. 433. A bill to regulate handgun ammunition, and for other 
purposes; to the Committee on the Judiciary.


                   the ammunition safety act of 1995

  Mr. KERRY. Mr. President, no gun works without a bullet. Yet 
for no good reason, Congress in the early 1980's repealed laws that 
regulate ammunition. And while a background check is required to stop 
felons from purchasing guns, no such background check is required to 
stop them from buying ammunition for the guns they may already have.
  In the meantime, bullets are getting meaner and more deadly. Law 
enforcement officers know all too well of the danger they face each and 
every time a gun is pointed at them.
  Advances in technology only promise to make matters worse. When a 
large percentage of gun-related deaths involve handguns, and a large 
percentage of gun related deaths is accidental, it is insane for the 
public to fear the creation of new, more destructive bullets.
  The fact is 157 police officers and State troopers were killed in 
this country last year. Five lost their lives in my home State of 
Massachusetts.
  And more than 200 people die from the accidental use of handguns 
every year. In 1992 alone, 233 accidental deaths occurred because of 
handguns. This included 6 babies, 36 kids under the age of 14, and 8 
senior citizens, 2 of whom were over the age of 80.
  In light of these sad and disturbing facts, there is no good reason 
to have ever more dangerous bullets on the market. And there is every 
good reason to keep off our streets and out of our homes bullets that 
supply handguns with the destructive power of assault weapons.
  That is why the Ammunition Safety Act of 1995 does two things: it 
reestablishes reasonable regulations for the sale of handgun 
ammunition, and it outlaws all exceedingly destructive handgun 
ammunition--whether or not such ammo has been invented yet--by 
expanding and updating the ban on armor-piercing handgun ammunition.
  This bill would provide a weapon for law enforcement to crack down on 
crime and would make ordinary people safer from handgun violence and 
accidental shootings. The bill accomplishes these goals in three steps.
  First, the bill reinstates and strengthens ammunition control 
language that Congress repealed during the Reagan era. It would require 
dealers of handgun ammunition to be licensed by the Federal Government. 
It would restrict interstate sale and transportation of handgun 
ammunition to licensed dealers. And it would double the maximum 
penalties for sale to and for possession of handgun ammunition by 
felons and persons under age 21.
  Second, the bill would apply Brady bill provisions to handgun 
ammunition. To
 prevent the sale of handgun ammunition to felons, once the nationwide, 
instantaneous background check the Brady bill created is in place, 
every purchaser of ammunition will have to pass a background check 
before ammunition could be sold to him or her. These regulations would 
be a vital tool to law enforcement in investigating crime, and would 
provide equity to a system that currently monitors and restricts the 
flow of guns, but--inexplicably--not of ammunition.

  Third, the bill expands the definition of illegal armor-piercing 
handgun ammunition to include any new conceivable kind of armor-
piercing bullet. The bill establishes a new method to accomplish this 
goal.
  To date, no law has been able to effectively ban all armor-piercing 
bullets. You can't ban what you can't define because vague laws are 
constitutionally void--and definitions to date have failed to cover all 
armor-piercing bullets. All that existing law does is ban bullets based 
on the materials of which they are made--consequently, bullets made of 
hard metals are illegal--in the hope that this definition will blanket 
most armor-piercing bullets. But the existing composition-based 
definition fails to prevent the sale of certain bullets that pierce 
armor--like large lead bullets that aren't intended for handguns but 
can be used in them--or the invention of new armor-piercing bullets--
for example, a plastic bullet hard enough to pierce armor.
  This bill calls on the Treasury Department to define armor-piercing 
bullets not by what they are but by what they are not. Fulfilling this 
new responsibility would entail four steps.
  First, within 1 year, the Treasury Department is charged with 
determining a standard test to ascertain the destructive capacity of 
any and all bullets. This will probably result in something along the 
lines of a rating system equal to the width times the depth of the hole 
a projectile bores in a block of gelatin when it is shot with no extra 
powder from a standard Colt .45 at a distance of 10 feet.
  Second, utilizing this destructive rating test, the Treasury 
Department would then determine a rating threshold which would be the 
rating of the least destructive bullet to pierce today's standard body 
armor.
  Third, all manufacturers of bullets for sale in the United States 
would be 
[[Page S2827]] required to cover the costs incurred by the Treasury 
Department in testing and determining the destructive rating of every 
existing bullet available on the market.
  Fourth, this bill would make it illegal to manufacture, sell, import, 
use, or possess any bullet--existing or newly invented--that has a 
destructive rating equal to or higher than the armor-piercing 
threshold. This would be in addition to the existing composition-based 
definition.
  This bill contains reasonable exemptions. Those bullets exclusively 
manufactured for law enforcement would be exempt; so would be those 
bullets designed for sporting purposes that Congress specifically 
exempts by law; and those bullets that are proven by their manufacturer 
at its expense to have a destructive rating below the armor-piercing 
threshold.
  By setting the legal standard at the armor-piercing threshold, all 
armor-piercing bullets would be illegal. And there is an additional 
advantage to setting a legal threshold in this fashion: The threshold 
would ban more than armor-piercing bullets. It would ban any new, sick, 
perverse bullet that has yet to be invented that explodes on impact, 
that turns to shrapnel, that does things today's technology cannot yet 
fathom, or that by any other means is exceptionally destructive.
  Setting a legal standard this way draws a hard and fast line between 
those bullets currently on the market and future bullets that do more 
damage than we can imagine today. This bills says that America is 
satisfied that the bullets of today are dangerous enough, and America 
will tolerate no greater likelihood of accidental death as a result of 
new bullets.
  This bill recognizes the fact that regulating only weapons is naive. 
Among other reasons, guns last centuries, but ammunition has a shelf-
life of not much more than 20 years. Felons who want to kill will 
always be able to find guns, but have to come out of the woodwork to 
purchase ammunition. When they do, this bill will be there to stop 
them.
  Of course, felons can make bullets at home, but it isn't easy, it 
isn't cheap, and it isn't safe. Mr. President, I recognize that there 
is a limit to what the Government can do to stop gun violence and 
accidental death. But today, the Government is shirking its 
responsibility. This bill is a vital first step toward ensuring that 
the Government does what is necessary to save lives.
  The law enforcement community and the public will never again have to 
react to advertisements like the one for the infamous Rhino bullet. 
This add states:

       The Rhino inflicts a wound of 8 inches in diameter. Each of 
     these fragments becomes lethal shrapnel and is hurled into 
     vital organs, lungs, circulatory system components, the heart 
     and other tissues. The wound channel is catastrophic. * * * 
     Death is nearly instantaneous.

  If this bill is enacted, opportunistic manufacturers like the man who 
created the Rhino will have nothing to gain from advertising the 
dramatic innovations of their bullets. If an advertisement claims that 
a new bullet is unusually destructive, the public will know that the 
advertisement is either an outright lie or that the product is illegal. 
Either way, the public will know in advance that no such bullet will 
ever hit the street, and the public will have no cause for hysteria.
  When this bill becomes law, no new bullets that are more dangerous 
than those of today will make it to market. When this bill becomes law, 
those bullets that are on the market won't end up in the wrong hands.
  This bill is a solid step toward returning sanity and safety to our 
Nation's streets and household. The Government has no greater 
responsibility than to work toward this goal.
  I welcome the support of colleagues who share my concerns, as many 
do. I urge them to join me in sponsoring this legislation.
  Mr. President, I ask unanimous consent that the full text of the 
legislation appear in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:
                                 S. 433

       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 ``Ammunition Safety Act of 
     1995''.

     SEC. 2. DEALERS OF AMMUNITION.

       (a) Definition.--Section 921(a)(11)(A) of title 18, United 
     States Code, is amended by inserting ``or ammunition'' after 
     ``firearms''.
       (b) Licensing.--Section 923(a) of title 18, United States 
     Code, is amended--
       (1) in the matter preceding paragraph (1) by striking ``or 
     importing or manufacturing ammunition'' and inserting ``or 
     importing, manufacturing, or dealing in ammunition''; and
       (2) in paragraph (3)--
       (A) in subparagraph (A), by striking ``or'' the last place 
     it appears;
       (B) in subparagraph (B), by striking the period at the end 
     and inserting ``; or''; and
       (C) by inserting the following new subparagraph:
       ``(C) in ammunition other than ammunition for destructive 
     devices, $10 per year.''.
       (c) Unlawful Acts.--Section 922(a)(1)(A) of title 18, 
     United States Code, is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (A)--
       (i) by inserting ``or ammunition'' after ``firearms''; and
       (ii) by inserting ``or ammunition'' after ``firearm''; and
       (B) in subparagraph (B), by striking ``or licensed 
     manufacturer'' and inserting ``licensed manufacturer, or 
     licensed dealer'';
       (2) in paragraph (2), in the matter preceding subparagraph 
     (A), by inserting ``or ammunition'' after ``firearm'';
       (3) in paragraph (3), by inserting ``or ammunition'' after 
     ``firearm'' the first place it appears;
       (4) in paragraph (5), by inserting ``or ammunition'' after 
     ``firearm'' the first place it appears; and
       (5) in paragraph (9), by inserting ``or ammunition'' after 
     ``firearms''.
       (d) Penalties.--Section 924 of title 18, United States 
     Code, is amended--
       (1) in paragraph (5)--
       (A) in subparagraph (A)(i), by striking ``1 year'' and 
     inserting ``2 years''; and
       (B) in subparagraph (B)--
       (i) in clause (i), by striking ``1 year'' and inserting ``2 
     years''; and
       (ii) in clause (ii), by striking ``10 years'' and inserting 
     ``20 years''; and
       (2) by adding at the end the following new subsection:
       ``(o) Except to the extent a greater minimum sentence is 
     otherwise provided, any person at least 18 years of age who 
     violates section 922(g) shall be subject to--
       ``(1) twice the maximum punishment authorized by this 
     subsection; and
       ``(2) at least twice any term of supervised release.''.
       (e) Application of Brady Handgun Violence Prevention Act to 
     Transfer of Ammunition.--Section 922(t) of title 18, United 
     States Code, is amended by inserting ``or ammunition'' after 
     ``firearm'' each place it appears.

     SEC. 3. REGULATION OF ARMOR PIERCING AND NEW TYPES OF 
                   DESTRUCTIVE AMMUNITION.

       (a) Testing of Ammunition.--Section 921(a)(17) of title 18, 
     United States Code, is amended--
       (1) by redesignating subparagraph (D), as added by section 
     2(e)(2), as subparagraph (E); and
       (2) by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D)(i) Notwithstanding subchapter II of chapter 5 of 
     title 5, United States Code, not later than 1 year after the 
     date of enactment of this subparagraph, the Secretary shall--
       ``(I) establish uniform standards for testing and rating 
     the destructive capacity of projectiles capable of being used 
     in handguns;
       ``(II) utilizing the standards established pursuant to 
     subclause (I), establish performance-based standards to 
     define the rating of `armor piercing ammunition' based on the 
     rating at which the projectiles pierce armor; and
       ``(III) at the expense of the ammunition manufacturer 
     seeking to sell a particular type of ammunition, test and 
     rate the destructive capacity of the ammunition utilizing the 
     testing, rating, and performance-based standards established 
     under subclauses (I) and (II).
       ``(ii) The term `armor piercing ammunition' shall include 
     any projectile determined to have a destructive capacity 
     rating higher than the rating threshold established under 
     subclause (II), in addition to the composition-based 
     determination of subparagraph (B).
       ``(iii) The Congress may exempt specific ammunition 
     designed for sporting purposes from the definition of `armor 
     piercing ammunition'.''.
       (b) Prohibition.--Section 922(a) of title 18, United States 
     Code, is amended--
       (1) in paragraph (7)--
       (A) by striking ``or import'' and inserting ``, import, 
     possess, or use'';
       (B) in subparagraph (B), by striking ``and'';
       (C) in subparagraph (C), by striking the period at the end 
     and inserting ``; and''; and
       (D) by adding at the end the following new subparagraph:
       ``(D) the manufacture, importation, or use of any 
     projectile that has been proven, by testing performed at the 
     expense of the manufacturer of the projectile, to have a 
     lower rating threshold than armor piercing ammunition.''; and
       (2) in paragraph (8)--
       (A) in subparagraph (B), by striking ``and'';
       (B) in subparagraph (C), by striking the period at the end 
     and inserting ``; and''; and
     [[Page S2828]]   (C) by adding at the end the following new 
     subparagraph:
       ``(D) the manufacture, importation, or use of any 
     projectile that has been proven, by testing performed at the 
     expense of the manufacturer of the projectile, to have a 
     lower rating threshold than armor piercing 
     ammunition.''.
                                 ______

      By Mr. KOHL:
  S. 434. A bill to amend the Internal Revenue Code of 1986 to increase 
the deductibility of business meal expenses for individuals who are 
subject to Federal limitation on hours of service; to the Committee on 
Finance.


            the business meal deduction fairness act of 1995

 Mr. KOHL. Mr. President, in 1993, the 103d Congress took a 
crucial and difficult stand on the deficit. In August of that year we 
passed the omnibus budget reconciliation bill. I am proud to stand here 
today and say that that legislation has helped to produce falling 
deficits and sustained economic growth.
  As my colleagues know, I am one of this body's strongest advocates 
for deficit reduction. I attribute much of my deep commitment to this 
goal to my days in business. As a businessman, I learned that you must 
balance your books and live within your means. I also learned that you 
must treat people fairly, and admit when you make a mistake. I have 
come to the floor today to once again acknowledge that a mistake was 
made in the 1993 reconciliation bill; a mistake which must be 
corrected.
  During consideration of the reconciliation bill, I opposed tax 
increases on working middle- and lower-income Americans. However, in 
fighting to eliminate increases in broad taxes on middle- and lower-
income Americans, Congress overlooked a provision which places a hidden 
tax on those hardworking Americans who work in the transportation 
sector. It is for this reason that I rise today to reintroduce the 
business meal deduction fairness bill.
  Included in the 1993 reconciliation bill was a provision which 
lowered the deductible portion of business meals and entertainment 
expenses from 80 to 50 percent. On the surface, this seems only a tax 
on those rich enough to spend their lunchtimes in luxury restaurants 
and their nighttimes on luxury yachts. But contrary to popular belief, 
the business meal deduction is not only used by lobbyists and fat cats 
for three-martini lunches. Due to regulations limiting travel hours, 
many transportation workers must eat out. That means the reduced 
business meal deduction is a tax on workers who have no control over 
the length of their trips, the amount of time they must rest during a 
delivery, or, in many cases, the places they can stop to eat.
  Let me provide you with a brief example to illustrate my point. The 
average truck driver earns approximately $30,000 a year. The reduced 
deduction will cost that driver between $750 and $1,000 per year. This 
is just one of many examples I could give to demonstrate the burden 
this change has placed on hard-working, middle-income Americans. The 
legislation I am introducing today, will lift this burden and restore 
some common sense to the tax code.
  Mr. President, the business meal deduction fairness bill repeals the 
hidden tax created last year by restoring the business meal deduction 
to 80 percent for those individuals covered by the Department of 
Transportation hours-of-service limit. This legislation is simple, 
straightforward, and most importantly, fair.
  Mr. President, I would like to remind my colleagues of a similar bill 
we worked on to correct another mistake which hurt tens of thousands of 
hard-working, middle-income Americans. As my colleagues remember, the 
1990 deficit reduction bill imposed a surtax on specific luxury items. 
At the time, it was argued that the surtax would only affect the 
wealthiest segment of society. However, after it went into effect, it 
became clear that, instead of paying the tax, the wealthy decided not 
to buy the new boat or the diamond ring. As a result, the middle- and 
lower-income Americans producing and selling those luxury items ended 
up bearing the burden of the tax through lost wages and jobs.
  Once it was apparent that the luxury tax was not achieving its 
intended goal, I began working with a number of my colleagues to repeal 
it. Fortunately, we were successful in getting a repeal in the 1993 
reconciliation bill. Unfortunately, far too many people were hurt by 
this mistake because we did not correct it quickly enough. We cannot 
let that happen again. Therefore I am requesting the support and 
assistance of my colleagues to ensure that the business meal deduction 
fairness bill becomes law. Mr. President, I ask unanimous consent that 
a copy of my legislation be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 434
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES 
                   FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS 
                   ON HOURS OF SERVICE.

       (a) In General.--Section 274(n) of the Internal Revenue 
     Code of 1986 (relating to only 50 percent of meal and 
     entertainment expenses allowed as deduction) is amended by 
     adding at the end the following new paragraph:
       ``(3) Special rule for individuals subject to federal 
     limitations on hours of service.--In the case of any expenses 
     for food or beverages consumed by an individual during, or 
     incident to, any period of duty which is subject to the hours 
     of service limitations of the Department of Transportation, 
     paragraph (1) shall be applied by substituting `80 percent' 
     for `50 percent'.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1994.
                                 ______

      By Mr. FAIRCLOTH:
  S. 435. A bill to provide for the elimination of the Department of 
Housing and Urban Development, and for other purposes; to the Committee 
on Banking, Housing, and Urban Affairs.


                       legislation to abolish hud

  Mr. FAIRCLOTH. Mr. President, today I am pleased to introduce 
legislation that will abolish the Department of Housing and Urban 
Development.
  Mr. President, HUD was created in 1965. When it was created, the 
purpose of this Department was to revitalize our urban areas and 
provide more housing for America.
  Mr. President, in short, HUD has been a collosal failure. Since 1965, 
HUD has spent hundreds of billions of dollars--that adjusted to 
inflation--probably exceeds a trillion dollars. Yet today, despite this 
massive spending, our Nation's urban areas are more decayed and more 
dangerous today than ever. Homelessness, hardly a problem 30 years ago, 
is now a major concern.
  Public housing has been a disaster and home ownership is down.
  Solving these problems was supposed to be HUD's mission. In each, it 
has failed miserably.
  Imagine if we applied a performance standard like this to other 
Federal agencies. Suppose that when we created NASA with the purpose of 
putting a man on the Moon, that 30 years later, they still had not done 
it. We might consider abolishing them. That is exactly what we should 
do with HUD because they failed to accomplish their mission.
  Suppose that instead of creating HUD, we had given a trillion dollars 
to an entrepreneur like Bill Gates. Do you think our inner cities would 
be any worse off, or do you think that they would be more livable 
places today? I think the answer is clear.
  Take Fannie Mae for example. Fannie Mae plans to spend $1 trillion on 
affordable housing before the end of the decade. The plan will finance 
homes for 10 million people. This would provide a home to one in three 
renters in America. This plan, however, unlike HUD, won't cost American 
taxpayers one cent, and yet it will provide homes for millions of 
Americans.
  Mr. President, I have no faith that HUD can be reinvented. Thirty 
years of failure is too much. Since the November 8 election, HUD 
Secretary Henry Cisneros has put on a masterful public relations plan 
to save his Department. I for one am not fooled. If he really believed 
in what he was doing, he would have done it 2 years ago.
  Most importantly, what are the savings from the Cisneros plan? There 
are none. The only clearly identified savings will amount to one-half 
of 1 percent over 5 years. Mr. President, let me repeat that, the total 
savings in the Cisneros plan amount to only one-half of 1 percent over 
5 years.
  [[Page S2829]] Of course, there are promises of more savings, but 
they are just that--promises.
  Actually, if you look at the projected outlays by HUD in the fiscal 
year 1996 budget for the years 1995-99, spending is $3 billion more 
than was projected in last year's budget. Yes, that's right, spending 
will actually increase despite the reorganization.
  Furthermore, my favorite line from the President's budget is on page 
190. It is a chart about HUD's program consolidation. It says:
  ``Net impact, HUD consolidations''--spending of $29.4 billion in 1995 
to $30.3 billion in 1996.
  Yes, that's right. Spending will actually go up by $1 billion because 
of HUD's consolidations--not down.
  The Wall Street Journal reported on February 15, 1995, that HUD's 
projected savings may have been oversold, and that down at HUD they 
knew this before they submitted their plan to Congress.
  For these reasons, I am introducing a bill to abolish HUD. The bill 
will abolish HUD, effective January 1, 1998. The bill will direct the 
Secretary to make one housing block grant available to States and 
localities; transform all rental assistance into vouchers; and make FHA 
a Government-controlled corporation with income targeting and risk 
sharing.
                                 ______

      By Mr. CAMPBELL (for himself, Mr. Inouye, Mr. McCain, and Mr. 
        Daschle):
  S. 436. A bill to improve the economic conditions and supply of 
housing in native American communities by creating the Native American 
Financial Services Organization, and for other purposes; to the 
Committee on Indian Affairs.


          native american financial services organization act

  Mr. CAMPBELL. Mr. President, today I am introducing legislation 
entitled the Native American Financial Services Organization Act. I am 
pleased to add my distinguished colleagues, the chairman and vice-
chairman of the Indian Affairs Committee, Senators McCain and Inouye, 
and Senator Daschle, as cosponsors of this important legislation.
  Mr. President, there is a continued need for assistance to improve 
the housing conditions that exist in many Indian reservation 
communities, Alaska Native villages, and native Hawaiian communities. 
Statistics from the Bureau of Indian Affairs estimated in 1993 that as 
many as 90,000 native American families were in need of improved 
housing and nearly 50,000 families need new homes.
  Further, a study completed by the Commission on American Indian, 
Alaska Native, and Native Hawaiian Housing, found that housing 
shortages and deplorable living conditions are at crisis proportions in 
many native American communities. In its study the commission 
documented several obstacles that stand between Indian people and 
affordable, adequate, and available housing.
  The Commission found there is currently little, if any, conventional 
lending available to native people seeking to purchase a home.
  In addition, many Indian housing authorities lack the expertise to 
manage, coordinate, and maintain viable programs.
  And importantly, tribal governments have had to rely primarily on 
Federal Government grant and loan programs to finance housing and 
economic development projects.
  As a result of the study, the Commission recommended the creation of 
an entity that could serve as an intermediary financing institution 
with the authority to package mortgage loans, provide technical 
assistance, and serve as a clearinghouse of information for alternative 
financing programs.
  Mr. President, the Native American Financial Services Organization 
Act is the culmination of extensive deliberations between officials 
from the Department of Housing and Urban Development, the Department of 
Treasury, the USDA, members of my staff, and staff of the Senate 
Committee on Indian Affairs. The purpose of this legislation is to 
create a financial infrastructure for commercial financing 
opportunities by and for Indian people. The primary mechanism that will 
bridge Indian tribes with the commercial lending markets will be the 
creation of a Native American Financial Services Organization.
  The Native American Financial Services Organization would establish a 
limited Government-chartered corporation. A Federal grant would 
capitalize the federally chartered organization, which would cease to 
exist upon a designated date. At that point the charter would become a 
private corporation.
  More specifically, the legislation is designed to:
  First, establish and organize native American community lending 
institutions, that will be called Native American Financial 
Institutions. These lending institutions could be any type of financial 
institution, including community banks, credit unions and saving banks, 
that together, could provide a wide range of financial services;
  Second, develop and provide financial expertise and technical 
assistance to the Native American Financial Institutions, including 
methods of underwriting, securing, and selling mortgage and small 
commercial and consumer loans; and
  Third, develop and provide specialized technical assistance on how to 
overcome barriers to primary mortgage lending on native American lands, 
including issues related to trust lands, discrimination, and 
inapplicability of standard underwriting criteria.
  Importantly, this legislation will work in conjunction with the 
Community Development Financial Institutions [CDFI] fund established in 
the Reigle Community Development Banking and Regulatory Improvement 
Act, signed into law by the President last year. Under a cooperative 
agreement with the CDFI fund, this legislation will provide technical 
assistance and other services to Native American Financial 
Institutions.
  This week, Secretary Cisneros testified before the Committee on 
Indian Affairs. In his remarks, he stated that this legislation will 
``neither conflict nor duplicate the functions of CDFI or any other 
Government-sponsored enterprise, but is intended to supplement the 
efforts of existing organizations.''
  In short, the Native American Financial Services Organization would 
help provide financial independence to the native American community 
and would begin to address the housing deficiencies by working to 
attract private capital into the Indian housing market.
  Mr. President, I would like to conclude my remarks by making 
reference to a letter I recently received from the chairperson of the 
Ute Mountain Ute Tribe, that I believe illustrates the great necessity 
for this legislation. The letter states that the shortage of housing in 
the community is so severe that among the approximately 1,500 tribal 
members, 400 are without a permanent home and that a waiting list for 
new housing approaches 300 people.
  It is for this reason, that I believe the Native American Financial 
Services Organization is much needed. Statistics such as this merit the 
need for an innovative financing mechanism the Native American 
Financial Services Organization can provide.
  Mr. President, in closing, I ask unanimous consent that the bill be 
printed in the Record immediately following the full text of my 
statement and that the statements of Senators McCain and Inouye, who 
are both original cosponsors, appear in the Record immediately 
following the bill.
  I also ask unanimous consent to include letters from the Ute Mountain 
Ute Tribe, the Native American Indian Housing Council, and HUD's 
Secretary Henry Cisneros to be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                 S. 436

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

     SECTION 1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Native 
     American Financial Services Organization Act of 1995''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title.

               TITLE I--STATEMENT OF POLICY; DEFINITIONS

Sec. 101. Policy.
Sec. 102. Statement of purposes.
Sec. 103. Definitions.
      [[Page S2830]] TITLE II--NATIVE AMERICAN FINANCIAL SERVICES 
                              ORGANIZATION

Sec. 201. Establishment of the organization.
Sec. 202. Authorized assistance and service functions.
Sec. 203. Native American lending services grant.
Sec. 204. Audits.
Sec. 205. Annual housing and economic development reports.
Sec. 206. Advisory Council.

               TITLE III--CAPITALIZATION OF ORGANIZATION

Sec. 301. Capitalization of the organization.
Sec. 302. Obligations and securities of the organization.
Sec. 303. Limit on total assets and liabilities.

             TITLE IV--REGULATION, EXAMINATION, AND REPORTS

Sec. 401. Regulation, examination, and reports.
Sec. 402. Authority of the Secretary of Housing and Urban Development.

                 TITLE V--FORMATION OF NEW CORPORATION

Sec. 501. Formation of new corporation.
Sec. 502. Adoption and approval of merger plan.
Sec. 503. Consummation of merger.
Sec. 504. Transition.
Sec. 505. Effect of merger.

               TITLE VI--AUTHORIZATIONS OF APPROPRIATIONS

Sec. 601. Authorization of appropriations for Native American Financial 
              Institutions.
Sec. 602. Authorization of appropriations for organization.
               TITLE I--STATEMENT OF POLICY; DEFINITIONS

     SEC. 101. POLICY.

       (a) In General.--Based upon the findings and 
     recommendations of the Commission on American Indian, Alaska 
     Native and Native Hawaiian Housing established by the 
     Department of Housing and Urban Development Reform Act of 
     1989, the Congress has determined that--
       (1) housing shortages and deplorable living conditions are 
     at crisis proportions in Native American communities 
     throughout the United States; and
       (2) the lack of private capital to finance housing and 
     economic development for Native Americans and Native American 
     communities seriously exacerbates these housing shortages and 
     poor living conditions.
       (b) Policy of the United States To Address Native American 
     Housing Shortage.--It is the policy of the United States to 
     improve the economic conditions and supply of housing in 
     Native American communities throughout the United States by 
     creating the Native American Financial Services Organization 
     to address the housing shortages and poor living conditions 
     described in subsection (a).

     SEC. 102. STATEMENT OF PURPOSES.

       The purposes of this Act are--
       (1) to help serve the mortgage and other lending needs of 
     Native Americans by assisting in the establishment and 
     organization of Native American Financial Institutions, 
     developing and providing financial expertise and technical 
     assistance to Native American Financial Institutions, 
     including assistance concerning overcoming--
       (A) barriers to lending with respect to Native American 
     lands; and
       (B) the past and present impact of discrimination;
       (2) to promote access to mortgage credit in Native American 
     communities in the United States by increasing the liquidity 
     of financing for housing and improving the distribution of 
     investment capital available for such financing, primarily 
     through Native American Financial Institutions;
       (3) to promote the infusion of public capital into Native 
     American communities throughout the United States and to 
     direct sources of public and private capital into housing and 
     economic development for Native American individuals and 
     families, primarily through Native American Financial 
     Institutions; and
       (4) to provide ongoing assistance to the secondary market 
     for residential mortgages and economic development loans for 
     Native American individuals and families, Native American 
     Financial Institutions, and other borrowers by increasing the 
     liquidity of such investments and improving the distribution 
     of investment capital available for such financing.

     SEC. 103. DEFINITIONS.

       For purposes of this Act, the following definitions shall 
     apply:
       (1) Alaska native.--The term ``Alaska Native'' has the 
     meaning given the term ``Native'' by section 3(b) of the 
     Alaska Native Claims Settlement Act.
       (2) Board.--The term ``Board'' means the Board of Directors 
     of the Organization established under section 201(a)(2).
       (3) Chairperson.--The term ``Chairperson'' means the 
     chairperson of the Board.
       (4) Council.--The term ``Council'' means the Advisory 
     Council established under section 206.
       (5) Designated merger date.--The term ``designated merger 
     date'' means the specific calendar date and time of day 
     designated by the Board under section 502(b).
       (6) Director.--The term ``Director'' means the Director of 
     the Office of Federal Housing Enterprise Oversight of the 
     Department of Housing and Urban Development.
       (7) Fund.--The term ``Fund'' means the Community 
     Development Financial Institutions Fund established under 
     section 104 of the Riegle Community Development and 
     Regulatory Improvement Act of 1994.
       (8) Indian tribe.--The term ``Indian tribe'' means any 
     Indian tribe, band, nation, or other organized group or 
     community, including any Alaska Native village or regional or 
     village corporation as defined in or established pursuant to 
     the Alaska Native Claims Settlement Act that is recognized as 
     eligible for the special programs and services provided by 
     the Federal Government to Indians because of their status as 
     Indians.
       (9) Merger plan.--The term ``merger plan'' means the plan 
     of merger adopted by the Board under section 502(a).
       (10) Native american.--The term ``Native American'' means 
     any member of an Indian tribe.
       (11) Native american financial institution.--The term 
     ``Native American Financial Institution'' means a person 
     (other than an individual) that--
       (A) qualifies as a community development financial 
     institution under section 103 of the Riegle Community 
     Development and Regulatory Improvement Act of 1994;
       (B) satisfies the requirements established by the Riegle 
     Community Development and Regulatory Improvement Act of 1994 
     and the Fund for applicants for assistance from the Fund;
       (C) demonstrates a special interest and expertise in 
     serving the primary economic development and mortgage lending 
     needs of the Native American community; and
       (D) demonstrates that the person has the endorsement of the 
     Native American community that the person intends to serve.
       (12) Native american lender.--The term ``Native American 
     lender'' means a Native American governing body, Native 
     American housing authority, or other Native American 
     Financial Institution that acts as a primary mortgage or 
     economic development lender in a Native American community.
       (13) New corporation.--The term ``new corporation'' means 
     the corporation formed in accordance with title V.
       (14) Nonqualifying mortgage loan.--The term ``nonqualifying 
     mortgage loan'' means a mortgage loan that is determined by 
     the Organization, on the basis of the quality, type, class, 
     or principal amount of the loan, to fail to meet the purchase 
     standards of the Federal National Mortgage Association or the 
     Federal Home Loan Mortgage Corporation in effect on September 
     30, 1994.
       (15) Organization.--The term ``Organization'' means the 
     Native American Financial Services Organization established 
     under section 201.
       (16) Qualifying mortgage loan.--The term ``qualifying 
     mortgage loan'' means a mortgage loan that is determined by 
     the Organization, on the basis of the quality, type, class or 
     principal amount of the loan, to meet the purchase standards 
     of the Federal National Mortgage Association or the Federal 
     Home Loan Mortgage Corporation in effect on September 30, 
     1994.
       (17) Transition period.--The term ``transition period'' 
     means the period beginning on the date on which the merger 
     plan is approved by both the Secretary of Housing and Urban 
     Development and the Secretary of the Treasury and ending on 
     the designated merger date.
       TITLE II--NATIVE AMERICAN FINANCIAL SERVICES ORGANIZATION

     SEC. 201. ESTABLISHMENT OF THE ORGANIZATION.

       (a) Creation; Board of Directors; Policies; Principal 
     Office; Membership; Vacancies.--
       (1) Creation.--
       (A) In general.--There is established and chartered a 
     corporation to be known as the Native American Financial 
     Services Organization.
       (B) Period of time.--The Organization shall be a 
     congressionally chartered body corporate until the earlier 
     of--
       (i) the designated merger date; or
       (ii) the date on which the charter is surrendered by the 
     Organization.
       (C) Changes to charter.--The right to revise, amend, or 
     modify the Organization charter is specifically and 
     exclusively reserved to the Congress.
       (2) Board of directors; principal office.--
       (A) Board.--The powers of the Organization shall be vested 
     in a Board of Directors. The Board shall determine the 
     policies that govern the operations and management of the 
     Organization.
       (B) Principal office; residency.--The principal office of 
     the Organization shall be in the District of Columbia. For 
     purposes of venue, the Organization shall be considered to be 
     a resident of the District of Columbia.
       (3) Membership.--
       (A) In general.--
       (i) Nine members.--Except as provided in clause (ii), the 
     Board shall consist of 9 members, 3 of whom shall be 
     appointed by the President and 6 of whom shall be elected by 
     the class A stockholders, in accordance with the bylaws of 
     the Organization.
       (ii) Thirteen members.--If class B stock is issued under 
     section 301(b), the Board shall consist of 13 members, 9 of 
     whom shall be appointed and elected in accordance with clause 
     (i) and 4 of whom shall be elected by the class B 
     stockholders, in accordance with the bylaws of the 
     Organization.
       (B) Terms.--Each member of the Board shall be elected or 
     appointed for a 4-year 
     [[Page S2831]] term, except that the members of the initial 
     Board shall be elected or appointed for the following terms:
       (i) Of the 3 members appointed by the President--

       (I) 1 member shall be appointed for a 2-year term;
       (II) 1 member shall be appointed for a 3-year term; and
       (III) 1 member shall be appointed for a 4-year term;

     as designated by the President at the time of the 
     appointments.
       (ii) Of the 6 members elected by the class A stockholders--

       (I) 2 members shall each be elected for a 2-year term;
       (II) 2 members shall each be elected for a 3-year term; and
       (III) 2 members shall each be elected for a 4-year term.

       (iii) If class B stock is issued and 4 additional members 
     are elected by the class B stockholders--

       (I) 1 member shall be elected for a 2-year term;
       (II) 1 member shall be elected for a 3-year term; and
       (III) 2 members shall each be elected for a 4-year term.

       (C) Qualifications.--Each member appointed by the President 
     shall have expertise in 1 or more of the following areas:
       (i) Native American housing and economic development 
     programs.
       (ii) Financing in Native American communities.
       (iii) Native American governing bodies and court systems.
       (iv) Restricted and trust land issues, economic 
     development, and small consumer loans.
       (D) Chairperson.--The Board shall select a Chairperson from 
     among its members, except that the initial Chairperson shall 
     be selected from among the members of the initial Board who 
     have been appointed or elected to serve for a 4-year term.
       (E) Vacancies.--
       (i) Appointed members.--Any vacancy in the appointed 
     membership of the Board shall be filled by appointment by the 
     President, but only for the unexpired portion of the term.
       (ii) Elected members.--Any vacancy in the elected 
     membership of the Board shall be filled by appointment by the 
     Board, but only for the unexpired portion of the term.
       (F) Transitions.--Any member of the Board may continue to 
     serve after the expiration of the term for which the member 
     was appointed or elected until a qualified successor has been 
     appointed or elected.
       (b) Powers of the Organization.--The Organization may--
       (1) adopt, alter, and use a corporate seal;
       (2) adopt bylaws, consistent with this Act, regulating, 
     among other things, the manner in which--
       (A) the business of the Organization shall be conducted;
       (B) the elected members of the Board shall be elected;
       (C) the stock of the Organization shall be issued, held, 
     and disposed of;
       (D) the property of the Organization shall be disposed of; 
     and
       (E) the powers and privileges granted to the Organization 
     by this Act and other law shall be exercised;
       (3) make and perform contracts, agreements, and 
     commitments, including entering into a cooperative agreement 
     with the Fund;
       (4) prescribe and impose fees and charges for services 
     provided by the Organization;
       (5)(A) settle, adjust, and compromise; and
       (B) with or without consideration or benefit to the 
     Organization, release or waive in whole or in part, in 
     advance or otherwise, any claim, demand, or right of, by, or 
     against the Organization;

     if such settlement, adjustment, compromise, release, or 
     waiver is not adverse to the interests of the United States;
       (6) sue and be sued, complain and defend, in any tribal, 
     Federal, State, or other court;
       (7) acquire, take, hold, and own, and to deal with and 
     dispose of any property;
       (8) determine the necessary expenditures of the 
     Organization and the manner in which such expenditures shall 
     be incurred, allowed, and paid, and appoint, employ, and fix 
     and provide for the compensation and benefits of officers, 
     employees, attorneys, and agents as the Board determines 
     reasonable and not inconsistent with this section;
       (9) incorporate a new corporation under State, District of 
     Columbia, or tribal law, as provided in section 501;
       (10) adopt a plan of merger, as provided in section 502;
       (11) consummate the merger of the Organization into the new 
     corporation, as provided in section 503; and
       (12) have succession until the designated merger date or 
     any earlier date on which the Organization surrenders its 
     Federal charter.
       (c) Investment of Funds; Designation as Depositary, 
     Custodian, or Agent.--
       (1) Investment of funds.--Funds of the Organization that 
     are not required to meet current operating expenses shall be 
     invested in obligations of, or obligations guaranteed by, the 
     United States or any agency thereof, or in obligations, 
     participations, or other instruments that are lawful 
     investments for fiduciary, trust, or public funds.
       (2) Designation as depositary, custodian, or agent.--Any 
     Federal Reserve bank or Federal home loan bank, or any bank 
     as to which at the time of its designation by the 
     Organization there is outstanding a designation by the 
     Secretary of the Treasury as a general or other depositary of 
     public money, may--
       (A) be designated by the Organization as a depositary or 
     custodian or as a fiscal or other agent of the Organization; 
     and
       (B) act as such depositary, custodian, or agent.
       (d) Actions By and Against the Organization.--
     Notwithstanding section 1349 of title 28, United States Code, 
     or any other provision of law--
       (1) the Organization shall be deemed to be an agency 
     covered under sections 1345 and 1442 of title 28, United 
     States Code;
       (2) any civil action to which the Organization is a party 
     shall be deemed to arise under the laws of the United States, 
     and the appropriate district court of the United States shall 
     have original jurisdiction over any such action, without 
     regard to amount or value; and
       (3) any civil or other action, case, or controversy in a 
     tribal court, court of a State, or in any court other than a 
     district court of the United States, to which the 
     Organization is a party, may at any time before the 
     commencement of the trial be removed by the Organization, 
     without the giving of any bond or security and by following 
     any procedure for removal of causes in effect at the time of 
     the removal--
       (A) to the district court of the United States for the 
     district and division in which the action is pending;
       (B) or, if there is no such district court, to the district 
     court of the United States for the District of Columbia.

     SEC. 202. AUTHORIZED ASSISTANCE AND SERVICE FUNCTIONS.

       (a) Technical Assistance and Services.--The Organization 
     may--
       (1) assist the Fund in the establishment and organization 
     of Native American Financial Institutions;
       (2) assist the Fund in developing and providing financial 
     expertise and technical assistance to Native American 
     Financial Institutions, including methods of underwriting, 
     securing, servicing, packaging, and selling mortgage and 
     small commercial and consumer loans;
       (3) develop and provide specialized technical assistance on 
     overcoming barriers to primary mortgage lending on Native 
     American lands, including issues related to trust lands, 
     discrimination, high operating costs, and inapplicability of 
     standard underwriting criteria;
       (4) assist the Fund in providing mortgage underwriting 
     assistance (but not in originating loans) under contract to 
     Native American Financial Institutions;
       (5) work with the Federal National Mortgage Association, 
     the Federal Home Loan Mortgage Corporation, and other 
     participants in the secondary market for home mortgage 
     instruments in identifying and eliminating barriers to the 
     purchase of Native American mortgage loans originated by 
     Native American Financial Institutions and other lenders in 
     Native American communities;
       (6) obtain capital investments in the Organization from 
     Indian tribes, Native American organizations, and other 
     entities;
       (7) assist the Fund in the operation of the Organization as 
     an information clearinghouse by providing information on 
     financial practices to Native American Financial 
     Institutions; and
       (8) assist the Fund in monitoring and reporting to the 
     Congress on the performance of Native American Financial 
     Institutions in meeting the economic development and housing 
     credit needs of Native Americans.
       (b) Purchases and Sales of Mortgages and Mortgage-Backed 
     Securities.--
       (1) In general.--
       (A) Authorization.--If a determination is made in 
     accordance with subparagraph (B), the Organization may, upon 
     receipt of a written authorization from the Secretary of 
     Housing and Urban Development under this paragraph, carry out 
     any activity described in paragraph (3).
       (B) Determination.--For purposes of subparagraph (A), a 
     determination made under this section is a determination by 
     the Secretary of Housing and Urban Development that the 
     combined purchases by the Federal National Mortgage 
     Association and the Federal Home Loan Mortgage Corporation of 
     residential Native American nonqualifying mortgage loans 
     originated by Native American Financial Institutions and 
     other lenders on housing consisting of between 1 and 4 
     dwelling units--
       (i) in the second year following the establishment of the 
     Organization, total less than $20,000,000 (unless the 
     Organization can demonstrate to the Secretary of Housing and 
     Urban Development that such purchase goal could not be met); 
     or
       (ii) in any succeeding year, total less than that amount 
     that the Secretary of Housing and Urban Development has 
     determined and published as a reasonable Native American 
     mortgage purchase goal (in accordance with paragraph (2)) for 
     such combined purchases by the Federal National Mortgage 
     Association and the Federal Home Loan Mortgage Corporation in 
     such year.
       (2) Factors considered.--In determining the purchase goal 
     described in paragraph 
     [[Page S2832]] (1)(B)(ii), the Secretary shall take into 
     account the study by the Fund of Native American lending and 
     investment conducted pursuant to section 117(c) of the Riegle 
     Community Development and Regulatory Improvement Act of 1994.
       (3) Powers of the organization.--Upon receiving a written 
     authorization from the Secretary of Housing and Urban 
     Development under paragraph (1), the Organization may, at any 
     time--
       (A) with respect to residential mortgage loans originated 
     by Native American Financial Institutions that are qualifying 
     mortgage loans--
       (i) purchase such qualifying mortgage loans;
       (ii) hold such qualifying mortgage loans for a period of 
     not to exceed 12 months; and
       (iii) resell such qualifying mortgage loans to the Federal 
     National Mortgage Association, the Federal Home Loan Mortgage 
     Corporation, or other secondary market participants, as 
     provided in section 303(b);
       (B) with respect to residential mortgage loans originated 
     by the Native American Financial Institutions that are 
     nonqualifying mortgage loans--
       (i) purchase such nonqualifying mortgage loans from the 
     Native American Financial Institutions for such terms as the 
     Organization determines to be appropriate, including the life 
     of the mortgage loan, if, with respect to any such loan--

       (I) the Organization has reasonable assurance that the loan 
     will be repaid within the time agreed;
       (II) the Native American Financial Institution selling the 
     loan retains a participation of not less than 10 percent in 
     the mortgage;
       (III) the Native American Financial Institution selling the 
     loan agrees for such period of time and under such 
     circumstances as the Organization may require, to repurchase 
     or replace the mortgage upon demand of the Organization in 
     the event that the loan is in default; or
       (IV) that portion of the outstanding principal balance of 
     the loan which exceeds 80 percent of the value of the 
     property securing such loan is guaranteed or insured by a 
     qualified insurer, as determined by the Organization; and

       (ii) issue mortgage-backed securities or other forms of 
     participations based on pools of such nonqualifying mortgage 
     loans, as provided in section 303(c); and
       (C) purchase, service, sell, lend on the security of, and 
     otherwise deal in--
       (i) residential mortgages that are secured by a subordinate 
     lien against a property consisting of 1 to 4 dwelling units 
     that is the principal residence of the mortgagor; and
       (ii) residential mortgages that are secured by a 
     subordinate lien against a property consisting of five or 
     more dwelling units.
       (4) Rights and remedies.--
       (A) In general.--The rights and remedies of the 
     Organization, including any rights and remedies of the 
     Organization on, under, or with respect to any mortgage or 
     any obligation secured thereby, shall be immune from 
     impairment, limitation, or restriction by or under any State, 
     District of Columbia, or tribal--
       (i) law that becomes effective after the acquisition by the 
     Organization of the subject or property on, under, or with 
     respect to which such right or remedy arises or exists or 
     would so arise or exist in the absence of such law; or
       (ii) administrative or other action that becomes effective 
     after such acquisition.
       (B) Qualification.--The Organization may conduct its 
     business without regard to any qualification or similar 
     requirement in the District of Columbia, or any State or 
     tribal jurisdiction.

     SEC. 203. NATIVE AMERICAN LENDING SERVICES GRANT.

       (a) Initial Grant Payment.--If the Fund and the 
     Organization enter into a cooperative agreement for the 
     Organization to provide technical assistance and other 
     services to Native American Financial Institutions, such 
     agreement shall, to the extent that funds are available as 
     provided in section 602, provide that the initial grant 
     payment, anticipated to be $5,000,000, shall be made when all 
     members of the initial Board have been appointed under 
     section 201.
       (b) Payment of Grant Balance.--The payment of the grant 
     balance of $5,000,000 shall be made to the Organization not 
     later than 1 year after the date on which the initial grant 
     payment is made under subsection (a).

     SEC. 204. AUDITS.

       (a) Independent Audits.--
       (1) In general.--The Organization shall have an annual 
     independent audit made of its financial statements by an 
     independent public accountant in accordance with generally 
     accepted auditing standards.
       (2) Determinations.--In conducting an audit under this 
     subsection, the independent public accountant shall determine 
     and report on whether the financial statements of the 
     Organization--
       (A) are presented fairly in accordance with generally 
     accepted accounting principles; and
       (B) to the extent determined necessary by the Director, 
     comply with any disclosure requirements imposed under section 
     401.
       (b) GAO Audits.--
       (1) In general.--Beginning after the first 2 years of the 
     operation of the Organization, unless an earlier date is 
     required by any other statute, grant, or agreement, the 
     programs, activities, receipts, expenditures, and financial 
     transactions of the Organization shall be subject to audit by 
     the Comptroller General of the United States under such rules 
     and regulations as may be prescribed by the Comptroller 
     General.
       (2) Access.--To carry out this subsection, the 
     representatives of the General Accounting Office shall--
       (A) have access to all books, accounts, financial records, 
     reports, files, and all other papers, things, or property 
     belonging to or in use by the Organization and necessary to 
     facilitate the audit;
       (B) be afforded full facilities for verifying transactions 
     with the balances or securities held by depositaries, fiscal 
     agents, and custodians; and
       (C) have access, upon request to the Organization or any 
     auditor for an audit of the Organization under subsection 
     (a), to any books, accounts, financial records, reports, 
     files, or other papers, or property belonging to or in use by 
     the Organization and used in any such audit and to any 
     papers, records, files, and reports of the auditor used in 
     such an audit.
       (3) Reports.--The Comptroller General of the United States 
     shall submit to the Congress a report on each audit conducted 
     under this subsection.
       (4) Reimbursement.--The Organization shall reimburse the 
     General Accounting Office for the full cost of any audit 
     conducted under this subsection.

     SEC. 205. ANNUAL HOUSING AND ECONOMIC DEVELOPMENT REPORTS.

       Not later than 1 year after the date of enactment of this 
     Act, and annually thereafter, the Organization shall collect, 
     maintain, and provide to the Secretary of Housing and Urban 
     Development, in a form determined by the Secretary, such data 
     as the Secretary determines to be appropriate with respect to 
     the Organization's--
       (1) mortgages on properties consisting of between 1 and 4 
     dwelling units;
       (2) mortgages on properties consisting of five or more 
     dwelling units; and
       (3) activities relating to economic development.

     SEC. 206. ADVISORY COUNCIL.

       (a) Establishment.--The Board shall establish an Advisory 
     Council in accordance with this section.
       (b) Membership.--
       (1) In general.--The Council shall consist of 13 members, 
     who shall be appointed by the Board, including 1 
     representative from each of the 12 districts established by 
     the Bureau of Indian Affairs and 1 representative from the 
     State of Hawaii.
       (2) Qualifications.--Not less than 6 of the members of the 
     Council shall have financial expertise, and not less than 9 
     members of the Council shall be Native Americans.
       (3) Terms.--Each member of the Council shall be appointed 
     for a 4-year term, except that the initial Council shall be 
     appointed, as designated by the Board at the time of 
     appointment, as follows:
       (A) Four members shall each be appointed for a 2-year term.
       (B) Four members shall each be appointed for a 3-year term.
       (C) Five members shall each be appointed for a 4-year term.
       (c) Duties.--The Council shall advise the Board on all 
     policy matters of the Organization. Through the regional 
     representation of its members, the Council shall provide 
     information to the Board from all sectors of the Native 
     American community.
               TITLE III--CAPITALIZATION OF ORGANIZATION

     SEC. 301. CAPITALIZATION OF THE ORGANIZATION.

       (a) Class A Stock.--The class A stock of the Organization 
     shall--
       (1) be issued only to Indian tribes;
       (2) be allocated on the basis of Indian tribe population, 
     as determined by the Secretary of Housing and Urban 
     Development in consultation with the Secretary of the 
     Interior;
       (3) have such par value and other characteristics as the 
     Organization shall provide;
       (4) be vested with voting rights, each share being entitled 
     to 1 vote;
       (5) be nontransferable; and
       (6) be surrendered to the Organization if the holder ceases 
     to be recognized as an Indian tribe under this Act.
       (b) Class B Stock.--
       (1) In general.--The Organization may issue class B stock 
     evidencing capital contributions in the manner and amount, 
     and subject to any limitations on concentration of ownership, 
     as may be established by the Organization.
       (2) Characteristics.--Any class B stock issued under 
     paragraph (1) shall--
       (A) be available for purchase by investors;
       (B) be entitled to such dividends as may be declared by the 
     Board in accordance with subsection (c);
       (C) have such par value and other characteristics as the 
     Organization shall provide;
       (D) be vested with voting rights, each share being entitled 
     to 1 vote; and
       (E) be transferable only on the books of the Organization.
       (c) Charges and Fees; Earnings.--
       (1) Charges and fees.--The Organization may impose charges 
     or fees, which may be regarded as elements of pricing, with 
     the objectives that--
       (A) all costs and expenses of the operations of the 
     Organization should be within the income of the Organization 
     derived from such operations; and
       (B) such operations would be fully self-supporting.
       (2) Earnings.--All earnings from the operations of the 
     Organization shall be annually 
     [[Page S2833]] transferred to the general surplus account of 
     the Organization. At any time, funds in the general surplus 
     account may, in the discretion of the Board, be transferred 
     to the reserves of the Organization.
       (d) Capital Distributions.--
       (1) In general.--Except as provided in paragraph (2), the 
     Organization may make such capital distributions (as such 
     term is defined in section 1303 of the Federal Housing 
     Financial Safety and Soundness Act of 1992) as may be 
     declared by the Board. All capital distributions shall be 
     charged against the general surplus account of the 
     Organization.
       (2) Restriction.--The Organization may not make any capital 
     distribution that would decrease the total capital (as such 
     term is defined in section 1303 of the Federal Housing 
     Financial Safety and Soundness Act of 1992) of the 
     Organization to an amount less than the capital level for the 
     Organization established under section 401, without prior 
     written approval of the distribution by the Director.

     SEC. 302. OBLIGATIONS AND SECURITIES OF THE ORGANIZATION.

       (a) In General.--
       (1) Authorization.--The Organization may--
       (A) borrow funds to give security or pay interest or other 
     return; and
       (B) issue upon the approval of the Secretary of the 
     Treasury, notes, debentures, bonds, or other obligations 
     having maturities and bearing such rate or rates of interest 
     as may be determined by the Organization with the approval of 
     the Secretary of the Treasury;

     if such borrowing and issuing of obligations qualifies as a 
     transaction by an issuer not involving any public offering 
     under section 4(2) of the Securities Act of 1933.
       (2) Restrictions.--
       (A) In general.--Obligations issued by the Organization 
     under this section shall not be obligations of the United 
     States or any agency of the United States.
       (B) No guarantees.--Payment of the principal of or interest 
     on such obligations shall not be guaranteed by the United 
     States or any agency of the United States. The obligations 
     issued by the Organization under this section shall so 
     plainly state.
       (b) Resales of Qualifying Mortgage Loans.--The sale or 
     other disposition by the Organization of qualifying mortgage 
     loans under section 202(b) shall be on such terms and 
     conditions relating to resale, repurchase, substitution, 
     replacement or otherwise as the Organization may prescribe, 
     except that the Organization may not guarantee or insure the 
     payment of any mortgage loan sold under section 202(b).
       (c) Securities Backed by Nonqualifying Mortgage Loans.--
     Securities in the form of debt obligations or trust 
     certificates of beneficial interest, or both, and based upon 
     nonqualifying mortgage loans held and set aside by the 
     Organization under section 202(b)--
       (1) may be issued upon the approval of the Secretary of the 
     Treasury; and
       (2) shall have such maturities, and shall bear such rate or 
     rates of interest, as may be determined by the Organization 
     with the approval of the Secretary of the Treasury;

     if such issuance qualifies as a transaction by an issuer not 
     involving any public offering under section 4(2) of the 
     Securities Act of 1933.
       (d) Prohibitions and Restrictions; Creation of Liens and 
     Charges.--
       (1) In general.--The Organization may, by regulation or by 
     writing executed by the Organization--
       (A) establish prohibitions or restrictions on the creation 
     of indebtedness or obligations of the Organization or of 
     liens or charges upon property of the Organization, including 
     after-acquired property; and
       (B) create liens and charges, which may be floating liens 
     or charges, upon all or any part or parts of the property of 
     the Organization, including after-acquired property.
       (2) Effect.--Any prohibition, restriction, lien, or charge 
     established under paragraph (2) shall--
       (A) have such effect, including such rank and priority, as 
     may be provided by regulations of the Organization or by any 
     writing executed by the Organization; and
       (B) create a cause of action which may be enforced by 
     action in the United States district court for the District 
     of Columbia or in the United States district court for any 
     judicial district in which any of the property affected is 
     located.
       (3) Jurisdiction; service of process.--Process in any 
     action described in paragraph (2) may run to or be served in 
     any judicial district or in any place subject to the 
     jurisdiction of the United States.
       (e) Validity of Provisions; Validity of Restrictions, 
     Prohibitions, Liens, or Charges.--This section and any 
     restriction, prohibition, lien, or charge referred to in 
     subsection (b) shall be fully effective notwithstanding any 
     other law, including any law of or relating to sovereign 
     immunity or priority.

     SEC. 303. LIMIT ON TOTAL ASSETS AND LIABILITIES.

       The aggregate of--
       (1) the total equity of the Organization, including all 
     capital from any issuance of class B stock; and
       (2) the total liabilities of the Organization, including 
     all obligations issued or incurred by the Organization;

     shall not at any time exceed $20,000,000.
             TITLE IV--REGULATION, EXAMINATION, AND REPORTS

     SEC. 401. REGULATION, EXAMINATION, AND REPORTS.

       (a) Effective Date of Section.--This section shall take 
     effect on the date on which the Secretary of Housing and 
     Urban Development makes a determination in accordance with 
     section 202(b) that the Organization may purchase and sell 
     mortgages and mortgage-backed securities.
       (b) In General.--The Organization shall be subject to the 
     regulatory authority of the Office of Federal Housing 
     Enterprise Oversight of the Department of Housing and Urban 
     Development with respect to all matters relating to the 
     financial safety and soundness of the Organization.
       (c) Duty of Director.--The Director shall ensure that the 
     Organization is adequately capitalized and operating safely 
     as a congressionally chartered body corporate.
       (d) Powers of Director.--The Director shall have all of the 
     exclusive powers granted the Director under subsections (b), 
     (d), and (e) of section 1313 of the Housing and Community 
     Development Act of 1992, as determined by the Director to be 
     necessary or appropriate to regulate the operation of the 
     Organization.
       (e) Reports to Director.--
       (1) Annual report.--Not later than 1 year after the date of 
     enactment of this Act, and annually thereafter, the 
     Organization shall submit to the Director a report describing 
     the financial condition and operations of the Organization. 
     The report shall be in such form, contain such information, 
     and be submitted on such date as the Director shall require.
       (2) Other reports.--In addition to the reports submitted 
     under paragraph (1), the Organization shall submit to the 
     Director any report required by the Director pursuant to 
     section 1314 of the Housing and Community Development Act of 
     1992.
       (3) Contents of report.--Each report submitted under this 
     subsection shall contain a declaration by the president, vice 
     president, treasurer, or any other officer of the 
     Organization designated by the Board to make such 
     declaration, that the report is true and correct to the best 
     of such officer's knowledge and belief.
       (f) Funding OFHEO Oversight.--
       (1) Assessment and collection.--The Director shall assess 
     and collect from the Organization such amounts as are 
     necessary to reimburse the Office of Federal Housing 
     Enterprise Oversight for the reasonable costs and expenses of 
     the activities undertaken by the Office of Federal Housing 
     Enterprise Oversight to carry out the duties of the Director 
     under paragraph (2), including the costs of examinations and 
     overhead expenses.
       (2) Requirements.--Annual assessments imposed by the 
     Director shall be--
       (A) imposed prior to October 1 of each year;
       (B) collected at such time or times during each assessment 
     year as determined necessary or appropriate by the Director;
       (C) deposited into the Federal Housing Enterprises 
     Oversight Fund established by section 1316(f) of the Housing 
     and Community Development Act of 1992; and
       (D) available, to the extent provided in appropriations 
     Acts, for carrying out the responsibilities of the Director 
     under this section.

     SEC. 402. AUTHORITY OF THE SECRETARY OF HOUSING AND URBAN 
                   DEVELOPMENT.

       Except for the authority of the Director under in section 
     401, the Secretary of Housing and Urban Development shall--
       (1) have general regulatory power over the Organization; 
     and
       (2) issue such rules and regulations applicable to the 
     Organization as determined necessary or appropriate by the 
     Secretary to ensure that the purposes specified in section 
     102 are accomplished.
                 TITLE V--FORMATION OF NEW CORPORATION

     SEC. 501. FORMATION OF NEW CORPORATION.

       (a) In General.--In order to continue the accomplishment of 
     the purposes specified in section 102 beyond the terms of the 
     charter of the Organization, the Board shall, not later than 
     10 years after the date of enactment of this Act, cause the 
     formation of a new corporation under the laws of any tribe, 
     any State, or the District of Columbia.
       (b) Powers of New Corporation Not Prescribed.--Except as 
     provided in this section, the new corporation may have any 
     corporate powers and attributes permitted under the laws of 
     the jurisdiction of its incorporation which the Board shall 
     determine, in its business judgment, to be appropriate.
       (c) Use of NAFSO Name Prohibited.--The new corporation may 
     not use in any manner the name ``Native American Financial 
     Services Organization'' or ``NAFSO'' or any variation of 
     thereof.

     SEC. 502. ADOPTION AND APPROVAL OF MERGER PLAN.

       (a) In General.--Not later than 10 years after the date of 
     enactment of this Act, the Board shall prepare, adopt, and 
     submit to the Secretary of Housing and Urban Development and 
     the Secretary of the Treasury for approval, a plan for 
     merging the Organization into the new corporation.
       (b) Designated Merger Date.--
       (1) In general.--The Board shall establish the designated 
     merger date in the merger 
     [[Page S2834]] plan as a specific calendar date on which and 
     time of day at which the merger of the Organization into the 
     new corporation shall take effect.
       (2) Changes.--The Board may change the designated merger 
     date in the merger plan by adopting an amended plan of 
     merger.
       (3) Restriction.--Except as provided in paragraph (4), the 
     designated merger date in the merger plan or any amended 
     merger plan shall not be later than 11 years after the date 
     of enactment of this Act.
       (4) Exception.--Subject to the restriction contained in 
     paragraph (5), the Board may adopt an amended plan of merger 
     that designates a date later than 11 years after the date of 
     enactment of this Act if the Board submits to both the 
     Secretary of Housing and Urban Development and the Secretary 
     of the Treasury a report--
       (A) stating that an orderly merger of the Organization into 
     the new corporation is not feasible before the latest date 
     designated by the Board;
       (B) explaining why an orderly merger of the Organization 
     into the new corporation is not feasible before the latest 
     date designated by the Board;
       (C) describing the steps that have been taken to consummate 
     an orderly merger of the Organization into the new 
     corporation not later than 11 years after the date of 
     enactment of this Act; and
       (D) describing the steps that will be taken to consummate 
     an orderly and timely merger of the Organization into the new 
     corporation.
       (5) Limitation.--The date designated by the Board in an 
     amended merger plan shall not be later than 12 years after 
     the date of enactment of this Act.
       (6) Consummation of merger.--The consummation of an orderly 
     and timely merger of the Organization into the new 
     corporation shall not occur later than 13 years after the 
     date of enactment of this Act.
       (c) Governmental Approvals of Merger Plan Required.--The 
     merger plan or any amended merger plan shall take effect on 
     the date on which the plan is approved by both the Secretary 
     of Housing and Urban Development and the Secretary of the 
     Treasury.
       (d) Revision of Disapproved Merger Plan Required.--If 
     either the Secretary of Housing and Urban Development or the 
     Secretary of the Treasury, or both, disapprove the merger 
     plan or any amended merger plan--
       (1) each Secretary that disapproves the plan shall notify 
     the Organization of such disapproval and indicate the reasons 
     for the disapproval; and
       (2) not later than 30 days after the date of notification 
     of disapproval under paragraph (1), the Organization shall 
     submit to both the Secretary of Housing and Urban Development 
     and the Secretary of the Treasury for approval an amended 
     merger plan responsive to the reasons for the disapproval 
     indicated in such notification.
       (e) No Stockholder Approval of Merger Plan Required.--The 
     approval or consent of the stockholders of the Organization 
     shall not be required to accomplish the merger of the 
     Organization into the new corporation.

     SEC. 503. CONSUMMATION OF MERGER.

       The Board shall ensure that the merger of the Organization 
     into the new corporation is accomplished in accordance with--
       (1) the merger plan approved by the Secretary of Housing 
     and Urban Development and the Secretary of the Treasury; and
       (2) all applicable laws of the jurisdiction in which the 
     new corporation is incorporated.

     SEC. 504. TRANSITION.

       (a) Continuation of Rights, Duties, and Restrictions.--
     Except as provided in this section, the Organization shall, 
     during the transition period, continue to have all of the 
     rights, privileges, duties, and obligations, and shall be 
     subject to all of the limitations and restrictions, set forth 
     in this Act.
       (b) Collateralization of Outstanding Obligations.--
       (1) In general.--The Organization shall provide for all 
     debt obligations of the Organization that are outstanding on 
     the date before the designated merger date to be secured as 
     to principal and interest by obligations of the United States 
     held in trust for the holders of such obligations.
       (2) Requirements, terms, and conditions.--The 
     collateralization and the trust referred to in the preceding 
     sentence shall be subject to such requirements, terms, and 
     conditions as the Secretary of the Treasury determines to be 
     necessary or appropriate.
       (c) Issuance of New Obligations During Transition Period.--
     As needed to carry out the purposes for which it was formed, 
     the Organization may, during the transition period, continue 
     to issue obligations under section 303. Any new obligation 
     issued during the transition period shall mature before the 
     designated merger date.

     SEC. 505. EFFECT OF MERGER.

       (a) Transfer of Assets and Liabilities.--
       (1) Transfer of Assets.--On the designated merger date, all 
     property, real, personal, and mixed, all debts due on any 
     account, and any other interest of or belonging to or due to 
     the Organization shall be transferred to and vested in the 
     new corporation without further act or deed, and title to any 
     property, whether real, personal, or mixed, shall not in any 
     way be impaired by reason of the merger.
       (2) Transfer of Liabilities.--On the designated merger 
     date, the new corporation shall be responsible and liable for 
     all obligations and liabilities of the Organization and 
     neither the rights of creditors nor any liens upon the 
     property of the Organization shall be impaired by the merger.
       (b) Termination of the Organization and Its Federal 
     Charter.--On the designated merger date--
       (1) the surviving corporation of the merger shall be the 
     new corporation;
       (2) the Federal charter of the Organization shall 
     terminate; and
       (3) the separate existence of the Organization shall 
     terminate.
       (c) References to the Organization in Law.--After the 
     designated merger date, any reference to the Organization in 
     any law or regulation shall be deemed to refer to the new 
     corporation.
       (d) Savings Clause.--
       (1) Proceedings.--The merger of the Organization into the 
     new corporation shall not abate any proceeding commenced by 
     or against the Organization before the designated merger 
     date, except that the new corporation shall be substituted 
     for the Organization as a party to any such proceeding as of 
     the designated merger date.
       (2) Contracts and agreements.--All contracts and agreements 
     to which the Organization is a party and which are in effect 
     on the day before the designated merger date shall continue 
     in effect according to their terms, except that the new 
     corporation shall be substituted for the Organization as a 
     party to those contracts and agreements as of the designated 
     merger date.
               TITLE VI--AUTHORIZATIONS OF APPROPRIATIONS

     SEC. 601. AUTHORIZATION OF APPROPRIATIONS FOR NATIVE AMERICAN 
                   FINANCIAL INSTITUTIONS.

       (a) In General.--There are authorized to be appropriated to 
     the Fund, without fiscal year limitation, $20,000,000 to 
     provide financial assistance to Native American Financial 
     Institutions.
       (b) Not Matching Funds.--To the extent that a Native 
     American Financial Institution receives a portion of an 
     appropriation made under subsection (a), such funds shall not 
     be considered to be matching funds required of the Native 
     American Financial Institution under section 108(e) of the 
     Riegle Community Development and Regulatory Improvement Act 
     of 1994.

     SEC. 602. AUTHORIZATION OF APPROPRIATIONS FOR ORGANIZATION.

       The Secretary of Housing and Urban Development may, to the 
     extent provided in advance in an appropriations Act, provide 
     not more than $10,000,000 to the Fund for the funding of a 
     cooperative agreement to be entered into by the Fund and the 
     Organization for technical assistance and other services to 
     be provided by the Organization to Native American Financial 
     Institutions.
                                                                    ____

                                            Ute Mountain Ute Tribe


                                             Towaoc, Colorado,

                                                 January 26, 1995.
     Senator Ben Nighthorse Campbell,
     Russell Office Building, Washington, DC.
       Dear Senator Campbell: Thank you for your letter of January 
     25, 1995 requesting my comments on the draft Native American 
     Financial Services Organization Act (NAFSO) attached thereto. 
     Based on this Tribe's experience and on the House Committee 
     on Banking, Finance and Urban Affairs report referenced in 
     the draft, this type of assistance to Tribes is desperately 
     needed. Your efforts to remedy the current housing situation 
     for Native Americans is greatly appreciated.
       After a brief review of the draft NAFSO, I have some 
     initial observations. First, with respect to governance of 
     NAFSO, it will be important to ensure that financial services 
     experts are either on the Board of Directors or in a position 
     to directly advise them. The issue here is that such experts 
     will be required for a successful NAFSO and to assist in the 
     establishment of NAFIs. Experts are necessary for the fiscal 
     management of NAFSO itself.
       Second, along these same lines, there probably should be 
     some federal oversight, but not necessarily regulatory 
     control, consistent with the United States's trust 
     responsibility, to make sure NAFSO and NAFIs are properly 
     established and operated. This oversight would be in addition 
     to that required by the draft if NAFSO is authorized to 
     purchase and sell Native American mortgages. Please advise if 
     NAFIs would be subject to banking and lending laws as other 
     such institutions are. Third, a more detailed explanation of 
     what the ``tribal contribution'' will amount to in NAFSO's 
     future would be beneficial. Many tribes with limited 
     financial resources will have concerns about this facet of 
     the legislation and some indication of what such 
     contributions will entail may help to alleviate apprehension 
     about them. Nevertheless, some tribes may oppose any tribal 
     contributions at all. One would hope that the NAFSO could 
     operate on its own resources if it is indeed successful.
       To sum up, my primary concern involves ensuring that NAFSO 
     will be successful, particularly considering it will be up to 
     the Tribes in large part to do so. Some expert or federal 
     representation on the Board of Directors would be helpful in 
     this regard.
       Coupled with this consideration is the importance of 
     oversight for operations of NAFIs. This seems appropriate 
     since the draft implies these institutions will be very 
     similar to banks, institutions which are already highly 
     regulated.
       As you may be aware, the Department of Veteran's Affairs 
     entered into a Cooperative Agreement with the Tribe on 
     November 15, 
     [[Page S2835]] 1993 to assist us in obtaining home loans for 
     veteran tribal members. To date, no loans have been processed 
     under this Cooperative Agreement. At the same time, I have 
     some concern about HUD's involvement in this program based on 
     their inability to resolve this problem on its own. 
     Nevertheless, surely HUD has learned much from its mistakes 
     and should add to the process. Whether that agency should be 
     a majority voice in the decision-making or policy formulating 
     process is something that should be examined.
       The shortage of suitable housing on this Reservation is 
     severe. We currently have close to 400 individuals without a 
     permanent home and near 300 which have placed themselves on 
     the waiting list for housing. Out of the 1500 or so tribal 
     members which reside here, this means over 25% of our people 
     are without a permanent home. We also have information which 
     indicates that upwards of 200 families are forced to share 
     their homes with other families to provide the most basic of 
     human needs, shelter. As you can understand, this desperate 
     situation seriously affects tribal member's sense of self-
     worth and self-esteem.
       Although this Tribe operates a Casino as well as other 
     successful enterprises, we must utilize those funds for 
     operation of the Tribal budget and economic development to 
     keep our people working and reduce unemployment. It is for 
     this reason that your draft NAFSO/NAFI legislation is 
     urgently needed. Again, I cannot stress enough how much your 
     efforts in this regard are appreciated. The Tribe 
     acknowledges this efforts and will endeavor to help where we 
     can.
       Thank you very much for the opportunity to comment. Please 
     contact my office if you require anything further.
           Sincerely,
                                                Judy Knight Frank,
     Chairperson.
                                                                    ____

                                          National American Indian


                                              Housing Council,

                                 Washington, DC, January 24, 1995.
     Hon. Ben Nighthorse Campbell,
     U.S. Senate, Washington, DC.
       Dear Senator: On behalf of the NAIHC's Board of Directors 
     and membership, I am writing to thank you for supporting 
     legislation that is very important to the Native American 
     community. In particular, your support for the Native 
     American Financial Services Organization (NAFSO) is greatly 
     appreciated as NAIHC believes this legislation will bring 
     much needed relief to solving the housing problems for Native 
     Americans.
       The housing needs in Indian Country remain acute and we 
     recognize that we must move beyond housing assistance from 
     the federal government. NAFSO will help us do so. We believe 
     that allowing the creation of Native American Financial 
     Institutions (NAFIs) will also stimulate local economies and 
     encourage privately financed housing.
       Your recognization that NAFSO will have a positive affect 
     on Indian Country is appreciated and valued. Please feel free 
     to contact me if I can be of further support regarding this 
     legislation.
           Sincerely,
                                                    Ruth A. Jaure,
     Executive Director.
                                                                    ____

         U.S. Department of Housing and Urban Development,
                               Washington, DC, September 22, 1994.
     Hon. Albert Gore, Jr.,
     President of the U.S. Senate,
     Washington, DC.
       Dear Mr. President: I am pleased to transmit to you the 
     ``Native American Financial Services Organization Act of 
     1994.'' For the past several months, the Department of 
     Housing and Urban Development has been working with the 
     Departments of the Treasury, the Interior, Agriculture and 
     Veterans' Affairs, in consultation with the Native American 
     Community to develop this bill.
       Based upon the findings and recommendations of the 
     Commission on American Indian, Alaska Native and Native 
     Hawaiian Housing, established by Public Law 101-235, HUD 
     believes that housing shortages and deplorable living 
     conditions have reached crisis proportions in Native American 
     communities throughout the United States.
       Historically, financing for most Native American housing 
     and economic development has been provided through government 
     programs. These federal programs, however, do not fully meet 
     the needs of Native American communities. Furthermore, there 
     are few financial institutions that provide financial 
     services to these communities.
       To begin to address this crisis, the Department is 
     proposing this legislation to improve the conditions and 
     supply of housing in Native American communities by creating 
     the Native American Financial Services Organization. This 
     legislation would establish a limited government-chartered 
     corporation to be known as the Native American Financial 
     Services Organization (NAFSO). A Federal grant would 
     capitalize the federally-chartered, for-profit NAFSO through 
     a cooperative agreement. Under the agreement, NAFSO could 
     assist Native Americans in creating local financial 
     institutions to address their capital needs. The Federal 
     NAFSO charter would cease to exist upon a designated date, by 
     which time it would be merged into a private corporation. The 
     legislation also provides for an ``asset cap'' that is 
     designed to limit the size of the NAFSO to $20 million. It is 
     anticipated that the NAFSO will be privatized in order to 
     grow beyond this limit. It also is anticipated that tribal 
     contributions would assist the NAFSO in becoming self-
     sufficient over time.
       The governance of the NAFSO would be vested in a Board of 
     Directors that would be representative of the Native American 
     community. Shares would be equitably distributed among 
     federally-recognized tribes; the Board could elect to 
     distribute additional shares on an investment basis.
       It is the purpose of this Act--
       (1) to help serve the mortgage, economic development, and 
     other lending needs of Native Americans by assisting in the 
     establishment and organization of Native American community 
     lending institutions that would be called Native American 
     Financial Institutions (NAFIs); NAFIs would be any type of 
     financial institution, including community banks, credit 
     unions and savings banks, and therefore could provide a wide 
     range of financial services;
       (2) to develop and provide financial expertise and 
     technical assistance to NAFIs, including assistance on how to 
     overcome barriers to lending on Native American lands, and 
     the past and present impact of discrimination;
       (3) to promote access to mortgage and economic development 
     credit throughout Native American communities by increasing 
     the liquidity of financing for housing and improving the 
     distribution of investment capital available for such 
     financing, primarily through NAFIs;
       (4) to direct sources of public and private capital into 
     housing and economic development for Native American 
     individuals and families, primarily through NAFIs; and,
       (5) to provide ongoing assistance to the secondary market 
     for residential mortgages and economic development loans for 
     Native American individuals and families, NAFIs, and other 
     borrowers by increasing the liquidity of such mortgage 
     investments and improving the distribution of investment 
     capital available for such residential mortgage financing.
       At the outset, it is contemplated that the NAFSO itself 
     will not purchase and sell Native American mortgages 
     originated by the NAFIs, but rather will work with the 
     existing secondary market for residential mortgages to 
     increase the liquidity for such investment. However, if it is 
     later determined that the secondary market is not meeting 
     reasonable mortgage purchase goals established by this 
     department, the NAFSO will be authorized to purchase and sell 
     such mortgages.
       The Secretary of Housing and Urban Development would be 
     authorized to provide up to $10 million, subject to 
     appropriations, for the funding of a cooperative agreement 
     for technical assistance and other services to be provided by 
     the NAFSO to NAFIs. In addition, there would be authorized, 
     without fiscal year limitation, $20 million to provide 
     financial assistance through the NAFSO to NAFIs. Funding 
     would be made available from the Community Development 
     Financial Institution (CDFI) fund. NAFIs are not eligible for 
     additional funding under the CDFI fund if the NAFI elects to 
     receive funding under this Act.
       This legislation further provides that the Office of 
     Federal Housing Enterprise Oversight would regulate matters 
     pertaining to the financial safety and soundness of the NAFSO 
     in the event that the NAFSO is authorized to purchase and 
     sell Native American mortgages and the Department of Housing 
     and Urban Development would have general regulatory 
     authority.
       The ``Native American Financial Services Act of 1994'' 
     would provide financial independence to the Native American 
     community that has never been enjoyed before. It provides the 
     structure to marry private financial resources with Federal 
     and tribal resources in a way that benefits all parties. The 
     creation of the NAFSO would have the ripple effect of opening 
     avenues to economic development and housing that have not 
     been available heretofore.
       The Office of Management and Budget has advised that it has 
     no objection to the transmittal of this legislation to 
     Congress.
       I request that the bill be referred to the appropriate 
     committee and urge its early consideration. I am sending a 
     similar letter to the Speaker of the House of 
     Representatives, Thomas S. Foley.
           Sincerely,
                                                Henry G. Cisneros,
                                                        Secretary.

  Mr. INOUYE, Mr. President, I rise today to express my support for a 
measure being introduced by my esteemed colleague from Colorado, 
Senator Ben Nighthorse Campbell. This measure, the Native American 
Financial Services Organization Act of 1995, is being introduced at the 
request of the administration. It is the end-product of a multiagency 
Federal working group whose goal was to craft a legislative proposal 
which would encourage, promote, and foster the delivery of housing and 
economic development financing to native American families and 
communities.
  Mr. President, it is difficult for many of us here to comprehend the 
sheer magnitude of the housing needs of this Nation's native 
communities. In 1993, the Bureau of Indian Affairs of the U.S. 
Department of Interior estimated that 88,689 native American families 
were in need of housing assistance. But anyone 
[[Page S2836]] familiar with Indian country would agree that these 
figures reflect a gross underestimation. I am pleased to note that in 
the next few months, the Department of Housing and Urban Development 
will be releasing the results of an assessment of Indian housing needs 
and programs. This survey is one of the most ambitious and 
comprehensive ever undertaken, and it is my hope that we in the 
Congress will finally be provided with a more accurate picture of the 
housing needs and conditions of native American families.
  The Native American Financial Services Organization Act has its 
genesis in the finding and recommendations of the National Commission 
on American Indian, Alaska Native, and Native Hawaiian housing. The 
Commission, established pursuant to Public Law 101-235, documented that 
native American Families and communities were overwhelmingly and 
consistently access to conventional financing mechanisms, often due to 
the unique legal status of Indian trust lands. The Commission 
recommended the creation of a Native American Finance Authority to 
direct sources of capital to native Americans, native American 
families, and other eligible mortgagors in order that they might meet 
their housing and related infrastructure needs.
  Mr. President, this administration heeded the Commission's call for 
action. The Department of Housing and Urban Development spearheaded a 
multi-departmental effort, which included representatives for the 
Department of the Treasury, the Bureau of Indian Affairs, and the 
Office of Management and Budget. The working group began with the 
Commission's legislative proposal, and ended with the measure which I 
am honored to be co-sponsoring today. This administration deserves to 
be commended for recognizing the distressed housing conditions under 
which many of our native American families live and for taking 
deliberate and meaningful steps to change and improve these 
circumstances.
  In many, many respects, the measure being introduced today addresses 
the concerns of the National Commission on American Indian, Alaska 
Native, and Native Hawaiian Housing and embodies the spirit of the 
Commission's recommendations. But Mr. President, I wish to point out 
one very fundamental difference between this measure, and the 
Commission's legislative proposal. The omission--one which I have just 
cause to be concerned about--is a glaring one, for while the original 
proposal included native Hawaiians, the bill before us today does not.
  Mr. President, the Commission's final report documented that native 
Hawaiians are among the neediest in the State of Hawaii--they have the 
worst housing conditions and the highest percentage of homelessness, 
representing over 30 percent of the State's homeless population. Under 
any circumstances, the figures would be deplorable, but the truth is 
that this situation can only worsen. I surely do not need to point out 
that Hawaii is one of the most expensive States in which to build, 
rent, or purchase a home, and that, according to a recent survey 
conducted by the National Association of Home Builders, Honolulu ranked 
179th out of 185 places in home affordability.
  Mr. President, I stand here, not only as a co-sponsor, in support of 
this measure, but as the senior Senator from the State of Hawaii and 
one who has long sought to address the housing needs of the native 
Hawaiian people. I must express for the record my disappointment that 
this bill departs from the recommendation of the very Commission which 
was the genesis for the concept of a financial service organization--
namely that native Hawaiians should be included in this measure. I 
assure you that I will seek to honor the Commission's recommendations.
  Mr. McCAIN. Mr. President, today I am pleased to join as an original 
cosponsor of a bill to establish a Native American Financial Services 
Organization [NAFSO] that will provide financial incentives to increase 
homeownership opportunities in Indian and Alaska Native communities.
  Indian housing problems have reached crisis proportions with 
seriously deteriorating conditions and severe overcrowding. The latest 
U.S. Census report indicates that 18 percent of Indian reservation 
homes are overcrowded, while the comparable data for the Nation as a 
whole is 2. The shortage of housing is made even more acute by the 
deplorable condition of existing housing in native American 
communities. Many Indian homes lack running water, indoor bathrooms, 
sufficient heat, or weatherization.
  To date, most of the housing construction done on reservations has 
been financed directly by the U.S. Government. But Indian housing needs 
have far out-stripped the capacity of Federal housing construction 
efforts. Everyone who has looked at the problem agrees that one main 
reason for the Indian housing disaster is an absence of private capital 
participation in financing housing in Indian and Alaska Native 
communities.
  The bill I am cosponsoring today would begin to change the Federal 
role in Indian housing in ways that strengthen and empower local tribal 
governments in their efforts to increase housing opportunities in their 
communities. The bill would do this by federally chartering a limited, 
for-profit corporation to be known as the Native American Financial 
Services Organization [NAFSO]. NAFSO would assist Indians and Alaska 
Natives to create local financial institutions that will attract 
capital investment in housing in Indian communities. It would also work 
within the existing secondary market to increase the liquidity of 
mortgages placed on housing located on land held in trust for Indians 
by the United States. If sufficient levels of private lending are not 
achieved, at a later date NAFSO could enter the secondary market itself 
to purchase and sell portages.
  I am particularly pleased that the bill contains a sunset-type 
provision under which the Federal charter would cease and NAFSO would 
be merged into a private corporation to permit further growth and 
attract private contributions, including those of tribes with funds to 
invest in Indian and native American housing.
  I look forward to a hearing on this bill because it will provide an 
opportunity for the Committee on Indian Affairs to evaluate this 
proposal to ensure that it is properly designed to accomplish its 
goals. While a commission on Indian and native American housing 
recommended the concepts underlying this bill, and while many tribal 
governments already are on record in support of the bill as introduced, 
I will ask tribes and tribal organizations to scrutinize the bill and 
provide the committee with recommendations to improve it and sharpen 
its focus on the serious problems plaguing Indian housing.
  I commend HUD Secretary Cisneros for his increased support for Indian 
housing efforts, one of which is reflected in the Department's 
development of this NAFSO proposal, and I look forward to working with 
the administration to enact this important legislation.
                                 ______

      By Ms. SNOWE:
  S. 437. A bill to establish a Northern Border States-Canada Trade 
Council, and for other purposes; to the Committee on Finance.


establishment of a northern border states council on united states and 
                             canadian trade
 Ms. SNOWE. Mr. President, today I am introducing legislation 
that would establish the Northern Border States Council on United 
States-Canada Trade. The purpose of this Council is to oversee cross-
border trade with our Nation's largest trading partner--an action that 
I believe is long overdue. The Council will serve as an early warning 
system to alert State and Federal trade officials to problems in cross-
border traffic and trade. And the Council will help the United States 
more efficiently manage the administration of its trade policy with 
Canada by applying the wealth of insight, knowledge and expertise that 
resides in our northern border States on this critical policy issue.
  Yes, we already have the Department of Commerce and a U.S. Trade 
Representative. But the fact is that these both are federal entities, 
responsible for our larger, national U.S. trade interest. Too often, 
they do not look after the interests of the 12 Northern States that 
share a border with Canada. The Northern Border States Council will 
provide State trade officials a mechanism to share information about 
cross-border traffic and trade. The Council will then advise the 
Congress, the President, the United States Trade 
[[Page S2837]] Representative, the Secretary of Commerce, and other 
Federal and State trade officials on United States-Canada trade 
policies, practices, and relations.
  Canada is America's largest trading partner. Trade with Canada 
accounts for approximately one-fifth of total United States exports and 
Canada is the top purchaser of U.S. exports. Canada is also the largest 
supplier of United States imports. Canada needs to maintain close trade 
ties with the United States to assure its survival. The Canadian 
economy is heavily oriented on exports, and most--roughly 75 percent--
of that trade is directly with the United States.
  Over the last decade, Canada and the United States have signed two 
major trade agreements--the United States-Canada Free-Trade Agreement 
in 1989, and the North American Free-Trade Agreement in 1993. 
Notwithstanding these trade accords, numerous disagreements have caused 
trade negotiators to shuttle back and forth between Washington and 
Ottawa. Most of the more well-known trade disputes with Canada have 
dealt with agricultural commodities such as durum wheat, peanut butter, 
dairy products, and poultry products, and these disputes have impacted 
more than just the 12 northern border States.
  But each and every day an enormous quantity of trade and traffic 
crosses the United States-Canada border. There are literally thousands 
of businesses, large and small, that rely on this cross-border traffic 
and trade for their livelihood. Any disruption in that flow of traffic 
and trade, whether intentional or not, would have traumatic economic 
consequences on hundreds of thousands, if not millions, of people in 
the 12 northern border States.
  The people best qualified to monitor that cross-border traffic and 
trade live in the States along our northern border--States that share 
that border with Canada. This is why it is important that the members 
of this Council be from those States.
  My own State of Maine has had a long-running dispute with Canada over 
that Nation's unfair policies in support of its potato industry. 
Specifically, Canada protects its domestic potato growers from United 
States competition through a system of nontariff trade barriers, such 
as setting container size limitations and a prohibition on bulk imports 
from the United States. This bulk import prohibition effectively blocks 
United States potato imports into Canada. At the same time, Canada 
artificially enhances the competitiveness of its product through 
domestic subsidies for potato growers.
  Another trade dispute with Canada, specifically with the province of 
New Brunswick, served as the inspiration for this legislation. In July 
1993, Canadian Federal Customs Officials began stopping Canadians 
returning from Maine and collecting from them the 11-percent New 
Brunswick provincial sales tax [PST] on goods purchased in Maine. 
Canadian Customs Officers had already been collecting the Canadian 
Federal sales tax all across the United States-Canada border. The 
collection of the New Brunswick PST was specifically targeted against 
goods purchased in Maine--not on goods purchased in any of the other 
provinces bordering New Brunswick. The premier of New Brunswick even 
admitted that his province had no intention of trying to collect the 
PST along any of its provincial borders. Only along the border with 
Maine.
  After months of imploring the United States Trade Representative to 
do something about the imposition of the unfair tax, Ambassador Kantor 
agreed that the New Brunswick PST was a violation of NAFTA, and that 
the United States would include the PST in the NAFTA dispute settlement 
process. It has languished in that process for almost a year because 
Canada and Mexico have been stubbornly refusing to finalize the details 
of the NAFTA dispute resolution process.
  Throughout the early months of the PST dispute, we in the State of 
Maine had enormous difficulty convincing our Federal trade officials 
that the PST was in fact an international trade dispute that
 warranted their attention action. We had no way of knowing if the PST 
was a national problem, or a localized one. If a body like the Northern 
State Trade Council had been in existence when the collection of the 
PST began, if would have immediately started investigating the issue to 
determine its causes and make recommendations on how to deal with it.

  In short, the Northern Border States Council will serve as the eyes 
and ears for our States that share a border with Canada, and are 
vulnerable to fluctuations in cross-border trade and traffic. The 
Council will be a tool for Federal and State officials to use in 
monitoring their cross-border trade. It will help ensure that national 
trade policy regarding America's largest trading partner will be 
developed and implemented with an eye toward the unique burdens and 
opportunities present to the northern border States.
  The Northern Border States Council will be an advisory body, not a 
regulatory one. Its fundamental purpose will be to determine the nature 
and course of cross-border trade issues or disputes, and to recommend 
how to resolve them.
  The duties and responsibilities of the Council will include, but are 
not limited to, providing advice and policy recommendations on such 
matters as taxation and the regulation of cross-border wholesale and 
retail trade in goods and services; taxation, regulation and 
subsidization of food, agricultural, energy, and forest-products 
commodities; and the potential for Federal, State, and Canadian 
provincial laws and regulations--including customs and immigrations 
regulations--to act as nontariff barriers to trade.
  As an advisory body, the Council will review and comment on all 
Federal and/or State reports, studies, and practices concerning United 
States-Canada trade, with particular emphasis on all reports from the 
dispute settlement panel established under the North American Free 
Trade Agreement. These Council reviews will be conducted upon the 
request of the U.S Trade Representative, the Secretary of Commerce, any 
Member of Congress from a Council State, and the Governor of a Council 
State.
  If the Council determines that the origin of a cross-border trade 
dispute resides with Canada, the Council must determine, to the best of 
its ability, if the source of the dispute is the Canadian Federal 
Government or a Canadian provincial government.
  My goal is not to create another Federal trade bureaucracy. The 
Council will be made up of individuals nominated by the Governors and 
approved by the Secretary of Commerce. Each Northern border State will 
have two members on the Council. The Council members will be unpaid, 
and serve a 2-year term.
  The Northern Border States Council on United States-Canada Trade will 
not solve all of our trade problems with Canada. But it will ensure 
that the voices and views of our northern border States are heard in 
Washington by our Federal trade officials. For too long their voices 
were ignored, and the northern border States have had to suffer severe 
economic consequences at times because of it. This legislation will 
restore our northern border States to their rightful position as full 
partners in administering and managing corss-border trade and traffic 
with America's largest trading partner.
  I urge my colleagues to join me in supporting this important 
legislation.
                                 ______

      By Ms. SNOWE:
  S. 438. A bill to reform criminal laws, and for other purposes; to 
the Committee on the Judiciary.


          LEGISLATION TO STRENGTHEN AMERICA'S ANTI-CRIME LAWS

 Ms. SNOWE. Mr. President, today I am introducing legislation 
to address the serious problem of crime in America, while offering 
stronger protection to the victims of crime. My legislation will 
propose mandatory minimum sentences for criminals who use a firearm 
while committing violent State crimes; require truth-in-sentencing 
provisions so that criminals complete at least 85 percent of their 
sentences; eliminate prison luxuries that coddle prisoners, and require 
courts to order restitution for the victims of crimes.
  Many of these proposals--which are designed to strengthen the crime 
package passed by Congress last year--are not new. Some have already 
won passage in the Senate as part of the Senate-passed crime bill. But 
they are important proposals--and it is important for our citizens and 
especially for our 
[[Page S2838]] children--that we include these plans to get tough on 
crime.
  When 23 million households will suffer from crimes this year, it is 
no wonder that crime is the number one concern of most Americans, 
whether in a relatively safe State like Maine, or here in the District 
of Columbia. As Americans scan the front page of the newspapers every 
morning, word of crimes right in our own neighborhoods catches our eye, 
puts us on guard--and keeps the American people on edge. We have been 
raised in a humane and advanced nation--and our citizens place a 
premium on safety, security. For too many Americans, the home is no 
longer a castle. Too many Americans must lock up their homes like a 
fortress, and walk through our streets with fear because of the scourge 
of violent crime.
  Indeed, Americans no longer feel safe in their own neighborhoods. In 
the 35 years since 1960, the population of the United States has 
increased by 44 percent. Over that same time, violent crime in America 
has increased by more than 500 percent. Our Nation has lost its edge in 
law enforcement and in humane social efforts that meet the root causes 
of crime. Indeed, according to a recent study published in Business 
Week, crime bears an enormous cost: The total direct and indirect cost 
of crime in America is a staggering $425 billion.
  Sadly, crime does not discriminate across regional or social 
boundaries. Crime reaches to us all--and exacts a devastating personal 
toll on its victims and their families and loved ones. Few among us 
have escaped the devastating impact of crime. Every day, 14 Americans 
are murdered, 48 are raped, and 578 are robbed. In our lifetimes, one-
third of all Americans will be robbed. Three-fourths will be assaulted.
  In the course of the average day in America, there is a murder every 
21 minutes. Rape is committed once every 5 minutes. Robberies occur 
every 46 seconds. Burglaries occur every 10 seconds. Imagine: A boy 
born in 1978 stands a greater chance of being murdered in the United 
States than one of our brave soldiers in World War II stood of dying in 
combat.
  Last year, Congress passed the President's crime bill--a package that 
took steps to punish violent criminals and keep them off the streets, 
and to address the root problems of crime. Unfortunately, however, the 
President's bill stopped short of proposals that I believe will give 
our Nation's anticrime laws teeth.
  My legislation includes tough provisions to provide mandatory minimum 
sentences for violent State crimes, or State drug trafficking crimes 
involving the use or possession of a firearm. Clearly, we must crack 
down on the violent offenders who have been proven responsible for the 
vast majority of crimes.
  Studies by the criminologist Marvin Wolfgang show that just 7 percent 
of each age group was responsible for two-thirds of all violent crime, 
including three-fourths of all rapes and robberies--and virtually every 
murder. According to Mr. Wolfgang's study--conducted in Philadelphia 
over a 13-year period--this 7 percent of the population had five or 
more arrests by the age of 18. For every arrest, each individual had 
gotten away with another dozen crimes.
  Indeed, it is estimated that last year, more than 1,100 convicted 
murderers did not go to prison; more than 6,900 convicted rapists did 
not go to prison; more than 37,000 individuals convicted of aggravated 
assault did not go to prison.
  My proposal will impose tough mandatory minimum sentences on violent 
criminals. For
 first-time offenders, we will direct the courts to impose sentences of 
10 years for those who possess a firearm; 20 years if they discharge 
that firearm with the intent to harm another person; and 30 years for 
possession of a machine gun or other weapon equipped with a firearm 
silencer or muffler.

  Too often, however, even a tough first sentence is not enough to stop 
the endless cycle of crime. More than 40 percent of murderers released 
from State prisons are re-arrested for a felony or serious misdemeanor 
within 3 years--more than 20 percent for another violent crime. Of the 
50,000 violent criminals who are put on probation this year, more than 
9,000 will not learn their lesson. They will be re-arrested in the same 
State within 3 years for another violent crime. An astonishing 10 
percent of America's jail population--39,000 people in 1989--committed 
their current crime while out on parole.
  So for second-time offenders, we will make our mandatory minimum 
sentences tougher; 20 years for possession of a firearm, 30 years for 
discharge of a firearm with the intent to injure another person, and 
life in prison for possession of a machine gun.
  And for a third offense? Three strikes and they're out--for life 
imprisonment for any violent offender.
  My provisions for mandatory minimum sentences will prohibit States 
from offering probation or suspended sentences, and we will direct the 
courts that sentences cannot run concurrently. This legislation also 
provides for Good Samaritans or for citizens who act in self-defense: 
the provision will not apply to those acting in defense of person or 
property during the course of a crime committed by another person.
  Criminals have also learned, over times, that the odds in sentencing 
are in their favor. For every 100 violent crimes reported, only 4 
criminals go to prison. The risk of punishment for a serious criminal 
offense has declined by two-thirds since 1950, while the annual number 
of serious crimes is seven times greater than it was then. This fact is 
not lost on criminals, who know that if they scoff at the criminal 
justice system--and hire a good lawyer--they can go free in little, if 
any time. Even when criminals are convicted and sent to prison after 
appeals, they know that the average violent offender--who in 1990 
received a sentence of 7.8 years--will serve just over 3 years in jail.
  To make sure that convicted criminals serve their time, my 
legislation will enact truth-in-sentencing provisions. In order to be 
eligible for prison funding under the 1994 crime bill, this legislation 
will require that States change their laws to require violent offenders 
to serve a minimum of 85 percent of their required sentence.
  Prison is not meant to be a pleasant experience: it is meant, 
instead, to serve as both a deterrent to crime and to rehabilitate 
criminals so that they can again become productive members of society. 
Too often, however, our criminal justice system has coddled prisoners 
with luxury items that even hard-working Americans can not afford. 
Indeed, our Federal prison system has earned the nickname ``Club Fed'' 
because of its luxury. I believe our Federal prison system must instead 
address the root causes of crime as it rehabilitates prisoners. We 
should eliminate the luxuries in our prisons from expansive weight 
lifting equipment to X-rated movies, cable television, computer, even 
miniature golf.
  Instead, we should require every able-bodied prisoner to work, and 
begin to return to society part of what the prisoner has taken. My 
legislation will give the Attorney General 120 days to implement and 
enforce regulations mandating prison work for able-bodied inmates in 
Federal penal and correctional institutions.
  In addition to these provisions that get tough on criminals and make 
our tough sentences stick, my legislation includes provisions to 
require increased fairness--and awareness--of the victims of crimes. 
For the 5 million people each year who are victims of violent crimes--
such as rape, murder, robbery or assault--these provisions will provide 
increased security and peace of mind. While criminals can pursue one 
legal remedy after another, victims of crimes quickly exhaust their 
options and are frequently forced to quietly bear the brunt of the 
crime, alone, and without restitution.
  Victim restitution presently can be ordered by courts, at the 
discretion of the court. My legislation will require courts to order 
restitution, and extends to the victims of crimes the same sort of 
safeguards that we extended to women in the Violence Against Women Act, 
which I cosponsored in the House.
  This legislation will state that victims should be reimbursed for all 
necessary expenses related to the investigation and prosecution of 
crime, whether child care, transportation or 
[[Page S2839]] other expenses. No longer will the economic cost of 
prosecution serve as a deterrent that could keep victims from 
vigorously pursuing justice.
  This legislation also will require reimbursement to the victim for 
medical services resulting from physical, psychiatric or psychological 
care, physical and occupational therapy costs due to rehabilitation, 
and all other losses suffered by the victim because of the crime. I 
believe that these provisions provide basic fairness for the victims of 
crime, and begin to balance our criminal justice system again by 
keeping in mind the needs of crime victims.
  Mr. President, the people of Maine and America have a right to be 
personally secure, free from the fear of violent crime. My legislation 
combines positive steps that punish criminals and keep them off the 
streets, and to meet the often-overlooked needs of the victims of 
crime. This is legislation that is overdue, and will improve our 
nation's crime-fighting efforts.
  I urge my colleagues to join me in supporting this 
legislation.
                                 ______

      By Mr. THOMAS (for himself, Mr. Lott, Mr. Simpson, Mr. Inhofe, 
        Mr. Coats, Mr. Murkowski, and Mr. Cochran):
  S. 439. A bill to direct the Director of the Office of Management and 
Budget to establish commissions to review regulations issued by certain 
Federal departments and agencies, and for other purposes; to the 
Committee on Governmental Affairs.


                    regulatory reform commission act

 Mr. THOMAS. Mr. President, it is well known that Federal 
regulations stifle economic growth. The cost of complying with Federal 
regulations alone is estimated to be between $300 and $500 billion per 
year--$4,000 to $6,000 for every working man and woman in America. The 
private sector spends 6.6 billion hours year complying with Federal 
paperwork requirements. The number of pages in the Federal Register 
last year was 45 percent higher than the number in 1986--without the 
Clinton health care bill going anywhere.
  These excessive and misguided mandates impose enormous economic costs 
that limit economic growth and job creation. Small and medium-sized 
businesses--which are the businesses in my State of Wyoming--are 
disproportionately hurt by overregulation because they have fewer 
resources to allocate for compliance.
  Mr. President, the 1994 elections were about change. The American 
people want less government in their lives. They don't want OSHA 
inspectors breathing down their necks, they don't want to pay for 
unnecessary EPA mandated facilities and they don't want Washington 
bureaucrats telling them how to live their lives.
  That is why I am introducing the Regulatory Reform Commissions Act. 
This measure is designed to look back, review, and reduce existing 
regulations. My legislation would establish three bipartisan Regulatory 
Review Commissions, one for each selected Federal department or agency. 
Initially, I have selected the Departments of Interior, Labor, and the 
Environmental Protection Agency [EPA]. Over a 2-year period, the 
commissions will examine all regulations within the selected Federal 
department or agency and determine if the regulations are justified and 
report all appropriate changes to Congress, the department, and the 
Director of the Office of Management and Budget [OMB]. The commissions 
will examine the department's or agency's rules based on the following 
criteria: Whether the regulations are within the scope of authority of 
the statutes under which the regulations were issued; whether the 
regulations are consistent with the original intent of Congress; 
whether the regulations are based on cost/benefit analysis; and whether 
the regulations are subject to judicial review.
  There have been several different proposals, which I support, to 
prevent new onerous regulations. This legislation is a perfect fit with 
those efforts, because it reviews the rules already on the books.
  I urge my colleagues to join me in the effort against 
overregulation.
                                 ______

      By Mr. WARNER (for himself, Mr. Chafee, Mr. Baucus, Mr. Moynihan, 
        Mr. Bond, Mr. Faircloth, Mr. Kempthorne, Mr. Lautenberg, Mr. 
        Lieberman, Mr. Inhofe, Mr. Reid, Mr. Smith, Mr. Lugar, Mrs. 
        Boxer, Mr. Graham, and Mr. Pell):
  S. 440. A bill to amend title 23, United States Code, to provide for 
the designation of the National Highway System, and for other purposes; 
to the Committee on Environment and Public Works.


          the national highway system designation act of 1995

 Mr. WARNER. Mr. President, I am pleased to be joined today by 
Chairman Chafee, Senator Baucus, Senator Lautenberg, Senator Bond, and 
others.
  We are here today to provide assurances to the States, to commercial 
activities dependent on a viable transportation system, and to the 
motoring public that the Congress will enact the National Highway 
System legislation this year.
  The legislation I am introducing to designate the National Highway 
System is sponsored by 14 of my colleagues.
  The National Highway System is the cornerstone of the 1991 ISTEA 
statute which preserves a Federal role in a core surface transportation 
network.
  As we come to the completion of the Eisenhower Interstate System, the 
NHS is the next generation of Federal focus to meet transportation 
challenges into the 21st century.
  This system of 159,000 miles--although only a small fraction of 
highways in this country--consists of the 44,000-mile Interstate System 
and other primary routes.
  Today, we affirm that Federal responsibility by ensuring a 
consistency of road engineering and safety among the States to provide 
for the free flow of commerce and to efficiently move people.
  Ideally, Congress has only to approve the map which is the product of 
a joint effort between the Department of Transportation and our States. 
But, pragmatically, we all know that this legislation will be the 18-
wheeler that will carry other issues.
  We must not, however, be detoured from our mission.
  Without passage of this bill, we know that our States will be 
crippled by the sanction of a loss of $6 billion until Congress does 
its job.
  The NHS also will allow States to benefit from the flexibility and 
intermodalism which is the hallmark of ISTEA.
  For the first time, States will focus their investments on connecting 
our rail, air, commercial water ports, and highways so that performance 
of the entire system can be maximized.
  The NHS also provides an opportunity for States to target their 
future investments on these routes which carry high volumes of commuter 
traffic and commercial truck traffic.
  Improving the safety of the motoring public must remain a Federal 
priority.
  Routes on the NHS must be among the first to benefit from the 
application of new and emerging technologies to improve safety and 
reduce congestion.
  In Virginia, the twin problems of congestion and safety in major 
urban/suburban areas have been the focus of our transportation policies 
for some time.
  We only need to look at Sunday's Washington Post to remind us of the 
dangers of driving on the Capital Beltway.
  Again this morning, our commuters and commerce suffered extensive 
delays on the Capital Beltway when a tractor-trailer accident at the 
Cabin John Bridge closed a large segment of the beltway for hours.
  As a result of this gridlock, commuters cannot get to work and 
interstate commerce is delayed. That translates into reduced 
productivity and wasted resources for all Americans.
  The legislation we are introducing today also includes modest 
provisions to provide uniformity and flexibility to States as they 
continue to implement ISTEA.
  As States enter the fourth year of ISTEA and we have sufficient 
information and experience to support these modifications.
  As we move this legislation forward, my focus will be to reduce 
mandates on our States, without jeopardizing the safety of the 
traveling public, and to increase flexibility for States to allocate 
funds to meet their own needs.
  [[Page S2840]] 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:
  National Highway System Designation Act of 1995--Section by Section 
                                Analysis

       Sec. 1: Short Title.
       Sec. 2:
       Section 2 approves the most recent National Highway System 
     submitted to Congress by the Secretary of Transportation. The 
     section also specifies the procedure for future changes and 
     modifications to the NHS after Congress has adopted the 
     initial system. At the request of a State, the Secretary may 
     add a new route segment to the NHS or delete an existing 
     route segment and any connection to the route segment, as 
     long as the segment or connection is within the jurisdiction 
     of the requesting State and the total mileage of the NHS 
     (including any route segment or connection proposed to be 
     added) does not exceed 165,000 miles.
       If a State requests a modification to the NHS as adopted by 
     Congress, the State must establish that each change in a 
     route segment or connection has been identified by the State 
     in cooperation with local officials. This cooperative process 
     between the State and local officials will be carried out 
     under the existing transportation planning activities for 
     metropolitan areas and the statewide planning processes 
     established under ISTEA.
       Congress will not approve or disapprove any subsequent 
     modifications made to the NHS. The cooperative planning 
     process between State and local officials, along with the 
     approval of the Secretary, is the appropriate forum for 
     considering modifications to the NHS following enactment of 
     this legislation.
       Sec. 3:
       Section 3 amends section 103(i) of title 23 to permit 
     States to use National Highway System and Congestion 
     Mitigation and Air Quality funds for operational expenses of 
     Intelligent Vehicle Highways System (IVHS) projects for an 
     unlimited period of time rather than the two years currently 
     stipulated.
       Sec. 4:
       Section 4 amends section 104 of title 23 to permit a State 
     to transfer 60 percent of its bridge apportionments to its 
     National Highway System or Surface Transportation Program 
     categories.
       Sec. 5:
       Section 5 amends section 129(a)(5) of title 23 to provide 
     that the Federal share for participation in toll highways, 
     bridges, and tunnels shall be a percentage as determined by 
     the State but not to exceed 80 percent. Depending on the 
     facility, the federal share currently ranges from 50 to 80 
     percent.
       Sec. 6:
       Section 6 amends 217(f) of title 23 to permit states to 
     apply the federal lands sliding scale match to bicycle and 
     pedestrian projects.
       Sec. 7:
       Section 7 amends section 323 of title 23 to allow private 
     funds, materials and services to be donated to an activity 
     eligible under title 23 and permits a state to apply 100 
     percent of such donated funds, materials or services to the 
     State's matching share under title 23.
       Sec. 8:
       Section 8 states that notwithstanding any requirements of 
     the Metric Conversion Act of 1975, no state is required to 
     erect signs which establish speed limits, distance or other 
     measurements using the metric system. If a state chooses to 
     use its federal-aid highway funds for such a purpose, it may 
     do so.
       Sec. 9:
       Section 9 requires states to receive U.S. Department of 
     Transportation approval for Intelligent Vehicle Highway 
     System (IVHS) projects within two years of receiving funds 
     for this purpose. If after two years the Secretary has not 
     approved a plan, the DOT may redirect unobligated funds to 
     another IVHS project. Prior to such redirection, the 
     Secretary shall notify the intended recipient that they are 
     in danger of losing their funds.
 Mr. CHAFEE. Mr. President, I am pleased to join Senator Warner 
in introducing legislation today that will approve the designation of 
the National Highway System.
  As my colleagues will remember, the Environment and Public Works 
Committee fashioned what I believe is a landmark surface transportation 
bill now known as the Intermodal Surface Transportation Efficiency Act 
of 1991 or ISTEA. The purpose of this surface transportation law is to 
provide mobility for all our citizens, to enable our country to be 
competitive internationally, to promote economic development, and to 
provide transportation facilities that are sensitive to the environment 
and the communities they pass through.
  The National Highway System, established by the surface 
transportation law, is an important part of our country's National 
Transportation System.
  The National Highway System, which includes the Interstate System 
represents 4 percent of the highway system but carries 40 percent of 
the Nation's highway travel. Even more importantly, it connects 
intermodal and strategic facilities including our ports, airports, 
train stations, and military bases.
  The U.S. Department of Transportation worked with the States and 
local governments to develop the National Highway System. In December 
of 1993 the Department transmitted the proposed System to Congress. 
Congress must approve the National Highway System by September 30 of 
this year, or States will not receive over $6 billion in highway funds.
  The NHS legislation we are introducing today maintains the important 
principles that ISTEA established for the National Highway System.
  First, it maintains the flexibility of the NHS so that the System can 
change as our transportation needs change. The legislation enables 
States, in consultation with local officials, and the Secretary of 
Transportation to add to and delete routes from the System.
  Second, the amount of funding a State receives for the NHS program is 
not tied to the number of miles it has on the NHS System. There is no 
incentive to pad the System with a lot of miles in hopes of receiving 
more of the Federal money.
  And third, the NHS funds retain their flexibility. States continue to 
have the ability to transfer NHS funds to other categories to target 
their highest priority needs.
  In addition to the approval of the National Highway System, the 
legislation we are introducing today includes several other provisions 
that are in keeping with the principles of ISTEA to provide flexibility 
wherever possible.
  Stability is very important in the Federal-aid highway program. 
States need the assurance of long-term funding to efficiently manage 
their transportation programs. As the NHS legislation makes its way 
through Congress this year, there may be a temptation to reopen the 
surface transportation law and debate items that are controversial. To 
disrupt this program and make significant changes in midstream will 
damage the transportation program. If we are to meet the September 30 
deadline for approval of the National Highway System, contentious 
issues must be postponed until ISTEA is reauthorized in 1997.
  I am pleased to join my colleagues in introducing the National 
Highway System bill and will work with them for its early 
approval.
                                 ______

      By Mr. McCAIN:
  S. 441. A bill to reauthorize appropriations for certain programs 
under the Indian Child Protection and Family Violence Prevention Act, 
and for other purposes; to the Committee on Indian Affairs.


     the indian child protection and family violence protection act

 Mr. McCAIN. Mr. President, today I am introducing a bill to 
reauthorize Public Law 101-630, the Indian Child Protection and Family 
Violence Prevention Act. This bill will provide a 2-year 
reauthorization of appropriations pursuant to sections 409, 410, and 
411 of the act. These sections are critical to Indian tribal 
governments in preventing and treating incidents of child abuse and 
family violence at the local level. Specifically, section 409 requires 
the Indian Health Service [IHS] and the Bureau of Indian Affairs [BIA] 
to cooperatively establish an Indian Child Abuse Treatment Grant 
Program, section 410 requires the BIA to establish Indian child 
resource and family services centers to provide technical assistance, 
training, and to develop policies and procedures on child abuse for 
Indian tribes, and section 411 requires the BIA to establish an Indian 
Child Protection and Family Violence Prevention Program.
  Mr. President, the Indian Child Protection and Family Violence 
Prevention Act was enacted into law on November 28, 1990 to address 
concerns raised by the findings of the Senate Select Committee on 
Indian Affairs and the Special Committee on Investigations. What these 
committees found through public hearings was that Indian country was 
literally a safe haven for child abuse perpetrators to prey upon Indian 
children. I'm sure that many of my colleagues in the Congress 
[[Page S2841]] will recall the notorious cases of multiple child sexual 
abuse that rose within the Hopi, Navajo, and Cherokee Indian 
reservations. These crimes were perpetrated over the course of many 
years, and in some cases, the crimes were perpetrated upon generations 
of families. The Federal investigation and prosecution of these crimes 
provided insight into the purposeful plan of the perpetrators in 
committing their crimes in Indian communities. Child abuse perpetrators 
were aware that the conditions of detecting, reporting, investigating, 
and preventing crimes upon children were in such a sorry state that 
there crimes would rarely be detected. As a result, hundreds of Indian 
children, their families, and communities needlessly suffered.
  Both the Special Committee on Investigations and the Committee on 
Indian Affairs held numerous hours of testimony in which both tribal 
and Federal witnesses testified about the serious deficiencies in the 
Federal Governments efforts to assist tribal governments in preventing 
and treating child abuse and family violence. The hearings disclosed 
that the BIA's failure to implement effective background checks on 
potential employees having contact with children resulted in negligent 
hiring practices, and child abuse reporting procedures deterred 
employees from reporting suspected child abuse. Tribal witnesses 
testified that law enforcement and social services lacked coordinated 
approaches to address child victimization. As a result, victims were 
often further
 traumatized by repeated interviews by physicians, social workers, 
investigators, and prosecutors. The hearings also revealed that due to 
scare resources, tribal social workers and mental health professional 
experienced case loads exceeding national standards. It also became 
very clear that both the IHS and the BIA lacked the professional 
experience necessary to treat incidents of child sexual abuse.

  The Indian Child Protection and Family Violence Prevention Act was 
intended to give the Federal Government an opportunity to meet it's 
responsibility to Indian children and families by establishing policies 
and programs which would prevent the tragedies of child abuse and 
family violence. To accomplish the goals of the act, appropriations 
were authorized per fiscal year from 1990 through 1995 to establish 
prevention and treatment programs within the BIA and IHS. The act also 
authorize the BIA and IHS to assist tribes in establishing on-
reservation child abuse prevention and treatment programs. The act also 
created mandatory Federal child abuse reporting and prescribed a 
process by which child abuse allegations would be handled to prevent 
further trauma to a victim.
  Mr. President, the implementation of this act has had positive 
results in Indian country. Indian tribal governments have initiated 
local public education programs on the prevention and detection of 
child abuse and domestic violence. However, these local efforts have 
been so successful that reports of child abuse and domestic violence 
incidents have increased substantially. Therefore, the need for funding 
for treatment of these victims has also substantially increased. Last 
Congress, the Committee on Indian Affairs received testimony from 
tribal governments which documented these needs, and which called for 
more vigorous implementation of the act by the Federal agencies.
  Finally, I believe that the possible benefits of the act have not 
been fully realized. Neither the BIA nor the IHS have successfully 
requested or received appropriations to fully implement the programs 
that are so critical to the protection of vulnerable Indian children 
and families. As a result, Indian tribal governments that are in 
desperate need of these services have had to rely on special 
appropriations and congressional earmarks to fund their efforts. Those 
tribes that are unable to obtain earmarks must struggle to provide 
child abuse and family violence prevention and treatment services using 
existing resources and piecemeal grants.
  Mr. President, I strongly believe that extending the authorization of 
appropriations for the Indian Child Protection and Family Violence 
prevention act will enable the Federal agencies and Indian tribal 
governments the opportunity to continue and enhance the work that has 
begun on behalf of Indian children and families.
  Mr. President, I ask unanimous consent that the full text 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. 441

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,
     SECTION 1. REAUTHORIZATION OF PROGRAMS.

       Sections 409(e), 410(h), and 411(i) of the Indian Child 
     Protection and Family Violence prevention Act (25 U.S.C. 
     3208(e), 3209(h), and 3210(i), respectively) are each amended 
     by striking ``and 1995'' and inserting ``1995, 1996, and 
     1997''.
                                 ______

      By Ms. SNOWE (for herself and Mr. Dole):
  S. 442. A bill to improve and strengthen the child support collection 
system, and for other purposes; to the Committee on Finance.


              THE CHILD SUPPORT RESPONSIBILITY ACT OF 1995

 Ms. SNOWE. Mr. President, I am pleased to introduce, on behalf 
of myself and Senator Dole, the Child Support Responsibility Act of 
1995.
  This bill improves upon existing child support enforcement mechanisms 
and establishes new enforcement systems where none currently are in 
place. Furthermore, it recognizes that the issue of child support 
enforcement goes far beyond parochial interests or state lines, that as 
a national problem for our children and their families, child support 
enforcement merits a national solution.
  When two people, whether married or not, have a baby, they incur an 
obligation to provide for and care for their child. When parents live 
apart, the parent not living with, and providing day-to-day care for, 
the parent is expected to provide financial assistance for the child.
  Consider the facts: millions of American single parents and children 
continue to suffer from the consequences of a parent who financially 
and emotionally abandons them. For mothers who have obtained a child 
support order--and more than 40 percent have not--only half of those 
actually receive what is owed--the other half receives partial payments 
or nothing. Never-married single parents have a particularly difficult 
time obtaining child support--1990 census data indicates that of all 
never-married custodial mothers, 75 percent did not have child support 
orders and more than 50 percent had household incomes below the poverty 
line. These statistics add up to significant economic and emotional 
burdens for single parents and their dependent children.
  The Child Support Enforcement Program was first created in 1975 and 
significantly modified in 1984 and 1988. The program's purpose is to 
strengthen existing State and local efforts to locate noncustodial 
parents, to establish paternity for them, to obtain child support 
orders and collect child support payments. My proposed legislation, a 
companion to the House bill introduced by Congresswomen Johnson and 
Roukema, would assist the Child Support Enforcement Program with each 
of these goals.
  To strengthen efforts to locate parents, it expands the Federal 
parent locator system and provides for State-to-State access of the 
network. To increase paternity establishment, the bill simplifies 
paternity procedures, facilitates voluntary acknowledgment, and 
encourages outreach. To facilitate the setting of effective child 
support orders, it calls for the establishment of a National Child 
Support Guidelines Commission to develop a national child support 
guideline for consideration by Congress, and provides for a simplified 
process for review and adjustment of child support orders. And to 
facilitate child support enforcement and collection, the bill expands 
the penalties for child support delinquency to include the denial of 
professional, recreational, and driver's license to deadbeat parents, 
the imposition of liens on real property, and the automatic reporting 
of delinquency to credit unions. It also grants families who are owed 
child support the right of first access to an IRS refund credited to a 
deadbeat dad and permits the denial of a passport for individuals who 
are more than $5,000 or 24 months in arrears.
  [[Page S2842]] Other provisions include developing a national 
registry of child support orders, developing centralized State 
registries, and requiring States to adopt the Uniform Interstate Family 
Support Act, as approved by the National Conference of Commissioners on 
Uniform State Laws in August 1992.
  Through the enactment of this child support legislation I would like 
to begin to ease, and eventually lift, the economic and emotional 
burdens caused by delinquent child support payments. Noncustodial 
parents must begin to accept and bear responsibility for their 
children, who will reap the support they so justly deserve and 
desperately need.
                                 ______

      By Mr. MURKOWSKI (for himself and Mr. Stevens):
  S. 444. A bill to amend the Alaska Native Claims Settlement Act to 
provide for the purchase of common stock of Cook Inlet region, and for 
other purposes; to the Committee on Energy and Natural Resources.


           the alaska native claims act amendment act of 1995

 Mr. MURKOWSKI. Mr. President, I am pleased to introduce a bill 
to amend the Alaska Native Claims Act of 1971 at the request of Cook 
Inlet Region, Inc. [CIRI] to allow CIRI to purchase stock from their 
shareholders and retire the stock.
  Congress enacted the Alaska Native Claims Settlement Act [ANCSA] in 
1971 to address claims to lands in Alaska by the Eskimo, Indian, and 
Aleut Native people. Lands and other benefits transferred to Alaska 
Natives under the act were conveyed to corporations formed under this 
act. CIRI is one of the corporations formed under ANCSA and has 
approximately 6,262 Alaska Natives enrolled, each of whom were issued 
100 shares of stock in CIRI, as required under ANCSA.
  ANCSA stock, unlike most corporate stock, cannot be sold, 
transferred, or pledged by the owners of the shares. Rather, transfers 
can only happen through inheritance, or in limited case, by court 
decree.
  To date, no Native corporation has sought to lift the restriction. 
For the most part, this is because Native shareholders continue to 
value Native ownership of the corporations and Native control of the 
lands and other assets held by them. These shareholders, whose numbers 
consistently register at the 70- 80-percent level, see economic 
benefits in the continuation of Native ownership, and also value the 
important cultural goals, values, and activities of their ANCSA 
corporation. However, a minority of shareholders favor assessing some 
or all of the value of their CIRI stock through the sale of that stock. 
These shareholders include, but are not limited to, elderly 
shareholders who have real current need yet doubt that sale of stock 
will be available to them in their lifetime; holder of small, 
fractional shares received through one or more cycles of inheritance; 
non-Natives who have acquired stock through inheritance but without 
attendant voting privileges; and shareholders who have few ties to the 
corporation or to Alaska, 25 percent of CIRI shareholders live outside 
of Alaska.
  Under current law, these two legitimate but conflicting concerns 
cannot be addressed, because lifting restrictions on the sale of stock 
in an all or nothing proposition. In order to allow the minority of 
shareholders to exercise their desire to sell some or all of their 
stock, the majority of shareholders would have to sacrifice their 
important desire to maintain Native control and ownership of CIRI.
  CIRI believes this conflict will eventually leave the interests of 
the majority of its shareholders vulnerable to political instability. 
In addition, CIRI recognizes that responding to the desire of those 
shareholders who wish to sell CIRI stock is a legitimate corporate 
responsibility. CIRI believes there is a way to address the needs and 
desires of both groups of shareholders, those who wish to sell stock 
and those who desire to maintain their Native ownership. The method 
embodied in this legislation is one that other companies routinely use, 
buying back of its own stock. The acquired stock would then be retired.
  Mr. President, I have discussed this bill at length with CIRI and I 
am convinced this is the best solution. This bill is identical to one 
that passed the House, and was approved by the Senate Energy Committee 
last session, and I look forward to its passage.
                                 ______

      By Mr. D'AMATO (for himself, Mr. Mack, Mr. Bennett, Mr. 
        Faircloth, and Mr. Bryan):
  S. 445. A bill to expand credit availability by lifting the growth 
cap on limited service financial institutions, and for other purposes; 
to the Committee on Banking, Housing, and Urban Affairs.


             THE LIMITED-PURPOSE BANK GROWTH CAP RELIEF ACT

 Mr. D'AMATO. Mr. President, I am today introducing the 
Limited-Purpose Bank Growth Cap Relief Act with Senators Mack, Bennett, 
Faircloth, and Bryan as cosponsors.
  Mr. President, this bill would lift the 7-percent cap on the annual 
asset growth of limited-purpose banks. This growth cap, which was 
imposed temporary under the 1987 Competitive Equality Banking Act 
[CEBA], imposes an arbitrary and unnecessary regulatory burden. The 
removal of this cap would enhance the ability of limited-purpose banks 
to serve their customers, increase the availability of credit, and 
allow such banks to maintain assets on their balance sheets.
  By way of background, the ownership of limited-purpose banks by 
certain non-banking holding companies was protected by a grandfather 
provision in CEBA. A grandfathered non-bank holding company was 
permitted to maintain its ownership of limited-purpose bank if the 
bank, first, did not both accept demand deposits and engage in 
commercial lending; second, limited its cross-marketing of financial 
services with affiliates; third, did not participate in activities in 
which the bank did not already engage prior to the passage of CEBA; 
fourth, did not provide daylight overdrafts to affiliates; and fifth, 
limited its annual asset growth to 7 percent. Except for these 
restrictions, limited-purpose banks were subjected to the same capital 
requirements, regulatory supervision, community reinvestment 
obligations, consumer protection laws and banking laws as full-service 
banks.
  Mr. President, Congress intended these CEBA restrictions on limited-
purpose banks to be only a temporary measure coexistent with the 
moratorium on the ability of the bank regulators to permit banks to 
engage in additional securities, insurance and real estate activities. 
The legislative history is clear that these restrictions would be 
reconsidered as part of comprehensive banking legislation. The overall 
purpose of CEBA was merely to preserve the opportunity for Congress--
not the regulators or the courts--to define more precisely regulatory 
supervision over financial service institutions and competition among 
financial service providers.
  Mr. President, Congress has not enacted comprehensive banking 
legislation, although I am hopeful this important national policy 
objective can be accomplished in this Congress with the enactment of S. 
337, the Depository Institution Affiliation Act of 1995, which I 
introduced on February 2. Despite the significant changes in the laws 
and regulation governing the financial services industry over the past 
8 years that have enhanced the diversification opportunities of banks, 
securities firms, insurance companies and other financial providers, 
the temporary and arbitrary restrictions CEBA imposed on limited 
purpose banks remain in place. The number of limited-purpose banks has 
sharply dropped from nearly 160 to only 23. And the remaining 
institutions are forced to labor under severe restrictions that cannot 
be justified from a regulatory, public policy, or competitive 
standpoint.
  Mr. President, limited service banks have been frozen in time. 
Congress has enacted numerous laws to render full-service banks more 
competitive, efficient and financially strong. The growth cap is no 
longer necessary from a regulatory perspective. In 1989 and 1991, 
Congress enacted legislation to increase the ability of regulators to 
ensure that all banks are run in a safe and sound manner, including the 
authority to freeze bank asset growth if capital levels decline 
significantly. And the restriction is not necessary from a competitive 
standpoint. The 
[[Page S2843]] 103d Congress enacted interstate banking legislation. 
Finally, bank regulators and the courts continue to approve a growing 
list of securities, insurance, and other financial services activities 
for banks.
  Mr. President, only a small category of specialized and limited 
purpose banks remain subject to onerous limitations on their growth, 
activities, products, and customer relationships. This situation is 
both unfair and unnecessary.
  Mr. President, the Limited-Purpose Bank Growth Cap Relief Act would 
lift the 7-percent asset growth cap for limited-purpose 
banks. It would not remove any of the other CEBA restrictions and it 
would not allow the chartering of additional limited-purpose banks from 
a statutory requirements that has outlived its usefulness.
  Mr. President, the repeal of the growth cap is entirely consistent 
with the objectives of the Depository Institutions Affiliation Act, 
which I introduced several weeks ago. Both bills seek to enhance the 
global competitiveness of the U.S. financial services industry and to 
ready the regulation of that industry for the next century.
 Mr. BRYAN. Mr. President, today I am introducing legislation 
which repeals a restriction on the ability of limited-purpose banks to 
increase their assets by more than 7 percent per year. I believe that a 
removal of this restriction will promote increased credit availability, 
and will enhance the safety and soundness of the 22 institutions that 
are subject to the growth limitation.
  This asset growth limitation was adopted in 1987, in legislation 
which stated that the restriction was being imposed temporarily. It 
remains in place nearly 8 years later, although the objectives it was 
intended to accomplish have been achieved by subsequent legislation, 
regulatory act on and judicial decisions. For example, supporters of 
this limitation said that it would help offset full-service banks' 
inability to establish interstate branches, an issue that has now been 
addressed.
  Today, the growth restriction is not needed to protect the banks, 
their customers, or competitors. To the contrary, the growth cap harms 
these banks, by imposing enormous and unnecessary compliance costs and 
by forcing them to dispose of assets despite adverse marketplace 
conditions and negative safety and soundness implications. It hurts 
their depositors and borrowers--and other consumers--by reducing 
limited-purpose banks' ability to offer competitive banking services. 
And it provides no legitimate benefit to full service banks, whose 
ability to compete will not be impaired if a small number of limited-
purpose banks are permitted to grow assets on their balance sheets 
rather than outside of the banks.
  The legislation I am introducing addresses only one of the 
restrictions on limited-purpose banks: The 7-percent asset growth cap. 
These banks will continue to be subject to the same requirements as 
other banks, including the provision enacted in 1991 requiring the 
asset growth of any undercapitalized institution to be curtailed. And 
they will remain subject to additional restrictions unique to limited-
purpose institutions, such as a limitation on engaging in new banking 
activities, and a restrictions on cross marketing with affiliates. The 
need to retain these restrictions is an issue that should be addressed 
in the near future, as we consider broader legislation addressing bank 
ownership, affiliations and permissible powers. But the asset growth 
restriction is a regulatory burden unrelated to these issues, and needs 
to be addressed now.
  In the last Congress, a number of my colleagues on both sides of the 
aisle supported the removal of the 7-percent growth cap. I am 
especially pleased that the distinguished chairman of the Committee on 
Banking, Housing, and Urban Affairs and others are joining me today as 
original cosponsors of their bill. I look forward to prompt action on 
this legislation.
                                 ______

      By Mr. INOUYE (for himself, Mr. Hatfield, Mr. Levin, Mr. D'Amato, 
        Mr. Akaka, Mr. Cochran, Mr. Dodd, Mr. Grassley, Mr. Hatch, Mr. 
        Heflin, Mr. Hollings, Mr. Kennedy, Ms. Mikulski, Mr. Moynihan, 
        Mr. Robb, and Mr. Simon):
  S. 446. A bill to require the Secretary of the Treasury to mint coins 
in commemoration of the public opening of the Franklin Delano Roosevelt 
Memorial in Washington, DC; to the Committee on Banking, Housing, and 
Urban Affairs.
          the franklin delano roosevelt commemorative coin act

 Mr. INOUYE. Mr. President, today, I introduce the Franklin 
Delano Roosevelt Commemorative Coin Act. I am joined by Senator 
Hatfield, Cochair of the FDR Memorial Commission, Senators Levin and 
D'Amato, FDR Memorial Commissioners, and Senators Akaka, Cochran, Dodd, 
Grassley, Hatch, Heflin, Hollings, Kennedy, Mikulski, Moynihan, Robb, 
and Simon.
  The Franklin Delano Roosevelt Commemorative Coin Act authorizes the 
Secretary of the Treasury to mint 500,000 half dollar silver coins 
bearing the likeness of our great leader, President Franklin Delano 
Roosevelt, in the year 1997, to celebrate the public opening of the 
Franklin Delano Roosevelt Memorial in Washington, DC.
  A surcharge of $3 will be applied to each coin. Proceeds from the 
sale of the coin will be used to finance the construction of the 
memorial. In 1992, the Congress mandated the FDR Memorial Commission to 
raise $10 million in private funds to supplement the Federal 
appropriations for the memorial.
  The American people are deeply indebted to Franklin Delano Roosevelt 
for his leadership in America's struggle for peace, well-being, and the 
assurance of human dignity. Personally, I will never forget the pride I 
felt in looking to President Roosevelt as my Commander in Chief as he 
led us in the worldwide struggle for freedom during World War II.
  All Americans enjoy more secure lives and a higher standard of living 
because of this great President. The Civilian Conservation Corps helped 
restore America's forests and land; the National Rural Electric 
Cooperative gave farmers a decent life; the Federal Highway Program 
developed a national system upon which the automobile and the trucking 
industries depend; the Works Progress Administration built schools and 
hospitals throughout the country and every American who receives Social 
Security owes a debt of gratitude to President Roosevelt.
  The commemorative coin will do more than honor one of our greatest 
Americans; it will also help ensure that an extraordinary era of our 
Nation's history will live on as a legacy for future generations. I 
want to assure my colleagues that this bill will not place any burden 
on the American taxpayer. The profits generated by the sale of this 
coin will cover all costs incurred by the Department of the Treasury.
  I urge my colleagues to support this important legislation which will 
honor one of America's greatest Presidents by establishing a 
magnificent and historic national memorial in our Nation's Capital.
  Mr. President, I ask unanimous consent that the text 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. 446

       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 ``1997 Franklin Delano 
     Roosevelt Commemorative Coin Act''.

     SEC. 2. FINDINGS.

       The Congress finds that--
       (1) the people of the United States feel a deep debt of 
     gratitude to Franklin Delano Roosevelt for his leadership in 
     America's struggle for peace, well-being, and human dignity;
       (2) Franklin Delano Roosevelt served his country as the 
     thirty-second President from 1932 until his death in 1945, 
     and is the only United States President elected to 4 terms in 
     office;
       (3) Franklin Delano Roosevelt served the State of New York 
     as Governor from 1928 through 1932;
       (4) Franklin Delano Roosevelt served his country as the 
     United States Assistant Secretary of the Navy from 1913 
     through 1920;
       (5) Franklin Delano Roosevelt piloted the American people 
     through the economic chaos of the Great Depression;
       (6) Franklin Delano Roosevelt, as our commander in chief, 
     led the American people through the turmoil of World War II;
       (7) Franklin Delano Roosevelt established Social Security, 
     thus providing all Americans with a more abundant and secure 
     life;
     [[Page S2844]]   (8) Franklin Delano Roosevelt was the author 
     of ``The Four Freedoms: Freedom of Speech, Freedom of 
     Worship, Freedom from Want, and Freedom from Fear'';
       (9) Franklin Delano Roosevelt was the founder of the 
     National Foundation for Infantile Paralysis, parent 
     organization of the March of Dimes;
       (10) Franklin Delano Roosevelt was the chief architect of 
     the United Nations;
       (11) after many years of planning, the Franklin Delano 
     Roosevelt Memorial will soon join the memorials of 
     Washington, Jefferson, and Lincoln as a tribute to another 
     great American leader;
       (12) the Franklin Delano Roosevelt Memorial will be a 
     series of 4 large outdoor rooms encompassing over 7 acres, 
     and will be situated between the Lincoln and Jefferson 
     memorials in Washington, D.C.; and
       (13) in 1997, the Nation will celebrate the public opening 
     of this magnificent memorial, honoring one of our greatest 
     Presidents.

     SEC. 3. COIN SPECIFICATIONS.

       (a) Half Dollar Silver Coins.--The Secretary of the 
     Treasury (hereafter in this Act referred to as the 
     ``Secretary'') shall mint and issue not more than 500,000 
     half dollar coins, each of which shall--
       (1) weigh 12.50 grams;
       (2) have a diameter of 30.61 millimeters; and
       (3) contain 90 percent silver and 10 percent copper.
       (b) Legal Tender.--The coins minted under this Act shall be 
     legal tender, as provided in section 5103 of title 31, United 
     States Code.
       (c) Numismatic Items.--For purposes of section 5134 of 
     title 31, United States Code, all coins minted under this Act 
     shall be considered to be numismatic items.

     SEC. 4. SOURCES OF BULLION.

       The Secretary shall obtain silver for minting coins under 
     this Act only from stockpiles established under the Strategic 
     and Critical Materials Stock Piling Act.

     SEC. 5. DESIGN OF COINS.

       (a) Design Requirements.--
       (1) In general.--The obverse side of each coin minted under 
     this Act shall bear a likeness of Franklin Delano Roosevelt, 
     the thirty-second President of the United States. The reverse 
     side of each coin shall be emblematic of the Franklin Delano 
     Roosevelt Memorial in Washington, D.C.
       (2) Designation and inscriptions.--On each coin minted 
     under this Act there shall be--
       (A) a designation of the value of the coin;
       (B) an inscription of the year ``1997''; and
       (C) inscriptions of the words ``Liberty'', ``In God We 
     Trust'', ``United States of America'', and ``E Pluribus 
     Unum''.
       (b) Selection.--The design for the coins minted under this 
     Act shall be--
       (1) selected by the Secretary after consultation with the 
     Franklin Delano Roosevelt Memorial Commission and the 
     Commission of Fine Arts; and
       (2) reviewed by the Citizens Commemorative Coin Advisory 
     Committee.
       (c) Additions and Alterations.--No addition or alteration 
     to the design selected in accordance with subsection (b) 
     shall be made without the approval of the Franklin Delano 
     Roosevelt Memorial Commission.

     SEC. 6. ISSUANCE OF COINS.

       (a) Quality and Mint Facility.--The coins authorized under 
     this Act may be issued in uncirculated and proof qualities 
     and shall be struck at the United States Bullion Depository 
     at West Point.
       (b) Period for Issuance.--The Secretary may issue coins 
     minted under this Act only during the period beginning on 
     January 1, 1997, and ending on December 31, 1997.

     SEC. 7. SALE OF COINS.

       (a) Sale Price.--The coins issued under this Act shall be 
     sold by the Secretary at a price equal to the sum of--
       (1) the face value of the coins;
       (2) the surcharge provided in subsection (d) with respect 
     to such coins; and
       (3) the cost of designing and issuing the coins (including 
     labor, materials, dies, use of machinery, overhead expenses, 
     marketing, and shipping).
       (b) Bulk Sales.--The Secretary shall make bulk sales of the 
     coins issued under this Act at a reasonable discount.
       (c) Prepaid Orders.--
       (1) In general.--The Secretary shall accept prepaid orders 
     for the coins minted under this Act before the issuance of 
     such coins.
       (2) Discount.--Sale prices with respect to prepaid orders 
     under paragraph (1) shall be at a reasonable discount.
       (d) Surcharges.--All sales shall include a surcharge of $3 
     per coin.

     SEC. 8. GENERAL WAIVER OF PROCUREMENT REGULATIONS.

       (a) In General.--Except as provided in subsection (b), no 
     provision of law governing procurement or public contracts 
     shall be applicable to the procurement of goods and services 
     necessary for carrying out the provisions of this Act.
       (b) Equal Employment Opportunity.--Subsection (a) shall not 
     relieve any person entering into a contract under the 
     authority of this Act from complying with any law relating to 
     equal employment opportunity.

     SEC. 9. DISTRIBUTION OF SURCHARGES.

       (a) In General.--All surcharges received by the Secretary 
     from the sale of coins issued under this Act shall be 
     promptly paid by the Secretary as follows:
       (1) An amount equal to 50 percent of the total surcharges 
     shall be paid to the National Park Foundation Restricted 
     Account for the Franklin Delano Roosevelt Memorial.
       (2) An amount equal to 50 percent of the total surcharges 
     shall be paid to the National Park Service Restricted 
     Construction Account for the Franklin Delano Roosevelt 
     Memorial.
       (b) Audits.--The Comptroller General of the United States 
     shall have the right to examine such books, records, 
     documents, and other data of the accounts referred to in 
     subsection (a) as may be related to the expenditures of 
     amounts paid under such subsection.

     SEC. 10. FINANCIAL ASSURANCES.

       (a) No Net Cost to the Government.--The Secretary shall 
     take such actions as may be necessary to ensure that minting 
     and issuing coins under this Act will not result in any net 
     cost to the United States Government.
       (b) Payment for Coins.--A coin shall not be issued under 
     this Act unless the Secretary has received--
       (1) full payment for the coin;
       (2) security satisfactory to the Secretary to indemnify the 
     United States for full payment; or
       (3) a guarantee of full payment satisfactory to the 
     Secretary from a depository institution whose deposits are 
     insured by the Federal Deposit Insurance Corporation or the 
     National Credit Union Administration Board.
                                 ______

      By Mr. INHOFE (for himself and Mr. Nickles):
  S. 447. A bill to provide tax incentives to encourage production of 
oil and gas within the United States, and for other purposes; to the 
Committee on Finance.


         the domestic oil and gas production tax incentives act

 Mr. INHOFE. Mr. President, I introduce legislation that is 
designed to help the domestic oil and gas industry not only in my own 
State of Oklahoma, but also the multitude of energy producing States 
throughout the United States. We are all very much aware that a healthy 
and competitive oil and gas industry is critically important to the 
U.S. economy. The petroleum industry alone is burdened with the highest 
tax rates in corporate America. Changes fostered by this bill only 
level the playing field with businesses throughout the United States 
that are trying to attract capital.
  Through tax incentives for new and existing marginal wells, small 
producers in Oklahoma, as well as throughout the United States, will be 
the primary benefactors of my legislation. Independents find more than 
half of all new oil and natural gas reserves, and they drill almost 85 
percent of all domestic wells--both exploratory and development--
onshore and offshore.
  The U.S. oil and gas industry is one of the Nation's major economic 
assets and has long been recognized as a world leader in size, scope, 
and technology. As such a vital national industry, we cannot afford to 
continue down the road we have become accustomed to for so long. We 
need to focus our energies inward and try to help the industry 
restimulate its growth. As a nation we must face up to the threat posed 
by mounting U.S. dependency on foreign energy imports from such regions 
as the Middle East.
                                 ______

      By Mr. GRASSLEY (for himself, Mr. Pryor and Mr. Reid):
  S. 448. A bill to amend sections 118 of the Internal Revenue Code of 
1986 to provide for certain exceptions from rules for determining 
contributions in aid of construction, and for other purposes, to the 
Committee on Finance.


          the contributions on aid of construction legislation

 Mr. GRASSLEY. Mr. President, today I am here to reintroduce 
revenue neutral legislation to reinstate the exclusion from gross 
income of contributions in aid of construction--known as CIAC--to a 
water or wastewater utility. Joining me as cosponsors are Senators 
Pryor and Reid. Senator Reid has taken the lead on this issue for a 
number of years.
  This legislation has passed as an amendment in the Senate on two 
occasions. It is my hope that this year we will finally be successful 
in passing this legislation and having the President sign it into law.
  Utilities are capital-incentive industries. Historically, they have 
received the capital for the construction of a utility extension 
directly from new customers, either through the developer or small 
municipality. The customer contributes this property, or a cash 
equivalent, to the utility. In this manner, existing customers will 
not 
[[Page S2845]] face rate increases every time the utility gains new 
customers.
  Prior to enactment of the Tax Reform Act of 1986, CIAC were not 
included in the gross income of an investor-owned utility and therefore 
were not subject to Federal income tax. In addition, utilities could 
not take tax depreciation or investment tax credits on CIAC. The 1986 
act repealed section 118(b) of the Internal Revenue Code and thus 
subjected CIAC to tax as gross income. As we all remember, the 1986 act 
had two basic premises as its core. One, the tax base would be 
broadened and rates would be lowered. Two, cuts in individual rates 
would be offset by increases in the corporate tax burden. Clearly the 
authors of the 1986 act intended to ensure that the burden of corporate 
taxes was spread to all industries including utilities.
  The removal of the exclusion from gross income of CIAC was intended 
as a tax on utilities. In practice, the CIAC tax is not a tax on 
utilities, but a tax on utility customers, primarily on developers and 
home buyers. State utility regulatory bodies, referred to as PUC's, 
generally require utilities to pass tax costs onto their customers. 
This is done in one of two ways. The most common approach is to require 
the new customer to pay the cost of the tax. But this is not a simple 
dollar-for-dollar charge. In order for utility to be made whole, it 
must pay on the CIAC, plus a tax on the tax. The phenomenon is known as 
gross-up. Depending on the State, a gross-up can add as much as 70 
percent to the customer's cost of the contributions. In other words, a 
contribution of water mains valued at $100,000 would cost a customer 
$170,000.
  Alternatively, the PUC's may allow the utility to recover the tax 
cost from existing customers or over a period of time from the new 
ratepayers. Not only does this defeat the purpose of a contribution, it 
also means a rate increase. And with many water utilities seeking rate 
increases of as much as 25 percent in order to pay for Safe Drinking 
Water Act requirements, additional rate increases can lead to calls for 
condemnation.
  Whichever method is chosen, utilities do not pay the tax, they pass 
it on. Passing the tax on has detrimental effects, not only on the 
utility's ability to bring in new business, but on the environment, and 
most significantly, on the price of new housing.
  Any developer faced with a large gross-up will have to evaluate its 
effect on the bottom line. Depending on conditions in the local housing 
market, a developer will ultimately pass the cost of the CIAC and the 
gross-up on to the new home buyer. The National Association of Home 
Builders has estimated that the CIAC tax can increase the cost of new 
housing by as much as $2,000 a unit. This additional cost is enough to 
end the dream of home ownership for a young couple.
  The CIAC tax also has some important environmental effects. New 
customers can avoid paying the CIAC tax by building their own 
independent water systems. This leads to a proliferation of systems 
that may not have the financial, technical, or managerial ability to 
comply with the rigorous requirements of the Safe Drinking Water Act. 
Such systems are referred to as nonviable. According to the EPA, in 
fiscal year 1990, more than 90 percent of the violations of the Safe 
Drinking Water Act were made by systems serving less than 3,300 
individuals. By encouraging the proliferation of nonviable systems, the 
CIAC tax frustrates the environmental policy goal of consolidating 
these systems into already existing, professionally managed systems.
  Mr. President, section 118(b) of the Internal Revenue Code, exempting 
CIAC from the gross income, should be restored. It is a tax on capital, 
not income. It is not a tax on utilities, it is a tax on their 
customers. The CIAC tax increases the price of new homes, leads to the 
development of environmentally unsound water and sewage facilities, and 
reduces the tax base for all levels of government.
  Most important in my opinion, elimination of the CIAC tax will help 
home buyers, not by fueling real estate speculation, but by removing 
another barrier to the purchase of a new home. Anyone who has bought a 
house recently knows you don't just pay the price of the house. You pay 
closing costs, title costs, title insurance fees, attorney's fees, and 
points. And when you buy a house hooked up to privately owned 
utilities, you also pay the CIAC tax--as much as $2,000 per unit.
  This legislation was most recently estimated to cost $106 million 
over 5 years. I have included a revenue offset in the bill as 
introduced that raises $140 million over the same period, thus netting 
$34 million for the Federal Government. The offset extends depreciation 
on new water utility plant from 20 to 25 years and switches from 150 
percent declining balance to straight-line depreciation. This offset 
was suggested by the investor-owned water industry and is indivisible 
from the substance of the legislation which is the restoration of the 
exclusion of CIAC from gross income. The industry suggested it only for 
the purpose of repealing the CIAC tax, and that is its only intended 
use.
  Mr. President, repeal of the tax on CIAC for water and wastewater 
utilities will have a noticeable effect on both housing prices and 
environmental policy. It is supported by the National Association of 
Water Companies, the National Association of Regulatory Utility 
Commissioners, and the National Association of Home Builders. I urge my 
colleagues to cosponsor this important legislation.
  Mr. President, I ask unanimous consent that the text 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. 448

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

     SECTION 1. TREATMENT OF CONTRIBUTIONS IN AID OF CONSTRUCTION.

       (a) Treatment of Contributions in Aid of Construction.--
       (1) In general.--Section 118 of the Internal Revenue Code 
     of 1986 (relating to contributions to the capital of a 
     corporation) is amended--
       (A) by redesignating subsection (c) as subsection (e), and
       (B) by inserting after subsection (b) the following new 
     subsections:
       ``(c) Special Rules For Water and Sewage Disposal 
     Utilities.--
       ``(1) General rule.--For purposes of this section, the term 
     `contribution to the capital of the taxpayer' includes any 
     amount of money or other property received from any person 
     (whether or not a shareholder) by a regulated public utility 
     which provides water or sewerage disposal service if--
       ``(A) such amount is a contribution in aid of construction,
       ``(B) in the case of contribution of property other than 
     water or sewerage disposal facilities, such amount meets the 
     requirements of the expenditure rule of paragraph (2), and
       ``(C) such amount (or any property acquired or constructed 
     with such amount) is not included in the taxpayer's rate base 
     for ratemaking purposes.
       ``(2) Expenditure rule.--An amount meets the requirements 
     of this paragraph if--
       ``(A) an amount equal to such amount is expended for the 
     acquisition or construction of tangible property described in 
     section 1231(b)--
       ``(i) which is the property for which the contribution was 
     made or is of the same type as such property, and
       ``(ii) which is used predominantly in the trade or business 
     of furnishing water or sewerage disposal services,
       ``(B) the expenditure referred to in subparagraph (A) 
     occurs before the end of the second taxable year after the 
     year in which such amount was received, and
       ``(C) accurate records are kept of the amounts contributed 
     and expenditures made, the expenditures to which 
     contributions are allocated, and the year in which the 
     contributions and expenditures are received and made.
       ``(3) Definitions.--For purpose of this subsection--
       ``(A) Contribution in aid of construction.--The term 
     `contribution in aid of
      construction' shall be defined by regulations prescribed by 
     the Secretary, except that such term shall not include 
     amounts paid as service charges for starting or stopping 
     services.
       ``(B) Predominantly.--The term `predominantly' means 80 
     percent or more.
       ``(C) Regulated public utility.--The term `regulated public 
     utility' has the meaning given such term by section 
     7701(a)(33), except that such term shall not include any 
     utility which is not required to provide water or sewerage 
     disposal services to members of the general public in its 
     service area.
       ``(4) Disallowance of deductions and investment credit; 
     adjusted basis.--Notwithstanding any other provision of this 
     subtitle, no deduction or credit shall be allowed for, or by 
     reason of, any expenditure which constitutes a contribution 
     in aid of construction to which this subsection applies. The 
     adjusted basis of any property acquired with 
     [[Page S2846]] contributions in aid of construction to which 
     this subsection applies shall be zero.
       ``(d) Statute of Limitations.--If the taxpayer for any 
     taxable year treats an amount as a contribution to the 
     capital of the taxpayer described in subsection (c), then--
       ``(1) the statutory period for the assessment of any 
     deficiency attributable to any part of such amount shall not 
     expire before the expiration of 3 years from the date the 
     Secretary is notified by the taxpayer (in such manner as the 
     Secretary may prescribe) of--
       ``(A) the amount of the expenditure referred to in 
     subparagraph (A) of subsection (c)(2),
       ``(B) the taxpayer's intention not to make the expenditures 
     referred to in such subparagraph, or
       ``(C) a failure to make such expenditure within the period 
     described in subparagraph (B) of subsection (c)(2); and
       ``(2) such deficiency may be assessed before the expiration 
     of such 3-year period notwithstanding the provisions of any 
     other law or rule of law which would otherwise prevent such 
     assessment.''
       (2) Conforming amendment.--Section 118(b) of such Code is 
     amended by inserting ``except as provided in subsection 
     (c),'' before ``the term''.
       (3) Effective Date.--The amendments made by this subsection 
     shall apply to amounts received after the date of the 
     enactment of this Act.
       (b) Recovery Method and Period for Water Utility 
     Property.--
       (1) Requirement to use straight line method.--Section 
     168(b)(3) of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new subparagraph:
       ``(F) Water utility property described in subsection 
     (e)(5).''
       (2) 25-year recovery period.--The table contained in 
     section 168(c)(1) of such Code is amended by inserting the 
     following item after the item relating to 20-year property:

``Water utility property....................................25 years''.

       (3) Water utility property.--
       (A) In general.--Section 168(e) of such Code is amended by 
     adding at the end the following new paragraph:
       ``(5) Water utility property.--The term `water utility 
     property' means property--
       ``(A) which is an integral part of the gathering, 
     treatment, or commercial distribution of water, and
       ``(B) which, without regard to this paragraph, would be 20-
     year property.''
       (B) Conforming amendment.--Subparagraph (F) of section 
     168(e)(3) of such Code is amended by adding at the end the 
     following new sentence: ``Such term does not include water 
     utility property.''
       (4) Alternative system.--Clause (iv) of section 
     168(g)(2)(C) of such Code is amended by inserting ``, water 
     utility property,'' and ``grading''.
       (5) Effective date.--The amendments made by this subsection 
     shall apply to property placed in service after the date of 
     the enactment of this Act, other than property placed in 
     service pursuant to a binding contract in effect on such date 
     and at all times thereafter before the property is placed in 
     service.
                                 ______

      By Mr. SIMON (for himself and Ms. Moseley-Braun):
  S. 449. A bill to establish the Midewin National Tallgrass Prairie in 
the State of Illinois, and for other purposes; to the Committee on 
Armed Services.


                     ILLINOIS LAND CONSERVATION ACT

 Mr. SIMON. Mr. President, I rise today to introduce a most 
unique piece of legislation--the Illinois Land Conservation Act. This 
bill is the result of a broad-based, bipartisan consensus involving 
Federal, State, county and municipal concerns. It is a model for the 
land reuse challenges faced by so many communities throughout the 
country who are impacted by military base closures. I believe this to 
be one of the most significant conservation and economic development 
efforts ever attempted.
  The closing of the Joliet Army Ammunition Plant in northeastern 
Illinois has provided a once-in-a-lifetime opportunity to recapture and 
preserve the tallgrass prairie that once covered most of the Prairie 
State.
  The Illinois Land Conservation Act will create the Midewin National 
Tallgrass Prairie. The term ``Midewin'' commemorates the grant medicine 
society of the Potawatoni Indian Tribe--the original inhabitants of 
this area of Illinois. This prairie will comprise 19,000 acres of land, 
which is home to 16 State endangered and threatened species, all within 
an easy drive of metropolitan Chicago.
  A 910-acre tract adjacent to the Midewin Prairie will become our 
county's largest national veterans' cemetery. Under the auspices of the 
Department of Veterans Affairs, this long-awaited site will provide a 
dignified place of rest for the many veterans in this region who 
sacrificed so much for our country.
  The remaining acreage will be developed as an industrial park and a 
county landfill by the local communities.
  Mr. President, the impact of the Joliet Arsenal closing has been 
profound on the entire region--particularly the small communities. The 
municipalities surrounding the arsenal have sustained the military 
presence here for the last 50 years, with several generations of 
families involve in the important work of defending our freedom. The 
Illinois Land Conservation Act is our opportunity to provide a true 
peace dividend to those who have supported this vital facility over the 
years.
  I hope all my colleagues will support this innovative effort that 
recaptures an important part of our past, and addresses our needs for 
the future.
 Ms. MOSELEY-BRAUN. Mr. President, I am pleased to join the 
distinguished senior Senator from Illinois, Senator Simon, in 
introducing the Illinois Land Conservation Act of 1995.
  This bill transfers land from the former Joliet Army Ammunition Plant 
to the Forest Service in order to establish a national grasslands. This 
bill also turns over land to the Veterans Administration for a new 
national veterans cemetery, and converts a number of former munitions 
production areas at the arsenal to local purposes.
  Illinois is known as the Prairie State. This name commemorates a 
younger Illinois, a region of rolling prairies, seas of butterflies, 
grazing wildlife, and pioneers seeking out new lands to settle. At one 
time, more than 43,000 square miles of prairie existed in Illinois.
  Over the course of 175 years, however, development has crept over 
these open lands. Farms, highways, and cities have been built to such 
an extent that today, only .01 percent of original prairie is left. 
Little evidence remains of, in the words of Charles Chamberlain, the 
author of the Illinois State song, this ``wilderness of prairies.''
  That is one reason why the bill we are introducing today is 
important, Mr. President--so important that it has attracted support 
from a broad, bipartisan array of Illinois groups, from industrialists 
to environmentalists, and from researchers to hunters.
  The Illinois Land Conservation Act is more than just a bill to create 
a national veterans cemetery, although it will address critical needs 
long awaited by Chicago veterans. It is more than just a bill to create 
a conservation area, although it will establish the largest in northern 
Illinois.
  The Illinois Land Conservation Act, once enacted, gives Illinois a 
rare opportunity to preserve one of the last remaining areas of natural 
prairie. It's a once-in-a-lifetime chance to set aside such a large, 
undeveloped tract of property for environmental and recreational 
purposes. In a sense, this bill helps to protect a slice of ecological 
history, and in doing so, creates a legacy for future generations of 
Illinoisans to study and enjoy.
  In April 1993, the U.S. Army, after announcing its intentions to 
close the Joliet Arsenal, approached former Illinois Congressman George 
Sangmeister to develop a concept plan for reutilization of the 
property. Congressman Sangmeister formed a commission of 24 local and 
Federal representatives, who, after several years of detailed planning, 
countless meetings, and extensive negotiations, carefully formulated 
and unanimously adopted a land reuse plan. The Illinois Land 
Conservation Act is the culmination of the commission's work.
  At the heart of this bill is the creation of a 19,000-acre national 
grasslands, to be known as the Midewin National Tallgrass Prairie.
  Located approximately 60 miles southwest of the Chicago metropolitan 
area, the grasslands will be a recreational treasure for city 
residents, accessible to millions for outdoor activities such as 
camping, horseback riding, hunting, hiking, and environmental 
education.
  The grasslands designation also will help to protect and improve upon 
what already is considered an ecological wonderland. Hundreds of types 
of plants and animals are found here, including plants indigenous to 
the area for more than 10,000 years, and many threatened and endangered 
species. Many future projects are under consideration for the 
grasslands, such as the restoration of wetlands and the reintroduction 
of bison.
  [[Page S2847]] Another cornerstone of this bill is the establishment 
of a 1,000-acre national veterans cemetery. Identified as the leading 
location by the Veterans Administration, this cemetery, proposed for 
the center of the arsenal property, will be a landscape rich in 
streams, marshes, and hardwood forests--a magnificent and tranquil 
setting for veterans. When complete, the cemetery will honor over 
92,000 Chicago veterans through the year 2030.
  Mr. President, the Illinois Land Conservation Act is based upon a 
plan that has been carefully crafted by key representatives of the 
local community who have worked closely with Federal agencies and the 
State of Illinois. It deserves to move forward quickly.
  This bill is an excellent opportunity to establish a monument to the 
fertile soils which cultivated the agricultural and commercial 
prosperity Illinois enjoys today.
  It's an excellent opportunity to create the first and the largest 
tallgrass prairie ecosystem east of the Mississippi River.
  And, most importantly, this bill is the last opportunity of our 
lifetimes to preserve a largely untouched, expansive tract of 
ecologically unique land in the State of Illinois. In the words of the 
Chicago Tribune, this is our chance to ``save Joliet Arsenal land for 
the ages.'' I agree, and urge the quick approval of this bill.
                                 ______

      By Mr. NICKLES (for himself, Mr. Inhofe, and Mr. Dole):
  S. 451. A bill to encourage production of oil and gas within the 
United States by providing tax incentives and easing regulatory 
burdens, and for other purposes; to the Committee on Finance.


        the domestic oil and gas production and preservation act

 Mr. NICKLES. Mr. President, today I am introducing The 
Domestic Oil and Gas Production and Preservation Act along with 
Senators Inhofe and Dole. A companion bill is also being introduced in 
the House by Congressman Lucas and the rest of the Oklahoma delegation. 
We are introducing this bill today in an effort to help revive our 
domestic oil and gas industry which plays such a vital role in our 
national security. If our domestic industry is to survive domestically, 
then Congress needs to act now to provide incentives and regulatory 
reforms to encourage production in America.
  Since the early 1980's oil and gas extraction employment has been cut 
in half. Employment in the oil and gas industry has declined by 500,000 
since 1984. Imports of crude oil products have increased by 200,000 
barrels a day over the last year and the import dependency ratio now 
exceeds 50 percent. In December 1994, crude oil production dropped to 5 
million barrels per day in the lower 48 States which is the lowest 
level since 1946. We must take action now to save domestic production 
not only for the sake of the oil and gas industry but for the sake of 
the national security of this Nation.
  I understand that today the administration released an investigative 
report conducted under section 232 of the Trade Expansion Act of 1962 
on the threat to national security from the rising tide of oil imports. 
I have not yet seen this report but previous Commerce Department 
reports have found that oil imports threaten the national security and 
they were conducted when our foreign oil dependence was much lower. The 
question now is not whether oil imports threaten national security; 
everyone agrees that is the case. The question now is what are we going 
to do about it.
  To date, the Clinton administration has done nothing to encourage 
domestic production. In fact, in 1993, crude oil reserves continued to 
decline by 788 million barrels. Natural gas reserves fell by 2,600 Bcf 
to 162,415 Bcf. I have been asking the Secretary of Energy for 3 years 
now, what she intends to do to help preserve the domestic oil and gas 
industry. In the President's 1996 budget there is nothing to aid this 
industry. That is why I am introducing this bill today.
  The Domestic Oil and Gas Production and Preservation Act is intended 
to do just what its name implies--encourage oil and gas production and 
preserve and revitalize the domestic oil and gas industry. This bill 
would accomplish these goals in several ways. In title 1, we provide 
for tax incentives. One of the cornerstone pieces of this legislation 
is a tax credit to preserve marginal production and to encourage new 
drilling. This provision would make it more economical to keep a 
marginal well producing during times of low prices and would provide 
incentives to producers not to shut in their marginal wells due to 
economics resulting in a permanent loss of the remaining unproduced 
reserves.
  This legislation also includes a tax credit for production from new 
wells that have been drilled after June 1, 1995. This provision is 
meant to encourage domestic exploration which has fallen dramatically 
in recent years. During the early 1980's the average rig count was 
around 2,929. In 1994 the rig count averaged 775. This is less than 
one-third the average during the boom years of the 1980's. If domestic 
production does not increase, our reliance on imported oil will only 
continue to grow.
  In addition to the tax credit, this bill provides for several 
depletion reforms. There are provisions to repeal the net income 
limitation for computing percentage depletion, exclude marginal 
production from the current 1,000 barrels per day limitation, repeal 
the property allocation rule for computing depletion, and freeze the 
percentage depletion rate at current marginal levels.
  Until 1976, percentage depletion was designed to operate as risk-
weighted depreciation for mineral properties. Since then, the multiple 
limitations on the availability of percentage depletion as an effective 
capital cost recovery provision has diminished our proven reserves. The 
time has come to revise U.S. energy depletion policy. The circumstances 
that prevail in today's crude oil market are precisely the opposite of 
those that led to change to the depletion deduction in 1976. The world 
crude oil market is now glutted with overproduction from Kuwait and 
unsold Iraqi supplies are threatening another oil market crash. When 
prices decline, many wells are lost forever and many other wells cannot 
be drilled.
  Percentage depletion should be reformed so that more U.S. production 
qualifies. Ensuring an adequate depletion allowance can reverse the 
falling U.S. energy
 resource base. These reforms will encourage new technology 
investments, provide economic stimulus to a major U.S. industry and 
create new, high-quality jobs.

  In addition to the tax credit and the percentage depletion reforms, 
this legislation provides that geological and geophysical expenditures 
shall be treated as deductible expenses, it expands the existing 
enhanced oil recovery tax credit and makes it AMT creditable, it 
provides an election for optional 5-year write-off of intangible 
drilling costs, and it increases the amount of intangible drilling 
costs that can be expended without being treated as a preference item 
for AMT purposes. All these provisions will help encourage continued 
production from marginal wells, thus saving a valuable national 
resource from being lost.
  Title II of this legislation calls for several regulatory reforms. It 
has provisions that address the enormous and unnecessary financial 
responsibility provisions of the Oil Pollution Act of 1990 [OPA '90]. 
This bill clarifies that the definition of ``navigable waters'' under 
OPA '90 only applies to true ``offshore facilities,'' not facilities 
onshore. It also changes the amount of financial responsibility 
required under OPA '90 from $150 to $35 million with discretion given 
to the Secretary to establish a higher amount (but not higher than $150 
million) taking into account factors relevant to risks posed by a 
facility.
  This legislation also addresses two oil and gas royalty issues. 
First, it establishes a 6-year statute of limitations on actions 
commenced by the United States for recovery of royalties due under an 
oil and gas lease on Federal lands unless a lessee has made a false or 
fraudulent statement with the intent to evade the payment of royalties 
due. This provision is intended to give some finality to the royalty 
collection process and require the government to be prompt and timely 
in their pursuit of any underpayment of royalties. Second, it provides 
the Secretary discretion to lower royalties on oil and gas leases on 
Federal lands. This is intended to be used to help marginal wells, when 
prices are low, from being shut in as uneconomical.
  [[Page S2848]] In addition to the aforementioned regulatory reforms, 
this bill addresses two critical areas of reform, private property 
rights and risk assessment. Private property rights are protected by 
the fifth amendment to the U.S. Constitution. Unfortunately, the 
Federal bureaucracy has increasingly used environmental laws to trample 
on these rights. Two of the worst offenders are the Endangered Species 
Act and the wetlands permitting program established by section 404 of 
the Clean Water Act. This legislation incorporates the provisions of a 
separate bill that I have introduced for the last 3 years entitled the 
Property Owners Bill of Rights. The provisions of this bill require a 
landowner's written consent before Federal agents could enter private 
property, guarantee a landowner's access to information gathered about 
their property, guarantee a landowner's right to dispute that 
information's accuracy, guarantee a landowner's right to appeal 
decisions made under endangered species or wetlands law, and guarantee 
that a landowner be compensated if federal actions under the Endangered 
Species Act or wetlands permitting program devalue their property by 33 
percent or more.
  The risk assessment provisions of this bill requires Federal agencies 
to use sound scientific data when risk criteria and benefits are 
determined. It also requires the agencies to make public the scientific 
basis for each risk criteria and full disclosure of all assumptions and 
uncertainties. It also provides for a petition process to require an 
agency to review an existing regulation to ensure that benefits exceed 
the costs.
  Finally, title III of this bill abolishes the existing prohibitions 
against the export of domestic crude oil production. This provision 
would also help encourage production in the lower 48 States.
  Together, the provisions of this bill provide much needed incentives 
and regulatory relief to an industry that is vital to our national 
security. The sooner the administration and Congress acknowledge the 
critical importance of the domestic oil and gas industry and stop 
burdening this industry with high taxes and regulatory obstacles, the 
sooner we can take the necessary actions to preserve and revitalize 
this important sector of our economy.
                                 ______

      By Mr. MOYNIHAN (for himself and Mr. Daschle) (by request):
  S. 452. A bill to amend the Internal Revenue Code of 1986 to provide 
tax relief for the middle class; to the Committee on Finance.


         the middle-class bill of rights tax relief act of 1995

  Mr. MOYNIHAN. Mr. President, as ranking member of the Committee on 
Finance, I am today joining with the Democratic leader in introducing a 
bill, at the request of the administration, containing the statutory 
provisions that implement the middle-income tax cuts contained in the 
President's fiscal year 1996 budget submission. Secretary Rubin 
appeared before the Finance Committee last week to testify concerning 
these proposals.
  By making statutory language available early in the legislative 
process, the administration has aided the process of Senate 
consideration of these provisions. This legislation also will serve to 
answer many of the questions that the public may have with respect to 
the President's tax proposals.
  I want to thank the administration for providing this level of detail 
in so timely a fashion, and I look forward to working with them on 
these proposals in the coming months.
  Mr. President, I ask unanimous consent that the text of the bill and 
additional material be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                 S. 452
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,
     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Middle-
     Class Bill of Rights Tax Relief Act of 1995''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act 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 Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--
Sec. 1. Short title; amendment of 1986 Code.

                    TITLE I--MIDDLE CLASS TAX RELIEF

Sec. 101. Credit for families with young children.
Sec. 102. Deduction for higher education expenses.

      TITLE II--PROVISIONS RELATING TO INDIVIDUAL RETIREMENT PLANS

               Subtitle A--Retirement Savings Incentives

                         Part I--IRA Deduction

Sec. 201. Increase in income limitations.
Sec. 202. Inflation adjustment for deductible amount and income 
              limitations.
Sec. 203. Coordination of IRA deduction limit with elective deferral 
              limit.

                 Part II--Nondeductible Tax-Free IRA's

Sec. 211. Establishment of nondeductible tax-free individual retirement 
              accounts.

                 Subtitle B--Penalty-Free Distributions

Sec. 221. Distributions from certain plans may be used without penalty 
              to purchase first homes, to pay higher education or 
              financially devastating medical expenses, or by the 
              unemployed.
Sec. 222. Contributions must be held at least 5 years in certain cases.
                    TITLE I--MIDDLE CLASS TAX RELIEF

     SEC. 101. CREDIT FOR FAMILIES WITH YOUNG CHILDREN.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 (relating to nonrefundable personal credits) is 
     amended by inserting after section 22 the following new 
     section:

     ``SEC. 23. FAMILIES WITH YOUNG CHILDREN.

       ``(a) Allowance of Credit.--
       ``(1) In general.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     chapter for the taxable year an amount equal to $300 
     multiplied by the number of eligible children of the taxpayer 
     for the taxable year.
       ``(2) Increase in credit.--In the case of taxable years 
     beginning after December 31, 1998, paragraph (1) shall be 
     applied by substituting `$500' for `$300'.
       ``(b) Limitations.--
       ``(1) Phase-out of credit.--
       ``(A) In general.--The amount of the credit allowed under 
     subsection (a) shall be reduced (but not below zero) by the 
     amount determined under subparagraph (B).
       ``(B) Amount of reduction.--The amount determined under 
     this subparagraph equals the amount which bears the same 
     ratio to the credit (determined without regard to this 
     subsection) as--
       ``(i) the excess of--

       ``(I) the taxpayer's adjusted gross income for such taxable 
     year, over
       ``(II) $60,000, bears to

       ``(ii) $15,000.

     Any amount determined under this subparagraph which is not a 
     multiple of $10 shall be rounded to the next lowest $10.
       ``(C) Adjusted gross income.--For purposes of this 
     paragraph, adjusted gross income of any taxpayer shall be 
     increased by any amount excluded from gross income under 
     section 911, 931, or 933.
       ``(2) Limitation based on amount of tax.--The credit 
     allowed by subsection (a) for the taxable year (after the 
     application of paragraph (1)) shall not exceed the excess (if 
     any) of--
       ``(A) the taxpayer's regular tax liability for the taxable 
     year reduced by the credits allowable against such tax under 
     this subpart (other than this section) determined without 
     regard to section 26, over
       ``(B) the sum of--
       ``(i) the taxpayer's tentative minimum tax for such taxable 
     year, plus
       ``(ii) the credit allowed for the taxable year under 
     section 32.
       ``(c) Eligible Child.--For purposes of this section, the 
     term `eligible child' means any child (as defined in section 
     151(c)(3)) of the taxpayer--
       ``(1) who has not attained age 13 as of the close of the 
     calendar year in which the taxable year of the taxpayer 
     begins,
       ``(2) who is a dependent of the taxpayer with respect to 
     whom the taxpayer is allowed a deduction under section 151 
     for such taxable year, and
       ``(3) whose TIN is included on the taxpayer's return for 
     such taxable year.
       ``(d) Inflation Adjustments.--In the case of a taxable year 
     beginning in a calendar year after 1999--
       ``(1) In general.--The $500 and $60,000 amounts contained 
     in subsections (a)(2) and (b)(2) shall each be increased by 
     an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1998' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(2) Increase in phaseout range.--If the amount applicable 
     under subsection (a) for any taxable year exceeds $500, 
     subsection (b)(2)(B) shall be applied by substituting an 
     amount equal to 30 times such applicable amount for 
     `$15,000'.
       ``(3) Rounding.--If any amount as adjusted under paragraph 
     (1) is not a multiple of $100, such amount shall be rounded 
     to the next lowest multiple of $100.
     [[Page S2849]]   ``(e) Special Rules.--
       ``(1) Amount of credit may be determined under tables.--The 
     amount of the credit allowed by this section may be 
     determined under tables prescribed by the Secretary.
       ``(2) Certain other rules apply.--Rules similar to the 
     rules of subsections (c)(1)(E) and (F), (d), and (e) of 
     section 32 shall apply for purposes of this section.''
       (b) Clerical Amendment.--The table of sections for subpart 
     A of part IV of subchapter A of chapter 1 is amended by 
     inserting after the item relating to section 22 the following 
     new item:

``Sec. 23. Families with young children.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 102. DEDUCTION FOR HIGHER EDUCATION EXPENSES.

       (a) Deduction Allowed.-- Part VII of subchapter B of 
     chapter 1 (relating to additional itemized deductions for 
     individuals) is amended by redesignating section 220 as 
     section 221 and by inserting after section 219 the following 
     new section:

     ``SEC. 220. HIGHER EDUCATION TUITION AND FEES.

       ``(a) Allowance of Deduction.--In the case of an 
     individual, there shall be allowed as a deduction the amount 
     of qualified higher education expenses paid by the taxpayer 
     during the taxable year.
       ``(b) Limitations.--
       ``(1) Dollar limitation.--
       ``(A) In general.--The amount allowed as a deduction under 
     subparagraph (a) for any taxable year shall not exceed 
     $10,000.
       ``(B) Phase-in.--In the case of taxable years beginning in 
     1996, 1997, or 1998, `$5,000' shall be substituted for 
     `$10,000' in subparagraph (A).
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--The amount which would (but for this 
     paragraph) be taken into account under paragraph (1) shall be 
     reduced (but not below zero) by the amount determined under 
     subparagraph (B).
       ``(B) Amount of reduction.--The amount determined under 
     this subparagraph equals the amount which bears the same 
     ratio to the amount which would be so taken into account as--
       ``(i) the excess of--

       ``(I) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(II) $70,000 ($100,000 in the case of a joint return), 
     bears to

       ``(ii) $20,000.
       ``(C) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means the adjusted gross income of the 
     taxpayer for the taxable year determined--
       ``(i) without regard to this section and sections 911, 931, 
     and 933, and
       ``(ii) after the application of sections 86, 135, 219 and 
     469.

     For purposes of sections 86, 135, 219, and 469, adjusted 
     gross income shall be determined without regard to the 
     deduction allowed under this section.
       ``(D) Inflation adjustments.--
       ``(i) In general.--In the case of a taxable year beginning 
     after 1999, the $70,000 and $100,000 amounts described in 
     subparagraph (B) shall each be increased by an amount equal 
     to--

       ``(I) such dollar amounts, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1998' 
     for `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding.--If any amount as adjusted under clause 
     (i) is not a multiple of $5,000, such amount shall be rounded 
     to the next lowest multiple of $5,000.
       ``(c) Qualified Higher Education Expenses.--For purposes of 
     this section--
       ``(1) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition and fees charged by an educational 
     institution and required for the enrollment or attendance 
     of--
       ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse, or
       ``(iii) any dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151,

     as an eligible student at an institution of higher education.
       ``(B) Exception for education involving sports, etc.--Such 
     term does not include expenses with respect to any course or 
     other education involving sports, games, or hobbies, unless 
     such expenses--
       ``(i) are part of a degree program, or
       ``(ii) are deductible under this chapter without regard to 
     this section.
       ``(C) Exception for nonacademic fees.--Such term does not 
     include any student activity fees, athletic fees, insurance 
     expenses, or other expenses unrelated to a student's academic 
     course of instruction.
       ``(D) Eligible student.--For purposes of subparagraph (A), 
     the term `eligible student' means a student who--
       ``(i) meets the requirements of section 484(a)(1) of the 
     Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in 
     effect on the date of the enactment of this section, and
       ``(ii)(I) is carrying at least one-half the normal full-
     time work load for the course of study the student is 
     pursuing, as determined by the institution of higher 
     education, or
       ``(II) is enrolled in a course which enables the student to 
     improve the student's job skills or to acquire new job 
     skills.
       ``(E) Identification requirement.--No deduction shall be 
     allowed under subsection (a) to a taxpayer with respect to an 
     eligible student unless the taxpayer includes the name, age, 
     and taxpayer identification number of such eligible student 
     on the return of tax for the taxable year.
       ``(2) Institution of higher education.--The term 
     `institution of higher education' means an institution 
     which--
       ``(A) is described in section 481 of the Higher Education 
     Act of 1965 (20 U.S.C. 1088), as in effect on the date of the 
     enactment of this section, and
       ``(B) is eligible to participate in programs under title IV 
     of such Act.
       ``(d) Special rules.--
       ``(1) No double benefit.--
       ``(A) In general.--No deduction shall be allowed under 
     subsection (a) for qualified higher education expenses with 
     respect to which a deduction is allowable to the taxpayer 
     under any other provision of this chapter unless the taxpayer 
     irrevocably waives his right to the deduction of such 
     expenses under such other provision.
       ``(B) Dependents.--No deduction shall be allowed under 
     subsection (a) to any individual with respect to whom a 
     deduction under section 151 is allowable to another taxpayer 
     for a taxable year beginning in the calendar year in which 
     such individual's taxable year begins.
       ``(C) Savings bond exclusion.--A deduction shall be allowed 
     under subsection (a) for qualified higher education expenses 
     only to the extent the amount of such expenses exceeds the 
     amount excludable under section 135 for the taxable year.
       ``(2) Limitation on taxable year of deduction.--
       ``(A) In general.--A deduction shall be allowed under 
     subsection (a) for any taxable year only to the extent the 
     qualified higher education expenses are in connection with 
     enrollment at an institution of higher education during the 
     taxable year.
       ``(B) Certain prepayments allowed.--Subparagraph (A) shall 
     not apply to qualified higher education expenses paid during 
     a taxable year if such expenses are in connection with an 
     academic term beginning during such taxable year or during 
     the 1st 3 months of the next taxable year.
       ``(3) Adjustment for certain scholarships and veterans 
     benefits.--The amount of qualified higher education expenses 
     otherwise taken into account under subsection (a) with 
     respect to the education of an individual shall be reduced 
     (before the application of subsection (b)) by the sum of the 
     amounts received with respect to such individual for the 
     taxable year as--
       ``(A) a qualified scholarship which under section 117 is 
     not includable in gross income,
       ``(B) an educational assistance allowance under chapter 30, 
     31, 32, 34, or 35 of title 38, United States Code, or
       ``(C) a payment (other than a gift, bequest, devise, or 
     inheritance within the meaning of section 102(a)) for 
     educational expenses, or attributable to enrollment at an 
     eligible educational institution, which is exempt from income 
     taxation by any law of the United States.
       ``(4) No deduction for married individuals filing separate 
     returns.--If the taxpayer is a married individual (within the 
     meaning of section 7703), this section shall apply only if 
     the taxpayer and the taxpayer's spouse file a joint return 
     for the taxable year.
       ``(5) Nonresident aliens.--If the taxpayer is a nonresident 
     alien individual for any portion of the taxable year, this 
     section shall apply only if such individual is treated as a 
     resident alien of the United States for purposes of this 
     chapter by reason of an election under subsection (g) or (h) 
     of section 6013.
       ``(6) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including regulations requiring recordkeeping 
     and information reporting.''
       (b) Deduction Allowed in Computing Adjusted Gross Income.--
     Section 62(a) is amended by inserting after paragraph (15) 
     the following new paragraph:
       ``(16) Higher education tuition and fees.--The deduction 
     allowed by section 220.''
       (c) Conforming Amendment.--The table of sections for part 
     VII of subchapter B of chapter 1 is amended by striking the 
     item relating to section 220 and inserting:

``Sec. 220. Higher education tuition and fees.
``Sec. 221. Cross reference.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to payments made after December 31, 1995.
      TITLE II--PROVISIONS RELATING TO INDIVIDUAL RETIREMENT PLANS
               Subtitle A--Retirement Savings Incentives

                         PART I--IRA DEDUCTION

     SEC. 201. INCREASE IN INCOME LIMITATIONS.

       (a) In General.--Subparagraph (B) of section 219(g)(3) is 
     amended--
       (1) by striking ``$40,000'' in clause (i) and inserting 
     ``$80,000'', and
       (2) by striking ``$25,000'' in clause (ii) and inserting 
     ``$50,000''.
       (b) Phase-Out of Limitations.--Clause (ii) of section 
     219(g)(2)(A) is amended by striking ``$10,000'' and inserting 
     ``an amount equal to 10 times the dollar amount applicable 
     for the taxable year under subsection (b)(1)(A)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
     [[Page S2850]] SEC. 202. INFLATION ADJUSTMENT FOR DEDUCTIBLE 
                   AMOUNT AND INCOME LIMITATIONS.

       (a) In General.--Section 219 is amended by redesignating 
     subsection (h) as subsection (i) and by inserting after 
     subsection (g) the following new subsection:
       ``(h) Cost-of-Living Adjustments.--
       ``(1) In general.--In the case of any taxable year 
     beginning in a calendar year after 1996, each dollar amount 
     to which this subsection applies shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1995' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(2) Dollar amounts to which subsection applies.--This 
     subsection shall apply to--
       ``(A) the $2,000 amounts under subsection (b)(1)(A) and 
     (c), and
       ``(B) the applicable dollar amounts under subsection 
     (g)(3)(B).
       ``(3) Rounding rules.--
       ``(A) Deduction amounts.--If any amount referred to in 
     paragraph (2)(A) as adjusted under paragraph (1) is not a 
     multiple of $500, such amount shall be rounded to the next 
     lowest multiple of $500.
       ``(B) Applicable dollar amounts.--If any amount referred to 
     in paragraph (2)(B) as adjusted under paragraph (1) is not a 
     multiple of $5,000, such amount shall be rounded to the next 
     lowest multiple of $5,000.''
       (b) Conforming Amendments.--
       (1) Clause (i) of section 219(c)(2)(A) is amended to read 
     as follows:
       ``(i) the sum of $250 and the dollar amount in effect for 
     the taxable year under subsection (b)(1)(A), or''.
       (2) Section 408(a)(1) is amended by striking ``in excess of 
     $2,000 on behalf of any individual'' and inserting ``on 
     behalf of any individual in excess of the amount in effect 
     for such taxable year under section 219(b)(1)(A)''.
       (3) Section 408(b)(2)(B) is amended by striking ``$2,000'' 
     and inserting ``the dollar amount in effect under section 
     219(b)(1)(A)''.
       (4) Subparagraph (A) of section 408(d)(5) is amended by 
     striking ``$2,250'' and inserting ``the dollar amount in 
     effect for the taxable year under section 219(c)(2)(A)(i)''.
       (5) Section 408(j) is amended by striking ``$2,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 203. COORDINATION OF IRA DEDUCTION LIMIT WITH ELECTIVE 
                   DEFERRAL LIMIT.

       (a) In General.--Section 219(b) (relating to maximum amount 
     of deduction) is amended by adding at the end the following 
     new paragraph:
       ``(4) Coordination with elective deferral limit.--The 
     amount determined under paragraph (1) or subsection (c)(2) 
     with respect to any individual for any taxable year shall not 
     exceed the excess (if any) of--
       ``(A) the limitation applicable for the taxable year under 
     section 402(g)(1), over
       ``(B) the elective deferrals (as defined in section 
     402(g)(3)) of such individual for such taxable year.''
       (b) Conforming Amendment.--Section 219(c) is amended by 
     adding at the end the following new paragraph:
       ``(3) Cross Reference.--
  ``For reduction in paragraph (2) amount, see subsection (b)(4).''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

                 PART II--NONDEDUCTIBLE TAX-FREE IRA'S

     SEC. 211. ESTABLISHMENT OF NONDEDUCTIBLE TAX-FREE INDIVIDUAL 
                   RETIREMENT ACCOUNTS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 (relating to pension, profit-sharing, stock bonus 
     plans, etc.) is amended by inserting after section 408 the 
     following new section:

     ``SEC. 408A. SPECIAL INDIVIDUAL RETIREMENT ACCOUNTS.

       ``(a) General Rule.--Except as provided in this chapter, a 
     special individual retirement account shall be treated for 
     purposes of this title in the same manner as an individual 
     retirement plan.
       ``(b) Special Individual Retirement Account.--For purposes 
     of this title, the term `special individual retirement 
     account' means an individual retirement plan which is 
     designated at the time of establishment of the plan as a 
     special individual retirement account.
       ``(c) Treatment of Contributions.--
       ``(1) No deduction allowed.--No deduction shall be allowed 
     under section 219 for a contribution to a special individual 
     retirement account.
       ``(2) Contribution limit.--The aggregate amount of 
     contributions for any taxable year to all special individual 
     retirement accounts maintained for the benefit of an 
     individual shall not exceed the excess (if any) of--
       ``(A) the maximum amount allowable as a deduction under 
     section 219 with respect to such individual for such taxable 
     year, over
       ``(B) the amount so allowed.
       ``(3) Special rules for qualified transfers.--
       ``(A) In general.--No rollover contribution may be made to 
     a special individual retirement account unless it is a 
     qualified transfer.
       ``(B) Limit not to apply.--The limitation under paragraph 
     (2) shall not apply to a qualified transfer to a special 
     individual retirement account.
       ``(d) Tax Treatment of Distributions.--
       ``(1) In general.--Except as provided in this subsection, 
     any amount paid or distributed out of a special individual 
     retirement account shall not be included in the gross income 
     of the distributee.
       ``(2) Exception for earnings on contributions held less 
     than 5 years.--
       ``(A) In general.--Any amount distributed out of a special 
     individual retirement account which consists of earnings 
     allocable to contributions made to the account during the 5-
     year period ending on the day before such distribution shall 
     be included in the gross income of the distributee for the 
     taxable year in which the distribution occurs.
       ``(B) Ordering rule.--
       ``(i) First-in, first-out rule.--Distributions from a 
     special individual retirement account shall be treated as 
     having been made--

       ``(I) first from the earliest contribution (and earnings 
     allocable thereto) remaining in the account at the time of 
     the distribution, and
       ``(II) then from other contributions (and earnings 
     allocable thereto) in the order in which made.

       ``(ii) Allocations between contributions and earnings.--Any 
     portion of a distribution allocated to a contribution (and 
     earnings allocable thereto) shall be treated as allocated 
     first to the earnings and then to the contribution.
       ``(iii) Allocation of earnings.--Earnings shall be 
     allocated to a contribution in such manner as the Secretary 
     may by regulations prescribe.
       ``(iv) Contributions in same year.--Except as provided in 
     regulations, all contributions made during the same taxable 
     year may be treated as 1 contribution for purposes of this 
     subparagraph.
       ``(C) Cross reference.--
  ``For additional tax for early withdrawal, see section 72(t).

       ``(3) Qualified transfer.--
       ``(A) In general.--Paragraph (2) shall not apply to any 
     distribution which is transferred in a qualified transfer to 
     another special individual retirement account.
       ``(B) Contribution period.--For purposes of paragraph (2), 
     the special individual retirement account to which any 
     contributions are transferred shall be treated as having held 
     such contributions during any period such contributions were 
     held (or are treated as held under this subparagraph) by the 
     special individual retirement account from which transferred.
       ``(4) Special rules relating to certain transfers.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, in the case of a qualified transfer to a special 
     individual retirement account from an individual retirement 
     plan which is not a special individual retirement account--
       ``(i) there shall be included in gross income any amount 
     which, but for the qualified transfer, would be includible in 
     gross income, but
       ``(ii) section 72(t) shall not apply to such amount.
       ``(B) Time for inclusion.--In the case of any qualified 
     transfer which occurs before January 1, 1997, any amount 
     includible in gross income under subparagraph (A) with 
     respect to such contribution shall be includible ratably over 
     the 4-taxable year period beginning in the taxable year in 
     which the amount was paid or distributed out of the 
     individual retirement plan.
       ``(e) Qualified Transfer.--For purposes of this section
       ``(1) In general.--The term `qualified transfer' means a 
     transfer to a special individual retirement account from 
     another such account or from an individual retirement plan 
     but only if such transfer meets the requirements of section 
     408(d)(3).
       ``(2) Limitation.--A transfer otherwise described in 
     paragraph (1) shall not be treated as a qualified transfer if 
     the taxpayer's adjusted gross income for the taxable year of 
     the transfer exceeds the sum of--
       ``(A) the applicable dollar amount, plus
       ``(B) the dollar amount applicable for the taxable year 
     under section 219(g)(2)(A)(ii).

     This paragraph shall not apply to a transfer from a special 
     individual retirement account to another special individual 
     retirement account.
       ``(3) Definitions.--For purposes of this subsection, the 
     terms `adjusted gross income' and `applicable dollar amount' 
     have the meanings given such terms by section 219(g)(3), 
     except subparagraph (A)(ii) thereof shall be applied without 
     regard to the phrase `or the deduction allowable under this 
     section'.''
       (b) Early Withdrawal Penalty.--Section 72(t) is amended by 
     adding at the end the following new paragraph:
       ``(6) Rules relating to special individual retirement 
     accounts.--In the case of a special individual retirement 
     account under section 408A--
       ``(A) this subsection shall only apply to distributions out 
     of such account which consist of earnings allocable to 
     contributions made to the account during the 5-year period 
     ending on the day before such distribution, and
       ``(B) paragraph (2)(A)(i) shall not apply to any 
     distribution described in subparagraph (A).''
     [[Page S2851]]   (c) Excess Contributions.--Section 4973(b) 
     is amended by adding at the end the following new sentence: 
     ``For purposes of paragraphs (1)(B) and (2)(C), the amount 
     allowable as a deduction under section 219 shall be computed 
     without regard to section 408A.''
       (d) Conforming Amendment.--The table of sections for 
     subpart A of part I of subchapter D of chapter 1 is amended 
     by inserting after the item relating to section 408 the 
     following new item:
``Sec. 408A. Special individual retirement accounts.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
                 Subtitle B--Penalty-Free Distributions

     SEC. 221. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED 
                   WITHOUT PENALTY TO PURCHASE FIRST HOMES, TO PAY 
                   HIGHER EDUCATION OR FINANCIALLY DEVASTATING 
                   MEDICAL EXPENSES, OR BY THE UNEMPLOYED.

       (a) In General.--Paragraph (2) of section 72(t) (relating 
     to exceptions to 10-percent additional tax on early 
     distributions from qualified retirement plans) is amended by 
     adding at the end the following new subparagraph:
       ``(D) Distributions from certain plans for first home 
     purchases or educational expenses.--Distributions to an 
     individual from an individual retirement plan--
       ``(i) which are qualified first-time homebuyer 
     distributions (as defined in paragraph (7)); or
       ``(ii) to the extent such distributions do not exceed the 
     qualified higher education expenses (as defined in paragraph 
     (8)) of the taxpayer for the taxable year.''
       (b) Financially Devastating Medical Expenses.--
       (1) In general.--Section 72(t)(3)(A) is amended by striking 
     ``(B),''.
       (2) Certain lineal descendants and ancestors treated as 
     dependents and long-term care services treated as medical 
     care.--Subparagraph (B) of section 72(t)(2) is amended by 
     striking ``medical care'' and all that follows and inserting 
     ``medical care determined--
       ``(i) without regard to whether the employee itemizes 
     deductions for such taxable year, and
       ``(ii) in the case of an individual retirement plan--

       ``(I) by treating such employee's dependents as including 
     all children, grandchildren and ancestors of the employee or 
     such employee's spouse and
       ``(II) by treating qualified long-term care services (as 
     defined in paragraph (9)) as medical care for purposes of 
     this subparagraph (B).''

       (3) Conforming amendment.--Subparagraph (B) of section 
     72(t)(2) is amended by striking ``or (C)'' and inserting ``, 
     (C) or (D)''.
       (c) Definitions.--Section 72(t), as amended by this Act, is 
     amended by adding at the end the following new paragraphs:
       ``(7) Qualified first-time homebuyer distributions.--For 
     purposes of paragraph (2)(D)(i)--
       ``(A) In general.--The term `qualified first-time homebuyer 
     distribution' means any payment or distribution received by 
     an individual to the extent such payment or distribution is 
     used by the individual before the close of the 60th day after 
     the day on which such payment or distribution is received to 
     pay qualified acquisition costs with respect to a principal 
     residence of a first-time homebuyer who is such individual or 
     the spouse, child (as defined in section 151(c)(3)), or 
     grandchild of such individual.
       ``(B) Qualified acquisition costs.--For purposes of this 
     paragraph, the term `qualified acquisition costs' means the 
     costs of acquiring, constructing, or reconstructing a 
     residence. Such term includes any usual or reasonable 
     settlement, financing, or other closing costs.
       ``(C) First-time homebuyer; other definitions.--For 
     purposes of this paragraph--
       ``(i) First-time homebuyer.--The term `first-time 
     homebuyer' means any individual if--

       ``(I) such individual (and if married, such individual's 
     spouse) had no present ownership interest in a principal 
     residence during the 3-year period ending on the date of 
     acquisition of the principal residence to which this 
     paragraph applies, and
       ``(II) subsection (h) or (k) of section 1034 did not 
     suspend the running of any period of time specified in 
     section 1034 with respect to such individual on the day 
     before the date the distribution is applied pursuant to 
     subparagraph (A).

     In the case of an individual described in section 
     143(i)(1)(C) for any year, an ownership interest shall not 
     include any interest under a contract of deed described in 
     such section. An individual who loses an ownership interest 
     in a principal residence incident to a divorce or legal 
     separation is deemed for purposes of this subparagraph to 
     have had no ownership interest in such principal residence 
     within the period referred to in subparagraph (A)(II).
       ``(ii) Principal residence.--The term `principal residence' 
     has the same meaning as when used in section 1034.
       ``(iii) Date of acquisition.--The term `date of 
     acquisition' means the date--

       ``(I) on which a binding contract to acquire the principal 
     residence to which subparagraph (A) applies is entered into, 
     or
       ``(II) on which construction or reconstruction of such a 
     principal residence is commenced.

       ``(D) Special rule where delay in acquisition.--If any 
     distribution from any individual retirement plan fails to 
     meet the requirements of subparagraph (A) solely by reason of 
     a delay or cancellation of the purchase or construction of 
     the residence, the amount of the distribution may be 
     contributed to an individual retirement plan as provided in 
     section 408(d)(3)(A)(i) (determined by substituting `120 
     days' for `60 days' in such section), except that--
       ``(i) section 408(d)(3)(B) shall not be applied to such 
     contribution, and
       ``(ii) such amount shall not be taken into account in 
     determining whether section 408(d)(3)(A)(i) applies to any 
     other amount.
       ``(8) Qualified higher education expenses.--For purposes of 
     paragraph (2)(D)(ii)--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition and fees required for the enrollment 
     or attendance of--
       ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse,
       ``(iii) a dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151, or
       ``(iv) the taxpayer's child (as defined in section 
     151(c)(3)) or grandchild,

     as an eligible student at an institution of higher education 
     (as defined in paragraphs (1)(D) and (2) of section 220(c)).
       ``(B) Exceptions.--The term `qualified higher education 
     expenses' does not include expenses described in 
     subparagraphs (B) and (C) of section 220(c)(1).
       ``(C) Coordination with savings bond provisions.--The 
     amount of qualified higher education expenses for any taxable 
     year shall be reduced by any amount excludable from gross 
     income under section 135.
       ``(9) Qualified long-term care services.--For purposes of 
     paragraph (2)(B)--
       ``(A) In general.--The term `qualified long-term care 
     services' means necessary diagnostic, curing, mitigating, 
     treating, preventive, therapeutic, and rehabilitative 
     services, and maintenance and personal care services (whether 
     performed in a residential or nonresidential setting) which--
       ``(i) are required by an individual during any period the 
     individual is an incapacitated individual (as defined in 
     subparagraph (B)),
       ``(ii) have as their primary purpose--

       ``(I) the provision of needed assistance with 1 or more 
     activities of daily living (as defined in subparagraph (C)), 
     or
       ``(II) protection from threats to health and safety due to 
     severe cognitive impairment, and

       ``(iii) are provided pursuant to a continuing plan of care 
     prescribed by a licensed professional (as defined in 
     subparagraph (D)).
       ``(B) Incapacitated individual.--The term `incapacitated 
     individual' means any individual who--
       ``(i) is unable to perform, without substantial assistance 
     from another individual (including assistance involving 
     cueing or substantial supervision), at least 2 activities of 
     daily living as defined in subparagraph (C), or
       ``(ii) has severe cognitive impairment as defined by the 
     Secretary in consultation with the Secretary of Health and 
     Human Services.

     Such term shall not include any individual otherwise meeting 
     the requirements of the preceding sentence unless a licensed 
     professional within the preceding 12-month period has 
     certified that such individual meets such requirements.
       ``(C) Activities of daily living.--Each of the following is 
     an activity of daily living:
       ``(i) Eating.
       ``(ii) Toileting.
       ``(iii) Transferring.
       ``(iv) Bathing.
       ``(v) Dressing.
       ``(D) Licensed professional.--The term `licensed 
     professional' means--
       ``(i) a physician or registered professional nurse, or
       ``(ii) any other individual who meets such requirements as 
     may be prescribed by the Secretary after consultation with 
     the Secretary of Health and Human Services.
       ``(E) Certain services not included.--The term `qualified 
     long-term care services' shall not include any services 
     provided to an individual--
       ``(i) by a relative (directly or through a partnership, 
     corporation, or other entity) unless the relative is a 
     licensed professional with respect to such services, or
       ``(ii) by a corporation or partnership which is related 
     (within the meaning of section 267(b) or 707(b)) to the 
     individual.

     For purposes of this subparagraph, the term `relative' means 
     an individual bearing a relationship to the individual which 
     is described in paragraphs (1) through (8) of section 
     152(a).''
       (d) Penalty-Free Distributions for Certain Unemployed 
     Individuals.--Paragraph (2) of section 72(t) is amended by 
     adding at the end the following new subparagraph:
       ``(E) Distributions to unemployed individuals.--A 
     distribution from an individual retirement plan to an 
     individual after separation from employment, if--
       ``(i) such individual has received unemployment 
     compensation for 12 consecutive weeks under any Federal or 
     State unemployment compensation law by reason of such 
     separation, and
     [[Page S2852]]   ``(ii) such distributions are made during 
     any taxable year during which such unemployment compensation 
     is paid or the succeeding taxable year.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to payments and distributions after December 31, 
     1995.

     SEC. 222. CONTRIBUTIONS MUST BE HELD AT LEAST 5 YEARS IN 
                   CERTAIN CASES.

       (a) In General.--Section 72(t), as amended by this Act, is 
     amended by adding at the end the following new paragraph:
       ``(10) Certain contributions must be held 5 years.--
       ``(A) In general.--Paragraph (2)(A)(i) shall not apply to 
     any amount distributed out of an individual retirement plan 
     (other than a special individual retirement account) which is 
     allocable to contributions made to the plan during the 5-year 
     period ending on the date of such distribution (and earnings 
     on such contributions).
       ``(B) Ordering rule.--For purposes of this paragraph, 
     distributions shall be treated as having been made--
       ``(i) first from the earliest contribution (and earnings 
     allocable thereto) remaining in the account at the time of 
     the distribution, and
       ``(ii) then from other contributions (and earnings 
     allocable thereto) in the order in which made.

     Earnings shall be allocated to contributions in such manner 
     as the Secretary may prescribe.
       ``(C) Special rule for rollovers.--
       ``(i) Pension plans.--Subparagraph (A) shall not apply to 
     distributions out of an individual retirement plan which are 
     allocable to rollover contributions to which section 402(c), 
     403(a)(4), or 403(b)(8) applied.
       ``(ii) Contribution period.--For purposes of subparagraph 
     (A), amounts shall be treated as having been held by a plan 
     during any period such contributions were held (or are 
     treated as held under this clause) by any individual 
     retirement plan from which transferred.
       ``(D) Special accounts.--For rules applicable to special 
     individual retirement accounts under section 408A, see 
     paragraph (8).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions (and earnings allocable thereto) 
     which are made after December 31, 1995.
                                                                    ____

     Presidential Message Regarding the Middle-Class Bill of Rights

To the Congress of the United States:
  I am pleased to transmit today for your immediate consideration and 
enactment the ``Middle-Class Bill of Rights Tax Relief Act of 1995.'' I 
am also sending you an explanation of the revenue proposals of this 
legislation.
  This bill is the next step in my Administration's continuing effort 
to raise living standards for working families and help restore the 
American Dream for all our people.
  For 2 years, we have worked hard to strengthen our economy. We worked 
with the last Congress to enact legislation that will reduce the annual 
deficits of 1994-98 by more than $600 billion; we created nearly 6 
million new jobs; we cut taxes for 15 million low-income families and 
gave tax relief to small businesses; we opened export markets through 
global and regional trade agreements; we invested in human and physical 
capital to increase productivity; and we reduced the Federal Government 
by more than 100,000 positions.
  With that strong foundation in place, I am now proposing a Middle 
Class Bill of Rights. Despite our progress, too many Americans are 
still working harder for less. The Middle Class Bill of Rights will 
enable working Americans to raise their families and get the education 
and training they need to meet the demands of a new global economy. It 
will let middle-income families share in our economic prosperity today 
and help them build our economic prosperity tomorrow.
  The ``Middle-Class Bill of Rights Tax Relief Act of 1995'' includes 
three of the four elements of my Middle Class Bill of Rights. First, it 
offers middle-income families a $500 tax credit for each child under 
13. Second, it includes a tax deduction of up to $10,000 a year to help 
middle-income Americans pay for postsecondary education expenses and 
training expenses. Third, it lets more middle-income Americans make 
tax-deductible contributions to Individual Retirement Accounts
 and withdraw from them, penalty-free, for the costs of education and 
training, health care, first-time home-buying, long periods of 
unemployment, or the care of an ill parent.

  The fourth element of my Middle Class Bill of Rights--not included in 
this legislation--is the GI Bill for America's Workers, which 
consolidates 70 Federal training programs and creates a more effective 
system for learning new skills and finding better jobs for adults and 
youth. Legislation for this proposal is being developed in cooperation 
with the Congress.
  If enacted, the Middle Class Bill of Rights will help keep the 
American Dream alive for everyone willing to take responsibility for 
themselves, their families, and their futures. And it will not burden 
our children with more debt. In my fiscal 1996 budget, we have found 
enough savings not only to pay for this tax bill, but also to provide 
another $81 billion in deficit reduction between 1996 and 2000.
  This legislation will restore fairness to our tax system, let middle-
income families in our economic prosperity, encourage Americans to 
prepare for the future, and help ensure that the United States moves 
into the 21st Century still the strongest nation in the world. I urge 
the Congress to take prompt and favorable action on this legislation.
                                                  William J. Clinton.  
  The White House, February 13, 1995.
                                                                    ____

 General Explanation of the Middle-Class Bill of Rights Tax Relief Act 
                                of 1995


                   tax credit for dependent children

                              Current law

       A tax exemption, in the form of a deduction, is allowed for 
     each taxpayer and for each dependent of a taxpayer. A 
     dependent includes a child of the taxpayer who is supported 
     by the taxpayer and is under age 19 at the close of the 
     calendar year or is a student under age 24. The deduction 
     amount is $2,500 for tax year 1995. This amount is indexed 
     annually for inflation.
       In addition to an exemption for each child, three other tax 
     benefits may accrue to taxpayers with dependent or otherwise 
     qualifying children: the credit for child and dependent care 
     expenses, the exclusion for employer-provided child and 
     dependent care benefits, and the earned income tax credit 
     (EITC).
       The EITC is a refundable tax credit based on the earnings 
     of the taxpayer. The EITC is restricted to lower-income 
     taxpayers and is phased out when earnings exceed specified 
     levels. Although the EITC is available for taxpayers without 
     dependents or otherwise qualifying children, the credit rate 
     and income range of the credit are far greater when the 
     taxpayer has one or more qualifying children. In addition, 
     the rate and income range are higher for taxpayers with two 
     or more qualifying children than for taxpayers with only one 
     qualifying child.

                           Reasons for change

       Tax relief for middle-class families has been and continues 
     to be an important goal of this Administration. In 1993, the 
     Administration faced a projection of ever-increasing 
     deficits. Bringing the deficit under control and providing 
     tax relief for the working poor through an expansion of the 
     EITC were the first priorities. Having achieved more 
     favorable than projected results from the deficit reduction 
     program introduced in 1993, the Administration can now turn 
     to providing tax relief to middle-income families.
       Tax relief to taxpayers with children is needed to adjust 
     the relative tax burdens of smaller and larger families to 
     reflect more accurately their relative abilities to pay 
     taxes. Available resources should be targeted to those in 
     greatest need and at greatest risk.

                                Proposal

       A nonrefundable tax credit, which would be applied after 
     the EITC, would be allowed for each dependent child under age 
     13. It would be phased in, at $300 per child for tax years 
     1996, 1997, and 1998, and $500 per child for 1999 and 
     thereafter. The credit would not reduce any alternative 
     minimum tax liability. The credit would be phased out for 
     taxpayers with adjusted gross income between $60,000 and 
     $75,000. Beginning in the year 2000, both the amount of the 
     credit and the phase-out range would be indexed for the 
     effects of inflation.
       Taxpayers claiming the dependent child credit would be 
     required to provide valid social security numbers for 
     themselves, their spouses, and their children who qualify for 
     the credit. The procedures that would apply for determining 
     the validity of social security numbers under the EITC, 
     discussed below, would apply for purposes of the dependent 
     child credit.

                                                REVENUE ESTIMATE                                                
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                         Fiscal years--                         
                                                       -------------------------------------------------  Total 
                                                         1995    1996    1997    1998    1999     2000          
----------------------------------------------------------------------------------------------------------------
Tax credit for dependent children.....................       0    -3.5    -6.8    -6.6    -8.3    -10.1    -35.4
----------------------------------------------------------------------------------------------------------------

                education and job training tax deduction

                              Current law

       Taxpayers generally may not deduct the expenses of higher 
     education and training. There are, however, special 
     circumstances in which deductions for educational expenses 
     are allowed, or in which the payment of educational expenses 
     by others is excluded from income.
       Educational expenses may be deductible, but only if the 
     taxpayer itemizes, and only 
     [[Page S2853]] to the extent that the expenses, along with 
     other miscellaneous itemized deductions, exceed two percent 
     of adjusted gross income (AGI). A deduction for educational 
     purposes is allowed only if the education maintains or 
     improves a skill required in the individual's employment or 
     other trade or business, or is required by the individual's 
     employer, or by law or regulation for the individual to 
     retain his or her current job.
       The interest from qualified U.S. savings bonds is excluded 
     from a taxpayer's gross income to the extent the interest is 
     used to pay qualified educational expenses. To be qualified, 
     the savings bonds must be purchased after December 31, 1989, 
     by a person who has attained the age of 25. Qualified 
     educational expenses consist of tuition and fees for 
     enrollment of the taxpayer, the taxpayer's spouse, or the 
     taxpayer's dependent at a public or non-profit institution of 
     higher education, including two-year colleges and vocational 
     schools.

                           Reasons for change

       Deductions for educational expenses combine needed tax 
     relief with preparation for new economic imperatives. The 
     expenses of higher education place a significant burden on 
     many middle-class families. Grants and subsidized loans are 
     available to students from low- and moderate-income families; 
     high-income families can afford the costs of higher 
     education.
       Well-educated workers are essential to an economy 
     experiencing technological change and facing global 
     competition. The Administration believes that reducing the 
     after-tax cost of education for individuals and families 
     encourages investment in education and training while 
     lowering tax burdens for middle-income taxpayers.

                                Proposal

       A taxpayer would be allowed to deduct qualified educational 
     expenses paid during the taxable year for the education or 
     training of the taxpayer, the taxpayer's spouse, or the 
     taxpayer's dependent. The deduction would be allowed in 
     determining AGI. Therefore, taxpayers could claim the 
     deduction
      even if they do not itemize and even if they do not meet the 
     two-percent AGI floor on itemized deductions.
       Qualified educational expenses would be defined as tuition 
     and fees charged by educational institutions that are 
     directly related to an eligible student's course of study 
     (e.g., registration fees, laboratory fees, and extra charges 
     for particular courses). Charges and expenses associated with 
     meals, lodging, student activities, athletics, health care, 
     transportation, books and similar personal, living or family 
     expenses would not be included. The expenses of education 
     involving sports, games, or hobbies would not be qualified 
     educational expenses unless the education is required as part 
     of a degree program or related to the student's current 
     profession.
       Qualified educational expenses would be deductible in the 
     year the expenses are paid, subject to the requirement that 
     the education commences or continues during that year or 
     during the first three months of the next year. Qualified 
     educational expenses paid with the proceeds of a loan 
     generally will be deductible (rather than repayment of the 
     loan itself). Normal tax benefit rules would apply to refunds 
     (and reimbursements through insurance) of previously deducted 
     tuition and fees.
       In 1996, 1997, and 1998, the maximum deduction would be 
     $5,000. In 1999 and thereafter, this maximum would increase 
     to $10,000. The deduction would be phased out ratably for 
     taxpayers with modified AGI between $70,000 and $90,000 
     ($100,000 and $120,000 for joint returns). Modified AGI would 
     include taxable Social Security benefits and amounts 
     otherwise excluded with respect to income earned abroad (or 
     income from Puerto Rico or U.S. possessions). Beginning in 
     2000, the income phase-out range would be indexed for 
     inflation.
       Any amount taken into account as a qualified educational 
     expense would be reduced by educational assistance that is 
     not required to be included in the gross income of either the 
     student or the taxpayer claiming the deduction. Thus, 
     qualified educational expenses would be reduced by 
     scholarship or fellowship grants excludable from gross income 
     under section 117 of the Internal Revenue Code (even if the 
     grants are used to pay expenses other than qualified 
     educational expenses) and any educational assistance received 
     as veterans' benefits. However, no reduction would be 
     required for a gift, bequest, devise or inheritance within 
     the meaning of section 102(a).
       An eligible student would be one who is enrolled or 
     accepted for enrollment in a degree, certificate, or other 
     program (including a program of study abroad approved for 
     credit by the institution at which such student is enrolled) 
     leading to a recognized educational credential at an eligible 
     institution. The student must pursue a course of study on at 
     least a half-time basis (or be taking a course to improve or 
     acquire job skills), cannot be enrolled in an elementary or 
     secondary school, and cannot be a nonresident alien. 
     Educational institutions would determine what constitutes a 
     half-time basis for individual programs.
       ``Eligible institution'' is defined by reference to section 
     481 of the Higher Education Act. Such institutions must have 
     entered into an agreement with the Department of Education to 
     participate in the student loan program. This definition 
     includes certain proprietary institutions.
       This proposal would not affect deductions claimed under any 
     other section of the Code, except that any amount deducted 
     under another section of the Code could not also be deducted 
     under this provision. An eligible student would not be 
     eligible to claim a deduction under this provision if that 
     student could be claimed as a dependent of another taxpayer.

                            REVENUE ESTIMATE                            
                        [In billions of dollars]                        
------------------------------------------------------------------------
                                      Fiscal years--                    
                --------------------------------------------------------
                  1995    1996    1997    1998    1999    2000    Total 
------------------------------------------------------------------------
Education and                                                           
 job training                                                           
 tax deduction.       0    -0.7    -4.7    -5.0    -5.8    -7.6    -23.7
------------------------------------------------------------------------

                EXPANDED INDIVIDUAL RETIREMENT ACCOUNTS

                              Current law

       Under current law, an individual may make deductible 
     contributions to an individual retirement account or 
     individual retirement annuity (IRA) up to the lesser of 
     $2,000 or compensation (wages and self-employment income). If 
     the individual (or the individual's spouse) is an active 
     participant in an employer-sponsored retirement plan, the 
     $2,000 limit on deductible contributions is phased out for 
     couples filing a joint return with adjusted gross income 
     (AGI) between $40,000 and $50,000, and for single taxpayers 
     with AGI between $25,000 and $35,000. To the extent that an 
     individual is not eligible for deductible IRA contributions, 
     he or she may make nondeductible IRA contributions (up to the 
     contributions limit).
       The earnings on IRA account balances are not included in 
     income until they are withdrawn. Withdrawals from an IRA 
     (other than withdrawals of nondeductible contributions) are 
     includable in income, and must begin by age 70\1/2\. Amounts 
     withdrawn before age 59\1/2\ are generally subject to an 
     additional 10 percent penalty tax. The penalty tax does not 
     apply to distributions upon the death or disability of the 
     taxpayer or withdrawals in the form of substantially equal 
     periodic payments over the life (or life expectancy) of the 
     IRA owner or over the joint lives (or life expectancies) of 
     the IRA owner and his or her beneficiary.

                           Reasons for change

       The Nation's savings rate has declined dramatically since 
     the 1970's. The Administration believes that increasing the 
     savings rate is essential if the United States is to sustain 
     a sufficient level of private investment into the next 
     century. Without adequate investment, the continued healthy 
     growth of the economy is at risk. The Administration is also 
     concerned that many households are not saving enough to 
     provide for long-term needs such as retirement and education.
       The Administration believes that individuals should be 
     encouraged to save, and that tax policies can provide a 
     significant incentive. Under current law, however, savings 
     incentives in the form of deductible IRAs are not available 
     to all middle-income taxpayers. Furthermore, the present-law 
     income thresholds for deductible IRAs and the maximum 
     contribution amount are not indexed for inflation, so that 
     fewer Americans are eligible to make a deductible IRA 
     contribution each year, and the amount of the maximum 
     contribution is declining in real terms over time. The 
     Administration also believes that providing taxpayers with 
     the option of making IRA contributions that are nondeductible 
     but can be withdrawn tax free will provide an alternative 
     savings vehicle that some middle-income taxpayers may find 
     more suitable for their savings needs.
       Individuals save for many purposes besides retirement. 
     Broadening the tax incentives for non-retirement saving can 
     be an important element in any proposal to increase the 
     Nation's savings rate. Expanding the flexibility of IRAs to 
     meet a wider variety of savings needs, such as first-time 
     home purchases, higher education expenditures, unemployment 
     and catastrophic medical and nursing home expenses, should 
     prove to be more attractive to many taxpayers than accounts 
     limited to retirement savings.

                                Proposal

       Expand Deductible IRAs: Under the proposal the income 
     thresholds and phase-out ranges for deductible IRAs would be 
     doubled; therefore, eligibility would be phased out for 
     couples filing joint returns with AGI between $80,000 and 
     $100,000 and for single individuals with AGI between $50,000 
     and $70,000. The income thresholds and the present-law annual 
     contribution limit of $2,000 would be indexed for inflation. 
     As under current law, 
     [[Page S2854]] any individual who is not an active 
     participant in an employer-sponsored plan and whose spouse is 
     also not an active participant would be eligible for 
     deductible IRAs regardless of income.
       Under the proposal, the IRA contribution limit would be 
     coordinated with the current law limits on elective deferrals 
     under qualified cash or deferred arrangements (sec. 401(k) 
     plans), tax-sheltered annuities (sec. 403(b) annuities), and 
     similar plans. The proposal also would provide that the 
     present-law rule permitting penalty-free IRA withdrawals 
     after an individual reaches age 59\1/2\ does not apply in the 
     case of amounts attributable to contributions made during the 
     previous five years. This provision does not apply to amounts 
     rolled over from tax-qualified plans or tax-sheltered 
     annuities.
       These provisions would be effective January 1, 1996.
       Special IRAs: Each individual eligible for a traditional 
     deductible IRA would have the option of contributing an 
     amount up to the contribution limit to either a deductible 
     IRA or to a new ``Special IRA.'' Contributions to a Special 
     IRA would not be deductible, but if the contributions 
     remained in the account for at least five years, 
     distributions of the contributions and earnings thereon would 
     be tax-free. Withdrawals of earnings from Special IRAs during 
     the five-year period after contribution would be subject to 
     ordinary income tax. In addition, such withdrawals would be 
     subject to the 10-percent penalty tax on early withdrawals 
     unless used for one of the four purposes described below.
       The proposal would permit individuals whose AGI for a 
     taxable year did not exceed the upper end of the new income
      eligibility limits to convert balances in deductible IRAs 
     into Special IRAs without being subject to the 10-percent 
     tax on early withdrawals. The amount transferred from the 
     deductible IRA to the Special IRA generally would be 
     includable in the individual's income in the year of the 
     transfer. However, if a transfer was made before January 
     1, 1997, the transferred amount included in the 
     individual's income would be spread evenly over four 
     taxable years.
       The Special IRA provisions would be effective January 1, 
     1996.
       Penalty-Free Distributions. Amounts could be withdrawn 
     penalty-free from deductible IRAs and Special IRAs within the 
     five-year period after contribution, if the taxpayer used the 
     amounts to pay post-secondary education costs, to buy or 
     build a first home, to cover living costs if unemployed, or 
     to pay catastrophic medical expenses (including certain 
     nursing home costs).
       a. Education expenses:
       Penalty-free withdrawals would be allowed to the extent the 
     amount withdrawn is used to pay qualified higher education 
     expenses of the taxpayer, the taxpayer's spouse, the 
     taxpayer's dependent, or the taxpayer's child or grandchild 
     (even if not a dependent). In general, a withdrawal for 
     qualified higher education expenses would be subject to the 
     same requirements as the deduction for qualified educational 
     expenses (e.g., the expenses are tuition and fees that are 
     charged by educational institutions and are directly related 
     to an eligible student's course of study).
       b. First-time home purchasers:
       Penalty-free withdrawals would be allowed to the extent the 
     amount withdrawn is used to pay qualified acquisition, 
     construction, or reconstruction costs with respect to a 
     principal residence of a first-time home buyer who is the 
     taxpayer, the taxpayer's spouse, or the taxpayer's child or 
     grandchild. A first-time home buyer would be any individual 
     (and if married, the individual's spouse) who (1) did not own 
     an interest in a principal residence during the three years 
     prior to the purchase of a home and (2) was not in an 
     extended period for rolling over gain from the sale of a 
     principal residence.
       c. Unemployment:
       Penalty-free withdrawals could be made by an individual 
     after the individual is separated from employment if (1) the 
     individual has received unemployment compensation for 12 
     consecutive weeks and (2) the withdrawal is made in the 
     taxable
      year in which the unemployment compensation is received for 
     the succeeding taxable year.
       d. Medical care expenses and nursing home costs:
       The proposal would extend to IRAs the present-law exception 
     to the early withdrawal tax for distributions from tax-
     qualified plans and tax-sheltered annuities for certain 
     medical care expenses (deductible medical expenses that are 
     subject to a floor of 7.5 percent of AGI) and expand the 
     exception for IRAs to allow withdrawal for medical care 
     expenses of the taxpayer's child, grandchild, parent or 
     grandparent, whether or not such person otherwise qualifies 
     as the taxpayer's dependent.
       In addition, for purposes of the exemption from the 10 
     percent tax on early withdrawals for distributions from IRAs, 
     the definition of medical care would include expenses for 
     qualified long-term care services for incapacitated 
     individuals. Qualified long-term care services generally 
     would be services that are required by an incapacitated 
     individual, where the primary purpose of the services is to 
     provide needed assistance with any activity of daily living 
     or protection from threats to health and safety due to severe 
     cognitive impairment. An incapacitated individual generally 
     would be a person who is certified by a licensed professional 
     within the preceding 12-month period as being unable to 
     perform without substantial assistance at least two 
     activities of daily living, or as having severe cognitive 
     impairment.
       These provisions would be effective January 1, 1996.

                            REVENUE ESTIMATE                            
                        [In billions of dollars]                        
------------------------------------------------------------------------
                                      Fiscal years--                    
                 -------------------------------------------------------
                   1995    1996    1997    1998    1999    2000    Total
------------------------------------------------------------------------
Expanded                                                                
 individual                                                             
 retirement                                                             
 accounts.......       0     0.4    -0.3    -0.8    -1.0    -2.0    -3.8
------------------------------------------------------------------------

  Mr. DASCHLE. Mr. President, I am pleased to join my distinguished 
colleague from New York, the ranking member of the Finance Committee, 
in introducing the President's Middle-Class Bill of Rights, a modest 
package of measures that will make it easier for middle-income 
Americans to raise their children, educate themselves and/or their 
children, and save for retirement.
  These proposals are in stark contrast to the tax cut proposals 
advanced by Republicans. The tax cuts in the Republican Contract With 
America would cost four times as much as the President's tax cuts over 
the next 10 years, with the overwhelming majority of the benefit going 
to those making more than $100,000.
  According to a recent report prepared by the Joint Committee on 
Taxation, while the Republican tax cuts would cost $200 billion over 
the first 5 years, that cost would balloon to $704 billion over 10 
years. The President's Middle-Class Bill of Rights would cost less than 
a quarter of that amount--$171 billion--over a 10-year period.
  In other words, Republicans are proposing tax cuts that will benefit 
the middle class, while at the same time asking those same middle-
income Americans to pay for tax cuts for high-income taxpayers that are 
three times as large. That doesn't sound like a fair deal to me.
  While there are some similarities between the President's tax cuts 
and those contained in the Contract With America, the principal 
difference is that the contract includes tax cuts for high-income 
people and large corporations. And, as far as their impact on the 
budget and middle-income taxpayers is concerned, it is an exceedingly 
large difference.
  Another way the President's tax cuts can be distinguished from 
Republican proposals is that the President would provide middle-income 
tax relief specifically for higher education and job training. 
Education and job training expenses are among the largest costs faced 
by middle-income families. Yet, education and job training are critical 
tools needed by middle-class Americans to build more quality of life 
for themselves and their children.
  Mr. President, I understand that the Finance Committee already has 
held hearings on the President's proposal, and I look forward to 
reviewing the committee's report on the testimony presented at those 
hearings.
                                 ______

      By Mr. MOYNIHAN (for himself and Mr. Daschle) (by request):
  S. 453. A bill to amend the Internal Revenue Code of 1986 to modify 
the eligibility criteria for the earned income tax credit, to improve 
tax compliance by U.S. persons establishing or benefiting from foreign 
trusts, and for other purposes; to the Committee on Finance.


                     THE TAX COMPLIANCE ACT OF 1995

  Mr. MOYNIHAN. Mr. President, as ranking member of the Committee on 
Finance, I am today joining with the Democratic leader in introducing a 
bill, at the request of the administration, containing the statutory 
provisions that implement the tax compliance proposals in the 
President's fiscal year 1996 budget submission.
  By making statutory language available early in the legislative 
process, the administration has aided the process of Senate 
consideration of these provisions. This legislation also will serve to 
answer many of the questions that the public may have with respect to 
the President's tax proposals.
  I want to thank the administration for providing this level of detail 
in so timely a fashion, and I look forward to working with them on 
these proposals in the coming months.
  Mr. President, I ask unanimous consent that the text of the bill and 
additional material be printed in the Record.
  [[Page S2855]] There being no objection, the material was ordered to 
be printed in the Record, as follows:
                                 S. 453

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,
     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Tax 
     Compliance Act of 1995''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act 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 Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--

Sec. 1. Short title; amendment of 1986 Code.

        TITLE I--PROVISIONS RELATING TO THE EARNED INCOME CREDIT

Sec. 101. Earned income tax credit denied to individuals not authorized 
              to be employed in the United States.
Sec. 102. Earned income tax credit denied to individuals with 
              substantial unearned income.

        TITLE II--PROVISIONS RELATING TO INTERNATIONAL TAXATION

Sec. 201. Revision of tax rules on expatriation.
Sec. 202. Improved information reporting on foreign trusts.
Sec. 203. Modification of rules relating to foreign trusts having one 
              or more United States beneficiaries.
Sec. 204. Foreign persons not to be treated as owners under grantor 
              trust rules.
Sec. 205. Gratuitous transfers by partnerships and foreign 
              corporations.
Sec. 206. Information reporting regarding large foreign gifts.
Sec. 207. Modification of rules relating to foreign trusts which are 
              not grantor trusts.
Sec. 208. Residence of estates and trusts.

                TITLE III--ADDITIONAL EMPOWERMENT ZONES

Sec. 301. Additional empowerment zones.
        TITLE I--PROVISIONS RELATING TO THE EARNED INCOME CREDIT

     SEC. 101. EARNED INCOME TAX CREDIT DENIED TO INDIVIDUALS NOT 
                   AUTHORIZED TO BE EMPLOYED IN THE UNITED STATES.

       (a) In General.--Section 32(c)(1) (relating to individuals 
     eligible to claim the earned income tax credit) is amended by 
     adding at the end the following new subparagraph:
       ``(F) Identification number requirement.--The term 
     `eligible individual' does not include any individual who 
     does not include on the return of tax for the taxable year--
       ``(i) such individual's taxpayer identification number, and
       ``(ii) if the individual is married (within the meaning of 
     section 7703), the taxpayer identification number of such 
     individual's spouse.''
       (b) Special Identification Number.--Section 32 is amended 
     by adding at the end the following new subsection:
       ``(k) Identification Numbers.--Solely for purposes of 
     subsections (c)(1)(F) and (c)(3)(D), a taxpayer 
     identification number means a social security number issued 
     to an individual by the Social Security Administration (other 
     than a social security number issued pursuant to clause (II) 
     (or that portion of clause (III) that relates to clause (II)) 
     of section 205(c)(2)(B)(i) of the Social Security Act).''
       (c) Extension of Procedures Applicable To Mathematical or 
     Clerical Errors.--Section 6213(g)(2) (relating to the 
     definition of mathematical or clerical errors) is amended by 
     striking ``and' at the end of subparagraph (D), by striking 
     the period at the end of subparagraph (E) and inserting ``, 
     and'', and by inserting after subparagraph (E) the following 
     new subparagraph:
       ``(F) an omission of a correct taxpayer identification 
     number required under section 23 (relating to credit for 
     families with younger children) or section 32 (relating to 
     the earned income tax credit) to be included on a return.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 102. EARNED INCOME TAX CREDIT DENIED TO INDIVIDUALS WITH 
                   SUBSTANTIAL UNEARNED INCOME.

       (a) In General.--Paragraph (1) of section 32(c) (relating 
     to individuals eligible to claim the earned income tax 
     credit) is amended by adding at the end the following new 
     subparagraph:
       ``(G) Exception for individual with substantial interest 
     and dividend income.--The term `eligible individual' shall 
     not include any individual if the aggregate amount of 
     interest and dividends includible in the gross income of the 
     taxpayer for the taxable year exceeds $2,500.''
       (b) Conforming Amendment.--
       (1) Paragraph (2) of section 32(i) (relating to inflation 
     adjustments) is amended to read as follows:
       ``(2) Unearned income limitation.--In the case of a taxable 
     year beginning in a calendar year after 1996, the dollar 
     amount contained in subsection (c)(1)(G) shall be increased 
     by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1995' 
     for `calendar year 1992' in subparagraph (B) thereof.
     If any amount as adjusted under the preceding sentence is not 
     a multiple of $50, such dollar amount shall be rounded to the 
     nearest multiple of $50.''
       (2) Paragraph (1) of section 32(i) is amended by adding at 
     the end the following new flush sentence:
     ``If any amount as adjusted under the preceding sentence is 
     not a multiple of $10, such dollar amount shall be rounded to 
     the nearest multiple of $10.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
     TITLE II--PROVISIONS RELATING TO INTERNATIONAL TAXATION
     SEC. 201. REVISION OF TAX RULES ON EXPATRIATION.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 is amended by inserting after section 877 the 
     following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Citizens.--If any United States citizen relinquishes 
     his citizenship during a taxable year, all property held by 
     such citizen at the time immediately before such 
     relinquishment shall be treated as sold at such time for its 
     fair market value and any gain or loss shall be taken into 
     account for such taxable year.
       ``(2) Certain residents.--If any long-term resident of the 
     United States ceases to be subject to tax as a resident of 
     the United States for any portion of any taxable year, all 
     property held by such resident at the time of such cessation 
     shall be treated as sold at such time for its fair market 
     value and any gain or loss shall be taken into account for 
     the taxable year which includes the date of such cessation.
       ``(b) Exclusion for Certain Gain.--The amount which would 
     (but for this subsection) be includible in the gross income 
     of any taxpayer by reason of subsection (a) shall be reduced 
     (but not below zero) by $600,000.
       ``(c) Property Treated as Held.--For purposes of this 
     section, except as otherwise provided by the Secretary, an 
     individual shall be treated as holding--
       ``(1) all property which would be includible in his gross 
     estate under chapter 11 were such individual to die at the 
     time the property is treated as sold,
       ``(2) any other interest in a trust which the individual is 
     treated as holding under the rules of section 679(e) 
     (determined by treating such section as applying to foreign 
     and domestic trusts), and
       ``(3) any other interest in property specified by the 
     Secretary as necessary or appropriate to carry out the 
     purposes of this section.
       ``(d) Exceptions.--The following property shall not be 
     treated as sold for purposes of this section:
       ``(1) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the date the 
     individual relinquishes his citizenship or ceases to be 
     subject to tax as a resident, meet the requirements of 
     section 897(c)(2).
       ``(2) Interest in certain retirement plans.--
       ``(A) In general.--Any interest in a qualified retirement 
     plan (as defined in section 4974(d)), other than any interest 
     attributable to contributions which are in excess of any 
     limitation or which violate any condition for tax-favored 
     treatment.
       ``(B) Foreign pension plans.--
       ``(i) In general.--Under regulations prescribed by the 
     Secretary, interests in foreign pension plans or similar 
     retirement arrangements or programs.
       ``(ii) Limitation.--The value of property which is treated 
     as not sold by reason of this subparagraph shall not exceed 
     $500,000.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing his United States citizenship on the 
     date the United States Department of State issues to the 
     individual a certificate of loss of nationality or on the 
     date a court of the United States cancels a naturalized 
     citizen's certificate of naturalization.
       ``(2) Long-term resident.--
       ``(A) In general.--The term `long-term resident' means any 
     individual (other than a citizen of the United States) who is 
     a lawful permanent resident of the United States and, as a 
     result of such status, has been subject to tax as a resident 
     in at least 10 taxable years during the period of 15 taxable 
     years ending with the taxable year during which the sale 
     under subsection (a) is treated as occurring.
       ``(B) Special rule.--For purposes of subparagraph (A), 
     there shall not be taken into account--
       ``(i) any taxable year during which any prior sale is 
     treated under subsection (a) as occurring, or
       ``(ii) any taxable year prior to the taxable year referred 
     to in clause (i).
     [[Page S2856]]   ``(f) Termination of Deferrals, Etc.--On the 
     date any property held by an individual is treated as sold 
     under subsection (a)--
       ``(1) any period deferring recognition of income or gain 
     shall terminate, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply and the unpaid portion of such tax shall be due and 
     payable.
       ``(g) Election by Expatriating Residents.--Solely for 
     purposes of determining gain under subsection (a)--
       ``(1) In general.--At the election of a resident not a 
     citizen of the United States, property--
       ``(A) which was held by such resident on the date the 
     individual first became a resident of the United States 
     during the period of long-term residency to which the 
     treatment under subsection (a) relates, and
       ``(B) which is treated as sold under subsection (a),
     shall be treated as having a basis on such date of not less 
     than the fair market value of such property on such date.
       ``(2) Election.--Such an election shall apply to all 
     property described in paragraph (1), and, once made, shall be 
     irrevocable.
       ``(h) Deferral of Tax on Closely Held Business Interests.--
     The District Director may enter into an agreement with any 
     individual which permits such individual to defer payment for 
     not more than 5 years of any tax imposed by subsection (a) by 
     reason of holding any interest in a closely held business (as 
     defined in section 6166(b)) other than a United States real 
     property interest described in subsection (d)(1).
       ``(i) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.
     ``(j) Cross Reference.--

       ``For termination of United States citizenship for tax 
     purposes, see section 7701(a)(47).''

       (b) Definition of Termination of United States 
     Citizenship.--Section 7701(a) is amended by adding at the end 
     the following new paragraph:
       ``(47) Termination of united states citizenship.--An 
     individual shall not cease to be treated as a United States 
     citizen before the date on which the individual's citizenship 
     is treated as relinquished under section 877A(e)(1).''
       (c) Conforming Amendments.--
       (1) Section 877 is amended by adding at the end the 
     following new subsection:
       ``(f) Termination.--This section shall not apply to any 
     individual who is subject to the provisions of section 
     877A.''
       (2) Paragraph (10) of section 7701(b) is amended by adding 
     at the end the following new sentence: ``This paragraph shall 
     not apply to any individual who is subject to the provisions 
     of section 877A.''
       (d) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 877 the 
     following new item:

``Sec. 877A. Tax responsibilities of expatriation.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) United States citizens who relinquish (within the 
     meaning of section 877A(e)(1) of the Internal Revenue Code of 
     1986, as added by this section) United States citizenship on 
     or after February 6, 1995, and
       (2) long-term residents (as defined in such section) who 
     cease to be subject to tax as residents of the United States 
     on or after such date.

     SEC. 202. IMPROVED INFORMATION REPORTING ON FOREIGN TRUSTS.

       (a) In General.--Section 6048 (relating to returns as to 
     certain foreign trusts) is amended to read as follows:
     ``SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN FOREIGN 
                   TRUSTS.

       ``(a) Notice of Certain Events.--
       ``(1) General rule.--On or before the 90th day (or such 
     later day as the Secretary may prescribe) after any 
     reportable event, the responsible party shall--
       ``(A) notify each trustee of the trust of the requirements 
     of subsection (b), and
       ``(B) provide written notice of such event to the Secretary 
     in accordance with paragraph (2).
       ``(2) Contents of notice.--The notice required by paragraph 
     (1)(B) shall contain such information as the Secretary may 
     prescribe, including--
       ``(A) the amount of money or other property (if any) 
     transferred to the trust in connection with the reportable 
     event,
       ``(B) the identity of the trust and of each trustee and 
     beneficiary (or class of beneficiaries) of the trust, and
       ``(C) a statement that each trustee of the trust has been 
     informed of the requirements of subsection (b).
       ``(3) Reportable event.--For purposes of this subsection, 
     the term `reportable event' means--
       ``(A) the creation of any foreign trust by a United States 
     person,
       ``(B) the transfer of any money or property to a foreign 
     trust by a United States person, including a transfer by 
     reason of death,
       ``(C) a domestic trust becoming a foreign trust,
       ``(D) the death of a citizen or resident of the United 
     States who is a grantor of a foreign trust, and
       ``(E) the residency starting date (within the meaning of 
     section 7701(b)(2)(A)) of a grantor of a foreign trust 
     subject to tax under section 679(a)(3).

     Subparagraphs (A) and (B) shall not apply with respect to a 
     trust described in section 404(a)(4) or 404A.
       ``(4) Responsible party.--For purposes of this subsection, 
     the term `responsible party' means--
       ``(A) the grantor in the case of a reportable event 
     described in subparagraph (A) or (E) of paragraph (3),
       ``(B) the transferor in the case of a reportable event 
     described in paragraph (3)(B) other than a transfer by reason 
     of death,
       ``(C) the trustee of the domestic trust in the case of a 
     reportable event described in paragraph (3)(C), and
       ``(D) the executor of the decedent's estate in the case of 
     a transfer by reason of death.
       ``(b) Trust Reporting Requirements.--If a foreign trust, at 
     any time during a taxable year of such trust--
       ``(1) has a grantor who is a United States person and--
       ``(A) such grantor is treated as the owner of any portion 
     of such trust under the rules of subpart E of part I of 
     subchapter J of chapter 1, or
       ``(B) any portion of such trust would be included in the 
     gross estate of such grantor if the grantor were to die at 
     such time, or
       ``(2) directly or indirectly distributes, credits, or 
     allocates money or property to any United States person 
     (whether or not the trust has a grantor described in 
     paragraph (1)),

     then such trust shall meet the requirements of subsection (c) 
     (relating to trust information and agent) and subsection (d) 
     (relating to annual return).
       ``(c) Contents of Section 6048 Statement.--
       ``(1) In general.--The requirements of this subsection are 
     met if the trust files with the Secretary a statement which 
     contains such information as the Secretary may prescribe and 
     which--
       ``(A) identifies a United States person who is the trust's 
     limited agent to provide the Secretary with such information 
     that reasonably should be available to the trust for purposes 
     of applying sections 7602, 7603, and 7604 with respect to any 
     request by the Secretary to examine trust records or produce 
     testimony related to any transaction by the trust or with 
     respect to any summons by the Secretary for such records or 
     testimony, and
       ``(B) contains an agreement to comply with the requirements 
     of subsection (d).
       ``(2) Special rule.--A foreign trust which appoints an 
     agent described in paragraph (1)(A) shall not be considered 
     to have an office or a permanent establishment in the United 
     States solely because of the activities of such agent 
     pursuant to this section. For purposes of this section, the 
     appearance of persons or production of records by reason of 
     the creation of the agency shall not subject such persons or 
     records to legal process for any purpose other than 
     determining the correct treatment under this title of the 
     activities and operations of the trust.
       ``(d) Annual Returns and Statements.--The requirements of 
     this subsection are met if--
       ``(1) the trust makes a return for the taxable year which 
     sets forth a full and complete accounting of all trust 
     activities and operations for the taxable year, and contains 
     such other information as the Secretary may prescribe; and
       ``(2) the trust furnishes such information as the Secretary 
     may prescribe to each United States person--
       ``(A) who is treated as the owner of any portion of such 
     trust under the rules of subpart E of part I of subchapter J 
     of chapter 1,
       ``(B) to whom any item with respect to the taxable year is 
     credited or allocated, or
       ``(C) who receives a distribution from such trust with 
     respect to the taxable year.
       ``(e) Time and Manner of Filing Information.--Any notice, 
     statement, or return required under this section shall be 
     made at such time and in such manner as the Secretary shall 
     prescribe.
       ``(f) Modification of Return Requirements.--The Secretary 
     is authorized to suspend or modify any requirement of this 
     section if the Secretary determines that the United States 
     has no significant tax interest in obtaining the required 
     information.''
       (b) Penalties.--Section 6677 (relating to failure to file 
     information returns with respect to certain foreign trusts) 
     is amended to read as follows:

     ``SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT TO 
                   CERTAIN FOREIGN TRUSTS.

       ``(a) Failure To Report Certain Events.--
       ``(1) In general.--In the case of a reportable event 
     described in any subparagraph of section 6048(a)(3) for which 
     a responsible party does not file a written notice meeting 
     the requirements of section 6048(a)(2) within the time 
     specified in section 6048(a)(1), the responsible party shall 
     pay a penalty of $10,000. If any failure described in the 
     preceding sentence continues for more than 90 days after the 
     day on which the Secretary mails notice of such failure to 
     the responsible party, such party shall pay a penalty (in 
     addition to the $10,000 amount) of $10,000 for each 30-day 
     period (or fraction thereof) during which such failure 
     continues after the expiration of such 90-day period.
       ``(2) 35-percent penalty.--In the case of a reportable 
     event described in subparagraph (A), (B), or (C) of section 
     6048(a)(3) (other 
     [[Page S2857]] than a transfer by reason of death), the 
     aggregate amount of the penalties under paragraph (1) shall 
     not be less than an amount equal to 35 percent of the gross 
     value of the property involved in such event (determined as 
     of the date of the event).
       ``(3) Responsible party.--For purposes of this subsection, 
     the term `responsible party' has the meaning given to such 
     term by section 6048(a)(4).
       ``(b) Failure To Make Certain Statements and Returns.--
       ``(1) In general.--In the case of any failure to meet the 
     requirements of section 6048(b), the appropriate tax 
     treatment of any trust transactions or operations shall be 
     determined by the Secretary in the Secretary's sole 
     discretion from the Secretary's own knowledge or from such 
     information as the Secretary may obtain through testimony or 
     otherwise.
       ``(2) Monetary penalty.--In the case of any failure to meet 
     the requirements of section 6048(b) with respect to a trust 
     described in such section by reason of paragraph (1) thereof, 
     the grantor described in such paragraph (1) shall pay a 
     penalty of $10,000 for each taxable year with respect to 
     which the foreign trust fails to meet such requirements. If 
     any failure described in the preceding sentence continues for 
     more than 90 days after the day on which the Secretary mails 
     notice of such failure to such grantor, such grantor shall 
     pay a penalty (in addition to any other penalty) of $10,000 
     for each 30-day period (or fraction thereof) during which 
     such failure continues after the expiration of such 90-day 
     period.
       ``(c) Reasonable Cause Exception.--No penalty shall be 
     imposed by this section on any failure which is shown to be 
     due to reasonable cause and not due to willful neglect. The 
     fact that a foreign jurisdiction would impose a civil or 
     criminal penalty on the taxpayer (or any other person) for 
     disclosing the requested documentation is not reasonable 
     cause.
       ``(d) Deficiency Procedures Not To Apply.--Subchapter B of 
     chapter 63 (relating to deficiency procedures for income, 
     estate, gift, and certain excise taxes) shall not apply in 
     respect of the assessment or collection of any penalty 
     imposed by this section.''
       (c) Clerical Amendments.--
       (1) The table of sections for subpart B of part III of 
     subchapter A of chapter 61 is amended by striking the item 
     relating to section 6048 and inserting the following new 
     item:

``Sec. 6048. Information with respect to certain foreign trusts.''

       (2) The table of sections for part I of subchapter B of 
     chapter 68 is amended by striking the item relating to 
     section 6677 and inserting the following new item:

``Sec. 6677. Failure to file information with respect to certain 
              foreign trusts.''

       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply--
       (A) to reportable events occurring on or after February 6, 
     1995, and
       (B) to the extent such amendments require reporting for any 
     taxable year under section 6048(b) of the Internal Revenue 
     Code of 1986 (as added by this section), to taxable years 
     beginning after the date of the enactment of this Act.
       (2) Notices.--For purposes of section 6048(a) of such Code, 
     the 90th day referred to therein shall in no event be treated 
     as being earlier than the 90th day after the date of the 
     enactment of this Act.
     SEC. 203. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS 
                   HAVING ONE OR MORE UNITED STATES BENEFICIARIES.

       (a) In General.--Section 679 (relating to foreign trusts 
     having one or more United States beneficiaries) is amended to 
     read as follows:
     ``SEC. 679. FOREIGN TRUSTS HAVING ONE OR MORE UNITED STATES 
                   BENEFICIARIES.

       ``(a) Transferor Treated as Owner.--
       ``(1) In general.--A United States person who directly or 
     indirectly transfers property to a foreign trust (other than 
     a trust described in section 404(a)(4) or section 404A) shall 
     be treated as the owner for his taxable year of the portion 
     of such trust attributable to such property if for such year 
     there is a United States beneficiary of such trust.
       ``(2) Exception.--
       ``(A) In general.--Paragraph (1) shall not apply to any 
     sale or exchange of property to a trust if--
       ``(i) the trust pays fair market value for such property, 
     and
       ``(ii) all of the gain to the transferor is recognized at 
     the time of transfer.
       ``(B) Certain obligations not taken into account.--For 
     purposes of subparagraph (A), in determining whether the 
     transferor received fair market value, there shall not be 
     taken into account--
       ``(i) any obligation of--

       ``(I) the trust,
       ``(II) any grantor or beneficiary of the trust, or
       ``(III) any person who is related (within the meaning of 
     section 643(i)(3)) to any grantor or beneficiary of the 
     trust, and

       ``(ii) except as provided in regulations, any obligation 
     which is guaranteed by a person described in clause (i).
       ``(C) Treatment of deemed sale election under section 
     1057.--For purposes of subparagraph (A), a transfer with 
     respect to which an election under section 1057 is made shall 
     not be treated as a sale or exchange.
       ``(3) Special rules applicable to foreign grantor who later 
     becomes a united states person.--A nonresident alien 
     individual who becomes a United States resident within 5 
     years after directly or indirectly transferring property to a 
     foreign trust shall be treated for purposes of this section 
     and section 6048 as having transferred such property, and any 
     undistributed income (including all realized and unrealized 
     gains) attributable thereto, to the foreign trust immediately 
     after becoming a United States resident. For this purpose, a 
     nonresident alien shall be treated as becoming a resident of 
     the United States on the residency starting date (within the 
     meaning of section 7701(b)(2)(A)).
       ``(b) Beneficiaries Treated as Transferors in Certain 
     Cases.--For purposes of this section and section 6048, if--
       ``(1) a citizen or resident of the United States who is 
     treated as the owner of any portion of a trust under 
     subsection (a) dies,
       ``(2) property is transferred to a foreign trust by reason 
     of the death of a citizen or resident of the United States, 
     or
       ``(3) a domestic trust to which any United States person 
     made a transfer becomes a foreign trust,

     then, except as otherwise provided in regulations, the trust 
     beneficiaries shall be treated as having transferred to such 
     trust (as of the date of the applicable event under paragraph 
     (1), (2), or (3)) their respective interests (as determined 
     under subsection (e)) in the property involved.
       ``(c) Trusts Acquiring United States Beneficiaries.--If--
       ``(1) subsection (a) applies to a trust for the 
     transferor's taxable year, and
       ``(2) subsection (a) would have applied to the trust for 
     the transferor's immediately preceding taxable year but for 
     the fact that for such preceding taxable year there was no 
     United States beneficiary for any portion of the trust,

     then, for purposes of this subtitle, the transferor shall be 
     treated as having received as an accumulation distribution 
     taxable under subpart D an amount equal to the undistributed 
     net income (as determined under section 665(a) as of the 
     close of such immediately preceding taxable year) 
     attributable to the portion of the trust referred to in 
     subsection (a).
       ``(d) Trusts Treated as Having a United States 
     Beneficiary.--
       ``(1) In general.--For purposes of this section, a trust 
     shall be treated as having a United States beneficiary for 
     the taxable year unless--
       ``(A) under the terms of the trust, no part of the income 
     or corpus of the trust may be paid or accumulated during the 
     taxable year to or for the benefit of a United States person, 
     and
       ``(B) if the trust were terminated at any time during the 
     taxable year, no part of the income or corpus of such trust 
     could be paid to or for the benefit of a United States 
     person.

     To the extent provided by the Secretary, for purposes of this 
     subsection, the term `United States person' includes any 
     person who was a United States person at any time during the 
     existence of the trust.
       ``(2) Attribution of ownership.--For purposes of paragraph 
     (1), an amount shall be treated as paid or accumulated to or 
     for the benefit of a United States person if such amount is 
     paid to or accumulated for a foreign corporation, foreign 
     partnership, or foreign trust or estate, and--
       ``(A) in the case of a foreign corporation, more than 50 
     percent of the total combined voting power of all classes of 
     stock of such corporation entitled to vote is owned (within 
     the meaning of section 958(a)) or is considered to be owned 
     (within the meaning of section 958(b)) by United States 
     shareholders (as defined in section 951(b)),
       ``(B) in the case of a foreign partnership, a United States 
     person is a partner of such partnership, or
       ``(C) in the case of a foreign trust or estate, such trust 
     or estate has a United States beneficiary (within the meaning 
     of paragraph (1)).
       ``(e) Determination of Beneficiaries' Interests in Trust.--
       ``(1) General rule.--For purposes of this section, a 
     beneficiary's interest in a foreign trust shall be based upon 
     all relevant facts and circumstances, including the terms of 
     the trust instrument and any letter of wishes or similar 
     document, historical patterns of trust distributions, and the 
     existence of and functions performed by a trust protector or 
     any similar advisor.
       ``(2) Special rule.--In the case of beneficiaries whose 
     interests in a trust cannot be determined under paragraph 
     (1)--
       ``(A) the beneficiary having the closest degree of kinship 
     to the grantor shall be treated as holding the remaining 
     interests in the trust not determined under paragraph (1) to 
     be held by any other beneficiary, and
       ``(B) if 2 or more beneficiaries have the same degree of 
     kinship to the grantor, such remaining interests shall be 
     treated as held equally by such beneficiaries.
       ``(3) Constructive ownership.--If a beneficiary of a 
     foreign trust is a corporation, partnership, trust, or 
     estate, the shareholders, partners, or beneficiaries shall be 
     deemed to be the trust beneficiaries for purposes of this 
     section.
     [[Page S2858]]   ``(4) Taxpayer return position.--A taxpayer 
     shall clearly indicate on its income tax return--
       ``(A) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(B) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''
       (b) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years ending on or after February 6, 1995.
       (2) Section 679(a).--Paragraphs (2) and (3) of section 
     679(a) of the Internal Revenue Code of 1986 (as added by this 
     section) shall apply to--
       (A) any trust created on or after February 6, 1995, and
       (B) the portion of any trust created before such date which 
     is attributable to actual transfers of property to the trust 
     on or after such date.
       (3) Section 679(b).--
       (A) In general.--Paragraphs (1) and (2) of section 679(b) 
     of such Code (as so added) shall apply to--
       (i) any trust created on or after the date of the enactment 
     of this Act, and
       (ii) the portion of any trust created before such date 
     which is attributable to actual transfers of property to the 
     trust on or after such date.
       (B) Section 679(b)(3).--Section 679(b)(3) of such Code (as 
     so added) shall take effect on February 6, 1995, without 
     regard to when the property was transferred to the trust.
     SEC. 204. FOREIGN PERSONS NOT TO BE TREATED AS OWNERS UNDER 
                   GRANTOR TRUST RULES.

       (a) In General.--So much of section 672(f) (relating to 
     special rule where grantor is foreign person) as precedes 
     paragraph (2) is amended to read as follows:
       ``(f) Subpart Not To Result in Foreign Ownership.--
       ``(1) In general.--Notwithstanding any other provision of 
     this subpart, this subpart shall apply only to the extent 
     such application results in an amount being included 
     (directly or through 1 or more entities) in the gross income 
     of a citizen or resident of the United States or a domestic 
     corporation. The preceding sentence shall not apply to any 
     portion of an investment trust if such trust is treated as a 
     trust for purposes of this title and the grantor of such 
     portion is the sole beneficiary of such portion.''
       (b) Credit for Certain Taxes.--Paragraph (2) of section 
     665(d) is amended by adding at the end the following new 
     sentence: ``Under rules or regulations prescribed by the 
     Secretary, in the case of any foreign trust of which the 
     settlor or another person would be treated as owner of any 
     portion of the trust under subpart E but for section 672(f), 
     the term `taxes imposed on the trust' includes the allocable 
     amount of any income, war profits, and excess profits taxes 
     imposed by any foreign country or possession of the United 
     States on the settlor or such other person in respect of 
     trust income.''
       (c) Distributions by Certain Foreign Trusts Through 
     Nominees.--
       (1) Section 643 is amended by adding at the end the 
     following new subsection:
       ``(h) Distributions by Certain Foreign Trusts Through 
     Nominees.--For purposes of this part, any amount paid to a 
     United States person which is derived directly or indirectly 
     from a foreign trust of which the payor is not the grantor 
     shall be deemed in the year of payment to have been directly 
     paid by the foreign trust to such United States person.''
       (2) Section 665 is amended by striking subsection (c).
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.
       (e) Transitional Rule.--If--
       (1) by reason of the amendments made by this section, any 
     person other than a United States person ceases to be treated 
     as the owner of a portion of a domestic trust, and
       (2) before January 1, 1996, such trust becomes a foreign 
     trust, or the assets of such trust are transferred to a 
     foreign trust,

     no tax shall be imposed by section 1491 of the Internal 
     Revenue Code of 1986 by reason of such trust becoming a 
     foreign trust or the assets of such trust being transferred 
     to a foreign trust.
     SEC. 205. GRATUITOUS TRANSFERS BY PARTNERSHIPS AND FOREIGN 
                   CORPORATIONS.

       (a) In General.--Subchapter C of chapter 80 (relating to 
     provisions affecting more than one subtitle) is amended by 
     adding at the end the following new section:
     ``SEC. 7874. PURPORTED GIFTS BY PARTNERSHIPS AND FOREIGN 
                   CORPORATIONS.

       ``(a) In General.--Any property (including money) that is 
     purportedly a direct or indirect gift by a partnership or a 
     foreign corporation to a person who is not a partner of the 
     partnership or a shareholder of the corporation, 
     respectively, may be recharacterized by the 
     Secretary to prevent the avoidance of tax. The Secretary may 
     not recharacterize gifts made for bona fide business or 
     charitable purposes.
       ``(b) Statements on Recipient's Return.--A taxpayer who 
     receives a purported gift subject to subsection (a) shall 
     attach a statement to his income tax return for the year of 
     receipt that identifies the property received and describes 
     fully the circumstances surrounding the purported gift.
       ``(c) Exemption.--Subsection (a) shall not apply to 
     purported gifts received by any person during any taxable 
     year if the amount thereof is less than $2,500.
       ``(d) Regulations.--The Secretary may prescribe such rules 
     as may be necessary or appropriate to carry out the purposes 
     of this section.''
       (b) Clerical Amendment.--The table of sections for such 
     subchapter C is amended by adding at the end the following 
     new item:

``Sec. 7874. Purported gifts by partnerships and foreign 
              corporations.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after the date of the 
     enactment of this Act.
     SEC. 206. INFORMATION REPORTING REGARDING LARGE FOREIGN 
                   GIFTS.

       (a) In General.--Subpart A of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6039E the 
     following new section:

     ``SEC. 6039F. NOTICE OF LARGE GIFTS RECEIVED FROM FOREIGN 
                   PERSONS.

       ``(a) In General.--If the value of the aggregate foreign 
     gifts received by a United States person (other than an 
     organization described in section 501(c) and exempt from tax 
     under section 501(a)) during any taxable year exceeds 
     $100,000, such United States person shall furnish (at such 
     time and in such manner as the Secretary shall prescribe) 
     such information as the Secretary may prescribe regarding 
     each foreign gift received during such year.
       ``(b) Foreign Gift.--For purposes of this section, the term 
     `foreign gift' means any amount received from a person other 
     than a United States person which the recipient treats as a 
     gift or bequest. Such term shall not include any qualified 
     transfer (within the meaning of section 2503(e)(2)).
       ``(c) Penalty For Failure To File Information.--
       ``(1) In general.--If a United States person fails to 
     furnish the information required by subsection (a) with 
     respect to any foreign gift within the time prescribed 
     therefor (including extensions)--
       ``(A) the tax consequences of the receipt of such gift 
     shall be determined by the Secretary in the Secretary's sole 
     discretion from the Secretary's own knowledge or from such 
     information as the Secretary may obtain through testimony or 
     otherwise, and
       ``(B) such United States person shall pay (upon notice and 
     demand by the Secretary and in the same manner as tax) an 
     amount equal to 5 percent of the amount of such foreign gift 
     for each month for which the failure continues (not to exceed 
     25 percent of such amount in the aggregate).
       ``(2) Reasonable cause exception.-- Paragraph (1) shall not 
     apply to any failure to report a foreign gift if the United 
     States person shows that the failure is due to reasonable 
     cause and not due to willful neglect.
       ``(d) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (b) Clerical Amendment.--The table of sections for such 
     subpart is amended by inserting after the item relating to 
     section 6039E the following new item:

``Sec. 6039F. Notice of large gifts received from foreign persons.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after the date of the 
     enactment of this Act in taxable years ending after such 
     date.
     SEC. 207. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS 
                   WHICH ARE NOT GRANTOR TRUSTS.

       (a) Modification of Interest Charge on Accumulation 
     Distributions.--Subsection (a) of section 668 (relating to 
     interest charge on accumulation distributions from foreign 
     trusts) is amended to read as follows:
       ``(a) General Rule.--For purposes of the tax determined 
     under section 667(a)--
       ``(1) Sum of interest charges for each throwback year.--The 
     interest charge (determined under paragraph (2)) with respect 
     to any distribution is the sum of the interest charges for 
     each of the throwback years to which such distribution is 
     allocated under section 666(a).
       ``(2) Interest charge for year.--Except as provided in 
     paragraph (6), the interest charge for any throwback year on 
     such year's allocable share of the partial tax computed under 
     section 667(b) with respect to any distribution shall be 
     determined for the period--
       ``(A) beginning on the due date for the throwback year, and
       ``(B) ending on the due date for the taxable year of the 
     distribution,

     by using the rates and method applicable under section 6621 
     for underpayments of tax for such period. For purposes of the 
     preceding sentence, the term `due date' means the date 
     prescribed by law (determined without regard to extensions) 
     for filing the return of the tax imposed by this chapter for 
     the taxable year.
       ``(3) Allocable partial tax.--For purposes of paragraph 
     (2), a throwback year's allocable share of the partial tax is 
     an amount equal to such partial tax multiplied by the 
     fraction--
     [[Page S2859]]   ``(A) the numerator of which is the amount 
     deemed by section 666(a) to be distributed on the last day of 
     such throwback year, and
       ``(B) the denominator of which is the accumulation 
     distribution taken into account under section 666(a).
       ``(4) Throwback year.--For purposes of this subsection, the 
     term `throwback year' means any taxable year to which a 
     distribution is allocated under section 666(a).
       ``(5) Periods of nonresidence.--The period under paragraph 
     (2) shall not include any portion thereof during which the 
     beneficiary was not a citizen or resident of the United 
     States.
       ``(6) Throwback years before 1996.--In the case of any 
     throwback year beginning before 1996--
       ``(A) interest for the portion of the period described in 
     paragraph (2) which occurs before the first taxable year 
     beginning after 1995 shall be determined by using an interest 
     rate of 6 percent and no compounding, and
       ``(B) interest for the remaining portion of such period 
     shall be determined as if the partial tax computed under 
     section 667(b) for the throwback year were increased (as of 
     the beginning of such first taxable year) by the amount of 
     the interest determined under subparagraph (A).''
       (b) Rule When Information Not Available.--Subsection (d) of 
     section 666 is amended by adding at the end the following: 
     ``In the case of a distribution from a foreign trust to which 
     section 6048(b) applies, adequate records shall not be 
     considered to be available for purposes of the preceding 
     sentence unless such trust meets the requirements referred to 
     in such section. If a taxpayer is not able to demonstrate 
     when a trust was created, the Secretary may use any 
     reasonable approximation based on available evidence.''
       (c) Abusive Transactions.--Section 643(a) is amended by 
     inserting after paragraph (6) the following new paragraph:
       ``(7) Abusive transactions.--The Secretary shall prescribe 
     such regulations as may be necessary or appropriate to carry 
     out the purposes of this part, including regulations to 
     prevent avoidance of such purposes.''
       (d) Treatment of Use of Trust Property.--Section 643 
     (relating to definitions applicable to subparts A, B, C, and 
     D) is amended by adding at the end the following new 
     subsection:
       ``(i) Use of Foreign Trust Property.--
       ``(1) General rule.--For purposes of subparts B, C, and D, 
     if, during a taxable year of a foreign trust a trust 
     participant of such trust directly or indirectly uses any of 
     the trust's property, the use value for such taxable year 
     shall be treated as an amount paid to such participant (other 
     than from income for the taxable year) within the meaning of 
     sections 661(a)(2) and section 662(a)(2).
       ``(2) Exemption.--Paragraph (1) shall not apply to any 
     trust participant as to whom the aggregate use value during 
     the taxable year does not exceed $2,500.
       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Use value.--Except as provided in subparagraph (B), 
     the term `use value' means the fair market value of the use 
     of property reduced by any amount paid for such use by the 
     trust participant or by any person who is related to such 
     participant.
       ``(B) Special rule for cash and cash equivalent.--A direct 
     or indirect loan of cash, or cash equivalent, by a foreign 
     trust shall be treated as a use of trust property by the 
     borrower and the full amount of the loan principal shall be 
     the use value.
       ``(C) Use by related party.--
       ``(i) Use by a person who is related to a trust participant 
     shall be treated as use by the participant.
       ``(ii) If property is used by any person who is a related 
     person with respect to more than one trust participant, then 
     the property shall be treated as used by the trust 
     participant most closely related, by blood or otherwise, to 
     such person.
       ``(D) Property includes cash and cash equivalents.--The 
     term `property' includes cash and cash equivalents.
       ``(E) Trust participant.--The term `trust participant' 
     means each grantor and beneficiary of the trust.
       ``(F) Related person.--A person is related to a trust 
     participant if the relationship between such persons would 
     result in a disallowance of losses under section 267(b) or 
     707(b). In applying section 267 for purposes of the preceding 
     sentence--
       ``(i) section 267(e) shall be applied as if such person or 
     the trust participant were a pass-thru entity,
       ``(ii) section 267(b) shall be applied by substituting `at 
     least 10 percent' for `more than 50 percent' each place it 
     appears, and
       ``(iii) in determining the family of an individual under 
     section 267(c)(4), such section shall be treated as including 
     the spouse (and former spouse) of such individual and of each 
     other person who is treated under such section as being a 
     member of the family of such individual or spouse.
       ``(G) Subsequent transactions regarding loan principal.--If 
     any loan described in subparagraph (B) is taken into account 
     under paragraph (1), any subsequent transaction between the 
     trust and the original borrower regarding the principal of 
     the loan (by way of complete or partial repayment, 
     satisfaction, cancellation, discharge, or otherwise) shall be 
     disregarded for purposes of this title.''
       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after the date of the enactment of this Act.
       (2) Interest charge.--The amendment made by subsection (a) 
     shall apply to interest for throwback years beginning before, 
     on, or after the date of the enactment of this Act.
     SEC. 208. RESIDENCE OF ESTATES AND TRUSTS.

       (a) Treatment as United States Person.--Paragraph (30) of 
     section 7701(a) is amended by striking subparagraph (D) and 
     by inserting after subparagraph (C) the following:
       ``(D) any estate or trust if--
       ``(i) a court within the United States is able to exercise 
     primary supervision over the administration of the estate or 
     trust, and
       ``(ii) in the case of a trust, one or more United States 
     fiduciaries have the authority to control all substantial 
     decisions of the trust.''
       (b) Conforming Amendment.--Paragraph (31) of section 
     7701(a) is amended to read as follows:
       ``(31) Foreign estate or trust.--The term `foreign estate' 
     or `foreign trust' means any estate or trust other than an 
     estate or trust described in section 7701(a)(30)(D).''
       (c) Effective Date.--The amendments made by this section 
     shall apply--
       (1) to taxable years beginning after December 31, 1996, and
       (2) at the election of the trustee of a trust, to taxable 
     years beginning after the date of the enactment of this Act 
     and on or before December 31, 1996.

     Such an election, once made, shall be irrevocable.
                TITLE III--ADDITIONAL EMPOWERMENT ZONES

     SEC. 301. ADDITIONAL EMPOWERMENT ZONES.

       (a) In General.--Paragraph (2) of section 1391(b) (relating 
     to designations of empowerment zones and enterprise 
     communities) is amended--
       (1) by striking ``9'' and inserting ``11'',
       (2) by striking ``6'' and inserting ``8'', and
       (3) by striking ``750,000'' and inserting ``1,000,000''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.
                                                                    ____

                                   Department of the Treasury,

                                Washington, DC, February 15, 1995.
     Hon. Daniel Patrick Moynihan,
     Ranking Democratic Member, Committee on Finance, U.S. Senate, 
         Washington, DC.
       Dear Senator Moynihan: I am pleased to transmit the 
     enclosed Tax Compliance Act of 1995 for your immediate 
     consideration. The provisions contained in this bill, which 
     were described in the budget submitted by the President to 
     Congress February 6, 1995, include a number of compliance and 
     related measures. Several proposals are aimed at curbing 
     offshore tax abuses. One proposal would close a tax loophole 
     that allows wealthy Americans to renounce their citizenship 
     and avoid paying tax on appreciated assets. Another would 
     tighten tax rules governing foreign trusts set up by U.S. 
     taxpayers and foreigners. In addition, the earned income tax 
     credit would be denied to undocumented workers and 
     individuals whose interest and dividend income exceeds 
     $2,500. Finally, the bill would authorize the designation of 
     two additional urban empowerment zones.
       An identical bill has been sent to Representative Gibbons 
     of the House Ways and Means Committee, Senate Democratic 
     Leader Daschle, and House Democratic Leader Gephardt. I urge 
     Congress to give the attached bill prompt and favorable 
     consideration.
       The Office of Management and Budget advises that there is 
     no objection to the presentation of this proposal to the 
     Congress, and that its enactment would be in accord with the 
     program of the President.
           Sincerely,
                                                  Robert e. Rubin,
     Secretary of the Treasury.
                                                                    ____

         General Explanation of the Tax Compliance Act of 1995


             earned income tax credit compliance proposals

                              Current law

       to be eligible for the Earned Income Tax Credit (EITC), a 
     taxpayer must reside in the United States for over six 
     months. Nonresident aliens are not entitled to the EITC 
     beginning in 1995. Other non-U.S. citizens are eligible for 
     the EITC if, among other things, they meet a six-month 
     residency requirement and do not file an income tax return as 
     a non-resident alien.
       To claim the higher EITC amounts available to taxpayers 
     with qualifying children, those taxpayers are required to 
     provide taxpayer identification numbers (TINs) for each 
     qualifying child. Unless otherwise proscribed by regulation, 
     social security numbers serve as TINs. Some taxpayers are 
     unable to obtain social security numbers. Under section 
     205(c) of the Social Security Act, social security numbers 
     are generally issued only to individuals who are citizens or 
     who are authorized to work in the U.S. Undocumented workers 
     may not be able to obtain social security numbers.
       The IRS must follow deficiency procedures when 
     investigating questionable EITC 
     [[Page S2860]] claims. First, contact letters are sent to the 
     taxpayer. If the necessary information is not provided by the 
     taxpayer, a statutory notice of deficiency is sent by 
     certified mail, notifying the taxpayer that the adjustment 
     will be assessed unless the taxpayer files a petition in Tax 
     Court within 90 days. If a petition is not filed within that 
     time and there is no other response to the statutory notice, 
     the assessment is made and the EITC is denied.

                           Reasons for change

       The Administration believes that the EITC should not be 
     available to individuals who are not authorized to work in 
     the United States. During the past year, the Administration 
     and Congress have taken steps to improve the administration 
     of the EITC. Further steps are desirable to ensure that only 
     the intended beneficiaries receive the EITC.

                                Proposal

       Only individuals who are authorized to work in the United 
     States would be eligible for the EITC. Taxpayers claiming the 
     EITC would be required to provide a valid social security 
     number for themselves, their spouses, and qualifying 
     children. Social security numbers would have to be valid for 
     employment purposes in the United States. Thus, eligible 
     individuals would include U.S. citizens and lawful permanent 
     residents. Taxpayers residing in the United States illegally 
     would not be eligible for the credit.
       In addition, the IRS would be authorized to use the math-
     error procedures, which are simpler than deficiency 
     procedures, to resolve questions about the validity of a 
     social security number. Under this approach, the failure to 
     provide a correct social security number would be treated as 
     a math error. Taxpayers would have 60 days in which they 
     could either provide a correct social security number or 
     request that the IRS follow the current-law deficiency 
     procedures. If a taxpayer failed to respond within this 
     period, he or she would be required to refile with correct 
     social security numbers in order to obtain the EITC.
       These provisions would be effective for tax years beginning 
     after December 31, 1995.

                                                REVENUE ESTIMATE                                                
                                           [In billions of dollars]\1\                                          
----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year--                           
                                           ---------------------------------------------------------------------
                                              1995      1996      1997      1998      1999      2000      Total 
----------------------------------------------------------------------------------------------------------------
EITC compliance proposals.................         0         0       0.4       0.5       0.5       0.5       1.9
----------------------------------------------------------------------------------------------------------------
\1\Includes reduction in outlays.                                                                               

        INTEREST AND DIVIDEND TEST FOR EARNED INCOME TAX CREDIT

                              Current law

       To be eligible to receive the Earned Income Tax Credit 
     (EITC), an individual must have earned income. To target the 
     EITC to low-income workers, the amount of the credit to which 
     a taxpayer is entitled decreases when the taxpayer's earned 
     income (or, if greater, adjusted gross income (AGI)) exceeds 
     certain thresholds. The earned income and AGI thresholds are 
     indexed for inflation and are also adjusted to take into 
     account qualifying children. In 1995, a taxpayer with two or 
     more qualifying children will not be eligible for the EITC if 
     his or her income exceeds $26,673. The income cut-offs 
     decline to $24,396 for a taxpayer with one qualifying child 
     and $9,230 for a taxpayer with no qualifying children.

                           Reason for change

       Under current law a taxpayer may have relatively low earned 
     income, and therefore may be eligible for the EITC, even 
     though he or she has significant interest and dividend 
     income. The EITC should be targeted to families with the 
     greatest need. Most EITC recipients do not have significant 
     resources and must rely on earnings to meet their day-to-day 
     living expenses, but taxpayers with high levels of interest 
     and dividend income can draw upon the resources that produce 
     this income to meet family needs.

                                Proposal

       Beginning in 1996, a taxpayer would not be entitled to the 
     EITC if his or her aggregate interest and dividend income 
     during a taxable year exceeds $2,500. This threshold would be 
     indexed for inflation thereafter.

                                                REVENUE ESTIMATE                                                
                                           [In billions of dollars]\1\                                          
----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year--                           
                                           ---------------------------------------------------------------------
                                              1995      1996      1997      1998      1999      2000      Total 
----------------------------------------------------------------------------------------------------------------
Interest and dividend test for earned                                                                           
 income tax credit........................         0         *       0.3       0.3       0.4       0.4       1.4
----------------------------------------------------------------------------------------------------------------
\1\Includes reduction in outlays.                                                                               
*Revenue gain of less than $50 million.                                                                         

       tax responsibilities of americans who renounce citizenship

                              Current law

       Under current law, worldwide gains realized by U.S. 
     citizens and resident aliens are subject to U.S. tax. 
     Existing rules recognize that the United States has a tax 
     interest in preventing tax avoidance through renunciation of 
     citizenship. These rules continue to tax former U.S. citizens 
     on U.S. source income for ten years following renunciation of 
     citizenship if one of the principal purposes of the 
     renunciation was to avoid U.S. income tax. A similar rule 
     applies to aliens who cease to be residents.

                           Reasons for change

       Wealthy U.S. citizens and long-term residents sometimes 
     abandon their U.S. citizenship or status as residents. 
     Existing rules to prevent tax avoidance through expatriation 
     have proven largely ineffective because departing taxpayers 
     have found ways to restructure their activities to avoid 
     those rules, and compliance with the rules is difficult to 
     monitor. Consequently, existing measures need to be enhanced 
     to ensure that gains generally accruing during the time a 
     taxpayer was a citizen or long-term permanent resident will 
     be subject to U.S. tax at the time the taxpayer abandons 
     citizenship or residency.

                                Proposal

       Existing rules would be expanded to provide that if a U.S. 
     person expatriates on or after February 6, 1995, the person 
     would be treated as having sold his or her assets at fair 
     market value immediately prior to expatriation and gain or 
     loss from such sale would be recognized and would be subject 
     to U.S. income tax. A U.S. citizen would be considered to 
     expatriate if the citizens renounces or abandons U.S. 
     citizenship. A resident alien individual would be taxed under 
     this proposal if the alien has been subject to U.S. tax as a 
     lawful permanent resident of the United States in at least 
     ten of the prior fifteen taxable years and then ceases to be 
     subject to U.S. tax as a resident.
       For this purpose, a taxpayer would be treated as owning 
     those assets that would be included in the taxpayer's gross 
     estate (determined as if the taxpayer's estate had been 
     created on the date of expatriation) as well as, in certain 
     cases, the taxpayer's interest in assets held in certain 
     trusts (defined below in Section II of the foreign trust 
     discussion). Exceptions to the tax on expatriation would be 
     made for most U.S. real property interests (because they 
     remain subject to U.S. taxing jurisdiction) and interests in 
     qualified retirement plans. An expatriating individual also 
     would be entitled to exclude $600,000 of gain as determined 
     under the proposal.
       The IRS may allow a taxpayer to defer payment of the tax on 
     expatriation with respect to interests in closely-held 
     businesses. In those cases, the taxpayer would be required to 
     provide collateral satisfactory to the IRS. Payment of tax 
     could not be deferred for more than five years, and an 
     interest charge would be imposed on the deferred tax.
       Solely for purposes of determining gain or loss subject to 
     the tax on expatriation, a resident alien individual would be 
     permitted to elect to determine basis using the fair market 
     value (instead of historical cost) of assets owned on the 
     date when U.S. residence first began. If made, this election 
     would apply to all of a taxpayer's property.
       This proposal would replace existing income tax rules with 
     respect to expatriations on or after February 6, 1995. 
     Existing rules that apply to taxes other than income taxes 
     would continue to apply.

                            REVENUE ESTIMATE                            
                        [In billions of dollars]                        
------------------------------------------------------------------------
                                       Fiscal year--                    
                 -------------------------------------------------------
                   1995    1996    1997    1998    1999    2000    Total
------------------------------------------------------------------------
Tax                                                                     
 responsibilitie                                                        
 s of Americans                                                         
 who renounce                                                           
 citizenship....     0.1     0.2     0.3     0.4     0.5     0.7     2.2
------------------------------------------------------------------------

             revise taxation of income from foreign trusts

       U.S. tax rules applicable to foreign trusts have not been 
     revised for nearly two decades. New rules are needed to 
     accommodate 
     [[Page S2861]] changes in the use and incidence of foreign 
     trusts and to limit the avoidance and evasion of U.S. taxes. 
     The Administration proposals would reform the taxation of 
     foreign trusts in five respects.

              I. Information reporting and foreign trusts

                              Current law

       Under current law, most foreign trusts established by U.S. 
     persons are grantor trusts, the income of which is taxed to 
     the grantor. U.S. persons who create or transfer property to 
     foreign trusts are required to report transactions with the 
     foreign trust to the IRS.

                           Reasons for change

       The existing information reporting statute predates the 
     significant expansion of the foreign grantor trust rules in 
     1976. In general, penalties for noncompliance with reporting 
     requirements are minimal. U.S. grantors of foreign trusts 
     often do not report the income earned by foreign trusts and 
     often do not comply with required information reporting. 
     These foreign trusts are frequently established in tax haven 
     jurisdictions with stringent secrecy rules. Consequently, the 
     IRS's attempts to verify income earned by foreign trusts are 
     often unsuccessful. Existing penalties have not proven 
     adequate to encourage some U.S. taxpayers to comply with 
     existing rules.

                                Proposal

       Notice of Transfer: Section 6048 would require U.S. persons 
     transferring property to foreign trusts to notify the IRS. 
     This notice would identify the trustee of the foreign trust, 
     indicate the property transferred to the trust, and identify 
     the trust beneficiaries.
       If a transferor did not file the required notice, a penalty 
     would be imposed equal to 35 percent of the gross value of 
     the property transferred, valued as of the date of transfer. 
     This penalty would not be less than $10,000, and could be 
     further increased for continuing noncompliance.
       Trustee Statements: Section 6048 would require trustees of 
     any foreign trust with a U.S. grantor or a U.S. beneficiary 
     to file two types of statements: a ``Section 6048 Statement'' 
     and an annual information return. In the Section 6048 
     Statement, the trustee would be required to:
       (1) appoint a U.S. agent (whether or not a trustee) who has 
     the ability to provide any information that reasonably should 
     be available to the trust in response to requests by the IRS; 
     and
       (2) agree to file an annual information return for the 
     foreign trust.

     The annual information return would be required to include a 
     full accounting of trust activities, including separate 
     schedules (K-1s) for income attributable to U.S. grantors or 
     U.S. beneficiaries, as appropriate. The foreign trust would 
     not be considered to have an office or permanent 
     establishment in the United States merely because of the 
     section 6048 activities of its U.S. agent.
       There would be two consequences if the trustee of the 
     foreign trust did not file a Section 6048 Statement or the 
     required annual information return. First, the U.S. settlor 
     of a foreign trust would be subject to a $10,000 penalty for 
     each failure to file a Section 6048 Statement or annual 
     information return. This penalty would be increased for 
     continuing noncompliance. Second, the IRS would be authorized 
     to determine, in its discretion, the tax consequences of any 
     trust transactions or operations to a U.S. grantor or U.S. 
     beneficiary. Thus, for example, the IRS could impose a gift 
     tax on property transferred to the foreign trust. In 
     appropriate circumstances, the IRS could also impute taxable 
     income to the U.S. settlor based on the value of assets 
     transferred to or held in the foreign trust. A distribution 
     to a U.S. beneficiary could be deemed to come from income 
     accumulated in the year the trust was organized (or an alien 
     beneficiary's first year of U.S. residence, if later). 
     Although the trustee would have an incentive to file the 
     trustee statements to avoid adverse U.S. tax consequences to 
     U.S. grantors and U.S. beneficiaries, there would be no 
     penalties directly imposed on a trustee for the failure to 
     file those statements.
       The Secretary would be authorized to waive any information 
     reporting requirements when there was no significant U.S. tax 
     interest in obtaining the information. Penalties would not be 
     imposed if the taxpayer acted with reasonable cause and not 
     willful neglect.
       These proposals generally would be effective for trust 
     taxable years beginning after the date of enactment.

                  II. Outbound foreign grantor trusts

                              Current law

       Under section 679, a foreign trust established by a U.S. 
     person for the benefit of U.S. persons generally is a 
     ``grantor trust'', and the grantor is treated as owner of 
     property transferred to the trust. There are, however, some 
     transfers that are not covered by this general rule. First, 
     transfers by reason of death are not subject to section 679. 
     Second, sales of property to a foreign trust at fair market 
     value are not subject to section 679. Third, if a foreign 
     person transfers property to a foreign trust for the benefit 
     of a U.S. person and
      then becomes a resident of the United States, section 679 
     does not apply to the transfer. Finally, current rules do 
     not clearly address the tax consequences for a domestic 
     trust that becomes a foreign trust.

                           Reasons for change

       Tax planning to avoid or defer recognition of income from 
     foreign trusts often utilizes the exceptions to section 679. 
     For example, a foreign trust may be established by will upon 
     the death of a U.S. person for the benefit of U.S. persons. 
     Because the trust is not a grantor trust, the income of the 
     trust is not subject to U.S. tax until distributed to a U.S. 
     person, even though the trust was created by a U.S. person 
     for the benefit of a U.S. person.
       U.S. persons also sometimes attempt to avoid section 679 by 
     selling property to a foreign trust in exchange for a note 
     from the trust. Often, the U.S. transferor does not intend to 
     collect on the note. In such a case, the purported seller of 
     the assets should be treated as owning the assets transferred 
     to the trust. (If there is no bona fide debt, these 
     transactions are subject to challenge under current law, 
     because the exchange would not be at fair market value.)
       Prior to becoming residents of the United States, foreign 
     persons often put their assets into irrevocable trusts in tax 
     haven jurisdictions for the benefit of U.S. persons. As a 
     result, the trust income escapes U.S. tax until distribution.
       Further, as tax haven jurisdictions enact legislation to 
     enable U.S. trusts to move to those jurisdictions, trust 
     migrations are becoming more common. Taxpayers should not be 
     able to achieve tax results through migration of a domestic 
     trust that they could not achieve directly by creating a 
     foreign trust.
       Finally, the inadequacy of the existing attribution rules 
     as they apply to discretionary beneficiaries encourages 
     taxpayers to avoid the appropriate tax consequences of their 
     transactions by disguising true economic ownership of assets 
     through the use of foreign discretionary trusts.

                                Proposal

       The Administration proposes several changes to section 679, 
     described below.
       Transfers at Death: Property transferred to a foreign trust 
     at the death of a trust grantor (including property in a 
     foreign grantor trust at the grantor's death) would be 
     treated as having been transferred to the trust by the 
     beneficiaries in accordance with their respective interests 
     in the trust (described below) in a transaction in which no 
     gain or loss would be recognized. U.S. beneficiaries 
     therefore would become grantors for purposes of section 679. 
     These proposals would be effective for assets transferred to 
     foreign trusts after the date of enactment.
       Sales to Foreign Trusts: The sale of property to a foreign 
     trust by a U.S. person would be considered a transfer to a 
     grantor trust under section 679 unless the trust pays the 
     grantor full fair market value for the property without 
     regard to any debt obligation received by the transferor 
     issued by the trust, the grantor, a beneficiary, or a person 
     related to the grantor or beneficiary or guaranteed by any 
     such person. Exceptions would be provided for legitimate 
     commercial transactions, such as credit extended by unrelated 
     persons. A transferor would not be treated as receiving fair 
     market value for property transferred in a deemed sale 
     (pursuant to an election under section 1057 or otherwise). 
     These proposals would be effective for assets transferred to 
     foreign trusts on or after February 6, 1995.
       Pre-immigration Trusts: If a foreign person transfers 
     property to a foreign trust and becomes a U.S. person within 
     five years of the transfer, the trust would be considered a 
     grantor trust under section 679 with respect to such 
     transferred assets if the trust has U.S. beneficiaries after 
     the grantor becomes a U.S. person. This proposal would be 
     effective for assets transferred to foreign trusts on or 
     after February 6, 1995.
       Outbound Trust Migrations: For purposes of section 679, if 
     a domestic trust becomes a foreign trust, the trust assets 
     would be deemed to have been transferred to the trust by the 
     beneficiaries in accordance with their respective interests 
     in the trust (defined below) in a transaction in which no 
     gain or loss is recognized. Thus, any U.S. beneficiaries 
     would be considered to be grantors of their respective 
     interests in the foreign trust for purposes of section 679. 
     However, if the IRS determines that the domestic trust was 
     established pursuant to a plan to retransfer assets to a 
     foreign trust, the IRS would be permitted to treat the U.S. 
     settlor of the domestic trust as grantor of the foreign trust 
     for purposes of section 679. The proposal would be effective 
     for assets transferred to foreign trusts on or after February 
     6, 1995.
       Determination of Respective Interests: For purposes of 
     presenting abusive transactions designed to avoid section 679 
     and the tax on expatriation, a beneficiary's respective 
     interest in a trust would be based on all relevant facts and 
     circumstances, including the terms of the trust instrument. 
     Other relevant factors may include letters of wishes or 
     similar documents, patterns of historical trust 
     distributions, and the existence of and functions performed 
     by a trust protector or any similar advisor. If the 
     respective interests of beneficiaries in a discretionary 
     trust cannot otherwise be determined, those beneficiaries 
     with the closest degree of family affiliation to the settlor 
     could be presumed to have equal proportionate interests in 
     the trust.
       The proposed would apply the attribution rules of 
     discretionary beneficiaries only to the abusive situations 
     under section 679 described above and to the tax on 
     expatriation of U.S. citizens and residents, but would not 
     directly apply the attribution rules for other purposes 
     (e.g., to determine if a discretionary beneficiary is a U.S. 
     shareholder of a 
     [[Page S2862]] controlled foreign corporation that is owned 
     by the trust). The determination of respective interests for 
     purposes of the tax on expatriation by U.S. citizens and 
     residents would be effective for expatriations occurring on 
     or after February 6, 1995.
                  III. Inbound foreign grantor trusts

                              Current law

       The United States disregards certain ``grantor'' trusts for 
     income tax purposes. This treatment is designed to prevent 
     abuses arising from attempts to shift income to beneficiaries 
     who are likely to be paying taxes at lower rates than the 
     grantor of the trust. Consequently, under existing anti-abuse 
     rules, the grantor of such a trust is taxed as if he owned 
     the trust assets directly. Trusts generally are considered 
     grantor trusts if (1 the grantor has a reversionary interest 
     in trust income or corpus, (2) the grantor or a nonadverse 
     party holds certain powers over the beneficial enjoyment of 
     trust income or corpus, (3) certain administrative powers are 
     exercisable for the grantor's benefit (e.g., the grantor can 
     reacquire trust assets by substituting assets of equivalent 
     value), (4) the grantor or a nonadverse party has the power 
     to revest trust assets in the grantor, or (5) trust income 
     may be paid or accumulated for the benefit of the grantor or 
     the grantor's spouse in the discretion of the grantor or a 
     nonadverse party. A person other than the grantor is treated 
     as owning trust assets if that person has the power to 
     withdraw trust income or corpus.
       The IRS has issued a revenue ruling in which a foreign 
     person funded a foreign grantor trust for U.S. beneficiaries. 
     The ruling holds that since the foreign person is treated as 
     the owner of the grantor trust, a U.S. beneficiary is not 
     taxable on trust distributions.

                           Reasons for change

       Existing law inappropriately permits foreign taxpayers to 
     affirmatively use the domestic anti-abuse rules concerning 
     grantor trusts. Although current law treats a foreign grantor 
     as the owner of the trust assets, the foreign grantor 
     generally is not subject to U.S. tax on income of the trust. 
     These rules therefore permit U.S. beneficiaries, who enjoy 
     the benefits of residing in the United States, to avoid U.S. 
     tax on trust income. U.S. beneficiaries should be 
     appropriately taxed in the United States.

                                Proposal

       Under the proposal, a person would be treated as owning 
     trust assets under the grantor trust rules only if that 
     person is a U.S. citizen, U.S. resident, or domestic 
     corporation. The IRS may prescribe rules for applying the 
     grantor trust rules to settlors that are partnerships, 
     trusts, and estates to the extent that the beneficial 
     interests in such entities are owned by U.S. citizens, U.S. 
     residents, or domestic corporations. A U.S. person receiving 
     distributions of trust income as result of this provision 
     would be allowed to claim a foreign tax credit for foreign 
     taxes paid on trust income by the trust or the foreign 
     grantor.
       Several related provisions are proposed to enforce these 
     rules. First, enhanced authority would be granted to the IRS 
     to prevent the use of nominees to evade these rules. For this 
     purpose, a bona fide settlor of a trust with power to 
     withdraw income or corpus from the trust would normally not 
     be considered a nominee. Second, new rules would
      harmonize the treatment of purported gifts by corporations 
     and partnerships with the new foreign grantor trust rules. 
     Third, U.S. persons would be required to report the 
     receipt of what they claim to be large gifts from foreign 
     persons in order to allow the IRS to verify that such 
     purported gifts are not, in fact, disguised income to the 
     U.S. recipients.
       If a trust that is a grantor trust under current law 
     becomes a nongrantor trust pursuant to this rule, the trust 
     would be treated as if it were resettled on the date the 
     trust becomes a nongrantor trust. Neither the grantor nor the 
     trust would recognize gain or loss. If a resettled domestic 
     trust that has a foreign grantor became a foreign trust 
     before December 31, 1995, the section 1491 excise tax on 
     outbound transfers of assets would not be applied to the 
     transfer by the domestic trust to the new foreign trust. 
     Otherwise, this proposal would be effective on the date of 
     enactment of this provision. These rules would not apply to 
     normal security arrangements involving a trustee (including 
     the use of indenture trustees and similar arrangements).

                     IV. Foreign nongrantor trusts

                              Current law

       Accumulation distributions: U.S. beneficiaries of foreign 
     trusts are subject to a nondeductible interest charge on 
     distributions of accumulated income earned by the trust in 
     earlier taxable years. The charge is based on the length of 
     time the tax was deferred by deferring distributions of 
     accumulated income. Under existing law, the interest charge 
     is equal to six percent simple interest per year multiplied 
     by the tax imposed on the distribution. If adequate records 
     are not available to determine the portion of a distribution 
     that is accumulated income, the distribution is deemed to be 
     an accumulation distribution from the year the trust was 
     organized.
       Constructive Distributions: The tax consequences of the use 
     of trust assets by beneficiaries is ambiguous under current 
     law. Taxpayers may assert that a beneficiary's use of assets 
     owned by a trust does not constitute a distribution to the 
     beneficiary.

                           Reasons for change

       Accumulation distributions: Interest paid by U.S. 
     beneficiaries of foreign trusts should reflect market rates 
     of interest.
       Constructive distributions: If a corporation makes 
     corporate assets available for a shareholder's personal use 
     (e.g., a corporate apartment made available rent-free to a 
     shareholder), the fair market value of the use of that 
     property is treated as a constructive distribution. Further, 
     if a controlled foreign corporation makes a loan to a U.S. 
     person, the loan is treated as a deemed distribution by the 
     foreign corporation to its U.S. shareholders. The use of 
     foreign trust assets by trust beneficiaries should give rise 
     to tax consequences that are similar to those associated with 
     the use of corporate shareholders.
                                Proposal

       Accumulation distributions: For periods of accumulation 
     after December 31, 1995, the rate of interest charged on 
     accumulation distributions would correspond to the interest 
     rate taxpayers pay on underpayment of tax. If a trust does 
     not provide information required under section 6048, the 
     distribution would be deemed to be from income accumulated in 
     the year the trust was organized (or an alien beneficiary's 
     first year of U.S. residence, if later). If a taxpayer is not 
     able to demonstrate when the trust was created, the IRS may 
     use any approximation based on available evidence.
       Taxpayers have used a variety of methods (e.g., tiered 
     trusts, divisions of trusts, mergers of trusts, and similar 
     transactions with corporations) to convert a distribution of 
     accumulated income into a distribution of current income or 
     corpus. The proposal would authorize the IRS to 
     recharacterize such transactions, effective for transactions 
     or arrangements entered into after the date of enactment. 
     Transactions that may be entered into to avoid the interest 
     charge on accumulation distributions (e.g., excessive 
     ``compensation'' paid to trust beneficiaries who are 
     directors of corporations owned by the foreign trust) may be 
     subject to recharacterization.
       The proposal also clarifies existing law by providing that 
     if an alien beneficiary of a foreign trust becomes a U.S. 
     resident and thereafter receives an accumulation 
     distribution, no interest would be charged for periods of 
     accumulation that predate U.S. residency.
       Constructive distributions: If a beneficiary uses assets of 
     a foreign trust, the value of that use would be a 
     constructive distribution to the beneficiary. Thus, if a 
     foreign trust made a residence available for use by a 
     beneficiary (or a related person), the difference between the 
     fair rental value of the residence and any rent actually paid 
     would be treated as a constructive distribution to that 
     beneficiary. If a foreign trust purported to loan cash (or 
     cash equivalents) to a U.S. beneficiary, the loan would be 
     treated as a constructive distribution by the foreign trust 
     to the U.S. beneficiary. These provisions would not apply if 
     constructive distributions did not exceed $2,500 during a 
     taxable year. The provisions would be effective for taxable 
     years of a trust that begin after the date of enactment.

                         V. Residence of trusts

                              Current law

       Under current law, a ``foreign estate or trust'' is an 
     estate or trust the ``income of which, from sources without 
     the United States which is not effectively connected with the 
     conduct of a trade or business within the United States, is 
     not includable in gross income under subtitle A'' of the 
     Internal Revenue Code. This definition does not provide 
     criteria for determining when an estate or trust is foreign.
       Court cases and rulings indicate that the residence of an 
     estate or trust depends on various factors, such as the 
     location of the assets, the country under whose laws the 
     estate or
      trust is created, the residence of the fiduciary, the 
     nationality of the decedent or settlor, the nationality of 
     the beneficiaries, and the location of the administration 
     of the trust or estate. See e.g., B.W. Jones Trust v. 
     Comm'r, 46 B.T.A. 531 (1942), aff'd, 132 F.2d 914 (4th 
     Cir. 1943).

                           Reasons for change

       Present rules provide insufficient guidance for determining 
     the residence of estates and trusts. Because the tax 
     treatment of an estate, trust, settlor, or beneficiary may 
     depend on whether the estate or trust is foreign or domestic, 
     it is important to have an objective definition of the 
     residence of an estate or trust. Reducing the number of 
     factors used in determining the residence of estates or 
     trusts for tax purposes would increase the flexibility of 
     settlors and trust administrators to decide where to locate 
     and in what assets to invest. For example, if the location of 
     the administration of the trust were no longer a relevant 
     criterion, settlors of foreign trusts would be able to choose 
     whether to administer the trusts in the United States or 
     abroad based on non-tax considerations.

                                Proposal

       An estate or trust would be considered a domestic estate or 
     trust if two factors were present: (1) a court within the 
     United States is able to exercise primary supervision over 
     the administration of the estate or trust; and (2) a U.S. 
     fiduciary (alone or in concert 
     [[Page S2863]] with other U.S. fiduciaries) has the authority 
     to control all major decisions of the estate or trust. A 
     foreign estate or trust would be any estate or trust that is 
     not domestic.
       The first factor would be fulfilled only if a U.S. court 
     had authority over the entire estate or trust, and not if it 
     merely had jurisdiction over certain assets or a particular 
     beneficiary. Normally, the first factor would be satisfied if 
     the trust instrument is governed by the laws of a U.S. state. 
     One way to satisfy this factor is to register the estate or 
     trust in a state pursuant to a state law which is 
     substantially similar to Article VII of the Uniform Probate 
     Code as published by the American Law Institute. The second 
     factor would normally be satisfied if a majority of the 
     fiduciaries are U.S. persons and a foreign fiduciary 
     (including a ``protector'' or similar trust advisor) may not 
     veto important decisions of the U.S. fiduciaries. In applying 
     this factor, the IRS would allow an estate or trust a 
     reasonable period of time to adjust for inadvertent changes 
     in fiduciaries (e.g., a U.S. trustee dies or abruptly resigns 
     where a trust has two U.S. fiduciaries and one foreign 
     fiduciary).
       The new rules defining domestic estates and trusts would be 
     effective for taxable years of an estate or trust that begin 
     after December 31, 1996. The delayed effective date is 
     intended to allow estates and trusts a period of time to 
     modify their governing instruments or to change fiduciaries. 
     Moreover, taxpayers would be allowed to elect to apply these 
     rules to taxable years of an estate or trust beginning after 
     the date of enactment.

                                                REVENUE ESTIMATE                                                
                                            [In billions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year--                           
                                           ---------------------------------------------------------------------
                                              1995      1996      1997      1998      1999      2000      Total 
----------------------------------------------------------------------------------------------------------------
Revise taxation of income from foreign                                                                          
 trusts (sections I-V)....................       0.1       0.3       0.5       0.5       0.5       0.6       2.4
----------------------------------------------------------------------------------------------------------------

                increase in number of empowerment zones

                              Current law

       The Omnibus Budget Reconciliation Act of 1993 (OBRA '93) 
     authorized a federal demonstration project in which nine 
     empowerment zones and 95 enterprise communities would be 
     designated in a competitive application process. Of the nine 
     empowerment zones, six were to be located in urban areas and 
     three were to be located in rural areas. State and local 
     governments jointly nominated distressed areas and proposed 
     strategic plans to stimulate economic and social 
     revitalization. By the June 30, 1994 application deadline, 
     over 500 communities had submitted applications.
       On December 21, 1994, the Secretaries of the Department of 
     Housing and Urban Development and the Department of 
     Agriculture designated the empowerment zones and enterprise 
     communities authorized by Congress in OBRA '93.
       Among other benefits, businesses located in empowerment 
     zones are eligible for three federal tax incentives: an 
     employment and training credit; an additional $20,000 per 
     year of section 179 expensing; and a new category of tax-
     exempt private activity bonds. Businesses located in 
     enterprise communities are eligible for the new category of 
     tax-exempt bonds. OBRA '93 also provided that federal grants 
     would be made to designated areas.

                           Reasons for change
       Because of the vast number of distressed urban areas and 
     the need to revitalize these areas, the Administration 
     believes that the number of authorized empowerment zones 
     should be expanded, subject to budgetary constraints. 
     Extending the tax incentives to economically distressed areas 
     will help stimulate revitalization of these areas.

                                Proposal

       The proposal would authorize the designation of two 
     additional urban empowerment zones and would be effective on 
     the date of enactment. No additional federal grants would be 
     authorized. The sole effect of the proposal would be to 
     extend the empowerment zone tax incentives to two additional 
     areas.

                            REVENUE ESTIMATE                            
                        [In billions of dollars]                        
------------------------------------------------------------------------
                                       Fiscal Year--                    
                 -------------------------------------------------------
                   1995    1996    1997    1998    1999    2000    Total
------------------------------------------------------------------------
Increase in                                                             
 number of                                                              
 empowernment                                                           
 zones..........    -0.1    -0.1    -0.1    -0.1    -0.1    -0.1    -0.7
------------------------------------------------------------------------

                                 ______

      By Mr. McCONNELL (for himself, Mr. Lieberman, and Mrs. 
        Kassebaum):
  S. 454. A bill to reform the health care liability system and improve 
health care quality through the establishment of quality assurance 
programs, and for other purposes; to the Committee on Labor and Human 
Resources.


   the health care liability reform and quality assurance act of 1995

 Mr. McCONNELL. Mr. President, I am pleased to introduce the 
Health Care Liability Reform and Quality Assurance Act of 1995. Last 
year, Congress spent many days and weeks considering a dramatic 
overhaul of the finest health care system in the world. But the vast 
majority of Americans concluded we didn't need to reinvent our medical 
system. So, Congress, with good reason, laid aside health care and 
vowed to come back this year and make some needed incremental changes 
to the health care system.
  Health care liability is one issue on which there was bipartisan 
consensus about the need to make some significant change. This bill 
which I am introducing today with the co-sponsorship and assistance of 
Senators Lieberman and Kassebaum represents this bipartisan effort.
  The purpose of our bill is to promote patient safety, compensate 
those who suffer injuries fully and fairly, without enriching lawyers 
and bureaucrats, make health care more accessible, gain some cost 
containment in health care, strengthen the doctor-patient relationship 
and encourage medical innovation. Our present system, unfortunately, 
does none of the above.
  First of all, patients don't get compensated. The Rand Corp. has 
reported that only 43 cents of every dollar spent in the liability 
system goes to the injured party. That means lawyers, experts, and 
court fees eat up 57 percent of all dollars spent in the liability 
system.
  Second, the prohibitive cost of liability insurance means some 
doctors won't provide care to those in our society who need it most. 
Half a million rural women can't get an obstetrician to deliver their 
babies. Because of high malpractice premiums, African-American doctors 
are avoiding the practice of medicine in high-risk areas--generally 
urban areas, making it more difficult for minority communities to get 
necessary care.
  Third, companies that invent new products are discouraged under the 
current system from putting them on the market. Medical device 
manufacturers are finding it more difficult to get raw materials to 
produce life saving devices because of the risk of lawsuits.
  Fourth, doctors are less likely to explore risky treatment because of 
the proliferation of lawsuits. A doctor has a better than 1 in 3 chance 
of being sued during his practice years. And the likelihood of suit has 
nothing to do with whether the doctor was negligent. GAO reports that 
almost 60 percent of all suits are dismissed without a verdict or even 
a settlement.
  So, something is very wrong with our liability system and our bill 
will help solve the problem. It contains many of the provisions that 
were considered, on a bipartisan basis, in the Finance Committee last 
year, during the health care debate. I have included a summary of the 
bill's provisions and I ask that the full text of the bill be printed 
in the Record.
  Mr. President, I am hopeful that health care liability will get full 
consideration and action in this Congress. There will be at least two 
opportunities--when we consider some targeted 
[[Page S2864]] health care reform and when we consider legal reform. It 
is very important that we tackle this issue and I look forward to 
prompt action.
  Mr. President, I ask unanimous consent that the text of the bill and 
additional material be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:
                                 S. 454

       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 ``Health 
     Care Liability Reform and Quality Assurance Act of 1995''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title; table of contents.

                 TITLE I--HEALTH CARE LIABILITY REFORM

                      Subtitle A--Liability Reform

Sec. 101. Findings and purpose.
Sec. 102. Definitions.
Sec. 103. Applicability.
Sec. 104. Statute of limitations.
Sec. 105. Reform of punitive damages.
Sec. 106. Periodic payments.
Sec. 107. Scope of liability.
Sec. 108. Mandatory offsets for damages paid by a collateral source.
Sec. 109. Treatment of attorneys' fees and other costs.
Sec. 110. Obstetric cases.
Sec. 111. State-based alternative dispute resolution mechanisms.
Sec. 112. Requirement of certificate of merit.

               Subtitle B--Biomaterials Access Assurance

Sec. 121. Short title.
Sec. 122. Findings.
Sec. 123. Definitions.
Sec. 124. General requirements; applicability; preemption.
Sec. 125. Liability of biomaterials suppliers.
Sec. 126. Procedures for dismissal of civil actions against 
              biomaterials suppliers.

                       Subtitle C--Applicability

Sec. 131. Applicability.

       TITLE II--PROTECTION OF THE HEALTH AND SAFETY OF PATIENTS

Sec. 201. Health care quality assurance program.
Sec. 202. Risk management programs.
Sec. 203. National practitioner data bank.

                        TITLE III--SEVERABILITY

Sec. 301. Severability.
                 TITLE I--HEALTH CARE LIABILITY REFORM

                      Subtitle A--Liability Reform

     SEC. 101. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds the following:
       (1) Effect on health care access and costs.--That the civil 
     justice system of the United States is a costly and 
     inefficient mechanism for resolving claims of health care 
     liability and compensating injured patients and that the 
     problems associated with the current system are having an 
     adverse impact on the availability of, and access to, health 
     care services and the cost of health care in this country.
       (2) Effect on interstate commerce.--That the health care 
     and insurance industries are industries affecting interstate 
     commerce and the health care liability litigation systems 
     existing throughout the United States affect interstate 
     commerce by contributing to the high cost of health care and 
     premiums for health care liability insurance purchased by 
     participants in the health care system.
       (3) Effect on federal spending.--That the health care 
     liability litigation systems existing throughout the United 
     States have a significant effect on the amount, distribution, 
     and use of Federal funds because of--
       (A) the large number of individuals who receive health care 
     benefits under programs operated or financed by the Federal 
     Government;
       (B) the large number of individuals who benefit because of 
     the exclusion from Federal taxes of the amounts spent to 
     provide them with health insurance benefits; and
       (C) the large number of health care providers who provide 
     items or services for which the Federal Government makes 
     payments.
       (b) Purpose.--It is the purpose of this Act to implement 
     reasonable, comprehensive, and effective health care 
     liability reform that is designed to--
       (1) ensure that individuals with meritorious health care 
     injury claims receive fair and adequate compensation, 
     including reasonable non-economic damages;
       (2) improve the availability of health care service in 
     cases in which health care liability actions have been shown 
     to be a factor in the decreased availability of services; and
       (3) improve the fairness and cost-effectiveness of our 
     current health care liability system to resolve disputes 
     over, and provide compensation for, health care liability by 
     reducing uncertainty and unpredictability in the amount of 
     compensation provided to injured individuals.

     SEC. 102. DEFINITIONS.

       As used in this subtitle:
       (1) Claimant.--The term ``claimant'' means any person who 
     commences a health care liability action, and any person on 
     whose behalf such an action is commenced, including the 
     decedent in the case of an action brought through or on 
     behalf of an estate.
       (2) Clear and convincing evidence.--The term ``clear and 
     convincing evidence'' is that measure or degree of proof that 
     will produce in the mind of the trier of fact a firm belief 
     or conviction as to the truth of the allegations sought to be 
     established, except that such measure or degree of proof is 
     more than that required under preponderance of the evidence, 
     but less than that required for proof beyond a reasonable 
     doubt.
       (3) Health care liability action.--The term ``health care 
     liability action'' means a civil action in a State or Federal 
     court--
       (A) against a health care provider, health care 
     professional, or other defendant joined in the action 
     (regardless of the theory of liability on which the action is 
     based) in which the claimant alleges injury related to the 
     provision of, or the failure to provide, health care 
     services; or
       (B) against a health care payor, a health maintenance 
     organization, insurance company, or any other individual, 
     organization, or entity that provides payment for health care 
     benefits in which the claimant alleges that injury was caused 
     by the payment for, or the failure to make payment for, 
     health care benefits, except to the extent such actions are 
     subject to the Employee Retirement Income Security Act of 
     1974.
       (4) Health care professional.--The term ``health care 
     professional'' means any individual who provides health care 
     services in a State and who is required by Federal or State 
     laws or regulations to be licensed, registered or certified 
     to provide such services or who is certified to provide 
     health care services pursuant to a program of education, 
     training and examination by an accredited institution, 
     professional board, or professional organization.
       (5) Health care provider.--The term ``health care 
     provider'' means any organization or institution that is 
     engaged in the delivery of health care items or services in a 
     State and that is required by Federal or State laws or 
     regulations to be licensed, registered or certified to engage 
     in the delivery of such items or services.
       (6) Health care services.--The term ``health care 
     services'' means any services provided by a health care 
     professional or health care provider, or any individual 
     working under the supervision of a health care professional, 
     that relate to the diagnosis, prevention, or treatment of any 
     disease or impairment, or the assessment of the health of 
     human beings.
       (7) Injury.--The term ``injury'' means any illness, 
     disease, or other harm that is the subject of a health care 
     liability action.
       (8) Noneconomic losses.--The term ``noneconomic losses'' 
     means losses for physical and emotional pain, suffering, 
     inconvenience, physical impairment, mental anguish, 
     disfigurement, loss of enjoyment of life, loss of consortium, 
     and other nonpecuniary losses incurred by an individual with 
     respect to which a health care liability action is brought.
       (9) Punitive damages.--The term ``punitive damages'' means 
     damages awarded, for the purpose of punishment or deterrence, 
     and not for compensatory purposes, against a health care 
     provider, health care organization, or other defendant in a 
     health care liability action. Punitive damages are neither 
     economic nor noneconomic damages.
       (10) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.

     SEC. 103. APPLICABILITY.

       (a) In General.--Except as provided in subsection (c), this 
     subtitle shall apply with respect to any health care 
     liability action brought in any Federal or State court, 
     except that this section shall not apply to an action for 
     damages arising from a vaccine-related injury or death to the 
     extent that title XXI of the Public Health Service Act 
     applies to the action.
       (b) Preemption.--The provisions of this subtitle shall 
     preempt any State law to the extent such law is inconsistent 
     with the limitations contained in such provisions. The 
     provisions of this subtitle shall not preempt any State law 
     that--
       (1) provides for defenses in addition to those contained in 
     this subtitle, places greater limitations on the amount of 
     attorneys' fees that can be collected, or otherwise imposes 
     greater restrictions on non-economic or punitive damages than 
     those provided in this subtitle;
       (2) permits State officials to commence health care 
     liability actions as a representative of an individual; or
       (3) permits provider-based dispute resolution.
       (c) Effect on Sovereign Immunity and Choice of Law or 
     Venue.--Nothing in this subtitle shall be construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any provision of law;
       (2) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (3) affect the applicability of any provision of the 
     Foreign Sovereign Immunities Act of 1976;
       (4) preempt State choice-of-law rules with respect to 
     actions brought by a foreign nation or a citizen of a foreign 
     nation; or
       (5) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation 
     [[Page S2865]] or to dismiss an action of a foreign nation or 
     of a citizen of a foreign nation on the ground of 
     inconvenient forum.
       (d) Federal Court Jurisdiction Not Established on Federal 
     Question Grounds.--Nothing in this subtitle shall be 
     construed to establish any jurisdiction in the district 
     courts of the United States over health care liability 
     actions on the basis of sections 1331 or 1337 of title 28, 
     United States Code.

     SEC. 104. STATUTE OF LIMITATIONS.

       A health care liability action that is subject to this Act 
     may not be initiated unless a complaint with respect to such 
     action is filed within the 2-year period beginning on the 
     date on which the claimant discovered or, in the exercise of 
     reasonable care, should have discovered the harm and its 
     cause, except that such an action relating to a claimant 
     under legal disability may be filed within 2 years after the 
     date on which the disability ceases. If the commencement of a 
     health care liability action is stayed or enjoined, the 
     running of the statute of limitations under this section 
     shall be suspended for the period of the stay or injunction.

     SEC. 105. REFORM OF PUNITIVE DAMAGES.

       (a) Limitation.--With respect to a health care liability 
     action, an award for punitive damages may only be made, if 
     otherwise permitted by applicable law, if it is proven by 
     clear and convincing evidence that the defendant--
       (1) intended to injure the claimant for a reason unrelated 
     to the provision of health care services;
       (2) understood the claimant was substantially certain to 
     suffer unnecessary injury, and in providing or failing to 
     provide health care services, the defendant deliberately 
     failed to avoid such injury; or
       (3) acted with a conscious disregard of a substantial and 
     unjustifiable risk of unnecessary injury which the defendant 
     failed to avoid in a manner which constitutes a gross 
     deviation from the normal standard of conduct in such 
     circumstances.
       (b) Punitive Damages Not Permitted.--Notwithstanding the 
     provisions of subsection (a), punitive damages may not be 
     awarded against a defendant with respect to any health care 
     liability action if no judgment for compensatory damages, 
     including nominal damages (under $500), is rendered against 
     the defendant.
       (c) Requirements for Pleading of Punitive Damages.--
       (1) In general.--No demand for punitive damages shall be 
     included in a health care liability action as initially 
     filed.
       (2) Amended pleading.--A court may allow a claimant to file 
     an amended complaint or pleading for punitive damages in a 
     health care liability action if--
       (A) the claimant submits a motion to amend the complaint or 
     pleading within the earlier of--
       (i) 2 years after the complaint or initial pleading is 
     filed, or
       (ii) 9 months before the date the matter is first set for 
     trial; and
       (B) after a finding by a court upon review of supporting 
     and opposing affidavits or after a hearing, that after 
     weighing the evidence the claimant has established by a 
     substantial probability that the claimant will prevail on the 
     claim for punitive damages.
       (d) Separate Proceeding.--
       (1) In general.--At the request of any defendant in a 
     health care liability action, the trier of fact shall 
     consider in a separate proceeding--
       (A) whether punitive damages are to be awarded and the 
     amount of such award, or
       (B) the amount of punitive damages following a 
     determination of punitive liability.
       (2) Only relevant evidence admissible.--If a defendant 
     requests a separate proceeding under paragraph (1), evidence 
     relevant only to the claim of punitive damages in a health 
     care liability action, as determined by applicable State law, 
     shall be inadmissible in any proceeding to determine whether 
     compensatory damages are to be awarded.
       (e) Determining Amount of Punitive Damages.--In determining 
     the amount of punitive damages in a health care liability 
     action, the trier of fact shall consider only the following:
       (1) The severity of the harm caused by the conduct of the 
     defendant.
       (2) The duration of the conduct or any concealment of it by 
     the defendant.
       (3) The profitability of the conduct of the defendant.
       (4) The number of products sold or medical procedures 
     rendered for compensation, as the case may be, by the 
     defendant of the kind causing the harm complained of by the 
     claimant.
       (5) Awards of punitive or exemplary damages to persons 
     similarly situated to the claimant, when offered by the 
     defendant.
       (6) Prospective awards of compensatory damages to persons 
     similarly situated to the claimant.
       (7) Any criminal penalties imposed on the defendant as a 
     result of the conduct complained of by the claimant, when 
     offered by the defendant.
       (8) The amount of any civil fines assessed against the 
     defendant as a result of the conduct complained of by the 
     claimant, when offered by the defendant.
       (f) Limitation Amount.--The amount of damages that may be 
     awarded as punitive damages in any health care liability 
     action shall not exceed 3 times the amount awarded to the 
     claimant for the economic injury on which such claim is 
     based, or $250,000, whichever is greater. This subsection 
     shall be applied by the court and shall not be disclosed to 
     the jury.
       (g) Restrictions Permitted.--Nothing in this section shall 
     be construed to imply a right to seek punitive damages where 
     none exists under Federal or State law.

     SEC. 106. PERIODIC PAYMENTS.

       With respect to a health care liability action, no person 
     may be required to pay more than $100,000 for future damages 
     in a single payment of a damages award, but a person shall be 
     permitted to make such payments of the award on a periodic 
     basis. The periods for such payments shall be determined by 
     the adjudicating body, based upon projections of future 
     losses and shall be reduced to present value. The 
     adjudicating body may waive the requirements of this section 
     if such body determines that such a waiver is in the 
     interests of justice.

     SEC. 107. SCOPE OF LIABILITY.

       (a) In General.--With respect to punitive and noneconomic 
     damages, the liability of each defendant in a health care 
     liability action shall be several only and may not be joint. 
     Such a defendant shall be liable only for the amount of 
     punitive or noneconomic damages allocated to the defendant in 
     direct proportion to such defendant's percentage of fault or 
     responsibility for the injury suffered by the claimant.
       (b) Determination of Percentage of Liability.--The trier of 
     fact in a health care liability action shall determine the 
     extent of each defendant's fault or responsibility for injury 
     suffered by the claimant, and shall assign a percentage of 
     responsibility for such injury to each such defendant.
       (c) Prohibition on Vicarious Liability.--A defendant in a 
     health care liability action may not be held vicariously 
     liable for the direct actions or omissions of other 
     individuals.

     SEC. 108. MANDATORY OFFSETS FOR DAMAGES PAID BY A COLLATERAL 
                   SOURCE.

       (a) In General.--With respect to a health care liability 
     action, the total amount of damages received by an individual 
     under such action shall be reduced, in accordance with 
     subsection (b), by any other payment that has been, or will 
     be, made to an individual to compensate such individual for 
     the injury that was the subject of such action.
       (b) Amount of Reduction.--The amount by which an award of 
     damages to an individual for an injury shall be reduced under 
     subsection (a) shall be--
       (1) the total amount of any payments (other than such 
     award) that have been made or that will be made to such 
     individual to pay costs of or compensate such individual for 
     the injury that was the subject of the action; minus
       (2) the amount paid by such individual (or by the spouse, 
     parent, or legal guardian of such individual) to secure the 
     payments described in paragraph (1).
       (c) Pretrial Determination of Amounts from Collateral 
     Services.--The reductions requires under subsection (b)(2) 
     shall be determined by the court in a pretrial proceeding. At 
     such proceeding--
       (1) no evidence shall be admitted as to the amount of any 
     charge, payments, or damage for which a claimant--
       (A) has received payment from a collateral source or the 
     obligation for which has been assured by a third party; or
       (B) is, or with reasonable certainty, will be eligible to 
     receive payment from a collateral source of the obligation 
     which will, with reasonable certainty be assumed by a third 
     party; and
       (2) the jury, if any, shall be advised that--
       (A) except for damages as to which the court permits the 
     introduction of evidence, the claimant's medical expenses and 
     lost income have been or will be paid by a collateral source 
     or third party; and
       (B) the claimant shall receive no award for any damages 
     that have been or will be paid by a collateral source or 
     third party.

     SEC. 109. TREATMENT OF ATTORNEYS' FEES AND OTHER COSTS.

       (a) Limitation on Amount of Contingency Fees.--
       (1) In general.--An attorney who represents, on a 
     contingency fee basis, a claimant in a health care liability 
     action may not charge, demand, receive, or collect for 
     services rendered in connection with such action in excess of 
     the following amount recovered by judgment or settlement 
     under such action:
       (A) 33\1/3\ percent of the first $150,000 (or portion 
     thereof) recovered, based on after-tax recovery, plus
       (B) 25 percent of any amount in excess of $150,000 
     recovered, based on after-tax recovery.
       (2) Calculation of periodic payments.--In the event that a 
     judgment or settlement includes periodic or future payments 
     of damages, the amount recovered for purposes of computing 
     the limitation on the contingency fee under paragraph (1) 
     shall be based on the cost of the annuity or trust 
     established to make the payments. In any case in which an 
     annuity or trust is not established to make such payments, 
     such amount shall be based on the present value of the 
     payments.
       (b) Contingency Fee Defined.--As used in this section, the 
     term ``contingency fee'' means any fee for professional legal 
     services which is, in whole or in part, contingent upon the 
     recovery of any amount of damages, whether through judgment 
     or settlement.

     SEC. 110. OBSTETRIC CASES.

       With respect to a health care liability action relating to 
     services provided during 
     [[Page S2866]] labor or the delivery of a baby, if the health 
     care professional against whom the action is brought did not 
     previously treat the pregnant woman for the pregnancy, the 
     trier of fact may not find that the defendant committed 
     malpractice and may not assess damages against the health 
     care professional unless the malpractice is proven by clear 
     and convincing evidence.

     SEC. 111. STATE-BASED ALTERNATIVE DISPUTE RESOLUTION 
                   MECHANISMS.

       (a) Application to Health Care Liability Claims under 
     Health Plans.--Prior to or immediately following the 
     commencement of any health care liability action, the parties 
     shall participate in the alternative dispute resolution 
     system administered by the State under subsection (b). Such 
     participation shall be in lieu of any other provision of 
     Federal or State law applicable to the parties prior to the 
     commencement of the health care liability action.
       (b) Adoption of Mechanism by State.--Each State shall--
       (1) maintain or adopt at least one of the alternative 
     dispute resolution methods satisfying the requirements 
     specified under subsection (c) and (d) for the resolution of 
     health care liability claims arising from the provision of 
     (or failure to provide) health care services to individuals 
     enrolled in a health plans; and
       (2) clearly disclose to enrollees in health plans (and 
     potential enrollees) the availability and procedures for 
     consumer grievances, including a description of the 
     alternative dispute resolution method or methods adopted 
     under this subsection.
       (c) Specification of Permissible Alternative Dispute 
     Resolution Methods.--
       (1) In general.--The Attorney General, in consultation with 
     the Secretary and the Administrative Conference of the United 
     States, shall, by regulation, develop alternative dispute 
     resolution methods for the use by States in resolving health 
     care liability claims under subsection (a). Such methods 
     shall include at least the following:
       (A) Arbitration.--The use of arbitration, a nonjury 
     adversarial dispute resolution process which may, subject to 
     subsection (d), result in a final decision as to facts, law, 
     liability or damages. The parties may elect binding 
     arbitration.
       (B) Mediation.--The use of mediation, a settlement process 
     coordinated by a neutral third party without the ultimate 
     rendering of a formal opinion as to factual or legal 
     findings.
       (C) Early neutral evaluation.--The use of early neutral 
     evaluation, in which the parties make a presentation to a 
     neutral attorney or other neutral evaluator for an assessment 
     of the merits, to encourage settlement. If the parties do not 
     settle as a result of assessment and proceed to trial, the 
     neutral evaluator's opinion shall be kept confidential.
       (D) Early offer and recovery mechanism.--
       (i) In general.--The use of early offer and recovery 
     mechanisms under which a health care provider, health care 
     organization, or any other alleged responsible defendant may 
     offer to compensate a claimant for his or her reasonable 
     economic damages, including future economic damages, less 
     amounts available from collateral sources.
       (ii) Binding arbitration.--If, after an offer is made under 
     clause (i), the claimant alleges that payment of economic 
     damages under the offer has not been reasonably made, or the 
     participants in the offer dispute their relative 
     contributions to the payments to be made to the claimant, 
     such disputes shall be resolved through binding arbitration 
     in accordance with applicable rules and procedures 
     established by the State involved.
       (2) Standards for establishing methods.--In developing 
     alternative dispute resolution methods under paragraph (1), 
     the Attorney General shall assure that the methods promote 
     the resolution of health care liability claims in a manner 
     that--
       (A) is affordable for the parties involved;
       (B) provides for timely resolution of claims;
       (C) provides for the consistent and fair resolution of 
     claims; and
       (D) provides for reasonably convenient access to dispute 
     resolution for individuals enrolled in plans.
       (3) Waiver authority.--Upon application of a State, the 
     Attorney General, in consultation with the Secretary, may 
     grant the State the authority to fulfill the requirement of 
     subsection (b) by adopting a mechanism other than a mechanism 
     established by the Attorney General pursuant to this 
     subsection, except that such mechanism must meet the 
     standards set forth in paragraph (2).
       (d) Further Redress.--Except with respect to the claimant-
     requested binding arbitration method set forth in subsection 
     (c)(1)(A), a claimant who is dissatisfied with the 
     determination reached as a result of an alternative dispute 
     resolution method applied under this section may, after the 
     final resolution of the claimant's claim under the method, 
     initiate or resume a cause of action to seek damages or other 
     redress with respect to the claim to the extent otherwise 
     permitted under State law. State law shall govern the 
     admissibility of results of any alternative dispute 
     resolution procedure and all statements, offers, and other 
     communications made during such procedures, at any subsequent 
     trial. An individual who indicates or resumes a health care 
     liability action shall only prevail if such individual proves 
     each element of the action beyond a reasonable doubt, 
     including proving that the defendant was grossly negligent or 
     intentionally caused injury.

     SEC. 112. REQUIREMENT OF CERTIFICATE OF MERIT.

       (a) Requiring Submission with Complaint.--Except as 
     provided in subsection (b) and subject to the penalties of 
     subsection (d), no health care liability action may be 
     brought by any individual unless, at the time the individual 
     commences such action, the individual or the individual's 
     attorney submits an affidavit declaring that--
       (1) the individual (or the individual's attorney) has 
     consulted and reviewed the facts of the claim with a 
     qualified specialist (as defined in subsection (c));
       (2) the individual or the individual's attorney has 
     obtained a written report by a qualified specialist that 
     clearly identifies the individual and that includes the 
     specialist's determination that, based upon a review of the 
     available medical record and other relevant material, a 
     reasonable medical interpretation of the facts supports a 
     finding that the claim against the defendant is meritorious 
     and based on good cause; and
       (3) on the basis of the qualified specialist's review and 
     consultation, the individual, and if represented, the 
     individual's attorney, have concluded that the claim is 
     meritorious and based on good cause.
       (b) Extension in Certain Instances.--
       (1) In general.--Subject to paragraph (2), subsection (a) 
     shall not apply with respect to an individual who brings a 
     health care liability action without submitting an affidavit 
     described in such subsection if--
       (A) despite good faith efforts, the individual is unable to 
     obtain the written report before the expiration of the 
     applicable statute of limitations;
       (B) despite good faith efforts, at the time the individual 
     commences the action, the individual has been unable to 
     obtain medical records or other information necessary, 
     pursuant to any applicable law, to prepare the written report 
     requested; or
       (C) the court of competent jurisdiction determines that the 
     affidavit requirement shall be extended upon a showing of 
     good cause.
       (2) Deadline for submission where extension applies.--In 
     the case of an individual who brings an action to which 
     paragraph (1) applies, the action shall be dismissed unless 
     the individual submits the affidavit described in subsection 
     (a) not later than--
       (A) in the case of an action to which subparagraph (A) of 
     paragraph (1) applies, 90 days after commencing the action; 
     or
       (B) in the case of an action to which subparagraph (B) of 
     paragraph (1) applies, 90 days after obtaining the 
     information described in such subparagraph or when good cause 
     for an extension no longer exists.
       (c) Qualified Specialist Defined.--
       (1) In general.--As used in subsection (a), the term 
     ``qualified specialist'' means, with respect to a health care 
     liability action, a health care professional who has 
     expertise in the same or substantially similar area of 
     practice to that involved in the action.
       (2) Evidence of expertise.--For purposes of paragraph (1), 
     evidence of required expertise may include evidence that the 
     individual--
       (A) practices (or has practiced) or teaches (or has taught) 
     in the same or substantially similar area of health care or 
     medicine to that involved in the action; or
       (B) is otherwise qualified by experience or demonstrated 
     competence in the relevant practice area.
       (d) Sanctions for Submitting False Affidavit.--Upon the 
     motion of any party or on its own initiative, the court in a 
     health care liability action may impose a sanction on a 
     party, the party's attorney, or both, for--
       (1) any knowingly false statement made in an affidavit 
     described in subsection (a);
       (2) making any false representations in order to obtain a 
     qualified specialist's report; or
       (3) failing to have the qualified specialist's written 
     report in his or her custody and control;
     and may require that the sanctioned party reimburse the other 
     party to the action for costs and reasonable attorney's fees.
               Subtitle B--Biomaterials Access Assurance

     SEC. 121. SHORT TITLE.

       This subtitle may be cited as the ``Biomaterials Access 
     Assurance Act of 1995''.

     SEC. 122. FINDINGS.

       Congress finds that--
       (1) each year millions of citizens of the United States 
     depend on the availability of lifesaving or life-enhancing 
     medical devices, many of which are permanently implantable 
     within the human body;
       (2) a continued supply of raw materials and component parts 
     is necessary for the invention, development, improvement, and 
     maintenance of the supply of the devices;
       (3) most of the medical devices are made with raw materials 
     and component parts that--
       (A) are not designed or manufactured specifically for use 
     in medical devices; and
       (B) come in contact with internal human tissue;
       (4) the raw materials and component parts also are used in 
     a variety of nonmedical products;
       (5) because small quantities of the raw materials and 
     component parts are used for medical devices, sales of raw 
     materials and component parts for medical devices constitute 
     an extremely small portion of the 
     [[Page S2867]] overall market for the raw materials and 
     medical devices;
       (6) under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.), manufacturers of medical devices are 
     required to demonstrate that the medical devices are safe and 
     effective, including demonstrating that the products are 
     properly designed and have adequate warnings or instructions;
       (7) notwithstanding the fact that raw materials and 
     component parts suppliers do not design, produce, or test a 
     final medical device, the suppliers have been the subject of 
     actions alleging inadequate--
       (A) design and testing of medical devices manufactured with 
     materials or parts supplied by the suppliers; or
       (B) warnings related to the use of such medical devices;
       (8) even though suppliers of raw materials and component 
     parts have very rarely been held liable in such actions, such 
     suppliers have ceased supplying certain raw materials and 
     component parts for use in medical devices because the costs 
     associated with litigation in order to ensure a favorable 
     judgment for the suppliers far exceeds the total potential 
     sales revenues from sales by such suppliers to the medical 
     device industry;
       (9) unless alternate sources of supply can be found, the 
     unavailability of raw materials and component parts for 
     medical devices will lead to unavailability of lifesaving and 
     life-enhancing medical devices;
       (10) because other suppliers of the raw materials and 
     component parts in foreign nations are refusing to sell raw 
     materials or component parts for use in manufacturing certain 
     medical devices in the United States, the prospects for 
     development of new sources of supply for the full range of 
     threatened raw materials and component parts for medical 
     devices are remote;
       (11) it is unlikely that the small market for such raw 
     materials and component parts in the United States could 
     support the large investment needed to develop new suppliers 
     of such raw materials and component parts;
       (12) attempts to develop such new suppliers would raise the 
     cost of medical devices;
       (13) courts that have considered the duties of the 
     suppliers of the raw materials and component parts have 
     generally found that the suppliers do not have a duty--
       (A) to evaluate the safety and efficacy of the use of a raw 
     material or component part in a medical device; and
       (B) to warn consumers concerning the safety and 
     effectiveness of a medical device;
       (14) attempts to impose the duties referred to in 
     subparagraphs (A) and (B) of paragraph (13) on suppliers of 
     the raw materials and component parts would cause more harm 
     than good by driving the suppliers to cease supplying 
     manufacturers of medical devices; and
       (15) in order to safeguard the availability of a wide 
     variety of lifesaving and life-enhancing medical devices, 
     immediate action is needed--
       (A) to clarify the permissible bases of liability for 
     suppliers of raw materials and component parts for medical 
     devices; and
       (B) to provide expeditious procedures to dispose of 
     unwarranted suits against the suppliers in such manner as to 
     minimize litigation costs.

     SEC. 123. DEFINITIONS.

       As used in this subtitle:
       (1) Biomaterials supplier.--
       (A) In general.--The term ``biomaterials supplier'' means 
     an entity that directly or indirectly supplies a component 
     part or raw material for use in the manufacture of an 
     implant.
       (B) Persons included.--Such term includes any person who--
       (i) has submitted master files to the Secretary for 
     purposes of premarket approval of a medical device; or
       (ii) licenses a biomaterials supplier to produce component 
     parts or raw materials.
       (2) Claimant.--
       (A) In general.--The term ``claimant'' means any person who 
     brings a civil action, or on whose behalf a civil action is 
     brought, arising from harm allegedly caused directly or 
     indirectly by an implant, including a person other than the 
     individual into whose body, or in contact with whose blood or 
     tissue, the implant is placed, who claims to have suffered 
     harm as a result of the implant.
       (B) Action brought on behalf of an estate.--With respect to 
     an action brought on behalf or through the estate of an 
     individual into whose body, or in contact with whose blood or 
     tissue the implant is placed, such term includes the decedent 
     that is the subject of the action.
       (C) Action brought on behalf of a minor.--With respect to 
     an action brought on behalf or through a minor, such term 
     includes the parent or guardian of the minor.
       (D) Exclusions.--Such term does not include--
       (i) a provider of professional services, in any case in 
     which--

       (I) the sale or use of an implant is incidental to the 
     transaction; and
       (II) the essence of the transaction is the furnishing of 
     judgment, skill, or services; or

       (ii) a manufacturer, seller, or biomaterials supplier.
       (3) Component part.--
       (A) In general.--The term ``component part'' means a 
     manufactured piece of an implant.
       (B) Certain components.--Such term includes a manufactured 
     piece of an implant that--
       (i) has significant nonimplant applications; and
       (ii) alone, has no implant value or purpose, but when 
     combined with other component parts and materials, 
     constitutes an implant.
       (4) Harm.--
       (A) In general.--The term ``harm'' means--
       (i) any injury to or damage suffered by an individual;
       (ii) any illness, disease, or death of that individual 
     resulting from that injury or damage; and
       (iii) any loss to that individual or any other individual 
     resulting from that injury or damage.
       (B) Exclusion.--The term does not include any commercial 
     loss or loss of or damage to an implant.
       (5) Implant.--The term ``implant'' means--
       (A) a medical device that is intended by the manufacturer 
     of the device--
       (i) to be placed into a surgically or naturally formed or 
     existing cavity of the body for a period of at least 30 days; 
     or
       (ii) to remain in contact with bodily fluids or internal 
     human tissue through a surgically produced opening for a 
     period of less than 30 days; and
       (B) suture materials used in implant procedures.
       (6) Manufacturer.--The term ``manufacturer'' means any 
     person who, with respect to an implant--
       (A) is engaged in the manufacture, preparation, 
     propagation, compounding, or processing (as defined in 
     section 510(a)(1) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 360(a)(1)) of the implant; and
       (B) is required--
       (i) to register with the Secretary pursuant to section 510 
     of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360) 
     and the regulations issued under such section; and
       (ii) to include the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section.
       (7) Medical device.--The term ``medical device'' means a 
     device, as defined in section 201(h) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 321(h)).
       (8) Qualified specialist.--With respect to an action, the 
     term ``qualified specialist'' means a person who is qualified 
     by knowledge, skill, experience, training, or education in 
     the specialty area that is the subject of the action.
       (9) Raw material.--The term ``raw material'' means a 
     substance or product that--
       (A) has a generic use; and
       (B) may be used in an application other than an implant.
       (10) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (11) Seller.--
       (A) In general.--The term ``seller'' means a person who, in 
     the course of a business conducted for that purpose, sells, 
     distributes, leases, packages, labels, or otherwise places an 
     implant in the stream of commerce.
       (B) Exclusions.--The term does not include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services, in any case in 
     which the sale or use of an implant is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who acts in only a financial capacity with 
     respect to the sale of an implant.

     SEC. 124. GENERAL REQUIREMENTS; APPLICABILITY; PREEMPTION.

       (a) General Requirements.--
       (1) In general.--In any civil action covered by this 
     subtitle, a biomaterials supplier may raise any defense set 
     forth in section 125.
       (2) Procedures.--Notwithstanding any other provision of 
     law, the Federal or State court in which a civil action 
     covered by this subtitle is pending shall, in connection with 
     a motion for dismissal or judgment based on a defense 
     described in paragraph (1), use the procedures set forth in 
     section 126.
       (b) Applicability.--
       (1) In general.--Except as provided in paragraph (2), 
     notwithstanding any other provision of law, this subtitle 
     applies to any civil action brought by a claimant, whether in 
     a Federal or State court, against a manufacturer, seller, or 
     biomaterials supplier, on the basis of any legal theory, for 
     harm allegedly caused by an implant.
       (2) Exclusion.--A civil action brought by a purchaser of a 
     medical device for use in providing professional services 
     against a manufacturer, seller, or biomaterials supplier for 
     loss or damage to an implant or for commercial loss to the 
     purchaser--
       (A) shall not be considered an action that is subject to 
     this subtitle; and
       (B) shall be governed by applicable commercial or contract 
     law.
       (c) Scope of Preemption.--
       (1) In general.--This subtitle supersedes any State law 
     regarding recovery for harm caused by an implant and any rule 
     of procedure applicable to a civil action to recover damages 
     for such harm only to the extent that this subtitle 
     establishes a rule of law applicable to the recovery of such 
     damages.
       (2) Applicability of other laws.--Any issue that arises 
     under this subtitle and that is not governed by a rule of law 
     applicable to the recovery of damages described in paragraph 
     (1) shall be governed by applicable Federal or State law.
     [[Page S2868]]   (d) Statutory Construction.--Nothing in this 
     subtitle may be construed--
       (1) to affect any defense available to a defendant under 
     any other provisions of Federal or State law in an action 
     alleging harm caused by an implant; or
       (2) to create a cause of action or Federal court 
     jurisdiction pursuant to section 1331 or 1337 of title 28, 
     United States Code, that otherwise would not exist under 
     applicable Federal or State law.

     SEC. 125. LIABILITY OF BIOMATERIALS SUPPLIERS.

       (a) In General.--
       (1) Exclusion from liability.--Except as provided in 
     paragraph (2), a biomaterials supplier shall not be liable 
     for harm to a claimant caused by an implant.
       (2) Liability.--A biomaterials supplier that--
       (A) is a manufacturer may be liable for harm to a claimant 
     described in subsection (b);
       (B) is a seller may be liable for harm to a claimant 
     described in subsection (c); and
       (C) furnishes raw materials or component parts that fail to 
     meet applicable contractual requirements or specifications 
     may be liable for a harm to a claimant described in 
     subsection (d).
       (b) Liability as Manufacturer.--
       (1) In general.--A biomaterials supplier may, to the extent 
     required and permitted by any other applicable law, be liable 
     for harm to a claimant caused by an implant if the 
     biomaterials supplier is the manufacturer of the implant.
       (2) Grounds for liability.--The biomaterials supplier may 
     be considered the manufacturer of the implant that allegedly 
     caused harm to a claimant only if the biomaterials supplier--
       (A)(i) has registered with the Secretary pursuant to 
     section 510 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 360) and the regulations issued under such section; 
     and
       (ii) included the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section; 
     or
       (B) is the subject of a declaration issued by the Secretary 
     pursuant to paragraph (3) that states that the supplier, with 
     respect to the implant that allegedly caused harm to the 
     claimant, was required to--
       (i) register with the Secretary under section 510 of such 
     Act (21 U.S.C. 360), and the regulations issued under such 
     section, but failed to do so; or
       (ii) include the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section, 
     but failed to do so.
       (3) Administrative procedures.--
       (A) In general.--The Secretary may issue a declaration 
     described in paragraph (2)(B) on the motion of the Secretary 
     or on petition by any person, after providing--
       (i) notice to the affected persons; and
       (ii) an opportunity for an informal hearing.
       (B) Docketing and final decision.--Immediately upon receipt 
     of a petition filed pursuant to this paragraph, the Secretary 
     shall docket the petition. Not later than 180 days after the 
     petition is filed, the Secretary shall issue a final decision 
     on the petition.
       (C) Applicability of statute of limitations.--Any 
     applicable statute of limitations shall toll during the 
     period during which a claimant has filed a petition with the 
     Secretary under this paragraph.
       (c) Liability as Seller.--A biomaterials supplier may, to 
     the extent required and permitted by any other applicable 
     law, be liable as a seller for harm to a claimant caused by 
     an implant if the biomaterials supplier--
       (1) held title to the implant that allegedly caused harm to 
     the claimant as a result of purchasing the implant after--
       (A) the manufacture of the implant; and
       (B) the entrance of the implant in the stream of commerce; 
     and
       (2) subsequently resold the implant.
       (d) Liability for Violating Contractual Requirements or 
     Specifications.--A biomaterials supplier may, to the extent 
     required and permitted by any other applicable law, be liable 
     for harm to a claimant caused by an implant, if the claimant 
     in an action shows, by a preponderance of the evidence, 
     that--
       (1) the raw materials or component parts delivered by the 
     biomaterials supplier either--
       (A) did not constitute the product described in the 
     contract between the biomaterials supplier and the person who 
     contracted for delivery of the product; or
       (B) failed to meet any specifications that were--
       (i) provided to the biomaterials supplier and not expressly 
     repudiated by the biomaterials supplier prior to acceptance 
     of delivery of the raw materials or component parts;
       (ii)(I) published by the biomaterials supplier;
       (II) provided to the manufacturer by the biomaterials 
     supplier; or
       (III) contained in a master file that was submitted by the 
     biomaterials supplier to the Secretary and that is currently 
     maintained by the biomaterials supplier for purposes of 
     premarket approval of medical devices; or
       (iii)(I) included in the submissions for purposes of 
     premarket approval or review by the Secretary under section 
     510, 513, 515, or 520 of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 360, 360c, 360e, or 360j); and
       (II) have received clearance from the Secretary,
     if such specifications were provided by the manufacturer to 
     the biomaterials supplier and were not expressly repudiated 
     by the biomaterials supplier prior to the acceptance by the 
     manufacturer of delivery of the raw materials or component 
     parts; and
       (2) such conduct was an actual and proximate cause of the 
     harm to the claimant.

     SEC. 126. PROCEDURES FOR DISMISSAL OF CIVIL ACTIONS AGAINST 
                   BIOMATERIALS SUPPLIERS.

       (a) Motion To Dismiss.--In any action that is subject to 
     this subtitle, a biomaterials supplier who is a defendant in 
     such action may, at any time during which a motion to dismiss 
     may be filed under an applicable law, move to dismiss the 
     action on the grounds that--
       (1) the defendant is a biomaterials supplier; and
       (2)(A) the defendant should not, for the purposes of--
       (i) section 125(b), be considered to be a manufacturer of 
     the implant that is subject to such section; or
       (ii) section 125(c), be considered to be a seller of the 
     implant that allegedly caused harm to the claimant; or
       (B)(i) the claimant has failed to establish, pursuant to 
     section 125(d), that the supplier furnished raw materials or 
     component parts in violation of contractual requirements or 
     specifications; or
       (ii) the claimant has failed to comply with the procedural 
     requirements of subsection (b).
       (b) Procedural Requirements.--
       (1) In general.--The procedural requirements described in 
     paragraphs (2) and (3) shall apply to any action by a 
     claimant against a biomaterials supplier that is subject to 
     this subtitle.
       (2) Manufacturer of implant shall be named a party.--The 
     claimant shall be required to name the manufacturer of the 
     implant as a party to the action, unless--
       (A) the manufacturer is subject to service of process 
     solely in a jurisdiction in which the biomaterials supplier 
     is not domiciled or subject to a service of process; or
       (B) an action against the manufacturer is barred by 
     applicable law.
       (3) Affidavit.--At the time the claimant brings an action 
     against a biomaterials supplier the claimant shall be 
     required to submit an affidavit that--
       (A) declares that the claimant has consulted and reviewed 
     the facts of the action with a qualified specialist, whose 
     qualifications the claimant shall disclose;
       (B) includes a written determination by a qualified 
     specialist that the raw materials or component parts actually 
     used in the manufacture of the implant of the claimant were 
     raw materials or component parts described in section 
     125(d)(1), together with a statement of the basis for such a 
     determination;
       (C) includes a written determination by a qualified 
     specialist that, after a review of the medical record and 
     other relevant material, the raw material or component part 
     supplied by the biomaterials supplier and actually used in 
     the manufacture of the implant was a cause of the harm 
     alleged by claimant, together with a statement of the basis 
     for the determination; and
       (D) states that, on the basis of review and consultation of 
     the qualified specialist, the claimant (or the attorney of 
     the claimant) has concluded that there is a reasonable and 
     meritorious cause for the filing of the action against the 
     biomaterials supplier.
       (c) Proceeding on Motion To Dismiss.--The following rules 
     shall apply to any proceeding on a motion to dismiss filed 
     under this section:
       (1) Affidavits relating to listing and declarations.--
       (A) In general.--The defendant in the action may submit an 
     affidavit demonstrating that defendant has not included the 
     implant on a list, if any, filed with the Secretary pursuant 
     to section 510(j) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 360(j)).
       (B) Response to motion to dismiss.--In response to the 
     motion to dismiss, the claimant may submit an affidavit 
     demonstrating that--
       (i) the Secretary has, with respect to the defendant and 
     the implant that allegedly caused harm to the claimant, 
     issued a declaration pursuant to section 125(b)(2)(B); or
       (ii) the defendant who filed the motion to dismiss is a 
     seller of the implant who is liable under section 125(c).
       (2) Effect of motion to dismiss on discovery.--
       (A) In general.--If a defendant files a motion to dismiss 
     under paragraph (1) or (3) of subsection (a), no discovery 
     shall be permitted in connection to the action that is the 
     subject of the motion, other than discovery necessary to 
     determine a motion to dismiss for lack of jurisdiction, until 
     such time as the court rules on the motion to dismiss in 
     accordance with the affidavits submitted by the parties in 
     accordance with this section.
       (B) Discovery.--If a defendant files a motion to dismiss 
     under subsection (a)(2) on the grounds that the biomaterials 
     supplier did not furnish raw materials or component parts in 
     violation of contractual requirements or specifications, the 
     court may permit discovery, as ordered by the court. The 
     discovery conducted pursuant to this subparagraph shall be 
     limited to issues that are directly relevant to--
     [[Page S2869]]   (i) the pending motion to dismiss; or
       (ii) the jurisdiction of the court.
       (3) Affidavits relating status of defendant.--
       (A) In general.--Except as provided in clauses (i) and (ii) 
     of subparagraph (B), the court shall consider a defendant to 
     be a biomaterials supplier who is not subject to an action 
     for harm to a claimant caused by an implant, other than an 
     action relating to liability for a violation of contractual 
     requirements or specifications described in subsection (d).
       (B) Responses to motion to dismiss.--The court shall grant 
     a motion to dismiss any action that asserts liability of the 
     defendant under subsection (b) or (c) of section 125 on the 
     grounds that the defendant is not a manufacturer subject to 
     such subsection 125(b) or seller subject to subsection 
     125(c), unless the claimant submits a valid affidavit that 
     demonstrates that--
       (i) with respect to a motion to dismiss contending the 
     defendant is not a manufacturer, the defendant meets the 
     applicable requirements for liability as a manufacturer under 
     section 125(b); or
       (ii) with respect to a motion to dismiss contending that 
     the defendant is not a seller, the defendant meets the 
     applicable requirements for liability as a seller under 
     section 125(c).
       (4) Basis of ruling on motion to dismiss.--
       (A) In general.--The court shall rule on a motion to 
     dismiss filed under subsection (a) solely on the basis of the 
     pleadings of the parties made pursuant to this section and 
     any affidavits submitted by the parties pursuant to this 
     section.
       (B) Motion for summary judgment.--Notwithstanding any other 
     provision of law, if the court determines that the pleadings 
     and affidavits made by parties pursuant to this section raise 
     genuine issues as concerning material facts with respect to a 
     motion concerning contractual requirements and 
     specifications, the court may deem the motion to dismiss to 
     be a motion for summary judgment made pursuant to subsection 
     (d).
       (d) Summary Judgment.--
       (1) In general.--
       (A) Basis for entry of judgment.--A biomaterials supplier 
     shall be entitled to entry of judgment without trial if the 
     court finds there is no genuine issue as concerning any 
     material fact for each applicable element set forth in 
     paragraphs (1) and (2) of section 125(d).
       (B) Issues of material fact.--With respect to a finding 
     made under subparagraph (A), the court shall consider a 
     genuine issue of material fact to exist only if the evidence 
     submitted by claimant would be sufficient to allow a 
     reasonable jury to reach a verdict for the claimant if the 
     jury found the evidence to be credible.
       (2) Discovery made prior to a ruling on a motion for 
     summary judgment.--If, under applicable rules, the court 
     permits discovery prior to a ruling on a motion for summary 
     judgment made pursuant to this subsection, such discovery 
     shall be limited solely to establishing whether a genuine 
     issue of material fact exists.
       (3) Discovery with respect to a biomaterials supplier.--A 
     biomaterials supplier shall be subject to discovery in 
     connection with a motion seeking dismissal or summary 
     judgment on the basis of the inapplicability of section 
     125(d) or the failure to establish the applicable elements of 
     section 125(d) solely to the extent permitted by the 
     applicable Federal or State rules for discovery against 
     nonparties.
       (e) Stay Pending Petition for Declaration.--If a claimant 
     has filed a petition for a declaration pursuant to section 
     125(b) with respect to a defendant, and the Secretary has not 
     issued a final decision on the petition, the court shall stay 
     all proceedings with respect to that defendant until such 
     time as the Secretary has issued a final decision on the 
     petition.
       (f) Manufacturer Conduct of Proceeding.--The manufacturer 
     of an implant that is the subject of an action covered under 
     this subtitle shall be permitted to file and conduct a 
     proceeding on any motion for summary judgment or dismissal 
     filed by a biomaterials supplier who is a defendant under 
     this section if the manufacturer and any other defendant in 
     such action enter into a valid and applicable contractual 
     agreement under which the manufacturer agrees to bear the 
     cost of such proceeding or to conduct such proceeding.
       (g) Attorney Fees.--The court shall require the claimant to 
     compensate the biomaterials supplier (or a manufacturer 
     appearing in lieu of a supplier pursuant to subsection (f)) 
     for attorney fees and costs, if--
       (1) the claimant named or joined the biomaterials supplier; 
     and
       (2) the court found the claim against the biomaterials 
     supplier to be without merit and frivolous.
                       Subtitle C--Applicability

     SEC. 131. APPLICABILITY.

       This title shall apply to all civil actions covered under 
     this title that are commenced on or after the date of 
     enactment of this Act, including any such action with respect 
     to which the harm asserted in the action or the conduct that 
     caused the harm occurred before the date of enactment of this 
     Act.
       TITLE II--PROTECTION OF THE HEALTH AND SAFETY OF PATIENTS

     SEC. 201. HEALTH CARE QUALITY ASSURANCE PROGRAM.

       (a) Fund.--Each State shall establish a health care quality 
     assurance program, to be approved by the Secretary, and a 
     fund consisting of such amounts as are transferred to the 
     fund under subsection (b).
       (b) Transfer of Amounts.--Each State shall require that 50 
     percent of all awards of punitive damages resulting from all 
     health care liability actions in that State be transferred to 
     the fund established under subsection (a) in the State.
       (c) Obligations from Fund.--The chief executive officer of 
     a State shall obligate such sums as are available in the fund 
     established in that State under subsection (a) to--
       (1) license and certify health care professionals in the 
     State;
       (2) implement health care quality assurance programs; and
       (3) carry out programs to reduce malpractice-related costs 
     for health care providers volunteering to provide health care 
     services in medically underserved areas.

     SEC. 202. RISK MANAGEMENT PROGRAMS.

       (a) Requirements for Providers.--Each State shall require 
     each health care professional and health care provider 
     providing services in the State to participate in a risk 
     management program to prevent and provide early warning of 
     practices which may result in injuries to patients or which 
     otherwise may endanger patient safety.
       (b) Requirements for Insurers.--Each State shall require 
     each entity which provides health care professional or 
     provider liability insurance to health care professionals and 
     health care providers in the State to--
       (1) establish risk management programs based on data 
     available to such entity or sanction programs of risk 
     management for health care professionals and health care 
     providers provided by other entities; and
       (2) require each such professional or provider, as a 
     condition of maintaining insurance, to participate in one 
     program described in paragraph (1) at least once in each 3-
     year period.

     SEC. 203. NATIONAL PRACTITIONER DATA BANK.

       Section 427 of the Health Care Quality Improvement Act of 
     1986 (42 U.S.C. 11137) is amended--
       (1) by redesignating subsections (b) through (d) as 
     subsections (c) through (e), respectively;
       (2) by inserting after subsection (a), the following new 
     subsection:
       ``(b) Disclosure of Information.--The Secretary shall 
     promulgate regulations providing for the disclosure of 
     information reported to the Secretary under sections 422 and 
     423, upon request, to any individual.''; and
       (3) in subsection (c) (as so redesignated)--
       (A) in the first sentence of paragraph (1), by striking 
     ``under this part'' and inserting ``under section 421''; and
       (B) in paragraph (3), by striking ``subsection (a)'' and 
     inserting ``subsections (a) and (b)''.
                        TITLE III--SEVERABILITY

     SEC. 301. SEVERABILITY.

       If any provision of this Act, an amendment made by this 
     Act, or the application of such provision or amendment to any 
     person or circumstance is held to be unconstitutional, the 
     remainder of this Act, the amendments made by this Act, and 
     the application of the provisions of such to any person or 
     circumstance shall not be affected thereby.
                                                                    ____

 Summary of McConnell-Lieberman-Kassebaum Health Care Liability Reform 
                   and Quality Assurance Act of 1995


                       title i--liability reform

                Subtitle A--Health Care Liability Reform

       1. Scope:
       a. Applies to any action, filed in federal or state court, 
     against a health care provider, professional, payor, hmo, 
     insurance company or any other defendant (except vaccine-
     related injuries);
       b. Preempts state law to the extent it is inconsistent with 
     the provisions herein; no preemption for state laws which:
       (1) provide additional defenses;
       (2) greater limitations on attorneys' fees;
       (3) greater restrictions on punitive or non-economic 
     damages;
       (4) permit state officials to institute action;
       (5) permit provider-based dispute resolution.
       c. Does not create federal jurisdiction for health care 
     liability actions.
       2. Uniform Statute of Limitations:
       Two years from the date injury discovered or should have 
     been discovered, except that any person under a legal 
     disability may file within two years after the disability 
     ceases.
       3. Limit on Punitive Damages:
       a. Awarded if proved by clear and convincing evidence 
     defendant:
       (1) intended to injure;
       (2) understood claimant was substantially certain to suffer 
     unnecessary injury and deliberately failed to avoid injury; 
     or
       (3) acted with conscious disregard of substantial and 
     unjustifiable risk which defendant failed to avoid in a way 
     which constitutes a gross deviation from the normal standard 
     of conduct.
       b. No punitive damages where compensatory damages of less 
     than $500 are awarded.
       c. Punitive damages may not be pleaded in original 
     complaint. A complaint may be amended within, the earlier of, 
     2 years of original complaint or 9 months before the case is 
     set for trial, and after court finds substantial probability 
     that claimant will prevail on the claim for punitive damages.
       [[Page S2870]] d. At the defendant's request, punitive 
     damages must be considered in a separate proceeding and, if 
     so requested, no evidence relevant to the claim for punitive 
     damages may be admitted in the proceedings for compensatory 
     damages.
       e. In determining the amount, court must consider only:
       (1) severity of harm;
       (2) duration of defendant's conduct and any concealment;
       (3) profitability of defendant's conduct;
       (4) number of products sold/procedures rendered which 
     caused similar harm;
       (5) similar awards of punitive damages in similar 
     circumstances;
       (6) prospective awards of compensatory damages to similarly 
     situated persons;
       (7) criminal penalties imposed on defendant;
       (8) civil fines imposed.
       f. No award may exceed the greater of 3 times the amount of 
     economic damages or $250,000.
       4. Periodic Payment of Damages:
       No more than $100,000 may be required to be paid in one 
     single payment. The court will determine the schedule for 
     payments, based on projection of future losses and reduced to 
     present value. This requirement may be waived, in the 
     interests of justice.
       5. Several, not Joint, Liability:
       Defendant liable only for the amount of non-economic and 
     punitive damages allocated to defendant's direct proportion 
     of fault or responsibility. The trier of fact determines 
     percentage of responsibility of each defendant. No vicarious 
     liability for direct acts or omissions.
       6. Collateral Source:
       Total damages must be reduced by payments from other 
     sources made, or to be made, to compensate individual for 
     injury that is the subject of the health care liability 
     action. The offset is reduced by any amount paid by the 
     injured party (or family member) to secure the payment. The 
     reductions must be determined by the judge in a pretrial 
     proceeding.
       7. Attorneys' Fees:
       Limits attorney contingent fees to 33\1/3\% of the first 
     $150,000 and 25% of any amount in excess of $150,000.
       8. Obstetric Cases:
       No malpractice award against a health care professional 
     relating to delivery of a baby, if the health care 
     professional did not previously treat the woman during the 
     pregnancy, unless malpractice proved by clear and convincing 
     evidence.
       9. State Based Alternative Dispute Resolution:
       a. Prior to the filing, or immediately following the filing 
     of the action, the parties must participate in a state 
     administered alternative dispute resolution system.
       b. The Attorney General will develop adr methods for use by 
     the states, including arbitration, mediation, early neutral 
     evaluation, early offer and recovery. The parties may elect 
     binding arbitration.
       c. Adr must promote resolution of health care liability 
     claims in an affordable, timely, fair and convenient manner. 
     States may be granted waivers if they have programs that meet 
     these standards.
       d. Any party dissatisfied (except where binding arbitration 
     selected) may continue the action in court and may prevail 
     only if each element of the case is proved beyond a 
     reasonable doubt,
      including that the defendant was grossly negligent or 
     intentionally caused injury. State law governs the 
     admission of adr proceedings.
       10. Certificate of Merit:
       Requires that, prior to bringing a lawsuit, an individual 
     (or his or her attorney) to submit an affidavit declaring 
     that the individual reviewed the facts with a qualified 
     specialist and that the specialist has concluded the claim is 
     meritorious. A qualified specialist means a health care 
     professional with expertise (the specialist practices or 
     teaches or has experience or demonstrated competence) in the 
     same or substantially similar area of practice as that 
     involved in the case. A court may impose sanctions for the 
     submission of a false affidavit.

                Subtitle B--Biomaterial Access Assurance

       1. Summary:
       The Biomaterial Access Assurance Act would allow suppliers 
     of the raw material (biomaterial) used to make medical 
     implants, to obtain dismissal, without extensive discovery or 
     other legal costs, in certain tort suits in which plaintiffs 
     allege harm from a finished medical implant.
       The Act would not affect the ability of plaintiffs to sue 
     manufacturers or sellers of medical implants. It would allow 
     raw materials suppliers, however, to be dismissed from 
     lawsuits if the generic raw material used in the medical 
     device met contract specifications, and if the biomaterial 
     supplier cannot be classified as either a manufacturer or 
     seller of the medical implant.
       2. Scope:
       a. Establishes that any biomaterial supplier may seek its 
     dismissal from a civil action within the parameters of the 
     Subtitle.
       b. Applies to any civil action brought by a claimant in 
     Federal or State court against a manufacturer, seller, or 
     biomaterial supplier, on the basis of any legal theory, for 
     harm allegedly caused by an implant.
       c. Preempts State law to the extent the bill establishes a 
     rule of law.
       3. Grounds for Dismissal:
       a. Requires dismissal of a biomaterial supplier unless the 
     claimant establishes that the supplier:
       (1) was itself the manufacturer of the implant;
       (2) was itself the seller of the implant; or
       (3) furnished raw materials that failed to met applicable 
     contractual requirements or specifications.
       b. A supplier may be deemed to be a manufacturer only if 
     the supplier registered as such with the FDA pursuant to 
     medical device requirements or if the HHS Secretary issues a 
     declaration that the supplier should have registered as such. 
     Establishes a procedure for the Secretary to issue such a 
     declaration.
       c. A supplier may be deemed to be a seller if the supplier 
     itself resold the implant after it had been manufactured and 
     had entered the stream of commerce.
       d. With respect to contractual requirements, a supplier may 
     be liable for harm only if the claimant shows that the 
     biomaterial were not the actual product for which the parties 
     contracted or the biomaterial failed to meet certain 
     specifications and that failure was the cause of the injury. 
     The relevant specifications are those:
       (1) provided to the supplier by the manufacturer,
       (2) provided by the manufacturer (either published, given 
     to the manufacturer, or included in an FDA master file), or
       (3) included in manufacturer submissions that had received 
     clearance from the FDA.
       4. Procedures for Dismissal:
       a. A supplier named as a defendant or joined as a co-
     defendant may file a motion to dismiss based on the defenses 
     set forth above.
       b. A plaintiff must sue a manufacturer directly whenever 
     jurisdiction over the manufacturer is available. A plaintiff 
     must submit an expert's affidavit certifying that the 
     biomaterial were actually used and were the cause of the 
     alleged harm and that the case has merit.
       c. Specific rules are established for the handling of a 
     motion to dismiss, including discovery limitations, summary 
     judgment procedures, and staying the proceedings.
       d. The manufacturer, not the supplier, may conduct the 
     proceeding on the motion if an appropriate contractual 
     indemnification agreement exists. The possibility of 
     frivolous claims against a supplier is reduced by permitting 
     the court to require the plaintiff to pay attorney fees if 
     the plaintiff succeeds in making the supplier a defendant, 
     but ultimately is found to have a meritless claim.
       5. Effective Date: The bill will apply to civil actions 
     commenced on or after the date of enactment.


           title II--protection of patient health and safety

       1. Quality Assurance:
       Requires each state to establish a health care quality 
     assurance program and fund, approved by the Secretary of HHS. 
     Allocates 50% of all punitive damage awards to be transferred 
     to the fund for the purpose of licensing and certifying 
     health care professionals, implementing programs, including 
     programs to reduce malpractice costs for volunteers serving 
     underserved areas.
       2. Risk Management Programs:
       Professionals and providers must participate in risk 
     management program to prevent and provide early warning of 
     practices which may result in injuries. Insurers must 
     establish risk management programs and require participation, 
     once every 3 years, as a condition of maintaining insurance.
       3. National Practitioner Data Bank:
       Requires that information on the discipline of health care 
     practitioners, including suspension or revocation of licenses 
     or hospital privileges, be accessible to the public.

  Mr. LIEBERMAN. Mr. President, I am pleased to join Senators 
McConnell and Kassebaum today in introducing the Liability Reform and 
Quality Assurance Act of 1995. I thank Senator McConnell for his 
leadership on the bill.
  Mr. President, our present system for compensating patients who have 
been injured by medical malpractice is ineffective, inefficient, and in 
many respects, unfair. The system promotes the overuse of medical tests 
and procedures, and diverts too much money away from victims. The Rand 
Corp. has estimated that injured patients receive only 43 percent of 
spending on medical malpractice and medical product litigation. And 
victims often receive their awards after many years of delay.
  Our medical malpractice system is a stealth contributor to the high 
cost of health care. The American Medical Association reports that in 
the 1980's liability insurance premiums grew faster that other 
physician practice expenses. The cost of liability insurance has been 
estimated at $9 billion in 1992.
  So called defensive medicine costs are an even greater concern. The 
Office of Technology Assessment has found that as many as 8 percent of 
diagnostic procedures are ordered primarily because of doctors' 
concerns about liability. These defensive practices present a hidden 
but significant burden on our health care system. The health care 
[[Page S2871]] consulting firm, Lewin-VHI, has estimated that physician 
and hospital charges for defensive medicine were as high as $25 billion 
in 1991.
  Taxpayers and health care consumers bear the financial burden of 
these excessive costs. Liability insurance and defensive medicine 
premiums drive up the cost of Medicare and Medicaid and of private 
health care premiums. Further, in some specialties, such as obstetrics, 
where malpractice premiums have skyrocketed, malpractice liability may 
be reducing access to quality health care. The American College of 
Obstetricians and Gynecologists report of that malpractice costs for 
ob/gyns increased 350 percent between 1982 and 1988, and that by 1988, 
41 percent of those ob/gyns surveyed indicated that they had made 
changes in their practice patterns, such as ceasing to serve high-risk 
patients, because of malpractice concerns.
  The bill we're introducing today will begin to address these 
inefficiencies and perverse effects of our malpractice system by 
directing a greater portion of malpractice awards to victims, by 
discouraging frivolous law suits, and by enhancing quality assurance 
programs. Key provisions of this malpractice reform bill include:
  Establishing a uniform statute of limitations, 2 years from the date 
the injury was discovered.
  Allowing periodic payments for awards greater than $100,000.
  Applying several, not joint and several liability for noneconomic and 
punitive damages.
  Limiting attorneys' contingency fees to 33\1/3\ of the $150,000 of an 
award and 25 percent of any amount above $150,000.
  Establishing a clear and convincing evidence standard for doctors 
delivering a baby who had not previously treated the pregnant women.
  Requiring States to establish mandatory alternative dispute 
resolution.
  Strengthening the standard for awarding punitive damages and 
establish State health care quality assurance programs funded with 50 
percent of punitive damage awards.
  Requiring providers and insurers to participate in risk management 
programs every 3 years to better detect and prevent practices which may 
result in patient injury.
  Increasing consumer access to the National Practitioner Data Bank 
which contains information on disciplinary actions against health care 
providers.
  The bill also incorporates legislation I introduced earlier this year 
with Senator McConnell and others, S. 303, the Biomaterials Access 
Assurance Act of 1995. That bill seeks to ensure that raw materials 
continue to be available for use in life-saving medical devices. It 
allows suppliers of raw materials or biomaterials used to make medical 
implants to obtain dismissal, with minimal legal costs, from certain 
tort suits in which plaintiffs allege harm from a finished medical 
product containing the biomaterial.
  Many of the reform ideas in the legislation we are introducing today 
were proposed or cosponsored by Democrats and Republicans in the last 
Congress as part of comprehensive health care reform bills. A number of 
these ideas were embraced last year by a group of us participating in 
the bipartisan Senate mainstream coalition. But we had little chance to 
debate these issues in the last Congress. I am optimistic that we will 
have the opportunity in this Congress to pass a bipartisan medical 
malpractice reform bill. I encourage my colleagues to consider this 
legislation and join Senator McConnell, Senator Kassebaum, and me as we 
seek to improve our medical malpractice system.
                                 ______

      By Mr. KEMPTHORNE (for himself and Mr. Craig):
  S. 455. A bill entitled the ``Consultation Clarification Act''; to 
the Committee on Environment and Public Works.


                     Consultation clarification Act

  Mr. KEMPTHORNE. Mr. President, today I am introducing a bill to amend 
the Endangered Species Act. I am introducing a bill critical to the 
people of this country who are held hostage by the inappropriate 
implementation of a provision of the Endangered Species Act.
  One abuse in particular has caused me to rise today with an urgent 
need to make a clarification to the Endangered Species Act.
  Late last month a Federal judge issued an injunction to protect an 
endangered strain of salmon. This action resulted in the shutting down 
of all mining, logging, and grazing in six Idaho National Forests. It 
didn't cover just the activities that would affect the salmon, it 
included all activities on lands that represent 30 percent of the land 
in the State of Idaho. And worse, it adversely affected people lives 
and jobs in half of the States.
  Mr. President, this is the area of the State of Idaho where people's 
jobs are needlessly at risk because of the vagaries of the courts and 
Federal agencies. The court imposed a 5-day injunction on all 
activities on the national forests covering 30 percent of the area of 
the State of Idaho and jeopardizing the jobs of nearly 5,000 workers, 
workers on projects that have been in continuous operation that the 
Forest Service has determined will not jeopardize the endangered salmon 
runs. And adding uncertainty to another 5,000 workers whose jobs are 
influenced by the project work.
  Mr. President, 2,500 people rallied in Challis, ID, January 21 to let 
their Government know that they are frustrated that no one is 
considering their plight. They are facing loss of jobs, not having 
money for food and clothing, and the uncertainties of having to move 
from their homes. I got a letter from Russell Ebberts who is an eighth 
grader in Challis, ID. He's facing having to move if his Dad looses his 
job. And Danny Fisher and Karena Turpin were planing on getting married 
in June. Their wedding and future plans have been shattered. And as 
long as there is a threat of a recurrence of that injunctions, they 
must continue to be worried.
  The current injunction, when it was in effect, affected mainly mining 
operations, but future injunctions, when they come will affect grazing, 
timber harvest including salvage, and other activities. We have 
estimated that if the injunction is put in
 place again in March, it will cost $65,000 per day in the loss of 
folks' wages across Idaho. That is intolerable.
  The insanity of this injunction was that many of the projects that 
would be shut down had already been the subject of consultation under 
the Endangered Species Act and had been determined to not harm the 
salmon.
  Let me repeat that important point, Mr. President. These are projects 
that had already been the subject of consultation, and had been found 
to have no effect on the salmon. Nonetheless, just because these 
projects were contained within a national forest management plan, and 
the plan had not yet been consulted upon for the salmon, the projects 
were subject to immediate cessation.
  Why, you ask, had the plan not been made subject to consultation? 
That is the irony of this judge's order. The plans in the six national 
forests had been consulted upon, in addition to the projects within the 
plans. The problem was that the salmon was listed under the Endangered 
Species Act after the forest plans had been consulted upon.
  Well, Mr. President, the injunction was temporarily lifted, until 
March 15. Hopefully this will be enough time for the National Marine 
Fisheries Service to complete consultation on the forest plans. But, if 
anything goes wrong, the injunction may be imposed again. As the year 
progresses, more and more people's jobs will be at risk. These 
uncertainties in folks' lives are not necessary.
  The legislation my colleague from Idaho and I are sponsoring does 
only one thing, it clarifies that it has never been the intent of 
Congress to give the regulatory agencies two opportunities to consult 
on the same project. It was never the intent to cause a project that 
has already been approved under the Endangered Species Act to come to a 
halt while the plan of which it is a part goes through a second review.
  Since the enactment of the Endangered Species Act, Congress has 
enacted laws requiring agencies to do broad plans for their activities. 
These agencies are required by Federal law to have different levels of 
planning--a broad scale long term plan and then site specific plans.
  Court decisions like this one have begun to force an interpretation 
that 
[[Page S2872]] there must be consultation on both levels of planning 
and that both these plans and the resulting projects may be held up if 
the consultation on both has not been completed.
  This is double jeopardy. We
   cannot afford to allow our Federal Government to waste taxpayers 
dollars in essentially looking at the same project twice. We can no 
longer throw out years of planning and community involvement on these 
plans every time a new species is listed. The laws and regulations for 
both the Forest Service and the BLM allow for these kinds of updates--
they are called amendments and require the kinds of public involvement 
that put people back into the management of their public lands.

  Mr. President, it is time that Congress is clear about what we 
intended for the consultation process. My bill amends section 7 of the 
Endangered Species Act to clarify that when a consultation has been 
completed on a project, the project does not need to stop while 
consultation is done on the overriding plan.
  This is a necessary clarification of the intent of Congress on this 
issue. Its intent is to avoid unnecessary multiple consultations on a 
project. We envision that it will help with existing situations in 
Oregon, Idaho, New Mexico, and California and it will prevent many 
other States from getting in the same situation that we are currently 
facing in Idaho.
  Mr. President, I want to make it clear that we are not intending to 
reform the Endangered Species Act with this bill. That reform effort is 
one that I feel needs careful consideration, constructive debate, and 
substantive suggestions over the months ahead. We are planning hearings 
on this broader reform bill and are looking to submit a comprehensive 
reauthorization bill in the fall.
  Mr. President, my bill will fix a small, but critical part of the 
frustrations caused by liberal interpretations of the Endangered 
Species Act. And, it will head off potential catastrophes in the short 
run that will bog down the kind of innovative discussions that are 
needed to bring forth the best possible bill reauthorizing the 
Endangered Species Act, to benefit the species truly at risk and to 
help, not hinder the American people.
                                 ______

      By Mr. BRADLEY (for himself, Mr. Dodd, Mr. Rockefeller, Mr. 
        Chafee, Mrs. Feinstein, Ms. Snowe, Mr. Lieberman, Mr. Dorgan, 
        and Mr. Kennedy):
  S. 456. A bill to improve and strengthen the child support collection 
system, and for other purposes; to the Committee on Finance.


            the interstate child support responsibility act

 Mr. BRADLEY. Mr. President, the crucible of American society 
is the family. Today the family faces stresses and injuries that we 
have never seen before in this country. Almost every child is affected 
by these pressures: the 40 percent of children who go home to an empty 
house every afternoon because both parents work as well as the 27 
percent of children who live with only one parent. Our efforts as a 
nation must address these stresses by seeking to recouple sexual 
behavior and childbearing with family responsibility. That 
responsibility involves giving time, love, care, and attention, but it 
also includes food, clothing, and medical care. We should send a clear 
message, above all to young men: If you father a child, whether or not 
you are married to the mother of that child, be prepared to set aside 
one-sixth or more of your earnings every year for 18 years to help that 
child grow up healthy, educated, and responsible.
  That's the principle of child support. Today, Mr. President, I rise 
to introduce a bill that will reinforce that principle by repairing all 
the holes in the tattered, State-based system of child support 
enforcement. That system has not worked well. It left $5.1 billion in 
court-ordered child support uncollected last year. It succeeds in 
establishing paternity for less than 40 percent of out-of-wedlock 
births. Still, the complex Federal-State system succeeds in collecting 
$3.98 for every dollar spent on enforcement. We face a choice. We can 
throw out the State system and replace it with a Federal bureaucracy, 
which might be more cumbersome but would be as hard to run away from as 
the IRS. Or, we can try to repair the State system, help States work 
together better, require some uniformity, and help the States by 
creating national databases of child support orders and new hires. That 
is the path that I and a number of my colleagues of both parties have 
chosen in developing the bill we introduce today.
  About 17.6 million children live with just one parent. There are 
almost 10 million women who are raising children on their own. Almost 
one-third of them live below the poverty level. Less than 60 percent 
have child support orders. Only half of those who have child support 
orders receive the full amount due.
  Mothers who do not receive child support do all they can to remain 
off of welfare. By definition, almost every family receiving Aid to 
Families with Dependent Children should be receiving child support, 
except in cases where one parent is deceased or in the small number of 
two-parent families participating in the AFDC-UP program. When we talk 
about welfare, we have to recognize that for every woman who is raising 
children, receiving welfare and not working, there is a father who is 
not raising the children and who may or may not be working. Either way, 
he is exploiting welfare as much or more than the mother who is 
receiving welfare. Tougher child support enforcement has resulted in 
collections for 873,000 families on welfare in 1993, and much of that 
money went back to the taxpayers to make up for welfare payments 
already made.
  If this Congress undertakes a serious effort at welfare reform, child 
support enforcement along the lines we propose today must be a part of 
it. I am very pleased that my colleagues in the House of 
Representatives, especially Congresswomen Marge Roukema and Nancy 
Johnson, were able to persuade the leadership of the Ways and Means 
Committee to expand the Contract With America's welfare reform bill to 
include comprehensive child support reform. But as I said last year, if 
welfare reform continues to be delayed by controversy, we must not 
allow child support to be delayed along with it. There is consensus on 
child support, and there are also three times as many mothers due child 
support who are not eligible for welfare as are. They should not have 
to wait until we fix the welfare system before they receive the support 
due them.
  The link to welfare makes child support a valid concern of the 
Federal Government, but it is also a Federal concern because one-third 
of all child support cases are interstate cases, which means that the 
parents live in different States. These cases are the most difficult to 
resolve. By moving from State to State and changing jobs, parents can 
systematically avoid paying child support, or even being located so 
that their wages can be withheld, for about a year at a time. These 
deliberate evasions occur against a backdrop of inconsistent State 
laws, inadequate staff and computer resources, and a continually 
growing caseload due to the tremendous rise in out-of-wedlock births.
  Expanded paternity establishment is key to improving interstate child 
support enforcement. Every year more than 1 million children are born 
to unmarried women, about one-fourth of all births that year. About 57 
percent of black children, 23 percent of Hispanic children, and 17 
percent of white children born in 1990 were born to unwed mothers. In 
1990, 68 percent of all births to women between the ages of 15 to 19 
were out of wedlock.
  Out-of-wedlock births need not automatically consign a mother and 
children to poverty. They can be handled like a divorce; support can be 
ordered and enforced. But in about one-quarter of the cases, the State 
cannot even get started, because they cannot obtain any information 
about the father.
  Many of the paternity establishment provisions of my earlier bill 
were passed in the 1993 budget package, which required States to 
establish hospital-based paternity establishment programs. These 
programs are now up and running, and are demonstrating a significant 
increase in the number of child support cases in which the father can 
be identified, so that support can be ordered and the other enforcement 
mechanisms can kick in. About 85 percent of fathers are in touch with 
the child and mother at, or soon after, the 
[[Page S2873]] birth. Many fathers visit their children in the hospital 
or birthing center. Programs that target these fathers and provide 
opportunities for them to acknowledge paternity can do a lot to cut 
down on the number of children for whom paternity has not been 
established.
  For the situations where the father was not targeted at the hospital, 
this bill contains provisions which would make it easier for paternity 
to be established by courts or administrative agencies. It makes it 
less difficult to locate out-of-State fathers by expanding the locate 
information and services available to custodial parents and child 
support professionals. It mandates changes in evidence standards which 
remove many of the obstacles
 that now exist to paternity establishment across State lines. It 
provides State child support agencies for the first time with a Federal 
incentive to work on establishing paternity, not just collecting child 
support that has already been ordered.

  Even when parentage is established, custodial parents always seem to 
be one step behind noncustodial parents. If a noncustodial parent gets 
a job in another State, child support officials do not usually learn 
about the job change until the next quarter in which the employer has 
to report payroll information. By the time child support officials in 
the custodial parent's State learn the information, the noncustodial 
parent has often moved to another job. A year can pass. This scenario 
is played out over and over in interstate cases.
  This bill requires information on every new hire to be filed in a 
national database, which States can regularly search for the names or 
Social Security numbers of parents who owe support to children in their 
States.
  To eliminate the problems associated with establishing a support 
order across State lines, my bill requires the States to expand their 
long-arm statutes to reach more out-of-State noncustodial parents. It 
requires States to recognize and enforce child support orders from 
other States, and it also requires all States to adopt the Uniform 
Interstate Family Support Act, adopted by the National Conference of 
Commissioners on Uniform State Laws, verbatim so that inconsistencies 
between the States in case processing and enforcement can be 
eliminated.
  Even where a support order has been established, custodial parents 
still have problems collecting money, especially in interstate cases. 
In response, this bill requires the States to take tougher measures 
against parents who do not pay their child support. It requires them to 
pass laws making it possible for delinquent parents to lose their 
professional and occupational licenses, hitting them in a sense at 
their livelihood. It requires the States to hold off issuing driver's 
licenses to delinquent parents. It calls for the expanded use of credit 
reporting--it is interesting that a noncustodial parent can be 
delinquent on a car loan and that fact can be reported on a credit 
report, but the fact that he or she is delinquent on child support 
might not be reported. In addition, this bill requires the States to 
intercept lottery winnings, money judgments, and other income of 
noncustodial parents who owe child support. This bill also requires the 
States to make it easier to freeze the bank accounts of delinquent 
parents, and requires the States to make it a State crime to willfully 
fail to pay child support.
  Finally, this bill responds to staffing the training issues which 
have plagued child support professionals for decades. In a GAO report I 
and the other congressional members of the commission requested, it was 
reported that the average caseload per child support case worker is 
1,000 cases. Can you imagine, Mr. President, 1,000 cases? This bill 
requires the Department of Health and Human Services to conduct 
staffing studies in every State and report such findings to this body 
and the States. It also requires the Office of Child Support 
Enforcement to make training assistance available to State child 
support agencies.
  Mr. President, this bill represents a consensus, an overdue 
consensus, about the kinds of repairs that are needed in the child 
support system. It began with the recommendations of the U.S. 
Commission on Interstate Child Support Enforcement, of which I was a 
member. I put those recommendations forward as legislation in 1992, as 
did my colleagues on the commission, Representatives Marge Roukema and 
Barbara Kennelly. Last year, the administration took those central 
recommendations and added some detail about the national databases of 
child support orders and new hires. Late last year and early this year, 
the House Caucus on Women's Issues took up the subject, and earlier 
this month introduced a bill modeled on the administration's and my 
earlier bill. The bill we introduce today is intended to be the Senate 
companion to H.R. 785, the Johnson bill in the House, with only minor 
differences.
  I ask unanimous consent that the text of the bill and a summary be 
inserted in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                 S. 456
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,
     SECTION 1. SHORT TITLE; REFERENCE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Interstate 
     Child Support Responsibility Act of 1995''.
       (b) Reference to Social Security Act.--Except as otherwise 
     specifically provided, wherever in this Act an amendment 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 that section or other provision of the Social 
     Security Act.
       (c) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; reference; table of contents.

      TITLE I--IMPROVEMENTS TO THE CHILD SUPPORT COLLECTION SYSTEM

Subtitle A--Eligibility and Other Matters Concerning Title IV-D Program 
                                Clients

Sec. 101. State obligation to provide paternity establishment and child 
              support enforcement services.
Sec. 102. Distribution of payments.
Sec. 103. Rights to notification and hearings.
Sec. 104. Privacy safeguards.

             Subtitle B--Program Administration and Funding

Sec. 111. Federal matching payments.
Sec. 112. Performance-based incentives and penalties.
Sec. 113. Federal and State reviews and audits.
Sec. 114. Required reporting procedures.
Sec. 115. Automated data processing requirements.
Sec. 116. Director of CSE program; staffing study.
Sec. 117. Funding for secretarial assistance to State programs.
Sec. 118. Data collection and reports by the Secretary.

                  Subtitle C--Locate and Case Tracking

Sec. 121. Central State and case registry.
Sec. 122. Centralized collection and disbursement of support payments.
Sec. 123. Amendments concerning income withholding.
Sec. 124. Locator information from interstate networks.
Sec. 125. Expanded Federal parent locator service.
Sec. 126. Use of social security numbers.

         Subtitle D--Streamlining and Uniformity of Procedures

Sec. 131. Adoption of uniform State laws.
Sec. 132. Improvements to full faith and credit for child support 
              orders.
Sec. 133. State laws providing expedited procedures.

                  Subtitle E--Paternity Establishment

Sec. 141. State laws concerning paternity establishment.
Sec. 142. Outreach for voluntary paternity establishment.

      Subtitle F--Establishment and Modification of Support Orders

Sec. 151. National Child Support Guidelines Commission.
Sec. 152. Simplified process for review and adjustment of child support 
              orders.

               Subtitle G--Enforcement of Support Orders

Sec. 161. Federal income tax refund offset.
Sec. 162. Internal Revenue Service collection of arrearages.
Sec. 163. Authority to collect support from Federal employees.
Sec. 164. Enforcement of child support obligations of members of the 
              Armed Forces.
Sec. 165. Motor vehicle liens.
Sec. 166. Voiding of fraudulent transfers.
Sec. 167. State law authorizing suspension of licenses.
Sec. 168. Reporting arrearages to credit bureaus.
Sec. 169. Extended statute of limitation for collection of arrearages.
Sec. 170. Charges for arrearages.
Sec. 171. Denial of passports for nonpayment of child support.
Sec. 172. International child support enforcement.
               [[Page S2874]] Subtitle H--Medical Support

Sec. 181. Technical correction to ERISA definition of medical child 
              support order.

               Subtitle I--Access and Visitation Programs

Sec. 191. Grants to States for access and visitation programs.

                     TITLE II--EFFECT OF ENACTMENT

Sec. 201. Effective dates.
Sec. 202. Severability.
      TITLE I--IMPROVEMENTS TO THE CHILD SUPPORT COLLECTION SYSTEM
Subtitle A--Eligibility and Other Matters Concerning Title IV-D Program 
                                Clients

     SEC. 101. STATE OBLIGATION TO PROVIDE PATERNITY ESTABLISHMENT 
                   AND CHILD SUPPORT ENFORCEMENT SERVICES.

       (a) State Law Requirements.--Section 466(a) (42 U.S.C. 
     666(a)) is amended by adding at the end the following new 
     paragraph:
       ``(12) Procedures under which--
       ``(A) every child support order established or modified in 
     the State on or after October 1, 1998, is recorded in the 
     central case registry established in accordance with section 
     454A(e); and
       ``(B) child support payments are collected through the 
     centralized collections unit established in accordance with 
     section 454B--
       ``(i) on and after October 1, 1998, under each order 
     subject to wage withholding under section 466(b); and
       ``(ii) on and after October 1, 1999, under each other order 
     required to be recorded in such central case registry under 
     this paragraph or section 454A(e), if requested by either 
     party subject to such order.''.
       (b) State Plan Requirements.--Section 454 (42 U.S.C. 654) 
     is amended--
       (1) by striking paragraph (4) and inserting the following 
     new paragraph:
       ``(4) provide that such State will undertake--
       ``(A) to provide appropriate services under this part to--
       ``(i) each child with respect to whom an assignment is 
     effective under section 402(a)(26), 471(a)(17), or 1912 
     (except in cases in which the State agency determines, in 
     accordance with paragraph (25), that it is against the best 
     interests of the child to do so); and
       ``(ii) each child not described in clause (i)--

       ``(I) with respect to whom an individual applies for such 
     services; or
       ``(II) on and after October 1, 1998, with respect to whom a 
     support order is recorded in the central State case registry 
     established under section 454A, if application is made for 
     services under this part.'';

       (2) in paragraph (6)--
       (A) by striking ``(6) provide that'' and all that follows 
     through subparagraph (A) and inserting the following:
       ``(6) provide that--
       ``(A) services under the State plan shall be made available 
     to nonresidents on the same terms as to residents;'';
       (B) in subparagraph (B)--
       (i) by inserting ``on individuals not receiving assistance 
     under part A'' after ``such services shall be imposed''; and
       (ii) by inserting ``but no fees or costs shall be imposed 
     on any absent or custodial parent or other individual for 
     inclusion in the central State registry maintained pursuant 
     to section 454A(e)'';
       (C) in each of subparagraphs (B), (C), (D), and (E), by 
     indenting such subparagraph and aligning its left margin with 
     the left margin of subparagraph (A); and
       (D) in each of subparagraphs (B), (C), and (D), by striking 
     the final comma and inserting a semicolon.
       (c) Conforming Amendments.--
       (1) Paternity establishment percentage.--Section 
     452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is amended by striking 
     ``454(6)'' each place it appears and inserting 
     ``454(4)(A)(ii)''.
       (2) State plan.--Section 454(23) (42 U.S.C. 654(23)) is 
     amended, effective October 1, 1998, by striking ``information 
     as to any application fees for such services and''.
       (3) Procedures to improve enforcement.--Section 
     466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is amended by striking 
     ``in the case of overdue support which a State has agreed to 
     collect under section 454(6)'' and inserting ``in any other 
     case''.
       (4) Definition of overdue support.--Section 466(e) (42 
     U.S.C. 666(e)) is amended by striking ``or (6)''.

     SEC. 102. DISTRIBUTION OF PAYMENTS.

       (a) Distributions Through State Child Support Enforcement 
     Agency to Former Assistance Recipients.--Section 454(5) (42 
     U.S.C. 654(5)) is amended--
       (1) in subparagraph (A)--
       (A) by inserting ``except as otherwise specifically 
     provided in section 464 or 466(a)(3),'' after ``is 
     effective,''; and
       (B) by striking ``except that'' and all that follows 
     through the semicolon; and
       (2) in subparagraph (B), by striking ``, except'' and all 
     that follows through ``medical assistance''.
       (b) Distribution to a Family Currently Receiving AFDC.--
     Section 457 (42 U.S.C. 657) is amended--
       (1) by striking subsection (a) and redesignating subsection 
     (b) as subsection (a);
       (2) in subsection (a), as redesignated--
       (A) in the matter preceding paragraph (2), to read as 
     follows:
       ``(a) In the Case of a Family Receiving AFDC.--Amounts 
     collected under this part during any month as support of a 
     child who is receiving assistance under part A (or a parent 
     or caretaker relative of such a child) shall (except in the 
     case of a State exercising the option under subsection (b)) 
     be distributed as follows:
       ``(1) an amount equal to the amount that will be 
     disregarded pursuant to section 402(a)(8)(A)(vi) shall be 
     taken from each of--
       ``(A) the amounts received in a month which represent 
     payments for that month; and
       ``(B) the amounts received in a month which represent 
     payments for a prior month which were made by the absent 
     parent in that prior month;

     and shall be paid to the family without affecting its 
     eligibility for assistance or decreasing any amount otherwise 
     payable as assistance to such family during such month;'';
       (B) in paragraph (4), by striking ``or (B)'' and all that 
     follows through the period and inserting ``; then (B) from 
     any remainder, amounts equal to arrearages of such support 
     obligations assigned, pursuant to part A, to any other State 
     or States shall be paid to such other State or States and 
     used to pay any such arrearages (with appropriate 
     reimbursement of the Federal Government to the extent of its 
     participation in the financing); and then (C) any remainder 
     shall be paid to the family.''.
       (3) by inserting after subsection (a), as redesignated, the 
     following new subsection:
       ``(b) Alternative Distribution in Case of Family Receiving 
     AFDC.--In the case of a State electing the option under this 
     subsection, amounts collected as described in subsection (a) 
     shall be distributed as follows:
       ``(1) an amount equal to the amount that will be 
     disregarded pursuant to section 402(a)(8)(A)(vi) shall be 
     taken from each of--
       ``(A) the amounts received in a month which represent 
     payments for that month; and
       ``(B) the amounts received in a month which represent 
     payments for a prior month which were made by the absent 
     parent in that prior month;
     and shall be paid to the family without affecting its 
     eligibility for assistance or decreasing any amount otherwise 
     payable as assistance to such family during such month;
       ``(2) second, from any remainder, amounts equal to the 
     balance of support owed for the current month shall be paid 
     to the family;
       ``(3) third, from any remainder, amounts equal to 
     arrearages of such support obligations assigned, pursuant to 
     part A, to the State making the collection shall be retained 
     and used by such State to pay any such arrearages (with 
     appropriate reimbursement of the Federal Government to the 
     extent of its participation in the financing);
       ``(4) fourth, from any remainder, amounts equal to 
     arrearages of such support obligations assigned, pursuant to 
     part A, to any other State or States shall be paid to such 
     other State or States and used to pay any such arrearages 
     (with appropriate reimbursement of the Federal Government to 
     the extent of its participation in the financing); and
       ``(5) fifth, any remainder shall be paid to the family.''.
       (c) Distribution to a Family Not Receiving AFDC.--
       (1) In general.--Section 457(c) (42 U.S.C. 657(c)) is 
     amended to read as follows:
       ``(c) Distributions In Case of Family Not Receiving AFDC.--
     Amounts collected by a State agency under this part during 
     any month as support of a child who is not receiving 
     assistance under part A (or of a parent or caretaker relative 
     of such a child) shall (subject to the remaining provisions 
     of this section) be distributed as follows:
       ``(1) first, amounts equal to the total of such support 
     owed for such month shall be paid to the family;
       ``(2) second, from any remainder, amounts equal to 
     arrearages of such support obligations for months during 
     which such child did not receive assistance under part A 
     shall be paid to the family;
       ``(3) third, from any remainder, amounts equal to 
     arrearages of such support obligations assigned to the State 
     making the collection pursuant to part A shall be retained 
     and used by such State to pay any such arrearages (with 
     appropriate reimbursement of the Federal Government to the 
     extent of its participation in the financing); and
       ``(4) fourth, from any remainder, amounts equal to 
     arrearages of such support obligations assigned to any other 
     State pursuant to part A shall be paid to such other State or 
     States, and used to pay such arrearages, in the order in 
     which such arrearages accrued (with appropriate reimbursement 
     of the Federal Government to the extent of its participation 
     in the financing).''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall become effective on October 1, 1999.
       (d) Distribution to a Child Receiving Assistance Under 
     Title IV-E.--Section 457(d) (42 U.S.C. 657(d)) is amended, in 
     the matter preceding paragraph (1), by striking 
     ``Notwithstanding the preceding provisions of this section, 
     amounts'' and inserting the following:
       ``(d) Distributions In Case of a Child Receiving Assistance 
     Under Title IV-E.--Amounts''.
       (e) Regulations.--The Secretary of Health and Human 
     Services shall promulgate regulations--
       (1) under part D of title IV of the Social Security Act, 
     establishing a uniform nationwide standard for allocation of 
     child support 
     [[Page S2875]] collections from an obligor owing support to 
     more than 1 family; and
       (2) under part A of such title, establishing standards 
     applicable to States electing the alternative formula under 
     section 457(b) of such Act for distribution of collections on 
     behalf of families receiving Aid to Families with Dependent 
     Children, designed to minimize irregular monthly payments to 
     such families.
       (f) Clerical Amendments.--Section 454 (42 U.S.C. 654) is 
     amended--
       (1) in paragraph (11)--
       (A) by striking ``(11)'' and inserting ``(11)(A)''; and
       (B) by inserting after the semicolon ``and''; and
       (2) by redesignating paragraph (12) as subparagraph (B) of 
     paragraph (11).
       (g) Mandatory Child Support Pass-Through.--
       (1) In general.--Section 402(a)(8)(A)(vi) (42 U.S.C. 
     602(a)(8)(A)(vi)) is amended--
       (A) by striking ``$50'' each place it appears and inserting 
     ``$50, or, if greater, $50 adjusted by the CPI (as prescribed 
     in section 406(i));''; and
       (B) by striking the semicolon at the end and inserting 
     ``or, in lieu of each dollar amount specified in this clause, 
     such greater amount as the State may choose (and provide for 
     in its State plan);''.
       (2) CPI adjustment.--Section 406 (42 U.S.C. 606) is amended 
     by adding at the end the following new subsection:
       ``(i) For purposes of this part, an amount is `adjusted by 
     the CPI' for any month in a calendar year by multiplying the 
     amount involved by the ratio of--
       ``(1) the Consumer Price Index (as prepared by the 
     Department of Labor) for the third quarter of the preceding 
     calendar year, to
       ``(2) such Consumer Price Index for the third quarter of 
     calendar year 1996,
     and rounding the product, if not a multiple of $10, to the 
     nearer multiple of $10.''.

     SEC. 103. RIGHTS TO NOTIFICATION AND HEARINGS.

       (a) In General.--Section 454 (42 U.S.C. 654), as amended by 
     section 102(f), is amended by inserting after paragraph (11) 
     the following new paragraph:
       ``(12) establish procedures to provide that--
       ``(A) individuals who are applying for or receiving 
     services under this part, or are parties to cases in which 
     services are being provided under this part--
       ``(i) receive notice of all proceedings in which support 
     obligations might be established or modified; and
       ``(ii) receive a copy of any order establishing or 
     modifying a child support obligation, or (in the case of a 
     petition for modification) a notice of determination that 
     there should be no change in the amount of the child support 
     award, within 14 days after issuance of such order or 
     determination;
       ``(B) individuals applying for or receiving services under 
     this part have access to a fair hearing or other formal 
     complaint procedure that meets standards established by the 
     Secretary and ensures prompt consideration and resolution of 
     complaints (but the resort to such procedure shall not stay 
     the enforcement of any support order); and
       ``(C) the State may not provide to any noncustodial parent 
     of a child representation relating to the establishment or 
     modification of an order for the payment of child support 
     with respect to that child, unless the State makes provision 
     for such representation outside the State agency;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall become effective on October 1, 1997.

     SEC. 104. PRIVACY SAFEGUARDS.

       (a) State Plan Requirement.--Section 454 (42 U.S.C. 454) is 
     amended--
       (1) by striking ``and'' at the end of paragraph (23);
       (2) by striking the period at the end of paragraph (24) and 
     inserting ``; and''; and
       (3) by adding after paragraph (24) the following:
       ``(25) provide that the State will have in effect 
     safeguards applicable to all sensitive and confidential 
     information handled by the State agency designed to protect 
     the privacy rights of the parties, including--
       ``(A) safeguards against unauthorized use or disclosure of 
     information relating to proceedings or actions to establish 
     paternity, or to establish or enforce support;
       ``(B) prohibitions on the release of information on the 
     whereabouts of 1 party to another party against whom a 
     protective order with respect to the former party has been 
     entered; and
       ``(C) prohibitions on the release of information on the 
     whereabouts of 1 party to another party if the State has 
     reason to believe that the release of the information may 
     result in physical or emotional harm to the former party.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall become effective on October 1, 1997.
             Subtitle B--Program Administration and Funding

     SEC. 111. FEDERAL MATCHING PAYMENTS.

       (a) Increased Base Matching Rate.--Section 455(a)(2) (42 
     U.S.C. 655(a)(2)) is amended to read as follows:
       ``(2) The applicable percent for a quarter for purposes of 
     paragraph (1)(A) is--
       ``(A) for fiscal year 1997, 69 percent,
       ``(B) for fiscal year 1998, 72 percent, and
       ``(C) for fiscal year 1999 and succeeding fiscal years, 75 
     percent.''.
       (b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is 
     amended--
       (1) in subsection (a)(1), in the matter preceding 
     subparagraph (A), by striking ``From'' and inserting 
     ``Subject to subsection (c), from''; and
       (2) by inserting after subsection (b) the following new 
     subsection:
       ``(c) Notwithstanding the provisions of subsection (a), 
     total expenditures for the State program under this part for 
     fiscal year 1997 and each succeeding fiscal year (excluding 
     1-time capital expenditures for automation), reduced by the 
     percentage specified for such fiscal year under subsection 
     (a)(2) shall not be less than such total expenditures for 
     fiscal year 1996, reduced by 66 percent.''.

     SEC. 112. PERFORMANCE-BASED INCENTIVES AND PENALTIES.

       (a) Incentive Adjustments to Federal Matching Rate.--
     Section 458 (42 U.S.C. 658) is amended to read as follows:


                ``incentive adjustments to matching rate

       ``Sec. 458. (a) Incentive Adjustment.--
       ``(1) In general.--In order to encourage and reward State 
     child support enforcement programs which perform in an 
     effective manner, the Federal matching rate for payments to a 
     State under section 455(a)(1)(A), for each fiscal year 
     beginning on or after October 1, 1998, shall be increased by 
     a factor reflecting the sum of the applicable incentive 
     adjustments (if any) determined in accordance with 
     regulations under this section with respect to Statewide 
     paternity establishment and to overall performance in child 
     support enforcement.
       ``(2) Standards.--
       ``(A) In general.--The Secretary shall specify in 
     regulations--
       ``(i) the levels of accomplishment, and rates of 
     improvement as alternatives to such levels, which States must 
     attain to qualify for incentive adjustments under this 
     section; and
       ``(ii) the amounts of incentive adjustment that shall be 
     awarded to States achieving specified accomplishment or 
     improvement levels, which amounts shall be graduated, ranging 
     up to--

       ``(I) 5 percentage points, in connection with Statewide 
     paternity establishment; and
       ``(II) 10 percentage points, in connection with overall 
     performance in child support enforcement.

       ``(B) Limitation.--In setting performance standards 
     pursuant to subparagraph (A)(i) and adjustment amounts 
     pursuant to subparagraph (A)(ii), the Secretary shall ensure 
     that the aggregate number of percentage point increases as 
     incentive adjustments to all States do not exceed such 
     aggregate increases as assumed by the Secretary in estimates 
     of the cost of this section as of June 1995, unless the 
     aggregate performance of all States exceeds the projected 
     aggregate performance of all States in such cost estimates.
       ``(3) Determination of incentive adjustment.--The Secretary 
     shall determine the amount (if any) of incentive adjustment 
     due each State on the basis of the data submitted by the 
     State pursuant to section 454(15)(B) concerning the levels of 
     accomplishment (and rates of improvement) with respect to 
     performance indicators specified by the Secretary pursuant to 
     this section.
       ``(4) Fiscal year subject to incentive adjustment.--The 
     total percentage point increase determined pursuant to this 
     section with respect to a State program in a fiscal year 
     shall apply as an adjustment to the applicable percent under 
     section 455(a)(2) for payments to such State for the 
     succeeding fiscal year.
       ``(5) Recycling of incentive adjustment.--A State shall 
     expend in the State program under this part all funds paid to 
     the State by the Federal Government as a result of an 
     incentive adjustment under this section.
       ``(b) Meaning of Terms.--
       ``(1) Statewide paternity establishment percentage.--
       ``(A) In general.--For purposes of this section, the term 
     `Statewide paternity establishment percentage' means, with 
     respect to a fiscal year, the ratio (expressed as a 
     percentage) of--
       ``(i) the total number of out-of-wedlock children in the 
     State under 1 year of age for whom paternity is established 
     or acknowledged during the fiscal year, to
       ``(ii) the total number of children requiring paternity 
     establishment born in the State during such fiscal year.
       ``(B) Alternative measurement.--The Secretary shall develop 
     an alternate method of measurement for the Statewide 
     paternity establishment percentage for any State that does 
     not record the out-of-wedlock status of children on birth 
     certificates.
       ``(2) The term `overall performance in child support 
     enforcement' means a measure or measures of the effectiveness 
     of the State agency in a fiscal year which takes into account 
     factors including--
       ``(A) the percentage of cases requiring a child support 
     order in which such an order was established;
       ``(B) the percentage of cases in which child support is 
     being paid;
       ``(C) the ratio of child support collected to child support 
     due; and
       ``(D) the cost-effectiveness of the State program, as 
     determined in accordance with standards established by the 
     Secretary in regulations.''.
       (b) Adjustment of Payments Under Part D of Title IV.--
     Section 455(a)(2) (42 U.S.C. 655(a)(2)), as amended by 
     section 111(a), is amended--
     [[Page S2876]]   (1) by striking the period at the end of 
     subparagraph (C) and inserting a comma; and
       (2) by adding after and below subparagraph (C), flush with 
     the left margin of the paragraph, the following:
     ``increased by the incentive adjustment factor (if any) 
     determined by the Secretary pursuant to section 458.''.
       (c) Conforming Amendments.--Section 454(22) (42 U.S.C. 
     654(22)) is amended--
       (1) by striking ``incentive payments'' the first place it 
     appears and inserting ``incentive adjustments''; and
       (2) by striking ``any such incentive payments made to the 
     State for such period'' and inserting ``any increases in 
     Federal payments to the State resulting from such incentive 
     adjustments''.
       (d) Calculation of IV-D Paternity Establishment 
     Percentage.--
       (1) Overall performance.--Section 452(g)(1) (42 U.S.C. 
     652(g)(1)) is amended in the matter preceding subparagraph 
     (A) by inserting ``its overall performance in child support 
     enforcement is satisfactory (as defined in section 458(b) and 
     regulations of the Secretary), and'' after ``1994,''.
       (2) Definition.--Section 452(g)(2)(A) (42 U.S.C. 
     652(g)(2)(A)) is amended, in the matter preceding clause 
     (i)--
       (A) by striking ``paternity establishment percentage'' and 
     inserting ``IV-D paternity establishment percentage''; and
       (B) by striking ``(or all States, as the case may be)''.
       (3) Modification of requirements.--Section 452(g)(3) (42 
     U.S.C. 652(g)(3)) is amended--
       (A) by striking subparagraph (A) and redesignating 
     subparagraphs (B) and (C) as subparagraphs (A) and (B), 
     respectively;
       (B) in subparagraph (A), as redesignated, by striking ``the 
     percentage of children born out-of-wedlock in the State'' and 
     inserting ``the percentage of children in the State who are 
     born out of wedlock or for whom support has not been 
     established''; and
       (C) in subparagraph (B), as redesignated--
       (i) by inserting ``and overall performance in child support 
     enforcement'' after ``paternity establishment percentages''; 
     and
       (ii) by inserting ``and securing support'' before the 
     period.
       (e) Reduction of Payments Under Part D of Title IV.--
       (1) New requirements.--Section 455 (42 U.S.C. 655) is 
     amended--
       (A) by redesignating subsection (e) as subsection (f); and
       (B) by inserting after subsection (d) the following new 
     subsection:
       ``(e)(1) Notwithstanding any other provision of law, if the 
     Secretary finds, with respect to a State program under this 
     part in a fiscal year beginning on or after October 1, 1997--
       ``(A)(i) on the basis of data submitted by a State pursuant 
     to section 454(15)(B), that the State program in such fiscal 
     year failed to achieve the IV-D paternity establishment 
     percentage (as defined in section 452(g)(2)(A)) or the 
     appropriate level of overall performance in child support 
     enforcement (as defined in section 458(b)(2)), or to meet 
     other performance measures that may be established by the 
     Secretary, or
       ``(ii) on the basis of an audit or audits of such State 
     data conducted pursuant to section 452(a)(4)(C), that the 
     State data submitted pursuant to section 454(15)(B) is 
     incomplete or unreliable; and
       ``(B) that, with respect to the succeeding fiscal year--
       ``(i) the State failed to take sufficient corrective action 
     to achieve the appropriate performance levels as described in 
     subparagraph (A)(i) of this paragraph, or
       ``(ii) the data submitted by the State pursuant to section 
     454(15)(B) is incomplete or unreliable,
     the amounts otherwise payable to the State under this part 
     for quarters following the end of such succeeding fiscal 
     year, prior to quarters following the end of the first 
     quarter throughout which the State program is in compliance 
     with such performance requirement, shall be reduced by the 
     percentage specified in paragraph (2).
       ``(2) The reductions required under paragraph (1) shall 
     be--
       ``(A) not less than 3 nor more than 5 percent, or
       ``(B) not less than 5 nor more than 7 percent, if the 
     finding is the second consecutive finding made pursuant to 
     paragraph (1), or
       ``(C) not less than 7 nor more than 10 percent, if the 
     finding is the third or a subsequent consecutive such 
     finding.
       ``(3) For purposes of this subsection, section 402(a)(27), 
     and section 452(a)(4), a State which is determined as a 
     result of an audit to have submitted incomplete or unreliable 
     data pursuant to section 454(15)(B), shall be determined to 
     have submitted adequate data if the Secretary determines that 
     the extent of the incompleteness or unreliability of the data 
     is of a technical nature which does not adversely affect the 
     determination of the level of the State's performance.''.
       (2) Conforming amendments.--
       (A) Payments to states.--Section 403 (42 U.S.C. 603) is 
     amended by striking subsection (h).
       (B) Duties of secretary.--Subsections (d)(3)(A), (g)(1), 
     and (g)(3)(A) of section 452 (42 U.S.C. 652) are each amended 
     by striking ``403(h)'' and inserting ``455(e)''.
       (f) Effective Dates.--
       (1) Incentive adjustments.--
       (A) In general.--The amendments made by subsections (a), 
     (b), and (c) shall become effective on October 1, 1997, 
     except to the extent provided in subparagraph (B).
       (B) Exception.--Section 458 of the Social Security Act, as 
     in effect prior to the enactment of this section, shall be 
     effective for purposes of incentive payments to States for 
     fiscal years prior to fiscal year 1999.
       (2) Penalty reductions.--
       (A) In general.--The amendments made by subsection (d) 
     shall become effective with respect to calendar quarters 
     beginning on and after the date of the enactment of this Act.
       (B) Reductions.--The amendments made by subsection (e) 
     shall become effective with respect to calendar quarters 
     beginning on and after the date 1 which is year after the 
     date of the enactment of this Act.

     SEC. 113. FEDERAL AND STATE REVIEWS AND AUDITS.

       (a) State Agency Activities.--Section 454 (42 U.S.C. 654) 
     is amended--
       (1) in paragraph (14)--
       (A) by striking ``(14)'' and inserting ``(14)(A)''; and
       (B) by inserting after the semicolon ``and'';
       (2) by redesignating paragraph (15) as subparagraph (B) of 
     paragraph (14); and
       (3) by inserting after paragraph (14) the following new 
     paragraph:
       ``(15) provide for--
       ``(A) a process for annual reviews of and reports to the 
     Secretary on the State program under this part--
       ``(i) which shall include such information as may be 
     necessary to measure State compliance with Federal 
     requirements for expedited procedures and timely case 
     processing, using such standards and procedures as are 
     required by the Secretary; and
       ``(ii) under which the State agency will determine the 
     extent to which such program is in conformity with applicable 
     requirements with respect to the operation of State programs 
     under this part (including the status of complaints filed 
     under the procedure required under paragraph (12)(B)); and
       ``(B) a process of extracting from the State automated data 
     processing system and transmitting to the Secretary data and 
     calculations concerning the levels of accomplishment (and 
     rates of improvement) with respect to applicable performance 
     indicators (including IV-D paternity establishment 
     percentages and overall performance in child support 
     enforcement) to the extent necessary for purposes of sections 
     452(g) and 458.''.
       (b) Federal Activities.--Section 452(a)(4) (42 U.S.C. 
     652(a)(4)) is amended to read as follows:
       ``(4)(A) review data and calculations transmitted by State 
     agencies pursuant to section 454(15)(B) on State program 
     accomplishments with respect to performance indicators for 
     purposes of section 452(g) and 458, and determine the amount 
     (if any) of penalty reductions pursuant to section 455(e) to 
     be applied to the State;
       ``(B) review annual reports by State agencies pursuant to 
     section 454(15)(A) on State program conformity with Federal 
     requirements; evaluate any elements of a State program in 
     which significant deficiencies are indicated by such report 
     on the status of complaints under the State procedure under 
     section 454(12)(B); and, as appropriate, provide to the State 
     agency comments, recommendations for additional or 
     alternative corrective actions, and technical assistance; and
       ``(C) conduct audits, in accordance with the government 
     auditing standards of the United States Comptroller General--
       ``(i) at least once every 3 years (or more frequently, in 
     the case of a State which fails to meet requirements of this 
     part, or of regulations implementing such requirements, 
     concerning performance standards and reliability of program 
     data) to assess the completeness, reliability, and security 
     of the data, and the accuracy of the reporting systems, used 
     for the calculations of performance indicators specified in 
     subsection (g) and section 458;
       ``(ii) of the adequacy of financial management of the State 
     program, including assessments of--
       ``(I) whether Federal and other funds made available to 
     carry out the State program under this part are being 
     appropriately expended, and are properly and fully accounted 
     for; and
       ``(II) whether collections and disbursements of support 
     payments and program income are carried out correctly and are 
     properly and fully accounted for; and
       ``(iii) for such other purposes as the Secretary may find 
     necessary;''.
       (c) Effective Date.--The amendments made by this section 
     shall be effective with respect to calendar quarters 
     beginning on or after the date which is 1 year after the 
     enactment of this section.

     SEC. 114. REQUIRED REPORTING PROCEDURES.

       (a) Establishment.--Section 452(a)(5) (42 U.S.C. 652(a)(5)) 
     is amended by inserting ``, and establish procedures to be 
     followed by States for collecting and reporting information 
     required to be provided under this part, and establish 
     uniform definitions (including those necessary to enable the 
     measurement of State compliance with the requirements of this 
     part relating to expedited processes and timely case 
     processing) to be applied in following such procedures'' 
     before the semicolon.
       (b) State Plan Requirement.--Section 454 (42 U.S.C. 654), 
     as amended by section 104(a), is amended--
       (1) by striking ``and'' at the end of paragraph (24);
     [[Page S2877]]   (2) by striking the period at the end of 
     paragraph (25) and inserting ``; and''; and
       (3) by adding after paragraph (25) the following:
       ``(26) provide that the State shall use the definitions 
     established under section 452(a)(5) in collecting and 
     reporting information as required under this part.''.

     SEC. 115. AUTOMATED DATA PROCESSING REQUIREMENTS.

       (a) Revised Requirements.--
       (1) State plan.--Section 454(16) (42 U.S.C. 654(16)) is 
     amended--
       (A) by striking ``, at the option of the State,'';
       (B) by inserting ``and operation by the State agency'' 
     after ``for the establishment'';
       (C) by inserting ``meeting the requirements of section 
     454A'' after ``information retrieval system'';
       (D) by striking ``in the State and localities thereof, so 
     as (A)'' and inserting ``so as'';
       (E) by striking ``(i)''; and
       (F) by striking ``(including, but not limited to,'' and all 
     that follows and to the semicolon.
       (2) Automated data processing.--Part D of title IV (42 
     U.S.C. 651-669) is amended by inserting after section 454 the 
     following new section:


                      ``automated data processing

       ``Sec. 454A. (a) In General.--In order to meet the 
     requirements of this section, for purposes of the requirement 
     of section 454(16), a State agency shall have in operation a 
     single statewide automated data processing and information 
     retrieval system which has the capability to perform the 
     tasks specified in this section, and performs such tasks with 
     the frequency and in the manner specified in this part or in 
     regulations or guidelines of the Secretary.
       ``(b) Program Management.--The automated system required 
     under this section shall perform such functions as the 
     Secretary may specify relating to management of the program 
     under this part, including--
       ``(1) controlling and accounting for use of Federal, State, 
     and local funds to carry out such program; and
       ``(2) maintaining the data necessary to meet Federal 
     reporting requirements on a timely basis.
       ``(c) Calculation of Performance Indicators.--In order to 
     enable the Secretary to determine the incentive and penalty 
     adjustments required by sections 452(g) and 458, the State 
     agency shall--
       ``(1) use the automated system--
       ``(A) to maintain the requisite data on State performance 
     with respect to paternity establishment and child support 
     enforcement in the State; and
       ``(B) to calculate the IV-D paternity establishment 
     percentage and overall performance in child support 
     enforcement for the State for each fiscal year; and
       ``(2) have in place systems controls to ensure the 
     completeness, and reliability of, and ready access to, the 
     data described in paragraph (1)(A), and the accuracy of the 
     calculations described in paragraph (1)(B).
       ``(d) Information Integrity and Security.--The State agency 
     shall have in effect safeguards on the integrity, accuracy, 
     and completeness of, access to, and use of data in the 
     automated system required under this section, which shall 
     include the following (in addition to such other safeguards 
     as the Secretary specifies in regulations):
       ``(1) Policies restricting access.--Written policies 
     concerning access to data by State agency personnel, and 
     sharing of data with other persons, which--
       ``(A) permit access to and use of data only to the extent 
     necessary to carry out program responsibilities;
       ``(B) specify the data which may be used for particular 
     program purposes, and the personnel permitted access to such 
     data; and
       ``(C) ensure that data obtained or disclosed for a limited 
     program purpose is not used or redisclosed for another, 
     impermissible purpose.
       ``(2) Systems controls.--Systems controls (such as 
     passwords or blocking of fields) to ensure strict adherence 
     to the policies specified under paragraph (1).
       ``(3) Monitoring of access.--Routine monitoring of access 
     to and use of the automated system, through methods such as 
     audit trails and feedback mechanisms, to guard against and 
     promptly identify unauthorized access or use.
       ``(4) Training and information.--The State agency shall 
     have in effect procedures to ensure that all personnel 
     (including State and local agency staff and contractors) who 
     may have access to or be required to use sensitive or 
     confidential program data are fully informed of applicable 
     requirements and penalties, and are adequately trained in 
     security procedures.
       ``(5) Penalties.--The State agency shall have in effect 
     administrative penalties (up to and including dismissal from 
     employment) for unauthorized access to, or disclosure or use 
     of, confidential data.''.
       (3) Regulations.--Section 452 (42 U.S.C. 652) is amended by 
     adding at the end the following new subsection:
       ``(j) The Secretary shall prescribe final regulations for 
     implementation of the requirements of section 454A not later 
     than 2 years after the date of the enactment of this 
     subsection.''.
       (4) Implementation timetable.--Section 454(24) (42 U.S.C. 
     654(24)), as amended by sections 104(a)(2) and 114(b)(1), is 
     amended to read as follows:
       ``(24) provide that the State will have in effect an 
     automated data processing and information retrieval system--
       ``(A) by October 1, 1996, meeting all requirements of this 
     part which were enacted on or before the date of the 
     enactment of the Family Support Act of 1988; and
       ``(B) by October 1, 1999, meeting all requirements of this 
     part enacted on or before the date of the enactment of the 
     Interstate Child Support Responsibility Act of 1995 (but this 
     provision shall not be construed to alter earlier deadlines 
     specified for elements of such system), except that such 
     deadline shall be extended by 1 day for each day (if any) by 
     which the Secretary fails to meet the deadline imposed by 
     section 452(j);''.
       (b) Special Federal Matching Rate for Development Costs of 
     Automated Systems.--Section 455(a) (42 U.S.C. 655(a)) is 
     amended--
       (1) in paragraph (1)(B)--
       (A) by striking ``90 percent'' and inserting ``the percent 
     specified in paragraph (3)'';
       (B) by striking ``so much of''; and
       (C) by striking ``which the Secretary'' and all that 
     follows through ``thereof''; and
       (2) by adding at the end the following new paragraph:
       ``(3)(A) The Secretary shall pay to each State, for each 
     quarter in fiscal year 1996, 90 percent of so much of State 
     expenditures described in paragraph (1)(B) as the Secretary 
     finds are for a system meeting the requirements specified in 
     section 454(16), or meeting such requirements without regard 
     to subparagraph (D) thereof.
       ``(B)(i) The Secretary shall pay to each State, for each 
     quarter in fiscal years 1997 through 2001, the percentage 
     specified in clause (ii) of so much of State expenditures 
     described in paragraph (1)(B) as the Secretary finds are for 
     a system meeting the requirements specified in section 
     454(16) and 454A, subject to clause (iii).
       ``(ii) The percentage specified in this clause, for 
     purposes of clause (i), is the higher of--
       ``(I) 80 percent, or
       ``(II) the percentage otherwise applicable to Federal 
     payments to the State under subparagraph (A) (as adjusted 
     pursuant to section 458).''.
       (c) Conforming Amendment.--Section 123(c) of the Family 
     Support Act of 1988 (102 Stat. 2352; Public Law 100-485) is 
     repealed.

     SEC. 116. DIRECTOR OF CSE PROGRAM; STAFFING STUDY.

       (a) Reporting to Secretary.--Section 452(a) (42 U.S.C. 
     652(a)) is amended in the matter preceding paragraph (1) by 
     striking ``directly''.
       (b) Staffing Studies.--
       (1) Scope.--The Secretary of Health and Human Services (in 
     this subsection referred to as the ``Secretary'') shall, 
     directly or by contract, conduct studies of the staffing of 
     each State child support enforcement program under part D of 
     title IV of the Social Security Act. Such studies shall--
       (A) include a review of the staffing needs created by 
     requirements for automated data processing, maintenance of a 
     central case registry and centralized collections of child 
     support, and of changes in these needs resulting from changes 
     in such requirements; and
       (B) examine and report on effective staffing practices used 
     by the States and on recommended staffing procedures.
       (2) Frequency of studies.--The Secretary shall complete the 
     first staffing study required under paragraph (1) not later 
     than October 1, 1997, and may conduct additional studies 
     subsequently at appropriate intervals.
       (3) Report to the congress.--The Secretary shall submit a 
     report to the Congress stating the findings and conclusions 
     of each study conducted under this subsection.

     SEC. 117. FUNDING FOR SECRETARIAL ASSISTANCE TO STATE 
                   PROGRAMS.

       Section 452 (42 U.S.C. 652), as amended by section 
     115(a)(3), is amended by adding at the end the following new 
     subsection:
       ``(k)(1) There shall be available to the Secretary, from 
     amounts appropriated for fiscal year 1996 and each succeeding 
     fiscal year for payments to States under this part, the 
     amount specified in paragraph (2) for the costs to the 
     Secretary for--
       ``(A) information dissemination and technical assistance to 
     States, training of State and Federal staff, staffing 
     studies, and related activities needed to improve programs 
     (including technical assistance concerning State automated 
     systems);
       ``(B) research, demonstration, and special projects of 
     regional or national significance relating to the operation 
     of State programs under this part; and
       ``(C) operation of the Federal Parent Locator Service under 
     section 453, to the extent such costs are not recovered 
     through user fees.
       ``(2) The amount specified in this paragraph for a fiscal 
     year is the amount equal to a percentage of the reduction in 
     Federal payments to States under part A on account of child 
     support (including arrearages) collected in the preceding 
     fiscal year on behalf of children receiving aid under such 
     part A in such preceding fiscal year (as determined on the 
     basis of the most recent reliable data available to the 
     Secretary as of the end of the third calendar quarter 
     following the end of such preceding fiscal year), equal to--
       ``(A) 1 percent, for the activities specified in 
     subparagraphs (A) and (B) of paragraph (1); and
       ``(B) 2 percent, for the activities specified in 
     subparagraph (C) of paragraph (1).''.
     [[Page S2878]] SEC. 118. DATA COLLECTION AND REPORTS BY THE 
                   SECRETARY.

       (a) Annual Report to Congress.--
       (1) In general.--Section 452(a)(10)(A) (42 U.S.C. 
     652(a)(10)(A)) is amended--
       (A) by striking ``this part;'' and inserting ``this part, 
     including--''; and
       (B) by adding at the end the following indented clauses:
       ``(i) the total amount of child support payments collected 
     as a result of services furnished during such fiscal year to 
     individuals receiving services under this part;
       ``(ii) the cost to the States and to the Federal Government 
     of furnishing such services to those individuals; and
       ``(iii) the number of cases involving families--

       ``(I) who became ineligible for aid under part A during a 
     month in such fiscal year; and
       ``(II) with respect to whom a child support payment was 
     received in the same month;''.

       (2) Certain data.--Section 452(a)(10)(C) (42 U.S.C. 
     652(a)(10)(C)) is amended--
       (A) in the matter preceding clause (i), by striking ``with 
     the data required under each clause being separately stated 
     for cases'' and all that follows through ``part:'' and 
     inserting ``separately stated for cases where the child is 
     receiving aid to families with dependent children (or foster 
     care maintenance payments under part E), or formerly received 
     such aid or payments and the State is continuing to collect 
     support assigned to it under section 402(a)(26), 471(a)(17), 
     or 1912, and all other cases under this part--'';
       (B) in each of clauses (i) and (ii), by striking ``, and 
     the total amount of such obligations'';
       (C) in clause (iii), by striking ``described in'' and all 
     that follows through the semicolon and inserting ``in which 
     support was collected during the fiscal year;'';
       (D) by striking clause (iv); and
       (E) by redesignating clause (v) as clause (vii), and 
     inserting after clause (iii) the following new clauses:
       ``(iv) the total amount of support collected during such 
     fiscal year and distributed as current support;
       ``(v) the total amount of support collected during such 
     fiscal year and distributed as arrearages;
       ``(vi) the total amount of support due and unpaid for all 
     fiscal years; and''.
       (3) Use of federal courts.--Section 452(a)(10)(G) (42 
     U.S.C. 652(a)(10)(G)) is amended by striking ``on the use of 
     Federal courts and''.
       (4) Additional information not necessary.--Section 
     452(a)(10) (42 U.S.C. 652(a)(10)) is amended by striking all 
     that follows subparagraph (I).
       (b) Data Collection and Reporting.--Section 469 (42 U.S.C. 
     669) is amended--
       (1) by striking subsections (a) and (b) and inserting the 
     following:
       ``(a) The Secretary shall collect and maintain, on a fiscal 
     year basis, up-to-date statistics, by State, with respect to 
     services to establish paternity and services to establish 
     child support obligations, the data specified in subsection 
     (b), separately stated, in the case of each such service, 
     with respect to--
       ``(1) families (or dependent children) receiving aid under 
     plans approved under part A (or E); and
       ``(2) families not receiving such aid.
       ``(b) The data referred to in subsection (a) are--
       ``(1) the number of cases in the caseload of the State 
     agency administering the plan under this part in which such 
     service is needed; and
       ``(2) the number of such cases in which the service has 
     been provided.''; and
       (2) in subsection (c), by striking ``(a)(2)'' and inserting 
     ``(b)(2)''.
       (c) Effective Date.--The amendments made by this section 
     shall be effective with respect to fiscal year 1996 and 
     succeeding fiscal years.
                  Subtitle C--Locate and Case Tracking

     SEC. 121. CENTRAL STATE AND CASE REGISTRY.

       Section 454A, as added by section 115(a)(2), is amended by 
     adding at the end the following new subsections:
       ``(e) Central Case Registry.--
       ``(1) In general.--The automated system required under this 
     section shall perform the functions, in accordance with the 
     provisions of this subsection, of a single central registry 
     containing records with respect to each case in which 
     services are being provided by the State agency (including, 
     on and after October 1, 1998, each order specified in section 
     466(a)(12)), using such standardized data elements (such as 
     names, social security numbers or other uniform 
     identification numbers, dates of birth, and case 
     identification numbers), and containing such other 
     information (such as information on case status) as the 
     Secretary may require.
       ``(2) Payment Records.--Each case record in the central 
     registry shall include a record of--
       ``(A) the amount of monthly (or other periodic) support 
     owed under the support order, and other amounts due or 
     overdue (including arrearages, interest or late payment 
     penalties, and fees);
       ``(B) all child support and related amounts collected 
     (including such amounts as fees, late payment penalties, and 
     interest on arrearages);
       ``(C) the distribution of such amounts collected; and
       ``(D) the birth date of the child for whom the child 
     support order is entered.
       ``(3) Updating and monitoring.--The State agency shall 
     promptly establish and maintain, and regularly monitor, case 
     records in the registry required by this subsection, on the 
     basis of--
       ``(A) information on administrative actions and 
     administrative and judicial proceedings and orders relating 
     to paternity and support;
       ``(B) information obtained from matches with Federal, 
     State, or local data sources;
       ``(C) information on support collections and distributions; 
     and
       ``(D) any other relevant information.
       ``(f) Data Matches and Other Disclosures of Information.--
     The automated system required under this section shall have 
     the capacity, and be used by the State agency, to extract 
     data at such times, and in such standardized format or 
     formats, as may be required by the Secretary, and to share 
     and match data with, and receive data from, other data bases 
     and data matching services, in order to obtain (or provide) 
     information necessary to enable the State agency (or 
     Secretary or other State or Federal agencies) to carry out 
     responsibilities under this part. Data matching activities of 
     the State agency shall include at least the following:
       ``(1) Data bank of child support orders.--Furnishing to the 
     Data Bank of Child Support Orders established under section 
     453(h) (and updating as necessary, with information, 
     including notice of expiration of orders) minimal information 
     specified by the Secretary on each child support case in the 
     central case registry.
       ``(2) Federal parent locator service.--Exchanging data with 
     the Federal Parent Locator Service for the purposes specified 
     in section 453.
       ``(3) AFDC and medicaid agencies.--Exchanging data with 
     State agencies (of the State and of other States) 
     administering the programs under part A and title XIX, as 
     necessary for the performance of State agency 
     responsibilities under this part and under such programs.
       ``(4) Intra- and interstate data matches.--Exchanging data 
     with other agencies of the State, agencies of other States, 
     and interstate information networks, as necessary and 
     appropriate to carry out (or assist other States to carry 
     out) the purposes of this part.''.

     SEC. 122. CENTRALIZED COLLECTION AND DISBURSEMENT OF SUPPORT 
                   PAYMENTS.

       (a) State Plan Requirement.--Section 454 (42 U.S.C. 654), 
     as amended by sections 104(a) and 114(b), is amended--
       (1) by striking ``and'' at the end of paragraph (25);
       (2) by striking the period at the end of paragraph (26) and 
     inserting ``; and''; and
       (3) by adding after paragraph (26) the following new 
     paragraph:
       ``(27) provide that the State agency, on and after October 
     1, 1998--
       ``(A) will operate a centralized, automated unit for the 
     collection and disbursement of child support under orders 
     being enforced under this part, in accordance with section 
     454B; and
       ``(B) will have sufficient State staff (consisting of State 
     employees), and, at State option, contractors reporting 
     directly to the State agency to monitor and enforce support 
     collections through such centralized unit, including carrying 
     out the automated data processing responsibilities specified 
     in section 454A(g) and to impose, as appropriate in 
     particular cases, the administrative enforcement remedies 
     specified in section 466(c)(1).''.
       (b) Establishment of Centralized Collection Unit.--Part D 
     of title IV (42 U.S.C. 651-669) is amended by adding after 
     section 454A the following new section:


     ``centralized collection and disbursement of support payments

       ``Sec. 454B. (a) In General.--In order to meet the 
     requirement of section 454(27), the State agency must operate 
     a single, centralized, automated unit for the collection and 
     disbursement of support payments, coordinated with the 
     automated data system required under section 454A, in 
     accordance with the provisions of this section, which shall 
     be--
       ``(1) operated directly by the State agency (or by 2 or 
     more State agencies under a regional cooperative agreement), 
     or by a single contractor responsible directly to the State 
     agency; and
       ``(2) used for the collection and disbursement (including 
     interstate collection and disbursement) of payments under 
     support orders in all cases being enforced by the State 
     pursuant to section 454(4).
       ``(b) Required Procedures.--The centralized collections 
     unit shall use automated procedures, electronic processes, 
     and computer-driven technology to the maximum extent 
     feasible, efficient, and economical, for the collection and 
     disbursement of support payments, including procedures--
       ``(1) for receipt of payments from parents, employers, and 
     other States, and for disbursements to custodial parents and 
     other obligees, the State agency, and the State agencies of 
     other States;
       ``(2) for accurate identification of payments;
       ``(3) to ensure prompt disbursement of the custodial 
     parent's share of any payment; and
       ``(4) to furnish to either parent, upon request, timely 
     information on the current status of support payments.''.
       (c) Use of Automated System.--Section 454A, as added by 
     section 115(a)(2) and as amended by section 121, is amended 
     by adding at the end the following new subsection:
     [[Page S2879]]   ``(g) Centralized Collection and 
     Distribution of Support Payments.--The automated system 
     required under this section shall be used, to the maximum 
     extent feasible, to assist and facilitate collections and 
     disbursement of support payments through the centralized 
     collections unit operated pursuant to section 454B, through 
     the performance of functions including at a minimum--
       ``(1) generation of orders and notices to employers (and 
     other debtors) for the withholding of wages (and other 
     income)--
       ``(A) within 2 working days after receipt (from the 
     directory of New Hires established under section 453(i) or 
     any other source) of notice of and the income source subject 
     to such withholding; and
       ``(B) using uniform formats directed by the Secretary;
       ``(2) ongoing monitoring to promptly identify failures to 
     make timely payment; and
       ``(3) automatic use of enforcement mechanisms (including 
     mechanisms authorized pursuant to section 466(c)) where 
     payments are not timely made.''.
       (d) Effective Date.--The amendments made by this section 
     shall become effective on October 1, 1998.

     SEC. 123. AMENDMENTS CONCERNING INCOME WITHHOLDING.

       (a) Mandatory Income Withholding.--
       (1) From wages.--Section 466(a)(1) (42 U.S.C. 666(a)(1)) is 
     amended to read as follows:
       ``(1)(A) Procedures described in subsection (b) for the 
     withholding from income of amounts payable as support in 
     cases subject to enforcement under the State plan.
       ``(B) Procedures under which all child support orders 
     issued (or modified) before October 1, 1996, and which are 
     not otherwise subject to withholding under subsection (b), 
     shall become subject to withholding from wages as provided in 
     subsection (b) if arrearages occur, without the need for a 
     judicial or administrative hearing.''.
       (2) Repeal of certain provisions concerning arrearages.--
     Section 466(a)(8) (42 U.S.C. 666(a)(8)) is repealed.
       (3) Procedures described.--Section 466(b) (42 U.S.C. 
     666(b)) is amended--
       (A) in the matter preceding paragraph (1), by striking 
     ``subsection (a)(1)'' and inserting ``subsection (a)(1)(A)'';
       (B) in paragraph (5), by striking ``a public agency'' and 
     all that follows through the period and inserting ``the State 
     through the centralized collections unit established pursuant 
     to section 454B, in accordance with the requirements of such 
     section 454B.'';
       (C) in paragraph (6)(A)(i)--
       (i) by inserting ``, in accordance with timetables 
     established by the Secretary,'' after ``must be required''; 
     and
       (ii) by striking ``to the appropriate agency'' and all that 
     follows through the period and inserting ``to the State 
     centralized collections unit within 5 working days after the 
     date such amount would (but for this subsection) have been 
     paid or credited to the employee, for distribution in 
     accordance with this part.'';
       (D) in paragraph (6)(A)(ii), by inserting ``be in a 
     standard format prescribed by the Secretary, and'' after 
     ``shall''; and
       (E) in paragraph (6)(D) to read as follows:
       ``(D) Provision must be made for the imposition of a fine 
     against any employer who--
       ``(i) discharges from employment, refuses to employ, or 
     takes disciplinary action against any absent parent subject 
     to wage withholding required by this subsection because of 
     the existence of such withholding and the obligations or 
     additional obligations which it imposes upon the employer; or
       ``(ii) fails to withhold support from wages, or to pay such 
     amounts to the State centralized collections unit in 
     accordance with this subsection.''.
       (b) Conforming Amendment.--Section 466(c) (42 U.S.C. 
     666(c)) is repealed.
       (c) Definition of Terms.--The Secretary of Health and Human 
     Services shall promulgate regulations providing definitions, 
     for purposes of part D of title IV of the Social Security 
     Act, for the term ``income'' and for such other terms 
     relating to income withholding under section 466(b) of such 
     Act as the Secretary may find it necessary or advisable to 
     define.

     SEC. 124. LOCATOR INFORMATION FROM INTERSTATE NETWORKS.

       Section 466(a) (42 U.S.C. 666(a)), as amended by section 
     123(a)(2), is amended by inserting after paragraph (7) the 
     following new paragraph:
       ``(8) Procedures ensuring that the State will neither 
     provide funding for, nor use for any purpose (including any 
     purpose unrelated to the purposes of this part), any 
     automated interstate network or system used to locate 
     individuals--
       ``(A) for purposes relating to the use of motor vehicles; 
     or
       ``(B) providing information for law enforcement purposes 
     (where child support enforcement agencies are otherwise 
     allowed access by State and Federal law),

     unless all Federal and State agencies administering programs 
     under this part (including the entities established under 
     section 453) have access to information in such system or 
     network to the same extent as any other user of such system 
     or network.''.

     SEC. 125. EXPANDED FEDERAL PARENT LOCATOR SERVICE.

       (a) Expanded Authority to Locate Individuals and Assets.--
     Section 453 (42 U.S.C. 653) is amended--
       (1) in subsection (a), by striking ``information as to the 
     whereabouts'' and all that follows through the period and 
     inserting ``, for the purpose of establishing parentage, 
     establishing, setting the amount of, modifying, or enforcing 
     child support obligations--
       ``(1) information on, or facilitating the discovery of, the 
     location of any individual--
       ``(A) who is under an obligation to pay child support;
       ``(B) against whom such an obligation is sought; or
       ``(C) to whom such an obligation is owed,

     including such individual's social security number (or 
     numbers), most recent residential address, and the name, 
     address, and employer identification number of such 
     individual's employer; and
       ``(2) information on the individual's wages (or other 
     income) from, and benefits of, employment (including rights 
     to or enrollment in group health care coverage); and
       ``(3) information on the type, status, location, and amount 
     of any assets of, or debts owed by or to, any such 
     individual.'';
       (2) in subsection (b)--
       (A) in the matter preceding paragraph (1), by striking 
     ``social security'' and all that follows through ``absent 
     parent'' and inserting ``information specified in subsection 
     (a)''; and
       (B) in paragraph (2), by inserting before the period ``, or 
     from any consumer reporting agency (as defined in section 
     603(f) of the Fair Credit Reporting Act (15 U.S.C. 
     1681a(f))''; and
       (3) in subsection (e)(1), by inserting before the period 
     ``, or by consumer reporting agencies''.
       (b) Reimbursement for Data From Federal Agencies.--Section 
     453(e)(2) (42 U.S.C. 653(e)(2)) is amended in the fourth 
     sentence by inserting before the period ``in an amount which 
     the Secretary determines to be reasonable payment for the 
     data exchange (which amount shall not include payment for the 
     costs of obtaining, compiling, or maintaining the data)''.
       (c) Access to Consumer Reports Under Fair Credit Reporting 
     Act.--
       (1) In general.--Section 608 of the Fair Credit Reporting 
     Act (15 U.S.C. 1681f) is amended--
       (A) by striking ``, limited to'' and inserting ``to a 
     governmental agency (including the entire consumer report, in 
     the case of a Federal, State, or local agency administering a 
     program under part D of title IV of the Social Security Act, 
     and limited to''; and
       (B) by striking ``employment, to a governmental agency'' 
     and inserting ``employment, in the case of any other 
     governmental agency)''.
       (2) Reimbursement for reports by state agencies and credit 
     bureaus.--Section 453 (42 U.S.C. 653) is amended by adding at 
     the end the following new subsection:
       ``(g) The Secretary is authorized to reimburse to State 
     agencies and consumer credit reporting agencies the costs 
     incurred by such entities in furnishing information requested 
     by the Secretary pursuant to this section in an amount which 
     the Secretary determines to be reasonable payment for the 
     data exchange (which amount shall not include payment for the 
     costs of obtaining, compiling, or maintaining the data).''.
       (d) Disclosure of Tax Return Information.--
       (1) By the secretary of the treasury.--Section 
     6103(l)(6)(A)(ii) of the Internal Revenue Code of 1986 
     (relating to disclosure of return information to Federal, 
     State, and local child support enforcement agencies) is 
     amended by striking ``, but only if'' and all that follows to 
     the period.
       (2) By the social security administration.--Section 
     6103(l)(8) of the Internal Revenue Code of 1986 (relating to 
     disclosure of certain return information by Social Security 
     Administration to State and local child support enforcement 
     agencies) is amended--
       (A) in subparagraph (A), by striking ``State or local'' and 
     inserting ``Federal, State, or local''; and
       (B) in subparagraph (C), by inserting ``(including any 
     entity under contract with such agency)'' after ``thereof''.
       (e) Technical Amendments.--
       (1) Sections 452(a)(9), 453(a), 453(b), 463(a), and 463(e) 
     (42 U.S.C. 652(a)(9), 653(a), 653(b), 663(a), and 663(e)) are 
     each amended by inserting ``Federal'' before ``Parent'' each 
     place it appears.
       (2) Section 453 (42 U.S.C. 653) is amended in the heading 
     by inserting ``federal'' before ``parent''.
       (f) New Components.--Section 453 (42 U.S.C. 653), as 
     amended by subsection (c)(2), is amended by adding at the end 
     the following new subsections:
       ``(h) Data Bank of Child Support Orders.--
       ``(1) In general.--Not later than October 1, 1998, in order 
     to assist States in administering their State plans under 
     this part and parts A, F, and G, and for the other purposes 
     specified in this section, the Secretary shall establish and 
     maintain in the Federal Parent Locator Service an automated 
     registry to be known as the Data Bank of Child Support 
     Orders, which shall contain abstracts of child support orders 
     and other information described in paragraph (2) on each case 
     in each State central case registry maintained pursuant to 
     section 454A(e), as furnished (and regularly updated), 
     pursuant to section 454A(f), by State agencies administering 
     programs under this part.
       ``(2) Case information.--The information referred to in 
     paragraph (1), as specified by the Secretary, shall include 
     sufficient information (including names, social security 
     [[Page S2880]] numbers or other uniform identification 
     numbers, and State case identification numbers) to identify 
     the individuals who owe or are owed support (or with respect 
     to or on behalf of whom support obligations are sought to be 
     established), and the State or States which have established 
     or modified, or are enforcing or seeking to establish, such 
     an order.
       ``(i) Directory of New Hires.--
       ``(1) In general.--Not later than October 1, 1998, in order 
     to assist States in administering their State plans under 
     this part and parts A, F, and G, and for the other purposes 
     specified in this section, the Secretary shall establish and 
     maintain in the Federal Parent Locator Service an automated 
     directory to be known as the directory of New Hires, 
     containing--
       ``(A) information supplied by employers on each newly hired 
     individual, in accordance with paragraph (2); and
       ``(B) information supplied by State agencies administering 
     State unemployment compensation laws, in accordance with 
     paragraph (3).
       ``(2) Employer information.--
       ``(A) Information required.--Subject to subparagraph (D), 
     each employer shall furnish to the Secretary, for inclusion 
     in the directory under this subsection, not later than 10 
     days after the date (on or after October 1, 1998) on which 
     the employer hires a new employee (as defined in subparagraph 
     (C)), a report containing the name, date of birth, and social 
     security number of such employee, and the employer 
     identification number of the employer.
       ``(B) Reporting method and format.--The Secretary shall 
     provide for transmission of the reports required under 
     subparagraph (A) using formats and methods which minimize the 
     burden on employers, which shall include--
       ``(i) automated or electronic transmission of such reports;
       ``(ii) transmission by regular mail; and
       ``(iii) transmission of a copy of the form required for 
     purposes of compliance with section 3402 of the Internal 
     Revenue Code of 1986.
       ``(C) Employee defined.--For purposes of this paragraph, 
     the term `employee' means any individual subject to the 
     requirement of section 3402(f)(2) of the Internal Revenue 
     Code of 1986.
       ``(D) Paperwork reduction requirement.--As required by the 
     information resources management policies published by the 
     Director of the Office of Management and Budget pursuant to 
     section 3504(b)(1) of title 44, United States Code, the 
     Secretary, in order to minimize the cost and reporting burden 
     on employers, shall not require reporting pursuant to this 
     paragraph if an alternative reporting mechanism can be 
     developed that either relies on existing Federal or State 
     reporting or enables the Secretary to collect the needed 
     information in a more cost-effective and equally expeditious 
     manner, taking into account the reporting costs on employers.
       ``(E) Civil money penalty on noncomplying employers.--
       ``(i) In general.--Any employer that fails to make a timely 
     report in accordance with this paragraph with respect to an 
     individual shall be subject to a civil money penalty, for 
     each calendar year in which the failure occurs, of the lesser 
     of $500 or 1 percent of the wages or other compensation paid 
     by such employer to such individual during such calendar 
     year.
       ``(ii) Application of section 1128a.--Subject to clause 
     (iii), the provisions of section 1128A (other than 
     subsections (a) and (b) thereof) shall apply to a civil money 
     penalty under clause (i) in the same manner as they apply to 
     a civil money penalty or proceeding under section 1128A(a).
       ``(iii) Costs to secretary.--Any employer with respect to 
     whom a penalty under this subparagraph is upheld after an 
     administrative hearing shall be liable to pay all costs of 
     the Secretary with respect to such hearing.
       ``(3) Employment security information.--
       ``(A) Reporting requirement.--Each State agency 
     administering a State unemployment compensation law approved 
     by the Secretary of Labor under the Federal Unemployment Tax 
     Act shall furnish to the Secretary extracts of the reports to 
     the Secretary of Labor concerning the wages and unemployment 
     compensation paid to individuals required under section 
     303(a)(6), in accordance with subparagraph (B).
       ``(B) Manner of compliance.--The extracts required under 
     subparagraph (A) shall be furnished to the Secretary on a 
     quarterly basis, with respect to calendar quarters beginning 
     on and after October 1, 1996, by such dates, in such format, 
     and containing such information as required by that Secretary 
     in regulations.
       ``(j) Data Matches and Other Disclosures.--
       ``(1) Verification by social security administration.--
       ``(A) Transmission of data.--The Secretary shall transmit 
     data on individuals and employers in the registries 
     maintained under this section to the Social Security 
     Administration to the extent necessary for verification in 
     accordance with subparagraph (B).
       ``(B) Verification.--The Commissioner of Social Security 
     shall verify the accuracy of, correct or supply to the extent 
     necessary and feasible, and report to the Secretary, the 
     following information in data supplied by the Secretary 
     pursuant to subparagraph (A):
       ``(i) the name, social security number, and birth date of 
     each individual; and
       ``(ii) the employer identification number of each employer.
       ``(2) Child support locator matches.--For the purpose of 
     locating individuals for purposes of paternity establishment 
     and establishment and enforcement of child support, the 
     Secretary shall--
       ``(A) match data in the directory of New Hires against the 
     child support order abstracts in the Data Bank of Child 
     Support Orders not less than every 2 working days; and
       ``(B) report information obtained from a match established 
     under subparagraph (A) to concerned State agencies operating 
     programs under this part not later than 2 working days after 
     such match.
       ``(3) Data matches and disclosures of data in all 
     registries for title iv program purposes.--The Secretary 
     shall--
       ``(A) perform matches of data in each component of the 
     Federal Parent Locator Service maintained under this section 
     against data in each other such component (other than the 
     matches required pursuant to paragraph (1)), and report 
     information resulting from such matches to State agencies 
     operating programs under this part and parts A, F, and G; and
       ``(B) disclose data in such registries to such State 
     agencies,

     to the extent, and with the frequency, that the Secretary 
     determines to be effective in assisting such States to carry 
     out their responsibilities under such programs.
       ``(k) Fees.--
       ``(1) For ssa verification.--The Secretary shall reimburse 
     the Commissioner of Social Security, at a rate negotiated 
     between the Secretary and the Commissioner, the costs 
     incurred by the Commissioner in performing the verification 
     services specified in subsection (j).
       ``(2) For information from sesas.--The Secretary shall 
     reimburse costs incurred by State employment security 
     agencies in furnishing data as required by subsection (i)(3), 
     at rates which the Secretary determines to be reasonable 
     (which rates shall not include payment for the costs of 
     obtaining, compiling, or maintaining such data).
       ``(3) For information furnished to state and federal 
     agencies.--State and Federal agencies receiving data or 
     information from the Secretary pursuant to this section shall 
     reimburse the costs incurred by the Secretary in furnishing 
     such data or information, at rates which the Secretary 
     determines to be reasonable (which rates shall include 
     payment for the costs of obtaining, verifying, maintaining, 
     and matching such data or information).
       ``(l) Restriction on Disclosure and Use.--Data in the 
     Federal Parent Locator Service, and information resulting 
     from matches using such data, shall not be used or disclosed 
     except as specifically provided in this section.
       ``(m) Retention of Data.--Data in the Federal Parent 
     Locator Service, and data resulting from matches performed 
     pursuant to this section, shall be retained for such period 
     (determined by the Secretary) as appropriate for the data 
     uses specified in this section.
       ``(n) Information Integrity and Security.--The Secretary 
     shall establish and implement safeguards with respect to the 
     entities established under this section designed to--
       ``(1) ensure the accuracy and completeness of information 
     in the Federal Parent Locator Service; and
       ``(2) restrict access to confidential information in the 
     Federal Parent Locator Service to authorized persons, and 
     restrict use of such information to authorized purposes.
       ``(o) Limit on Liability.--The Secretary shall not be 
     liable to either a State or an individual for inaccurate 
     information provided to a component of the Federal Parent 
     Locator Service and disclosed by the Secretary in accordance 
     with this section.''.
       (g) Conforming Amendments.--
       (1) To part d of title iv of the social security act.--
     Section 454(8)(B) (42 U.S.C. 654(8)(B)) is amended to read as 
     follows:
       ``(B) the Federal Parent Locator Service established under 
     section 453;''.
       (2) To federal unemployment tax act.--Section 3304(16) of 
     the Internal Revenue Code of 1986 (relating to approval of 
     State laws) is amended--
       (A) by striking ``Secretary of Health, Education, and 
     Welfare'' each place it appears and inserting ``Secretary of 
     Health and Human Services'';
       (B) in subparagraph (B), by striking ``such information'' 
     and all that follows through the semicolon and inserting 
     ``information furnished under subparagraph (A) or (B) is used 
     only for the purposes authorized under such subparagraph;'';
       (C) by striking ``and'' at the end of subparagraph (A);
       (D) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (E) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) wage and unemployment compensation information 
     contained in the records of such agency shall be furnished to 
     the Secretary of Health and Human Services (in accordance 
     with regulations promulgated by such Secretary) as necessary 
     for the purposes of the directory of New Hires established 
     under section 453(i) of the Social Security Act, and''.
       (3) To state grant program under title iii of the social 
     security act.--Section 303(a) (42 U.S.C. 503(a)) is amended--
      [[Page S2881]]   (A) by striking ``and'' at the end of 
     paragraph (8);
       (B) by striking the period at the end of paragraph (9) and 
     inserting ``; and''; and
       (C) by adding after paragraph (9) the following new 
     paragraph:
       ``(10) The making of quarterly electronic reports, at such 
     dates, in such format, and containing such information, as 
     required by the Secretary under section 453(i)(3), and 
     compliance with such provisions as such Secretary may find 
     necessary to ensure the correctness and verification of such 
     reports.''.

     SEC. 126. USE OF SOCIAL SECURITY NUMBERS.

       (a) State Law Requirement.--Section 466(a) (42 U.S.C. 
     666(a)), as amended by section 101(a), is amended by adding 
     at the end the following new paragraph:
       ``(13) Procedures requiring the recording of social 
     security numbers--
       ``(A) of both parties on marriage licenses and divorce 
     decrees;
       ``(B) of both parents, on birth records and child support 
     and paternity orders; and
       ``(C) on all applications for motor vehicle licenses and 
     professional licenses.''.
       (b) Clarification of Federal Policy.--Section 
     205(c)(2)(C)(ii) (42 U.S.C. 405(c)(2)(C)(ii)) is amended by 
     striking the third sentence and inserting ``This clause shall 
     not be considered to authorize disclosure of such numbers 
     except as provided in the preceding sentence.''.
         Subtitle D--Streamlining and Uniformity of Procedures

     SEC. 131. ADOPTION OF UNIFORM STATE LAWS.

       Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
     101(a) and 126(a), is amended by adding at the end the 
     following new paragraph:
       ``(14)(A) Procedures under which the State adopts in its 
     entirety (with the modifications and additions specified in 
     this paragraph) not later than January 1, 1997, and uses on 
     and after such date, the Uniform Interstate Family Support 
     Act, as approved by the National Conference of Commissioners 
     on Uniform State Laws in August 1992.
       ``(B) The State law adopted pursuant to subparagraph (A) 
     shall be applied to any case--
       ``(i) involving an order established or modified in one 
     State and for which a subsequent modification is sought in 
     another State; or
       ``(ii) in which interstate activity is required to enforce 
     an order.
       ``(C) The State law adopted pursuant to subparagraph (A) of 
     this paragraph shall contain the following provision in lieu 
     of section 611(a)(1) of the Uniform Interstate Family Support 
     Act described in such subparagraph (A):
       ```(1) the following requirements are met:
       ```(i) the child, the individual obligee, and the obligor--
       ```(I) do not reside in the issuing State; and
       ```(II) either reside in this State or are subject to the 
     jurisdiction of this State pursuant to section 201; and
       ```(ii) in any case where another State is exercising or 
     seeks to exercise jurisdiction to modify the order, the 
     conditions of section 204 are met to the same extent as 
     required for proceedings to establish orders; or'.
       ``(D) The State law adopted pursuant to subparagraph (A) 
     shall recognize as valid, for purposes of any proceeding 
     subject to such State law, service of process upon persons in 
     the State (and proof of such service) by any means acceptable 
     in another State which is the initiating or responding State 
     in such proceeding.''.

     SEC. 132. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD 
                   SUPPORT ORDERS.

       Section 1738B of title 28, United States Code, is amended--
       (1) in subsection (a)(2), by striking ``subsection (e)'' 
     and inserting ``subsections (e), (f), and (i)'';
       (2) in subsection (b), by inserting after the first 
     undesignated paragraph the following:
       ```child's home State' means the State in which a child 
     lived with a parent or a person acting as parent for at least 
     6 consecutive months immediately preceding the time of filing 
     of a petition or comparable pleading for support and, if a 
     child is less than 6 months old, the State in which the child 
     lived from birth with any of them. A period of temporary 
     absence of any of them is counted as part of the 6-month 
     period.'';
       (3) in subsection (c), by inserting ``by a court of a 
     State'' before ``is made'';
       (4) in subsection (c)(1), by inserting ``and subsections 
     (e), (f), and (g)'' after ``located'';
       (5) in subsection (d)--
       (A) by inserting ``individual'' before ``contestant''; and
       (B) by striking ``subsection (e)'' and inserting 
     ``subsections (e) and (f)'';
       (6) in subsection (e), by striking ``make a modification of 
     a child support order with respect to a child that is made'' 
     and inserting ``modify a child support order issued'';
       (7) in subsection (e)(1), by inserting ``pursuant to 
     subsection (i)'' before the semicolon;
       (8) in subsection (e)(2)--
       (A) by inserting ``individual'' before ``contestant'' each 
     place such term appears; and
       (B) by striking ``to that court's making the modification 
     and assuming'' and inserting ``with the State of continuing, 
     exclusive jurisdiction for a court of another State to modify 
     the order and assume'';
       (9) by redesignating subsections (f) and (g) as subsections 
     (g) and (h), respectively;
       (10) by inserting after subsection (e) the following new 
     subsection:
       ``(f) Recognition of Child Support Orders.--If 1 or more 
     child support orders have been issued in this or another 
     State with regard to an obligor and a child, a court shall 
     apply the following rules in determining which order to 
     recognize for purposes of continuing, exclusive jurisdiction 
     and enforcement:
       ``(1) If only 1 court has issued a child support order, the 
     order of that court must be recognized.
       ``(2) If 2 or more courts have issued child support orders 
     for the same obligor and child, and only 1 of the courts 
     would have continuing, exclusive jurisdiction under this 
     section, the order of that court must be recognized.
       ``(3) If 2 or more courts have issued child support orders 
     for the same obligor and child, and only 1 of the courts 
     would have continuing, exclusive jurisdiction under this 
     section, an order issued by a court in the current home State 
     of the child must be recognized, but if an order has not been 
     issued in the current home State of the child, the order most 
     recently issued must be recognized.
       ``(4) If 2 or more courts have issued child support orders 
     for the same obligor and child, and none of the courts would 
     have continuing, exclusive jurisdiction under this section, a 
     court may issue a child support order, which must be 
     recognized.
       ``(5) The court that has issued an order recognized under 
     this subsection is the court having continuing, exclusive 
     jurisdiction.'';
       (11) in subsection (g) (as so redesignated)--
       (A) by striking ``Prior'' and inserting ``Modified''; and
       (B) by striking ``subsection (e)'' and inserting 
     ``subsections (e) and (f)'';
       (12) in subsection (h) (as so redesignated)--
       (A) in paragraph (2), by inserting ``including the duration 
     of current payments and other obligations of support'' before 
     the comma; and
       (B) in paragraph (3), by inserting ``arrears under'' after 
     ``enforce''; and
       (13) by adding at the end the following new subsection:
       ``(i) Registration for Modification.--If there is no 
     individual contestant or child residing in the issuing State, 
     the party or support enforcement agency seeking to modify, or 
     to modify and enforce, a child support order issued in 
     another State shall register that order in a State with 
     jurisdiction over the nonmovant for the purpose of 
     modification.''.

     SEC. 133. STATE LAWS PROVIDING EXPEDITED PROCEDURES.

       (a) State Law Requirements.--Section 466 (42 U.S.C. 666), 
     as amended by section 123(b), is amended--
       (1) in subsection (a)(2), in the first sentence, to read as 
     follows: ``Expedited administrative and judicial procedures 
     (including the procedures specified in subsection (c)) for 
     establishing paternity and for establishing, modifying, and 
     enforcing support obligations.''; and
       (2) by adding after subsection (b) the following new 
     subsection:
       ``(c) The procedures specified in this subsection are the 
     following:
       ``(1) Procedures which give the State agency the authority 
     (and recognize and enforce the authority of State agencies of 
     other States), without the necessity of obtaining an order 
     from any other judicial or administrative tribunal (but 
     subject to due process safeguards, including (as appropriate) 
     requirements for notice, opportunity to contest the action, 
     and opportunity for an appeal on the record to an independent 
     administrative or judicial tribunal), to take the following 
     actions relating to establishment or enforcement of orders:
       ``(A) To order genetic testing for the purpose of paternity 
     establishment as provided in section 466(a)(5).
       ``(B) To enter a default order, upon a showing of service 
     of process and any additional showing required by State law--
       ``(i) establishing paternity, in the case of any putative 
     father who refuses to submit to genetic testing; and
       ``(ii) establishing or modifying a support obligation, in 
     the case of a parent (or other obligor or obligee) who fails 
     to respond to notice to appear at a proceeding for such 
     purpose.
       ``(C) To subpoena any financial or other information needed 
     to establish, modify, or enforce an order, and to sanction 
     failure to respond to any such subpoena.
       ``(D) To require all entities in the State (including for-
     profit, nonprofit, and governmental employers) to provide 
     promptly, in response to a request by the State agency of 
     that or any other State administering a program under this 
     part, information on the employment, compensation, and 
     benefits of any individual employed by such entity as an 
     employee or contractor, and to sanction failure to respond to 
     any such request.
       ``(E) To obtain access, subject to safeguards on privacy 
     and information security, to the following records (including 
     automated access, in the case of records maintained in 
     automated data bases):
       ``(i) Records of other State and local government agencies, 
     including--

       ``(I) vital statistics (including records of marriage, 
     birth, and divorce);
       ``(II) State and local tax and revenue records (including 
     information on residence address, employer, income and 
     assets);
     [[Page S2882]]   ``(III) records concerning real and titled 
     personal property;
       ``(IV) records of occupational and professional licenses, 
     and records concerning the ownership and control of 
     corporations, partnerships, and other business entities;
       ``(V) employment security records;
       ``(VI) records of agencies administering public assistance 
     programs;
       ``(VII) records of the motor vehicle department; and
       ``(VIII) corrections records.

       ``(ii) Certain records held by private entities, 
     including--

       ``(I) customer records of public utilities and cable 
     television companies; and
       ``(II) information (including information on assets and 
     liabilities) on individuals who owe or are owed support (or 
     against or with respect to whom a support obligation is 
     sought) held by financial institutions (subject to 
     limitations on liability of such entities arising from 
     affording such access).

       ``(F) To order income withholding in accordance with 
     subsection (a)(1) and (b) of section 466.
       ``(G) In cases where support is subject to an assignment 
     under section 402(a)(26), 471(a)(17), or 1912, or to a 
     requirement to pay through the centralized collections unit 
     under section 454B) upon providing notice to obligor and 
     obligee, to direct the obligor or other payor to change the 
     payee to the appropriate government entity.
       ``(H) For the purpose of securing overdue support--
       ``(i) to intercept and seize any periodic or lump-sum 
     payment to the obligor by or through a State or local 
     government agency, including--

       ``(I) unemployment compensation, workers' compensation, and 
     other benefits;
       ``(II) judgments and settlements in cases under the 
     jurisdiction of the State or local government; and
       ``(III) lottery winnings;

       ``(ii) to attach and seize assets of the obligor held by 
     financial institutions;
       ``(iii) to attach public and private retirement funds in 
     appropriate cases, as determined by the Secretary; and
       ``(iv) to impose liens in accordance with paragraph (a)(4) 
     and, in appropriate cases, to force sale of property and 
     distribution of proceeds.
       ``(I) For the purpose of securing overdue support, to 
     increase the amount of monthly support payments to include 
     amounts for arrearages (subject to such conditions or 
     restrictions as the State may provide).
       ``(J) To suspend drivers' licenses of individuals owing 
     past-due support, in accordance with subsection (a)(16).
       ``(2) The expedited procedures required under subsection 
     (a)(2) shall include the following rules and authority, 
     applicable with respect to all proceedings to establish 
     paternity or to establish, modify, or enforce support orders:
       ``(A) Procedures under which--
       ``(i) the parties to any paternity or child support 
     proceedings are required (subject to privacy safeguards) to 
     file with the tribunal before entry of an order, and to 
     update as appropriate, information on location and identity 
     (including social security number, residential and mailing 
     addresses, telephone number, driver's license number, and 
     name, address, and telephone number of employer); and
       ``(ii) in any subsequent child support enforcement action 
     between the same parties, the tribunal shall be authorized, 
     upon sufficient showing that diligent effort has been made to 
     ascertain such party's current location, to deem due process 
     requirements for notice and service of process to be met, 
     with respect to such party, by delivery to the most recent 
     residential or employer address so filed pursuant to clause 
     (i).
       ``(B) Procedures under which--
       ``(i) the State agency and any administrative or judicial 
     tribunal with authority to hear child support and paternity 
     cases exerts statewide jurisdiction over the parties, and 
     orders issued in such cases have statewide effect; and
       ``(ii) in the case of a State in which orders in such cases 
     are issued by local jurisdictions, a case may be transferred 
     between jurisdictions in the State without need for any 
     additional filing by the petitioner, or service of process 
     upon the respondent, to retain jurisdiction over the 
     parties.''.
       (c) Exceptions from State Law Requirements.--Section 466(d) 
     (42 U.S.C. 666(d)) is amended--
       (1) by striking ``(d) If'' and inserting ``(d)(1) Subject 
     to paragraph (2), if''; and
       (2) by adding at the end the following new paragraph:
       ``(2) The Secretary shall not grant an exemption from the 
     requirements of--
       ``(A) subsection (a)(5) (concerning procedures for 
     paternity establishment);
       ``(B) subsection (a)(10) (concerning modification of 
     orders);
       ``(C) subsection (a)(12) (concerning recording of orders in 
     the central State case registry);
       ``(D) subsection (a)(13) (concerning recording of social 
     security numbers);
       ``(E) subsection (a)(14) (concerning interstate 
     enforcement); or
       ``(F) subsection (c) (concerning expedited procedures), 
     other than paragraph (1)(A) thereof (concerning establishment 
     or modification of support amount).''.
       (c) Automation of State Agency Functions.--Section 454A, as 
     added by section 115(a)(2) and as amended by sections 121 and 
     122(c), is amended by adding at the end the following new 
     subsection:
       ``(h) Expedited Administrative Procedures.--The automated 
     system required under this section shall be used, to the 
     maximum extent feasible, to implement any expedited 
     administrative procedures required under section 466(c).''.
                  Subtitle E--Paternity Establishment

     SEC. 141. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT.

       (a) State Laws Required.--Section 466(a)(5) (42 U.S.C. 
     666(a)(5)) is amended--
       (1) in subparagraph (B)--
       (A) by striking ``(B)'' and inserting ``(B)(i)'';
       (B) in clause (i), as redesignated, by inserting before the 
     period ``, where such request is supported by a sworn 
     statement--
       ``(I) by such party alleging paternity setting forth facts 
     establishing a reasonable possibility of the requisite sexual 
     contact of the parties; or
       ``(II) by such party denying paternity setting forth facts 
     establishing a reasonable possibility of the nonexistence of 
     sexual contact of the parties;''; and
       (C) by inserting after clause (i) (as redesignated) the 
     following new clause:
       ``(ii) Procedures which require the State agency, in any 
     case in which such agency orders genetic testing--
       ``(I) to pay the costs of such tests, subject to recoupment 
     (where the State so elects) from the putative father if 
     paternity is established; and
       ``(II) to obtain additional testing in any case where an 
     original test result is disputed, upon request and advance 
     payment by the disputing party.'';
       (2) by striking subparagraphs (C), (D), (E), and (F) and 
     inserting the following:
       ``(C)(i) Procedures for a simple civil process for 
     voluntarily acknowledging paternity under which the State 
     must provide that, before a mother and a putative father can 
     sign an acknowledgment of paternity, the putative father and 
     the mother must be given notice, orally, in writing, and in a 
     language that each can understand, of the alternatives to, 
     the legal consequences of, and the rights (including, if 1 
     parent is a minor, any rights afforded due to minority 
     status) and responsibilities that arise from, signing the 
     acknowledgment.
       ``(ii) Such procedures must include a hospital-based 
     program for the voluntary acknowledgment of paternity 
     focusing on the period immediately before or after the birth 
     of a child.
       ``(iii) Such procedures must require the State agency 
     responsible for maintaining birth records to offer voluntary 
     paternity establishment services.
       ``(iv) The Secretary shall prescribe regulations governing 
     voluntary paternity establishment services offered by 
     hospitals and birth record agencies. The Secretary shall 
     prescribe regulations specifying the types of other entities 
     that may offer voluntary paternity establishment services, 
     and governing the provision of such services, which shall 
     include a requirement that such an entity must use the same 
     notice provisions used by, the same materials used by, 
     provide the personnel providing such services with the same 
     training provided by, and evaluate the provision of such 
     services in the same manner as, voluntary paternity 
     establishment programs of hospitals and birth record 
     agencies.
       ``(D)(i) Procedures under which a signed acknowledgment of 
     paternity is considered a legal finding of paternity, subject 
     to the right of any signatory to rescind the acknowledgment 
     within 60 days.
       ``(ii)(I) Procedures under which, after the 60-day period 
     referred to in clause (i), a signed acknowledgment of 
     paternity may be challenged in court only on the basis of 
     fraud, duress, or material mistake of fact, with the burden 
     of proof upon the challenger, and under which the legal 
     responsibilities (including child support obligations) of any 
     signatory arising from the acknowledgment may not be 
     suspended during the challenge, except for good cause shown.
       ``(II) Procedures under which, after the 60-day period 
     referred to in clause (i), a minor who signs an 
     acknowledgment of paternity other than in the presence of a 
     parent or court-appointed guardian ad litem may rescind the 
     acknowledgment in a judicial or administrative proceeding, 
     until the earlier of--
       ``(aa) attaining the age of majority; or
       ``(bb) the date of the first judicial or administrative 
     proceeding brought (after the signing) to establish a child 
     support obligation, visitation rights, or custody rights with 
     respect to the child whose paternity is the subject of the 
     acknowledgment, and at which the minor is represented by a 
     parent, guardian ad litem, or attorney.
       ``(E) Procedures under which no judicial or administrative 
     proceedings are required or permitted to ratify an 
     unchallenged acknowledgment of paternity.
       ``(F) Procedures requiring--
       ``(i) that the State admit into evidence, for purposes of 
     establishing paternity, results of any genetic test that is--
       ``(I) of a type generally acknowledged, by accreditation 
     bodies designated by the Secretary, as reliable evidence of 
     paternity; and
       ``(II) performed by a laboratory approved by such an 
     accreditation body;
       ``(ii) that any objection to genetic testing results must 
     be made in writing not later than a specified number of days 
     before any hearing at which such results may be introduced 
     into evidence (or, at State option, not 
     [[Page S2883]] later than a specified number of days after 
     receipt of such results); and
       ``(iii) that, if no objection is made, the test results are 
     admissible as evidence of paternity without the need for 
     foundation testimony or other proof of authenticity or 
     accuracy.''; and
       (3) by adding after subparagraph (H) the following new 
     subparagraphs:
       ``(I) Procedures providing that the parties to an action to 
     establish paternity are not entitled to a jury trial.
       ``(J) Procedures which require that a temporary order be 
     issued, upon motion by a party, requiring the provision of 
     child support pending an administrative or judicial 
     determination of parentage, where there is clear and 
     convincing evidence of paternity (on the basis of genetic 
     tests or other evidence).
       ``(K) Procedures under which bills for pregnancy, 
     childbirth, and genetic testing are admissible as evidence 
     without requiring third-party foundation testimony, and shall 
     constitute prima facie evidence of amounts incurred for such 
     services and testing on behalf of the child.
       ``(L) At the option of the State, procedures under which 
     the tribunal establishing paternity and support has 
     discretion to waive rights to all or part of amounts owed to 
     the State (but not to the mother) for costs related to 
     pregnancy, childbirth, and genetic testing and for public 
     assistance paid to the family where the father cooperates or 
     acknowledges paternity before or after genetic testing.
       ``(M) Procedures ensuring that the putative father has a 
     reasonable opportunity to initiate a paternity action.''.
       (b) National Paternity Acknowledgment Affidavit.--Section 
     452(a)(7) (42 U.S.C. 652(a)(7)) is amended by inserting ``, 
     and develop an affidavit to be used for the voluntary 
     acknowledgment of paternity which shall include the social 
     security number of each parent'' before the semicolon.
       (c) Technical Amendment.--Section 468 (42 U.S.C. 668) is 
     amended by striking ``a simple civil process for voluntarily 
     acknowledging paternity and''.

     SEC. 142. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT.

       (a) State Plan Requirement.--Section 454(23) (42 U.S.C. 
     654(23)) is amended--
       (1) by striking ``(23)'' and inserting ``(23)(A)'';
       (2) by inserting ``and'' after the semicolon; and
       (3) by adding at the end the following new subparagraph:
       ``(B) publicize the availability and encourage the use of 
     procedures for voluntary establishment of paternity and child 
     support through a variety of means, which--
       ``(i) include distribution of written materials at health 
     care facilities (including hospitals and clinics), and other 
     locations such as schools;
       ``(ii) may include pre-natal programs to educate expectant 
     couples on individual and joint rights and responsibilities 
     with respect to paternity (and may require all expectant 
     recipients of assistance under part A to participate in such 
     pre-natal programs, as an element of cooperation with efforts 
     to establish paternity and child support);
       ``(iii) include, with respect to each child discharged from 
     a hospital after birth for whom paternity or child support 
     has not been established, reasonable follow-up efforts, 
     providing--
       ``(I) in the case of a child for whom paternity has not 
     been established, information on the benefits of and 
     procedures for establishing paternity; and
       ``(II) in the case of a child for whom paternity has been 
     established but child support has not been established, 
     information on the benefits of and procedures for 
     establishing a child support order, and an application for 
     child support services;''.
       (b) Enhanced Federal Matching.--Section 455(a)(1)(C) (42 
     U.S.C. 655(a)(1)(C)) is amended--
       (1) by inserting ``(i)'' before ``laboratory costs'', and
       (2) by inserting before the semicolon ``, and (ii) costs of 
     outreach programs designed to encourage voluntary 
     acknowledgment of paternity''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by subsection (a) 
     shall become effective October 1, 1997.
       (2) Exception.--The amendments made by subsection (b) shall 
     be effective with respect to calendar quarters beginning on 
     and after October 1, 1996.
      Subtitle F--Establishment and Modification of Support Orders

     SEC. 151. NATIONAL CHILD SUPPORT GUIDELINES COMMISSION.

       (a) Establishment.--There is hereby established a 
     commission to be known as the ``National Child Support 
     Guidelines Commission'' (in this section referred to as the 
     ``Commission'').
       (b) General Duties.--
       (1) In general.--The Commission shall determine--
       (A) whether it is appropriate to develop a national child 
     support guideline for consideration by the Congress or for 
     adoption by individual States; or
       (B) based on a study of various guideline models, the 
     benefits and deficiencies of such models, and any needed 
     improvements.
       (2) Development of models.--If the Commission determines 
     under paragraph (1)(A) that a national child support 
     guideline is needed or under paragraph (1)(B) that 
     improvements to guideline models are needed, the Commission 
     shall develop such national guideline or improvements.
       (c) Matters for Consideration by the Commission.--In making 
     the recommendations concerning guidelines required under 
     subsection (b), the Commission shall consider--
       (1) the adequacy of State child support guidelines 
     established pursuant to section 467;
       (2) matters generally applicable to all support orders, 
     including--
       (A) the feasibility of adopting uniform terms in all child 
     support orders;
       (B) how to define income and under what circumstances 
     income should be imputed; and
       (C) tax treatment of child support payments;
       (3) the appropriate treatment of cases in which either or 
     both parents have financial obligations to more than 1 
     family, including the effect (if any) to be given to--
       (A) the income of either parent's spouse; and
       (B) the financial responsibilities of either parent for 
     other children or stepchildren;
       (4) the appropriate treatment of expenses for child care 
     (including care of the children of either parent, and work-
     related or job-training-related child care);
       (5) the appropriate treatment of expenses for health care 
     (including uninsured health care) and other extraordinary 
     expenses for children with special needs;
       (6) the appropriate duration of support by 1 or both 
     parents, including
       (A) support (including shared support) for post-secondary 
     or vocational education; and
       (B) support for disabled adult children;
       (7) procedures to automatically adjust child support orders 
     periodically to address changed economic circumstances, 
     including changes in the consumer price index or either 
     parent's income and expenses in particular cases;
       (8) procedures to help non-custodial parents address 
     grievances regarding visitation and custody orders to prevent 
     such parents from withholding child support payments until 
     such grievances are resolved; and
       (9) whether, or to what extent, support levels should be 
     adjusted in cases in which custody is shared or in which the 
     noncustodial parent has extended visitation rights.
       (d) Membership.--
       (1) Number; appointment.--
       (A) In general.--The Commission shall be composed of 12 
     individuals appointed jointly by the Secretary of Health and 
     Human Services and the Congress, not later than January 15, 
     1997, of which--
       (i) 2 shall be appointed by the Chairman of the Committee 
     on Finance of the Senate, and 1 shall be appointed by the 
     ranking minority member of the Committee;
       (ii) 2 shall be appointed by the Chairman of the Committee 
     on Ways and Means of the House of Representatives, and 1 
     shall be appointed by the ranking minority member of the 
     Committee; and
       (iii) 6 shall be appointed by the Secretary of Health and 
     Human Services.
       (B) Qualifications of members.--Members of the Commission 
     shall have expertise and experience in the evaluation and 
     development of child support guidelines. At least 1 member 
     shall represent advocacy groups for custodial parents, at 
     least 1 member shall represent advocacy groups for 
     noncustodial parents, and at least 1 member shall be the 
     director of a State program under part D of title IV of the 
     Social Security Act.
       (2) Terms of office.--Each member shall be appointed for a 
     term of 2 years. A vacancy in the Commission shall be filled 
     in the manner in which the original appointment was made.
       (e) Commission Powers, Compensation, Access to Information, 
     and Supervision.--The first sentence of subparagraph (C), the 
     first and third sentences of subparagraph (D), subparagraph 
     (F) (except with respect to the conduct of medical studies), 
     clauses (ii) and (iii) of subparagraph (G), and subparagraph 
     (H) of section 1886(e)(6) of the Social Security Act shall 
     apply to the Commission in the same manner in which such 
     provisions apply to the Prospective Payment Assessment 
     Commission.
       (f) Report.--Not later than 2 years after the appointment 
     of members, the Commission shall submit to the President, the 
     Committee on Ways and Means of the House of Representatives, 
     and the Committee on Finance of the Senate, a recommended 
     national child support guideline and a final assessment of 
     issues relating to such a proposed national child support 
     guideline.
       (g) Termination.--The Commission shall terminate 6 months 
     after the submission of the report described in subsection 
     (e).

     SEC. 152. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF 
                   CHILD SUPPORT ORDERS.

       Section 466(a)(10) (42 U.S.C. 666(a)(10)) is amended to 
     read as follows:
       ``(10)(A)(i) Procedures under which--
       ``(I) every 3 years, at the request of either parent 
     subject to a child support order, the State shall review and, 
     as appropriate, adjust the order in accordance with the 
     guidelines established under section 467(a) if the amount of 
     the child support award under the order differs from the 
     amount that would be awarded in accordance with such 
     guidelines, without a requirement for any other change in 
     circumstances; and
       ``(II) upon request at any time of either parent subject to 
     a child support order, the 
     [[Page S2884]] State shall review and, as appropriate, adjust 
     the order in accordance with the guidelines established under 
     section 467(a) based on a substantial change in the 
     circumstances of either such parent.
       ``(ii) Such procedures shall require both parents subject 
     to a child support order to be notified of their rights and 
     responsibilities provided for under clause (i) at the time 
     the order is issued and in the annual information exchange 
     form provided under subparagraph (B).
       ``(B) Procedures under which each child support order 
     issued or modified in the State after the effective date of 
     this subparagraph shall require the parents subject to the 
     order to provide each other with a complete statement of 
     their respective financial condition annually on a form which 
     shall be provided by the State. The Secretary shall establish 
     regulations for the enforcement of such exchange of 
     information.''.
               Subtitle G--Enforcement of Support Orders

     SEC. 161. FEDERAL INCOME TAX REFUND OFFSET.

       (a) Changed Order of Refund Distribution Under Internal 
     Revenue Code.--Section 6402(c) of the Internal Revenue Code 
     of 1986 (relating to offset of past-due support against 
     overpayments) is amended--
       (1) by striking ``The amount'' and inserting
       ``(1) In general.--The amount'';
       (2) by striking ``paid to the State. A reduction'' and 
     inserting ``paid to the State.
       ``(2) Priorities for offset.--A reduction'';
       (3) by striking ``has been assigned'' and inserting ``has 
     not been assigned''; and
       (4) by striking ``and shall be applied'' and all that 
     follows and inserting ``and shall thereafter be applied to 
     satisfy any past-due support that has been so assigned.''.
       (b) Elimination of Disparities in Treatment of Assigned and 
     Non-Assigned Arrearages.--
       (1) In general.--Section 464(a) (42 U.S.C. 664(a)) is 
     amended--
       (A) in paragraph (1)--
       (i) in the first sentence, by striking ``which has been 
     assigned to such State pursuant to section 402(a)(26) or 
     section 471(a)(17)''; and
       (ii) in the second sentence, by striking ``in accordance 
     with section 457 (b)(4) or (d)(3)'' and inserting ``as 
     provided in paragraph (2)'';
       (B) in paragraph (2), to read as follows:
       ``(2) The State agency shall distribute amounts paid by the 
     Secretary of the Treasury pursuant to paragraph (1)--
       ``(A) in accordance with subsection (a)(4) or (d)(3) of 
     section 457, in the case of past-due support assigned to a 
     State pursuant to section 402(a)(26) or section 471(a)(17); 
     and
       ``(B) to or on behalf of the child to whom the support was 
     owed, in the case of past-due support not so assigned.'';
       (C) in paragraph (3)--
       (i) by striking ``or (2)'' each place it appears; and
       (ii) in subparagraph (B), by striking ``under paragraph 
     (2)'' and inserting ``on account of past-due support 
     described in paragraph (2)(B)''.
       (2) Notices of past-due support.--Section 464(b) (42 U.S.C. 
     664(b)) is amended--
       (A) by striking ``(b)(1)'' and inserting ``(b)''; and
       (B) by striking paragraph (2).
       (3) Definition of past-due support.--Section 464(c) (42 
     U.S.C. 664(c)) is amended--
       (A) by striking ``(c)(1) Except as provided in paragraph 
     (2), as'' and inserting ``(c) As''; and
       (B) by striking paragraphs (2) and (3).
       (c) Treatment of Lump-Sum Tax Refund Under AFDC.--
       (1) Exemption from lump-sum rule.--Section 402(a)(17) (42 
     U.S.C. 602(a)(17)) is amended by inserting before the 
     semicolon at the end the following: ``, but this paragraph 
     shall not apply to income received by a family that is 
     attributable to a child support obligation owed with respect 
     to a member of the family and that is paid to the family from 
     amounts withheld from a Federal income tax refund otherwise 
     payable to the person owing such obligation, to the extent 
     that such income is placed in a qualified asset account (as 
     defined in section 406(j)) the total amounts in which, after 
     such placement, does not exceed $10,000''.
       (2) Qualified asset account defined.--Section 406 (42 
     U.S.C. 606), as amended by section 102(g)(2), is amended by 
     adding at the end the following new subsection:
       ``(j)(1) The term `qualified asset account' means a 
     mechanism approved by the State (such as individual 
     retirement accounts, escrow accounts, or savings bonds) that 
     allows savings of a family receiving aid to families with 
     dependent children to be used for qualified distributions.
       ``(2) The term `qualified distribution' means a 
     distribution from a qualified asset account for expenses 
     directly related to 1 or more of the following purposes:
       ``(A) The attendance of a member of the family at any 
     education or training program.
       ``(B) The improvement of the employability (including self-
     employment) of a member of the family (such as through the 
     purchase of an automobile).
       ``(C) The purchase of a home for the family.
       ``(D) A change of the family residence.''.
       (d) Effective Date.--The amendments made by this section 
     shall become effective October 1, 1999.

     SEC. 162. INTERNAL REVENUE SERVICE COLLECTION OF ARREARAGES.

       (a) Amendment to Internal Revenue Code.--Section 6305(a) of 
     the Internal Revenue Code of 1986 (relating to collection of 
     certain liability) is amended--
       (1) in paragraph (1), by inserting ``except as provided in 
     paragraph (5)'' after ``collected'';
       (2) by striking ``and'' at the end of paragraph (3);
       (3) by striking the period at the end of paragraph (4) and 
     inserting ``, and'';
       (4) by adding at the end the following new paragraph:
       ``(5) no additional fee may be assessed for adjustments to 
     an amount previously certified pursuant to such section 
     452(b) with respect to the same obligor.''; and
       (5) by striking ``Secretary of Health, Education, and 
     Welfare'' each place it appears and inserting ``Secretary of 
     Health and Human Services''.
       (b) Effective Date.--The amendments made by this section 
     shall become effective October 1, 1997.

     SEC. 163. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL 
                   EMPLOYEES.

       (a) Consolidation and Streamlining of Authorities.--
       (1) Section 459 (42 U.S.C. 659) is amended--
       (1) in the heading, by inserting ``income withholding,'' 
     before ``garnishment'';
       (2) in subsection (a)--
       (A) by striking ``section 207'' and inserting ``section 207 
     and section 5301 of title 38, United States Code''; and
       (B) by striking ``to legal process'' and all that follows 
     through the period and inserting ``to withholding in 
     accordance with State law pursuant to subsections (a)(1) and 
     (b) of section 466 and regulations of the Secretary 
     thereunder, and to any other legal process brought, by a 
     State agency administering a program under this part or by an 
     individual obligee, to enforce the legal obligation of such 
     individual to provide child support or alimony.'';
       (3) in subsection (b), to read as follows:
       ``(b) Except as otherwise provided herein, each entity 
     specified in subsection (a) shall be subject, with respect to 
     notice to withhold income pursuant to subsection (a)(1) or 
     (b) of section 466, or to any other order or process to 
     enforce support obligations against an individual (if such 
     order or process contains or is accompanied by sufficient 
     data to permit prompt identification of the individual and 
     the moneys involved), to the same requirements as would apply 
     if such entity were a private person.'';
       (4) by striking subsections (c) and (d) and inserting the 
     following new subsections:
       ``(c)(1) The head of each agency subject to the 
     requirements of this section shall--
       ``(A) designate an agent or agents to receive orders and 
     accept service of process; and
       ``(B) publish--
       ``(i) in the appendix of such regulations;
       ``(ii) in each subsequent republication of such 
     regulations; and
       ``(iii) annually in the Federal Register,
     the designation of such agent or agents, identified by title 
     of position, mailing address, and telephone number.
       ``(2) Whenever an agent designated pursuant to paragraph 
     (1) receives notice pursuant to subsection (a)(1) or (b) of 
     section 466, or is effectively served with any order, 
     process, or interrogatories, with respect to an individual's 
     child support or alimony payment obligations, such agent 
     shall--
       ``(A) as soon as possible (but not later than 15 days) 
     thereafter, send written notice of such notice or service 
     (together with a copy thereof) to such individual at his duty 
     station or last-known home address;
       ``(B) not later than 30 days (or such longer period as may 
     be prescribed by applicable State law) after receipt of a 
     notice pursuant to subsection (a)(1) or (b) of section 466, 
     comply with all applicable provisions of such section 466; 
     and
       ``(C) not later than 30 days (or such longer period as may 
     be prescribed by applicable State law) after effective 
     service of any other such order, process, or interrogatories, 
     respond thereto.
       ``(d) In the event that a governmental entity receives 
     notice or is served with process, as provided in this 
     section, concerning amounts owed by an individual to more 
     than 1 person--
       ``(1) support collection under section 466(b) must be given 
     priority over any other process, as provided in section 
     466(b)(7);
       ``(2) allocation of moneys due or payable to an individual 
     among claimants under section 466(b) shall be governed by the 
     provisions of such section 466(b) and regulations thereunder; 
     and
       ``(3) such moneys as remain after compliance with 
     subparagraphs (A) and (B) shall be available to satisfy any 
     other such processes on a first-come, first-served basis, 
     with any such process being satisfied out of such moneys as 
     remain after the satisfaction of all such processes which 
     have been previously served.'';
       (5) in subsection (f)--
       (A) by striking ``(f)'' and inserting ``(f)(1)''; and
       (B) by adding at the end the following new paragraph:
       ``(2) No Federal employee whose duties include taking 
     actions necessary to comply with the requirements of 
     subsection (a) with regard to any individual shall be subject 
     under any law to any disciplinary action or civil or criminal 
     liability or penalty for, or on account of, any disclosure of 
     information made by him in connection with the carrying out 
     of such duties.''; and
       (6) by adding at the end the following new subsections:
     [[Page S2885]]   ``(g) Authority to promulgate regulations 
     for the implementation of the provisions of this section 
     shall, insofar as the provisions of this section are 
     applicable to moneys due from (or payable by)--
       ``(1) the executive branch of the Federal Government 
     (including in such branch, for the purposes of this 
     subsection, the territories and possessions of the United 
     States, the United States Postal Service, the Postal Rate 
     Commission, any wholly owned Federal corporation created by 
     an Act of Congress, and the government of the District of 
     Columbia), be vested in the President (or the President's 
     designee);
       ``(2) the legislative branch of the Federal Government, be 
     vested jointly in the President pro tempore of the Senate and 
     the Speaker of the House of Representatives (or their 
     designees); and
       ``(3) the judicial branch of the Federal Government, be 
     vested in the Chief Justice of the United States (or the 
     Chief Justice's designee).
       ``(h) Subject to subsection (i), moneys paid or payable to 
     an individual which are considered to be based upon 
     remuneration for employment, for purposes of this section--
       ``(1) consist of--
       ``(A) compensation paid or payable for personal services of 
     such individual, whether such compensation is denominated as 
     wages, salary, commission, bonus, pay, allowances, or 
     otherwise (including severance pay, sick pay, and incentive 
     pay);
       ``(B) periodic benefits (including a periodic benefit as 
     defined in section 228(h)(3)) or other payments--
       ``(i) under the insurance system established by title II;
       ``(ii) under any other system or fund established by the 
     United States which provides for the payment of pensions, 
     retirement or retired pay, annuities, dependents' or 
     survivors' benefits, or similar amounts payable on account of 
     personal services performed by the individual or any other 
     individual;
       ``(iii) as compensation for death under any Federal 
     program;
       ``(iv) under any Federal program established to provide 
     `black lung' benefits; or
       ``(v) by the Secretary of Veterans Affairs as pension, or 
     as compensation for a service-connected disability or death 
     (except any compensation paid by such Secretary to a former 
     member of the Armed Forces who is in receipt of retired or 
     retainer pay if such former member has waived a portion of 
     his retired pay in order to receive such compensation); and
       ``(C) worker's compensation benefits paid under Federal or 
     State law; but
       ``(2) do not include any payment--
       ``(A) by way of reimbursement or otherwise, to defray 
     expenses incurred by such individual in carrying out duties 
     associated with his employment; or
       ``(B) as allowances for members of the uniformed services 
     payable pursuant to chapter 7 of title 37, United States 
     Code, as prescribed by the Secretaries concerned (defined by 
     section 101(5) of such title) as necessary for the efficient 
     performance of duty.
       ``(i) In determining the amount of any moneys due from, or 
     payable by, the United States to any individual, there shall 
     be excluded amounts which--
       ``(1) are owed by such individual to the United States;
       ``(2) are required by law to be, and are, deducted from the 
     remuneration or other payment involved, including Federal 
     employment taxes, and fines and forfeitures ordered by court-
     martial;
       ``(3) are properly withheld for Federal, State, or local 
     income tax purposes, if the withholding of such amounts is 
     authorized or required by law and if amounts withheld are not 
     greater than would be the case if such individual claimed all 
     the dependents that the individual was entitled to (the 
     withholding of additional amounts pursuant to section 3402(i) 
     of the Internal Revenue Code of 1986 may be permitted only 
     when such individual presents evidence of a tax obligation 
     which supports the additional withholding);
       ``(4) are deducted as health insurance premiums;
       ``(5) are deducted as normal retirement contributions (not 
     including amounts deducted for supplementary coverage); or
       ``(6) are deducted as normal life insurance premiums from 
     salary or other remuneration for employment (not including 
     amounts deducted for supplementary coverage).
       ``(j) For purposes of this section--''.
       (b) Transfer of Subsections.--Subsections (a) through (e) 
     of section 462 (42 U.S.C. 662), are transferred and 
     redesignated as paragraphs (1) through (4), respectively of 
     section 459(j) (as added by subsection (a)(6)), and the left 
     margin of each of such paragraphs (1) through (4) is indented 
     2 ems to the right of the left margin of subsection (j) (as 
     added by subsection (a)(6)).
       (c) Conforming Amendments.--
       (1) To part d of title iv.--Sections 461 and 462 (42 U.S.C. 
     661) are repealed.
       (2) To title 5, united states code.--Section 5520a of title 
     5, United States Code, is amended, in subsections (h)(2) and 
     (i), by striking ``sections 459, 461, and 462 of the Social 
     Security Act (42 U.S.C. 659, 661, and 662)'' each place it 
     appears and inserting ``section 459 of the Social Security 
     Act (42 U.S.C. 659)''.
       (d) Military Retired and Retainer Pay.--Section 1408(a)(1) 
     of title 10, United States Code, is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (B), by striking ``and'';
       (B) in subparagraph (C), by striking the period and 
     inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(D) any administrative or judicial tribunal of a State 
     competent to enter orders for support or maintenance 
     (including a State agency administering a State program under 
     part D of title IV of the Social Security Act).'';
       (2) in paragraph (2), by inserting ``or a court order for 
     the payment of child support not included in or accompanied 
     by such a decree or settlement,'' before ``which--'';
       (3) in subsection (d)--
       (A) in the heading, by inserting ``(or for benefit of)'' 
     after ``concerned''; and
       (B) in paragraph (1), in the first sentence, by inserting 
     ``(or for the benefit of such spouse or former spouse to a 
     State central collections unit or other public payee 
     designated by a State, in accordance with part D of title IV 
     of the Social Security Act, as directed by court order, or as 
     otherwise directed in accordance with such part D)'' before 
     ``in an amount sufficient''; and
       (4) by adding at the end the following new subsection:
       ``(j) Relationship to Other Laws.--In any case involving a 
     child support order against a member who has never been 
     married to the other parent of the child, the provisions of 
     this section shall not apply, and the case shall be subject 
     to the provisions of section 459 of the Social Security 
     Act.''.
       (e) Effective Date.--The amendments made by this section 
     shall become effective 6 months after the date of the 
     enactment of this Act.

     SEC. 164. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEMBERS 
                   OF THE ARMED FORCES.

       (a) Availability of Locator Information.--
       (1) Maintenance of address information.--The Secretary of 
     Defense shall establish a centralized personnel locator 
     service that includes the address of each member of the Armed 
     Forces under the jurisdiction of the Secretary. Upon request 
     of the Secretary of Transportation, addresses for members of 
     the Coast Guard shall be included in the centralized 
     personnel locator service.
       (2) Type of address.--
       (A) Residential address.--Except as provided in 
     subparagraph (B), the address for a member of the Armed 
     Forces shown in the locator service shall be the residential 
     address of that member.
       (B) Duty address.--The address for a member of the Armed 
     Forces shown in the locator service shall be the duty address 
     of that member in the case of a member--
       (i) who is permanently assigned overseas, to a vessel, or 
     to a routinely deployable unit; or
       (ii) with respect to whom the Secretary concerned makes a 
     determination that the member's residential address should 
     not be disclosed due to national security or safety concerns.
       (3) Updating of locator information.--Not later than 30 
     days after a member listed in the locator service establishes 
     a new residential address (or a new duty address, in the case 
     of a member covered by paragraph (2)(B)), the Secretary 
     concerned shall update the locator service to indicate the 
     new address of the member.
       (4) Availability of information.--The Secretary of Defense 
     shall make information regarding the address of a member of 
     the Armed Forces listed in the locator service available, on 
     request, to the Federal Parent Locator Service.
       (b) Facilitating Granting of Leave for Attendance at 
     Hearings.--
       (1) Regulations.--The Secretary of each military 
     department, and the Secretary of Transportation with respect 
     to the Coast Guard when it is not operating as a service in 
     the Navy, shall prescribe regulations to facilitate the 
     granting of leave to a member of the Armed Forces under the 
     jurisdiction of that Secretary in a case in which--
       (A) the leave is needed for the member to attend a hearing 
     described in paragraph (2);
       (B) the member is not serving in or with a unit deployed in 
     a contingency operation (as defined in section 101 of title 
     10, United States Code); and
       (C) the exigencies of military service (as determined by 
     the Secretary concerned) do not otherwise require that such 
     leave not be granted.
       (2) Covered hearings.--Paragraph (1) applies to a hearing 
     that is conducted by a court or pursuant to an administrative 
     process established under State law, in connection with a 
     civil action--
       (A) to determine whether a member of the Armed Forces is a 
     natural parent of a child; or
       (B) to determine an obligation of a member of the Armed 
     Forces to provide child support.
       (3) Definitions.--For purposes of this subsection:
       (A) The term ``court'' has the meaning given that term in 
     section 1408(a) of title 10, United States Code.
       (B) The term ``child support'' has the meaning given such 
     term in section 462 of the Social Security Act (42 U.S.C. 
     662).
       (c) Payment of Military Retired Pay in Compliance With 
     Child Support Orders.--Section 1408 of title 10, United 
     States Code, as amended by section 163(d)(4), is amended--
       (1) by redesignating subsections (i) and (j) as subsections 
     (j) and (k), respectively;
       (2) by inserting after subsection (h) the following new 
     subsection:
     [[Page S2886]]   ``(i) Certification Date.--It is not 
     necessary that the date of a certification of the 
     authenticity or completeness of a copy of a court order or an 
     order of an administrative process established under State 
     law for child support received by the Secretary concerned for 
     the purposes of this section be recent in relation to the 
     date of receipt by the Secretary.''; and
       (3) in subsection (d)--
       (A) in paragraph (1), by inserting after the first sentence 
     the following: ``In the case of a spouse or former spouse 
     who, pursuant to section 402(a)(26) of the Social Security 
     Act (42 U.S.C. 602(26)), assigns to a State the rights of the 
     spouse or former spouse to receive support, the Secretary 
     concerned may make the child support payments referred to in 
     the preceding sentence to that State in amounts consistent 
     with that assignment of rights.''; and
       (B) by adding at the end the following new paragraph:
       ``(6) In the case of a court order or an order of an 
     administrative process established under State law for which 
     effective service is made on the Secretary concerned on or 
     after the date of the enactment of this paragraph and which 
     provides for payments from the disposable retired pay of a 
     member to satisfy the amount of child support set forth in 
     the order, the authority provided in paragraph (1) to make 
     payments from the disposable retired pay of a member to 
     satisfy the amount of child support set forth in a court 
     order or an order of an administrative process established 
     under State law shall apply to payment of any amount of child 
     support arrearages set forth in that order as well as to 
     amounts of child support that currently become due.''.

     SEC. 165. MOTOR VEHICLE LIENS.

       Section 466(a)(4) (42 U.S.C. 666(a)(4)) is amended--
       (1) by striking ``(4)'' and inserting ``(4)(A)''; and
       (2) by adding at the end the following new subparagraph:
       ``(B) Procedures for placing liens for arrearages of child 
     support on motor vehicle titles of individuals owing such 
     arrearages equal to or exceeding 1 month of support (or other 
     minimum amount set by the State), under which--
       ``(i) any person owed such arrearages may place such a 
     lien;
       ``(ii) the State agency administering the program under 
     this part shall systematically place such liens;
       ``(iii) expedited methods are provided for--
       ``(I) ascertaining the amount of arrears;
       ``(II) affording the person owing the arrears or other 
     titleholder to contest the amount of arrears or to obtain a 
     release upon fulfilling the support obligation;
       ``(iv) such a lien has precedence over all other 
     encumbrances on a vehicle title other than a purchase money 
     security interest; and
       ``(v) the individual or State agency owed the arrears may 
     execute on, seize, and sell the property in accordance with 
     State law.''.

     SEC. 166. VOIDING OF FRAUDULENT TRANSFERS.

       Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
     101(a), 126(a), and 131, is amended by adding at the end the 
     following new paragraph:
       ``(15) Procedures under which--
       ``(A) the State has in effect--
       ``(i) the Uniform Fraudulent Conveyance Act of 1981,
       ``(ii) the Uniform Fraudulent Transfer Act of 1984, or
       ``(iii) another law, specifying indicia of fraud which 
     create a prima facie case that a debtor transferred income or 
     property to avoid payment to a child support creditor, which 
     the Secretary finds affords comparable rights to child 
     support creditors; and
       ``(B) in any case in which the State knows of a transfer by 
     a child support debtor with respect to which such a prima 
     facie case is established, the State must--
       ``(i) seek to void such transfer; or
       ``(ii) obtain a settlement in the best interests of the 
     child support creditor.''.

     SEC. 167. STATE LAW AUTHORIZING SUSPENSION OF LICENSES.

       Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
     101(a), 126(a), 131, and 166, is amended by adding at the end 
     the following new paragraph:
       ``(16) Procedures under which the State has (and uses in 
     appropriate cases) authority (subject to appropriate due 
     process safeguards) to withhold or suspend, or to restrict 
     the use of driver's licenses, professional and occupational 
     licenses, and recreational licenses of individuals owing 
     overdue child support or failing, after receiving appropriate 
     notice, to comply with subpoenas or warrants relating to 
     paternity or child support proceedings.''.

     SEC. 168. REPORTING ARREARAGES TO CREDIT BUREAUS.

       Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended to read 
     as follows:
       ``(7)(A) Procedures (subject to safeguards pursuant to 
     subparagraph (B)) requiring the State to report periodically 
     to consumer reporting agencies (as defined in section 603(f) 
     of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)) the 
     name of any absent parent who is delinquent in the payment of 
     support, and the amount of overdue support owed by such 
     parent.
       ``(B) Procedures ensuring that, in carrying out 
     subparagraph (A), information with respect to an absent 
     parent is reported--
       ``(i) only after such parent has been afforded all due 
     process required under State law, including notice and a 
     reasonable opportunity to contest the accuracy of such 
     information; and
       ``(ii) only to an entity that has furnished evidence 
     satisfactory to the State that the entity is a consumer 
     reporting agency.''.

     SEC. 169. EXTENDED STATUTE OF LIMITATION FOR COLLECTION OF 
                   ARREARAGES.

       (a) In General.--Section 466(a)(9) (42 U.S.C. 666(a)(9)) is 
     amended--
       (1) by redesignating subparagraphs (A), (B), and (C) as 
     clauses (i), (ii), and (iii), respectively;
       (2) by striking ``(9)'' and inserting ``(9)(A)''; and
       (3) by adding at the end the following new subparagraph:
       ``(B) Procedures under which the statute of limitations on 
     any arrearages of child support extends at least until the 
     child owed such support is 30 years of age.''.
       (b) Application of Requirement.--The amendment made by this 
     section shall not be interpreted to require any State law to 
     revive any payment obligation which had lapsed prior to the 
     effective date of such State law.

     SEC. 170. CHARGES FOR ARREARAGES.

       (a) State Law Requirement.--Section 466(a) (42 U.S.C. 
     666(a)), as amended by sections 101(a), 126(a), 131, 166, and 
     167, is amended by adding at the end the following new 
     paragraph:
       ``(17) Procedures providing for the calculation and 
     collection of interest or penalties for arrearages of child 
     support, and for distribution of such interest or penalties 
     collected for the benefit of the child (except where the 
     right to support has been assigned to the State).''.
       (b) Regulations.--The Secretary of Health and Human 
     Services shall establish by regulation a rule to resolve 
     choice of law conflicts arising in the implementation of the 
     amendment made by subsection (a).
       (c) Conforming Amendment.--Section 454(21) (42 U.S.C. 
     654(21)) is repealed.
       (d) Effective Date.--The amendments made by this section 
     shall be effective with respect to arrearages accruing on or 
     after October 1, 1998.

     SEC. 171. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD 
                   SUPPORT.

       (a) HHS Certification Procedure.--
       (1) Secretarial responsibility.--Section 452 (42 U.S.C. 
     652), as amended by sections 115(a)(3) and 117, is amended by 
     adding at the end the following new subsection:
       ``(l)(1) If the Secretary receives a certification by a 
     State agency in accordance with the requirements of section 
     454(28) that an individual owes arrearages of child support 
     in an amount exceeding $5,000 or in an amount exceeding 24 
     months' worth of child support, the Secretary shall transmit 
     such certification to the Secretary of State for action (with 
     respect to denial, revocation, or limitation of passports) 
     pursuant to section 171(b) of the Interstate Child Support 
     Responsibility Act of 1995.
       ``(2) The Secretary shall not be liable to an individual 
     for any action with respect to a certification by a State 
     agency under this section.''.
       (2) State cse agency responsibility.--Section 454 (42 
     U.S.C. 654), as amended by sections 104(a), 114(b), and 
     122(a), is amended--
       (A) by striking ``and'' at the end of paragraph (26);
       (B) by striking the period at the end of paragraph (27) and 
     inserting ``; and''; and
       (C) by adding after paragraph (27) the following new 
     paragraph:
       ``(28) provide that the State agency will have in effect a 
     procedure (which may be combined with the procedure for tax 
     refund offset under section 464) for certifying to the 
     Secretary, for purposes of the procedure under section 452(l) 
     (concerning denial of passports) determinations that 
     individuals owe arrearages of child support in an amount 
     exceeding $5,000 or in an amount exceeding 24 months' worth 
     of child support, under which procedure--
       ``(A) each individual concerned is afforded notice of such 
     determination and the consequences thereof, and an 
     opportunity to contest the determination; and
       ``(B) the certification by the State agency is furnished to 
     the Secretary in such format, and accompanied by such 
     supporting documentation, as the Secretary may require.''.
       (b) State Department Procedure for Denial of Passports.--
       (1) In general.--The Secretary of State, upon certification 
     by the Secretary of Health and Human Services, in accordance 
     with section 452(l) of the Social Security Act, that an 
     individual owes arrearages of child support in excess of 
     $5,000, shall refuse to issue a passport to such individual, 
     and may revoke, restrict, or limit a passport issued 
     previously to such individual.
       (2) Limit on liability.--The Secretary of State shall not 
     be liable to an individual for any action with respect to a 
     certification by a State agency under this section.
       (c) Effective Date.--This section and the amendments made 
     by this section shall become effective October 1, 1996.

     SEC. 172. INTERNATIONAL CHILD SUPPORT ENFORCEMENT.

       (a) Sense of the Congress That the United States Should 
     Ratify the United Nations Convention of 1956.--It is the 
     sense of the Congress that the United States should ratify 
     the United Nations Convention of 1956.
     [[Page S2887]]   (b) Treatment of International Child Support 
     Cases as Interstate Cases.--Section 454 (42 U.S.C. 654), as 
     amended by sections 104(a), 114(b), 122(a), and 171(a)(2) of 
     this Act, is amended--
       (1) by striking ``and'' at the end of paragraph (27);
       (2) by striking the period at the end of paragraph (28) and 
     inserting ``; and''; and
       (3) by inserting after paragraph (28) the following new 
     paragraph:
       ``(29) provide that the State must treat international 
     child support cases in the same manner as the State treats 
     interstate child support cases under the plan.''.
                      Subtitle H--Medical Support

     SEC. 181. TECHNICAL CORRECTION TO ERISA DEFINITION OF MEDICAL 
                   CHILD SUPPORT ORDER.

       (a) In General.--Section 609(a)(2)(B) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1169(a)(2)(B)) is amended--
       (1) by striking ``issued by a court of competent 
     jurisdiction'';
       (2) in clause (ii) by striking the period and inserting a 
     comma; and
       (3) by adding after clause (ii), the following flush left 
     language:
     ``if such judgment, decree, or order (I) is issued by a court 
     of competent jurisdiction or (II) is issued by an 
     administrative adjudicator and has the force and effect of 
     law under applicable State law.''.
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     become effective on the date of the enactment of this Act.
       (2) Plan amendments not required until january 1, 1996.--
       (A) In general.--Any amendment to a plan required to be 
     made by an amendment made by this section shall not be 
     required to be made before the first plan year beginning on 
     or after January 1, 1996, if--
       (i) during the period after the date before the date of the 
     enactment of this Act and before such first plan year, the 
     plan is operated in accordance with the requirements of the 
     amendments made by this section; and
       (ii) such plan amendment applies retroactively to the 
     period after the date before the date of the enactment of 
     this Act and before such first plan year.
       (B) No failure for compliance with this paragraph.--A plan 
     shall not be treated as failing to be operated in accordance 
     with the provisions of the plan merely because it operates in 
     accordance with this paragraph.
               Subtitle I--Access and Visitation Programs

     SEC. 191. GRANTS TO STATES FOR ACCESS AND VISITATION 
                   PROGRAMS.

       (a) In General.--Part D of title IV is amended by adding at 
     the end the following new section:


         ``grants to states for access and visitation programs

       ``Sec. 469A. (a) Purposes; Authorization of 
     Appropriations.--For purposes of enabling States to establish 
     and administer programs to support and facilitate absent 
     parents' access to and visitation of their children, by means 
     of activities including mediation (both voluntary and 
     mandatory), counseling, education, development of parenting 
     plans, visitation enforcement (including monitoring, 
     supervision, and neutral drop-off and pickup), and 
     development of guidelines for visitation and alternative 
     custody arrangements, there are authorized to be appropriated 
     $5,000,000 for each of fiscal years 1996 and 1997, and 
     $10,000,000 for each succeeding fiscal year.
       ``(b) Payments to States.--
       ``(1) In general.--Each State shall be entitled to payment 
     under this section for each fiscal year in an amount equal to 
     its allotment under subsection (c) for such fiscal year, to 
     be used for payment of 90 percent of State expenditures for 
     the purposes specified in subsection (a).
       ``(2) Supplementary use.--Payments under this section shall 
     be used by a State to supplement (and not to substitute for) 
     expenditures by the State, for activities specified in 
     subsection (a), at a level at least equal to the level of 
     such expenditures for fiscal year 1994.
       ``(c) Allotments to States.--
       ``(1) In general.--For purposes of subsection (b), each 
     State shall be entitled (subject to paragraph (2)) to an 
     amount for each fiscal year bearing the same ratio to the 
     amount authorized to be appropriated pursuant to subsection 
     (a) for such fiscal year as the number of children in the 
     State living with only 1 biological parent bears to the total 
     number of such children in all States.
       ``(2) Minimum allotment.--Allotments to States under 
     paragraph (1) shall be adjusted as necessary to ensure that 
     no State is allotted less than $50,000 for fiscal year 1996 
     or 1997, or $100,000 for any succeeding fiscal year.
       ``(d) Federal Administration.--The program under this 
     section shall be administered by the Administration for 
     Children and Families.
       ``(e) State Program Administration.--
       ``(1) In general.--Each State may administer the program 
     under this section directly or through grants to or contracts 
     with courts, local public agencies, or non-profit private 
     entities.
       ``(2) Statewide plan permissible.--State programs under 
     this section may, but need not, be statewide.
       ``(3) Evaluation.--States administering programs under this 
     section shall monitor, evaluate, and report on such programs 
     in accordance with requirements established by the 
     Secretary.''.
                     TITLE II--EFFECT OF ENACTMENT

     SEC. 201. EFFECTIVE DATES.

       (a) In General.--Except as otherwise specifically provided 
     (but subject to subsections (b) and (c))--
       (1) provisions of title I requiring enactment or amendment 
     of State laws under section 466 of the Social Security Act, 
     or revision of State plans under section 454 of such Act, 
     shall be effective with respect to periods beginning on and 
     after October 1, 1996; and
       (2) all other provisions of title I shall become effective 
     upon the date of the enactment of this Act.
       (b) Grace Period for State Law Changes.--The provisions of 
     title I shall become effective with respect to a State on the 
     later of--
       (1) the date specified in title I, or
       (2) the effective date of laws enacted by the legislature 
     of such State implementing such provisions,
     but in no event later than the first day of the first 
     calendar quarter beginning after the close of the first 
     regular session of the State legislature that begins after 
     the date of the enactment of this Act. For purposes of the 
     previous sentence, in the case of a State that has a 2-year 
     legislative session, each year of such session shall be 
     deemed to be a separate regular session of the State 
     legislature.
       (c) Grace Period for State Constitutional Amendment.--A 
     State shall not be found out of compliance with any 
     requirement enacted by title I if it is unable to comply 
     without amending the State constitution until the earlier 
     of--
       (1) the date which is 1 year after the effective date of 
     the necessary State constitutional amendment, or
       (2) the date which is 5 years after the date of the 
     enactment of this Act.

     SEC. 202. SEVERABILITY.

       If any provision of title I or the application thereof to 
     any person or circumstance is held invalid, the invalidity 
     shall not affect other provisions or applications of title I 
     which can be given effect without regard to the invalid 
     provision or application, and to this end the provisions of 
     title I shall be severable.
   Interstate Child Support Responsibility Act of 1995--Bill Summary

       The Interstate Child Support Responsibility Act of 1995 is 
     a comprehensive effort to repair the state-based system of 
     child support. It would establish uniform procedures among 
     states; create state and national databases to locate absent 
     parents and garnish the wages of parents who owe child 
     support; improve paternity establishment; and make it easier 
     to modify child support orders as necessary.
       The legislation is based on recommendations of the U.S. 
     Commission on Interstate Child Support Enforcement, the 
     Office of Child Support Enforcement at HHS, and child support 
     administrators from many states. Its provisions are 
     comparable to those of S. 689 in the 103d Congress (the 
     Bradley bill) and the child support section of S. 2224, the 
     Work and Family Responsibility Act, updated to account for 
     more recent innovations in enforcement at the state level. It 
     also parallels H.R. 785, with exceptions as noted below.


                            state uniformity

       States would be required to adopt the Uniform Interstate 
     Family Support Act (UIFSA) in its entirety. This model 
     legislation, already adopted by 20 states, sets a framework 
     for determining jurisdiction of interstate cases, and governs 
     the relationship among states.
       The Full Faith and Credit Act, signed into law last year, 
     which requires every state to respect child support orders 
     from other states, would be modified to follow UIFSA.
       States would establish administrative procedures for 
     paternity establishment, subpoenas, liens, access to 
     financial information, and suspension of drivers' and 
     professional licenses for parents in arrears on child 
     support. Custodial parents would not have to go to court.


                     enforcement of support orders

       Outlines the procedures by which a state may suspend the 
     licenses (including driver's, professional and occupational) 
     of delinquent non-custodial parents, as well as procedures 
     through which the state may place liens on the delinquent 
     parent property.
       Requires states to report to credit bureaus delinquencies 
     that exceed 30 days.
       Grants families who are owed child support the right to 
     first access to an IRS refund credited to a delinquent non-
     custodial parent, except for amounts due from time the family 
     received AFDC.
       Subjects federal employees to the same withholding and 
     enforcement rules as other workers. Clarifies rules for 
     active-duty military personnel.
       Extends the statute of limitations for the collection of 
     child support arrearage to the child's 30th birthday.
       Permits the denial of a passport for individuals who are 
     more than $5,000 or 24 months in arrears.
       Establllishes state-based demonstration projects to address 
     non-custodial parents' visitation and custody issues.


                        state automated systems

       Each state would establish a database of basic information 
     about every child support order opened in that state. This 
     data would be sent to a national registry on a regular 
     [[Page S2888]] basis to aid in enforcement of interstate 
     cases.
       States would centralize the collection and disbursement of 
     information and payments. Employers would be able to send 
     withheld income to one state location, even if a county has 
     jurisdiction over the child support order. States may 
     contract the collection and distribution system out to 
     private firms.


        national systems--expanded federal parent locator system

       The modified Federal Parent Locator System would contain 
     three components: a databank of Child Support Orders; 
     directory of new hires, and expanded locator.
       The Databank of Child Support Orders contains information 
     on child support orders, as obtained from the individual 
     states.
       The Directory of New Hires will record basic information 
     supplied by employers. This data will be compared against the 
     child support data in order to better track down parents 
     evading payment of child support, especially on the 
     interstate level.
       The expanded locator component allows states to access 
     federal information to not only enforce orders, but also to 
     establish paternity and establish and modify orders.


                   voluntary paternity establishment

       The process of determination of paternity would be 
     simplified, and voluntary paternity processes enhanced. These 
     provisions would strengthen the hospital-based paternity 
     establishment provisions enacted into law in the 1993 budget 
     reconciliation.
       For parents who voluntarily acknowledge paternity, a signed 
     affidavit would be presumed to be a final judgement of 
     paternity 60 days after signature. Both parents must be 
     informed of their rights and responsibilities before signing 
     the acknowledgement. Exceptions to the final judgement status 
     include fraud, duress, or material mistake of fact.
       Minor parents who sign the voluntary acknowledgement not in 
     the presence of a parent or guardian may rescind that 
     acknowledgment at any time until turning 18, or until court 
     proceedings in which the teen and his or her attorney, parent 
     or guardian is present.
       At state option, states may waive fees charged to fathers 
     who cooperate with the state, e.g. for genetic testing.


            modification and establishment of support orders

       Requires that child support orders may be reviewed by a 
     state at the request of either parent every three years or 
     when there is a substantial change in the financial 
     circumstances of either parent.
       Requires parents to exchange financial information 
     annually.
       Establishes a National Child Support Guidelines Commission, 
     which will develop support order guidelines which states may 
     adopt of Congress may consider adopting nationally.


                   program administration and funding

       Increases the base federal matching rate for child support 
     services from 66% to 75%. Creates an incentive payment to 
     state of up to 15% for paternity establishment and overall 
     performance of a state IV-D program. Strengthens penalties on 
     states for failure to comply with program requirements.


                                 costs

       Increased match rate will cost approximately $300 million 
     over five years. Other costs to federal and state taxpayers 
     have not been scored by CBO, but all will be offset by 
     increased collections. (The existing program, despite flaws, 
     collects $3.98 for every $1 spent.)


              differences between senate bill and h.r. 785

       Senate bill authorizes a demonstration in several states of 
     innovative procedures to mediate disputes over visitation and 
     custody.
       Senate bill is slightly less prescriptive to states.
       Senate bill includes more specific instructions to the 
     Commission on Child Support Guidelines, and permits the 
     Commission to conclude that national guidelines are not 
     needed.

 Mr. CHAFEE. Mr. President, I am pleased to support the Child 
Support Act of 1995, introduced by Mr. Bradley.
  With over half of our marriages ending in divorce in the United 
States, and more and more children being born out-of-wedlock, single 
parent households have become more and more common. Most of the 
children in these homes grow up to be healthy and happy contributors to 
our society. Too many, however, are abandoned by a parent at a young 
age and struggle into adulthood. Mom or Dad, while raising a child, is 
working to make ends meet--without the help of the child's other 
parent.
  We have spent a great deal of time talking about family and the role 
of the State in preserving traditional families. We have talked at 
great length about how to help poor unwed and single mothers become 
independent from government handouts. Certainly, a central factor as to 
why these mothers are on welfare in the first place and may not be able 
to get off, is because of the lack of support coming from their child's 
father.
  Only 58 percent of single mothers had a child support order in 1990--
the vast majority of single mothers had applied for such an order but 
were unsuccessful in receiving one. The numbers are quite stark: over 
half of the 17.2 million children in single parent
 homes in our Nation are living in poverty.

  I think there is consensus on this issue--Republican or Democrat, 
Rhode Islander or Mississippian--we all agree that the time has come 
for Congress to become more involved in ensuring that children are not 
cheated out of a healthy childhood. This legislation does an admirable 
job of addressing the problems of ``dead-beat'' parents.
  Currently, States have a rather haphazard way of collecting child 
support. With the ease in which citizens move from one State to 
another, there is a real need to have strong and efficient 
communication between the States in collecting child support. This 
legislation addresses this problem through the creation of a national 
data base of child support orders. States will be required to 
periodically contribute new child support orders to this registry which 
may then be accessed by other states. Clearly, such a program aids 
greatly in tracking down interstate cases. In addition, by requiring 
parents to exchange financial information annually and streamlining the 
collection and distribution policy of the States, this legislation will 
make it far less complicated to ensure that those families deserving of 
child support moneys will get it.
  I would urge my colleagues to support this crucial legislation. By 
some estimates, in 1990, if we had enforceable child support orders 
reflecting ability to pay, single mothers and children would have 
received nearly $50 billion in child support. I am sure that you would 
agree that such a number is astounding. This money is wilfully being 
kept from the children who need it. We cannot, in good conscience, talk 
about reforming our welfare system without discussing more effective 
ways to ensure that poor children are in fact receiving the fiscal and 
emotional support that they need in order to grow and to thrive. Thank 
you very much for your time and consideration.
 Mr. LIEBERMAN. Mr. President, I am pleased to join Senator 
Bradley today as a cosponsor of the Interstate Child Support 
Responsibility Act of 1995. My esteemed colleague from Connecticut, 
Representative Johnson, introduced a similar bill in the House, and I 
thank them both for their leadership on this issue. The bill will 
greatly strengthen our child support enforcement system. This year, as 
Congress debates dramatic changes to our welfare system, we should make 
child support enforcement a key part of our welfare reform agenda and 
should pass the comprehensive reforms set forth in this act.
  A tough child support enforcement system has three far-reaching 
benefits for our society. First, child support directly improves the 
lives of millions of children. An increasing number of our children 
depend on child support. Thirty years ago the vast number of children 
lived with both of their parents. But an astounding 50 percent of all 
children born in the 1980's will spend some time in a single-parent 
family. Children living with only one parent are all too likely to 
experience poverty. In 1992, half of the children living in single-
parent families--over 8 million children--were poor. Improving child 
support enforcement will directly improve the quality of these 
children's lives and their chances for a bright future.
  Second, enhancing child support enforcement will help keep families 
off of public assistance. About 45 percent of families enter our 
welfare system as a result of a divorce or separation, and another 30 
percent seek welfare assistance after having a child out-of-wedlock. 
Receiving support from the absent parent can make the difference for 
many families between self-sufficiency and dependency.
  Third, strengthening child support enforcement sends a critical 
message of responsibility to parents. The decision to have a child has 
profound moral content. Our child support policies must clearly signal 
that our society will hold all parents accountable for 
[[Page S2889]] their children. In an era of skyrocketing out-of-wedlock 
births and rising teen pregnancy rates, child support enforcement 
payments must become a well known and unavoidable fact of life for 
absent fathers and mothers. Would-be ``dead-beat'' dads must know that 
they can't
 simply cross a State border to escape support payments.

  For too many parents today, child support collection is not a 
certainty. Less than 60 percent of custodial mothers establish a child 
support order. And only half of support orders are paid in full. The 
Urban Institute estimates that the gap between the amount of child 
support parents should be paying and the amount we are actually 
collecting is $34 billion a year.
  The bill we are introducing today will help close that child support 
collection gap. It will help States at each step of the child support 
collection process. The bill will make it easier for States to locate 
absent noncustodial parents; establish paternity; establish a court 
order; and enforce payment of court orders.
  To help States locate parents and collect child support the bill, 
among other things: Requires States to automate and centralize child 
support order data to aid in enforcement of interstate cases; requires 
employers to notify States of new hires and establishes a Federal 
directory of new hires to aid in locating parents; streamlines 
procedures for voluntary paternity establishment; provides States with 
greater financial incentives to establish paternity; requires more 
frequent modification of child support orders so awards will increase 
with parents' earnings; requires States to have procedures for 
suspending drivers licenses and professional licenses of deadbeat 
parents; and provides greater incentives for States to increase child 
support collection.
  The bill will also support State demonstration projects to address an 
underlying cause of some parents' failure to pay child support because 
access or visitation rulings limit their involvement in their 
children's lives. The bill will help States try new ways of working 
with families to increase noncustodial parents' visitation privileges 
and their financial commitment to their children.
  While the bill will impose modest administrative costs on States and 
the Federal Government, it will also save both levels of government 
money over the long term. That is why State welfare administrators 
support it. The U.S. Department of Health and Human Services Reports 
that for every $1 spent on child support enforcement, $4 is collected. 
The collected funds are delivered to families and are used in part to 
reimburse Federal and State governments for welfare expenditures. This 
bill's provisions will increase the rate of return on our investment, 
benefiting children, families, and taxpayers.
  Mr. President, let me reiterate that child support enforcement must 
be a part of our welfare reform strategy. Last month I introduced S. 
246, the Welfare Reform That Works Act--a bill that would help States 
make bold changes to their welfare systems to move welfare recipients 
into the work force and strengthen families. I stated when I introduced 
the bill, and I want to reiterate now, that the States ability to 
achieve our welfare reform goals will be limited if we do not improve 
our child support enforcement programs. States' welfare caseloads will 
be higher and their budgets lower if deadbeat parents can continue to 
evade their responsibilities, if teenagers know that they can continue 
to have babies without consequences.
  Mr. President, I urge my colleagues to join Senator Bradley and the 
bill's other cosponsors in supporting the act.


                          ____________________