Congressional Record, Volume 141 Issue 39 (Thursday, March 2, 1995)

[Congressional Record Volume 141, Number 39 (Thursday, March 2, 1995)]
[Senate]
[Pages S3390-S3426]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. HOLLINGS (for himself and Mr. Thurmond):
S. 482. A bill to authorize the Secretary of Transportation to issue
a certificate of documentation and coastwise trade endorsement for the
vessel Emerald Ayes; to the Committee on Commerce, Science, and
Transportation.

``emerald ayes'' certificate of documentation legislation

Mr. HOLLINGS. Mr. President, I am introducing a bill today to direct
that the vessel Emerald Ayes, official number 986099, be accorded
coastwise trading privileges and be issued a certificate of
documentation under section 12103 of title 46, United States Code.
The Emerald Ayes was constructed in Canada in 1992, and is a sailing
catamaran for use as a recreational vessel. It is 36.4 feet in length,
18.2 feet in breadth, has a depth of 9.4 feet, and is self-propelled.
The vessel was purchased by Dr. Stephen D. Michel of Mount Pleasant,
SC, who purchased it with the intention of chartering the vessel for
short sailing tours. However, because the vessel was built in Canada,
it did not meet the requirements for coastwise license endorsement in
the United States. Such documentation is mandatory to enable the owner
to use the vessel for its intended purpose. He first sought to purchase
a U.S.-built vessel, but this type of sailboat is not built by any U.S.
shipbuilders. He has invested a considerable amount of money in this
vessel, and without a Jones Act waiver for the boat, he will be forced
to sell it.
The owner of the Emerald Ayes is seeking a waiver of the existing law
because he wishes to use the vessel for charters. His desired
intentions for the vessel's use will not adversely affect the coastwise
trade in U.S. waters. If he is granted this waiver, it is his intention
to comply fully with U.S. documentation and safety requirements. The
purpose of the legislation I am introducing is to allow the Emerald
Ayes to engage in the coastwise trade and the fisheries of the United
States.
______

By Mr. HATCH (for himself, Mrs. Feinstein, and Mr. Thompson):
S. 483. A bill to amend the provisions of title 17, United States
Code, with respect to the duration of copyright, and for other
purposes; to the Committee on the Judiciary.

the copyright term extension act of 1995

Mr. HATCH. Mr. President, Congress has in recent years passed many
significant copyright measures, but it is a rare occasion when we
address the fundamental aspects of copyright protection, such as the
nature of the works protected, the scope of rights recognized, or the
duration of copyright.
Still, from time to time, it becomes clear that fundamental change is
needed. I believe we are now at such a point with respect to the
question of whether the current term of copyright adequately protects
the interests of authors and the related question of whether the term
of protection continues to provide a sufficient incentive for the
creation of new works of authorship.
The current term of copyright is, in my view, inadequate to perform
its historic functions of spurring creativity and protecting authors.
Thus, I am filing today the Copyright Term Extension Act of 1995, which
has the general purpose of increasing existing copyright terms by the
addition of a further 20 years of protection. I am pleased to be joined
in this effort by my colleagues on the Senate Judiciary Committee,
Senator Feinstein of California and Senator Thompson of Tennessee.
Mr. President, Congress has protected copyrights since the very first
Congress, and the entire history of our copyright laws has been a
history of everincreasing protection, both with respect to the nature
of works protected, as well as with respect to the duration of
protection. Still, in over 200 years, the copyright term has only been
extended on three prior occasions.
In 1790, the first Congress set the maximum term of copyright
protection at 28 years--a 14-year initial period that could be renewed
for an additional 14 years. In 1831, we extended that period by 14
years--a 28-year initial period that could be renewed for an additional
14 years. In 1909, the major copyright reform act of that era extended
the maximum term of copyright to 56 years--a 28-year initial term that
could be renewed for an additional 28 years.
Most recently, the Copyright Act of 1976 fundamentally altered the
way in which we measure copyright by protecting works throughout the
life of their creator plus an additional 50 years. In so doing, we
adopted the prevailing international standard of protection--a standard
that was first recommended by the members of the Berne Convention for
the Protection of Literary and Artistic Works in the Act of Berlin of
November 13, 1908, and that was made mandatory for members of the Berne
Union by the Act of Brussels of June 26, 1948.
For existing works, the Copyright Act of 1976 created a maximum term
of 75 years of protection--a 34-percent increase in term of protection
over the preceding maximum of 56 years. The 20-year increase in
protection that the Copyright Extension Act of 1995 provides for
existing works is a far more modest extension of copyright than that
which we adopted in 1976, or, in fact, that which was implemented by
the two previous congressional extensions of copyright term.
[[Page S3391]] Every work created after the effective date of the
Copyright Term Extension Act will be prospectively protected for the
remainder of the author's life and for 70 years thereafter. Works in
existence on that date will receive the identical protection, if their
author is still living. As for the works of authors already decreased,
my bill provides an additional 20 years of protection; provided, that
the works have not, on the effective date of the bill, already gone
into the public domain.
Those works whose term of protection under the current Copyright Act
is not tied to the life of an author but is a fixed term of years, such
as works made for hire, will also receive an additional 20 years of
protection. Where they are protected for 75 years under present law,
they will be protected for 95 years under the provisions of the
Copyright Term Extension Act.
By providing this across-the-board extension of copyright for an
additional 20 years, I believe that authors will reap the full benefits
to which they are entitled from the exploitation of their creative
works. In addition, there are significant trade benefits to be obtained
by extending copyright in the United States to bring our law into
conformity with the longer copyright term enjoyed by authors in other
nations.
As I noted above, our current basic copyright term of life plus 50
years is prevailing international standard, one now also applicable to
the members of the World Trade Organization through the implementation
of the Agreement on the Trade Related Aspects of Intellectual Property
Protection [TRIPS]. Despite the nearly universal adoption of the life-
plus-50-year term of copyright, many have observed that the term
itself, particularly the decision to give significance to 50 years, has
achieved dominance perhaps more through imitation and acceptance than
through an analytical belief that the life-plus-50-year term represents
the ideal period of protection needed to appropriately reward and
inspire creative activity. See, that is, Ricketson, ``The Berne
Convention for the protection of literary and artistic works: 1886-
1986'' p. 321.

While the [Berne Convention's] prescriptions as to duration
are quite precise, there has never been any real effort made
to justify why, or to explain how, these terms have come to
be adopted * * *

Even though the United States adopted the life-plus-50-year term of
copyright only 19 years ago, and even though that term of protection
has a nearly century-old history in the international arena, I do not
believe that it should be accepted uncritically as an ideal or even
sufficient measurement of the most appropriate duration for copyright
term. Instead, we should be aware of the many nations that have
historically provided longer terms of copyright as well as the recent
developments to extend copyright in Europe. Also, we need to examine
the real-life experience of creators, their reasonable expectations for
exploiting their works, and the concerns and views of the descendants,
heirs, and others whom the postmortem protection of copyright was
designed to benefit.
Among the European nations, Germany and Spain have for some time
recognized respectively terms of life plus 70 pears and life plus 80
years, and Portugal has for much of this century provided a perpetual
term of protection. In addition, it is common for bilateral agreements
relating to copyright protection among particular nations to provide
for terms of protection in excess of the life-plus-50-year standard.
As far as a general reconsideration of the life-plus-50-year term, it
should be noted that as long ago as 1961 the permanent committee of the
Berne Union began the process of reexamining the sufficiency of that
term of protection. At the Stockholm Conference of 1967, a proposal to
increase the copyright term to life plus 80 years was debated though
not adopted. It is, however, easy to speculate that the failure to
increase copyright term at that time may have been disproportionately
influenced by the contemporaneous efforts in the United States to adopt
a copyright act compatible with the existing minimum requirements of
the Berne Convention. An extension of the minimum term at that time
would, however meritorious, surely have made more difficult the
eventual adoption of the Copyright Act of 1976 in the United States.
In the intervening years, the inadequacy of the life-plus-50-year
term has become more apparent, and nations have acted to increase the
duration of copyright. Most significantly, the nations of the European
Union, pursuant to an October 1993, directive of the Council of the
European Communities, are committed to reaching a life-plus-70-minimum
term of protection by July of this year. It is thus fair to say that
for a significant portion of the developed world--for the nations,
moreover, that have traditionally been in the forefront of protecting
authors' rights--the term of life-plus-70 has gained a broad
acceptance.
I am pleased to be the author of the bill that I hope will bring
American copyright law into accord with this developing international
understanding as to the appropriate duration of copyright.
The benefits of extending copyright by 20 years will be felt in many
areas. The vast majority of our European and other trading partners
have obligated themselves to extend to our
authors the full protection of their copyright laws--at least to the
extent that America recognizes complementary rights. Of course, I
should add that with respect to the minimum requirements for copyright
protection, national treatment for U.S. authors is mandated by the
Berne Convention as well as by the TRIPS agreement. But copyright
protections in excess of the Berne minima will not be freely granted to
U.S. authors on the basis of national treatment. Instead, the option
allowed by the Berne Convention's ``role of the shorter term'' will no
doubt be often employed by foreign states with the result that American
works will be protected in those nations only to the extent that the
works of their authors are protected in America--article 7(1) of the EC
directive explicitly mandates rule of the shorter term treatment for
the works of foreign authors.

After the European law goes into effect, American authors will be
theoretically protected for an additional 20 years, but will in reality
be unprotected for that entire period of time--unless American law is
strengthened in the manner proposed by the bill I am filing today.
America exports more copyrighted intellectual property than any
country in the world, a huge percentage of it to the nations of the
European Union. Intellectual property is, in fact, our second largest
export; it is an area in which we possess a large trade surplus. At a
time when we face trade deficits in many other areas, we cannot afford
to abandon 20 years' worth of valuable overseas protection now
available to our creators and copyright owners. We must adopt a life-
plus-70-year term of copyright if we wish to improve our international
balance. It just makes plain common sense to ensure fair compensation
for the American creators whose efforts fuel this important
intellectual property sector of our economy by extending our copyright
term to allow American copyright owners to benefit from foreign uses.
By so doing, we guarantee that our trading partners do not get a free
ride for their use of our intellectual property.
While we may be accustomed to a substantial American balance-of-trade
surplus with respect to trade in works of intellectual property, we
cannot afford to take this condition for granted. In a world economy
where copyrighted works flow through a fiber optic global information
infrastructure, American competitiveness demands that we adapt our
laws--and adapt them quickly--to provide the maximum advantage for our
creators.
Anonymous and pseudonymous works: I noted about that the copyright
term extension provided by the bill I file today is not mandated by our
treaty obligations. But it may be well to note parenthetically that at
least in one respect the 20-year term extension does advance our
ongoing efforts to fulfill our obligations under the Berne Convention.
I am speaking of the term of protection applicable to anonymous and
pseudonymous works. Article 7(3) of the Berne Convention mandates that
such works be protected for at least 50 years after they are first made
lawfully available to the public. Our current law protects those works
for 75 years, yet Sec. 302(c) of the Copyright Act also establishes a
maximum term of protection--
[[Page S3392]] 100 years from the date of their creation--beyond which
no anonymous or pseudonymous work will be protected, regardless of the
date on which it may ultimately be made available to the public. My
bill increases each of these terms by 20 years.
Since the Stockholm Act of July 14, 1967, the Berne Convention has
recognized the need for an outer limit on the protection of anonymous
and pseudonymous works by providing that, ``The countries of the Union
shall not be required to protect anonymous or pseudonymous works in
respect of which it is reasonable to presume that their author has been
dead for fifty years.'' Art. 7(3). It has been argued that the American
provision setting an outer limit of 100 years of protection for
anonymous and pseudonymous works is in violation of the Berne
Convention, see Nimmer, ``Copyright'' Sec. 9.01[D], at least with
respect to works whose country of origin is not the United States. By
increasing the maximum protection from its current 100 years to a
period of 120 years, the Copyright Term Extension Act will at least
serve to reduce greatly the number of potential situations in which our
law may operate in violation of the Berne Convention. This for the
reason that it is far more reasonable to presume that an author who
created a work 120 years ago may have been deceased for 50 years, than
it is to presume that the author of a work created only 100 years ago
may have been deceased for at least 50 years.
Mr. President, that is the theoretical, one might say
jurisprudential, background of the copyright issue before us today. But
it may be well to consider this legal question in its practical aspect
as well. What works are we talking about? Who is affected by this
legislation?
Mr. President, this legislation matters and it matters to some of the
most distinguished members of America's cultural and artistic
community. If we examine the significance of this legislation just in
the area of popular music alone, I believe we will see its importance.
Consider the following songs that fell into the public domain just 2
months ago at the end of 1994--works still widely performed in theaters
and through media around the world:
``Swanee'' by George Gershwin and Irving Caesar; ``A Pretty Girl Is
Like a Melody'' by Irving Berlin; ``Alice Blue Gown'' by Joseph
McCarthy and Harry Tierney.
In the preceding 2 years, the following standards also lost
copyright protection, despite their continued popularity: ``After
You've Gone'' by Henry Creamer and turner Layton; ``Till the Clouds
Roll By'' by Jerome Kern and P.G. Wodehouse; ``Over There'' by George
M. Cohan; ``Till We Meet Again'' by Richard Whiting and Raymond Egan.

If the Copyright Term Extension Act of 1995 is not adopted this year
in this session of Congress, the following songs will no longer be
protected by copyright: ``Look for the Silver Lining'' by Jerome Kern
and bud DeSylva; ``Avalon'' by Al Jolson, Bud DeSylva, and Vincent
Rose.
Within the next few years, if Congress does not act to adopt
legislation such as that which I introduce today, the following musical
works will also fall into the public domain: ``Rahpsody in Blue'' by
George Gershwin; ``My Buddy'' by Walter Donaldson and Gus Kahn;
``What'll I Do'' by Irving Berlin; ``Georgia'' by Walter Donaldson and
Howard Johnson; ``It Had To Be You'' by Isham Jones and Gus Kahn;
``Showboat'' by Jerome Kern and Oscar Hammerstein II.
All of these songwriters and composers are household names still,
after 75 years. Indeed ``Showboat'' is back on Broadway, eight
performances a week, nearly 70 years after its premiere.
But I would like to draw particular attention to the career of Walter
Donaldson. He composed the songs cited above when he was in his
twenties, and he died in 1947 when he was in his midfifties. He
composed innumerable standards and will forever be linked to the
extraordinary success of the 1927 film ``The Jazz Singer'' in which his
songs were sung by Al Jolsen. The historical significance of that
motion picture, the first sound film to be commercially released, can
hardly be overstated.
If the present copyright law had been in effect in the 1920's, all of
Walter Donaldson's compositions would fall into the public domain
within the next 2 years. Yet these historical facts should not mislead
us into thinking that the copyright status of his works is an academic
issue. For it was Ellen Donaldson, the composer's daughter, who first
alerted me to the importance of this issue only 2 years ago. I do not
think she will mind my pointing out that she is now only in her early
fifties. She remains extremely active in publishing and exploiting her
father's music and in protecting his copyrights. Like the children of
composers such as Richard Rogers, Irving Berlin, Richard Whiting, Hoagy
Carmichael, and many, many others, her legitimate interest in her
father's copyrights can be expected to continue for decades, certainly
for another 20 years.
Mr. President, from interviews I have had with writers, authors, and
artists of all kinds, and from the hearings we have held on issues of
concern to authors in the Judiciary Committee over the past 18 years, I
have come to the conclusion that the vast majority of authors expect
their copyrights to be a potentially valuable resource to be passed on
to their children and through them into the succeeding generation. I
believe that they are reasonable in this expectation and that such a
general expectation is what the Framers of the Constitution had in mind
when they constrained the power of Congress to grant patents and
copyrights only with the very broad and flexible requirement that such
rights be granted ``for limited times.'' Article I, section 8. When,
however, we so often see copyrights expiring before even the first
generation of an author's heirs have fully benefited from them, then I
believe that is accurate to say that our term of copyright is too short
and for a too limited time.
One could also cite demographic factors that point to the need for a
longer term if copyright is truly to reflect the natural desire of
authors to provide for their heirs. Principal among these would be the
increasing lifespan of the average American, as well as the increasing
fact of children being born far later, in a marriage than in past
decades. Whatever the reason, the inescapable conclusion must be drawn
that copyrights in valuable works are too often expiring before they
have served their purpose of allowing an author to pass their benefits
on to his or her heirs. I urge my colleagues to pass the Copyright Term
Extension Act of 1995 to remedy this situation.
Mr. President, we in Congress are currently dealing with a number of
fundamental issues that bring into question how we have done things in
the Federal government over many years. These debates raise the
question of the proper role of the Federal Government in sponsoring,
stimulating, and, where appropriate, funding artistic activity across a
wide range of fields. We are asking virtually every Federal program now
in existence to justify its function. And, as a result, we hear much
about the programs that do not work.
We hear all too little about the good that Government can do when it
functions in a limited and effective way. I would submit that the
copyright system--in the way that it rewards private initiative through
governmental protection, all without the need for a regulatory
bureaucracy--is a model for the best that government can do to improve
the life of its citizens.
And when one considers that all works of creativity fixed by any
method now known or later developed are invested from the moment of
their creation with substantial rights that can be protected in any
Federal court, then I think it becomes clear that the copyright system
is something we should encourage and, where appropriate, extend.
Because the bill I introduce today does extend the benefits of
copyright in an appropriate and obviously needed way, I am proud to be
its sponsor. I urge my colleagues to give it their most serious
consideration.
Mr. President, I ask unanimous consent that the text of this
legislation be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

[[Page S3393]]

S. 483

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 ``Copyright Term Extension Act
of 1995''.

SEC. 2. DURATION OF COPYRIGHT PROVISIONS.

(a) Preemption With Respect to Other Laws.--Section 301(c)
of title 17, United States Code, is amended by striking out
``February 15, 2047'' in each place it appears and inserting
``February 15, 2067'' in each such place.
(b) Duration of Copyright: Works Created on or After
January 1, 1978.--Section 302 of title 17, United States
Code, is amended--
(1) in subsection (a) by striking out ``fifty'' and
inserting in lieu thereof ``seventy'';
(2) in subsection (b) by striking out ``fifty'' and
inserting in lieu thereof ``seventy'';
(3) in subsection (c) in the first sentence--
(A) by striking out ``seventy-five'' and inserting in lieu
thereof ``ninety-five''; and
(B) by striking out ``one hundred'' and inserting in lieu
thereof ``one hundred and twenty''; and
(4) in subsection (e) in the first sentence--
(A) by striking out ``seventy-five'' and inserting in lieu
thereof ``ninety-five'';
(B) by striking out ``one hundred'' and inserting in lieu
thereof ``one hundred and twenty''; and
(C) by striking out ``fifty'' in each place it appears and
inserting ``seventy'' in each such place.
(c) Duration of Copyright: Works Created but not Published
or Copyrighted Before January 1, 1978.--Section 303 of title
17, United States Code, is amended in the second sentence--
(1) by striking out ``December 31, 2002'' in each place it
appears and inserting ``December 31, 2012'' in each such
place; and
(2) by striking out ``December 31, 2027'' and inserting in
lieu thereof ``December 31, 2047''.
(d) Duration of Copyright: Subsisting Copyrights.--
(1) Section 304 of title 17, United States Code, is
amended--
(A) in subsection (a)--
(i) in paragraph (1)--
(I) in subparagraph (B) by striking out ``47'' and
inserting in lieu thereof ``67''; and
(II) in subparagraph (C) by striking out ``47'' and
inserting in lieu thereof ``67'';
(ii) in paragraph (2)--
(I) in subparagraph (A) by striking out ``47'' and
inserting in lieu thereof ``67''; and
(II) in subparagraph (B) by striking out ``47 and inserting
in lieu thereof ``67''; and
(iii) in paragraph (3)--
(I) in subparagraph (A)(i) by striking out ``47'' and
inserting in lieu thereof ``67''; and
(II) in subparagraph (B) by striking out ``47'' and
inserting in lieu thereof ``67''; and
(B) in subsection (b) by striking out ``seventy-five'' and
inserting in lieu thereof ``ninety-five''.
(2) Section 102 of the Copyright Renewal Act of 1992
(Public Law 102-307; 106 Stat. 266; 17 U.S.C. 304 note) is
amended--
(A) in subsection (c)--
(i) by striking out ``47'' and inserting in lieu thereof
``67'';
(ii) by striking out ``(as amended by subsection (a) of
this section)''; and
(iii) by striking out ``effective date of this section''
each place it appears and inserting in each such place
``effective date of the Copyright Term Extension Act of
1995''; and
(B) in subsection (g)(2) in the second sentence by
inserting before the period the following: ``, except each
reference to forty-seven years in such provisions shall be
deemed to be sixty-seven years''.

SEC. 3. EFFECTIVE DATE.

This Act and the amendments made by this Act shall take
effect on the date of enactment of this Act.

Mrs. FEINSTEIN. Mr. President, as always when it comes to matters of
copyright law, the distinguished chairman of the Judiciary Committee
has spoken well and to the point as to why extending the basic term of
copyright protection by 20 years is both the right and the economically
desirable thing to do, and to do without delay. As the bill's coauthor,
I'd like to add just a few thoughts about our proposal to extend the
length of copyright protection for only the fourth time since the
Founding Fathers established such rights more than 200 years ago.
First principles come first. The fundamental animating principle of
copyright protection was--and remains--assuring that the Nation's most
creative individuals have and retain a sufficient economic incentive to
continue to craft, work by copyrightable work, the incomparable mosaic
of our Nation's cultural life. For many years now, such incentive has
been considered to be the right to profit from licensing one's work
during one's lifetime and to take pride and comfort in knowing that
one's children--and perhaps their children--might also benefit from
one's posthumous popularity. Indeed, it was to preserve that incentive
that Congress adopted the current life plus 50 years term that is now
the law.
Human longevity, however, is increasingly undermining this
fundamental precept of copyright law, Mr. President, and with it the
economic incentive deemed essential by the authors of the Constitution.
We all had the great good fortune, for example, to have the
incomparable Irving Berlin among us until 1989, when he died at the age
of 101. By that time, however, Mr. Berlin had outlived the period in
which he was entitled to royalties from the immortal ``Alexander's
Ragtime Band.'' Although not every American copyright owner will reach
the century mark, Mr. President, it's clear that we as a Nation are
living longer and more active lives.
Copyright law has in the past--and should now again--reflect that
central fact of life. Accordingly, the Copyright Term Extension Act of
1995 uniformly extends the life of copyright protection in this country
by 20 years, a modest extension relative to past adjustments, as
Chairman Hatch points out. Writers, artists, filmmakers, composers,
photographers, sculptors, and cartographers alike--and their children,
all will benefit from this overdue adjustment. Perhaps more
importantly, as the ultimate beneficiaries of the creativity that
copyright protection is intended to assure, so will we all.
Second, Mr. President, as important as America's cultural enrichment
is, the United States also stands to benefit dramatically on the world
economic stage from extension of the current copyright term. As the
tense and protracted negotiations with China just concluded
underscored, intellectual property--the collective copyrightable output
of America's creators of movies, music, art and other works--is an
enormous asset to the Nation's balance of trade.
Indeed, in a recent Billboard magazine commentary, Prof. Arthur
Miller of the Harvard Law School noted that, ``In 1990, America's
`copyright industries' recorded $34 billion in foreign sales * * *.''
It's no wonder, Mr. President, that the Chinese preferred to
appropriate American film and music for resale--two great exports from
my State of California--rather than license American works.
By extending to life plus 70 years the basic copyright protection
afforded in the United States for new works, Congress will assure
comparable protection for American authors in the countries of the
European Union, which will formally adopt the life-plus-70 standard
this summer. If we do not act, Mr. President, those nations quite
simply will not be required to provide American authors, artists and
other copyright holders with more than the protection we afford their
intellectual property holders here at home. Simply put, Mr. President,
conforming our intellectual property laws with those of our trading
partners in the service of American competitiveness is critical.
As Professor Miller aptly put it: ``Unless Congress matches the
copyright extension adopted by the European Union, we will lost 20
years of valuable protection against rip-off artists around the
world.'' I'm certain that the tired, but successful team from the
United States Trade Representative's office just returned from China
will testify if asked, Mr. President, that the stronger our copyright
laws here at home, the better the deal they can negotiate for American
copyright holders abroad. Since America is--and is likely to remain--
the world's principal exporter of popular culture, extension of the
basic copyright term makes international dollars and sense.
Third, and finally, Mr. President, I want to note for the record the
extraordinary support for this legislation within the intellectual
property community. Not only do movie and music companies strongly back
this bill as written, as one would expect, but book and music
publishers, performing rights societies representing America's premier
songwriters and composers, and major software producing firms all
concur that Congress can and must pass this important legislation.
I want to thank Chairman Hatch and his staff once again, Mr.
President, for another--to my mind--successful collaboration to protect
and encourage the production of American intellectual property. Just as
was the case with the digital performance rights legislation which we
first introduced in the last Congress and jointly offered again
recently, it is equity and economics which make the Copyright
[[Page S3394]] Term Extension Act of 1995 an important and worthwhile
bill.
I commend it to my colleagues, and look forward to working with them
and the copyright community at large to put it--as well as digital
performance rights legislation--before the President by the end of this
session of Congress.
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:

[From Billboard magazine, January 14, 1995]

Extending Copyrights Preserves U.S. Culture

(By Arthur R. Miller)

Beginning this summer, all member nations of the European
Union will extend the length of copyright protection to the
life of the author plus 70 years. Should we in America
provide the same protection for our own writers, musicians,
artists, computer programmers, and other creators of
copyrighted items?
Some feel that we should not tamper with existing U.S. law,
which provides copyright protection for life plus 50 years.
But this status-quoism ignores some fundamental changes that
have occurred in the 20th century.
One of the major reasons Congress originally adopted life-
plus-50-years was to offer protection not only to the creator
of the copyrighted works, but to his or her children and
grandchildren--that is, to three generations in all. With
people living longer today, an extension of the copyright
term by 20 years would roughly correspond to the increase in
longevity that has occurred during the 20th century.
In addition, Congress has already recognized the wisdom of
extending copyright protection to match the terms guaranteed
by other nations. That is exactly what Congress did in 1976
when it extended the copyright term to life-plus-50-years, in
order to bring American law into line with the term then
commonly recognized by other nations.
But beyond this, the main arguments for term extension are
equity and economics.
If Congress does not extend to Americans the same copyright
protection afforded Europeans, American creators will have 20
years less protection than their European counterparts--20
years during which Europeans will not be paying Americans for
our copyrighted products. This situation would not only be
unfair to creators of copyrighted works, but would be harmful
economically to the country as a whole.
The export of intellectual property is growing at a
tremendous rate because America dominates popular culture the
world over. In 1990, America's ``copyright industries''
recorded $34 billion in foreign sales of records, CDs,
computer software, motion pictures, music, books, scientific
journals, periodicals, photographs, designs, and pictorial
and sculptural works. Because the world is so eager for the
products of America's copyright industries, they are one of
the few bright spots in our balance-of-trade picture.
The question of copyright extension should be viewed in the
larger context of bilateral and multilateral trade talks--
including the Trade Related Intellectual Property Rights
(TRIPS) negotiations under GATT. U.S. trade representatives
have found that shortcomings in our own copyright law are
used against us when we call for stronger protection for
American works overseas. One can just hear the Europeans
objecting in future negotiations: ``How can you ask for
better protection in Europe when you do not even grant the
same term of protection we do?''
The need for strong copyright protection becomes more
important every year as a weapon with which to fight the
piracy of intellectual property. Overseas piracy of American
copyrighted material has grown dramatically in recent years
due to the
availability of equipment that can make cheap copies of
movies, videotapes, sound recordings, and computer
programs. As more and more digital technology arrives on
the scene, the problem will only become worse.
Indeed, China alone produced an estimated $2 billion worth
of counterfeit recordings and computer discs last year.
According to the International Federation of the Phonographic
Industry, China now has as many as 26 factories capable of
producing 62 million compact discs. China's domestic market
accounts for only about 3 million discs, so the dimension of
the loss to copyright owners is obvious. Unless Congress
matches the copyright extension adopted by the European
Union, we will lose 20 years of valuable protection against
rip-off artists around the world.
It would not take long to see what harm can come from not
changing our laws to match those of Europeans. America may be
a young nation, but we have the world's oldest popular
culture. Many wonderful motion pictures and songs--including
Irving Berlin's ``Alexander's Rag Time Band''--already have
lost their copyright protection. Dozens, if not hundreds, of
other valuable songs and motion pictures--the legacy of
American culture--also will lose their protection in the next
few years. For example, if Congress does not act soon, such
classics as ``After You've Gone,'' ``I'm Always Chasing
Rainbows,'' ``A Pretty Girl Is Like A Melody,'' ``Swanee,''
and ``The World Is Waiting For The Sunrise'' will fall into
the public domain, and that is only the beginning.
Commentary writer Professor Lewis Kurlantzick (Billboard,
Oct. 29, 1994) asserted that when copyrighted works lose
their protection, they become more widely available. At first
blush, this appears logical. But, paradoxically, works of art
become less available to the public when they enter the
public domain--at least in a form that does credit to the
original. This is because few businesses will invest the
money necessary to reproduce and distribute products that
have lost their copyright protection and can therefore be
reproduced by anyone. The only products that do tend to be
made available after a copyright expires are ``down and
dirty'' reproductions of such poor quality that they degrade
the original copyrighted work. And there is very little
evidence that the consumer really benefits economically from
works falling into the public domain.
Kurlantzick also denigrates the importance of long-term
copyright protection by stating that ``a dollar to be
received 75 years from now is worth a small fraction of one
cent.'' But, he fails to see that the dollar value placed on
future copyright advantages will increase more or less in
proportion with the inflation rate. That is to say, if the
dollar loses 90% of its value over the next 75 years, then
the cost of goods and services will be roughly 90% higher in
75 years than it is today.
For all these reasons, it's clear why Congress should act.
America can reap valuable benefits, at no cost to itself, if
Congress enacts legislation to extend our copyright
protection by 20 years. By harmonizing our laws with the EU,
we can reduce our balance-of-trade deficit, encourage
economic investment, strengthen our hand in dealing with
intellectual piracy, and see to it that America's authors,
composers, artists, and computer programmers receive the same
level of protection afforded the creative people of other
nations. Thus, copyright term extension makes economic sense,
and it's equitable.
______

By Mr. GRAHAM:
S. 484. A bill to amend the Omnibus Crime Control and Safe Streets
Act of 1968 to establish a national clearinghouse to assist in
background checks of applicants for law enforcement positions, and for
other purposes; to the Committee on the Judiciary.

the law enforcement and correctional officers employment registration
act of 1995

Mr. GRAHAM. Mr. President, I introduce the Law Enforcement and
Correctional Officers Employment Registration Act of 1995, which will
establish a national clearinghouse to assist in background checks on
law enforcement applicants.
This legislation would establish a national data bank to provide
quick, accurate and prior officer employment history on all applicants
for law enforcement agencies. This clearinghouse has been called a
Pointer File and simply maintains basic information of all certified
officers, including names, dates of birth, social security numbers,
dates of employment, and any decertifications. The Department of
Justice would maintain and offer computer access to all criminal
agencies.
The intent of my legislation is to help prevent what ``Dateline NBC''
has referred to as gypsy cops. These are police officers who have been
dismissed or have been forced to resign from previous positions but
conceal prior employment history in future job applications.
In the case of the beating death of Bobby Jewett on November 24,
1990, in West Palm Beach, FL, ``Dateline NBC'' was able to subsequently
trace the prior employment histories of the two officers involved in
the case through four States and eight different law enforcement
agencies. Much of this had been concealed in their job applications.
As noted in a Tampa Tribune editorial in support of a clearinghouse,

Few agencies, particularly those in rural areas and smaller
towns, have the personnel and resources to conduct thorough
background checks on police applicants. Not even the largest
agencies always succeed in finding an officer's past if he or
she is determined to hide it.

Florida Department of Law Enforcement Commissioner James T. Moore
adds, ``Experience has shown that, after being found guilty of
misconduct, many problem officers resign or are fired, only to seek
police jobs elsewhere. The clearinghouse system would allow a law
enforcement agency to review each officer applicant's prior history as
an officer.'' In order to protect the rights of officers, however, the
clearinghouse would not contain information relating to causes of
dismissal.
Thomas J. O'Loughlin, chief of police of Wellesley, MA, notes,

[[Page S3395]] The safety of the citizens of this
Commonwealth and this Nation is either weakened or solidified
by the character of the individuals that we entrust with the
responsibility to protect. This legislation provides society
with the necessary tools to ensure that individuals who have
violated this trust do not simply relocate and once again
commit grievous offenses against the public good, and it
ensures that a complete and thorough background investigation
will be completed prior to an individual assuming the
public's trust to be a protector of society.

This legislation is essential to maintaining public confidence in the
police. Further, the financial impact of office misconduct, as measured
by the costs of civil liability litigation, is alarming. A 1992 survey
of members of the National Institute of Municipal Law Officers found
police liability to be the leading cause of soaring litigation costs
since 1989. For the majority of law enforcement officers, this is also
an issue of job integrity and job safety. The misdeeds of a few place
others in an unfavorable light and also at risk.
It is safe to say that a history of past dishonorable service in
other criminal justice agencies is the most compelling reason to reject
an offer. However, this critical information is often unavailable. That
is why the International Association of Chiefs of Police has endorsed
this legislation.
In addition, the Florida Criminal Justice Standards and Training
Commission adopted a unanimous resolution in support of such a program.
I would like to thank these organizations, as well as Commissioner
Moore, for their efforts to protect effectiveness and professionalism
in law enforcement as well as the public's safety.
I urge my colleagues to join me in support of this important
legislation.
______

By Mrs. HUTCHISON:
S. 485. A bill to amend the Solid Waste Disposal Act to provide and
clarify the authority for certain municipal solid waste flow control
arrangements; to the Committee on Environment and Public Works.

the municipal waste flow control transition act of 1995

Mrs. HUTCHISON. Mr. President, on May 16, 1994 the U.S.
Supreme Court handed down a decision in C&A Carbone versus Clarkstown,
NY that has important implications for local municipal waste management
planning.
At issue in the Carbone case was the constitutionality of local
ordinances that enforce flow control. A flow control ordinance enables
a local government to direct locally generated waste to a specific
waste disposal facility. The waste disposal facility is typically a
solid waste combustor that is owned by the local government.
In its Carbone decision the Court found that flow control was an
unconstitutional interference in interstate commerce. In general, this
ruling was a victory for taxpaying consumers who will benefit from the
improved service and prices that result from competition for waste
disposal services.
However, the Court's decision leaves local governments with flow
control regimes in a vulnerable position. In most cases, flow control
assures the financial feasibility of a locally owned or financed waste
disposal facility. That is, municipal bonds were sold and facilities
built in reliance on flow control guaranteed waste disposal income.
Lacking this the financial feasibility of such disposal facilities and
local governments is jeopardized.
At the end of the 103d Congress a number of my colleagues and I
worked on a bill that would have grandfathered existing flow control
arrangements. Unfortunately, the Senate did not complete action before
adjournment.
If anything, the urgency of cushioning the effects of the Carbone
decision on affected local governments has increased. Although there
have not yet been any defaults, the risk of local and municipal bond
market disruptions continues.
Today I offer legislation, the Municipal Waste Flow Control
Transition Act of 1995, that is very similar to that supported by most
of the affected parties at the end of the last Congress.
My bill preserves flow control for local governments that made
substantial investments predicated on flow control authority before
Carbone. It ensures flow control authority for the life of the affected
facilities. However, my legislation would not permit new flow control
arrangements, thereby assuring free competition and unfettered
interstate commerce in the future.
Mr. President, we should protect the local governments and local
taxpayers who are threatened financially by invalidation of their flow
control ordinances. We can do so, as my bill does, in a straight
forward fashion and, at the same time, assure that businesses and
homeowners will have the benefits of a free market in the
future.
______

By Mr. HEFLIN (for himself, Mr. Specter, Mr. Ford, Mr. Thurmond,
Mr. Bumpers, Mr. Brown, Mr. Simon, Mr. Shelby, Ms. Moseley-
Braun, and Mr. Cohen):
S. 486. A bill to reorganize the Federal administrative law
judiciary, and for other purposes; to the Committee on the Judiciary.

the reorganization of the federal administrative judiciary act

Mr. HEFLIN. Mr. President, I am pleased to rise in support of
legislation entitled ``the Reorganization of the Federal Administrative
Judiciary Act.'' I am pleased to advise that I have been joined today
by nine colleagues from both sides of the aisle and who are original
cosponsors of this reform legislation. They are Senators Specter, Ford,
Thurmond, Bumpers, Brown, Simon, Shelby, Moseley-Braun, and Cohen.
The purpose of this legislation is to reorganize and establish an
independent corps of administrative law judges within the executive
branch of Government. The bill is designed to address two critical
issues which face our Nation. First, an independent corps is vital to
the continued impartial resolution of issues and decision of cases
arising under the administrative procedure act. Second, this bill
streamlines the Federal bureaucracy in order to better meet the needs
of the people of the United States. For these reasons, legislation
needs to be adopted to improve this Nation's administrative system of
justice.
In the 103d Congress, I introduced similar legislation, and on
September 15, 1993, the Judiciary Committee considered this
legislation, and ordered it favorably reported in the nature of a
substitute to the Senate. On November 19, 1993, this bill was
considered on the floor of the Senate and adopted a technical amendment
which I offered and two valuable amendments offered by my colleagues
Senator Hank Brown of Colorado and Senator William Cohen of Maine. The
legislation I am introducing today is identical to the legislation
which unanimously passed the Senate on November 19, 1993.
While the House of Representatives regretfully failed to consider S.
486 during the second session of the 103d Congress, I am hopeful, in
light of the recent election results by which the American people
expressed their support for leaner, more efficient, and less costly
Federal Government, that the new Congress will favorably consider and
adopt this legislation and send it to President Clinton for signature.
the primary objective of this legislation is to reorganize the
Federal administrative judiciary to promote efficiency, productivity,
and the reduction of overhead functions. It will provide for economies
of scale to better serve the public in the resolution of administrative
disputes. This goal will be accomplished by placing all ALJ's in a
unified corps with a chief judge as the primary administrative officer.
The chief judge will be responsible for developing programs and
practices, which attain this objective. Those programs and practices
will include the training of judges in more than one subject area. This
training will permit the utilization of the skills and expertise of
each judge across agency lines to meet the demands of the existing
workload.
Generally, this bill would establish an independent corps for
administrative law judges which would operate under the executive
branch of the Government. The corps would be governed by a chief
administrative law judge. Further, the corps would be divided into
eight divisions, with each division governed by a division chief
administrative law judge. The chief and division chief ALJ's would be
Presidential appointments, by and with the advice and consent of the
U.S. Senate.
The chief and division chief ALJ's would form a council. The council
would be the policy making body for
[[Page S3396]] the corps. The council would have the authority to
assign judges to divisions, appoint persons as administrative law
judges, prescribe rules of practice and procedure for the corps, issue
appropriate rules and regulations for the efficient conduct of the
corps, and generally manage the day-to-day operations of the corps.
This bill provides explicit protection for ALJ's. The corps would
continue to make appointments of administrative law judges from a
register of qualified candidates maintained by the Office of Personnel
Management. In order for an ALJ to be involuntarily reassigned to a new
permanent duty station, an ALJ must receive a written explanation from
the council stating that such a move is required in order to meet
substantial changes in workloads. ALJ's would continue to hear and
adjudicate the same types of cases which they presently decide.
Further, ALJ's would continue to be assigned cases within their
division on a rotating basis, taking into account issues of expertise
and education. In addition, ALJ's would be given explicit authority to
continue to act as special masters pursuant to Federal Rule of Civil
Procedure 53(a). This bill also contains provisions for the removal and
discipline of administrative law judges.
In the committee report (103-154) to this legislation, my colleague,
Senator Cohen. expressed support for the concept of establishing an
independent corps of administrative law judges within the executive
branch of Government and for the concept which would reform and
streamline the Federal bureaucracy in order to serve the American
public. Senator Cohen did have legitimate concerns and offered
excellent suggestions to improve and strengthen section 599(e) of the
bill relating to removal and discipline of judges.
I have worked with Senator Cohen to strengthen and improve the
removal and discipline provisions of the bill, and I believe these
provisions are a balanced effort to make the provisions fairer to all
interest parties concerned by insuring public members serve on the
complaint resolution board--and its panels--to ensure objectivity and
impartiality. This legislation is better because of Senator Cohen's
participation and I greatly appreciate his cooperation.
This legislation will promote good government in an efficient and
effective manner. The Congressional Budget Office [CBO] has prepared a
report which estimates the legislation can save as much as $22 million
a year in as few as 5 years. These are the types of savings the
American people expect and deserve.
Since the reorganization of the Federal administrative law judges
into a unified corps is expected to save the U.S. taxpayer substantial
dollars, and in consultation with Senator Hank Brown of Colorado, a
provision offered by Senator Brown is included in this legislation
ensuring that agencies will reduce their budgets to reflect the
projected savings from the removal of ALJ's from their agencies and
report to Congress on their efforts.
The establishment of a unified corps of administrative law judges is
not a unique concept. In fact, this type of legislation was first
implemented in a number of States, and has been very successful. The
individual States have been leaders in adapting and streamlining the
administrative process to meet the changing needs of the American
public. The adoption of similar Federal legislation merely builds upon
the successful experiences of the States.
A final consideration which argues in favor of independence for ALJ's
is the issue of public perception. For individuals who face the
daunting prospect of being accused by a Federal agency of illegal
activities, the fact that an administrative law judge who is an
employee of that agency is hearing their case is hardly reassuring. The
realities of the everyday world indicate that the key to public
satisfaction and confidence in judicial decisionmaking is the issue of
decisional independence. The creation of a unified corps of
administrative law judges is likely to have the beneficial effect of
greater public satisfaction with the administrative law system.
This legislation which I introduce today responds to concerns
expressed by executive branch agencies, particularly the Department of
Justice. This legislation is truly a reorganization of Federal
administrative adjudication functions and not a radical departure from
the principles of administrative law, which has concerned some members
in the past. To the contrary, the substitute insures that the rule of
law will prevail in administrative adjudications without impermissible
influence.
The legislation specifically states that an agency's policymaking
authority will not be changed nor will the administrative law judge's
adjudicatory authority. The reorganization preserves the existing
powers of both agency managers and the administrative law judges, while
removing the tension that naturally arises between those two functions.
The bill provides that enactment of the bill will effect no change in
an agency's rulemaking, interpretative or policymaking authority in
carrying out statutory responsibilities vested in the agency or agency
head.
The bill clarifies that the reorganization of administrative law
judges in a corps will give the new corps no policymaking authority for
the agency, a past concern expressed by some members. In preserving the
status quo of the present administrative system, the agency and its
head retain the authority to review decisions of administrative law
judges under any applicable provision of law. The policymaking role of
ALJ's is not enlarged by enactment of the bill nor is their
adjudicatory authority changed from current status. An agency head or
secretary retains final authority to reverse ALJ decisions as provided
by statute and makes the final decisions for the agency.
I look forward to working for passage of this reform legislation here
in the Senate, and I hope my colleagues in the House of Representatives
will likewise favorably consider and act on it, so that President
Clinton can sign it into law before the end of the year.
Mr. President, I ask unanimous consent that the bill in its entirety
be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 486

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 ``Reorganization of the
Federal Administrative Judiciary Act''.

SEC. 2. FINDINGS.

The Congress finds that--
(1) in order to promote efficiency, productivity, the
reduction of administrative functions, and to provide
economies of scale and better public service and public trust
in the administrative resolution of disputes, Federal
administrative law judges should be organized in a unified
corps;
(2) the dispersal of administrative law judges appointed
under section 3105 of title 5, United States Code, in every
Federal agency that requires hearings to be conducted by
administrative law judges, underutilizes the potential of
administrative law judges to serve the public and assist the
Federal courts as special masters and finders of fact in
specific instances to help reduce the backlog of cases in
Federal courts;
(3) the organization of administrative law judges in a
corps will best promote their assignment to Federal agency
needs as demand requires;
(4) a unified administrative law judge corps will better
promote the use of information technology in serving the
public; and
(5) an administrative law judge corps will, through
consolidation, eliminate unnecessary offices and reduce
travel and other related costs.

SEC. 3. ESTABLISHMENT OF ADMINISTRATIVE LAW JUDGE CORPS.

(a) In General.--Chapter 5 of title 5, United States Code,
is amended by adding at the end thereof the following new
subchapter:

``SUBCHAPTER VI--ADMINISTRATIVE LAW JUDGE CORPS

``Sec. 597. Definitions

``For the purposes of this subchapter--
``(1) `agency' means an authority referred to in section
551(1);
``(2) `Corps' means the Administrative Law Judge Corps of
the United States established under section 598;
``(3) `administrative law judge' means an administrative
law judge appointed under section 3105 on or before the
effective date of the Reorganization of the Federal
Administrative Judiciary Act or under section 599c after such
effective date;
``(4) `chief judge' means the chief administrative law
judge appointed and serving under section 599;
``(5) `Council' means the Council of the Administrative Law
Judge Corps established under section 599b;
``(6) `Board', unless otherwise indicated, means the
Complaints Resolution Board established under section 599e;
and
[[Page S3397]] ``(7) `division chief judge' means the chief
administrative law judge of a division appointed and serving
under section 599a.

``Sec. 598. Establishment; membership

``(a) Establishment.--There is established an
Administrative Law Judge Corps consisting of all
administrative law judges, in accordance with the provisions
of subsection (b). Such Corps shall be administered in
Washington, D.C.
``(b) Membership.--An administrative law judge serving as
such on the date of the commencement of the operation of the
Corps shall be transferred to the Corps as of that date. An
administrative law judge who is appointed on or after the
date of the commencement of the operation of the Corps shall
be a member of the Corps as of the date of such appointment.

``Sec. 599. Chief administrative law judge

``(a) Appointment; Term.--The chief administrative law
judge shall be the chief administrative officer of the Corps
and shall be the presiding judge of the Corps. The chief
judge shall be appointed by the President, by and with the
advice and consent of the Senate. The chief judge shall be
learned in the law. The chief judge shall serve for a term of
five years or until a successor is appointed and qualifies to
serve. A chief judge may be reappointed upon the expiration
of the term of such judge, by and with the advice and consent
of the Senate.
``(b) Vacancies.--(1) If the office of chief judge is
vacant, the division chief judge who is senior in length of
service as a member of the Council shall serve as acting
chief judge until such vacancy is filled.
``(2) If 2 or more division chief judges have the same
length of service as members of the Council, the division
chief judge who is senior in length of service as an
administrative law judge shall serve as such acting chief
judge.
``(c) Special Functions of Chief Judge.--(1) In addition to
other duties conferred on the chief judge, the chief judge
shall be responsible for developing programs and practices,
in coordination with agencies using administrative law
judges, which foster economy and efficiency in the processing
of cases heard by administrative law judges. These programs
and practices shall include--
``(A) training of judges in more than one subject area;
``(B) employment of computers and software and other
information technology for automated decision preparation,
case docketing, and research;
``(C) consolidating hearing facilities and law libraries;
and
``(D) programs and practices to foster overall efficient
use of staff, personnel, equipment, and facilities.
``(2) In order to minimize costs--
``(A) all administrative law judges and support personnel
shall, for at least 1 year after the date of the commencement
of the operation of the Corps, continue to use the office
space and facilities, at the agencies using such judges and
personnel, available before such date, and
``(B) the chief judge shall phase in transfers of
administrative law judges and support personnel to other
facilities so that the cost of providing facilities for the
Corps shall not exceed the cost of maintaining such judges
and personnel in equivalent space available at agencies using
the Corps.
``(d) Reports.--The chief judge shall, within 90 days after
the end of each fiscal year, make a written report to the
President and the Congress concerning the business of the
Corps during the preceding fiscal year. The report shall
include information and recommendations of the Council
concerning the future personnel requirements of the Corps.
``(e) Service After Term Expires.--After serving as chief
judge, an individual may continue to serve as an
administrative law judge unless such individual has been
removed from office in accordance with section 599e.

``Sec. 599a. Divisions of the Corps; division chief judges

``(a) Assignment to Divisions.--Each judge of the Corps
shall be assigned to a division by the Council, pursuant to
section 599b. The assignment of a judge who was an
administrative law judge on the date of commencement of the
operation of the Corps shall be made after consideration of
the areas of specialization in which the judge has served.
Each division shall be headed by a division chief judge who
shall exercise administrative supervision over such division.
``(b) Divisions.--The divisions of the Corps shall be as
follows:
``(1) Division of Communications, Public Utility, and
Transportation Regulation.
``(2) Division of Safety and Environmental Regulation.
``(3) Division of Labor.
``(4) Division of Labor Relations.
``(5) Division of Health and Human Services Programs.
``(6) Division of Securities, Commodities, and Trade
Regulation.
``(7) Division of General Programs.
``(8) Division of Financial Services Institutions.
``(c) Appointment of Division Chief Judges.--(1) The
division chief judge of each division set forth in subsection
(b) shall be appointed by the President, by and with the
advice and consent of the Senate, and shall be learned in the
law.
``(2) Division chief judges shall be appointed for 5-year
terms, except that of those division chief judges first
appointed, the President shall designate 2 such individuals
to be appointed for 5-year terms, 3 for 4-year terms, and 2
for 3-year terms.
``(3) Any division chief judge appointed to fill an
unexpired term shall be appointed only for the remainder of
such predecessor's term, but may be reappointed as provided
in paragraph (4).
``(4) Any division chief judge may be reappointed upon the
expiration of his or her term.
``(5) Any judge, after serving as division chief judge, may
continue to serve as an administrative law judge unless such
individual has been removed from office in accordance with
section 599e.

``Sec. 599b. Council of the Corps

``(a) In General.--The policymaking body of the Corps shall
be the Council of the Corps. The chief judge and the division
chief judges shall constitute the Council. The chief judge
shall preside over the Council. If the chief judge is unable
to be present at a meeting of the Council, the division chief
judge who is senior in length of service as a member of such
Council shall preside at the meeting.
``(b) Quorum; Voting.--One half of all of the members of
the Council shall constitute a quorum for the purpose of
transacting business. The affirmative vote by a majority of
all the members of the Council shall be required to approve a
matter on behalf of the Council. Each member of the Council
shall have one vote.
``(c) Meetings.--Meetings of the Council shall be held at
least once a month at the call of the chief judge or by the
call of one-third or more of the members of the Council.
``(d) Powers.--The Council is authorized--
``(1) to assign judges to divisions and transfer or
reassign judges from one division to another, subject to the
provisions of section 599c;
``(2) to appoint persons as administrative law judges under
section 599c;
``(3) to file charges seeking adverse action against an
administrative law judge under section 599e;
``(4) to prescribe, after providing an opportunity for
notice and comment, the rules of practice and procedure for
the conduct of proceedings before the Corps, except that,
with respect to a category of proceedings adjudicated by an
agency before the effective date of the Reorganization of the
Federal Administrative Judiciary Act, the Council may not
amend or revise the rules of practice and procedure
prescribed by that agency during the 2 years following such
effective date without the approval of that agency, and any
amendments or revisions made to such rules shall not affect
or be applied to any pending action;
``(5) to issue such rules and regulations as may be
appropriate for the efficient conduct of the business of the
Corps and the implementation of this subchapter, including
the assignment of cases to administrative law judges;
``(6) subject to the civil service and classification laws
and regulations--
``(A) to select, appoint, employ, and fix the compensation
of the employees (other than administrative law judges) that
the Council deems necessary to carry out the functions,
powers, and duties of the Corps; and
``(B) to prescribe the authority and duties of such
employees;
``(7) to establish, abolish, alter, consolidate, and
maintain such regional, district, and other field offices as
are necessary to carry out the functions, powers, and duties
of the Corps and to assign and reassign employees to such
field offices;
``(8) to procure temporary and intermittent services under
section 3109;
``(9) to enter into, to the extent or in such amounts as
are authorized in appropriation Acts, without regard to
section 3709 of the Revised Statutes of the United States (41
U.S.C. 5), contracts, leases, cooperative agreements, or
other transactions that may be necessary to conduct the
business of the Corps;
``(10) to delegate any of the chief judge's functions or
powers with the consent of the chief judge, or whenever the
office of such chief judge is vacant, to one or more division
chief judges or other employees of the Corps, and to
authorize the redelegation of any of those functions or
powers;
``(11) to establish, after consulting with an agency,
initial and continuing educational programs to assure that
each administrative law judge assigned to hear cases of that
agency has the necessary training in the specialized field of
law of that agency;
``(12) to make suitable arrangements for continuing
education and training of other employees of the Corps, so
that the level of expertise in the divisions of the Corps
will be maintained and enhanced; and
``(13) to determine all other matters of general policy of
the Corps.
``(e) Official Seal.--The Council shall select an official
seal for the Corps which shall be judicially noticed.

``Sec. 599c. Appointment and transfer of administrative law
judges

``(a) Appointment.--After the initial establishment of the
Corps, the Council shall appoint new or additional judges as
may be necessary for the efficient and expeditious conduct of
the business of the Corps. Appointments shall be made from a
register maintained by the Office of Personnel Management
under subchapter I of chapter 33 of this title. Upon request
by the chief judge, the Office of Personnel Management shall
certify enough names from the top of such
[[Page S3398]] register to enable the Council to consider
five names for each vacancy. Notwithstanding section 3318, a
vacancy in the Corps may be filled from the highest five
eligible individuals available for appointment on the
certificate furnished by the Office of Personnel Management.
``(b) Limitation on Judge's Duties.--A judge of the Corps
may not perform or be assigned to perform duties inconsistent
with the duties and responsibilities of an administrative law
judge.
``(c) Reassignments; Details.--A judge or staff member of
the Corps on the date of commencement of the operation of the
Corps, and all new judges and staff members appointed by the
Council, may not thereafter be involuntarily reassigned to a
new permanent duty station if such station is beyond the
commuting area of the duty station which is the judge's or
staff member's permanent duty station on that date. A judge
or staff member of the Corps may be temporarily detailed,
once in a 24-month period, to a new duty station at any
location, for a period of not more than 120 days.

``Sec. 599d. Jurisdiction

``(a) In General.--Any case, claim, action, or proceeding
authorized to be heard before an administrative law judge on
the day before the effective date of the Reorganization of
the Federal Administrative Judiciary Act shall, on or after
such date, be referred to the Corps for adjudication on the
record after an opportunity for a hearing.
``(b) Types of Cases.--An administrative law judge who is a
member of the Corps shall hear and render a decision upon--
``(1) every case of adjudication subject to the provisions
of section 553, 554, or 556;
``(2) every case in which hearings are required by law to
be held in accordance with sections 553, 554, or section 556;
``(3) every other case referred to the Corps by an agency
in which a determination is to be made on the record after an
opportunity for a hearing; and
``(4) every case referred to the Corps by a court for an
administrative law judge to act as a special master or to
otherwise making findings of fact on behalf of the referring
court, which shall continue to have exclusive and
undiminished jurisdiction over the case.
``(c) Referral of Cases.--When a case under subsection (b)
arises, it shall be referred to the Corps. Under regulations
issued by the Council, the case shall be assigned to a
division. The appropriate division chief shall assign cases
to judges, taking into consideration specialization,
training, workload, and conflicts of interest.
``(d) Referrals by Agencies and Courts.--Courts are
authorized to refer, subject to the approval of the majority
of the Council and the parties in the court proceeding, those
cases, or portions thereof, in which they seek an
administrative law judge to act as a special master pursuant
to the provisions of Rule 53(a) of the Federal Rules of Civil
Procedure which shall continue to have exclusive and
undiminished jurisdiction over the case. When a court has
referred a case to an administrative law judge, the
recommendations, rulings, and findings of fact of the
administrative law judge are subject to de novo review by the
referring court.
``(e) Satisfaction of Other Procedural Requirements.--
Compliance with this subchapter shall satisfy all
requirements imposed under section 916 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989.
``(f) Application of Agency Policy.--The provisions of this
subchapter shall effect no change in--
``(1) an agency's rulemaking, interpretative, or
policymaking authority in carrying out the statutory
responsibilities vested in the agency or agency head;
``(2) the adjudicatory authority of administrative law
judges; or
``(3) the authority of an agency to review decisions of
administrative law judges under any applicable provision of
law.

``Sec. 599e. Removal and discipline

``(a) In General.--(1) Except as provided under paragraph
(2), an administrative law judge may not be removed,
suspended, reprimanded, or disciplined except for misconduct
or neglect of duty, but may be removed for physical or mental
disability (consistent with prohibitions on discrimination
otherwise imposed by law).
``(2) Paragraph (1) shall not apply to an action initiated
under section 1215.
``(b) Rules of Judicial Conduct.--No later than 180 days
after the appointment and confirmation of the Council, the
Council shall adopt and issue rules of judicial conduct for
administrative law judges. Such code shall be enforced by the
Council and shall include standards governing--
``(1) judicial conduct and extra-judicial activities to
avoid actual, or the appearance of, improprieties or
conflicts of interest;
``(2) the performance of judicial duties impartially and
diligently;
``(3) avoidance of bias or prejudice with respect to all
parties; and
``(4) efficiency and management of cases so as to reduce
dilatory practices and unnecessary costs.
``(c) Disciplinary Action by the Council.--An
administrative law judge may be subject to disciplinary
action by the Council under subsection (j). An administrative
law judge may be removed only after the Council has filed
with the Merit Systems Protection Board a notice of removal
and the Merit Systems Protection Board has determined on the
record, after an opportunity for a hearing before the Merit
Systems Protection Board, that there is good cause to take
the action of removal.
``(d) Complaints Resolution Board.--Under regulations
issued by the Council, a Complaints Resolution Board shall be
established within the Corps to consider and to recommend
appropriate action to be taken when a complaint is made
concerning conduct of a judge of the Corps. Such complaint
may be made by any interested person, including parties,
practitioners, the chief judge, administrative law judges,
and agencies.
``(e) Composition of the Board.--(1) The Board shall
consist of--
``(A) 2 judges from each division of the Corps, who shall
be appointed by the Council; and
``(B) 16 attorneys who shall be appointed in accordance
with the provisions of paragraph (2).
``(2) The Council shall request a list of candidates to be
members of the Board from the American Bar Association. Such
list may not include any individual who is an administrative
law judge or former administrative law judge.
``(3) The chief judge and the division chief judges may not
serve on the Board.
``(4) No individual may serve 2 successive terms on the
Board.
``(5)(A) Except as provided under subparagraph (B), all
terms on the Board shall be 2 years.
``(B) In making the original appointments to the Board, the
Council shall designate one-half of the appointments made
under paragraph (1)(A) and one-half of the appointments made
under paragraph (1)(B), as a term of 1 year.
``(6)(A) Each member of the Board who is not an officer or
employee of the Federal Government shall be compensated at a
rate equal to the daily equivalent of the annual rate of
basic pay prescribed for a position at the level of AL-3,
rate C under section 5372 of this title for each day
(including traveltime) during which such member is engaged in
the performance of the duties of the Board. All members of
the Board who are administrative law judges shall serve
without compensation in addition to that received for their
services as officers or employees of the United States.
``(B) The members of the Board shall be allowed travel
expenses, including per diem in lieu of subsistence, at rates
authorized for employees of agencies under subchapter I of
chapter 57 of title 5, United States Code, while away from
their homes or regular places of business in the performance
of services for the Board.
``(f) Filing and Referral of Complaint.--(1) A complaint
concerning the official conduct of an administrative law
judge shall be made in writing. The complaint shall be filed
with the chief judge, or it may be originated by the chief
judge on his own motion. The chief judge shall refer the
complaint to a 5-member panel designated by the Council--
``(A) consisting of 3 administrative law judges appointed
under subsection (e)(1)(A), none of whom may be serving in
the same division as the administrative law judge who is the
subject of the complaint; and
``(B) two members appointed under subsection (e)(1)(B),
none of whom regularly practice before the division to which
the administrative law judge, who is the subject of the
complaint is assigned.
``(2) Any individual chosen to serve on the panel who has a
personal or financial conflict of interest involving the
administrative law judge who is the subject of the complaint
shall be disqualified by the Council from serving on the
panel. The Council shall replace any disqualified individual
or vacancy with another member of the Board who is eligible
to serve on the panel.
``(g) Chief Judge Action.--(1) After expeditiously
reviewing a complaint, the chief judge, by written order
stating his reason, may--
``(A) dismiss the complaint, if the chief judge finds the
complaint to be--
``(i) directly related to the merits of a decision or
procedural ruling; or
``(ii) frivolous;
``(B) conclude the proceeding if the chief judge finds that
appropriate corrective action has been taken or that action
on the complaint is no longer necessary because of
intervening events; or
``(C) refer the complaint to the Complaint Resolution Board
in accordance with subsection (f).
``(2) The chief judge shall transmit copies of the written
order to the complainant and to the administrative law judge
who is the subject of the complaint.
``(h) Notice of the Complaint.--The administrative law
judge and the complainant shall be given notice of receipt of
the complaint and notice of referral of the complaint to the
panel.
``(i) Inquiry and Report by Panel.--(1) The panel shall
inquire into the complaint and have authority to conduct a
full investigation of the complaint, including authority to
hold hearings and issue subpoenas, examine witnesses, and
receive evidence. All proceedings of the Complaint Resolution
Board shall be confidential. The administrative law judge who
is the subject of the complaint shall have the right to be
represented by counsel and shall have an opportunity to
appear before the panel. The complainant shall be afforded an
opportunity to appear at the proceedings conducted by the
investigating panel, if the panel concludes that the
[[Page S3399]] complainant could offer substantial
information.
``(2) In determining whether misconduct has occurred, the
panel shall apply a preponderance of evidence standard of
proof to its proceedings.
``(3)(A) Within 90 days after the referral of the
complaint, the panel shall report to the Council on its
findings of fact and recommendations for appropriate
disciplinary action, if any, that should be taken against the
administrative law judge.
``(B) If the panel has not completed its inquiry within 90
days after receiving the complaint, the panel shall request
an extension of time from the Council to complete its
inquiry.
``(C) A copy of the report shall be provided concurrently
to the Council, the administrative law judge who is the
subject of the complaint, and the complainant. The Council
shall retain all reports filed under this section and such
reports shall be confidential, except that a recommendation
for disciplinary action shall be made available to the
public.
``(4) The recommendations of the panel shall include one of
the following:
``(A) Dismissal of all or part of the complaint.
``(B) Direct informal reprimand.
``(C) Direct formal reprimand.
``(D) Suspension.
``(E) Automatic referral to the Merit Systems Protection
Board on recommendations of removal.
``(5) The recommendations of the panel are binding on the
Council, unless the administrative law judge appeals to the
Merit Systems Protection Board.
``(j) Disciplinary Action.--Except as provided in
subsection (a)(2), the Council shall take appropriate
disciplinary action against the administrative law judge
based upon the report of the panel within 30 days after
receiving the report of the panel. Such disciplinary action
shall be enforced by the Council and shall be final unless
the administrative law judge files an appeal with the Merit
Systems Protection Board within 30 days after receiving
notice of such disciplinary action.
``(k) Recommendation for Relief to Agency, Department, or
Commission.--Based upon a finding of judicial misconduct by
an administrative law judge, the Council shall have authority
to recommend to the head of an agency, department or
commission that action may be taken to provide relief to
aggrieved individuals due to the judicial misconduct by an
administrative law judge.''.
(b) Appointments of Division Chief Judges.--It is the sense
of the Congress that the President should appoint as division
chief judges under section 599a(c) of title 5, United States
Code (as added by subsection (a) of this section),
individuals who have served as an administrative law judge
for at least 5 years.
(c) Administrative Provision.--Except as provided under
subchapter VI of chapter 5 of title 5, United States Code,
the chief administrative law judge and the division chief
judges appointed under such subchapter shall be deemed
administrative law judges appointed under section 3105.
(d) Technical and Conforming Amendment.--The table of
sections for chapter 5 of title 5, United States Code, is
amended by adding at the end thereof the following:

``SUBCHAPTER VI--ADMINISTRATIVE LAW JUDGE CORPS
``Sec.
``597. Definitions.
``598. Establishment; membership.
``599. Chief administrative law judge.
``599a. Divisions of the Corps; division chief judges.
``599b. Council of the Corps.
``599c. Appointment and transfer of administrative law judges.
``599d. Jurisdiction.
``599e. Removal and discipline.''.
SEC. 4. AGENCY REVIEW STUDY AND REPORT.

(a) Study.--The chief administrative law judge of the
Administrative Law Judge Corps of the United States shall
conduct a study of the various types and levels of agency
review to which decisions of administrative law judges are
subject. A separate study shall be conducted for each
division of the Corps. The studies shall include monitoring
and evaluating data and shall be conducted in consultation
with the division chief judges, the Chairman of the
Administrative Conference of the United States, and the
agencies that review the decisions of administrative law
judges.
(b) Report.--(1) Not later than 2 years after the effective
date of this Act, the Council shall report to the President
and the Congress on the findings and recommendations
resulting from the studies conducted under subsection (a).
(2) The report under paragraph (1) shall include
recommendations, including recommendations for new
legislation, for any reforms that may be appropriate to make
review of administrative law judges' decisions more efficient
and meaningful and to accord greater finality to such
decisions, except that all decisions subject, before the
effective date of this Act, to review pursuant to section
205(g) of the Social Security Act (42 U.S.C. 405(g)) shall
continue to be subject to such review pursuant to such
section.
(3) The report under paragraph (1) shall also include
recommendations for using staff more efficiently to decrease
backlogs, especially in the area of social security
disability cases.

SEC. 5. TRANSITION AND SAVINGS PROVISIONS.

(a) Transfer of Functions.--There are transferred to the
administrative law judges of the Administrative Law Judge
Corps established by section 598 of title 5, United States
Code (as added by section 3 of this Act), all functions
authorized to be performed on the day before the effective
date of this Act by the administrative law judges appointed
under section 3105 of such title before the effective date of
this Act.
(b) Use of Agency Facilities and Personnel.--With the
consent of the agencies concerned, the Administrative Law
Judge Corps of the United States may use the facilities and
the services of officers, employees, and other personnel of
agencies from which functions and duties are transferred to
the Corps for so long as may be needed to facilitate the
orderly transfer of those functions and duties under this
Act.
(c) Incidental Transfers.--The personnel, assets,
liabilities, contracts, property, records, and unexpended
balances of appropriations, authorizations, allocations, and
other funds employed, held, used, arising from, available or
to be made available, in connection with the functions
transferred by this Act, are, subject to section 1531 of
title 31, United States Code, transferred to the Corps for
appropriate allocation.
(d) Pay of Transferred Personnel.--The transfer of
personnel pursuant to subsection (b) or (c) shall be without
reduction in pay or classification for 5 years after such
transfer.
(e) Authorities of Director of OMB.--The Director of the
Office of Management and Budget, at such time or times as the
Director shall provide, may make such determinations as may
be necessary with regard to the functions transferred by this
Act, and to make such additional incidental dispositions of
personnel, assets, liabilities, grants, contracts, property,
records, and unexpended balances of appropriations,
authorizations, allocations, and other funds held, used,
arising from, available to, or to be made available in
connection with such functions, as may be necessary to carry
out the provisions of this Act.
(f) Continued Effectiveness of Prior Actions.--All orders,
determinations, rules, regulations, permits, contracts,
collective bargaining agreements, recognition of labor
organizations, certificates, licenses, and privileges which
have been issued, made, granted, or allowed to become
effective in the exercise of any duties, powers, or functions
which are transferred under this Act and are in effect at the
time this Act becomes effective shall continue in effect
according to their terms until modified, terminated,
superseded, set aside, or repealed by the Administrative Law
Judge Corps of the United States or a judge thereof in the
exercise of authority vested in the Corps or its members by
this Act, by a court of competent jurisdiction, or by
operation of law.
(g) Pending Proceedings.--(1) Except as provided in
subsections (d)(5) and (e) of section 599b of title 5, United
States Code, this Act shall not affect any proceeding before
any department or agency or component thereof which is
pending at the time this Act takes effect. Such a proceeding
shall be continued before the Administrative Law Judge Corps
of the United States or a judge thereof, or, to the extent
the proceeding does not relate to functions so transferred,
shall be continued before the agency in which it was pending
on the effective date of this Act.
(2) No suit, action, or other proceeding commenced before
the effective date of this Act shall abate by reason of the
enactment of this Act.
(h) Reports by Office of Management and Budget.--The
Director of the Office of Management and Budget shall monitor
and report to the Congress--
(1) 60 days after the effective date of this Act, on the
amount of all funds expended in fiscal year 1995 by each
agency on the functions transferred under this Act and the
amendments made by this Act;
(2) no later than October 1, 1995, on the amount of
unexpended balances of appropriations, authorizations,
allocations, and other funds transferred by all agencies to
the Administrative Law Judge Corps under this Act and the
amendments made by this Act; and
(3) 1 year after the effective date of this Act, and each
of the next 2 years thereafter on--
(A) whether the expenditure of each agency that transfers
functions and duties under this Act and the amendments made
by this Act are reduced by the amount of savings resulting
from the transfer of such functions and duties; and
(B) the Government savings resulting from transfer of such
functions to the Administrative Law Judge Corps and
recommendations to the Congress on how to achieve additional
savings.

SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated for each of fiscal
years 1996, 1997, 1998, 1999, and 2000 to carry out the
provisions of this Act and subchapter VI of title 5, United
States Code (as added by section 3 of this Act) such amounts
as may be necessary, not to exceed in any such fiscal year
the total amount expended by all agencies in fiscal year 1995
in performing all functions transferred under this Act and
the amendments made by this Act.

SEC. 7. TECHNICAL AND CONFORMING AMENDMENTS.

(a) Title 5, United States Code.--Title 5, United States
Code, is amended as follows:
(1) Section 593(b) is amended--
[[Page S3400]] (A) by redesignating paragraphs (4), (5),
and (6) as paragraphs (5), (6), and (7), respectively, and
(B) by inserting the following after paragraph (3):
``(4) the chief administrative law judge of the
Administrative Law Judge Corps of the United States;''.
(2) Section 3105 is amended to read as follows:

``Sec. 3105. Appointment of administrative law judges

``Administrative law judges shall be appointed by the
Council of the Administrative Law Judge Corps pursuant to
sections 596 and 599c of this title.''.
(3) Section 3344, and the item relating to section 3344 in
the table of sections for chapter 33, are repealed.
(4) Subchapter III of chapter 75, and the items relating to
subchapter III and section 7521 in the table of sections at
the beginning of chapter 75, are repealed.
(5) Section 559 is amended--
(A) in the first sentence by striking ``chapter 7'' and all
that follows through ``7521'' and inserting ``subchapter VI
of this chapter, chapter 7, and sections 1305, 3105,
4301(2)(E), and 5372''; and
(B) in the last sentence by striking ``chapter 7'' and all
that follows through ``7521'' and inserting ``subchapter VI
of this chapter, chapter 7, section 1305, 3105, 4301(2)(E),
or 5372''.
(6) Section 1305 is amended--
(A) by striking ``section 3105, 3344,'' and inserting
``sections 3105,''; and
(B) by striking ``, and for the purpose of section 7521 of
this title, the Merit Systems Protection Board may''.
(7) Section 5514(a)(2) is amended in the fourth sentence by
striking ``, except that'' and all that follows through
``administrative law judge''.
(8) Section 7105 is amended--
(A) in subsection (d) by striking ``, administrative law
judges under section 3105 of this title,''; and
(B) in subsection (e)(2) by striking ``under subsection (d)
of this section'' and inserting ``under section 3105 of this
title''.
(9) Section 7132(a) is amended by striking ``appointed by
the Authority under section 3105 of this title'' and
inserting ``appointed under section 3105 of this title who is
conducting hearings under this chapter''.
(10) Section 7502 is amended by striking ``7521 or''.
(11) Section 7512(E) is amended by striking ``or 7521''.
(b) Other Provisions of Law.--
(1) Section 6(c) of the Commodity Exchange Act is amended--
(A) in the second sentence (7 U.S.C. 9)--
(i) by striking ``Administrative Law Judge designated by
the Commission'' and inserting ``administrative law judge of
the Administrative Law Judge Corps''; and
(ii) by striking ``Administrative Law Judge'' and inserting
``administrative law judge''; and
(B) by striking ``Administrative Law Judge'' each
subsequent place it appears (7 U.S.C. 15) and inserting
``administrative law judge of the Administrative Law Judge
Corps''.
(2) Section 12(b) of the Commodity Exchange Act (7 U.S.C.
16(b)) is amended by striking ``Administrative Law Judges,''.
(3) Section 274B(e)(2) of the Immigration and Nationality
Act (8 U.S.C. 1324b(e)(2)) is amended by striking ``are
specially designated by the Attorney General as having'' and
inserting ``have''.
(4) Section 1416(a) of the Interstate Land Sales Full
Disclosure Act (15 U.S.C. 1715(a)) is amended--
(A) in the first sentence by inserting ``, subject to
section 599d of title 5, United States Code,'' after ``who
may'';
(B) by striking the second sentence; and
(C) in the third sentence by striking ``his administrative
law judges to other administrative law judges or'' and
inserting ``administrative law judges carrying out functions
under this title''.
(5) Section 488A(b) of the Higher Education Act of 1965 (20
U.S.C. 1095a(b)) is amended in the third sentence by striking
``, except that'' and all that follows through
``administrative law judge''.
(6) Section 509(1) of title 28, United States Code, is
amended--
(A) by striking ``subchapter II'' and inserting
``subchapters II and VI''; and
(B) by striking ``employed by the Department of Justice''.
(7) Section 12 of the Occupational Safety and Health Act of
1970 (29 U.S.C. 661) is amended--
(A) in subsection (e)--
(i) by striking ``administrative law judges and other'';
and
(ii) by striking ``: Provided'' and all that follows
through the end of the subsection and inserting a period;
(B) in subsection (j) in the first sentence by striking
``A'' and all that follows through ``Commission,'' and
inserting ``An administrative law judge to whom is assigned
any proceeding instituted before the Commission shall hear
and make a determination upon the proceeding and any motion
in connection with such proceeding,''; and
(C) by striking subsection (k).
(8) Section 502(e)(1) of the Rehabilitation Act of 1973 (29
U.S.C. 792(e)(1)) is amended by striking the second and third
sentences and inserting the following: ``Proceedings required
to be conducted under this section shall be presided over by
administrative law judges appointed under subchapter VI of
chapter 5 of title 5, United States Code.''.
(9) Section 166 of the Job Training Partnership Act (29
U.S.C. 1576(a)) is amended in the first sentence by striking
``of the Department of Labor''.
(10) Section 5(e) of the Federal Mine Safety and Health Act
of 1977 (30 U.S.C. 804(e)) is amended to read as follows:
``(e) Proceedings required to be conducted in accordance
with the provisions of this Act shall be presided over by
administrative law judges appointed under subchapter VI of
chapter 5 of title 5, United States Code.''.
(11) Section 113 of the Federal Mine Safety and Health Act
of 1977 (30 U.S.C. 823) is amended--
(A) in subsection (b)(2) by striking all that follows the
second sentence;
(B) in subsection (d)(1) in the first sentence by striking
``appointed by the Commission'' and all that follows through
``by the Commission,'' and inserting ``to whom is assigned
any proceeding instituted before the Commission shall hear
and make a determination upon the proceeding and any motion
in connection with the proceeding,''; and
(C) in subsection (e) in the first sentence by striking
``its'' each place it appears.
(12) Section 428(b) of the Black Lung Benefits Act (30
U.S.C. 938(b)) is amended by striking the seventh sentence.
(13) Section 321(c)(1) of title 31, United States Code, is
amended--
(A) by striking ``subchapter II'' and inserting
``subchapters II and VI''; and
(B) by striking ``employed by the Secretary''.
(14) Section 3801(a)(7)(A) of title 31, United States Code,
is amended by striking ``appointed in the authority'' and all
that follows through ``such title;'' and inserting ``of the
Administrative Law Judge Corps;''.
(15) Section 19(d) of the Longshore and Harbor Workers'
Compensation Act (33 U.S.C. 919(d)) is amended by amending
the second sentence to read as follows: ``Any such hearing
shall be conducted by an administrative law judge qualified
under subchapter VI of chapter 5 of that title.''.
(16) Section 21(b)(5) of the Longshore and Harbor Workers'
Compensation Act (33 U.S.C. 921(b)(5)) is amended by striking
the first sentence.
(17) Section 7101(b)(2)(B) of title 38, United States Code,
is amended by striking ``7521'' and inserting ``599e''.
(18) Section 8(b)(1) of the Contract Disputes Act of 1978
(41 U.S.C. 607(b)(1)) is amended in the first sentence by
striking ``hearing examiners appointed pursuant to section
3105 of title 5, United States Code'' and inserting
``administrative law judges appointed under section 3105 of
title 5, United States Code (as in effect on the day before
the effective date of the Reorganization of the Federal
Administrative Judiciary Act)''.
(19) Section 705(a) of the Civil Rights Act of 1964 (42
U.S.C. 2000e-4(a)) is amended--
(A) by striking ``administrative law judges,''; and
(B) by striking ``: Provided'' and all that follows through
the end of the subsection and inserting a period.
(20) Section 808(c) of the Act of April 11, 1968 (42 U.S.C.
3608(c)), is amended--
(A) in the first sentence by inserting ``, subject to
section 599d of title 5, United States Code,'' after ``The
Secretary may'';
(B) by striking the second sentence; and
(C) in the last sentence by striking ``his hearing
examiners to other hearing examiners or'' and inserting
``administrative law judges carrying out functions under this
title''.
(21) Section 806 of the Omnibus Crime Control and Safe
Streets Act of 1968 (42 U.S.C. 3787) is amended--
(A) in the first sentence by striking ``appoint such
hearing examiners'' and all that follows through ``United
States Code,'' and inserting ``, subject to section 599d of
title 5, United States Code, request the use of such
administrative law judges''; and
(B) in the second sentence by striking ``hearing examiner
or administrative law judge assigned to or employed thereby''
and inserting ``such administrative law judge''.
(22) Section 401(c) of the Department of Energy
Organization Act (42 U.S.C. 7171(c)) is amended by striking
``appointment and employment of hearing examiners in
accordance with the provisions of title 5,'' and inserting
``referral of cases to the Administrative Law Judge Corps in
accordance with subchapter VI of chapter 5 of title 5,''.
(23) Section 303(c)(3) of the Independent Safety Board Act
of 1974 (49 U.S.C. App. 1902(c)(3)) is amended by striking
``, attorneys, and administrative law judges'' and inserting
``and attorneys''.
(24) Section 304(b)(1) of the Independent Safety Board Act
of 1974 (49 U.S.C. App. 1903(b)(1)) is amended in the first
sentence by striking ``employed by or''.
(c) References in Other Laws.--Reference in any other
Federal law to an administrative law judge or hearing
examiner or to an administrative law judge, hearing examiner,
or employee appointed under section 3105 of title 5, United
States Code, shall be deemed to refer to an administrative
law judge of the Administrative Law Judge Corps established
by section 598 of title 5, United States Code.

SEC. 8. OPERATION OF THE CORPS.

Operation of the Corps shall commence on the date the first
chief administrative law judge of the Corps takes office.

SEC. 9. CONTRACT DISPUTES ACT.

Nothing in this Act or the amendments made by this Act
shall be deemed to affect
[[Page S3401]] any agency board established pursuant to the
Contract Disputes Act (41 U.S.C. 601 and following), or any
other person designated to resolve claims or disputes
pursuant to such Act.

SEC. 10. PAYMENT BY CERTAIN AGENCIES FOR ADMINISTRATIVE LAW
JUDGE SALARIES AND EXPENSES.

Any agency which before the effective date of this Act paid
the salaries and expenses of administrative law judges from
fees charged by such agency shall on and after the effective
date of this Act pay from such fees to the chief judge of the
Administrative Law Judge Corps, or the designee of the chief
judge, an amount necessary to reimburse the salaries and
expenses of the Corps for services provided by the Corps to
such agency.

SEC. 11. EFFECTIVE DATE.

Except as otherwise provided, this Act and the amendments
made by this Act shall take effect 120 days after the date of
the enactment of this Act.
______

By Mr. McCAIN (for himself and Mr. Inouye):
S. 487. A bill to amend the Indian Gaming Regulatory Act, and for
other purposes; to the Committee on Indian Affairs.

the indian gaming regulatory act amendments act of 1995

Mr. McCAIN. Mr. President, I am pleased to join today with the
vice chairman of the Committee on Indian Affairs, Senator Inouye, as
the sponsor of the Indian Gaming Regulatory Act Amendments Act of 1995.
I want to associate myself with Senator Inouye's remarks regarding this
legislation and the issue of Indian gaming. I commend Senator Inouye
for his outstanding leadership over the years on this complex issue.
The bill we are introducing today would provide for a major overhaul
of the Indian Gaming Regulatory Act of 1988. It will provide for
minimum Federal standards in the regulation and licensing of class II
and class III gaming as well as all of the contractors, suppliers, and
industries associated with such gaming. This will be accomplished
through the Federal Indian Gaming Regulatory Commission which will be
funded through assessments on Indian gaming revenues and fees imposed
on license applicants. The bill also provides a new process for the
negotiation of class III compacts which authorizes the Secretary of the
Department of the Interior to negotiate compacts with Indian tribes in
those instances where a State chooses not to participate in compact
negotiations or where an Indian tribe and a State cannot reach an
agreement on a compact. This process is consistent with recent Federal
court decisions.
In addition, the bill is consistent with the 1987 decision of the
U.S. Supreme Court in the case of California versus Cabazon Band of
Mission Indians in that it neither expands for further restricts the
scope of Indian Gaming. The laws of each State would continue to be the
basis for determining what gaming activities may be available to an
Indian tribe located in that State.
Since the enactment of the Indian Gaming Regulatory Act in 1988,
there has been a dramatic increase in the amount of gaming activity
among the Indian tribes. In 1993, Indian gaming was estimated to yield
gross revenues of about $4 billion per year and net revenues were
estimated at $750 million. Today, there are about 160 class II bingo
and card games in operation and there are now over 110 tribal/State
compacts governing class III gaming in 21 States. Indian gaming
comprises about 3 percent of all gaming in the United States. Gaming
activities operated by State governments
comprise about 36 percent of all gaming and the private sector
accounts for the balance of the gaming activity in the Nation.

Indian gaming has become the single largest source of economic
activity for Indian tribes. Annual revenues derived from Indian
agricultural resources have been estimated at $550 million and have
historically been the leading source of income for Indian tribes and
individuals. Annual revenues from oil, gas, and minerals are about $230
million and Indian forestry resources revenues are estimated at $61
million. The estimated annual earnings on gaming now equal or exceed
all of the revenues derived from Indian natural resources. In addition,
Indian gaming has generated tens of thousands of new jobs for Indians
and non-Indians. On many reservations gaming has meant the end of
unemployment rates of 90 or 100 percent and the beginning of an era of
full employment.
Under the Indian Gaming Regulatory Act of 1988, Indian tribes are
required to expend the profits from gaming activities to fund tribal
government operations or programs and to promote tribal economic
development. Profits may only be distributed directly to the members of
an Indian tribe under a plan which has been approved by the Secretary
of the Interior. Only a few such plans have been approved. Virtually
all of the proceeds from Indian gaming activities are used to fund the
social welfare, education, and health needs of the Indian tribes.
Schools, health facilities, roads, and other vital infrastructure is
being built by the Indian tribes with the proceeds from Indian gaming.
In the years before the enactment of the Indian Gaming Regulatory Act
and in the years since its enactment we have heard concerns about the
possibility for organized criminal elements to penetrate Indian gaming.
Both the Department of Justice and the FBI have repeatedly testified
before the Committee on Indian Affairs and have indicated that there is
not any substantial criminal activity of any kind associated with
Indian gaming. Some of our colleagues have suggested that no one would
know if there is criminal activity because not enough people are
looking for it. I believe that this point of view overlooks the fact
that the act provides for a very substantial regulatory and law
enforcement role by the States and Indian tribes in class III gaming
and by the Federal Government in class II gaming. The record clearly
shows that in the few instances of known criminal activity in class III
gaming, the Indian tribes have discovered the activity and have sought
Federal assistance in law enforcement.
Nevertheless, the record before the Committee on Indian Affairs also
shows that the absence of minimum Federal standards for the regulation
and licensing of Indian gaming has allowed a void to develop which will
become more and more attractive to criminal elements as Indian gaming
continues to generate increased revenues. The legislation we are
introducing today provides for the development of strict minimum
Federal standards based on the recommendations of Federal, State and
tribal officials. While Indian tribes or States, or both, will continue
to exercise primary regulatory authority, their regulatory standards
must meet or exceed the minimum Federal standards. In the event that
the Federal Indian Gaming Regulatory Commission determines that the
minimum Federal standards are not being met, then the Commission may
directly regulate the gaming activity until such time as the Federal
standards are met. In addition, the Commission is vested with authority
to issue and revoke licenses as well as to impose civil fines, close
Indian gaming facilities or seek enforcement of the act through the
Federal courts.
As many of our colleagues know, one of the areas which has caused the
greatest controversy under the current law relates to what has come to
be known as the scope of gaming. A related issue is the refusal of some
States to enter into negotiations for a class III compact and their
assertion of sovereign immunity under the 11th amendment to the
Constitution when an Indian tribe seeks judicial relief as provided by
the act. The bill we are introducing incorporates the explicit
standards of the Cabazon decision to guide all parties in determining
the permissible gaming activities under the laws of any State. State
laws will continue to govern this issue. We have not proposed the
preemption of the gaming laws of any State. In most States, the issue
of scope of gaming has now been settled through negotiation or
litigation. In a few States this issue remains unresolved, but appears
headed toward resolution by the courts.
In the course of our work on the gaming issue in the 103d Congress,
Senator Inouye and I advanced various formal and informal proposals for
Federal legislation to resolve the scope of gaming issue. In addition
proposals were developed by State and tribal officials. However, we
were never able to develop a consensus on any one proposal. While the
Committee on Indian Affairs remains open to suggestions on this issue,
it is apparent that obtaining a consensus may not be possible. This
[[Page S3402]] may be an area of the law best left to resolution
through the courts.
With regard to the issue of the refusal of some States to negotiate
and their assertion that the 1988 act violates the 11th amendment, the
U.S. Supreme Court recently agreed to hear a case which raises that
issue. As I noted earlier, the bill we are introducing today seeks to
resolve this issue on terms that are consistent with recent decisions
of the Federal courts.
Mr. President, I am sure that we will find many things to change in
this legislation as it moves through the Senate. However, I believe
that it provides a good foundation for our further consideration of
this important issue. I want to emphasize that this bill is intended to
stimulate discussion. I am looking forward to hearing from all
interested parties with regard to their constructive suggestions for
ways to improve the bill and move it forward.
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. 487

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 ``Indian Gaming Regulatory Act
Amendments Act of 1995''.

SEC. 2. AMENDMENTS TO THE INDIAN GAMING REGULATORY ACT.

The Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.)
is amended--
(1) by striking the first section and inserting the
following new section:
``SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

``Sec. 1. Short title; table of contents.
``Sec. 2. Congressional findings.
``Sec. 3. Purposes.
``Sec. 4. Definitions.
``Sec. 5. Establishment of the Federal Indian Gaming Regulatory
Commission.
``Sec. 6. Powers of the Chairperson.
``Sec. 7. Powers and authority of the Commission.
``Sec. 8. Regulatory framework.
``Sec. 9. Advisory Committee on Minimum Regulatory Requirements and
Licensing Standards.
``Sec. 10. Licensing.
``Sec. 11. Requirements for the conduct of class I and class II gaming
on Indian lands.
``Sec. 12. Class III gaming on Indian lands.
``Sec. 13. Review of contracts.
``Sec. 14. Review of existing contracts; interim authority.
``Sec. 15. Civil penalties.
``Sec. 16. Judicial review.
``Sec. 17. Commission funding.
``Sec. 18. Authorization of appropriations.
``Sec. 19. Miscellaneous.
``Sec. 20. Dissemination of information.
``Sec. 21. Severability.
``Sec. 22. Criminal penalties.
``Sec. 23. Conforming amendment.
``Sec. 24. Definition of financial institutions.'';

(2) by striking sections 2 through 19 and inserting the
following new sections:

``SEC. 2. CONGRESSIONAL FINDINGS.

``The Congress finds that--
``(1) Indian tribes are--
``(A) engaged in the operation of gaming activities on
Indian lands as a means of generating tribal governmental
revenue; and
``(B) licensing such activities;
``(2) clear Federal standards and regulations for the
conduct of gaming on Indian lands will assist tribal
governments in assuring the integrity of gaming activities
conducted on Indian lands;
``(3) a principal goal of Federal Indian policy is to
promote tribal economic development, tribal self-sufficiency,
and strong tribal government;
``(4) while Indian tribes have the right to regulate the
operation of gaming activities on Indian lands if such gaming
activities are--
``(A) not specifically prohibited by Federal law; and
``(B) conducted within a State that as a matter of public
policy permits such gaming activities,
Congress has the authority to regulate the privilege of doing
business with Indian tribes in Indian country (as defined in
section 1151 of title 18, United States Code);
``(5) systems for the regulation of gaming activities on
Indian lands should meet or exceed federally established
minimum regulatory requirements;
``(6) the operation of gaming activities on Indian lands
has had a significant impact on commerce with foreign
nations, among the several States and with the Indian tribes;
and
``(7) the Constitution vests the Congress with the powers
to regulate Commerce with foreign Nations, and among the
several States, and with the Indian Tribes, and this Act is
enacted in the exercise of those powers.

``SEC. 3. PURPOSES.

``The purposes of this Act are--
``(1) to ensure the right of Indian tribes to conduct
gaming activities on Indian lands in a manner consistent with
the decision of the Supreme Court in California et al. v.
Cabazon Band of Mission Indians et al. (480 U.S. 202, 107 S.
Ct. 1083, 94 L. Ed. 2d 244 (1987)), involving the Cabazon and
Morongo Bands of Mission Indians;
``(2) to provide a statutory basis for the conduct of
gaming activities on Indian lands as a means of promoting
tribal economic development, self-sufficiency, and strong
Indian tribal governments;
``(3) to provide a statutory basis for the regulation of
gaming activities on Indian lands by an Indian tribe adequate
to shield such activities from organized crime and other
corrupting influences, to ensure that an Indian tribal
government is the primary beneficiary of the operation of
gaming activities, and to ensure that gaming is conducted
fairly and honestly by both the operator and players; and
``(4) to declare that the establishment of independent
Federal regulatory authority for the conduct of gaming
activities on Indian lands and the establishment of Federal
minimum regulatory requirements for the conduct of gaming
activities on Indian lands are necessary to protect such
gaming.

``SEC. 4. DEFINITIONS.

``For purposes of this Act, the following definitions shall
apply:
``(1) Applicant.--The term `applicant' means any person who
applies for a license pursuant to this Act, including persons
applying for a renewal of a license.
``(2) Advisory committee.--The term `Advisory Committee'
means the Advisory Committee on Minimum Regulatory
Requirements and Licensing Standards established under
section 9(a).
``(3) Attorney general.--The term `Attorney General' means
the Attorney General of the United States.
``(4) Chairperson.--The term `Chairperson' means the
Chairperson of the Federal Indian Gaming Regulatory
Commission established under section 5.
``(5) Class i gaming.--The term `class I gaming' means
social games played solely for prizes of minimal value or
traditional forms of Indian gaming engaged in by individuals
as a part of, or in connection with, tribal ceremonies or
celebrations.
``(6) Class ii gaming.--
``(A) In general.--The term `class II gaming' means--
``(i) the game of chance commonly known as bingo or lotto
including, if played in the same location, pull-tabs, punch
boards, tip jars, instant bingo, and other games similar to
bingo (whether or not electronic, computer, or other
technologic aids are used in connection therewith)--

``(I) which is played for prizes, including monetary
prizes, with cards bearing numbers or other designations;
``(II) in which the holder of the card covers such numbers
or designations when objects, similarly numbered or
designated, are drawn or electronically determined; and
``(III) in which the game is won by the first person
covering a previously designated arrangement of numbers or
designations on such cards; and

``(ii) card games that--

``(I) are explicitly authorized by the laws of a State; or
``(II) are not explicitly prohibited by the laws of a State
and are played at any location in the State, but only if such
card games are played in conformity with any such laws
(including regulations) of the State regarding hours or
periods of operation of such card games or limitations on
wagers or pot sizes in such card games.

``(B) Exclusions.--The term `class II gaming' does not
include--
``(i) any banking card games, including baccarat, chemin de
fer, or blackjack (21); or
``(ii) gambling devices, as defined in paragraph (11),
except for any class II game that is played under
subparagraph (A)(i) with technologic aid that has been
approved by the Commission.
``(C) Treatment of certain games.--Notwithstanding any
other provision of this paragraph, the term `class II gaming'
includes those card games played in the State of Michigan,
the State of North Dakota, the State of South Dakota, or the
State of Washington, that, on or before May 1, 1988, were
actually operated in such State by an Indian tribe, but only
to the extent of the nature and scope of the card games that
were actually operated by an Indian tribe in such State on or
before such date, as determined by the Commission (as defined
in paragraph (8)).
``(7) Class iii gaming.--The term `class III gaming' means
all forms of gaming that are not class I gaming or class II
gaming.
``(8) Commission.--The term `Commission' means the Federal
Indian Gaming Regulatory Commission established under section
5.
``(9) Compact.--The term `compact' means an agreement
relating to the operation of class III gaming on Indian lands
entered into by an Indian tribe and a State, that is approved
by the Secretary, or an agreement relating to the operation
of class III gaming that is negotiated by an Indian tribe and
the Secretary, and approved by the Secretary.
``(10) Electronic, computer, or other technologic aid.--The
term `electronic,
[[Page S3403]] computer, or other technologic aid', in
connection with class II gaming, means a device, such as a
computer, telephone, cable, television, satellite, or bingo
blower, that, when used--
``(A) is not a game of chance or a gambling device;
``(B) merely assists a player or the playing of a game; and
``(C) is operated according to applicable Federal
communications law.
``(11) Electronic or electromechanical facsimile.--The term
`electronic or electromechanical facsimile' means any
gambling device, as defined in paragraph (12).
``(12) Gambling device.--The term `gambling device' means--
``(A) any gambling device, as defined in section 1(a) of
the Act of January 2, 1951 (commonly referred to as the
`Gambling Devices Transportation Act') (64 Stat. 1134,
chapter 1194; 15 U.S.C. 1171(a)), including any electronic or
electromechanical facsimile; and
``(B) does not include a technological aid to class II
gaming that is approved by the Commission.
``(13) Gaming-related contract.--The term `gaming-related
contract' means any agreement for an amount of more than
$50,000 per year--
``(A) under which an Indian tribe or an agent of any Indian
tribe procures gaming materials, supplies, equipment, or
services that are used in the conduct of a class II or class
III gaming activity, or
``(B) financing contracts or agreements for any facility in
which a gaming activity is to be conducted.
``(14) Gaming-related contractor.--The term `gaming-related
contractor' means any person who enters into a gaming-related
contract with an Indian tribe or an agent of an Indian tribe,
including any person with a financial interest in such
contract.
``(15) Gaming service industry.--The term `gaming service
industry' means any form of enterprise that provides goods or
services that are used in conjunction with any class II or
class III gaming activity, in any case in which--
``(A) the proposed agreement between the enterprise and a
class II or class III gaming operation, or the aggregate of
such agreements is for an amount of not less than $100,000
per year; or
``(B) the amount of business conducted by such enterprise
with any gaming operation in the 1-year period preceding the
effective date of such agreement was not less than $250,000.
``(16) Indian lands.--The term `Indian lands' means--
``(A) all lands within the limits of any Indian
reservation; and
``(B) any lands--
``(i) the title to which is held in trust by the United
States for the benefit of any Indian tribe; or
``(ii) the title to which is--

``(I) held by an Indian tribe subject to a restriction by
the United States against alienation;
``(II) held by the United States for the benefit of an
individual Indian; or
``(III) held by an individual subject to restriction by the
United States against alienation; and

``(iii) over which an Indian tribe exercises governmental
power.
``(17) Indian tribe.--The term `Indian tribe' means any
Indian tribe, band, nation, or other organized group or
community of Indians that--
``(A) is recognized as eligible by the Secretary for the
special programs and services provided by the United States
to Indians because of their status as Indians; and
``(B) is recognized as possessing powers of self-
government.
``(18) Key employee.--The term `key employee' means any
individual employed in a gaming operation licensed pursuant
to this Act in a supervisory capacity or empowered to make
any discretionary decision with regard to the gaming
operation, including any pit boss, shift boss, credit
executive, cashier supervisor, gaming facility manager or
assistant manager, or manager or supervisor of security
employees.
``(19) Management contract.--The term `management contract'
means any contract or collateral agreement between an Indian
tribe and a contractor, if such contract or agreement
provides for the management of all or part of a gaming
operation.
``(20) Management contractor.--The term `management
contractor' means any person entering into a management
contract with an Indian tribe or an agent of the Indian tribe
for the management of a gaming operation, including any
person with a financial interest in such contract.
``(21) Material control.--The term `material control' means
the exercise of authority or supervision or the power to make
or cause to be made any discretionary decision with regard to
matters which have a substantial effect on the financial or
management aspects of a gaming operation.
``(22) Net revenues.--The term `net revenues' means the
gross revenues of an Indian gaming activity reduced by the
sum of--
``(A) any amounts paid out or paid for as prizes; and
``(B) the total operating expenses associated with the
gaming activity, excluding management fees.
``(23) Person.--The term `person' means an individual,
firm, corporation, association, partnership, trust,
consortium, joint venture, entity, or gaming operation.
``(24) Secretary.--The term `Secretary' means the Secretary
of the Interior.

``SEC. 5. ESTABLISHMENT OF THE FEDERAL INDIAN GAMING
REGULATORY COMMISSION.

``(a) Establishment.--There is established as an
independent agency of the United States, a Commission to be
known as the Federal Indian Gaming Regulatory Commission.
Such Commission shall be an independent establishment, as
defined in section 104 of title 5, United States Code.
``(b) Composition of the Commission.--
``(1) In general.--The Commission shall be composed of 3
full-time members, who shall be appointed by the President,
by and with the advice and consent of the Senate.
``(2) Citizenship of members.--Each member of the
Commission shall be a citizen of the United States.
``(3) Requirements for members.--No member of the
Commission may--
``(A) pursue any other business or occupation or hold any
other office;
``(B) be actively engaged in or, other than through
distribution of gaming revenues as a member of an Indian
tribe, have any direct pecuniary interest in gaming
activities;
``(C) other than through distribution of gaming revenues as
a member of an Indian tribe, have any pecuniary interest in
any business or organization that holds a gaming license
under this Act or that does business with any person or
organization licensed under this Act;
``(D) have been convicted of a felony or gaming offense; or
``(E) have any financial interest in, or management
responsibility for, any gaming-related contract or any other
contract approved pursuant to this Act.
``(4) Political affiliation.--
``(A) In general.--Not more than 2 members of the
Commission shall be members of the same political party. In
making appointments to the Commission, the President shall
appoint members of different political parties, to the extent
practicable.
``(B) Tribal membership.--At least 2 members of the
Commission shall each be a member of a federally recognized
Indian tribe. No 2 members appointed under this subparagraph
shall be members of the same Indian tribe.
``(5) Additional requirements.--The Commission shall be
composed of the most qualified individuals available, subject
to the following conditions:
``(A) Certified public accountant representation.--One
member of the Commission shall be a certified public
accountant with not less than 5 years of progressively
responsible experience in accounting and auditing, and a
comprehensive knowledge of the principles and practices of
corporate finance.
``(B) Law enforcement representation.--One member of the
Commission shall be selected with special reference to
training and experience in the fields of investigation or law
enforcement.
``(6) Background investigations.--The Attorney General
shall conduct a background investigation concerning any
individual under consideration for appointment to the
Commission, with particular regard to the financial
stability, integrity, responsibility, and reputation for good
character, honesty, and integrity of the nominee.
``(c) Chairperson.--The President shall select a
Chairperson from among the members appointed to the
Commission.
``(d) Vice Chairperson.--The Commission shall select, by
majority vote, one of the members of the Commission to serve
as Vice Chairperson. The Vice Chairperson shall--
``(1) serve as Chairperson of the Commission in the absence
of the Chairperson; and
``(2) exercise such other powers as may be delegated by the
Chairperson.
``(e) Terms of Office.--
``(1) In general.--Each member of the Commission shall hold
office for a term of 5 years.
``(2) Initial appointments.--Initial appointments to the
Commission shall be made for the following terms:
``(A) The Chairperson shall be appointed for a term of 5
years.
``(B) One member shall be appointed for a term of 4 years.
``(C) One member shall be appointed for a term of 3 years.
``(3) Limitation.--No member shall serve for more than 2
terms of 5 years each.
``(f) Vacancies.--
``(1) In general.--Each individual appointed by the
President to serve as Chairperson and each member of the
Commission shall, unless removed for cause under paragraph
(2), serve in the capacity for which such individual is
appointed until the expiration of the term of such individual
or until a successor is duly appointed and qualified.
``(2) Removal from office.--The Chairperson or any member
of the Commission may only be removed from office before the
expiration of the term of office by the President for neglect
of duty, malfeasance in office, or for other good cause
shown.
``(3) Term to fill vacancies.--The term of any member
appointed to fill a vacancy on the Commission shall be for
the unexpired term of the member.
``(g) Quorum.--Two members of the Commission shall
constitute a quorum.
``(h) Meetings.--
``(1) In general.--The Commission shall meet at the call of
the Chairperson or a majority of the members of the
Commission.
[[Page S3404]] ``(2) Majority of members determine
action.--A majority of the members of the Commission shall
determine any action of the Commission.
``(i) Compensation.--
``(1) Chairperson.--The Chairperson shall be paid at a rate
equal to that of level IV of the Executive Schedule under
section 5316 of title 5, United States Code.
``(2) Other members.--Each other member of the Commission
shall be paid at a rate equal to that of level V of the
Executive Schedule under section 5316 of title 5, United
States Code.
``(3) Travel.--All members of the Commission shall be
reimbursed in accordance with title 5, United States Code,
for travel, subsistence, and other necessary expenses
incurred by them in the performance of their duties.
``(j) Administrative Support Services.--The Administrator
of General Services shall provide to the Commission on a
reimbursable basis such administrative support services as
the Commission may request.

``SEC. 6. POWERS OF THE CHAIRPERSON.

``(a) Chief Executive Officer.--The Chairperson shall serve
as the chief executive officer of the Commission.
``(b) Administration of the Commission.--
``(1) In general.--Subject to subsection (c), the
Chairperson--
``(A) shall employ and supervise such personnel as the
Chairperson considers necessary to carry out the functions of
the Commission, and assign work among such personnel;
``(B) shall appoint a General Counsel to the Commission who
shall be paid at the annual rate of basic pay payable for ES-
6 of the Senior Executive Service Schedule under section 5382
of title 5, United States Code;
``(C) shall appoint and supervise other staff of the
Commission without regard to the provisions of title 5,
United States Code, governing appointments in the competitive
service;
``(D) may procure temporary and intermittent services under
section 3109(b) of title 5, United States Code, but at rates
for individuals not to exceed the daily equivalent of the
maximum annual rate of basic pay payable for ES-6 of the
Senior Executive Service Schedule;
``(E) may request the head of any Federal agency to detail
any personnel of such agency to the Commission to assist the
Commission in carrying out the duties of the Commission under
this Act, unless otherwise prohibited by law;
``(F) shall use and expend Federal funds and funds
collected pursuant to section 17; and
``(G) may contract for the services of such other
professional, technical, and operational personnel and
consultants as may be necessary to the performance of the
Commission's responsibilities under this Act.
``(2) Compensation of staff.--The staff referred to in
paragraph (1)(C) shall be paid without regard to the
provisions of chapter 51 and subchapters III and VIII of
chapter 53 of title 5, United States Code, relating to
classification and General Schedule and Senior Executive
Service Schedule pay rates, except that no individual so
appointed may receive pay in excess of the annual rate of
basic pay payable for ES-5 of the Senior Executive Service
Schedule under section 5382 of title 5, United States Code.
``(c) Applicable Policies.--In carrying out any of the
functions under this section, the Chairperson shall be
governed by the general policies of the Commission and by
such regulatory decisions, findings, and determinations as
the Commission may by law be authorized to make.

``SEC. 7. POWERS AND AUTHORITY OF THE COMMISSION.

``(a) General Powers.--
``(1) In general.--The Commission shall have the power to--
``(A) approve the annual budget of the Commission;
``(B) promulgate regulations to carry out this Act;
``(C) establish a rate of fees and assessments, as provided
in section 17;
``(D) conduct investigations, including background
investigations;
``(E) issue a temporary order closing the operation of
gaming activities;
``(F) after a hearing, make permanent a temporary order
closing the operation of gaming activities, as provided in
section 15;
``(G) grant, deny, limit, condition, restrict, revoke, or
suspend any license issued under any licensing authority
conferred upon the Commission pursuant to this Act or fine
any person licensed pursuant to this Act for violation of any
of the conditions of licensure under this Act;
``(H) inspect and examine all premises in which class II or
class III gaming is conducted on Indian lands;
``(I) demand access to and inspect, examine, photocopy, and
audit all papers, books, and records of class II and class
III gaming activities conducted on Indian lands and any other
matters necessary to carry out the duties of the Commission
under this Act;
``(J) use the United States mail in the same manner and
under the same conditions as any department or agency of the
United States;
``(K) procure supplies, services, and property by contract
in accordance with applicable Federal laws;
``(L) enter into contracts with Federal, State, tribal, and
private entities for activities necessary to the discharge of
the duties of the Commission;
``(M) serve or cause to be served process or notices of the
Commission in a manner provided for by the Commission or in a
manner provided for the service of process and notice in
civil actions in accordance with the applicable rules of a
tribal, State, or Federal court;
``(N) propound written interrogatories and appoint hearing
examiners, to whom may be delegated the power and authority
to administer oaths, issue subpoenas, propound written
interrogatories, and require testimony under oath;
``(O) conduct all administrative hearings pertaining to
civil violations of this Act (including any civil violation
of a regulation promulgated under this Act);
``(P) collect all fees and assessments authorized by this
Act and the regulations promulgated pursuant to this Act;
``(Q) assess penalties for violations of the provisions of
this Act and the regulations promulgated pursuant to this
Act;
``(R) provide training and technical assistance to Indian
tribes with respect to all aspects of the conduct and
regulation of gaming activities;
``(S) monitor and, as specifically authorized by this Act,
regulate class II and class III gaming;
``(T) approve all management-related and gaming-related
contracts; and
``(U) in addition to the authorities otherwise specified in
this Act, delegate, by published order or rule, any of the
functions of the Commission (including functions with respect
to hearing, determining, ordering, certifying, reporting, or
otherwise acting on the part of the Commission concerning any
work, business, or matter) to a division of the Commission,
an individual member of the Commission, an administrative law
judge, or an employee of the Commission.
``(2) Statutory construction.--Nothing in this section may
be construed to authorize the delegation of the function of
rulemaking, as described in subchapter II of chapter 5 of
title 5, United States Code, with respect to general rules
(as distinguished from rules of particular applicability), or
the promulgation of any other rule.
``(b) Right To Review Delegated Functions.--
``(1) In general.--With respect to the delegation of any of
the functions of the Commission, the Commission shall retain
a discretionary right to review the action of any division of
the Commission, individual member of the Commission,
administrative law judge, or employee of the Commission, upon
the initiative of the Commission.
``(2) Vote needed for review.--The vote of one member of
the Commission shall be sufficient to bring an action
referred to in paragraph (1) before the Commission for
review, and the Commission shall ratify, revise, or reject
the action under review not later than the last day of the
applicable period specified in regulations promulgated by the
Commission.
``(3) Failure to conduct review.--If the Commission
declines to exercise the right to such review or fails to
exercise such right within the applicable period specified in
regulations promulgated by the Commission, the action of any
such division of the Commission, individual member of the
Commission, administrative law judge, or employee, shall, for
all purposes, including any appeal or review of such action,
be deemed an action of the Commission.
``(c) Minimum Requirements.--Pursuant to the procedures
described in section 9(d), after receiving recommendations
from the Advisory Committee, the Commission shall establish
minimum Federal standards--
``(1) for background investigations, licensing of persons,
and licensing of gaming operations associated with the
conduct or regulation of class II and class III gaming on
Indian lands by tribal governments; and
``(2) for the operation of class II and class III gaming
activities on Indian lands, including--
``(A) surveillance and security personnel and systems
capable of monitoring all gaming activities, including the
conduct of games, cashiers' cages, change booths, count
rooms, movements of cash and chips, entrances and exits to
gaming facilities, and other critical areas of any gaming
facility;
``(B) procedures for the protection of the integrity of the
rules for the play of games and controls related to such
rules;
``(C) credit and debit collection controls;
``(D) controls over gambling devices and equipment; and
``(E) accounting and auditing.
``(d) Commission Access to Information.--
``(1) In general.--The Commission may secure from any
department or agency of the United States information
necessary to enable the Commission to carry out this Act.
Unless otherwise prohibited by law, upon request of the
Chairperson, the head of such department or agency shall
furnish such information to the Commission.
``(2) Information transfer.--The Commission may secure from
any law enforcement or gaming regulatory agency of any State,
Indian tribe, or foreign nation information necessary to
enable the Commission to carry out this Act. Unless otherwise
prohibited by law, upon request of the Chairperson, the head
of any State or tribal law enforcement agency shall furnish
such information to the Commission.
``(3) Privileged information.--Notwithstanding sections 552
and 552a of title 5, United States Code, the Commission shall
protect from disclosure information provided by
[[Page S3405]] Federal, State, tribal, or international law
enforcement or gaming regulatory agencies.
``(4) Law enforcement agency.--For purposes of this
subsection, the Commission shall be considered a law
enforcement agency.
``(e) Investigations and Actions.--
``(1) In general.--
``(A) Possible violations.--The Commission may, at the
discretion of the Commission, and as specifically authorized
by this Act, conduct such investigations as the Commission
considers necessary to determine whether any person has
violated, is violating, or is conspiring to violate any
provision of this Act (including any rule or regulation
promulgated under this Act). The Commission may require or
permit any person to file with the Commission a statement in
writing, under oath, or otherwise as the Commission may
determine, concerning all of the relevant facts and
circumstances regarding the matter under investigation by the
Commission pursuant to this subsection.
``(B) Administrative investigations.--The Commission is
authorized, at the discretion of the Commission, and as
specifically authorized by this Act, to investigate such
facts, conditions, practices, or matters as the Commission
considers necessary or proper to aid in--
``(i) the enforcement of any provision of this Act;
``(ii) prescribing rules and regulations under this Act; or
``(iii) securing information to serve as a basis for
recommending further legislation concerning the matters to
which this Act relates.
``(2) Administrative authorities.--
``(A) In general.--For the purpose of any investigation or
any other proceeding conducted under this Act, any member of
the Commission or any officer designated by the Commission is
empowered to administer oaths and affirmations, subpoena
witnesses, compel their attendance, take evidence, and
require the production of any books, papers, correspondence,
memoranda, or other records that the Commission considers
relevant or material to the inquiry. The attendance of such
witnesses and the production of any such records may be
required from any place in the United States at any
designated place of hearing.
``(B) Requiring appearances or testimony.--In case of
contumacy by, or refusal to obey any subpoena issued to, any
person, the Commission may invoke the jurisdiction of any
court of the United States within the jurisdiction of which
an investigation or proceeding is carried on, or where such
person resides or carries on business, in requiring the
attendance and testimony of witnesses and the production of
books, papers, correspondence, memoranda, and other records.
``(C) Court orders.--Any such court may issue an order
requiring such person to appear before the Commission or
member of the Commission or officer designated by the
Commission, there to produce records, if so ordered, or to
give testimony touching the matter under investigation or in
question, and any failure to obey such order of the court may
be punished by such court as a contempt of such court.
``(3) Enforcement.--
``(A) In general.--If the Commission determines that any
person is engaged, has engaged, or is conspiring to engage,
in any act or practice constituting a violation of any
provision of this Act (including any rule or regulation
promulgated under this Act), the Commission may--
``(i) bring an action in the appropriate district court of
the United States or the United States District Court for the
District of Columbia to enjoin such act or practice, and upon
a proper showing, the court shall grant, without bond, a
permanent or temporary injunction or restraining order; or
``(ii) transmit such evidence as may be available
concerning such act or practice as may constitute a violation
of any Federal criminal law to the Attorney General, who may
institute the necessary criminal proceedings.
``(B) Statutory construction.--The authority of the
Commission to conduct investigations and take actions may not
be construed to affect in any way the authority of any other
agency or department of the United States to carry out
statutory responsibilities of such agency or department.
``(4) Writs, injunctions, and orders.--Upon application of
the Commission, each district court of the United States
shall have jurisdiction to issue writs of mandamus,
injunctions, and orders commanding any person to comply with
the provisions of this Act (including any rules and
regulations promulgated under this Act).

``SEC. 8. REGULATORY FRAMEWORK.

``(a) Class II Gaming.--For class II gaming, Indian tribes
shall retain the right of such tribes to, in a manner that
meets or exceeds minimum Federal standards established by the
Commission pursuant to section 7(c)--
``(1) monitor and regulate such gaming; and
``(2) conduct background investigations and issue licenses
to persons who are required to obtain a license under section
10(a).
``(b) Class III Gaming Conducted Under a Tribal-State
Compact.--For class III gaming conducted under the authority
of a tribal-State compact entered into pursuant to section
12, an Indian tribe or a State, or both, as provided in a
compact or by tribal ordinance or resolution, shall, in a
manner that meets or exceeds minimum Federal standards
established by the Commission pursuant to section 7(c)--
``(1) monitor and regulate gaming;
``(2) conduct background investigations and issue licenses
to persons who are required to obtain a license pursuant to
section 10(a); and
``(3) establish and regulate internal control systems.
``(c) Certain Other Compacts.--For class III gaming
conducted under the authority of a compact negotiated with
the Secretary pursuant to section 12(a)(2), such compact
shall provide that the Indian tribes or other appropriate
entity shall, in a manner that meets or exceeds minimum
Federal standards established by the Commission pursuant to
section 7(c)--
``(1) monitor and regulate such gaming;
``(2) conduct background investigations and issue licenses
to persons who are required to obtain a license pursuant to
section 10(a); and
``(3) establish and regulate internal control systems.
``(d) Violations of Minimum Federal Standards.--
``(1) Class ii gaming.--In any case in which an Indian
tribe that conducts class II gaming substantially fails to
meet minimum Federal standards for class II gaming, after
providing the Indian tribe notice and opportunity to cure
violations and to be heard, and after the exhaustion of other
authorized remedies and sanctions, the Commission shall have
the authority to conduct background investigations, issue
licenses, and establish and regulate internal control
systems. Such authority of the Commission may be exclusive
until such time as the regulatory and internal control
systems of the Indian tribe meet or exceed the minimum
Federal standards concerning regulatory, licensing, or
internal control requirements established by the Commission.
``(2) Class iii gaming.--In any case in which an Indian
tribe or a State (or both) that regulates class III gaming
fails to meet or exceed minimum Federal standards for class
III gaming, after providing notice and opportunity to cure
violations and be heard, and after the exhaustion of other
authorized remedies and sanctions, the Commission shall have
the authority to conduct background investigations, issue
licenses, and establish and regulate internal control
systems. Such authority of the Commission may be exclusive
until such time as the regulatory or internal control systems
of the Indian tribe or a State, or both, meet or exceed the
minimum regulatory, licensing, or internal control
requirements established by the Commission.

``SEC. 9. ADVISORY COMMITTEE ON MINIMUM REGULATORY
REQUIREMENTS AND LICENSING STANDARDS.

``(a) Establishment.--The President shall establish an
advisory committee to be known as the `Advisory Committee on
Minimum Regulatory Requirements and Licensing Standards'.
``(b) Members.--The Advisory Committee shall be composed of
7 members who shall be appointed by the President, of which--
``(1) 3 members, selected from a list of recommendations
submitted to the President by the Chairperson and Vice
Chairperson of the Committee on Indian Affairs of the Senate
and the Chairperson and ranking minority member of the
Subcommittee on Native American and Insular Affairs of the
Committee on Resources of the House of Representatives, shall
be members of federally recognized Indian tribes involved in
gaming covered under this Act;
``(2) 2 members, selected from a list of recommendations
submitted to the President by the Majority Leader and the
Minority Leader of the Senate and the Speaker and the
Minority Leader of the House of Representatives, shall
represent State governments; and
``(3) 2 members shall each be an employee of the Department
of Justice.
``(c) Recommendations for Minimum Federal Standards.--
``(1) In general.--Not later than 180 days after the date
on which the Advisory Committee is fully constituted, the
Advisory Committee shall develop and submit to the entities
referred to in paragraph (2) recommendations for minimum
Federal standards for the conduct of background
investigations and the establishment of internal control
systems and licensing standards.
``(2) Recipients of recommendations.--The Advisory
Committee shall submit the recommendations described in
paragraph (1) to the Committee on Indian Affairs of the
Senate, the Subcommittee on Native American and Insular
Affairs of the Committee on Resources of the House of
Representatives, the Commission, and to each federally
recognized Indian tribe.
``(3) Factors for consideration.--While the minimum
standards established pursuant to this section may be
developed in light of existing industry standards, the
Advisory Committee, and Commission in promulgating standards
pursuant to subsection (d), shall give equal weight to--
``(A) the unique nature of tribal gaming as compared to
non-Indian commercial, governmental, and charitable gaming;
``(B) the broad variations in the scope and size of tribal
gaming activity;
``(C) the inherent sovereign right of Indian tribes to
regulate their own affairs; and
``(D) the findings and purposes set forth in sections 2 and
3.
[[Page S3406]] ``(d) Regulations.--Upon receipt of the
recommendations of the Advisory Committee, the Commission
shall hold public hearings on the recommendations. After the
conclusion of the hearings, the Commission shall promulgate
regulations establishing minimum regulatory requirements and
licensing standards.
``(e) Travel.--Members of the Advisory Committee appointed
under paragraphs (1) and (2) of subsection (b) shall be
reimbursed for travel and per diem in lieu of subsistence
expenses during the performance of duties of the Advisory
Committee while away from home or their regular place of
business, in accordance with subchapter I of chapter 57 of
title 5, United States Code.
``(f) Termination.--The Advisory Committee shall cease to
exist on the date that is 60 days after the date on which the
Advisory Committee submits the recommendations under
subsection (c).
``(g) Exemption From Federal Advisory Committee Act.--All
activities of the Advisory Committee shall be exempt from the
Federal Advisory Committee Act (5 U.S.C. App.).

``SEC. 10. LICENSING.

``(a) In General.--A license issued under this Act shall be
required of--
``(1) gaming operations;
``(2) key employees of a gaming operation;
``(3) management- and gaming-related contractors;
``(4) any gaming service industry; and
``(5) any person who has material control, either directly
or indirectly, over a licensed gaming operation.
``(b) Certain Licenses for Management Contractors and
Gaming Operations.--Notwithstanding any other provision of
law relating to licenses issued by an Indian tribe or a State
(or both) pursuant to this Act, the Commission may require
licenses of--
``(1) management contractors; and
``(2) gaming operations.
``(c) Statement of Compliance.--
``(1) In general.--The Commission may issue a statement of
compliance to an applicant for any license or for
qualification status under this Act at any time that the
Commission is satisfied that one or more eligibility criteria
for the license have been satisfied by an applicant.
``(2) Contents of statement.--A statement issued under
subparagraph (A) shall specify the eligibility criterion
satisfied, the date of such satisfaction, and a reservation
by the Commission permitting the Commission to revoke the
statement of compliance at any time on the basis of a change
of circumstances affecting such compliance.
``(d) Gaming Operation License.--
``(1) In general.--No gaming operation shall operate unless
all required licenses and approvals for the gaming operation
have been obtained in accordance with this Act.
``(2) Written agreements.--
``(A) Filing.--Prior to the operation of any gaming
facility or activity, each management contract for the gaming
operation shall be in writing and filed with the Commission
pursuant to section 13.
``(B) Express approval required.--No such agreement shall
be effective unless the Commission expressly approves the
agreement.
``(C) Requirement of additional provisions.--The Commission
may require that an agreement referred to in subparagraph (A)
includes any provisions that are reasonably necessary to meet
the requirements of this Act.
``(D) Ineligibility or exemption.--Any applicant who does
not have the ability to exercise any significant control over
a licensed gaming operation may be determined by the
Commission to be ineligible to hold a license or may exempt
such applicant from being required to hold a license.
``(e) Denial of License.--The Commission, in the exercise
of the specific licensure power conferred upon the Commission
by this Act, shall deny a license to any applicant who is
disqualified on the basis of a failure to meet any of the
minimum Federal standards promulgated by the Commission
pursuant to section 7(c).
``(f) Application for License.--
``(1) In general.--Upon the filing of the materials
specified in paragraph (2), the Commission shall conduct an
investigation into the qualifications of an applicant. The
Commission may conduct a nonpublic hearing on such
investigation concerning the qualifications of the applicant
in accordance with regulations promulgated by the Commission.
``(2) Filing of materials.--The Commission shall carry out
paragraph (1) upon the filing of--
``(A) an application for a license that the Commission is
specifically authorized to issue pursuant to this Act; and
``(B) such supplemental information as the Commission may
require.
``(3) Timing of final action.--After an application is
submitted to the Commission, the Commission shall take final
action not later than 90 days after--
``(A) completing all hearings and investigations concerning
the application; and
``(B) receiving all information required to be submitted to
the Commission.
``(4) Deadline for hearings and investigations.--Not later
than 90 days after receiving the information described in
paragraph (3)(B), the Commission shall complete the hearings
and investigations described in paragraph (3)(A).
``(5) Action by commission.--Following the completion of an
investigation and hearing, the Commission shall either deny
or grant a license to an applicant.
``(6) Denials.--
``(A) In general.--The Commission may deny any application
pursuant to this Act.
``(B) Order of denial.--If the Commission denies an
application submitted under this section, the Commission
shall prepare an order denying such application. In addition,
if an applicant requests a statement of the reasons for the
denial, the Commission shall prepare such statement and
provide the statement to the applicant. The statement shall
include specific findings of fact.
``(7) Issuance of licenses.--If the Commission is satisfied
that an applicant is qualified to receive a license, the
Commission shall issue a license to the applicant upon tender
of--
``(A) all license fees and assessments as required by this
Act (including regulations promulgated by the Commission
under this Act); and
``(B) such bonds as the Commission may require for the
faithful performance of all requirements imposed by this Act
(including regulations promulgated under this Act).
``(8) Bonds.--
``(A) Amounts.--The Commission shall, by rules of uniform
application, fix the amount of each bond that the Commission
requires under this section in such amount as the Commission
considers appropriate.
``(B) Use of bonds.--The bonds furnished to the Commission
under this paragraph may be applied by the Commission to the
payment of any unpaid liability of the licensee under this
Act.
``(C) Terms.--Each bond required in accordance with this
section shall be furnished--
``(i) in cash or negotiable securities;
``(ii) by a surety bond guaranteed by a satisfactory
guarantor; or
``(iii) by an irrevocable letter of credit issued by a
banking institution acceptable to the Commission.
``(D) Treatment of principal and income.--If a bond is
furnished in cash or negotiable securities, the principal
shall be placed without restriction at the disposal of the
Commission, but any income shall inure to the benefit of the
licensee.
``(g) Renewal of License.--
``(1) In general.--
``(A) Renewals.--Subject to the power of the Commission to
deny, revoke, or suspend licenses, any license issued under
this section and in force shall be renewed by the Commission
for the next succeeding license period upon proper
application for renewal and payment of license fees and
assessments, as required by applicable law (including
regulations of the Commission).
``(B) Renewal term.--Subject to subparagraph (C), the term
of a renewal period for a license issued under this section
shall be for a period of not more than--
``(i) 2 years, for each of the first 2 renewal periods
succeeding the initial issuance of a license pursuant to
subsection (f); and
``(ii) 3 years, for each succeeding renewal period.
``(C) Reopening hearings.--The Commission may reopen
licensing hearings at any time after the Commission has
issued or renewed a license.
``(2) Transition.--
``(A) In general.--Notwithstanding any other provision of
this subsection, the Commission shall, for the purpose of
facilitating the administration of this Act, renew a license
for an activity covered under subsection (a) that is held by
a person on the date of enactment of the Indian Gaming
Regulatory Act Amendments Act of 1995 for a renewal period of
18 months.
``(B) Action before expiration.--The Commission shall act
upon any license renewal application that is filed in a
timely manner prior to the date of expiration of the then
current license.
``(3) Filing requirement.--Each application for renewal
shall be filed with the Commission not later than 90 days
prior to the expiration of the then current license. All
license fees and assessments that are required by law shall
be paid to the Commission on or before the date of expiration
of the then current license.
``(4) Renewal certificate.--Upon renewal of a license, the
Commission shall issue an appropriate renewal certificate,
validating device, or sticker, which shall be attached to the
license.
``(h) Hearings.--
``(1) In general.--The Commission shall establish
procedures for the conduct of hearings associated with
licensing, including procedures for denying, limiting,
conditioning, restricting, revoking, or suspending any such
license.
``(2) Action by commission.--Following a hearing conducted
for any of the purposes authorized in this section, the
Commission shall--
``(A) render a decision of the Commission;
``(B) issue an order; and
``(C) serve such decision and order upon the affected
parties.
``(3) Rehearing.--
``(A) In general.--The Commission may, upon a motion made
not later than 10 days after the service of a decision and
order, order a rehearing before the Commission on such terms
and conditions as the Commission considers just and proper if
the Commission finds cause to believe that the decision and
order should be reconsidered in view of
[[Page S3407]] the legal, policy, or factual matters that
are--
``(i) advanced by the party that makes the motion; or
``(ii) raised by the Commission on a motion made by the
Commission.
``(B) Action after rehearing.--Following a rehearing
conducted by the Commission, the Commission shall--
``(i) render a decision of the Commission;
``(ii) issue an order; and
``(iii) serve such decision and order upon the affected
parties.
``(C) Final agency action.--A decision and order made by
the Commission under paragraph (2) (if no motion for a
rehearing is made), or a decision and order made by the
Commission upon rehearing shall constitute final agency
action for purposes of judicial review.
``(4) Jurisdiction.--The United States Court of Appeals for
the District of Columbia Circuit shall have jurisdiction to
review the licensing decisions and orders of the Commission.
``(i) License Registry.--The Commission shall--
``(1) maintain a registry of all licenses that are granted
or denied pursuant to this Act; and
``(2) make the information contained in the registry
available to Indian tribes to assist the licensure and
regulatory activities of Indian tribes.

``SEC. 11. REQUIREMENTS FOR THE CONDUCT OF CLASS I AND CLASS
II GAMING ON INDIAN LANDS.

``(a) Class I Gaming.--Class I gaming on Indian lands shall
be within the exclusive jurisdiction of the Indian tribes and
shall not be subject to the provisions of this Act.
``(b) Class II Gaming.--
``(1) In general.--Any class II gaming on Indian lands
shall be within the jurisdiction of the Indian tribes, but
shall be subject to the provisions of this Act.
``(2) Legal activities.--An Indian tribe may engage in, and
license and regulate, class II gaming on Indian lands within
the jurisdiction of such tribe, if--
``(A) such Indian gaming is located within a State that
permits such gaming for any purpose by any person; and
``(B) the class II gaming operation meets or exceeds the
requirements of sections 7(c) and 10.
``(3) Requirements for class ii gaming operations.--
``(A) In general.--The Commission shall ensure that with
regard to any class II gaming operation on Indian lands--
``(i) a separate license is issued by the Indian tribe for
each place, facility, or location on Indian lands at which
class II gaming is conducted;
``(ii) the Indian tribe has or will have the sole
proprietary interest and responsibility for the conduct of
any class II gaming activity, unless the conditions of clause
(ix) apply;
``(iii) the net revenues from any class II gaming activity
may only be used--

``(I) to fund tribal government operations or programs;
``(II) to provide for the general welfare of the Indian
tribe and the members of the Indian tribe;
``(III) to promote tribal economic development;
``(IV) to donate to charitable organizations;
``(V) to help fund operations of local government agencies;
or
``(VI) to comply with the provisions of section 17;

``(iv) the Indian tribe shall provide to the Commission
annual outside audits of the class II gaming operation of the
Indian tribe, which may be encompassed within existing
independent tribal audit systems;
``(v) all contracts for supplies, services, or concessions
for a contract amount equal to more than $50,000 per year,
other than contracts for professional legal or accounting
services, relating to such gaming shall be subject to such
independent audits and any audit conducted by the Commission;
``(vi) the construction and maintenance of a class II
gaming facility and the operation of class II gaming shall be
conducted in a manner that adequately protects the
environment and public health and safety;
``(vii) there shall be instituted an adequate system that--

``(I) ensures that--

``(aa) background investigations are conducted on primary
management officials, key employees, and persons having
material control, either directly or indirectly, in a
licensed class II gaming operation, and gaming-related
contractors associated with a licensed class II gaming
operation; and
``(bb) oversight of such officials and the management by
such officials is conducted on an ongoing basis; and

``(II) includes--

``(aa) tribal licenses for persons involved in class II
gaming operations, issued in accordance with sections 7(c)
and 10;
``(bb) a standard whereby any person whose prior
activities, criminal record, if any, or reputation, habits,
and associations pose a threat to the public interest or to
the effective regulation of gaming, or create or enhance the
dangers of unsuitable, unfair, or illegal practices and
methods and activities in the conduct of gaming shall not be
eligible for employment or licensure; and
``(cc) notification by the Indian tribe to the Commission
of the results of such background investigation before the
issuance of any such license;
``(viii) net revenues from any class II gaming activities
conducted or licensed by any Indian tribal government may be
used to make per capita payments to members of the Indian
tribe only if--

``(I) the Indian tribe has prepared a plan to allocate
revenues to uses authorized by clause (iii);
``(II) the Secretary determines that the plan is adequate,
particularly with respect to uses described in subclause (I)
or (III) of clause (iii);
``(III) the interests of minors and other legally
incompetent persons who are entitled to receive any of the
per capita payments are protected and preserved;
``(IV) the per capita payments to minors and other legally
incompetent persons are disbursed to the parents or legal
guardians of such minors or legally incompetent persons in
such amounts as may be necessary for the health, education,
or welfare of each such minor or legally incompetent person
under a plan approved by the Secretary and the governing body
of the Indian tribe; and
``(V) the per capita payments are subject to Federal income
taxation and Indian tribes withhold such taxes when such
payments are made.

``(ix) a separate license shall be issued by the Indian
tribe for any class II gaming operation owned by any person
or entity other than the Indian tribe and conducted on Indian
lands, that includes--

``(I) requirements set forth in subparagraph (C); and
``(II) requirements that are at least as restrictive as
those established by State law governing similar gaming
within the jurisdiction of the State within which such Indian
lands are located; and

``(x) no person or entity, other than the Indian tribe,
shall be eligible to receive a tribal license to own a class
II gaming operation conducted on Indian lands within the
jurisdiction of the Indian tribe if such person or entity
would not be eligible to receive a State license to conduct
the same activity within the jurisdiction of the State.
``(B) Transition.--
``(i) In general.--Clauses (ii), (iii), and (ix) shall not
bar the continued operation of an individually owned class II
gaming operation that was operating on September 1, 1986,
if--

``(I) such gaming operation is licensed and regulated by an
Indian tribe;
``(II) income to the Indian tribe from such gaming is used
only for the purposes described in subparagraph (A)(iii);
``(III) not less than 60 percent of the net revenues from
such gaming operation is income to the licensing Indian
tribe; and
``(IV) the owner of such gaming operation pays an
appropriate assessment to the Commission pursuant to section
17 for the regulation of such gaming.

``(ii) Limitations on exemption.--The exemption from
application provided under clause (i) may not be transferred
to any person or entity and shall remain in effect only
during such period as the gaming operation remains within the
same nature and scope as such gaming operation was actually
operated on October 17, 1988.
``(C) List.--The Commission shall--
``(i) maintain a list of each individually owned gaming
operation that is subject to subparagraph (A)(x); and
``(ii) publish such list in the Federal Register.
``(c) Petition for Certificate of Self-Regulation.--
``(1) In general.--Any Indian tribe that operates, directly
or with a management contract, a class II gaming activity may
petition the Commission for a certificate of self-regulation
if that Indian tribe--
``(A) has continuously conducted such activity for a period
of not less than 3 years, including a period of at least 1
year after the date of the enactment of the Indian Gaming
Regulatory Act Amendments Act of 1995; and
``(B) has otherwise complied with the provisions of this
Act.
``(2) Issuance of certificate of self-regulation.--The
Commission shall issue a certificate of self-regulation if
the Commission determines on the basis of available
information, and after a hearing if requested by the tribe,
that the Indian tribe has--
``(A) conducted its gaming activity in a manner which has--
``(i) resulted in an effective and honest accounting of all
revenues;
``(ii) resulted in a reputation for safe, fair, and honest
operation of the activity; and
``(iii) been generally free of evidence of criminal or
dishonest activity;
``(B) adopted and implemented adequate systems for--
``(i) accounting for all revenues from the activity;
``(ii) investigation, licensing, and monitoring of all
employees of the gaming activity; and
``(iii) investigation, enforcement, and prosecution of
violations of its gaming ordinance and regulations;
``(C) conducted the operation on a fiscally and
economically sound basis; and
``(D) paid all fees and assessments that the tribe is
required to pay to the Commission under this Act.
``(3) Effect of certificate of self-regulation.--During the
period in which a certificate of self-regulation issued under
this paragraph is in effect with respect to a gaming activity
conducted by an Indian tribe--
``(A) the tribe shall--
``(i) continue to submit an annual independent audit as
required by subsection (b)(3)(A)(iv); and
[[Page S3408]] ``(ii) submit to the Commission a complete
resume of each employee hired and licensed by the tribe
subsequent to the issuance of a certificate of self-
regulation; and
``(B) the Commission may not assess a fee on such activity
pursuant to section 17 in excess of \1/4\ of 1 percent of the
gross revenue from such activity.
``(4) Rescission.--The Commission may, for just cause and
after an opportunity for a hearing, rescind a certificate of
self-regulation by majority vote of the members of the
Commission.
``(d) License Revocation.--If, after the issuance of any
license by an Indian tribe under this section, the Indian
tribe receives reliable information from the Commission
indicating that a licensee does not meet any standard
established under section 7(c) or 10, or any other applicable
regulation promulgated by the Commission, the Indian tribe--
``(1) shall suspend such license; and
``(2) after notice and hearing under procedures established
pursuant to applicable tribal law, may revoke such license.

``SEC. 12. CLASS III GAMING ON INDIAN LANDS.

``(a) Requirements for the Conduct of Class III Gaming on
Indian Lands.--
``(1) In general.--Class III gaming activities shall be
lawful on Indian lands only if such activities are--
``(A) authorized by a compact that--
``(i) is approved pursuant to tribal law by the governing
body of the Indian tribe having jurisdiction over such lands;
``(ii) meets the requirements of section 11(b)(3) for the
conduct of class II gaming; and
``(iii) is approved by the Secretary;
``(B) located in a State that permits such gaming for any
purpose by any person; and
``(C) conducted in conformance with a tribal-State compact
that--
``(i) is in effect; and
``(ii) is--

``(I) entered into by an Indian tribe and a State and
approved by the Secretary under paragraph (2); or
``(II) issued by the Secretary under paragraph (2).

``(2) Compact negotiations.--
``(A) In general.--
``(i) Compact negotiations.--Any Indian tribe having
jurisdiction over the lands upon which a class III gaming
activity is to be conducted may request the State in which
such lands are located to enter into negotiations for the
purpose of entering into a tribal-State compact governing the
conduct of class III gaming activities.
``(ii) Requirements for request for negotiations.--A
request for negotiations under clause (i) shall be in writing
and shall specify each gaming activity that the Indian tribe
proposes for inclusion in the compact. Not later than 30 days
after receipt of such written request, the State shall
respond to the Indian tribe.
``(iii) Commencement of compact negotiations.--Compact
negotiations conducted under this paragraph shall commence
not later than 30 days after the date on which a response by
a State is due to the Indian tribe, and shall be completed
not later than 120 days after the initiation of compact
negotiations, unless the State and the Indian tribe agree to
a different period of time for the completion of compact
negotiations.
``(iv) Inability to meet deadlines for negotiations.--

``(I) Notification.--If the State and the Indian tribe find
that the State and Indian tribe are unable to commence or
complete compact negotiations within the applicable time
periods provided in this subsection, the Indian tribe shall
notify the Secretary.
``(II) Presentation of positions.--Upon receipt of a notice
under subclause (I), the Secretary shall request that the
tribe and the State present their respective positions, not
later than 60 days after such request, regarding--

``(aa) the gaming activities that the tribe seeks to
conduct that are permissible under this Act;
``(bb) the framework for regulation of tribal gaming; and
``(cc) such other matters as the Secretary may consider
appropriate.
``(B) Approval of compact.--Not later than 90 days after
the date of expiration of the 60-day period specified in
subparagraph (A), the Secretary shall approve a compact that
meets the requirements of this section, and shall publish the
compact in the Federal Register. The compact shall--
``(i) include provisions--

``(I) that best meet the objectives of this Act; and
``(II) for background investigations, internal controls,
and licensing that are consistent with this Act (including
regulations promulgated by the Commission pursuant to section
7(c)); and

``(ii) not violate--

``(I) any provision of this Act (including regulations
promulgated by the Commission pursuant to this Act);
``(II) any other provision of Federal law; or
``(III) the trust obligation of the United States to
Indians.

``(C) Mandatory disapproval.--Notwithstanding any other
provision of this Act, the Secretary shall not have the
authority to approve a compact if the compact requires State
regulation of Indian gaming absent the consent of the State
or the Indian tribe.
``(D) Effect of publication of compact.--Except for an
appeal conducted under subchapter II of chapter 5 of title 5,
United States Code, by an Indian tribe or a State associated
with the publication of the compact, the publication of a
compact pursuant to subparagraph (B) that permits a form of
class III gaming shall, for the purposes of this Act, be
conclusive evidence that such class III gaming is an activity
subject to negotiations under the laws of the State where the
gaming is to be conducted, in any matter under consideration
by the Commission or a Federal court.
``(E) Effective date of compact.--Any compact negotiated
under this subsection shall become effective upon the
publication of the compact in the Federal Register by the
Secretary.
``(F) Duties of commission.--Consistent with the provisions
of sections 7(c), 8, and 10, the Commission shall monitor
and, if specifically authorized, regulate and license class
III gaming with respect to any compact that is approved by
the Secretary under this subsection and published in the
Federal Register.
``(3) Provisions of compacts.--
``(A) In general.--A compact negotiated under this
subsection may include provisions relating to--
``(i) the application of the criminal and civil laws
(including regulations) of the Indian tribe or the State that
are directly related to, and necessary for, the licensing and
regulation of such activity in a manner consistent with
sections 7(c), 8, and 10;
``(ii) the allocation of criminal and civil jurisdiction
between the State and the Indian tribe necessary for the
enforcement of such laws (including regulations);
``(iii) the assessment by the State of the costs associated
with such activities in such amounts as are necessary to
defray the costs of regulating such activity;
``(iv) taxation by the Indian tribe of such activity in
amounts comparable to amounts assessed by the State for
comparable activities;
``(v) remedies for breach of compact provisions;
``(vi) standards for the operation of such activity and
maintenance of the gaming facility, including licensing, in a
manner consistent with sections 7(c), 8, and 10; and
``(vii) any other subject that is directly related to the
operation of gaming activities and the impact of gaming on
tribal, State, and local governments.
``(B) Statutory construction with respect to assessments.--
Except for any assessments for services agreed to by an
Indian tribe in compact negotiations, nothing in this section
may be construed as conferring upon a State or any political
subdivision thereof the authority to impose any tax, fee,
charge, or other assessment upon an Indian tribe, an Indian
gaming operation or the value generated by the gaming
operation, or any person or entity authorized by an Indian
tribe to engage in a class III gaming activity in conformance
with this Act.
``(4) Statutory construction with respect to certain rights
of indian tribes.--Nothing in this subsection impairs the
right of an Indian tribe to regulate class III gaming on the
Indian lands of the Indian tribe concurrently with a State
and the Commission, except to the extent that such regulation
is inconsistent with, or less stringent than, this Act or any
laws (including regulations) made applicable by any compact
entered into by the Indian tribe under this subsection that
is in effect.
``(5) Exemption.--The provisions of section 2 of the Act of
January 2, 1951 (commonly referred to as the `Gambling
Devices Transportation Act') (64 Stat. 1134, chapter 1194, 15
U.S.C. 1175) shall not apply to any class II gaming activity
or any gaming activity conducted pursuant to a compact
entered into after the date of enactment of this Act, but in
no event shall this paragraph be construed as invalidating
any exemption from the provisions of such section 2 for any
compact entered into prior to the date of enactment of this
Act.
``(b) Jurisdiction of United States District Court for the
District of Columbia.--The United States District Court for
the District of Columbia shall have jurisdiction over any
action initiated by the Secretary, the Commission, a State,
or an Indian tribe to enforce any provision of a compact
entered into under subsection (a) or to enjoin a class III
gaming activity located on Indian lands and conducted in
violation of any compact that is in effect and that was
entered into under subsection (a).
``(c) Approval of Compacts.--
``(1) In general.--The Secretary is authorized to approve
any compact between an Indian tribe and a State governing the
conduct of class III gaming on Indian lands of such Indian
tribe entered into under subsection (a).
``(2) Reasons for disapproval by secretary.--The Secretary
may disapprove a compact entered into under subsection (a)
only if such compact violates any--
``(A) provision of this Act or any regulation promulgated
by the Commission pursuant to this Act;
``(B) other provision of Federal law; or
``(C) trust obligation of the United States to Indians.
``(3) Effect of failure to act on compact.--If the
Secretary fails to approve or disapprove a compact entered
into under subsection (a) before the date that is 45 days
after the date on which the compact is submitted to the
Secretary for approval, the
[[Page S3409]] compact shall be considered to have been
approved by the Secretary, but only to the extent the compact
is consistent with the provisions of this Act and the
regulations promulgated by the Commission pursuant to this
Act.
``(4) Notification.--The Secretary shall publish in the
Federal Register notice of any compact that is approved, or
considered to have been approved, under this subsection.
``(d) Revocation of Ordinance.--
``(1) In general.--The governing body of an Indian tribe,
in its sole discretion, may adopt an ordinance or resolution
revoking any prior ordinance or resolution that authorized
class III gaming on the Indian lands of the Indian tribe.
Such revocation shall render class III gaming illegal on the
Indian lands of such Indian tribe.
``(2) Publication of revocation.--An Indian tribe shall
submit any revocation ordinance or resolution described in
paragraph (1) to the Commission. The Commission shall publish
such ordinance or resolution in the Federal Register. The
revocation provided by such ordinance or resolution shall
take effect on the date of such publication.
``(3) Conditional operation.--Notwithstanding any other
provision of this subsection--
``(A) any person or entity operating a class III gaming
activity pursuant to this paragraph on the date on which an
ordinance or resolution described in paragraph (1) that
revokes authorization for such class III gaming activity is
published in the Federal Register may, during the 1-year
period beginning on the date on which such revocation,
ordinance, or resolution is published under paragraph (2),
continue to operate such activity in conformance with an
applicable compact entered into under subsection (a) that is
in effect; and
``(B) any civil action that arises before, and any crime
that is committed before, the termination of such 1-year
period shall not be affected by such revocation ordinance, or
resolution.
``(e) Certain Class III Gaming Activities.--
``(1) Compacts entered into before the date of enactment of
the indian gaming regulatory act amendments act of 1995.--
Class III gaming activities that are authorized under a
compact approved or issued by the Secretary under the
authority of this Act prior to the date of enactment of the
Indian Gaming Regulatory Act Amendments Act of 1995 shall,
during such period as the compact is in effect, remain lawful
for the purposes of this Act, notwithstanding the Indian
Gaming Regulatory Act Amendments Act of 1995 and the
amendments made by such Act or any change in State law
enacted after the approval or issuance of the compact.
``(2) Compact entered into after the date of enactment of
the indian gaming regulatory act amendments act of 1995.--Any
compact entered into under subsection (a) after the date
specified in paragraph (1) shall remain lawful for the
purposes of this Act, notwithstanding any change in State law
enacted after the approval or issuance of the compact.

``SEC. 13. REVIEW OF CONTRACTS.

``(a) Contracts Included.--The Commission shall review and
approve or disapprove--
``(1) any management contract for the operation and
management of any gaming activity that an Indian tribe may
engage in under this Act; and
``(2) unless licensed by an Indian tribe consistent with
the minimum Federal standards adopted pursuant to section
7(c), any gaming-related contract.
``(b) Management Contract Requirements.--The Commission
shall approve any management contract between an Indian tribe
and a person licensed by an Indian tribe or the Commission
that is entered into pursuant to this Act only if the
Commission determines that the contract provides for--
``(1) adequate accounting procedures that are maintained,
and verifiable financial reports that are prepared by or for,
the governing body of the Indian tribe on a monthly basis;
``(2) access to the daily gaming operations by appropriate
officials of the Indian tribe who shall have the right to
verify the daily gross revenues and income derived from any
gaming activity;
``(3) a minimum guaranteed payment to the Indian tribe that
has preference over the retirement of any development and
construction costs;
``(4) an agreed upon ceiling for the repayment of any
development and construction costs;
``(5) a contract term of not to exceed 5 years, except
that, upon the request of an Indian tribe, the Commission may
authorize a contract term that exceeds 5 years but does not
exceed 7 years, if the Commission is satisfied that the
capital investment required, and the income projections for
the particular gaming activity, require the additional time;
and
``(6) grounds and mechanisms for the termination of the
contract, but any such termination shall not require the
approval of the Commission.
``(c) Management Fee Based on Percentage of Net Revenues.--
``(1) Percentage fee.--The Commission may approve a
management contract that provides for a fee that is based on
a percentage of the net revenues of a tribal gaming activity
if the Commission determines that such percentage fee is
reasonable, taking into consideration surrounding
circumstances.
``(2) Fee amount.--Except as provided in paragraph (3), a
fee described in paragraph (1) shall not exceed an amount
equal to 30 percent of the net revenues described in such
paragraph.
``(3) Exception.--Upon the request of an Indian tribe, if
the Commission is satisfied that the capital investment
required, and income projections for, a tribal gaming
activity, necessitate a fee in excess of the amount specified
in paragraph (2), the Commission may approve a management
contract that provides for a fee described in paragraph (1)
in an amount in excess of the amount specified in paragraph
(2), but not to exceed 40 percent of the net revenues
described in paragraph (1).
``(d) Gaming-Related Contract Requirements.--The Commission
shall approve a gaming-related contract covered under
subsection (a)(2) that is entered into pursuant to this Act
only if the Commission determines that the contract provides
for--
``(1) grounds and mechanisms for termination of the
contract, but such termination shall not require the approval
of the Commission; and
``(2) such other provisions as the Commission may be
empowered to impose by this Act.
``(e) Time Period for Review.--
``(1) In general.--Except as provided in paragraph (2), not
later than 90 days after the date on which a management
contract or other gaming-related contract is submitted to the
Commission for approval, the Commission shall approve or
disapprove such contract on the merits of the contract. The
Commission may extend the 90-day period for an additional
period of not more than 45 days if the Commission notifies
the Indian tribe in writing of the reason for the extension
of the period. The Indian tribe may bring an action in the
United States District Court for the District of Columbia to
compel action by the Commission if a contract has not been
approved or disapproved by the termination date of an
applicable period under this subsection.
``(2) Effect of failure of commission to act on certain
gaming-related contract.--Any gaming-related contract for an
amount less than or equal to $100,000 that is submitted to
the Commission pursuant to paragraph (1) by a person who
holds a valid license that is in effect under this Act shall
be deemed to be approved, if by the date that is 90 days
after the contract is submitted to the Commission, the
Commission fails to approve or disapprove the contract.
``(f) Contract Modifications and Void Contracts.--The
Commission, after providing notice and hearing--
``(1) shall have the authority to require appropriate
contract modifications to ensure compliance with the
provisions of this Act; or
``(2) may void any contract regulated by the Commission
under this Act if the Commission determines that any of the
provisions of this Act have been violated by the terms of the
contract.
``(g) Interests in Real Property.--No contract regulated by
this Act may transfer or, in any other manner, convey any
interest in land or other real property, unless specific
statutory authority exists, all necessary approvals for such
transfer or conveyance have been obtained, and such transfer
or conveyance is clearly specified in the contract.
``(h) Authority of the Secretary.--The authority of the
Secretary under section 2103 of the Revised Statutes (25
U.S.C. 81) shall not extend to any contract or agreement that
is regulated pursuant to this Act.
``(i) Disapproval of Contracts.--The Commission may not
approve a contract if the Commission determines that--
``(1) any person having a direct financial interest in, or
management responsibility for, such contract, and, in the
case of a corporation, any individual who serves on the board
of directors of such corporation, and any of the stockholders
who hold (directly or indirectly) 10 percent or more of its
issued and outstanding stock--
``(A) is an elected member of the governing body of the
Indian tribe which is a party to the contract;
``(B) has been convicted of any felony or gaming offense;
``(C) has knowingly and willfully provided materially
important false statements or information to the Commission
or the Indian tribe pursuant to this Act or has refused to
respond to questions propounded by the Commission; or
``(D) has been determined to be a person whose prior
activities, criminal record, if any, or reputation, habits,
and associations pose a threat to the public interest or to
the effective regulation and control of gaming, or create or
enhance the dangers of unsuitable, unfair, or illegal
practices, methods, and activities in the conduct of gaming
or the carrying on of the business and financial arrangements
incidental thereto;
``(2) the contractor--
``(A) has unduly interfered or influenced for its gain or
advantage any decision or process of tribal government
relating to the gaming activity; or
``(B) has attempted to interfere or influence a decision
pursuant to subparagraph (A);
``(3) the contractor has deliberately or substantially
failed to comply with the terms of the contract; or
``(4) a trustee, exercising the skill and diligence that a
trustee is commonly held to, would not approve the contract.
[[Page S3410]] ``SEC. 14. REVIEW OF EXISTING CONTRACTS;
INTERIM AUTHORITY.

``(a) Review of Existing Contracts.--
``(1) In general.--At any time after the Commission is
sworn in and has promulgated regulations for the
implementation of this Act, the Commission shall notify each
Indian tribe and management contractor who, prior to the
enactment of the Indian Gaming Regulatory Act Amendments Act
of 1995, entered into a management contract that was approved
by the Secretary, that the Indian tribe is required to submit
to the Commission such contract, including all collateral
agreements relating to the gaming activity, for review by the
Commission not later than 60 days after such notification.
Any such contract shall be valid under this Act, unless the
contract is disapproved by the Commission under this section.
``(2) Review.--
``(A) In general.--Not later than 180 days after the
submission of a management contract, including all collateral
agreements, to the Commission pursuant to this section, the
Commission shall review the contract to determine whether the
contract meets the requirements of section 13 and was entered
into in accordance with the procedures under such section.
``(B) Approval of contract.--The Commission shall approve a
management contract submitted for review under subsection (a)
if the Commission determines that--
``(i) the management contract meets the requirements of
section 13; and
``(ii) the management contractor has obtained all of the
licenses that the contractor is required to obtain under this
Act.
``(C) Notification of necessary modifications.--If the
Commission determines that a contract submitted under this
section does not meet the requirements of section 13, the
Commission shall provide written notification to the parties
to such contract of the necessary modifications and the
parties shall have 180 days to make the modifications.
``(b) Interim Authority of the National Indian Gaming
Commission.--
``(1) In general.--Notwithstanding any other provision of
this Act, the Chairperson and the associate members of the
National Indian Gaming Commission who are holding office on
the date of enactment of this Act shall exercise those
authorities vested in the Federal Indian Gaming Regulatory
Commission by this Act until such time as the members of the
Federal Indian Gaming Regulatory Commission are sworn into
office.
``(2) Transition.--Notwithstanding any other provision of
law, the Commission shall exercise the authority conferred on
the Commission by this Act, and until such time as the
Commission promulgates revised regulations after the date of
enactment of the Indian Gaming Regulatory Act Amendments Act
of 1995, the regulations issued under this Act, as in effect
on the day before such date of enactment, shall apply.

``SEC. 15. CIVIL PENALTIES.

``(a) Amount.--Any person who commits any act or causes to
be done any act that violates any provision of this Act or
the rules or regulations promulgated under this Act, or who
fails to carry out any act or causes the failure to carry out
any act that is required by any such provision of law shall
be subject to a civil penalty in an amount equal to not more
than $50,000 per day for each such violation.
``(b) Assessment and Collection.--
``(1) In general.--Each civil penalty assessed under this
section shall be assessed by the Commission and collected in
a civil action brought by the Attorney General on behalf of
the United States. Before the Commission refers civil penalty
claims to the Attorney General, the Commission may compromise
the civil penalty after affording the person charged with a
violation referred to in subsection (a), an opportunity to
present views and evidence in support of such action by the
Commission to establish that the alleged violation did not
occur.
``(2) Penalty amount.--In determining the amount of a civil
penalty assessed under this section, the Commission shall
take into account--
``(A) the nature, circumstances, extent, and gravity of the
violation committed;
``(B) with respect to the person found to have committed
such violation, the degree of culpability, any history of
prior violations, ability to pay, the effect on ability to
continue to do business; and
``(C) such other matters as justice may require.
``(c) Temporary Closures.--
``(1) In general.--The Commission may order the temporary
closure of all or part of an Indian gaming operation for a
substantial violation of any provision of law referred to in
subsection (a).
``(2) Hearing on order of temporary closure.--
``(A) In general.--Not later than 30 days after the
issuance of an order of temporary closure, the Indian tribe
or the individual owner of a gaming operation shall have the
right to request a hearing before the Commission to determine
whether such order should be made permanent or dissolved.
``(B) Deadlines relating to hearing.--Not later than 30
days after a request for a hearing is made, the Commission
shall conduct such hearing. Not later than 30 days after the
termination of the hearing, the Commission shall render a
final decision on the closure.

``SEC. 16. JUDICIAL REVIEW.

``A decision made by the Commission pursuant to sections 7,
8, 10, 13, 14, and 15 shall constitute final agency decisions
for purposes of appeal to the United States District Court
for the District of Columbia pursuant to chapter 7 of title
5, United States Code.

``SEC. 17. COMMISSION FUNDING.

``(a) Annual Fees.--
``(1) In general.--The Commission shall establish a
schedule of fees to be paid to the Commission annually by
gaming operations for each class II and class III gaming
activity that is regulated by this Act.
``(2) Limitation on fee rates.--
``(A) In general.--For each gaming operation regulated
under this Act, the rate of the fees imposed under the
schedule established under paragraph (1) shall not exceed 2
percent of the net revenues of such gaming operation.
``(B) Total amount of fees.--The total amount of all fees
imposed during any fiscal year under the schedule established
under paragraph (1) shall equal not more than $25,000,000.
``(3) Annual fee rate.--The Commission, by a vote of a
majority of the members of the Commission, shall annually
adopt the rate of the fees authorized by this section. Such
fees shall be payable to the Commission on a monthly basis.
``(4) Adjustment of fees.--The fees paid by a gaming
operation may be adjusted by the Commission to reduce the
amount of the fees by an amount that takes into account that
regulatory functions are performed by an Indian tribe, or the
Indian tribe and a State, pursuant to regulations promulgated
by the Commission.
``(5) Consequences of failure to pay fees.--Failure to pay
the fees imposed under the schedule established under
paragraph (1) shall, subject to regulations promulgated by
the Commission, be grounds for revocation of the approval of
the Commission of any license required under this Act for the
operation of gaming activities.
``(6) Surplus funds.--To the extent that revenue derived
from fees imposed under the schedule established under
paragraph (1) exceed the limitation in paragraph (2)(B) or
are not expended or committed at the close of any fiscal
year, such surplus funds shall be credited to each gaming
activity that is the subject of the fees on a pro rata basis
against such fees imposed for the succeeding year.
``(b) Reimbursement of Costs.--The Commission is authorized
to assess any applicant, except the governing body of an
Indian tribe, for any license required pursuant to this Act.
Such assessment shall be an amount equal to the actual costs
of conducting all reviews and investigations necessary for
the Commission to determine whether a license should be
granted or denied to the applicant.
``(c) Annual Budget.--
``(1) In general.--For the first full fiscal year beginning
after the date of enactment of the Indian Gaming Regulatory
Act Amendments Act of 1995, and each fiscal year thereafter,
the Commission shall adopt an annual budget for the expenses
and operation of the Commission.
``(2) Request for appropriations.--The budget of the
Commission may include a request for appropriations
authorized under section 18.
``(3) Submission to congress.--Notwithstanding any other
provision of law, a request for appropriations made pursuant
to paragraph (2) shall be submitted by the Commission
directly to the Congress beginning with the request for the
first full fiscal year beginning after the date of enactment
of this Act, and shall include the proposed annual budget of
the Commission and the estimated revenues to be derived from
fees.

``SEC. 18. AUTHORIZATION OF APPROPRIATIONS.

``Subject to section 17, there are authorized to be
appropriated $5,000,000 to provide for the operation of the
Commission for each of fiscal years 1997, 1998, and 1999, to
remain available until expended.

``SEC. 19. MISCELLANEOUS.

``(a) Gaming Proscribed on Lands Acquired in Trust.--
``(1) In general.--Except as provided in paragraph (2),
gaming regulated by this Act shall not be conducted on lands
acquired by the Secretary in trust for the benefit of an
Indian tribe after the date of enactment of this Act,
unless--
``(A) such lands are located within or contiguous to the
boundaries of the reservation of the Indian tribe on the date
of enactment of this Act;
``(B) the Indian tribe has no reservation on the date of
enactment of this Act and such lands are located in the State
of Oklahoma and--
``(i) are within the boundaries of the former reservation
of the Indian tribe, as defined by the Secretary; or
``(ii) are contiguous to other land held in trust or
restricted status by the United States for the Indian tribe
in the State of Oklahoma; or
``(C) such lands are located in a State other than the
State of Oklahoma and are within the last recognized
reservation of the Indian tribe within the State within which
the Indian tribe is presently located.
``(2) Exemption for certain trust lands.--Paragraph (1)
does not apply in any case in which--
``(A) the Secretary, after consultation with the Indian
tribe and a review of the recommendations, if any, of the
Governor of the State in which such lands are located, and
any other State and local officials, including
[[Page S3411]] officials of other nearby Indian tribes,
determines that a gaming establishment on newly acquired
lands--
``(i) would be in the best interest of the Indian tribe and
the members of the Indian tribe; and
``(ii) would not be detrimental to the surrounding
community;
``(B) lands are taken into trust as part of a settlement of
a land claim;
``(C) the initial reservation of an Indian tribe is
acknowledged by the Secretary under the Federal
acknowledgment process or by an Act of Congress; or
``(D) lands are restored for an Indian tribe that is
restored to Federal recognition.
``(3) Exemption.--Paragraph (1) shall not apply to--
``(A) any lands involved in the trust petition of the St.
Croix Chippewa Indians of Wisconsin that is the subject of
the action filed in the United States District Court for the
District of Columbia entitled St. Croix Chippewa Indians of
Wisconsin v. United States, Civ. No. 86-2278; or
``(B) the interests of the Miccosukee Tribe of Indians of
Florida in approximately 25 contiguous acres of land, more or
less, in Dade County, Florida, located within 1 mile of the
intersection of State road numbered 27 (also known as Krome
Avenue) and the Tamiami Trail.
``(4) Authority of the secretary.--Nothing in this section
may affect or diminish the authority and responsibility of
the Secretary to take land into trust.
``(b) Application of the Internal Revenue Code of 1986.--
``(1) In general.--The provisions of the Internal Revenue
Code of 1986 (including sections 1441, 3402(q), 6041, and
chapter 35 of such Code) concerning the reporting and
withholding of taxes with respect to the winnings from gaming
or wagering operations shall apply to Indian gaming
operations conducted pursuant to this Act, or under a compact
entered into under section 12 that is in effect, in the same
manner as such provisions apply to State gaming and wagering
operations. Any exemptions to States with respect to taxation
of such gaming or wagering operations shall be allowed to
Indian tribes.
``(2) Exemption.--The provisions of section 6050I of the
Internal Revenue Code of 1986 shall apply to an Indian gaming
establishment that is not designated by the Secretary of the
Treasury as a financial institution pursuant to chapter 53 of
title 31, United States Code.
``(3) Statutory construction.--This subsection shall apply
notwithstanding any other provision of law enacted before the
date of enactment of this Act unless such other provision of
law specifically cites this subsection.
``(c) Access to Information by State and Tribal
Governments.--Subject to section 7(d), upon the request of a
State or the governing body of an Indian tribe, the
Commission shall make available any law enforcement
information which it has obtained pursuant to such section,
unless otherwise prohibited by law, in order to enable the
State or the Indian tribe to carry out its responsibilities
under this Act or any compact approved by the Secretary.'';
(3) by striking section 20;
(4) by redesignating sections 21 through 24 as sections 20
through 23, respectively; and
(5) by adding at the end the following new section:

``SEC. 24. DEFINITION OF FINANCIAL INSTITUTIONS.

``Section 5312(a)(2) of title 31, United States Code, is
amended--
``(1) by redesignating subparagraphs (X) and (Y) as
subparagraphs (Y) and (Z), respectively; and
``(2) by inserting after subparagraph (W) the following new
subparagraph:
``(X) an Indian gaming establishment;''.

SEC. 3. CONFORMING AMENDMENTS.

(a) Title 10.--Section 2323a(e)(1) of title 10, United
States Code, is amended by striking ``section 4(4) of the
Indian Gaming Regulatory Act (102 Stat. 2468; 25 U.S.C.
2703(4))'' and inserting ``section 4(16) of the Indian Gaming
Regulatory Act''.
(b) Title 18.--Title 18, United States Code, is amended--
(1) in subsections (c) and (d) of section 1166, by striking
``section 11(d)(8) of the Indian Gaming Regulatory Act'' each
place it appears and inserting ``section 12(a)(2)(B) of the
Indian Gaming Regulatory Act'';
(2) in section 1167--
(A) in subsection (a), by striking ``National Indian Gaming
Commission'' and inserting ``Federal Indian Gaming Regulatory
Commission established under section 5 of the Indian Gaming
Regulatory Act''; and
(B) in subsection (b), by striking ``National Indian Gaming
Commission'' and inserting ``Federal Indian Gaming Regulatory
Commission''; and
(3) in section 1168--
(A) in subsection (a), by striking ``National Indian Gaming
Commission'' and inserting ``Federal Indian Gaming Regulatory
Commission established under section 5 of the Indian Gaming
Regulatory Act''; and
(B) in subsection (b), by striking ``National Indian Gaming
Commission'' and inserting ``Federal Indian Gaming Regulatory
Commission''.
(c) Internal Revenue Code of 1986.--Section
168(j)(4)(A)(iv) of the Internal Revenue Code of 1986 is
amended by striking ``Indian Regulatory Act'' and inserting
``Indian Gaming Regulatory Act''.
(d) Title 28.--Title 28, United States Code, is amended--
(1) in section 3701(2)--
(A) by striking ``section 4(5) of the Indian Gaming
Regulatory Act (25 U.S.C. 2703(5))'' and inserting ``section
4(17) of the Indian Gaming Regulatory Act''; and
(B) by striking ``section 4(4) of such Act (25 U.S.C.
2703(4))'' and inserting ``section 4(16) of such Act''; and
(2) in section 3704(b), by striking ``section 4(4) of the
Indian Gaming Regulatory Act'' and inserting ``section 4(16)
of the Indian Gaming Regulatory Act''.
____

Section-by-Section Summary of the Indian Gaming Regulatory Act
Amendments Act of 1995

Section 1. Short Title. This section provides that this Act
may be cited as the ``Indian Gaming Regulatory Act Amendments
Act of 1995''.
Section 2. Amendment to the Indian Gaming Regulatory Act.
This section provides that the Indian Gaming Regulatory Act
(25 U.S.C. 2701 et seq.) is amended by striking sections 2
through 19 and inserting the following new sections:
Section 1. Short Title; Table of Contents. Subsection (a)
provides that this Act may be cited as the ``Indian Gaming
Regulatory Act''.
Subsection (b) sets forth the table of contents for the
Act.
Section 2. Congressional Findings. This section contains
seven separate findings, including the following: Indian
tribes are engaged in the licensing and operation of gaming
activities as a means of generating tribal governmental
revenue; clear Federal standards and regulations for the
conduct of Indian gaming will assist tribal governments in
assuring the integrity of gaming activities; a principal goal
of Federal Indian policy is to promote tribal economic
development, self-sufficiency and strong tribal government;
Indian tribes have the right to regulate gaming activities on
Indian lands if such activities are not prohibited by Federal
law and are conducted within a state that permits such gaming
activities and the Congress has the authority to regulate the
privilege of doing business with Indian tribes in Indian
country; the regulation of Indian gaming activities should
meet or exceed federally established minimum regulatory
requirements; gaming activities on Indian lands has had a
substantial impact on commerce with foreign nations, among
the several states and with the Indian tribes; and the
Constitution vests the Congress with the power to regulate
commerce with foreign nations, among the several states and
with the Indian tribes and this Act is enacted in the
exercise of those powers.
Section 3. Purposes. This section sets forth four purposes
of the Act, including the following: to ensure the right of
Indian tribes to conduct gaming operations on Indian lands
consistent with the U.S. Supreme Court decision in the case
of California v. Cabazon Band of Mission Indians; to provide
a statutory basis for the conduct of gaming activities on
Indian lands as a means of promoting tribal economic
development and strong tribal governments; to provide an
adequate statutory basis for the regulation of Indian gaming
by tribal governments to shield the gaming from organized
crime; ensure that the Indian tribe is the primary
beneficiary of the gaming activities and to ensure that the
gaming activities are conducted fairly by both the operator
and the patrons; and to declare that the establishment of
independent Federal regulatory authority and minimum
regulatory standards for the conduct of gaming activities on
Indian lands are necessary to protect such gaming.
Section 4. Definitions. This section contains definitions
for the following terms: ``applicant'', ``Advisory
Committee'', ``Attorney General'', ``Chairperson'', ``Class I
Gaming'', ``Class II Gaming'', ``Class III Gaming'',
``Commission'', ``Compact'', ``Electronic, Computer, and
Other Technologic Aid'', ``Electronic or Electromechanical
Facsimile'', ``Gambling Device'', ``Gaming-Related
Contract'', ``Gaming Related Contractor'', ``Gaming Service
Industry'', ``Indian Lands'', ``Indian Tribe'', ``Key
Employee'', ``Management Contract'', ``Management
Contractor'', ``Material Control'', ``Net Revenues'',
``Person'', and ``Secretary''.
Section 5. Establishment of the Federal Indian Gaming
Regulatory Commission. Subsection (a) of this section
provides for the establishment of the Federal Indian Gaming
Regulatory Commission as an independent agency of the United
States.
Subsection b. provides that the Commission shall be
composed of 3 full-time members who are appointed by the
President and confirmed by the Senate. Commission members
are prohibited from pursuing any other business or
occupation or holding any other office. Other than through
distribution of gaming revenues as a member of an Indian
tribe, Commission members are prohibited from engaging in
or having a pecuniary interest in a gaming activity or in
any business or organization that has a license under this
Act or that does business with any person or organization
under this Act. Persons who have been convicted or a
felony or a gaming offense cannot serve as Commissioners.
In addition, persons who have any financial interest in or
management responsibility for any gaming contract or
other
[[Page S3412]] contract approved pursuant to this Act are
also ineligible to serve as Commissioners.
Subsection (b) also provides that not more than 2 members
of the Commission shall be members of the same political
party and at least two members of the Commission shall be
members of federally recognized Indian tribes. One member of
the Commission must be a certified public accountant with at
least 5 years of experience in accounting and auditing as
well as a comprehensive knowledge of the principles and
practices of corporate finance. One member of the Commission
must have training and experience in the fields of
investigation or law enforcement. Any person under
consideration for appointment to the Commission shall be the
subject of a background investigation conducted by the
Attorney General with particular emphasis on the person's
financial stability, integrity, responsibility and reputation
for good character and honesty.
Subparagraph (c) provides that the President shall select a
Chairperson from among the members appointed to the
Commission.
Subparagraph (d) provides that the Commission shall select
a Vice Chairperson by majority vote. The Vice Chairperson
shall serve as the Chairperson in the absence of the
Chairperson and shall exercise such other powers as may be
delegated by the Chairperson.
Subparagraph (e) provides that each member of the
Commission shall hold office for a term of 5 years and no
member can serve more than two terms of 5 years each. The
initial appointments to the Commission will be made for
staggered terms, with the Chairperson serving a full 5 year
term.
Subparagraph (f) provides that Commissioners shall serve
until the expiration of their term or until their successor
is duly appointed and qualified, unless a Commissioner is
removed for cause. A Commissioner can only be removed by the
President for neglect of duty, malfeasance in office or for
other good cause. Any member appointed to fill a vacancy
shall serve for the unexpired term of the vacancy.
Subparagraph (g) provides that two members of the
Commission shall constitute a quorum.
Subparagraph (h) provides that the Commission shall meet at
the call of the Chairperson or a majority of the members of
the Commission. A majority of the members of the Commission
shall determine any action of the Commission.
Subparagraph (i) provides that the Chairperson shall be
compensated at level IV of the Executive Schedule and other
members shall be compensated at level V. All members of the
Commission shall be reimbursed for travel, subsistence and
other necessary expenses.
Subparagraph (j) requires the Administrator of General
Services to provide to the Commission on a reimbursable basis
such administrative support services as the Commission may
request.
Section 6. Powers of the Chairperson. Subsection (a)
provides that the Chairperson is the chief executive officer
of the Commission.
Subsection (b) provides that the Chairperson can employ and
supervise such personnel as may be necessary to carry out the
functions of the Commission, without regard to the
requirements of title 5 of the United States Code relating to
appointments in the competitive service. The Chairperson is
required to appoint a
General Counsel and may procure temporary and intermittent
services or request the head of any federal agency to
detail any personnel of such agency to the Commission to
assist in carrying out the duties of the Commission under
this Act. The Chairperson is also authorized to use and
expend federal funds and fees collected pursuant to this
Act and to contract for such professional, technical and
operational personnel as may be necessary to carry out
this Act. Staff of the Commission are to be paid without
regard to the requirements of title 5 of the United States
Code related to classification and pay rates.
Subsection (c) provides that the Chairperson shall be
governed by the general policies of the Commission and by
such regulatory decisions and determinations as the
Commission is authorized to make.
Section 7. Powers and Authority of the Commission.
Subsection (a) provides that the Commission shall have the
power to approve the annual budget of the Commission;
promulgate regulations to carry out this Act; establish fees
and assessments; conduct investigations; issue temporary and
permanent orders closing gaming operations; grant, deny or
condition or suspend any license issued under any authority
conferred on the Commission by this Act; fine any person
licensed pursuant to this Act for violation of any of the
conditions of licensure under this Act; inspect the premises
where Class II and III gaming operations are located; inspect
and audit all books and records of Class II and III gaming
operations; use the U.S. mail in the same manner as any
agency of the U.S.; procure supplies and services by
contract; contract with state, tribal and private entities to
assist in the discharge of the Commission's duties; serve or
cause to be served process or notices of the Commission;
propound written interrogatories and appoint hearing
examiners who are empowered to administer oaths; conduct
hearings pertaining to violations of this Act; collect the
fees and assessments authorized by this Act; assess penalties
for violations of the Act; provide training and technical
assistance to Indian tribes with respect to the conduct and
regulation of gaming activities; monitor and regulate Class
II and III gaming; approve all management-related and gaming-
related contracts; delegate any of the functions of the
Commission, except for rulemaking, to a division of the
Commission or a Commissioner, employee or administrative law
judge.
Subsection (b) provides that the Commission reserves the
right to review any action taken pursuant to a delegation of
its authority. The vote of one Commissioner is sufficient to
bring a delegated action before the full Commission for
review. If the Commission declines to exercise the right of
review, then the delegated action shall be deemed an action
of the Commission.
Subsection (c) provides that after receiving
recommendations from the Advisory Committee pursuant to this
Act, the Commission shall establish minimum Federal standards
for: background investigations; licensing; the operation of
Class II and III gaming activities, including surveillance,
security and systems for monitoring all gaming activity,
protection of the integrity of the rules for play of games,
cash counting and control, controls over gambling devices and
accounting and auditing.
Subsection (d) provides that the Commission may secure from
any department or agency of the Untied States information
necessary to enable the Commission to carry out the Act. The
Commission may also secure from any law enforcement or gaming
regulatory agency of any State, Indian tribe or foreign
nation information necessary to enable the Commission to
carry out this Act. All such information obtained by the
Commission shall be protected from disclosure by the
Commission. For purposes of this subsection, the Commission
shall be considered to be a law enforcement agency.
Subsection (e) authorizes the Commission to conduct such
investigations as the Commission considers necessary to
determine whether any person has violated, is violating or is
conspiring to violate any provision of this Act. In addition,
the Commission is authorized to investigate such facts,
conditions, practices, or matters as the Commission considers
necessary or proper to aid in the enforcement, implementation
or amendment of the Act.
Any member of the Commission or any officer designated by
the Commission is empowered to administer oaths and to
subpoena witnesses and evidence from any place in the
United States at any designated place of hearing. The
Commission is authorized to invoke the jurisdiction of any
Federal court to require the attendance and testimony of
witnesses and the production of records. The failure of
any person to obey an order of a Federal court to appear
and testify or to produce records is punishable as a
contempt of such court. If the Commission determines that
any person is engaged, has engaged or is conspiring to
engage in any act or practice which constitutes a
violation of this Act, the Commission may bring an action
in the Federal District Court for the District of Columbia
to enjoin such act or practice or refer the matter to the
Attorney General for the initiation of criminal
proceedings. At the request of the Commission, each
Federal district court shall have jurisdiction to issue
writs of mandamus, injunctions and orders commanding any
person to comply with this Act and any rules or
regulations promulgated pursuant to the Act.
Section 8. Regulatory Framework. Subsection (a) provides
that for Class II gaming Indian tribes shall retain the right
to monitor and regulate such gaming, conduct background
investigations, and issue licenses in a manner which meets or
exceeds minimum Federal standards established by the
Commission pursuant to section 7(c) of this Act.
Subparagraph (b) provides that for Class III gaming which
is conducted pursuant to a tribal/state compact, an Indian
tribe or a state or both shall monitor and regulate such
gaming, conduct background investigations, issue licenses and
establish and regulate internal control systems in a manner
which meets or exceeds minimum Federal standards established
by the Commission pursuant to section 7(c) of this Act.
Subparagraph (c) provides that for Class III gaming
conducted under the authority of a compact negotiated with
the Secretary, such compact shall provide that the Indian
tribe or other appropriate entity shall monitor and regulate
such gaming, conduct background investigations, issue
licenses and establish and regulate internal control systems
in a manner which meets or exceeds minimum Federal standards
established by the Commission pursuant to section 7(c).
Subsection (d) provides that in any case in which an Indian
tribe conducts Class II gaming in a manner which
substantially fails to meet the minimum federal standards for
Class II gaming, then the Commission shall have the authority
to conduct background investigations, issue licenses and
establish and regulate internal control systems after
providing the Indian tribe an opportunity to cure violations
and to be heard. The authority of the Commission may be
exclusive and may continue until such time as the regulatory
and internal control systems of the Indian tribe meet or
exceed the minimum Federal standards established by the
Commission.
Subsection (d) also provides that in the case of Class III
gaming, if an Indian tribe or a state, or both, fail to meet
or exceed minimum Federal standards for Class III gaming
[[Page S3413]] then the Commission shall have the authority
to conduct background investigations, issue licenses and
establish and regulate internal control systems after
providing notice and an opportunity to cure problems and be
heard. The authority of the Commission may be exclusive and
may continue until such time as the regulatory and internal
control systems of an Indian tribe or a state, or both, meet
or exceed the minimum Federal standards established by the
Commission.
Section 9. Advisory Committee on Minimum Regulatory
Requirements and Licensing Standards. Subsection (a)
authorizes the President to establish an Advisory Committee
on Minimum Regulatory Requirements and Licensing Standards.
Subsection (b) provides that the advisory committee shall
be composed of 7 members who shall be appointed by the
President. Three members shall be members of federally
recognized Indian tribes which are engaged in gaming under
this Act and shall be selected from a list of recommendations
submitted to the President by the Chairman and Vice Chairman
of the Senate Committee on
Indian Affairs and the Chairman and ranking minority member
of the Subcommittee on Native American and Insular Affairs
of the Committee on Resources of the House of
Representatives. Two members shall represent state
governments and shall be selected from a list of
recommendations submitted to the President by the Majority
Leader and the Minority Leader of the Senate and the
Speaker and Minority Leader of the House of
Representatives. Two members shall be employees of the
Department of Justice.
Subsection (c) provides that 180 days after the date on
which the Advisory Committee is fully constituted it shall
develop recommendations for minimum Federal standards for the
conduct of background investigations, internal control
systems and licensing standards. The committee's
recommendations shall be submitted to the Committee on Indian
Affairs of the Senate, the Subcommittee on Native American
and Insular Affairs of the Committee on Resources of the
House of Representatives, the Commission and to each
federally recognized Indian tribe. The Commission and the
Advisory Committee are required to give equal weight to
existing industry standards, the unique nature of tribal
gaming, the broad variations in the scope and size of tribal
gaming activity, the inherent sovereign right of Indian
tribes to regulate their own affairs and the Findings and
Purposes set forth in sections 2 and 3 of this Act.
Subsection (d) provides that the Commission shall hold
public hearings on the Advisory Committee's recommendations
after they are received. At the conclusion of the hearings,
the Commission shall promulgate regulations establishing
minimum regulatory requirements and licensing standards.
Subsection (e) provides that the members of the Advisory
Committee who are representatives of Indian tribes and states
shall be reimbursed for travel and per diem during the
performance of the duties of the Advisory Committee and while
away from home or their regular place of business.
Subsection (f) provides that the Advisory Committee shall
cease to exist 60 days after it submits its recommendations
to the Commission.
Subsection (g) provides that the activities of the Advisory
Committee are exempt from the Federal Advisory Committee Act.
Section 10. Licensing. Subsection (a) provides that
licenses shall be required of gaming operations, key
employees of a gaming operation, management- and gaming-
related contractors, any gaming service industry, and any
person who has material control over a licensed gaming
operation.
Subsection (b) provides that the Commission may require
licenses of management contractors and gaming operations
notwithstanding any other provision of law relating to the
issuance of licenses by an Indian tribe or a state, or both.
Subsection (c) provides that the Commission may issue a
statement of compliance to an applicant for a license under
this Act at any time that the Commission is satisfied that
one or more eligibility criteria for the license has been
satisfied by the applicant.
Subsection (d) provides that no gaming operation shall
operate unless all required licenses and approvals have been
obtained in accordance with this Act. Each management
contract for a gaming operation must be in writing and filed
with and approved by the Commission. The Commission may
require that a management contract include any provisions
that are reasonably necessary to meet the requirements of
this Act. Any applicant for a license who does not have the
ability to exercise any significant control over a licensed
gaming operation may be determined by the Commission to be
ineligible to hold a license or to be exempt from being
required to hold a license.
Subsection (e) provides that the Commission shall deny a
license to any applicant who is disqualified for failure to
meet any of the minimum Federal standards promulgated by the
Commission pursuant to section 7(c).
Subsection (f) provides that the Commission shall conduct
an investigation into the qualifications of the applicant and
may conduct a non-public hearing concerning the applicant's
qualifications. After an application is filed with the
Commission final action will be taken by the Commission to
grant or deny the application not later than 90 days after
completing all hearings and investigations and receiving all
information required to be submitted. If an application is
denied by the Commission, the applicant can request a
statement of the reasons, including specific findings of
fact. If the Commission is satisfied that the applicant is
qualified to receive a license, then the Commission shall
issue a license upon the tender of all license fees and
assessments required by this Act and such bonds as the
Commission may require for the faithful performance of all
requirements imposed by this Act. The Commission is
authorized to fix the amount of any bond it requires. Bonds
furnished to the Commission may be applied by the Commission
to any unpaid liability of the licensee. Bonds shall be
furnished in cash or negotiable securities, by a surety or
through an irrevocable letter of credit.
Subsection (g) provides that the Commission shall renew any
license issued under this Act, subject to its power to deny,
revoke or suspend licenses, upon proper application for
renewal and the receipt of license fees and assessments.
Licenses can be renewed for up to two years for each of the
first 2 renewal periods and three years for each succeeding
renewal period. A licensing hearing can be reopened by the
Commission at any time. Any licenses in existence on the date
of enactment of this Act may be renewed for a period of 18
months. Any application for renewal must be filed with the
Commission not later than 90 days prior to the expiration of
the current license. Upon renewal of a license, the
Commission shall issue an appropriate renewal certificate.
Subsection (h) provides that the Commission shall establish
procedures for the conduct of hearings associated with
licensing including procedures for denying, limiting,
conditioning, revoking or suspending any such license. After
the completion of a licensing hearing the Commission shall
render a decision and issue and serve an order on the
affected parties. The Commission may order a rehearing on a
decision on a motion made by a party or the Commission not
later than 10 days after the services of a decision and
order. Following a rehearing, the Commission shall render a
decision, issue an order and serve it on the affected
parties. Any licensing decision or order made by the
Commission shall be final agency action for the purposes of
judicial review. The United States Court of Appeals for the
District of Columbia has jurisdiction to review the licensing
decisions and orders of the Commission.
Subsection (i) provides that the Commission shall maintain
a registry of all licenses granted or denied and shall make
the information contained in the registry available to Indian
tribes to assist them in the licensing and regulation of
gaming activities.
Section 11. Requirements for the Conduct of Class I and
Class II Gaming on Indian Lands. Subsection (a) provides that
Class I gaming shall be within the exclusive jurisdiction of
the Indian tribes and shall not be subject to the provisions
of this Act.
Subsection (b) provides that Class II gaming shall be
within the jurisdiction of the Indian tribes, but shall be
subject to the provisions of this Act. An Indian tribe may
engage in and license and regulate Class II gaming on the
lands within the jurisdiction of the tribe if: the gaming is
located within a State that permits such gaming for any
purpose by any person; such gaming is not otherwise
specifically prohibited on Indian lands by Federal law; and
the Class II gaming operation meets or exceeds the
requirements of section 7(c) and 10. With regard to any Class
II gaming operation, the Commission shall ensure that: the
Indian tribe has issued a separate license for each place,
facility or location at which Class II gaming is conducted;
the Indian tribe has or will have the sole proprietary
interest and responsibility for the conduct of any Class II
gaming activity, except as provided elsewhere in the Act with
regard to gaming operations by Indian individuals; and the
net revenues from Class II gaming may only be used to
fund tribal government operations or programs, to provide
for the general welfare of the Indian tribe and its
members, to promote tribal economic development, to donate
to charitable organizations, to help fund operations of
local government agencies or to comply with section 17 of
this Act. The Indian tribe is required to provide the
Commission with annual outside audits of its Class II
gaming operation. Such audits shall include a review of
all contracts for supplies and services equal to or more
than $50,000 annually, except for contracts for legal and
accounting services.
Subsection (b) further provides that the Commission shall
ensure that the construction and maintenance of a Class I
gaming facility and the operation of the gaming shall be
conducted in a manner that adequately protects the
environment and public health and safety. The Commission must
also ensure that there is an adequate system for background
investigations on all persons who are required to be licensed
in accordance with sections 7(c) and 10 and notice to the
Commission by the Indian tribe of the results of the
background investigation before the issuance of any license.
No license may be granted to any person whose prior
activities, criminal record or reputation habits and
associations pose a threat to the public interest or the
effective regulation of gaming.
With regard to per capita payments, subsection (b) provides
that such payments may
[[Page S3414]] only be made if: the Indian tribe has prepared
a plan to allocate revenues to the public, governmental,
economic development and social welfare purposes prescribed
by this Act and the Secretary determines that the plan is
adequate; the interests of minors and other legally
incompetent persons are protected and preserved and the
payments for such individuals are disbursed to their parents
or legal guardians under a plan approved by the Secretary and
the governing body of the Indian tribe; and the per capita
payments are subject to Federal income taxation and Indian
tribes withhold such tax.
With regard to Class II gaming operations on Indian lands
which are owned by a person or entity other than the Indian
tribe, subsection (b) requires the issuance of a separate
license which includes the requirements of this section and
requirements that are at least as restrictive as those
established by state law governing similar gaming within the
jurisdiction of the state within which the Indian lands are
located. No person or entity, other than the Indian tribe
shall be eligible to receive a tribal license to own a Class
II gaming operation on Indian lands within the jurisdiction
of the Indian tribe if such person or entity would not be
eligible to receive a state license to conduct the same
activity within the jurisdiction of the state. Any
individually owned Class II gaming operation that was in
operation on September 1, 1986 shall not be barred by this
Act if: it is licensed by an Indian tribe; the income to the
Indian tribe from such gaming is not used for per capita
payments; not less than 60 percent of the net revenues from
the gaming operation is income to the Indian tribe; and the
owner of the gaming operation pays an assessment to the
Commission pursuant to section 17 for the regulation of such
gaming. This exemption for certain individually owned games
cannot be transferred to any person or entity and only
remains in effect so long as the gaming activity remains
within the same nature and scope as the gaming operation
which was operated on October 17, 1988. The Commission is
required to maintain and publish in the Federal Register a
list of individually owned gaming operations.
Subsection (c) provides that any Indian tribe that operates
a Class II gaming activity may petition the Commission for a
certificate of self-regulation if that Indian tribe has
continuously conducted such gaming activity for a period of
not less than 3 years, including at least one year after the
date of enactment of this Act, and has otherwise complied
with the provisions of this Act. The Commission shall issue a
certificate of self-regulation if it determines that the
Indian tribe has: conducted its gaming activity in a manner
which has resulted in an effective and honest accounting of
all revenues; resulted in a reputation for safe, fair, and
honest operation of the activity; been generally free of
evidence of criminal or dishonest activity; and the Indian
tribe has adequate systems for accounting for revenues,
investigation and licensing of employees and contractors,
investigation and enforcement of its gaming
laws and has conducted the gaming operation on a fiscally
sound basis. During any period in which a certificate of
self-regulation is in effect, the Indian tribe shall
continue to submit an annual independent audit to the
Commission and a complete resume of each employee and
contractor hired and licensed by the Indian tribe. The
Commission cannot assess a fee on a self-regulated
activity pursuant to section 17 in excess of one quarter
of 1 percent of the net revenue from such activity. The
Commission may rescind a certificate of self-regulation
for just cause and after an opportunity for a hearing.
Subsection (d) provides that if the Commission notifies the
Indian tribe that any license which has been issued by the
tribe under this section does not meet any standards
established under sections 7(c) or 10, then the Indian tribe
shall immediately suspend the license and after notice and
hearing to the licensee in conformity with the laws of the
Indian tribe may revoke such license.
Section 12. Class III Gaming on Indian Lands. Subsection
(a) provides that Class III gaming activities shall be lawful
on Indian lands only if such activities are authorized by a
compact that: is adopted by the governing body of the Indian
tribe having jurisdiction over such lands; meets the
requirements of section 11(b)(3) for the conduct of Class II
gaming; is approved by the Secretary; is located in a state
that permits such gaming for any purpose by any person; and
is conducted in conformity with the tribal/state compact that
is in effect. Any Indian tribe which has jurisdiction over
the lands upon which a Class III gaming activity is to be
conducted may request the state in which such lands are
located to enter into negotiations for the purpose of
entering into a compact to govern the conduct of Class III
gaming activities. A request for negotiations shall be in
writing and shall specify each gaming activity that the
Indian tribe proposes for inclusion in the compact. The state
shall respond to the request within 30 days of receipt.
Compact negotiations shall commence not later than 30 days
after the date on which a response by a state is due to the
Indian tribe and shall be completed not later than 120 days
after the initiation of negotiations unless the state and the
Indian tribe agree to a different time period. If the state
and the Indian tribe cannot commence or complete compact
negotiations within the time periods provided in this Act,
the Indian tribe shall notify the Secretary. After the
Secretary receives the notice from the Indian tribe, the
Secretary shall provide the state and the Indian tribe 60
days to present their positions on the gaming activities that
are permissible, the framework for the regulation of the
gaming, and such other matters as the Secretary may consider
appropriate. Not later than 90 days after the date of the
expiration of the 60 day period for the submission of the
positions of the state and the Indian tribe, the Secretary
shall approve a compact that meets the requirements of this
Act and publish it in the Federal Register. The Secretary
shall not approve a compact if the compact requires state
regulation of Indian gaming without the consent of the state
or the Indian tribe. The publication of a compact that
permits a form of Class III gaming shall be conclusive
evidence that such Class III gaming is an activity subject to
the laws of the state where the gaming is to be conducted.
Any compact negotiated under this subsection shall become
effective on its publication in the Federal Register. The
Commission shall monitor and, if authorized, regulate and
license Class III gaming with respect to any compact that is
approved by the Secretary.
Subsection (a) also provides that a compact may include
provisions relating to the criminal and civil laws of the
Indian tribe or the state; the allocation of criminal and
civil jurisdiction between the state and the Indian tribe;
the assessment by the state of the costs associated with such
activities in such amounts as are necessary to defray the
costs of regulating such activity; taxation by the Indian
tribe of such activity in amounts comparable to the amounts
assessed by the state for similar activity; remedies for
breach of contract; standards for the operation of such
activity and maintenance of the gaming facility; and any
other subject that is directly related to the operation of
gaming activities and the impact of gaming on tribal, state
and local governments. Nothing in this Act may be construed
as conferring on a state or political subdivision of a state
the authority to impose any tax,
fee, charge, or other assessment on an Indian tribe, an
Indian gaming operation or the value generated by the
gaming operation or any person or entity authorized by an
Indian tribe to engage in a Class III gaming activity in
conformity with this Act.
Nothing in subsection (a) impairs the right of an Indian
tribe to regulate Class III gaming on the lands of the Indian
tribe concurrently with a state and the Commission, except to
the extent that such regulation is inconsistent with or less
stringent than this Act. The Gambling devices Transportation
Act shall not apply to any gaming activity conducted pursuant
to a compact entered into under this Act. The Federal
District Court for the District of Columbia shall have
jurisdiction over any action initiated by an Indian tribe, a
state, the Secretary or the Commission to enforce a compact
or to enjoin a Class III gaming activity located on Indian
lands and conducted in violation of any compact.
Subsection (c) provides that the Secretary is authorized to
approve any compact between an Indian tribe and a state
governing the conduct of Class III gaming on the Indian lands
of such Indian tribe. The Secretary may disapprove a compact
entered into under this Act only if such compact violates any
provision of this Act or any regulation promulgated by the
Commission or any other Federal law or the trust obligation
of the United States to Indians. If the Secretary fails to
approve or disapprove a compact within 45 days after the
compact is presented to the Secretary for approval, then the
compact shall be considered to have been approved by the
Secretary, but only to the extent that it is consistent with
this Act and the regulations promulgated by the Commission.
The Secretary shall publish notice in the Federal Register of
any compact that is approved or considered to have been
approved.
Subsection (d) provides that the governing body of an
Indian tribe may adopt an ordinance or resolution revoking
any prior ordinance or resolution that authorized Class III
gaming on the Indian lands of the Indian tribe. Such a
revocation shall render Class III gaming illegal on the
Indian lands of such Indian tribe. The Commission is required
to publish the revocation ordinance or resolution in the
Federal Register and it shall take effect upon such
publication. Any person or entity operating a Class III
gaming activity on the date of such revocation may continue
to operate such activity in conformity with a compact that is
in effect for one year from the date of publication of the
revocation.
Subsection (e) provides that with regard to compacts
entered into and approved by the Secretary before the date of
enactment of this Act shall remain lawful during the period
such compact is in effect notwithstanding any amendments made
by this Act or any changes made in state law enacted after
the approval of the compact. Any compact entered into after
the date of enactment of this Act shall remain lawful under
this Act notwithstanding any change in state law enacted
after the approval of the compact.
Section 13. Review of Contracts. Subsection (a) provides
that the Commission shall review and approve or disapprove
any management contracts for the management of any gaming
activity and any gaming-related contract unless such gaming
related contract is licensed by an Indian tribe consistent
with the minimum Federal standards promulgated pursuant to
section 7(c).
[[Page S3415]] Subsection (b) provides that the Commission
shall only approve a management contract if it determines
that the contract provides for: adequate accounting
procedures that are maintained and for verifiable monthly
financial reports prepared by or for the governing body of
the Indian tribe; access to the gaming operations by tribal
officials who shall have the right to verify the daily gross
revenues and income derived from the gaming activity; a
minimum guaranteed payment to the Indian tribe that has
preference over the retirement of any development and
construction costs; an agreed upon ceiling for the repayment
of any development and construction costs; a contract term of
not more than 5 years unless the Commission determines that a
term of 7 years is appropriate based on the capital
investment required and the income projections for the gaming
activity; and grounds and mechanisms for the termination of
the contract.
Subsection (c) provides that the Commission may approve a
management contract that provides for a fee of 30% of the net
revenues of a tribal gaming activity, unless the Indian tribe
requests a higher fee and the Commission determines that
based on the capital investment required and the income
projections a higher fee is justified. In no circumstance can
a management fee exceed 40%.
Subsection (d) provides that the Commission shall approve a
gaming-related contract only if the Commission determines
that the contract provides for: grounds and mechanisms for
the termination of the contract and such other conditions as
the Commission may be empowered to impose under this Act.
Subsection (e) provides that not later than 90 days after
the date on which a management contract or gaming-related
contract is submitted to the Commission for approval the
Commission shall either approve or disapprove the contract.
The 90 day period may be extended for 45 days if the
Commission notifies the tribe in writing of the reason for
the extension. The Indian tribe may bring an action in the
Federal District Court for the District of Columbia to compel
action by the Commission if it does not act in a timely
manner. Any gaming-related contract for an amount of $100,000
or less which is submitted to the Commission for approval by
a person who holds a valid license that is in effect under
this Act, shall be deemed to be approved if the Commission
has not acted to approve or disapprove it within 90 days of
its submission.
Subsection (f) provides that after providing notice and
hearing, the Commission shall have the authority to require
appropriate contract modifications to ensure compliance with
this Act or may void any contract if the Commission
determines that it violates any of the provisions of this
Act.
Subsection (g) provides that no contract regulated by this
Act may transfer or in any other manner convey any interest
in real property unless specific statutory authority exists,
all necessary approvals have been obtained and the conveyance
is clearly specified in the contract.
Subsection (h) provides that the authority of the Secretary
under 25 U.S.C. 81 shall not extend to any contracts or
agreements which are regulated pursuant to this Act.
Subsection (i) provides that the Commission may not approve
a contract if the Commission finds that: any person having a
direct financial interest in, or management responsibility
for such contract, and in the case of a corporation, any
member of the board of directors or any stockholders who hold
more than 10% of its issued stock is an elected member of the
governing body of the Indian tribe which is a party to the
contract; has been convicted of any felony or any gaming
offense; has knowingly and willfully provided materially
false statements to the Commission or the Indian tribe or has
refused to respond to questions propounded by the Commission;
or has been determined to be a person whose prior activities,
criminal record, reputation, habits or associations pose a
threat to the public interest or to the effective regulation
and control of gaming. The Commission may also disapprove any
contract if it finds that: the contractor has unduly
interfered or influenced for its gain any decision or process
of tribal government relating to the gaming activity; the
contractor has deliberately or substantially failed to comply
with the terms of the contract; or a trustee, exercising the
skill and diligence that a trustee is commonly held to, would
not approve the contract.
Section 14. Review of Existing Contracts; Interim
Authority. Subsection (a) provides that at any time after the
Commission is sworn in and has promulgated regulations for
the implementation of this Act the Commission shall notify
each Indian tribe and management contractor who entered into
a contract prior to the enactment of this Act that the Indian
tribe is required to submit the contract to the Commission
within 60 days of such notice. Any such contract shall be
valid under this Act unless the Commission disapproves it
under this section. Not later than 180 days after the
submission of a contract for review, the Commission shall
review it to
determine if it meets the requirements of section 13. The
Commission shall approve a contract if it determines that
the contract meets the requirements of section 13 and the
contractor has obtained all of the licenses required by
this Act. If the Commission determines that a contract
does not meet the requirements of section 13, the
Commission shall provide written notice to the parties of
the necessary modifications and the parties shall have 180
days to make the modifications.
Subsection (b) provides that the Commissioners who are
holding office on the date of enactment of this Act shall
exercise the authorities vested in the Federal Indian Gaming
Regulatory Commission until such time as the members of that
Commission are sworn into office. Until such time as the
Federal Indian Gaming Regulatory Commission promulgates
regulations under this Act, the regulations promulgated under
the Indian Gaming Regulatory Act of 1988 shall apply.
Section 15. Civil Penalties. Subsection (a) provides that
any person who violates this Act or the regulations
promulgated pursuant to this Act, either by an act or an
omission, shall be subject to a civil penalty of not more
than $50,000 per day for each violation.
Subsection (b) provides that the Commission shall assess
the civil penalties authorized by this Act and the Attorney
General shall collect them in a civil action. The Commission
may seek to compromise any assessed civil penalty. In
determining the amount of a civil penalty, the Commission
shall take into account: the nature, circumstances, extent
and gravity of the violation; with regard to the person found
to have committed the violation, the degree of culpability,
any history of prior violations, ability to pay and the
effect on ability to continue to do business; and such other
matters as justice may require.
Subparagraph (c) provides that the Commission may order the
temporary closure of all or part of an Indian gaming
operation for substantial violation of this Act and the
regulations promulgated by the Commission. Not later than 30
days after an order of temporary closure the Indian tribe or
the individual owner of the gaming operation may request a
hearing to determine whether the order should be made
permanent or dissolved. Not later than 30 days after a
request for a hearing, the Commission shall hold the hearing
and render a final decision within 30 days after the
completion of the hearing.
Section 16. Judicial Review. Any decision made by the
Commission pursuant to sections 7, 8, 10, 14, and 15 shall
constitute final agency decisions for purposes of appeal to
the Federal District Court for the District of Columbia under
the Administrative Procedures Act.
Section 17. Commission Funding. Subsection (a) provides
that the Commission shall establish an annual schedule of
fees to be paid to it by each Class II and III gaming
operation that is regulated by this Act. No gaming operation
may be assessed more than 2% of its net revenues and the
Commission cannot collect more than $25 million in fees in
any year. Fees are payable to the Commission on a monthly
basis. The fees paid by a gaming operation may be reduced by
the Commission to take into account that regulatory functions
are performed by an Indian tribe, or an Indian tribe and a
state. Failure to pay fees imposed by the Commission will be
grounds for revocation of any license required under this Act
for the operation of gaming activities. Any surplus
assessments in any given year will be credited pro rata
against such fees for the succeeding year.
Subparagraph (b) provides that the Commission is authorized
to assess license applicants, except for Indian tribes, for
the actual cost of all reviews and investigations necessary
to determine whether a license should be granted or denied.
Subparagraph (c) provides that the Commission shall adopt
an annual budget for each fiscal year. Any request for an
appropriation pursuant to section 18 shall be submitted
directly to the Congress.
Section 18. Authorization of Appropriations. This section
authorizes an appropriation of $5 million for the operation
of the Commission for each of the fiscal years, 1997, 1998
and 1999, to remain available until expended.
Section 19. Miscellaneous. Subsection (a) provides that in
general, gaming regulated by this Act shall not be conducted
on lands acquired by the Secretary in trust for the benefit
of an Indian tribe unless: such lands are located within or
are contiguous to the boundaries of the reservation of the
Indian tribe; the Indian tribe has no reservation and such
lands are located in the State of Oklahoma and are within the
boundaries of the former reservation of the Indian tribe or
are contiguous to other land held in trust by the United
States for the Indian tribe; or such lands are located in a
state other than Oklahoma and are within the last recognized
reservation of the Indian tribe within the state in which the
Indian tribe is presently located.
Subsection (a) further provides that the general
prohibition on the use of lands taken into trust after the
date of enactment of this Act for gaming does not apply if
the Secretary, after consultation with the Indian tribe,
other Indian tribes, state and local officials and a review
of the recommendations of the Governor of the state in which
such lands are located, determines that gaming on the newly
acquired lands would be in the best interest of the Indian
tribe and would not be detrimental to the surrounding
community; or where lands are taken into trust as part of a
settlement of a land claim; or the initial reservation of an
Indian tribe is acknowledged by the Secretary under the
Federal acknowledgement process; or where lands are restored
for an Indian tribe that is restored to federal recognition.
[[Page S3416]] Lastly, subsection (a) provides that nothing
in this section may affect or diminish the authority and
responsibility of the Secretary to take land into trust.
Subsection (b) provides that the provisions of the Internal
Revenue Code with regard to reporting and withholding taxes
on winnings and the provisions of the Bank Secrecy Act
relating to the reporting requirements for cash transactions
of $10,000 or greater will apply to Indian gaming operations
which are regulated by this Act.
Subsection (c) provides that the Commission shall make
available to a state or the governing body of an Indian tribe
any law enforcement information it has obtained pursuant to
section 7(d), unless otherwise prohibited by law, in order to
assist the state or Indian tribe to carry out its
responsibilities under this Act or any compact approved by
the Secretary.
Section 24. Definition of Financial Institutions. This
section amends section 5312(a)(2) of title 31, United States
Code to include Indian gaming establishments.
Section 3. Conforming Amendments. This section provides for
several amendments to titles 10, 18, 26 and 28 of the United
States Code to conform them to the provisions of this
Act.

Mr. INOUYE. Mr. President, I am pleased to join the esteemed
chairman of the Committee on Indian Affairs today, in the introduction,
for purposes of discussion, of a bill to amend the Indian Gaming
Regulatory Act of 1988.
Mr. President, the impetus for the amendment of the Indian Gaming
Regulatory Act arose a little under 3 years ago when a number of
Governors of the several States called upon the President and the
Congress to address the rulings of Federal district courts interpreting
the act within the context of various State laws. In response, Chairman
McCain and I initiated a dialog involving Governors, attorneys general,
and tribal leaders that we hoped would lead to a consensus with regard
to the manner in which the act would be amended. Although the dialog
did not yield that consensus, it did provide us with considerable
guidance in formulating the amendments that we advance today for the
consideration of all affected parties.
In the interim, there have been a number of rulings from the circuit
courts of appeal that have clarified what has become known as the
scope-of-gaming issue, and the Supreme Court has granted certiorari in
litigation raising the issues associated with the 11th amendment and
the doctrine of Ex parte Young. Nonetheless, the Indian Gaming
Regulatory Act Amendments Act sets forth a process that does not entail
litigation between State and tribal governments. In an effort to
address the 10th amendment concerns of the States, the bill we
introduce today removes any requirement for good-faith negotiations and
provides for tribal-State compacting only if a State elects to engage
in negotiations leading to a compact.
As Chairman McCain has indicated, the 1995 Amendments Act provides
authority for the establishment of minimum Federal standards for the
regulation of Indian gaming, including background investigations,
internal control and licensing standards. The States and the tribes
would participate in the development of recommendations of these
standards through an advisory committee, and the Federal Indian Gaming
Regulatory Commission would hold hearings on those recommendations and
promulgate regulations. It is in the capacity of assuring compliance
with minimum Federal standards that the Commission will have a greater
role to play in the area of class III gaming.
This is a matter that I believe bears some emphasis. Under existing
law, the
National Indian Gaming Commission's responsibilities lie primarily in
the area of class II gaming. Class III gaming is regulated by the State
and tribal governments. Thus, when comparisons are made by some between
the regulatory capacity of Nevada or Atlantic City to the regulatory
authority of the National Indian Gaming Commission, they are comparing
two regulatory systems that oversee those activities that are typically
associated with large casino operations with a regulatory system that
is designed to monitor tribal regulation of bingo halls. I would hope
that as the debate in the Congress on matters of Indian gaming
proceeds, this stark disparity in the type of operation being regulated
will not be lost.

Finally, in an effort to address the constitutional concerns
associated with the Interior Secretary's authority to take land into
trust for gaming purposes, the bill authorizes the Secretary to consult
with the Governor of the State in which the land is located.
Chairman McCain and I wrote to all parties in December of last year
to advise them of our intent to introduce a bill to amend the Indian
Gaming Regulatory Act early in the 104th session of the Congress, and
to request their comments on the substitute amendment to S. 2230, a
bill we introduced in the 103d session of the Congress. The National
Governors Association [NGA] requested that we delay introduction of a
new measure, and we indicated that we would delay introduction until
March. Unfortunately, at the scheduled time of introduction, the
committee has not had the benefit of the Governors' views on these
matters--and so the bill we introduce today is substantially lacking in
that respect. However, as Chairman McCain has indicated, we look
forward to working with all of the affected governments--Federal,
State, and tribal--in the further refinement of this measure.
In conclusion, I want to thank the chairman of the Committee on
Indian Affairs for his kind comments, and to commend him on his
leadership of the committee in the 104th session of the
Congress.
______

By Mr. SPECTER:
S. 488. A bill to amend the Internal Revenue Code of 1986 to impose a
flat tax only on the earned income of individuals and the business
taxable income of corporations, and for other purposes; to the
Committee on Finance.

the flat tax act of 1995

Mr. SPECTER.
Mr. President, I now turn to the introduction of the modified flat
tax bill entitled the Flat Tax Act of 1995. This is a proposal which
would simplify the filing of Federal tax returns, would provide for
fairness among all taxpayers, and would stimulate economic growth in
the United States. As these proceedings of the U.S. Senate are being
watched on C-SPAN2, I am confident that thousands of Americans are
sitting at their desks with an ear to television but an eye to their
tax returns and they are poring over the complexities of the Federal
tax laws.

This bill would permit the American taxpayer to file his or her
return on a small, 10-line postcard. It would do so because it retains
the principles of a flat tax, which have long been discussed but not
really considered in sufficient depth and not acted upon by the
American Congress. This flat tax would be a 20-percent rate, with
deductions limited to interest on home mortgages up to $100,000 in
borrowing and charitable deductions up to $2,500.
The entire return could be filled out on a simple 10-line postcard.
This postcard would identify the taxpayer, specify the total amount of
wages, salaries, pensions, and retirement benefits, list the deductions
and exemptions, and allow taxpayers to compute their taxes on this
simple postcard form.
Beyond simplicity, and the simplicity is of great importance, we now
have reliable estimates that Americans spend some $5.4 billion a year
on their tax returns. The Internal Revenue Service regulations have
grown from 744,000 words in 1955 to some 5,600,000 words at the present
time. The Internal Revenue Service is a mammoth bureaucracy, with
annual spending of $13 billion on the IRS bureaucracy alone, with
110,000 employees in over 650 offices nationwide. The compliance costs
to the American people are almost $200 billion a year.
We all know that the greatest impediment in confidence between the
American Government and the American citizen is concern with the
Internal Revenue Service. How often have you and I received those
automatic computer printouts from the IRS, written them a letter,
written them a second letter or multiple letters, and finally had a
conference to work out some bureaucratic computer error? And most of
the time, no additional tax is needed.
This legislation would liberate the American people to devote their
time and energy to productive pursuits.
A second major advantage to my flat tax bill is that there would be
an enormous increase in growth. This growth would occur because this
flat tax would not impose any tax burden on interest, on dividends, or
capital gains because
[[Page S3417]] all of those items of income would have been taxed at
the source; that is, at the business level.
Another benefit of the flat tax is the projected growth in the
economy. From the point of view of growth, reliable estimates are that
we would have an increase in the gross national product of some $2
trillion during the course of a 7-year period--an increase of some 28
percent.
We would also benefit from increased savings, which would mean that
the United States of America would be less dependent on borrowing from
foreign sources. These increased savings would substantially change the
great imbalance we have now, where we have massive interest payments on
foreign debt flowing abroad.
Additionally, in terms of fairness, there would be a lesser tax on
those in the lower brackets by having an increase in the personal
allowance for $16,500 for married couples filing jointly, $9,500 for
single taxpayers, $14,000 for single head of households, and an
exemption of $4,500 for each dependent. That would be substantially
more than under the present code and would enable a family of four
earning $25,500 to pay no taxes at all. A family of four earning up to
$30,000 a year would pay very minimal or no taxes at all. The effective
tax rate would be as low as 12.7 percent for an average projection of a
family earning $100,000 a year.
This proposal is revenue neutral based upon the computations made by
Professor Hall and Professor Rabushka of Stanford's Hoover Institute.
They have elaborately projected a national flat tax with no deductions
and are calling for a rate of some 19 percent to have tax neutrality.
This bill deviates from what Professors Hall and Rabushka have proposed
by having the allowance of charitable contributions of up to $2,500 a
year and the deduction for interest on home mortgages with a maximum
borrowing of up to $100,000 a year.
The computations provided by the Joint Tax Committee show that the
cost will be $35 billion a year to the Government for the interest
deduction on borrowings up to $100,000 a year, and $13 billion for the
charitable contributions up to $2,500 a year. The computation is that
the additional 1 percent in my flat tax above Hall and Rabushka would
cover those deductions.
I might say the computation is necessarily inexact because the model
used by the Joint Tax Committee was on a national flat tax on
individuals alone while this proposal is a national flat tax on both
individuals and businesses. The Hall-Rabushka proposal is very similar
to the proposal made by Congressman Armey last year with the
differences being in the allowance here for interest and charitable
contributions. Also, a difference between this plan and the flat tax
plan of Congressman Armey is that Congressman Armey did not provide for
automatic withholding.
Mr. President, my interest in tax policy is longstanding, originating
during my law school days. Some of my early practice of law included
some tax work. And years ago, I published an article on the subject in
the Villanova Law Review raising an issue of fairness as to the pension
and profit sharing deductions for professional associations contrasted
with corporations.
This is a subject where I debated my former colleague, Senator John
Heinz, almost 20 years ago in our contest for the Republican nomination
to the U.S. Senate in 1976 based upon legislation which he had
introduced in the House of Representatives where he had suggested very
substantial cuts in a good many deductions.
Mr. President, in offering this legislation, it is not cast in stone,
but I think it is high time that the U.S. Senate consider in some
detail the benefits of this national flat tax proposal or the modified
Flat Tax Act which I am suggesting today.
The benefits are very, very substantial in terms of simplicity,
growth, and fairness.
Mr. President, I ask unanimous consent that the full text of my
statement be printed in the Record, as well as the text of the
legislative proposal itself.
Mr. President, as April 15 rapidly approaches--and as I present this
floor statement--millions of Americans are spending their evenings
poring over page after page of IRS instructions, going through their
records looking for information and struggling to find and fill out all
the appropriate forms on their Federal tax returns. At the same time, a
patchwork quilt of deductions, credits, and special exceptions lets
some Americans pay less than their fair share of taxes. Year after
year, we continue to ask the same question--isn't there a better way?
Today I am introducing legislation that provides that better way. I
am introducing legislation which will fundamentally revise the present
Tax Code, with its myriad rates, deductions, and instructions. Instead,
the legislation I offer today would institute a simple, flat 20 percent
tax rate for all individuals and businesses. It will allow all
taxpayers to file their April 15 tax returns on a simple postcard. This
legislation is a vital first step in simplifying our Nation's Tax Code
and redirecting our collective energies toward productivity and growth.
This proposal is not in stone, but is intended to move the debate
forward as the first such legislation to be introduced this term in the
Senate, by focusing attention on three key principles which are
critical to an effective and equitable taxation system: simplicity,
fairness, and economic growth.
Over the years, I have devoted considerable time and attention to
analyzing our Nation's Tax Code and the policies which underlie it. I
began this study of the complexities of the Tax Code 40 years ago as a
law student at Yale University. I included some tax law as part of my
practice in my early years as an attorney in Philadelphia. In the
spring of 1962, I published a law review article in the Villanova Law
Review, ``Pension and Profit Sharing Plans: Coverage and Operation for
Closely Held Corporations and Professional Associations,'' 7 Villanova
L. Rev. 335, which in part focused on the inequity in making tax-exempt
retirement benefits available to some kinds of businesses but not
others. It was apparent then, as it is now, that the very complexities
of the Internal Revenue Code could be used to give unfair advantage to
some; and made the already unpleasant obligation of paying taxes a real
nightmare for many Americans.
I became interested many years ago in the practicality and simplicity
of a flat tax as a way to reduce the burden on working Americans. My
former Senate colleague, John Heinz, while he was in the House of
Representatives, introduced H.R. 636, which would have eliminated
numerous deductions, including the deductibility of home mortgage
interest, charitable contributions, the investment tax credit, the oil
depletion allowance and other exemptions, exclusions and deductions.
Last fall, I had discussions with Congressmen Richard Armey, now the
House majority leader, about his flat tax proposal, which he introduced
as H.R. 4585. Since then, my staff and I have studied the flat tax at
some length and have engaged in a host of discussions with economists
and tax experts, including the staff of the Joint Committee on
Taxation, to evaluate the economic impact and viability of a flat tax.
Based on those discussions, and on the revenue estimates supplied to
us, I have concluded that a simple flat tax at a rate of 20 percent on
all business and personal income can be enacted without reducing
Federal revenues, and I offer such a bill today.
The flat tax will help reduce the size of Government and allow
ordinary citizens to have more influence over how their money is spent
because they will spend it and not the Government. With a simple 20-
percent flat tax rate in effect, the average person can easily see the
impact of any additional Federal spending proposal on his or her own
paycheck. By creating strong incentives for savings and investment, the
flat tax will have the beneficial result of making available larger
pools of capital for expansion of the private sector for the economy--
rather than more tax money for big Government. This will mean more jobs
and, just as important, more better paying jobs.
As a matter of Federal tax policy, there has been considerable
controversy over whether tax breaks should be used to stimulate
particular kinds of economic activity, or whether tax policy should be
neutral, leaving people to do what they consider best from a purely
economic point of view. Our current Tax Code attempts to use tax policy
to direct economic activity,
[[Page S3418]] but experience under that Code has demonstrated that so-
called tax breaks are inevitably used as the basis for tax shelters
which have no real relation to solid economic purposes, or to the
activities which the tax laws were meant to promote. Even when the
Government responds to particular tax shelters with new and often
complex revisions of the regulations, clever tax experts are able to
stay one or two steps ahead of the IRS bureaucrats by changing the
structure of their business transactions and then claiming some legal
distinctions between the taxpayer's new approach and the revised IRS
regulations and precedents.
Under the massive complexity of the current IRS Code, the battle
between $500-an-hour tax lawyers and IRS bureaucrats to open and close
loopholes is a battle the Government can never win. Under the flat tax
bill I offer today, there are no loopholes, and tax avoidance through
manipulations will become a thing of the past.
The basic model for this legislation comes from a plan created by
Professors Robert Hall and Alvin Rabushka of the Hoover Institute at
Stanford University. Their plan envisioned a flat tax with no
deductions whatever. After considerable reflection, I have decided to
include limited deductions for home mortgage interest on up to $100,000
in borrowing and charitable contributions up to $2,500 in the
legislation I offer today. While this modification undercuts the pure
principle of the flat tax, and does continue the use of tax policy to
promote homebuying and charitable contributions by retaining those
deductions, I believe that those two deductions are so deeply ingrained
in the financial planning of American families that they should be
retained as a matter of fairness and public policy--and also political
practicality. With those two deductions maintained, passage of a
modified flat tax will be difficult; but without them, probably
impossible.
In my judgment, an indispensable prerequisite to enactment of a
modified flat tax is revenue neutrality. Professor Hall advised that
the revenue neutrality of the Hall-Rabushka proposal, which uses a 19-
percent rate, is based on a well documented model founded on reliable
governmental statistics. The bill offered today raises that rate from
19 to 20 percent to accommodate retaining limited home mortgage
interest and charitable deductions. A preliminary estimate by the
Committee on Joint Taxation places the annual cost of the home interest
deduction at $35 billion, and the cost of the charitable deduction at
$13 billion. While the revenue calculation is complicated because the
Hall-Rabushka proposal encompasses significant revisions to business
taxes as well as personal income taxes, there is a sound basis for
concluding that the 1-percent increase in rate would pay for the two
deductions. Revenue estimates for Tax Code revisions are difficult to
obtain and are, at best, judgment calls based on projections from fact
situations with a myriad of assumed variables. It is possible that some
modification may be needed at a later date to guarantee revenue
neutrality.
This legislation offered today is quite similar to the bill
introduced in the House by Congressman Armey, which was itself modeled
after the Hall-Rabushka proposal and uses much of the same legislative
language as the Armey bill. The flat tax offers great potential for
enormous economic growth, in keeping with principles articulated so
well by former Congressman Jack Kemp. This proposal taxes business
revenues fully at their source, so that there is no personal taxation
on interest, dividends and capital gains. Restructured in this way, the
tax code can become a powerful incentive for savings and investment--
which translates into economic growth and expansion, more and better
jobs, and a rising standard of living for all Americans.
In this Congress, we have so far been concerned with the work of
reducing the size and cost of Government, and this is work which is
vitally important. But the work of downsizing Government is only one
side of the coin; what we must do at the same time, and with as much
energy and care, is to grow the private sector. As we reform the
welfare programs and Government bureaucracies of past administrations,
we must replace those programs with a prosperity that extends to all
segments of American society through private investment and job
creation--which can have the additional benefit of producing even lower
taxes for Americans as economic expansion adds to Federal revenues.
Just as Americans need a tax code that is fair and simple, they also
are entitled to tax laws designed to foster rather than retard economic
growth. The bill I offer today embodies those principles.
Professors Hall and Rabushka have summarized the advantages of their
proposals as follows:

The tax on families is fair and progressive--the poor pay
no tax at all, and the fraction of income that a family pays
rises with income. The system is simple and easy to
understand. And the tax operates on the consumption-tax
principle [encourages savings; discourages consumption]--
families are taxed on what they take out of the economy, not
what they put into it
Our system rests on a basic administrative principle:
income should be taxed exactly once, as close as possible to
its source. Today's tax system violates this principle in all
kinds of ways. Some kinds of income--like fringe benefits--
are never taxed at all. Other kinds, like dividends and
capital gains, are taxed twice. And interest income, which is
supposed to be taxed once, escapes taxation completely in all
too many cases, where clever taxpayers arrange to receive
interest beyond the reach of the IRS.
Under our plan, all income is taxed at the same rate.
Equality of tax rates is a basic concept of the flat tax. Its
logic is much more profound than just the simplicity of
calculation with a single tax rate. Whenever different forms
of income are taxed at different rates or different taxpayers
face different rates, the public figures out how to take
advantage of the differential.
Limiting the burden of taxes on the poor is a central
principle of tax reform. Some ideas for tax simplification
and reform flout this principle--neither a federal sales tax
nor a value-added tax is progressive. Instead, all citizens,
rich and poor alike, pay essentially the same fraction of
their spending in taxes. We reject sales and value-added
taxes for this reason. . . .
Exempting the poor from taxes does not require graduated
tax rates rising to high levels for upper-income taxpayers. A
flat rate, applied to all income above a generous personal
allowance, provides progressivity without creating important
differences in tax rates. Graduated taxes automatically
create differences in tax rates among taxpayers, with all the
attendant opportunities for leakage. Because it is high-
income taxpayers who have the biggest incentive and the best
opportunity to use special tricks to exploit tax-rate
differentials, applying the same tax rate to these taxpayers
for all of their income in all years is the most important
goal of flat-rate taxation. . . .
We believe that the simplicity of our system is a central
feature. Complex tax forms and tax laws do more harm than
just deforesting America. Complicated taxes require expensive
advisers for taxpayers and equally expensive reviews and
audits by the Government. A complex tax invites the
taxpayer to search for a special feature to exploit to the
disadvantage of the rest of us. And complex taxes diminish
confidence in government, inviting a breakdown in
cooperation with the tax system and the spread of outright
evasion.

My plan, which like Representative Armey's is based on the Hall-
Rabushka analysis, differs from the legislation introduced by
Representative Armey in four key respects: First, my bill contains a
20-percent flat tax rate. Second, this bill would retain modified
deductions for mortgage interest and charitable contributions, which
will require a 1 percent higher tax rate than otherwise. Third, my bill
would maintain the automatic withholding of taxes from an individual's
paycheck. Lastly, my bill is designed to be revenue neutral, and thus
will not undermine our vital efforts to balance the Nation's budget.
The estimate of revenue neutrality is based on the Hall-Rabushka
analysis together with preliminary projections supplied by the Joint
Committee on Taxation on the modifications proposed in this bill
The key advantages of this flat tax plan are threefold: First, it
will dramatically simplify the payment of taxes. Second, it will remove
much of the IRS regulatory morass now imposed on individual and
corporate taxpayers, and allow those taxpayers to devote more of their
energies to productive pursuits. Third, since it is a plan which
rewards savings and investment, the flat tax will spur economic growth
in all sectors of the economy as more money flows into investments and
savings accounts, and as interest rates drop. By contrast, there will
be a contraction of the IRS if this proposal is enacted.
Under this tax plan, individuals would be taxed at a flat rate of 20
percent on all income they earn from
[[Page S3419]] wages, pensions, and salaries. Individuals would not be
taxed on any capital gains, interest on savings, or dividends--since
those items will have already been taxed as part of the flat tax on
business revenue. The flat tax will also eliminate all but two of the
deductions and exemptions currently contained within the Tax Code.
Instead, taxpayers will be entitled to personal allowances for
themselves and their children: $9,500 for a single taxpayer, $14,000
for a single head of household and $16,500 for a married couple filing
jointly; and $4,500 per child or dependent. These personal allowances
would be adjusted annually for inflation.
In order to ensure that this flat tax does not unfairly impact low
income families, the personal allowances contained in my proposal are
much higher than the standard deduction and personal exemptions allowed
under the current Tax Code. For example, in 1994, the standard
deduction is $3,800 for a single taxpayer, $5,600 for a head of
household, and $6,350 for a married couple filing jointly, while the
personal exemption for individuals and dependents is $2,450. Thus,
under the current Tax Code, a family of four which does not itemize
deductions would pay tax on all income over $16,500--personal
exemptions of $9,800 and a standard deduction of $6,350. By contrast,
under my flat tax bill, that same family would receive a personal
exemption of $25,500, and would pay tax only on income over that
amount.
My legislation retains the provisions for the deductibility of
charitable contributions up to a limit of $2,500 and home mortgage
interest on up to $100,000 of borrowing. Retention of these key
deductions will, I believe, enhance the political salability of this
legislation and allow the debate on the flat tax to move forward. If a
decision is made to eliminate these deductions, the revenue saved could
be used to reduce the overall flat tax rate from 20 to 19 percent.
With respect to businesses, the flat tax would also be a flat rate of
20 percent. My legislation would eliminate the intricate scheme of
complicated depreciation schedules, deductions, credits, and other
complexities that go into business taxation in favor of a much-
simplified system that taxes all business revenue less only wages,
direct expenses and purchases--a system with much less potential for
fraud, ``creative accounting,'' and tax avoidance.
Businesses would be allowed to expense 100 percent of the cost of
capital formation, including purchases of capital equipment, structures
and land, and to do so in the year in which the investments are made.
The business tax would apply to all money not reinvested in the company
in the form of employment or capital formation--thus fully taxing
revenue at the business level and making it inappropriate to retax the
same money when passed on to investors as dividends or capital gains.
Professors Hall and Rabushka summarize the benefits from this kind of
flat taxation of business revenue as follows:

The business tax is a giant, comprehensive withholding tax
on all types of income other than wages, salaries, and
pensions. It is carefully designed to tax every bit of income
outside of wages, but to tax it only once. The business tax
does not have deductions for interest payments, dividends, or
any other type of payment to the owners of the business. As a
result, all income that people receive from business activity
has already been taxed. Because the tax has already been
paid, the tax system does not need to worry about what
happens to interest, dividends, or capital gains after these
types of income leave the firm. The resulting simplification
and improvement in the tax system is enormous. Today, the IRS
receives over a billion Form 1099s, which keep track of
interest and dividends, and must make an overwhelming effort
to match these forms to the 1040s filed by the recipients.
The only reason for a Form 1099 is track income as it makes
its way from the business where it originates to the ultimate
recipient. Not a single Form 1099 would be needed under a
flat tax with business income taxed at the source.

Let me now turn to a more specific discussion of the advantages of
the flat tax legislation I offer today.

simplicity

The first major advantage to this flat tax is simplicity. According
to reliable studies, Americans spend approximately 5.4 billion hours
each year filling out tax forms. Much of this time is spent burrowing
through IRS laws and regulations, which, according to the Tax
Foundation, have grown from 744,000 words in 1955 to 5.6 million words
in 1994. The Internal Revenue Code annotations alone have grown to 21
volumes of mind-numbing detail and minutiae. Even those IRS forms which
are intended to be simple are not--the instructions for the 1040EZ
form--the so-called easy form--alone comprise 17 small-print pages.
Whenever the Government gets involved in any aspect of our lives, it
can covert the most simple goal or task into a tangled array of
complexity, frustration and inefficiency. By way of example, most
Americans have become familiar with the absurdities of the Government's
military procurement programs. If these programs have taught us
anything, it is how a simple purchase order for a hammer or a toilet
seat can mushroom into thousands of words of regulations and
restrictions when the government gets involved. The Internal Revenue
Service is certainly no exception. Indeed, it has become a distressly
common experience for taxpayers to receive computerized printouts
claiming that additional taxes are due, which require repeated
exchanges of correspondence or personal visits before it is determined,
as it so often is, that the taxpayer was right in the first place.
The plan offered today would eliminate these kinds of frustrations
for millions of taxpayers. This flat tax would enable us to scrap the
great majority of the IRS rules, regulations and instructions and
delete literally millions of words from the Internal Revenue Code.
Instead of tens of millions of hours of nonproductive time spent in
compliance with--or avoidance of--the Tax Code, taxpayers would spend
only the small amount of time necessary to fill out a postcard-sized
form. Both business and individual taxpayers would thus find valuable
hours freed up to engage in productive business activity, or for more
time with their families, instead of poring over tax tables, schedules
and regulations.
The flat tax I have proposed can be calculated just by filling out a
small postcard which would require a taxpayer only to answer a few easy
questions. The postcard would ask for the following information:
Form 1--Individual Wage Tax, 1995

Your first name and initial (if joint return, also give
spouse's name and initial):
Your social security number:
Home address (number and street including apartment number
or rural route):
Spouse's social security number:
City, town, or post office, state, and ZIP code:
1. Wages, salary, pension and retirement benefits:
2. Personal allowance (enter only one):
$16,500 for married filing jointly
$9,500 for single
$14,000 for single head of household
3. Number of dependents, not including spouse, multiplied
by $4,500:
4. Mortgage interest on debt up to $100,000 for owner-
occupied home:
5. Cash or equivalent charitable contributions (up to
$2,500):
6. Total allowances and deductions (lines 2, 3, 4, 5):
7. Taxable compensation (line 1 less line 6, if positive;
otherwise zero):
8. Tax (20% of line 7):
9. Tax withheld by employer:
10. Tax or refund due (difference between lines 8 and 9):

Filing a tax return would become a manageable chore, not a seemingly
endless nightmare, for most taxpayers.

cutting back government

Along with the advantage of simplicity, enactment of this flat tax
bill will help to remove the burden of costly and unnecessary
government regulation, bureaucracy and redtape from our everyday lives.
The heavy hand of government bureaucracy is particularly onerous in the
case of the Internal Revenue Service, which has been able to extend its
influence into so many aspects of our lives.
In 1994, the IRS employed over 110,000 people, spread out over 650
offices across the United States. Its budget was in excess of $13
billion, with some $7.1 billion spent annually just to administer the
tax laws, and another $4 billion for enforcement. By simplifying the
Tax Code and eliminating most of the IRS' vast array of rules and
regulations, the flat tax would enable us to cut a significant portion
of the IRS budget, including the bulk of the funding now needed for
enforcement and administration.

[[Page S3420]]

In addition, a flat tax would allow taxpayers to redirect their time,
energies, and money away from the yearly morass of tax compliance.
According to the Tax Foundation, in 1994, businesses spent
approximately $127 billion in compliance with the Federal tax laws, and
individuals spent an additional $65 billion, for a total of $192
billion. Moneys spent by businesses and investors in creating tax
shelters and finding loopholes could be instead directed to productive
and job-creating economic activity. With the adoption of a flat tax,
the opportunities for fraud and cheating would also be vastly reduced,
allowing the Government to collect, according to some estimates, over
$120 billion annually.

economic growth

The third major advantage to a flat tax is that it will be a
tremendous spur to economic growth. Harvard economist Dale Jorgenson
estimates adoption of a flat tax like the one offered today would
increase future national wealth by over $2 trillion, in present value
terms, over a 7-year period. The economic principles are fairly
straightforward. Our current tax system is inefficient; it is biased
toward too little savings and too much consumption. The flat tax
creates substantial incentives for savings and investment by
eliminating taxation on interest, dividends, and capital gains--and tax
policies which promote capital formation and investment are the best
vehicle for creation of new and high paying jobs, and for a greater
prosperity for all Americans.
It is well recognized that to promote future economic growth, we need
not only to eliminate the Federal Government's reliance on deficits and
borrowed money, but to restore and expand the base of private savings
and investment that has been the real engine driving American
prosperity throughout our history. These concepts are interrelated, for
the Federal budget deficit soaks up much of what we have saved, leaving
less for businesses to borrow for investments.
It is the sum total of savings by all aspects of the U.S. economy
that represented the pool of all capital available for investment--in
training, education, research, machinery, physical plant, et cetera--
and that constitutes the real seed of future prosperity. The statistics
here are daunting. In the 1960's the net U.S. national savings rate was
8.2 percent, but it has fallen to a dismal 1.5 percent. In recent
international comparisons, the United States has the lowest savings
rate of any of the G-7 countries. We save at only one-tenth the rate of
the Japanese, and only one-fifth the rate of the Germans, which is
clearly reflected in the comparative growth rates of our economies over
the last three decades.
An analysis of the components of U.S. savings patterns shows that
although the Federal budget deficit is the largest cause of dissavings,
both personal and business savings rates have declined significantly
over the past three decades. Thus, to recreate the pool of capital
stock that is critical to future U.S. growth and prosperity, we have to
do more than just get rid of the deficit. We have to very materially
raise our levels of private savings and investment. And we have to do
so in a way that will not cause additional deficits.
The less money people save, the less money is available for business
investment and growth. The current tax system discourages savings and
investment, because it taxes the interest we earn from our savings
accounts, the dividends we make from investing in the stock market, and
the capital gains we make from successful investments in our homes and
the financial markets. Indeed, under the current law these rewards for
saving and investment are not only taxed, they are overtaxed--since
gains due solely to inflation, which represent no real increase in
value, are taxed as if they were really profit.
With the limited exceptions of retirement plans and tax-free
municipal bonds, our current Tax Code does virtually nothing to
encourage personal savings and investment, or to reward it over
consumption. As William Schreyer wrote recently in the Harvard Business
Review, ``the budget deficit is only one part of a larger national
problem: the U.S. saving deficit.''
This bill will change this system, and address this problem. The
proposed legislation reverses the current skewed incentives by
promoting savings and investment by individuals and by businesses.
Individuals would be able to invest and save their money tax-free and
reap the benefits of the accumulated value of those investments without
paying a capital gains tax upon the sale of these investments.
Businesses would also invest more as the flat tax allowed them to
expense fully all sums invested in new equipment and technology in the
year the expense was incurred, rather than dragging out the tax
benefits for these investments through complicated depreciation
schedules. With greater investment and a larger pool of savings
available, interest rates and the costs of investment would also drop,
spurring even further economic growth.
Critics of the flat tax have argued that we cannot afford the revenue
losses associated with the tremendous savings and investment incentives
the bill affords to businesses and individuals. Those critics are
wrong. Not only is this bill carefully crafted to be revenue neutral,
but historically we have seen that when taxes are cut, revenues
actually increase, as more taxpayers work harder for a larger share of
their take-home pay, and investors are more willing to take risks in
pursuit of rewards that will not get eaten up in taxes. As one example,
under President Kennedy individual tax rates were lowered, investment
incentives including the investment tax credit were created and then
expanded, depreciation rates were accelerated, and yet between 1962 and
1967 gross annual Federal tax receipts went from $99.7 to $148
billion--an increase of nearly 50 percent. More recently under
President Reagan, after his tax cuts in the early 1980's, Government
tax revenues rose from just under $600 billion in 1981 to nearly $1
trillion in 1989. In fact, the Reagan tax cut program helped to bring
about the longest peacetime expansion of the U.S. economy in history.
There is every reason to believe that the flat tax proposed here can do
the same--and by maintaining revenue neutrality in this flat tax
proposal, as we have, we can avoid any increases in annual deficits and
the national debt.
In addition to increasing Federal revenues by fostering economic
growth, the flat tax can also add to Federal revenues without
increasing taxes by closing tax loopholes. The Congressional Research
Service estimates that for fiscal year 1995, individuals will shelter
more than $393 billion in tax revenue in legal loopholes, and
corporations will shelter an additional $60 billion. There may well be
additional moneys hidden in quasi-legal or even illegal tax shelters.
Under a flat tax system, all tax shelters will disappear and all income
will be subject to taxation.
The larger pool of savings created by a flat tax will also help to
reduce our dependence
on foreign investors to finance both our Federal budget deficits and
our private sector economic activity. Currently, of the publicly held
Federal debt, that is, the portion was not held by various Federal
trust funds like Social Security, nearly 20 percent is held by
foreigners--the highest level in our history. By contrast, in 1965 less
than 5 percent of publicly held national debt was foreign-owned. We are
paying over $40 billion in annual interest to foreign governments and
individuals, and this by itself accounts for roughly one-third of our
whole international balance of payments deficit. These massive interest
payments are one of the principal sources of American capital flowing
abroad, a factor which then enables foreign investors to buy up
American business. During the period 1980-91, the gross value of U.S.
assets owned by foreign businesses and individuals rose 427 percent
from $543 billion to $2.3 trillion.

The substantial level of foreign ownership of our national debt
creates both political and economic problems. On the political level,
there is at least the potential that some foreign nation may assume a
position where its level of investment in U.S. debt gives it
disproportionate leverage over American policy. Economically,
increasing foreign investment in Treasury debt furthers our national
shift from a creditor to a debtor nation, weakening the dollar and
undercutting our international trade position. A recent Congressional
Research Service report put it succinctly: ``To pay for today's
capital
[[Page S3421]] inflows, tomorrow's economy will have to ship more
abroad in exchange for fewer foreign products. These payments will be a
consequence in part of heavy Federal borrowing since 1982.'' With a
flat tax in place, America's own supply of capital can be replenished,
and we can return to our historic position as an international creditor
nation rather than a debtor.
Professors Hall and Rabushka describe the pro-growth aspects of the
flat tax in this way:

Today's absurd system taxes entrepreneurial success at 60
percent while it actually subsidizes leveraged investment.
Our simple tax would put the same low rate on both
activities. A huge redirection of national effort would
follow. And the redirection could only be food for national
income. There is nothing wrong with shopping centers,
apartment buildings, airplanes, boxcars, medical equipment,
and cattle, but tax advantages have made us invest far too
much in them, and their contribution to income is
correspondingly low. Real growth will come when effort and
capital flow back into innovation and the development of new
business, the areas where confiscatory taxation has
discouraged investment. The contribution to income from new
resources will be correspondingly high.
We project a 3 percent increase in output from increased
total work in the U.S. economy and an additional increment to
total output of 3 percent from added capital formation and
dramatically improved entrepreneurial incentives. The sum of
6 percent is our best estimate of the improvement in real
incomes after the economy has had seven years to assimilate
the changed economic conditions brought about by the simple
flat tax. Both the amount and the timing are conservative.
Even this limited claim for economic improvement represents
enormous progress. By 2002, it would mean each American will
have an income about $1,900 higher, in 1995 dollars, as a
consequence of tax reform.

As Professors Hall and Rabushka state it, the growth case for a flat
tax is compelling. It is even more compelling in the case of a tax
revision that is simple and demonstrably fair.

fairness

By substantially increasing the personal allowances for taxpayers and
their dependents, this flat tax proposal ensures that poorer taxpayers
will pay no tax and that taxes will not be regressive for lower and
middle income taxpayers. At the same time, by closing the hundreds of
tax loopholes which are currently used by wealthier taxpayers to
shelter their income and avoid taxes, this flat tax bill will also
ensure that all Americans pay their fair share.
A variety of specific cases illustrate the fairness and simplicity of
this flat tax:
Case No. 1.--Married couple with two children, rents home, yearly
income $30,000

Under Current Law:
Income.........................................................30,000
Four personal exemptions........................................9,800
Standard deduction..............................................6,350
Taxable income.................................................13,850
Tax due under current rates...................................2,081
__________

Marginal rate (percent)..........................................15.0
Effective tax rate (percent)......................................6.9
Under Flat Tax:
Personal allowance.............................................16,500
Two dependents..................................................9,000
Taxable income..................................................4,500
Tax due under flat tax..........................................900
__________

Effective tax rate (percent)......................................3.0

* * * Savings of $1,181 * * *

Case No. 2.--Single individual, rents home, yearly income $45,000

Under Current Law:
Income.........................................................45,000
One personal exemption..........................................2,450
Standard deduction..............................................3,800
Taxable income.................................................38,750
Tax due under current rates...................................7,900
__________

Marginal rate (percent)..........................................28.0
Effective rate (percent).........................................17.6
Under Flat Tax:
Personal allowance..............................................9,500
Taxable income.................................................35,500
Tax due under flat tax........................................7,100
Effective rate (percent).........................................15.8

* * * Savings of $800 * * *

Case No. 3.--Married couple with no children, $140,000 mortgage at 9%,
yearly income $70,000

Under Current Law:
Income........................................................$70,000
Two personal exemptions.........................................4,900
Home mortgage deduction........................................12,600
State and local taxes...........................................2,000
Charitable deduction............................................1,400
Taxable income.................................................49,100
Tax due under current rates...................................8,815
__________

Marginal rate (percent)........................................... 28
Effective tax rate (percent).....................................12.6
Under Flat Tax:
Personal allowance.............................................16,500
Home mortgage deduction.........................................9,000
Charitable deduction............................................1,400
Taxable income.................................................43,100
Tax due under flat tax........................................8,620
__________

Effective tax rate (percent).....................................12.3

* * * Savings of $195 * * *

Case No. 4.--Married couple with two children, $240,000 mortgage at 9%,
yearly income $120,000

Under Current Law:
Income.......................................................$120,000
Four personal exemptions........................................9,800
Home mortgage deduction........................................21,600
State and local taxes...........................................6,000
Retirement fund deductions......................................6,000
Charitable deductions...........................................2,500
Taxable income.................................................74,100
Tax due under current rates..................................15,815
__________

Marginal rate (percent)........................................... 31
Effective tax rate (percent).....................................13.2
Under Flat Tax:
Personal allowance.............................................16,500
Two dependents..................................................9,000
Home mortgage deduction.........................................9,000
Charitable deduction............................................2,500
Taxable income.................................................78,500
Tax due under flat tax.........................................15,700
__________

Effective tax rate (percent).....................................13.1

* * * Savings of $115 * * *

Case No. 5.--Married couple, no children, $1,000,000 mortgages at 9
percent on 2 homes, $500,000 income

Under Current Law:
Income.......................................................$500,000
Personal exemptions at this level................................. 0
Home mortgage deductions.......................................90,000
State and local taxes..........................................50,000
Retirement deductions..........................................40,000
Charitable deductions..........................................30,000
Taxable income................................................290,000
Tax due under current rates..................................91,144
__________

Marginal rate (percent)..........................................39.6
Effective tax rate (percent).....................................18.2
Under Flat Tax:
Personal allowance.............................................16,500
Mortgage deduction..............................................9,000
Charitable deduction............................................2,500
Taxable income................................................472,000
Tax due under flat tax.......................................94,400
__________

Effective tax rate (percent).....................................18.9

* * * $3,256 higher taxes * * *

The flat tax legislation that I am offering will retain the element
of progressivity that Americans view as essential to fairness in an
income tax system. Because of the lower end income exclusions, and the
capped deductions for home mortgage interest and charitable
contributions, the effective tax rates under my bill will range from 0
percent for families with incomes under about $30,000 to roughly 20
percent for the highest income groups:

ANNUAL TAXES UNDER 20 PERCENT FLAT TAX FOR MARRIED COUPLE WITH TWO
CHILDREN FILING JOINTLY
------------------------------------------------------------------------
Effective
Income Taxes rate
owed (percent)
------------------------------------------------------------------------
$25,500........................................... None 0
$30,000........................................... None 0
$40,000........................................... $1,300 3.3
$50,000........................................... 2,900 5.8
$60,000........................................... 4,860 8.1
$70,000........................................... 6,820 9.7
$80,000........................................... 8,780 11
$90,000........................................... 10,740 11.9
$100,000.......................................... 12,700 12.7
$125,000.......................................... 17,600 14.1
$150,000.......................................... 22,600 15.1
$200,000.......................................... 32,600 16.3
$250,000.......................................... 42,600 17.0
$500,000.......................................... 92,600 18.5
$1,000,000........................................ 192,600 19.3
------------------------------------------------------------------------
Note: Assumes home mortgage of twice annual income at a rate of 9
percent and charitable contributions up to 2 percent of annual income.

My proposed legislation demonstrably retains the fairness that must
be an essential component of the American tax system.

conclusion

The proposal that I make today is dramatic, but so are its
advantages: a taxation system that is simple, fair and designed to
maximize prosperity for all Americans. A summary of the key advantages
are:
Simplicity: A 10-line postcard filing would replace the myriad forms
and attachments currently required, thus saving Americans up to 5.4
billion hours they currently spend every year in tax compliance.
Cuts Government: The flat tax would eliminate the lion's share of IRS
rules, regulations, and requirements, which have grown from 744,000
words in 1955 to 5.6 million words in 1994. It would also allow us to
slash the mammoth IRS bureaucracy of 110,000 employees spread out over
650 offices nationwide.
Promotes economic growth: Economists estimate a growth of over $2
trillion in national wealth over 7 years, representing an increase of
$1,900 in personal income for every man, woman, and child in America.
Increases efficiency: Investment decisions would be made on the basis
of productivity rather than simply for tax avoidance, thus leading to
even greater economic expansion.
[[Page S3422]] Reduces interest rates: Economic forecasts indicate
that interest rates would fall substantially, by as much as two points,
as the flat tax removes many of the current disincentives to savings.
Lowers compliance costs: Americans would be able to save up to $192
billion they currently spend every year in tax compliance.
Decreases fraud: As tax loopholes are eliminated and the Tax Code is
simplified, there will be far less opportunity for tax avoidance and
fraud, which now amounts to over $120 billion in uncollected revenue
annually.
Reduces IRS costs: Simplification of the Tax Code will allow us to
save significantly on the $13 billion annual budget currently allocated
to the Internal Revenue Service.
Professors Hall and Rabushka have projected that within 7 years of
enactment, this type of a flat tax would produce a 6-percent increase
in output from increased total work in the U.S. economy and increased
capital formation. The economic growth would mean a $1,900 increase in
the personal income of all Americans.
No one likes to pay taxes. But Americans will be much more willing to
pay their taxes under a system that they believe is fair, a system that
they can understand, and a system that they recognize promotes rather
than prevents growth and prosperity. The legislation I introduce today
will afford Americans such a tax system.
______

By Mr. CAMPBELL (for himself and Mr. Brown):
S. 489. A bill to authorize the Secretary of the Interior to enter
into an appropriate form of agreement with, the town of Grand Lake, CO,
authorizing the town to maintain permanently a cemetery in the Rocky
Mountain National Park; to the Committee on Energy and Natural
Resources.

THE ROCKY MOUNTAIN NATIONAL PARK GRAND LAKE CEMETERY ACT OF 1995

Mr. CAMPBELL. Mr. President, on January 26, 1915, Congress passed
legislation creating a 265,726-acre Rocky Mountain National Park. In
1892, long before the park was created, the town of Grand Lake
established a small, less than 5-acre community cemetery that lies
barely 1,000 feet inside the western edge of the park. Apparently, in
the early 1950's, the National Park Service took notice of the cemetery
and issued the town a formal special use permit, which has been renewed
over the years. In 1991, Rocky Mountain National Park apparently
informed the town of Grand Lake that it would issue one final 5-year
special use permit.
This 103-year-old cemetery has become part of the community's
heritage. Grand Lake residents have very strong emotional and personal
attachments to it and need to be assured of its continued use and
designation as a cemetery. The current permit is due to expire in 1996.
All parties have agreed that a more permanent solution was needed to
meet the needs of the community and the resource preservation and
protection intended by the establishment of the park.
Existing measures available to the National Park Service, including
special use permit authority, do not provide for a permanent solution
that satisfies both the park and the community. In addition, special
uses apparently can only be permitted for a maximum period of 5 years.
Given that the town and park agree that the small cemetery is a
permanent use, continued renewal of a 5-year permit is not a realistic
solution.
In an effort to avoid future difficulties, park and town
representatives have agreed that this legislation would offer the best
solution to this problem. Authorizing the continued existence of the
cemetery with specific size and boundaries within the park also
protects park resources. The community has expressed a strong
willingness and desire to assume responsibility for permanent
management of the cemetery. This legislation would authorize the
development of an agreement to turn maintenance responsibilities for
the cemetery and road over to the town, resulting in a financial
savings to the park. It also recognizes the cultural significance of
the cemetery and its strong ties with the history of the Grand Lake
area, which includes the story of Rocky Mountain National Park.
This legislation would negate the need for repeated negotiations
between the community and the National Park Service, and the chance for
misunderstandings. The National Park Service and Grand Lake
representatives have worked long and hard on developing this proposal.
Enactment of this legislation would go a long way in maintaining and
enhancing the spirit of cooperation and goodwill between park and
community that has been achieved during the development of this
resolution.
______

By Mr. GRASSLEY:
S. 490. A bill to amend the Clean Air Act to exempt agriculture-
related facilities from certain permitting requirements, and for other
purposes; to the Committee on Environment and Public Works.

the clean air act amendment act of 1995

Mr. GRASSLEY. 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. 490

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

SECTION 1. DEFINITION OF POTENTIAL TO EMIT.

Section 302(j) of the Clean Air Act (42 U.S.C. 7602(j)) is
amended--
(1) by striking ``(j) Except as otherwise'' and inserting
the following:
``(j) Major Stationary Source and Major Emitting
Facility.--
``(1) In general.--Except as otherwise''; and
(2) by adding at the end the following:
``(2) Agriculture-related facility.--In this subsection,
with respect to an agriculture-related facility, such as a
grain elevator, a grain, feed, or rice mill, or a grain
processing facility;
(A) Air pollutant.--With respect to particulate emissions,
the term `air pollutant' shall include only particulate
matter less than or equal to 10 microns in size.
``(B) Potential to emit.--
``(i) In general.--The term `potential to emit' means the
potential of a facility to emit during a 1-year period under
maximum realistic operation of the facility.
`(ii) Maximum realistic operation.--In determining the
maximum realistic operation of an agriculture-related
facility, the Administrator shall consider--
``(I) the cyclical or seasonal nature of the facility; and
``(II) in the case of a facility in operation on the date
of the determination, the maximum hours of operation of the
facility that actually occurred during any of the preceding 5
years.
``(iii) Equipment, techniques, and procedures.--The
Administrator shall consider the effect of control equipment,
techniques, and procedures in lowering the potential to emit
of an agriculture-related facility.''.

SEC. 2. EXEMPTION FROM PERMITTING REQUIREMENTS.

Section 502 of the Clean Air Act (42 U.S.C. 7661a) is
amended--
(1) in the first sentence of subsection (a), by striking
``any other source (including an area source) subject to
standards or regulations under section 111 or 112,''; and
(2) by adding at the end the following:
``(j) Exemption.--A source shall not be subject to any
regulation or requirement under this section if the source
is--
``(1) not a major source; and
``(2) subject to section 111 or 112.''.
______

By Mr. BREAUX (for himself, Mr. Hollings, Mr. Inouye, Mr.
Cochran, and Mr. Chafee):
S. 491. A bill to amend title XVIII of the Social Security Act to
provide coverage of outpatient self-management training services under
part B of the Medicare Program for individuals with diabetes; to the
Committee on Finance.

the medicare diabetes outpatients self-management training act of 1995

Mr. BREAUX. Mr. President, diabetes is the third leading cause
of death from disease in the United States. It is the leading cause of
blindness in people aged 25 to 74 and the most frequent cause of
nontraumatic lower limb amputations. Diabetes also greatly increases an
individual's chances of succumbing to stroke or heart disease.
What is such a shame, Mr. President, is that diabetes is a condition
that can generally be treated so that major complications do not occur.
In some cases it can even be prevented. While there is no known cure
for diabetes, individuals with the disease can lead completely normal
lives--even extraordinarily productive lives--if they know how to
balance their diet, get enough exercise, and manage their disease.
[[Page S3423]] People with diabetes learn to take care of themselves
through self-maintenance and education programs. Generally, classes are
taken when an individual is diagnosed with the disease and periodically
thereafter in order to keep up with the changes in their condition and
to get the most up-to-date treatments available.
Appropriate preventive education services for those with diabetes
have the potential to save a great deal of money that would otherwise
go for hospitalizations and other acute care costs. Education also
saves these individuals from a great deal of unnecessary pain and
suffering. Studies by the American Diabetes Association and others have
shown that the Medicare program could save $2 to $3 for every $1 spent
on diabetes education.
Medicare currently covers these services in inpatient or
hospitalbased settings and in limited outpatient settings--specifically
hospital outpatient departments or rural health clinics. Unfortunately,
Medicare does not currently cover education services if they are given
in any other outpatient setting, such as a doctor's office. Even the
limited coverage of outpatient settings that is currently permitted
under Medicare is subject to State-by-State variation according to
interpretation by the program's fiscal intermediaries.
The Medicare Diabetes Outpatient Self-Management Training Act of
1995, which I am reintroducing today along with Senators Chafee,
Cochran, Inouye, and Hollings, would provide for Medicare coverage for
outpatient diabetes education on a consistent basis throughout the
country. The bill would extend Medicare coverage of outpatient programs
beyond hospital-based programs and rural health clinics. It would
direct the Secretary of Health and Human Services to guarantee that
coverage be available only for those services delivered through
programs that meet stringent quality standards. Uniform payment would
be achieved through implementation of new working guidelines.
This legislation is all about preventive medicine and is a sensible
approach that should show savings for the Medicare Program in the long
run. I hope that my colleagues will join me as cosponsors.
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. 491

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 ``Medicare Diabetes Outpatient
Self-Management Training Act of 1995''.

SEC. 2. MEDICARE COVERAGE OF DIABETES OUTPATIENT SELF-
MANAGEMENT TRAINING SERVICES.

(a) In General.--Section 1861(s)(2) of the Social Security
Act (42 U.S.C. 1395x(s)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (O) (as
redesignated by section 147(f)(6)(B)(iii)(II) of the Social
Security Act Amendments of 1994 (Pub. Law 103-432)); and
(2) by inserting after subparagraph (O) the following new
subparagraph:
``(P) diabetes outpatient self-management training services
(as defined in subsection (oo)); and.''.
(b) Definition.--Section 1861 of the Social Security Act
(42 U.S.C. 1395x) is amended by adding at the end the
following new subsection:

``Diabetes Outpatient Self-Management Training Services

``(oo)(1) The term `diabetes outpatient self-management
training services' means educational and training services
furnished to an individual with diabetes by or under
arrangements with a certified provider (as described in
paragraph (2)(A)) if--
``(A) the services are furnished in an outpatient setting
by an individual or entity meeting the quality standards
described in paragraph (2)(B); and
``(B) the physician who is managing the individual's
diabetic condition certifies that the services are needed
under a comprehensive plan of care related to the
individual's diabetic condition to provide the individual
with necessary skills and knowledge (including skills related
to the self-administration of injectable drugs) to
participate in the management of the individual's condition.
``(2) In paragraph (1)--
``(A) a `certified provider' is an individual or entity
that, in addition to furnishing diabetes outpatient self-
management training services, provides other items or
services for which payment may be made under this title; and
``(B) an individual or entity meets the quality standards
described in this paragraph if the individual or entity--
``(i) meets quality standards established by the Secretary;
``(ii) meets applicable standards developed by the National
Diabetes Advisory Board, including any revision of such
standards by the organizations that participated in the
original development of the applicable standards; or
``(iii) is recognized by the American Diabetes Association
as being qualified to furnish the services.''.
(c) Consultation With Organizations in Establishing Payment
Amounts for Services Provided by Physicians.--In establishing
payment amounts under section 1848(a) of the Social Security
Act for physicians' services consisting of diabetes
outpatient self-management training services, the Secretary
of Health and Human Services shall consult with appropriate
organizations, including the American Diabetes Association,
in determining the relative value for such services under
section 1848(c)(2) of such Act.
(d) Effective Date.--The amendments made by this section
shall apply to services furnished on or after January 1,
1996.
______

By Mr. CHAFEE:
S. 492. A bill to authorize the Secretary of Transportation to issue
a certificate of documentation for the vessel Intrepid, to the
Committee on Commerce, Science, and Transportation.

jones act waiver legislation

Mr. CHAFEE. Mr. President, today I am introducing legislation
to issue a certificate of documentation for the vessel Intrepid under
title 46, United States Code.
The Intrepid has a long and proud history in sailing, including
representing the United States in the America's Cup and winning in 1967
and 1971. It is currently U.S.-owned and is the Flagship of the
America's Cup Hall of Fame.
The Intrepid is a 12 meter yacht, 65 feet in length that was built at
the Minneford Boat Yard in City Island, NY in 1967. At the time of its
construction, the vessel employed the breakthrough technology of noted
boat designer Olin Stephen. In a departure from the past, its design
separated the keel and rudder, and added a trim tab on the trailing
edge of the keel. Variations of this technology are still being used
today.
Because the Intrepid was at one point sold to non-U.S. owners and
thus became ineligible to participate in U.S. coastwise trade, the
owners seek a waiver of the Jones Act. They plan to use the vessel only
in limited commercial ventures, and the vessel's use will not adversely
affect the coastwise trade in U.S. waters. If granted this waiver,
Intrepid's owners intend to fully comply with U.S. documentation and
safety requirements.
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. 492

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

SECTION 1. AUTHORIZATION OF CERTIFICATE OF DOCUMENTATION.

Notwithstanding sections 12106, 12107, and 12108 of title
46, United States Code, and section 27 of the Merchant Marine
Act, 1920 (46 App. U.S.C. 883), as applicable on the date of
enactment of this Act, the Secretary of Transportation may
issue a certificate of documentation for the vessel INTREPID,
United States official number 508185.
______

By Mr. CHAFEE:
S. 493. A bill to authorize the Secretary of Transportation to issue
a certificate of documentation for the vessel Consortium; to the
Committee on Commerce, Science, and Transportation.

JONES ACT WAIVER LEGISLATION

Mr. CHAFEE. Mr. President, today I am introducing legislation
to issue a certificate of documentation for the vessel Consortium under
title 46, United States Code.
A recently formed Rhode Island corporation, Marine Consortium, Inc.,
has purchased the 102-foot Camper and Nicholson motoryacht, Consortium.
It is a U.S. documented vessel homeported in Newport, RI, and is
ideally suited for charter operation.
Because Consortium has a foreign built--British--hull, it cannot
undertake charters in U.S. waters. Its owners seek a waiver of this
Jones Act prohibition so that they may engage in
[[Page S3424]] charter operations this summer and in the future.
Operation of the Consortium would build upon the economic vitality of
Newport County. Its owners have also offered to make the vessel
available at no cost to the Newport Preservation Society, the Museum of
Yachting, and the Save the Bay Foundation.
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. 493

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

SECTION 1. AUTHORIZATION OF CERTIFICATE OF DOCUMENTATION.

Notwithstanding sections 12106, 12107, and 12108 of title
46, United States Code, and section 27 of the Merchant Marine
Act, 1920 (46 App. U.S.C. 883), as applicable on the date of
enactment of this Act, the Secretary of Transportation may
issue a certificate of documentation for the vessel
CONSORTIUM, United States official number 1029192.
______

By Mr. JEFFORDS (for himself, Mr. Leahy, Ms. Snowe, Mr. Kennedy,
Mr. Cohen, Mr. Gregg, Mr. Dodd, Mr. Smith, Mr. Chafee, Mr.
Kerry, Mr. Lieberman, and Mr. Pell):
S.J. Res. 28. A joint resolution to grant consent of Congress to the
Northeast Interstate Dairy Compact; read the first time.

northeast interstate dairy compact

Mr. JEFFORDS. Mr. President, I rise today to strongly support the
introduction of a joint resolution to grant the consent of Congress to
the northeast interstate dairy compact. Congress is simply being asked
to ratify a completed piece of legislation--legislation that passed
overwhelmingly in each of the six New England States that the compact
represents.
Mr. President, a great deal of time and effort has gone into creating
the dairy compact, over 6 years in fact. The dairy compact represents a
cooperative effort of six States working collectively to restore the
traditional Federal-State balance to milk regulation. The compact has
been carefully designed so that it will not adversely affect any other
region of the country. Provisions have been set forth in the compact to
protect the interests of farmers and processors outside the compact
region. In addition, there is no cost to the Federal Government.
Mr. President, the dairy compact simply complements the Federal Milk
Marketing Program. It would not supplant or replace Federal law. The
compact regulates only fluid milk, which is milk for beverage use. Milk
for manufacturing purposes such as cheese and ice cream would be
absolutely exempt from the compact. We are talking about a very small
amount of milk in a local market.
Just since 1984, almost a third of the 3,170 farms then operating in
Vermont have shut down. In 1994 alone, Vermont lost 148 farms and if
the downward trend of milk prices continues we will lose more this
year. Vermont dairy farmers are receiving milk prices well below the
cost of production. Current milk prices for farmers are as low as they
were 10 years ago, yet the cost of production and price to the consumer
has increased. Farmers and consumers would both benefit from the
compact's ability to establish a more stable price structure for the
milk they produce and purchase, removing the fluctuations in fluid milk
prices, assuring the region a viable supply of locally produced milk.
The dairy compact is a unique partnership of the region's governments
and the dairy industry supported by a broad coalition of organizations
and people committed to maintaining the vitality of the region's dairy
industry.
The joint resolution being introduced today, has strong support from
both sides of the isle. All 12 Senators from the New England
delegation, representing producing and consuming States have come
together to cosponsor this joint resolution.
Mr. President, I can say with certainty, support for the dairy
compact in New England is impressive. During the New England Governors'
Conference winter meeting, all six New England Governors urged Congress
to approve the dairy compact. A resolution of the New England
Governors' Conference in support of congressional enactment of the
northeast dairy compact was approved and signed by the chair of the New
England Governors, Governor Steve Merrill of New Hampshire.
The Governors of the compact region speak for not only the farmers
and consumers but for the States themselves and the rights of the
States. Mr. President, the message to Congress from Governors
nationwide has been clear. ``Increase the flexibility of states and
support legislation that promotes state and regional policy
initiatives.''
Well Mr. President, this thoroughly thought out compact provides the
opportunity for a partnership between Congress and the States to
strengthen this fundamental federalism movement. It maintains that the
States' constitutional authority, resources, and competence of the
people to govern, is recognized and protected.
Mr. President, I am certain that my colleagues will agree with me
that dairy farmers deserve a fair price for their product. What does it
say about our values when some of the hardest working people. our
farmers, are underpaid and unappreciated? The people of New England
have a right and deserve the chance to help themselves. The joint
resolution that I am introducing today, along with Senator Leahy and my
colleagues from New England gives the region the tools to face the
challenges of improving and stabilizing farm prices.
I urge my colleagues to respect this interstate cooperation and
ratify the dairy compact.
Mr. President, I ask unanimous consent that this one page fact sheet
that explains and addresses the compact appear in the Record.
Mr. President, I unanimous consent ask to have printed in the Record
the resolution of the New England Governors' Conference.
There being no objection, the material was ordered to be printed in
the Record, as follows:

New England Governors'

Conference, Inc.,

Boston, MA, February 13, 1995.
Hon. James M. Jeffords,
Washington, DC.
Dear Senator Jeffords: I understand the Northeast
Interstate Dairy Compact awaits action by the full Senate. On
behalf of the New England Governors' Conference, Inc., I
write to ask your help in moving the Compact bill forward as
quickly as possible.
The attached Resolution of the New England Governors'
Conference, Inc. was adopted unanimously at our recent
meeting in Washington, D.C.
The Dairy Compact has been enacted into law by the six New
England states. We hope you will support this unique
experiment in cooperative federalism. This Compact is a bi-
partisan, state-sponsored, regional response to the chronic
problem of low dairy farm prices. If successfully
implemented, the Compact will stabilize our region's dairy
industry and reinvigorate this crucial segment of our rural
economy, without cost to the federal government or adverse
impact on the national industry.
Thank you for your consideration of this matter.
Very truly yours,
William A. Gildea,
Executive Director.
____

resolution 127--northeast dairy compact

A Resolution of the New England Governors' Conference, Inc.
in support of congressional enactment of the Northeast Dairy
Compact.
Whereas, the six New England states have enacted the
Northeast Interstate Dairy Compact to address the alarming
loss of dairy farms in the region; and
Whereas, the Compact is a unique partnership of the
region's governments and the dairy industry supported by a
broad and active coalition of organizations and people
committed to maintaining the vitality of the region's dairy
industry, including consumers, processors, bankers, equipment
dealers, veterinarians, the tourist and travel industry,
environmentalists, land conservationists and recreational
users of open land; and
Whereas, the Compact would not harm but instead complement
the existing federal structure for milk pricing, nor
adversely affect the competitive position of any dairy
farmer, processor or other market participant in the nation's
dairy industry; and
Whereas, the limited and relatively isolated market
position of the New England dairy industry makes it an
appropriate locality in which to access the effectiveness of
regional regulation of milk pricing, and
Whereas, the Constitution of the United States expressly
authorizes states to enter into interstate compacts with the
approval of Congress and government at all levels
increasingly recognizes the need to promote cooperative,
federalist solutions to local and regional problems; and
[[Page S3425]] Whereas, the Northeast Interstate Dairy
Compact has been submitted to Congress for approval as
required by the Constitution;
Now therefore be it resolved That the New England
Governors' Conference, Inc. requests that Congress approve
the Northeast Interstate Dairy Compact; and
Be it further resolved that, a copy of this resolution be
sent to the leadership of the Senate and the House of
Representatives, the Chairs of the appropriate legislative
committees, and the Secretary of the United States Department
of Agriculture.
Adoption certified by the New England Governors'
Conference, Inc. on January 31, 1995.
Stephen Merrill,
Governor of New Hampshire Chairman.
____

the northeast interstate dairy compact

Was adopted with near-unanimous support by the six New
England state legislatures. It is backed by the New England
Governors Conference, the region's consumer groups, dairy
farmers and processors.
Establishes an interstate commission authorized to regulate
New England dairy farm prices. The commission would help
stabilize fluid milk prices for both consumers and farmers by
establishing a pricing structure which would remove the price
fluctuations that currently exist.
Assures control by the region's consumer states. Four of
the six compact states, Massachusetts, Connecticut, Rhode
Island and New Hampshire, are milk importing states. They
joined the Compact because it promotes as well as protects
the consumer interest.
Complements the federal milk marketing program. It would
not supplant or replace federal law.
Does not discriminate against out-of-region farmers or
processors. Milk will flow into and from the Compact region
in exactly the same manner as occurs under federal law. Any
farmer or processor, regardless of their location, may market
milk in the compact region without competitive disadvantage.
Benefits out-of-region farmers equally with New England
farmers. Thirty percent of New England's milk supply is
produced by New York farmers. These farmers will receive the
same Compact benefits as New England farmers.
Is strictly local in effect. The Compact regulates only
fluid milk. Processors purchasing milk for manufacturing
purposes such as cheese and ice cream would be absolutely
exempt from the Compact.
Protects against the production of surplus milk. Provisions
in the Compact and the Congressional enabling legislation
ensure this result.
Was given a zero score by the Congressional Budget Office.
It will operate without cost to the federal government.

Mr. LEAHY. Mr. President, I rise along with my good friend from
Vermont, Senator Jeffords, and in fact the entire New England
delegation. We rise to introduce a resolution to approve the Northeast
Interstate Dairy Compact.
The compact is an agreement among the six New England States that has
been approved by each of our States' legislatures. It needs approval,
under the Constitution, of the Congress to take effect. Its intent is
simple. It would rationalize the pricing of fluid milk in the New
England States so our farmers can receive a fair price and so the
consumers themselves can play a role in stabilizing these milk prices.
In fact, the roots of this compact are in the country's strong
tradition of federalism. On January 27, 1995, this body overwhelmingly
approved the unfunded mandates bill, which is currently in the House-
Senate conference committee.
Now, throughout that debate, I heard Senator after Senator talk about
giving more power back to our States. They said the Federal Government
should not dictate to the States what they are supposed to do without
providing the money. They said the States should have constraints
lifted so they could take care of their own concerns.
The New England States are concerned about the dairy farmers in our
area. They want to take more control of pricing fluid milk as a minimum
price that is now set by a very complicated system of Federal milk
marketing orders.
So, here is a chance for the Senate to show its support of the
federalist principles it espoused in the unfunded mandates bill. This
measure was approved last year by the Senate Judiciary Committee with
the strong support of Senator Kennedy, and Senator Cohen, but it ended
in a filibuster at the end of last year.
All we are saying from New England, is that we have gotten the
Governors together, Republicans and Democrats; the Senators together,
Republicans and Democrats; legislatures made up of Republicans and
Democrats all came together to agree on a procedure that affects only
the New England States in the pricing and sale of fluid milk. We have
done all this. We now come, as the Constitution requires, to the
Congress to ask for the imprimatur of the Congress, the blessing of the
Congress. We can go forward and handle our own affairs without the
Federal Government telling us what to do.
The New England States want to improve the way milk is priced and the
compact is the way to do it. Farmers are struggling as they receive
prices at or below their cost of production. While farmers struggle
with low prices, the consumers have not seen any benefit. While farm
prices have declined 5 to 10 percent for the last decade, retail milk
prices have increased nearly 30 percent. A recent USDA study shows that
stable prices will help consumers.
The compact would create a commission made up of both farmers and
consumers that would have the authority to adjust and stabilize fluid
milk prices. The commission could raise prices so farmers receive a
fair return for their work, but there are also strong consumer
safeguards. Consumers are represented from each State and it would take
four of the six New England States to approve any price increase. Any
State could drop out of the compact after 1 year.
The compact is designed to work in conjunction with the New England
Federal milk marketing order. The compact would work just as the
Federal order does with all farmers supplying the market benefitting
from any price increase. Milk would move into and out of the region
just as it does now.
This compact is a model of cooperation--it is a partnership between
the States and the Federal Government, between dairy cooperatives and
milk processors and most importantly, between farmers and consumers.
In addition to the New England Governors Association, the National
Association of State Departments of Agriculture, the National Grange,
the National Farmers Organization, and dairy cooperatives from many
regions in the country support this compact.
The New England States are asking for nothing from this body nor the
Federal treasury--just the opportunity to act in concert for their
common good. In the spirit of federalism I urge my colleagues to give
this opportunity to the New England States and approve this compact.
Ms. SNOWE. Mr. President, I am pleased to join my colleagues
from New England in introducing this resolution to grant the consent of
Congress to the Northeast Interstate Dairy Compact. The survival of
many family dairy farms in Maine and the other New England States
depends on prompt passage of this legislation.
As in many other rural regions of the country, agriculture is a
cornerstone of Maine's economy. Within the agricultural sector, dairy
farming usually ranks second or third in cash receipts every year. The
dairy industry provides not only jobs for the farmers themselves, but
for the people who sell farm machinery, service the machinery, sell
fuel and feed, and provide other goods and services. Dairy farms also
account for large shares of the municipal tax base throughout rural
Maine, making them critical contributors to local schools and essential
town services.
Unfortunately, all is not well in the Maine dairy industry. In 1978,
Maine had 1,133 dairy farms. By 1988, that number had declined to 800.
In 1991, there were 680. And by 1994, the number dwindled further to
606.
This precipitous decline in the number of dairy farms can be
attributed to several factors, most notably to the fact that dairy
prices are very low while costs remain high, and these same
circumstances are driving farmers in other New England States out of
business as well. In Maine, the average cost of producing milk is $17
per 100 pounds. The June 1994 Federal order price in the Northeast was
$16.23 per hundred. For August of 1994, the market order price declined
to $14.49. In 1993, the average milk price in the Northeast declined by
54 cents per hundred.
Milk prices simply have not increased in concert with production.
Whereas the retail price for a gallon of milk in 1991 was $2.20 a
gallon, that same gallon still retailed for $2.20 a
[[Page S3426]] gallon in 1994--without adjusting for inflation.
Another contributing factor in the loss of dairy farms is price
volatility. Prices can decline by $2 per hundred in less than 3 months.
These price swings add serious uncertainty to a farmer's daily
existence, making it difficult for the farmer to plan strategically or
to raise capital when needed.
The State of Maine attempted to address this serious problem by
establishing a dairy vendor's fee that stabilized the price that
farmers in Maine received for their milk. The vendor's fee enjoyed the
strong support of both farmers and consumers in Maine, but a Federal
court struck it down in 1994 as a violation of interstate commerce.
According to the Maine Department of Agriculture, the inevitable result
of the court's action will be an accelerating decline in family dairy
farms.
Faced with similar problems throughout the region, the six New
England States banded together to develop a joint regional solution.
They negotiated an interstate dairy compact that will ensure a more
reasonable and stable price for dairy farmers in the region. But it is
a pricing program that also protects the interests of consumers in the
region. As evidence of the balance and fairness achieved by the
compact, both the net-producing and net-consuming States in the region
all approved it with strong support.
The compact creates a regional commission which has the authority to
set minimum prices paid to farmers for fluid, or class I milk.
Delegations from each State comprise the voting membership of the
commission, and these delegations in turn will include both farmer and
consumer representatives. The minimum price established by the
commission is the Federal market order price plus a small over-order
differential that would be paid by milk processing plants. This over-
order price is capped in the compact, and a two-thirds voting majority
of the commission is required before any over-order price can be
instituted.
Mr. President, until the court struck down the Maine dairy vendor's
fee, milk in my State was priced by a mechanism that is similar to that
which could be utilized by the compact commission. Maine's experience
was uniformly positive. Farm prices were stable, and they were higher,
but only modestly higher. No farmers got rich on the minimal adjustment
provided by the over-order price under the vendor's fee program. It
helped them keep their heads above water. Dairy processors and vendors
maintained their business, and consumers did not see any significant
increases in the price of milk. It was a win-win proposition for
everyone in Maine, and I am confident that the compact will achieve the
same success throughout New England without violating the
Constitution's interstate commerce clause.
Although the compact affects only the participating States, the
cosponsors decided to remove any doubt by including language in the
resolution that provides explicit assurances to farmers and processors
in States outside the region. These assurances further specify that the
over-order price can only be established for class I fluid milk, that
no new States can join the compact without the formal approval of both
Houses of Congress, that out-of-region farmers who sell milk in the
compact region will get the same price as farmers in the region, that
the commission's pricing authority is strictly limited, and that the
commission must develop a plan to ensure that over-order prices do not
lead to increases in production.
In the debates held so far in this Congress, and surely in the
debates to come, we have heard and will hear many Members argue that
the States are often best-positioned to solve their own problems, and
that they should be allowed to do so without interference from
Washington. I couldn't agree more.
With the Northeast Interstate Dairy Compact bill being introduced
today, Senators will have an opportunity to match words on this concept
with deeds. The compact represents a regional response to a regional
problem. It affects only those States that belong to the compact. Why
should the Federal Government deny the States an opportunity to solve
their own problems? The answer is that we shouldn't. We should praise
the States for their self-reliance and ingenuity. I hope that Senators
will recognize the value in this kind of State-based problem-solving,
and support the compact when it comes to the floor for a vote.

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