[Congressional Record Volume 141, Number 62 (Tuesday, April 4, 1995)]
[Senate]
[Pages S5142-S5155]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

                                 ______

      By Mr. DORGAN;
  S. 663. A bill to modernize the Federal Reserve System, to provide 
for a Federal Open Market Advisory Committee, and for other purposes; 
to the Committee on Banking, Housing, and Urban Affairs.


              the federal reserve board reform act of 1995

  Mr. DORGAN. Mr. President, today I rise to introduce a piece of 
legislation that I want to describe briefly for the Senate.
  On my behalf, and on behalf of Senator Reid from Nevada, we 
introduced this morning a piece of legislation called the Federal 
Reserve Reform Act of 1995.
  Anyone who has listened to the debate in the Senate the last year 
understands that I have had major differences with the Federal Reserve 
Board and its policies. We all know that the Federal Reserve Board has 
raised interest rates seven times over the past year or so. And its 
decision to tighten the money supply has had an enormous impact on the 
economic well-being of this country. But despite its central role in 
our economy, the Federal Reserve still dwells only in the shadows of 
public debate.
  This organization, located downtown in a concrete temple, meets in 
secret to make interest rate decisions that have an enormous impact on 
our economy. The Federal Reserve is the last dinosaur in what is 
supposed to be a democratic Government because it, behind closed doors, 
makes decisions that affect every single American family, with no 
democratic input or debate. So for seven times in the last year or so 
they have decided we have a major storm brewing called inflation, and 
therefore they should increase interest rates in order to stem the tide 
of inflation.
  Of course there is no credible evidence that inflation is on the 
horizon in any significant way. For the last 4 successive years, 
inflation has been declining. So what is the Federal Reserve Board 
doing? It is serving its constituency, the big money center banks, at 
the expense of American families.
  But members of the Fed still meet in secret to make decisions that 
are critical to the lives of every American. Until recently, the Fed 
would not even disclose its monetary policy decisions to the public in 
a timely manner. Also, the Fed's entire budget is not published in the 
budget of the U.S. Government. And there are currently no formal 
channels established through which the Fed can coordinate its monetary 
policy goals with the fiscal policies of the President and Congress. 
Finally, regional Fed bank presidents, who are not accountable to the 
American people, are casting votes on interest rate decisions. In my 
judgment, these conditions are not what Congress intended when it 
created the Federal Reserve in the early 1900's.
  My legislation would do the following to rectify these problems:
  First, the President's top economic advisers would be required to 
meet three times a year with the Board of Governors of the Federal 
Reserve. This includes the Secretary of the Treasury, the Chairman of 
the Council of Economic Advisers, and the Director of the Office of 
Management and Budget.
  Second, the President would be empowered to appoint a new Chairman of 
the Federal Reserve near the beginning of his term rather than toward 
the end. The Fed is crucial to the success of any economic policy and 
the President should have the opportunity to appoint a Chairman of the 
Fed near the beginning of the Presidential term.
  Third, the Fed would be required to disclose immediately any changes 
in its targets for the money supply. This would provide all investors, 
large and small, with equal and timely information about monetary 
policy decisions. The provision merely codifies what the Federal 
Reserve is doing in recent practice.
  Fourth, the Fed would be required to publish all of its budget in the 
budget of the U.S. Government. Only a small fraction of Federal Reserve 
budget is published in the Federal budget; the rest is published in a 
variety of Federal Reserve publications. The legislation requires that 
it all be published in one place for public review.
  Fifth, the Comptroller General would be permitted to conduct more 
thorough audits of Fed operations, including policy procedures and 
processes. For many years the Fed was totally exempt from any such 
audits to uncover misdoing or waste. Today the General Accounting 
Office [GAO] is prohibited from auditing many of the Fed's operations, 
including actions on monetary policy and transactions made under the 
direction 
[[Page S5143]] of the current Federal Open Market Committee. This bill 
will remove many of these restrictions.
  Sixth, only those members of the Board of Governors, who have been 
appointed by the President and confirmed by the Senate, will be 
permitted to vote on monetary policy matters. This will help take back 
the Nation's monetary policy from the heads of the money center bankers 
who are accountable only to their shareholders, and restore it to those 
Fed officials who are accountable to the general public, as the framers 
of the original Federal Reserve Act intended.
  My legislation is not designed to politicize monetary policy or 
politicize the Federal Reserve Board. But, I do want the Federal 
Reserve Board to be more accountable to the American people.
  If the Federal Reserve Board is a public agency--if it belongs 
ultimately to the people of this country--then the people ought to be 
able to know what is going on there, and all its voting members ought 
to answer to the American people.
  I might say, as an aside, I am also thinking of introducing 
legislation that renames the Open Market Committee. My central thesis 
is if the Open Market Committee is going to be closed, then let us 
rename it the Closed Market Committee until such time as it is open. 
The American people deserve to know what goes on behind closed doors in 
the construct of monetary policy--policy, incidentally, that affects 
every single American family.
  I know words do not always have specific meaning here in public 
policy and in politics, but they ought to. Why should we close the door 
and then call the committee that closes the door, in law, the Open 
Market Committee? Let us just call it the Closed Market Committee.
  That is for another day. I do not include that recommendation in this 
legislation. But the Federal Reserve Reform Act of 1995 is something I 
am pleased to offer on behalf of myself and Senator Reid from Nevada.
                                 ______

      By Mr. COHEN:
  S. 664. A bill to ensure the competitive availability of consumer 
electronics devices affording access to telecommunications system 
services, and for other purposes; to the Committee on Commerce, 
Science, and Transportation.


       Competitive Consumer Electronics Availability Act of 1995

  Mr. COHEN. Mr. President, all consumers like choice. When companies 
are allowed to compete and consumers are given more choices, products 
and services inevitably become more affordable and of higher quality. 
For this reason, the major thrust of the various telecommunications 
bills that have been offered this year is to create a more competitive 
environment for communications products and services. I support this 
goal.
  Today, I am introducing legislation that is focused on one particular 
area of telecommunications that I believe truly needs more 
competition--cable television.
  Less than 20 years ago, we had little choice as to where we could 
obtain our phones. Each of us rented a standard, ordinary phone from 
our local telephone company. This monopoly ended with the break-up of 
AT&T. Today, most people own their telephones, and the types of phones 
we can choose are endless. Callers, for example, can go to any number 
of local retailers to buy phones that are more sophisticated than those 
previously offered by the telephone company. Consumers now can purchase 
car phones, phones that are connected to an answering machine, or 
cellular phones. Moreover, today's phones are considerably cheaper than 
the rotary dial phones of the 1950's. Innovation, greater choice, and 
lower prices have been the result of intense competition in the 
telephone market.
  Unfortunately, consumers today do not have the same choices with 
regard to the devices necessary to obtain cable television. Cable 
customers are in the same situation phone customers found themselves 20 
years ago. Virtually all cable users get their cable set-top boxes and 
other hardware, which have security features, only from one source--the 
local cable company. There is no competition for these devices.
  The bill I am introducing today would allow cable customers to buy 
their converter boxes and other communications access devices from 
their local retail stores. Cable users in Maine and elsewhere in the 
country would no longer be at the mercy of cable operators to get their 
cable boxes. They could buy or rent them from anyone they choose--just 
as they do currently with telephones.
  This bill, which is identical to legislation already introduced in 
the House by Representative Bliley, would require the Federal 
Communications Commission [FCC] to adopt regulations to ensure that 
converter boxes and other interface equipment could be sold 
commercially by non-cable operators. Cable users, of course, could 
still choose to rent boxes from their cable operator if they desired.
  In the near future, the Senate will consider legislation designed to 
increase competition in all telecommunications markets. My bill would 
bring competition to a segment of the telecommunication market that 
desperately needs it. By allowing consumers to choose how they get 
their cable box, prices on the boxes and other interface equipment will 
likely drop, and manufacturers and retailers of converter boxes will 
become more innovative and responsive to the needs of consumers.
  Cable companies argue that they need a monopoly over cable devices to 
protect against theft of cable programming. I fully agree that cable 
operators should be able to protect their signals so that only paying 
customers get the benefit of their services. I do not, however, believe 
that a monopoly over the cable device market is necessary to achieve 
this purpose.
  It should be noted that the phone companies once made the same 
argument. They argued that if phone customers were allowed to purchase 
phones from anyone other than the phone company, there would be 
widespread theft of phone services. This, however, has not turned out 
to be the case.
  Likewise, I am confident that the sale of cable devices by non cable 
businesses would not lead to the theft of cable programming.
  Today's technology will allow cable operators to protect their 
signals without monopolizing the hardware and restricting consumers' 
ability to choose how they will get a box. Cable companies can prevent 
theft of their signals without controlling the distribution of 
converter boxes. For example, the Electronic Industries Association has 
developed a draft standard that would allow codes to be put on magnetic 
cards, similar to credit cards. This card, which could be used with a 
commercially sold box, would ensure that only those customers who have 
paid for services actually get them.
  Under my legislation, the FCC would determine the rules--after 
significant public comment--that would promote competition in the cable 
device market while safeguarding against the theft of cable 
programming. My legislation gives the FCC significant discretion in 
meeting this goal, but requires them to make it a high priority.
  Competition for converter boxes and other devices can only benefit 
consumers. As it did in the telephone market, competition will lead to 
innovation, greater choice, as well as lower prices for converter 
boxes.
                                 ______

      By Mr. SIMON:
  S. 665. A bill to amend the Internal Revenue Code of 1986 to increase 
motor fuel taxes by 8 cents a gallon, the resulting revenues to be used 
for mass transit, AMTRAK, and interstate, State, and local roads and 
bridges, and for other purposes; to the Committee on Finance.


                          FUEL TAX LEGISLATION

 Mr. SIMON. Mr. President, today I am introducing a bill 
calling for an 8 cents a gallon tax increase on gasoline and diesel 
fuel.
  Revenue gained from this tax would be used for mass transit, AMTRAK, 
and interstate, State, and local roads and bridges. As the 
administration and the Congress consider proposals to downsize the 
Federal Government and increase the responsibilities of State 
governments, returning some Federal taxes to States and cities would be 
a very sensible step.
  [[Page S5144]] We are all aware of the need for increases in transit 
and surface transportation investment. And returning revenue to State 
and local governments for infrastructure and capital improvement 
projects would help State and local governments, promote job creation 
and improve the Nation's economic well-being in general. This motor 
fuel tax increase would go a long way toward meeting this goal. An 
increase in public investment is long overdue, Mr. President. I urge my 
colleagues to support this legislation.
                                 ______

      By Mr. SIMON:
  S. 666. A bill to amend chapter 93 of title 31, United States Code, 
to provide additional requirements for a surety corporation to be 
approved by the Secretary of the Treasury, to provide for equal access 
to surety bonding, and for other purposes; to the Committee on the 
Judiciary.


             THE EQUAL SURETY BOND OPPORTUNITY ACT OF 1995

  Mr. SIMON. Mr. President, I am pleased to introduce the Equal Surety 
Bond Opportunity Act of 1995. This bill is designed to further equal 
opportunity for surety bond applicants and to equip bond applicants--
particularly small business applicants--with information to help them 
to strengthen their businesses.
  Construction firms must have surety bonds to bid on all Federal 
projects in excess of $25,000 and all federally assisted projects in 
excess of $100,000. In fact, bonding is now required for most State and 
local government construction projects and an increasing number of 
private construction projects. Clearly, access to surety bonding is 
essential to the livelihood of the majority of construction companies.
  Surety bonds ensure that a contractor is capable of completing the 
specified work and has the financial ability to pay its bills on time. 
If the bonded contractor fails to complete the project, the surety firm 
steps in to fulfill the contract.
  Furthermore, surety firms minimize their own risk by determining, 
before they issue a bond, whether the applicant is capable of 
completing the particular project in question. The principal source of 
bonds--for-profit corporate surety firms--use undisclosed underwriting 
standards to make this determination. Essentially, they assess an 
applicant's three C's--cash, capacity to do work, and character. But 
the personal character of a contractor may be evaluated in a very 
subjective manner, which can result in discrimination.
  Although classified as a type of insurance, these bonds are really 
more like a line of credit. If a surety firm has to step in to fulfill 
the bonded company's obligation under a contract, it expects to be 
reimbursed. Unfortunately, as with other types of lines of credit such 
as mortgage financing, women and minority contractors face serious 
problems in obtaining surety bonds. Several studies of mortgage lending 
rates in Detroit, Atlanta, and Washington, DC have revealed a 
significant race-related mortgage lending gap even after adjusting the 
data for legitimate business concerns. These studies were based in part 
on data that banks and other lending institutions are required to 
report to the Federal Government. Federal law does not require surety 
firms to report any similar data for applications received or granted.
  I sponsored and held hearings on the Equal Surety Bond Opportunity 
Act in the 102d Congress. Witnesses at that hearing
 included representatives of the Women Construction Owners and 
Executives and the National Association of Minority Contractors who 
testified in support of the bill. According to these witnesses, bond 
applicants have been rejected simply for being a woman, or being a 
minority. Clearly, these are unacceptable reasons for rejecting a bond 
applicant.

  The American Subcontractors Association also presented testimony at 
that hearing. They agreed that women and minority-owned construction 
companies face special problems in getting bonds, as do many small and 
emerging construction firms. They noted, however, that all of these 
companies would benefit if surety companies were required to give an 
explanation for rejecting a bond application. This would allow them to 
take corrective action for future applications.
  By law, the U.S. Treasury Department maintains a list of federally 
approved surety firms authorized to issue bonds on Federal projects. My 
bill, which is modeled after the Equal Credit Opportunity Act, would 
make it unlawful for a Treasury-approved surety to discriminate against 
applicants based on race, color, religion, national origin, sex, 
marital status, or age. Simply put, the bill makes it clear that the 
three C's cannot be determined by reference to an applicant's race, 
color, religion, national origin, sex, or marital status.
  The bill would also require Treasury-approved firms to provide denied 
applicants, upon request, full written disclosure of the reasons for 
their denial. A written explanation will give all construction firms 
the opportunity to take appropriate corrective action--an opportunity 
now available to all prospective Federal small business contractors 
when denied by an agency contracting officer. The written explanation 
would also help curb denials of bonding based on nonlegitimate reasons.
  Again, the legislation will benefit all construction firms. It does 
not dictate underwriting standards for the surety industry. It does not 
require sureties to report data on applications received or bonds 
written. Nor does it inflict onerous regulations on the industry. But 
it will give businesses the information they need to improve their 
businesses. Moreover, the bill will ensure that surety firms comply 
with the same nondiscrimination laws that apply to banks and other 
lending institutions. If a surety firm is in compliance with these 
laws, it has nothing to fear from this legislation.
  Mr. President, I urge my colleagues to support this very simple, but 
important legislation.
  Mr. President, I ask unanimous consent that the text of my bill be 
included in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:
                                 S. 666

       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 ``Equal Surety Bond 
     Opportunity Act of 1995''.

     SEC. 2. ADDITIONAL REQUIREMENTS REGARDING APPROVAL OF 
                   SURETIES.

       (a) In General.--A company may not be approved as a surety 
     by the Secretary of the Treasury under section 9304 of title 
     31, United States Code, or provide any surety bond pursuant 
     to such section unless the company maintains full compliance 
     with the requirements of section 9310 of title 31, United 
     States Code.
       (b) Requirements Relating to Enforceability.--
       (1) Signed statement of compliance with application.--
     Section 9305(a) of title 31, United States Code, is amended--
       (A) by striking ``and'' at the end of paragraph (1);
       (B) by striking the period at the end of paragraph (2) and 
     inserting ``; and''; and
       (C) by adding at the end the following new paragraph:
       ``(3) a statement of compliance with section 9310, which is 
     signed under penalty of perjury by the president and the 
     secretary of the corporation.''.
       (2) Compliance as a condition for approval of 
     application.--Section 9305(b) of title 31, United States 
     Code, is amended--
       (A) by striking ``and'' at the end of paragraph (2);
       (B) by striking the period at the end of paragraph (3) and 
     inserting ``; and''; and
       (C) by adding at the end the following new paragraph:
       ``(4) the corporation is in full compliance with section 
     9310.''.
       (3) Signed statement of compliance with quarterly 
     reports.--Section 9305(c) of title 31, United States Code, is 
     amended by inserting ``and a statement of compliance with 
     section 9310,'' before ``signed and sworn''.
       (4) Enforcement authority of secretary of the treasury.--
     Section 9305(d) of title 31, United States Code, is amended--
       (A) in paragraph (1), by striking ``9304 or 9306'' and 
     inserting ``9304, 9306, or 9310''; and
       (B) by striking ``and'' at the end of paragraph (2);
       (C) by striking the period at the end of paragraph (3) and 
     inserting ``; and''; and
       (D) by adding at the end the following new paragraph:
       ``(4) may, after the end of the 1-year period beginning on 
     the effective date of any revocation under paragraph (1) of 
     the authority of a surety corporation for noncompliance with 
     section 9310, reauthorize such corporation to provide surety 
     bonds under section 9304.''.
       (5) Revocation for failure to pay certain judgments.--
     Section 9305(e) of title 31, United States Code, is amended--
       (A) by striking ``and'' at the end of paragraph (1);
       (B) by redesignating paragraph (2) as paragraph (3); and
     [[Page S5145]]   (C) by inserting after paragraph (1) the 
     following new paragraph:
       ``(2) the corporation does not pay a final judgment or 
     order against the corporation for noncompliance with section 
     9310, or fails to comply with any order under that section; 
     and''.
       (c) Technical and Conforming Amendment.--Section 9304(a)(3) 
     of title 31, United States Code, is amended by striking 
     ``9305 and 9306'' and inserting ``9305, 9306, and 9310''.
     SEC. 3. INFORMATION FOR BOND APPLICANTS AND 
                   NONDISCRIMINATION.

       (a) In General.--Chapter 93 of title 31, United States 
     Code, is amended by adding at the end the following new 
     section:

     ``SEC. 9310. INFORMATION FOR BOND APPLICANTS; 
                   NONDISCRIMINATION.

       ``(a) Reasons for Adverse Action; Procedure Applicable.--
       ``(1) Notice required.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     any surety approved under section 9304 shall notify an 
     applicant for a bid bond, payment bond, or performance bond 
     of its action on a completed application not later than 10 
     days after receipt of the application.
       ``(B) Extension.--The notification required by subparagraph 
     (A) may be furnished not later than 20 days after receipt of 
     the application, if the surety has not issued a bond to the 
     applicant in the 12-month period preceding the date of 
     receipt of the application.
       ``(2) Statement of reasons.--
       ``(A) In general.--Each applicant against whom adverse 
     action is taken shall be entitled to a statement of reasons 
     for such action from the surety.
       ``(B) Acceptable forms of statement.--A surety satisfies 
     the requirements of subparagraph (A)--
       ``(i) by providing a statement of reasons in writing as a 
     matter of course to applicants against whom adverse action is 
     taken; or
       ``(ii) by giving written notification of adverse action 
     which discloses--

       ``(I) the applicant's right to a statement of reasons not 
     later than 30 days after receipt by the surety of a written 
     request made by the applicant not later than 60 days after 
     such notification; and
       ``(II) the identity of the person or office from which such 
     statement may be obtained.

       ``(C) Oral statement permitted.--A required statement of 
     reasons for adverse action may be given orally if written 
     notification advises the applicant of the applicant's right 
     to have the statement of reasons confirmed in writing upon 
     the applicant's written request.
       ``(3) Specificity of reasons.--A statement of reasons meets 
     the requirements of this section only if it contains specific 
     reasons for the adverse action taken.
       ``(4) Applicability in case of third party applications.--
     In the case of a request to a surety by a third party to 
     issue a bond directly or indirectly to an applicant, the 
     notification and statement of reasons required by this 
     section may be made directly by such surety, or indirectly 
     through the third party, if the identity of the surety is 
     disclosed to the applicant.
       ``(5) Applicability in case of sureties which accept few 
     applications.--The requirements of paragraphs (2), (3), and 
     (4) may be satisfied by oral statements or notifications in 
     the case of any surety which acted on not more than 100 
     applications during the calendar year in which the adverse 
     action is taken.
       ``(b)  Nondiscrimination.--
       ``(1) Activities.--It shall be unlawful for any surety to 
     discriminate against any applicant, with respect to any 
     aspect of a surety bond transaction--
       ``(A) on the basis of race, color, religion, national 
     origin, sex, marital status, disability, or age (if the 
     applicant has the capacity to contract);
       ``(B) because the applicant has in good faith exercised any 
     right under this chapter;
       ``(C) because the applicant previously obtained a bond 
     through an individual or personal surety; or
       ``(D) because the applicant previously obtained a bond 
     through--
       ``(i) any bonding assistance program expressly authorized 
     by law;
       ``(ii) any bonding assistance program administered by a 
     nonprofit organization for its members or an economically 
     disadvantaged class of persons; or
       ``(iii) any special purpose bonding program offered by a 
     profitmaking organization to meet special needs.
       ``(2) Activities not constituting discrimination.--It shall 
     not constitute discrimination for purposes of this section 
     for a surety--
       ``(A) to make an inquiry of marital status if such inquiry 
     is for the purpose of ascertaining the surety's rights and 
     remedies applicable to the granting of a bond and not to 
     discriminate in a determination of bondability;
       ``(B) to make an inquiry of the applicant's age if such 
     inquiry is for the purpose of determining the amount and 
     probable continuance of bondability; or
       ``(C) to make an inquiry as to where the applicant has 
     previously obtained a bond, in order to determine bonding 
     history, or other pertinent element of bondability, except 
     that an applicant may not be assigned a negative factor or 
     value because such applicant previously obtained a bond 
     through--
       ``(i) an individual or personal surety;
       ``(ii) a bonding assistance program expressly authorized by 
     law;
       ``(iii) any bonding program administered by a nonprofit 
     organization for its members or an economically disadvantaged 
     class of persons; or
       ``(iv) any special purpose bonding program offered by a 
     profitmaking organization to meet special needs.
       ``(3) Additional activities not constituting 
     discrimination.--It is not a violation of this section for a 
     surety to refuse to issue a bond pursuant to--
       ``(A) any bonding assistance program authorized by law for 
     an economically disadvantaged class of persons;
       ``(B) any bonding assistance program administered by a 
     nonprofit organization for its members or an economically 
     disadvantaged class of persons; or
       ``(C) any special purpose bonding program offered by a 
     profitmaking organization to meet special needs,

     if such refusal is required by or made pursuant to such 
     program.''.
       (b) Definition of Adverse Action.--Section 9301 of title 
     31, United States Code, is amended--
       (1) by striking the period at the end of paragraph (1) and 
     inserting a semicolon;
       (2) by striking the period at the end of paragraph (2) and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(3) `adverse action'--
       ``(A) means a denial of a bond, a change in the terms of an 
     existing bonding arrangement, or a refusal to issue a bond in 
     the amount or on substantially the terms requested; and
       ``(B) does not include any refusal to issue an additional 
     bond under an existing bonding arrangement where the 
     applicant is in default, or where such additional bond would 
     exceed a previously established bonding limit.''.

     SEC. 4. CIVIL PENALTIES.

       Section 9308 of title 31, United States Code, is amended--
       (1) in the first sentence by striking ``A surety 
     corporation'' and inserting the following:
       ``(a) Liability to the United States.--A surety 
     corporation'';
       (2) in the second sentence by striking ``A civil action'' 
     and inserting the following:
       ``(c) Jurisdiction.--A civil action'';
       (3) in the third sentence by striking ``A penalty imposed'' 
     and inserting the following:
       ``(d) Effect of Penalties on Contracts.--A penalty 
     imposed''; and
       (4) by inserting after subsection (a) (as designated by 
     paragraph (1)) the following new subsection:
       ``(b) Liability for Discriminatory Action.--Any surety 
     corporation that fails to comply with section 9310(b) shall 
     be liable to the applicant for--
       ``(1) any actual damage sustained by such applicant 
     (individually or as a member of a class); and
       ``(2) in the case of any successful action under this 
     subsection, the costs of the action, together with reasonable 
     attorney's fees, as determined by the court.''.

     SEC. 5. REGULATIONS.

       The Secretary of the Treasury shall issue such proposed 
     regulations as may be necessary to carry out this Act not 
     later than 270 days after the date of the enactment of this 
     Act. The final regulations shall become effective not later 
     than 1 year after the date of enactment of this Act.

     SEC. 6. EFFECTIVE DATE.

       The amendments made by this Act shall become effective on 
     the earlier of--
       (1) the effective date of final regulations promulgated 
     pursuant to section 5; or
       (2) the end of the 1-year period beginning on the date of 
     enactment of this Act.
                                 ______

      By Mr. BRYAN (for himself and Mr. Shelby):
  S. 667. A bill to amend the Securities Exchange Act of 1934 in order 
to reform the conduct of private securities litigation, to provide for 
financial fraud detection and disclosure, and for other purposes; to 
the Committee on Banking, Housing and Urban Affairs.


                 the securities enforcement act of 1995

 Mr. BRYAN. Mr. President, today Senator Shelby and I are 
introducing the Private Securities Enforcement Improvement Act of 1995 
to improve the Federal securities litigation process. I believe our 
legislation provides a balance between protecting the rights of 
defrauded investors and providing relief to honest companies who may 
find themselves the target of a frivolous lawsuit.
  I have serious concerns that in a rush to judgment Congress may err 
too far and end up curtailing suits that have merit and thus undermine 
the American public's confidence in the integrity of our financial 
markets. There is no greater harm Congress could do to the capital 
markets.
  The issue of securities litigation reform came to my attention 
several years ago when a constituent was defrauded in a real estate 
limited partnership. On numerous occasions he raised concerns over the 
time periods individuals had to file securities lawsuits. Little could 
he have known that 
[[Page S5146]] a short while later the Supreme Court would rule in the 
Lampf case that the statute of limitations in a major section of 
securities law would be shortened to 1 year after discovery or 3 years 
after the fraud actually took place--whichever came first.
  I do not believe the Court felt this was the appropriate amount of 
time to uncover financial fraud but was all they could provide in a 
strict interpretation of the statute. To make matters worse, the Court 
applied the shortened time period retroactively, thereby imperiling 
hundreds of legitimate fraud cases--many of which were in the midst of 
years of litigation.
  In 1992, we were successful in fixing the retroactive cases by 
applying the statute of limitations that was applicable when the cases 
were filed. Unfortunately, we were not able to fix the standard 
prospectively.
  The legislation we are introducing today would help rectify this 
problem by establishing a statute of limitations of 2 years after 
discovering the fraud or 5 years after the fraud took place. I find it 
hard to believe reasonable people could object to such a timetable. Our 
experience with financial crooks like Charlie Keating have demonstrated 
how easy it is to conceal financial crimes. You would be hard pressed 
to find anyone who thinks that financial crimes are on the decline. In 
fact, the evidence shows financial crimes are escalating.
  This legislation is designed to improve private securities litigation 
in a number of ways: eliminating certain abusive litigation practices; 
deterring and providing sanctions against the filing of meritless 
cases; instituting procedural reforms to screen out weak cases nearly 
in the judicial process and enhancing the detection of financial fraud.
  These measures are carefully crafted so as not to discourage 
meritorious suits yet attack several areas of potential abuse. As 
Securities and Exchange Chairman Arthur Levitt recently noted that 
``[p]rivate securities litigation plays a prominent role in checking 
the market excesses. To change that, we would need to recalibrate our 
entire system checks and balances.''
  The fundamental purpose of Federal securities laws is to provide 
investor protection and thereby foster investor confidence and 
encourage the investment necessary for capital formation, economic 
growth and job creation. Our system of private litigation under the 
Federal securities laws has functioned effectively as a necessary and 
essential supplement to the enforcement program of the Securities and 
Exchange Commission.
  The provisions of this bill should ensure that defrauded investors 
can recover their damages, that criminals are brought to justice, and 
that corporations are protected from unwarranted litigation in a system 
that is quicker, less costly and more fair to all concerned.
  Mr. President, I look forward to passing legislation that will 
correct some of the abuses present in the current securities litigation 
system and address the issues raised by Supreme Court rulings in 
legislation that President Clinton can sign.
                                 ______

      By Mr. WARNER:
  S. 668. A bill to authorize the establishment of the National Capital 
Region Interstate Transportation Authority, to define the powers and 
duties of the Authority, and for other purposes; to the Committee on 
Environment and Public Works.


the national capital region interstate transportation authority act of 
                                  1995

 Mr. WARNER. Mr. President, I introduce legislation today to 
establish the National Capital Region Interstate Transportation 
Authority.
  This Authority, representing Virginia, Maryland, and the District of 
Columbia, will serve the region's need to focus attention and to build 
a partnership between the Federal Government, the Commonwealth of 
Virginia, the State of Maryland, the District of Columbia, local 
governments, and other interested persons to move forward with a new 
Potomac River crossing on the Capital Beltway at the Woodrow Wilson 
Memorial Bridge.
  This legislation will establish one entity to devote its full time 
and attention to facilitating the construction of a replacement bridge, 
or bridge and tunnel project, for the aging Woodrow Wilson Memorial 
Bridge.
  Mr. President, State and local governments have long recognized the 
importance of the Woodrow Wilson Bridge to the region's economic 
vitality and its critical link to providing efficient interstate travel 
from Maine to Florida.
  The Congress also recognized the needs of this facility and its 
relationship to the efficient movement of people and commerce in the 
region during the development of the Intermodal Surface Transportation 
Efficiency Act of 1991. That legislation established the Interstate 
Transportation Study Commission and charged the Commission with the 
responsibility of recommending ``new mechanisms, authority, and/or 
agreements to fund, develop, and manage the transportation system of 
the National Capital Region, primarily focusing on the interstate 
highway and bridge systems.''
  The 13 members of the Commission extensively examined the existing 
transportation needs of the National Capital region and concluded that 
the immediate demand was to focus attention on examining every option 
to provide for a new Potomac River crossing at the Woodrow Wilson 
Bridge. To accomplish this, the Commission recommended the creation of 
a new interstate authority to assume ownership and responsibilities of 
the bridge and to move forward with the financing of a new facility as 
recommended by the Woodrow Wilson Bridge Coordination Committee and 
approved by the National Capital Region Transportation Planning Board.
  The Woodrow Wilson Bridge Coordination Committee is a working 
partnership to identify options for the future of the bridge and to 
develop a consensus plan on fixing or replacing the deteriorating 
Woodrow Wilson Bridge. The Coordination Committee is following an open 
participatory process to examine alternatives to improve this vital 
crossing and is scheduled to identify a preferred alternative, complete 
an environmental impact statement and issue a record of decision by 
mid-1996.
  It is not my intention for the Authority established by this 
legislation to interfere with or disrupt this valuable ongoing work. 
The Authority will provide the next critical step in these tight fiscal 
times--a financing mechanism--which will provide the means necessary to 
finance, operate, and maintain a new river crossing.
  It is important for my colleagues to remember that the Federal 
Government constructed the Woodrow Wilson Bridge in 1954 and remains 
responsible for the needs of the existing facility and the financing, 
planning, and design work required for a new facility.
  Today the Woodrow Wilson Memorial Bridge is the only segment of the 
44,000 mile Interstate System that is owned by the Federal Government. 
The bridge was designed 40 years ago to carry 75,000 vehicles per day, 
with 10 percent of the traffic consisting of heavy trucks. Today, the 
bridge carries 165,000 vehicles per day, and 11 percent of the volume 
is truck traffic. This facility is the only drawbridge on the regional 
interstate network, the only piece of the region's eight-lane Capital 
Beltway
 that is limited to six lanes, and the only segment of the Capital 
Beltway with a remaining lifespan of less than 10 years.

  Recent studies by the Federal Highway Administration confirm that 
annual repairs to the existing bridge fail to extend the use life of 
the facility and are no longer cost effective. Safety experts for the 
Federal Highway Administration advise me that unless a new facility is 
constructed within the next 9 years, the Department may be required to 
enforce truck size and weight restrictions on this segment of the 
Capital Beltway.
  Mr. President, the solution is clear. The Woodrow Wilson Bridge, a 
critical line in the region's transportation network and a vital link 
in our Nation's intermodal transportation system, needs to be rebuilt 
with the capacity to handle the significant demands being placed upon 
it every day. The National Capital Region Interstate Transportation 
Authority is the first step in addressing a problem that has gone 
unresolved for far to long.
  Recent census data reveals that half of all workers in this region 
live and work in different jurisdictions and one-third live and work in 
different States. 
[[Page S5147]] The National Capital Region Transportation Planning 
Board forecasts that between 1990 and 2020 the volume of traffic in our 
region will increase by more than 70 percent, while the current planned 
highway capacity will expand by only 20 percent. Between now and 2020, 
our traffic volume could triple during the heaviest part of the evening 
rush hour.
  Traffic congestion translates into wasted productivity and dollars. A 
recent study by the Texas Transportation Institute found that in 1987 
traffic congestion in the Metropolitan Washington area cost each of an 
estimated $570 a year in lost time and wasted fuel. Today, it is 
estimated that our traffic congestion is costing each of us at least 
$1,000 per year. This is a cost both to residents and to the region's 
business community.
  Because of the gridlock that occurs on our region's roadways during 
the morning and evening rush hours, our residents are not resistant to 
using public transit. Indeed, we currently have the highest percentage 
of high-occupancy vehicle [HOV] users in the Nation are tied for second 
place with Chicago for the highest percentage of mass transit users. 
While I fully support expanding public transportation options and 
building upon our HOV road network, these efforts alone will not solve 
our region's problems with inadequate highways and bridges.
  The National Capital Region Interstate Transportation Authority will 
enhance the ability of the system to meet expanding economic growth and 
help our Nation's Capital thrive in the increasingly competitive global 
marketplace. Almost 85 percent of the Nation's freight travels at least 
part of its journey over a highway. As American companies rely more and 
more on just-in-time-delivery to get raw materials to manufacturing 
facilities, and American wholesalers and retailers count on rapid 
delivery to keep their inventories lean, the economic importance of an 
efficient national transportation infrastructure is actually growing.
  Mr. President, I look forward to working with my colleagues and the 
Commonwealth of Virginia, the State of Maryland, and the District of 
Columbia as we advance this legislation.
                                 ______

      By Mr. GLENN (by request):
  S. 669. A bill to revise and streamline the acquisition laws of the 
Federal Government, and for other purposes; to the Committee on 
Governmental Affairs.


            THE FEDERAL ACQUISITION IMPROVEMENT ACT OF 1995

  Mr. GLENN. Mr. President, I rise today to introduce a bill, the 
Federal Acquisition Improvement Act, by request of the administration. 
I am glad to do it, because this bill represents the next step of 
reforming the way Government buys its goods and services.
  Last year, the Congress passed the Federal Acquisition Streamlining 
Act, better known as FASA. That was the first major piece of 
procurement reform legislation in over 10 years. The passage of the act 
constituted a critical victory in the war against Government 
inefficiency and one of the most significant accomplishments of the 
Governmental Affairs Committee during the 103d Congress.
  FASA is a comprehensive Governmentwide procurement reform effort 
aimed at streamlining the acquisition process by reducing paperwork 
burdens through revision and consolidation of acquisition statutes to 
eliminate redundancy, provide consistency and facilitate 
implementation.
  The law is the culmination of years of legislative and oversight 
effort led by the Governmental Affairs Committee, in conjunction with 
the Armed Services and Small Business Committees of both the Senate and 
the House, to make sense out of the complex process of supplying the 
Federal Government with the goods and services it needs just to 
operate.
  Figuring significantly also were recommendations of the Vice 
President's National Performance Review regarding increased reliance on 
acquisitions of commercial items and increased simplified acquisition 
threshold of $100,000, and other recommendations mirroring those in the 
report of the advisory panel on streamlining and codifying acquisition 
laws pursuant to section 800 of the National Defense Authorization Act 
for fiscal year 1991. That was the so-called 800 panel.
  Mr. President, this really was a culmination of a number of different 
activities that came together to pass the legislation last year. We had 
been working in the Governmental Affairs Committee on this problem of 
streamlining acquisition, making it more efficient for all of 
Government, not just the armed services.
  At the same time, the Armed Services Committee, of which I am also a 
member, asked the Pentagon to do a study of their own procurement 
practices, and that was done with what became known as the 800 panel.
  Then, when the new administration was elected, the Vice President 
headed up the National Performance Review. And it, once again, got into 
areas of procurement reform. So we all combined our efforts, and that 
culminated then in passage last year of FASA.
  That was quite an accomplishment. As if that were not enough, I am 
pleased today to be a sponsor of a bill which I hope will mark the 
beginning of serious Senate efforts in the 104th Congress to make even 
further reforms to our procurement system.
  People in the agencies and industry have already begun to refer to 
this new set of proposed reforms as FASA 2, but its actual title is the 
Federal Acquisition Improvement Act. I think that is symbolic of what 
the administration is trying to do. Yes, this is a further streamlining 
effort, but the administration is also trying to improve on and refine 
the endeavor which began last year with the passage of FASA.
  I believe this bill is a good starting point for this second round of 
reforms, and we are definitely headed in the right direction for this 
venture.
  It appears that the administration is trying to finish what it 
started last year with FASA, as well as pursuing some bold new 
objectives with this bill, and I want to commend them personally for 
that.
  For instance, one theme in the bill appears to be furthering the work 
begun in FASA of attempting to bring the Government more in line with 
the commercial world exemplified by provisions clarifying the 
definition of commercial services and shortening the time it takes to 
complete a procurement. That is a major item.
  Consistent with this theme is the desire expressed in this bill to 
further streamline the award process, something also begun in FASA. 
Significant provisions we will be watching in this realm involve the 
lowering of agency approval levels and delegation of authorities for 
using noncompetitive procedures; limiting competitive range 
determinations to as few as the three highest-ranked offerors; and the 
authorization of two-phase selection procedures for certain information 
technology in design-build contracts.
  The administration has also begun to tackle the controversial, highly 
charged issue of reform of the protest system by attempting to 
streamline it and reduce the number of protests filed. Included are 
provisions on making statutory and consistent the standards of review 
used for development and evaluation of the protest record; preaward 
debriefings for unsuccessful offerors; and consolidation of the 
judicial protest forum. I will be watching suggestions in this area 
with particular interest, especially since I know that the proposals in 
this area do not begin and end with those made in this bill.
  There are also some very beneficial concepts in this bill related to 
ethics; recoupment of fees paid to the U.S. Government on foreign sales 
of military products and technologies developed under Government 
contracts; FACNET, the newly established electronic commerce system 
created under FASA for procurements under the simplified acquisition 
threshold; and more pilot programs to test out new and different 
concepts.
  This list barely scratches the surface, and it is easy to see that 
the administration is attacking some tough and very diverse issues with 
this bill. We will be scrutinizing each and every one of these 
provisions for their wisdom and for their prudence.
  As I said, at this juncture I may not support every single provision 
of this bill. Most of the proposals I am sure I will support. Others I 
support the concept behind but feel the language may need some work and 
will be glad to do that. There are also ideas in the bill with which I 
may disagree altogether, 
[[Page S5148]] and I am sure we count on being blessed with new ideas 
as we go along. In general, though, I think we are headed in the right 
direction with this new bill, and I am very glad to be submitting it on 
behalf of the administration.
  The bill is being introduced today and the legislative process can 
begin to work and we can begin to consider opinions from all interested 
parties on each provision so that we can put forth the best possible 
measure for the President's signature. I know that the General 
Accounting Office, GAO, and others, have testified before the House 
Government Reform and Oversight Committee offering many valuable 
suggestions along this line. I look forward to engaging in that process 
again, as I did last year.
  Mr. President, I want to reiterate that I believe the 
administration's bill is a very good place to start working on the next 
round of reforms to streamline our procurement system. We have a 
challenge ahead of us to flesh out this bill, but I am excited that the 
administration continues to focus attention in this area.
                                 ______

      By Mr. GLENN (for himself and Mr. Pryor):
  S. 670. A bill to amend the Internal Revenue Code of 1986 to prevent 
the unauthorized inspection of tax returns or tax return information; 
to the Committee on Finance.


                    Taxpayer Browsing Protection Act

  Mr. GLENN. Mr. President, this bill is entitled the Taxpayer Browsing 
Protection Act. We have a problem. Criminal penalties and sanctions do 
currently apply when IRS employees look at taxpayer returns that they 
are not authorized to do for work purposes and willfully disclose that 
information to third parties. However, there is a nebulous loophole for 
when IRS employees engage in such browsing for their own curious 
interests but do not disclose that information to others.
  The bill that we are submitting here today is based on 
recommendations by the IRS and the Department of Justice, which began 
looking at this issue following hearings last year which publicly 
disclosed this activity. This bill would provide in the Internal 
Revenue Code that unauthorized inspection of returns or return 
information is an offense punishable by a fine not to exceed $1,000, or 
imprisonment of not more than 1-year, or both, together with costs of 
prosecution.
  If the offense is committed by an officer or employee of the United 
States, they are immediately fired upon conviction.
  Third, it will clarify that the unauthorized inspection, as well as 
the unauthorized disclosure, of returns or return information is a 
violation of the code's confidentiality provisions for returns and 
return information.
  Mr. President, this bill addresses something that came out in our 
hearings last year where we found that some employees were just 
browsing through accounts on which they were not doing work. They were 
just curious about what was in the accounts. We had some that actually 
got into accounts and changed some of the figures in there and received 
kickbacks for what they were doing. Some of those people are already in 
jail now. So that area is covered.
  We want to tighten this up, and the IRS very much favors this. 
Commissioner Margaret Richardson said this morning at our hearing that 
she does favor this, and we worked with her on this. She feels it 
covers a loophole in the legislation that needs to be covered. I am 
glad to submit it and help close that loophole so that we will make it 
absolutely unequivocally illegal for IRS employees to be browsing 
through other people's accounts, whether for voyeuristic reasons, or 
just plain curiosity, or whatever the motives are. But people should 
expect that when they file their tax returns and that information is in 
the internal revenue system, those returns are confidential and will be 
worked on only by people that are dealing with business matters on 
their accounts and nothing more. That is what this legislation does. I 
hope we can have support on it after it has been through the committee 
process.
  The PRESIDING OFFICER. The bill will be appropriately referred.
  Mr. PRYOR. Mr. President, I am very proud that I was here at the 
moment when Senator Glenn was introducing his two proposals, especially 
the proposal on browsing by the Internal Revenue Service.
  It has been my pleasure to have served as the chairman of the Finance 
Committee's Committee on Oversight of the Internal Revenue Service for 
a period of years. During that period of time, I might say that the 
committee in the House and the Senate, in their wisdom, did in fact 
adopt the 1988 Taxpayers Bill of Rights. The Taxpayer's Bill of Rights 
was the very first piece of legislation ever in the history of this 
Republic, or in the history of the Internal Revenue Service, to spell 
out the specific powers of the individual taxpayer.
  We have now introduced something we call T-2, Mr. President, which is 
the taxpayers Bill of Rights II.
  This legislation goes even several steps further in the protection of 
the rights afforded to the individual taxpayer in this country.
  Senator Glenn's proposal is an answer to, and is a direct result of, 
testimony which was unearthed and information which has been gathered 
by Senator Glenn's committee, his very competent staff, on the issues 
and the alarming fact that, in the past--and maybe even in the 
present--certain overzealous Internal Revenue Service employees have 
taken the liberty to abuse the system by looking at individual taxpayer 
records and accounts and sharing those facts with other individuals. I 
think what Senator Glenn is doing today is a true service. I stand 
behind him all the way, and I hope that the Senator will put me down as 
an original cosponsor.
  Mr. GLENN. I will be glad to do so. If the Senator will yield for a 
moment, Mr. President. To put this in a broader context, the Senator 
from Arkansas, Senator Pryor, is the one who on our Governmental 
Affairs Committee took the lead in putting together the Taxpayer Bill 
of Rights. It has served us well and the taxpayers of this country 
should be glad for what he did. I am sure they are, whether they 
realize they are in his debt or not. What I have done here is expand a 
little on his efforts. To put it in an even larger context, we are 
coming into a time with the information age, the information flow, time 
period in history that replaces the agriculture revolution, the 
industrial revolution. Now we are into the information revolution. 
Along with that is going the computerization of all of the taxpayer 
records that formerly were all in on a piece of paper in the file. They 
were not as accessible as they are now to computers and hackers and 
other people.
  One of our biggest problems in keeping confidentiality is making sure 
that as we move into the taxpayer system modernization program, the TSM 
Program, a very expensive modernization program--and it will be another 
3 or 4 years before completion--that will completely modernize the IRS. 
We need protections like this and like the protections the Senator from 
Arkansas put the initiative on in putting it together. So he is to be 
complimented for his efforts in times past on this. As he said, he has 
T-2, the Taxpayer Bill of Rights II, which is being prepared.
  This bill I put in today is one that covers one loophole that we had 
discerned was there and which the IRS agreed we should close, and we 
are glad the Senator from Arkansas is a cosponsor because he did a lot 
of the original work and deserves a lot of the credit for it.
                                 ______

      By Mr. HATCH:
  S. 671. A bill to provide a fair and balanced resolution to the 
problem of multiple imposition of punitive damages, and for other 
purposes; to the Committee on the Judiciary.


               the multiple punitive damages fairness act

  Mr. HATCH. Mr. President, I rise today to introduce legislation which 
will at last deal with one aspect of one of the most serious problems 
facing our civil justice system today--out of control punitive damage 
awards.
  Punitive damages constitute punishment and an effort to deter future 
egregious misconduct. Punitive damages are not awarded to make whole 
the victim of wrongdoing. Punitive damages reform is not about 
shielding wrongdoers from liability, nor does such reform prevent 
victims of wrongdoing 
[[Page S5149]] from being rightfully compensated for their damages.
  Safeguards are needed to protect against abuse in the award of 
punitive damages. In a 1994 opinion authored by Justice Stevens, the 
Supreme Court noted, ``Punitive damages pose an acute danger of 
arbitrary deprivation of property.'' [Honda Motor Co. v. Oberq, 114 S. 
Ct. 2331, 2340]
  One particular problem is multiple awards of punitive damages. While 
I do not argue that a person or company that acts maliciously should 
not be subject to punitive damages, it is neither just nor fair for the 
repeated imposition of punitive damages in several States for the same 
act or conduct, as our system currently permits. Moreover, exorbitant 
and out-of-control punitive damage awards have the effect of punishing 
innocent people as well: employees, other consumers and shareholders.
  This is not a hypothetical problem. This past September, for example, 
a State court let stand a multimillion dollar punitive damage award 
against an automobile distributor who failed to inform a buyer that his 
new vehicle had been refinished to cure superficial paint damage.
  The victim, a purchaser of a $40,000 BMW automobile, learned 9 months 
after his purchase that his vehicle might have been partially 
refinished. As a result of the discovery, he sued the automobile 
dealer, the North American distributor, and the manufacturer, for fraud 
and breach of contract. He also sought an award for punitive damages. 
He won and hit the jackpot.
  At trial, the jury was allowed to assess damages for each of the 
partially refinished vehicles that had been sold throughout the United 
States over a period of 10 years. As sought by the plaintiff's 
attorney, the jury returned a verdict of $4,000 in compensatory damages 
and $4 million in punitive damages.
  On appeal to the State supreme court, the punitive damage award was 
reduced to $2 million, applicable to the North American distributor. 
The U.S. Supreme Court has accepted this case for review of the 
constitutionality of the $2 million punitive damage award.
  I should note that this same defendant can be sued again and again 
for punitive damages by every owner of a partially refinished vehicle. 
In fact, according to defense counsel, the same plaintiff's attorney 
has filed 24 other similar lawsuits.
  Defendant and consumers are not the only ones hurt by excessive, 
multiple punitive damage awards. Ironically, other victims can be those 
the system supposedly is intended to benefit, the injured parties 
themselves. Funds that might otherwise be available to compensate later 
victims can be wiped out at any early stage by excessive punitive 
damage awards.
  The imposition of multiple punitive damage awards in different States 
for the same act is an issue that can only be addressed through Federal 
legislation. If only one State limits such awards, other States still 
remain free to impose multiple punitive damages. Accordingly, a Federal 
response is necessary.
  Mr. President, I hope Senators will join me in supporting this 
initiative.
                                 ______

      By Mr. HATCH (for himself, Mr. McConnell, and Mr. Thomas):
  S. 672. A bill to provide a fair and balanced resolution to the 
problem of multiple imposition of punitive damages, and for the reform 
of the civil justice system; to the Committee on the Judiciary.


                     the civil justice fairness act

  Mr. HATCH. Mr. President, one of the few things on which most 
Americans can agree today is the need for reform of our civil justice 
system. In plain English, which is itself something too often absent 
from our courthouses and law offices, America's civil justice system 
has gotten out of control.
  In too many cases, the system fails to deliver justice to the 
parties. For most Americans, rich or poor, private citizen, small 
business person, or major corporation, the prospect of going to court, 
regardless of the merits of the case, is about as welcome as root canal 
work or an IRS audit.
  The litany of problems is no secret; they include excessive legal 
fees and costs, dilatory and sometimes abusive litigation practices, 
the increasing use of junk science as evidence, a veritable tidal wave 
of frivolous lawsuits by prison inmates, and a risk of unduly large 
punitive damage awards.
  The problems with our current civil justice system have resulted in 
several perverse effects. First, all too often the system fails to 
accomplish its most important function--to compensate adequately 
deserving plaintiffs. Second, it imposes unnecessarily high litigation 
costs on all parties--costs that are passed along to consumers, to each 
and every American, in the form of higher prices for products and 
services we buy--costs that ultimately harm our Nation's business 
competitiveness in the increasingly global economy.
  It's time Congress faced up to the problem and enacted meaningful 
legislation reforming our civil justice system, to eliminate its abuses 
and procedural problems and to restore to the American people a civil 
justice system deserving of their trust, confidence, and support. To 
achieve this goal, I am today introducing the Civil Justice Fairness 
Act, along with Senators McConnell and Thomas.
  I would like to review the major provisions of this legislation and 
to explain how they would correct some of the more serious problems in 
our present civil justice system.
  This legislation would address the problem of multiple punitive 
damage awards. We all know that punitive damage awards are out of 
control in this country. The imposition of multiple punitive damages 
for the same wrongful act in particular, raises great concern about the 
fairness of punitive damages and their ability to serve the purposes of 
punishment and deterrence for which they are intended.
  This past September, for example, a State court let stand a multi-
million-dollar punitive damage award against an automobile
 distributor who failed to inform a buyer that his new vehicle had been 
refinished to cure superficial paint damage. The jury was allowed to 
assess damages for each of the nearly 1,000 other vehicles that had 
been sold throughout the United States.

  Conceivably, the company can still be sued for punitive damages in 
every other State where it sold one of its vehicles for the same act.
  Moreover, multiple punitive damage awards can hurt injured parties. 
Funds that would otherwise be available to compensate later victims can 
be wiped out at any early stage by excessive punitive damage awards. A 
Federal response is critical: if only one State limits such awards, 
other States still remain free to impose multiple punitive damages. 
Accordingly, my bill limits these multiple punitive damage awards.
  My legislation also addresses abuses of punitive damages litigation. 
It includes a heightened standard of proof to ensure that punitive 
damages are awarded only if there is clear and convincing evidence that 
the harm suffered was the result of conduct either specifically 
intended to cause that harm, or carried out with conscious, flagrant 
indifference to the rights or the safety of the claimant.
  This bill also provides that punitive damages may not be awarded 
against the seller of a drug or medical device that received pre-market 
approval from the Food and Drug Administration.
  Additionally, this legislation would allow a bifurcated trial, at the 
defendant's request, on the issue of punitive damages and limits the 
amount of the award to either $250,000 or three times the economic 
damages suffered by the claimant, whichever is greater.
  This legislation would also limit a defendant's joint liability for 
noneconomic damages. In any civil case for personal injury, wrongful 
death, or based upon the principles of comparative fault, a defendant's 
liability for non-economic loss shall be severable only and shall not 
be joint. The trier of fact will determine the proportional liability 
of each person, whether or not a party to the action, and enter 
separate judgments against each defendant.
  Another provision of this bill would shift costs and attorneys fees 
in circumstances in which a party has rejected a settlement offer, 
forcing the litigation to proceed, and then obtained a less favorable 
judgment. This provision encourages parties to act reasonably, rather 
than pursue lengthy and costly litigation. It allows a plaintiff or a 
defendant to be compensated 
[[Page S5150]] for their reasonable attorneys fees and costs from the 
point the other party rejects a reasonable settlement offer.
  Another reform included in this legislation is a provision aimed at 
abusive litigation practices. This bill restores earlier provisions of 
rule 11 of the Federal Rules of Civil Procedure, to make sanctions for 
abusive litigation practices mandatory, and to require attorneys to 
make reasonable inquiries into the factual allegations before they file 
a pleading in court. This bill also eliminates the so-called safe 
harbor rule that allows an offending party to withdraw his offending 
pleading and clarifies that sanctions would also serve to compensate a 
prevailing party under rule 11.
  Another problem in our civil justice system that has been widely 
reported is abuse in contingency fee cases. This bill encourages 
attorneys to disclose fully to clients the hours worked and fees paid 
in all contingency fee cases. The bill calls upon the Attorney General 
to draft model State legislation requiring such disclosure to clients. 
It also requires the Attorney General to study possible abuses in the 
area of contingency fees and, where such abuses are found, to draft 
model State legislation specifically addressing those problems.
  This legislation restricts the use of so-called ``junk science'' in 
the courtroom. This long overdue reform will improve the reliability of 
expert scientific evidence and permit juries
 to consider only scientific evidence that is objectively reliable.

  This legislation also includes a provision for health care liability 
reform. It limits, in any health care liability action, the maximum 
amount of noneconomic damages that may be awarded to a claimant to 
$250,000. This limit would apply regardless of the number of parties 
against whom the action is brought, and regardless of the number of 
claims or actions brought. To avoid prejudice to any parties, the jury 
would not be informed about the limitations on noneconomic damages.
  This legislation would also establish a reasonable, uniform statute 
of limitations for the bringing of health care liability actions.
  Further, if damages for losses incurred after the date of judgment 
exceed $100,000, the court shall allow the parties to have 60 days in 
which to negotiate an agreement providing for the payment of such 
damages in a lump sum, periodic payments, or a combination of both. If 
no agreement is reached, a defendant may elect to pay the damages on a 
periodic basis. Periodic payments for future damages would terminate in 
the event of the claimant's return to work, or upon the claimant's 
death. There is an exception for the portion of such payments allocable 
to future earnings, which shall be paid to any individual to whom the 
claimant owed a duty of support immediately prior to death, to the 
extent required by law at the time of the claimant's death.
  This legislation also allows States the freedom to experiment with 
alternative patient compensation systems based upon no-fault 
principles. The Secretary of Health and Human Services would award 
grants based on applications by interested States according to 
enumerated criteria and subject to enumerated reporting requirements. 
Persons or entities participating in such experimental systems may 
obtain from the Secretary a waiver from the provisions of this 
legislation for the duration of the experiment. The Secretary would 
collect information regarding these experiments and submit an annual 
report to Congress, including an assessment of the feasibility of 
implementing no-fault systems, and legislative recommendations, if any.
  Our court system, at both the Federal and State level, is facing an 
ever-mounting tide of lawsuits, many totally frivolous, filed by prison 
inmates. This bill improves the ability of our courts to dismiss 
nonmeritorious in forma pauperis claims and requires the exhaustion of 
available administrative remedies in prisoner civil rights cases before 
a lawsuit is filed in court. Also, the bill requires that inmates bear 
at least some of the cost of initiating litigation, by enabling the 
courts to require the payment of at least a partial fee, or the payment 
of court fees in installments where the inmate cannot afford the entire 
fee.
  Mr. President, I ask for unanimous consent that a section-by-section 
description of the bill be printed in the Record.
  I urge my colleagues to take a serious look at these problems within 
our civil justice system. I believe this bill addresses these issues in 
a common sense way, and I hope my colleagues will join me in sponsoring 
this legislation.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
    Section-by-Section Description of the Civil Justice Fairness Act


                    title i--punitive damages reform

       Sec. 101: Definitions. This section defines various terms 
     and phrases used in Title I of the bill.
       Sec. 102: Multiple Punitive Damages Fairness. This section 
     generally prohibits the award of multiple punitive damages. 
     With one exception, it prevents courts from awarding punitive 
     damages based on the same act or course of conduct for which 
     punitive damages have already been awarded against the same 
     defendant. Under the exception, an additional award of 
     punitive damages may be permitted if the court determines in 
     a pretrial hearing that the claimant will offer new and 
     substantial evidence of previously undiscovered, additional 
     wrongful behavior on the part of the defendant, other than 
     injury to the claimant. In those circumstances, the court 
     must make specific findings of fact to support the award, 
     must reduce the amount of punitive damages awarded by the 
     amounts of prior punitive damages based on the same acts, and 
     may not disclose to the jury the court's determination and 
     action under the section. This section would not apply to any 
     action brought under a federal or state statute that 
     specifically mandates the amount of punitive damages to be 
     awarded.
       Sec. 103: Uniform Standards for Award of Punitive Damages. 
     This section sets the following uniform standards for the 
     award of punitive damages in any State or Federal Court 
     action: (1) In general, punitive damages may be awarded only 
     if the claimant establishes by clear and convincing evidence 
     that the conduct causing the harm was either specifically 
     intended to cause harm or carried out with conscious, 
     flagrant indifference to the rights or the safety of other 
     persons. (2) Punitive damages may not be awarded in the 
     absence of an award of compensatory damages exceeding nominal 
     damages. (3) Punitive damages may not be awarded against a 
     manufacturer or product seller of a drug or medical device 
     which was the subject of pre-market approval by the food and 
     Drug Administration (FDA). This FDA exemption is not 
     applicable where a party has withheld or misrepresented 
     relevant information to the FDA. (4) Punitive damages may not 
     be pleaded in a complaint. Instead, a party must establish at 
     a pre-trial hearing that it has a reasonable likelihood of
      proving facts at trial sufficient to support an award of 
     punitive damages, and may then amend the pleading to 
     include a prayer for relief seeking punitive damages. (5) 
     At the defendant's request, the trier of fact shall 
     consider in separate proceedings whether punitive damages 
     are warranted and, if so, the amount of such damages. If a 
     defendant requests bifurcated proceedings, evidence 
     relevant only to the claim for punitive damages may not be 
     introduced in the proceeding on compensatory damages. 
     Evidence of the defendant's profits from his misconduct, 
     if any, is admissible, but evidence of the defendant's 
     overall wealth is inadmissible in the proceeding on 
     punitive damages. (6) In any civil action where the 
     plaintiff seeks punitive damages under this title, the 
     amount awarded shall not exceed three times the economic 
     damages or $250,000, whichever is greater. This provision 
     shall be applied by the court and shall not be disclosed 
     to the jury. (7) This section applies to all civil actions 
     in which a trial has not commenced before the effective 
     date of this Act.
       Sec. 104: Effect on Other Law. This section specifies that 
     certain state and federal laws are not superseded or affected 
     by this legislation. Choice-of-law and forum nonconveniens 
     rules are similarly unaffected.


                      title ii--several liability

       Sec. 201: Several Liability for Noneconomic Loss. This 
     section limits a defendant's joint liability for non-economic 
     damages. In any civil action for personal injury, wrongful 
     death, or based upon principles of comparative fault, a 
     defendant's liability for noneconomic loss shall be several 
     only and shall not be joint. The trier of fact will determine 
     the proportional liability of each person, whether or not 
     such person is a party to the action, and enter separate 
     judgments against each defendant.


                   title iii--civil procedural reform

       Sec. 301: Sanctions for Abusive Litigation Practices. This 
     section restores key provisions to Federal Rule of Civil 
     Procedure 11. It requires a party to conduct a reasonable 
     pre-filling inquiry into allegations and factual assertions 
     contained in a pleading or motion, and makes the issuance of 
     sanctions for frivolous or abusive tactics mandatory rather 
     than permissive. It also gives the courts wider latitude to 
     impose sanctions on attorneys for filing abusive pleadings by 
     eliminating the so-called ``safe harbor'' rule. The safe 
     harbor rule allows a party moved 
     [[Page S5151]] against to withdraw the offending pleading 
     within 21 days of a Rule 11 motion--an indulgent free bite at 
     the apple. The section also clarifies that the purpose of 
     sanctions is to deter repetition of abusive litigation 
     practices and to compensate a party injured by the conduct.
       Sec. 302: Trial Lawyer Accountability. This section 
     contains two major provisions. The first provides that it is 
     the sense of the Congress that each State should require 
     attorneys who enter into contingent fee agreements to 
     disclose to their clients the actual services performed and 
     hours expended in connection with such agreements. The second 
     provision directs the Attorney General to study and evaluate 
     contingent fee awards and their abuses in State and Federal 
     court; to develop model legislation to require attorneys who 
     enter into contingency fee agreements to disclose to clients 
     the actual services performed and hours expended, and to curb 
     abuses in contingency fee awards based on the study; and to 
     report the Attorney General's findings and recommendations to 
     Congress within one year of enactment.
       Sec. 303: Honesty in Evidence. This section amends Federal 
     Rule of Evidence 702 to reform the rules regarding the use of 
     expert testimony. It clarifies that courts retain substantial 
     discretion to determine whether the testimony of an expert 
     witness that is premised on scientific, technical, or medical 
     knowledge is based on scientifically valid reasoning, is 
     sufficiently reliable, and is sufficiently established to 
     have gained general acceptance in the particular field in 
     which it belongs. The section codifies the standard for 
     admissibility of expert testimony enunciated in Daubert v. 
     Merrell Dow Pharmaceuticals, Inc., 113 S. Ct. 2786 (1993). It 
     also restores the common law Frye rule that requires that 
     scientific evidence have ``general acceptance'' in the 
     relevant scientific community to be admissible. This section 
     further clarifies that expert witnesses have expertise in the 
     particular field on which they are testifying. Finally, this 
     section mandates that the testimony of an expert retained on 
     a contingency fee basis is inadmissible.
       Sec. 304: Fair Shifting of Costs and Reasonable Attorney 
     Fees. This section modifies Federal Rule of Civil Procedure 
     68 to allow either party, not just the defendant, to make a 
     written offer of settlement or to allow a
      judgment to be entered against the offering party. It 
     expands the time period during which an offer can be made 
     from 10 days before trial to any time during the 
     litigation. If within 21 days the offer is accepted, a 
     judgment may be entered by the court. If, however, a final 
     judgment is not more favorable to an offeree than the 
     offer, the offeree must pay attorney fees and costs 
     incurred after the time expired for acceptance of the 
     offer. Thus, this is not a true ``loser pays'' provision 
     where a loser pays the winner's attorney's fees, but 
     rather a narrower attorney fee- and cost-shifting idea 
     applicable only when a party has made an offer of 
     settlement or judgment. This section also significantly 
     expands the definition of recoverable costs. Currently, 
     costs are narrowly defined and do not create enough of a 
     financial incentive for a party to make an offer that 
     allows judgment to be entered. Finally, this section also 
     allows a party to make an offer of judgment after 
     liability has already been determined but before the 
     amount or extent has been adjudged.


                 title iv--health care liability reform

       Sec. 401: Limitations on Noneconomic Damages. In any health 
     care liability action the maximum amount of noneconomic 
     damages that may be awarded to a claimant is $250,000. This 
     limit shall apply regardless of the number of parties against 
     whom the action is brought, and regardless of the number of 
     claims or actions brought. The jury shall not be informed 
     about the limitations on noneconomic damages.
       Sec. 402: Uniform Statute of Limitations. This section 
     provides a reasonable uniform statute of limitations for 
     health care liability actions, with one exception for minors. 
     The general rule is that an action must be brought within two 
     years from the date the injury and its cause was or 
     reasonably should have been discovered, but in no event can 
     an action be brought more than six years after the alleged 
     date of injury. This section also allows an exception for 
     young children. The rule for children under six years of age 
     is that an action must be brought within two years from the 
     date the injury and its cause was or reasonably should have 
     been discovered, but in no event can an action be brought 
     more than six years after the alleged date of injury or the 
     date on which the child attains 12 years of age, whichever is 
     later.
       Sec. 403: Periodic Payment of Future Damages. This section 
     allows for the periodic payment of large awards for losses 
     accruing in the future. If damages for losses incurred after 
     the date of judgment exceed $100,000, the court shall allow 
     the parties to have 60 days in which to negotiate an 
     agreement providing for the payment of such damages in a lump 
     sum, periodic installments, or a combination of both. If no 
     agreement is reached within those 60 days, a defendant may 
     elect to pay the damages on a periodic basis. The court will 
     determine the amount and periods for such payments, reducing 
     amounts to present value for purposes of determining the 
     funding obligations of the individual making the payments. 
     Periodic payments for future damages terminate in the event 
     of the claimant's recovery or return to work; or upon the 
     claimant's death, except for the portion of the payments 
     allocable to future earnings which shall be paid to any 
     individual to whom the claimant owed a duty of support 
     immediately prior to death to the extent required by law at 
     the time of death. Such payments shall expire upon the death 
     of the last person to whom a duty of support is owed or the 
     expiration of the obligation pursuant to the judgment for 
     periodic payments.
       Sec. 404: Non-Fault Based Patient Compensation System 
     Demonstration Project. This section allows states to 
     experiment with alternative patient compensation systems 
     based upon no-fault principles. Grants shall be awarded by 
     the Secretary of Health and Human Services based on 
     applications made by interested states according to 
     enumerated criteria and subject to enumerated reporting 
     requirements. Persons or entities involved in the 
     demonstrations involved may obtain a waiver from the 
     Secretary from the provisions of this Title for the duration 
     of the experiment, which shall be not greater than five 
     years. The Secretary shall collect information regarding 
     these experiments and submit an annual report to Congress 
     including an assessment of the feasibility of implementing 
     no-fault systems and legislative recommendations, if any.
       Sec. 405: Definitions. This section defines various terms 
     and phrases used in Title IV of the bill.


        title V--Control of abusive prisoner litigation tactics

       Sec. 501: Reform of In Forma Pauperis Determinations. This 
     section reforms in forma pauperis determinations by 
     permitting courts to require a prisoner to make either 
     partial payment of fees or the payment of fees in
      installments where the court determines that a prisoner is 
     unable to pay the total fees. This section also requires 
     that, where a prisoner files an in forma pauperis 
     affidavit, the prisoner must also file (1) an affidavit 
     listing the prisoner's assets, and (2) a statement, signed 
     by prison officials, specifying the prisoner's income and 
     assets during the preceding year.
       Sec. 502: Improving Courts' Abilities to Dismiss 
     Nonmeritorious Claims. This section improves courts' 
     abilities to dismiss nonmeritorious in forma pauperis claims 
     by permitting courts to dismiss such claims at any time where 
     the allegation of poverty is untrue, where those claims are 
     frivolous or malicious, where the complaint fails to state a 
     claim on which relief can be granted, or where the claim is 
     insubstantial in that the plaintiff suffered no injury or an 
     insubstantial injury.
       Sec. 503: Exhaustion of Administrative Remedies in Prisoner 
     Litigation. This section amends Section 7 of the Civil Rights 
     of Institutionalized Persons Act to require the exhaustion of 
     available administrative remedies where a prisoner files a 
     lawsuit under 42 U.S.C. Sec. 1983. It also makes minor 
     changes in the assessment of whether administrative remedies 
     are adequate, to grant greater flexibility to the Attorney 
     General. Currently, courts are required to continue a case 
     for no longer than 90 days to allow a prisoner to exhaust his 
     administrative remedies. Prisoners often merely wait out the 
     time period and make no effort to pursue an administrative 
     remedy. Thus, this section requires exhaustion of a 
     prisoner's plain, speedy, and effective administrative 
     remedy.


                   title vi--miscellaneous provisions

       Sec. 601: Federal Cause of Action Precluded. This section 
     provides that the bill does not provide any new basis for 
     federal court jurisdiction. The resolution of punitive 
     damages claims is left to state courts or to federal courts 
     that currently have jurisdiction over those claims.
       Sec. 602: Effective Date. Except as otherwise provided, 
     this section provides that this Act shall be effective 30 
     days after the date of its enactment and shall apply to all 
     civil actions commenced on or after that date, including 
     actions in which the harm occurred before the effective date 
     of this Act.
                                 ______

      By Mrs. KASSEBAUM (for herself, Mr. Inouye, Mr. Domenici, and Mr. 
        Stevens):
  S. 673. A bill to establish a youth development grant program, and 
for other purposes; to the Committee on Labor and Human Resources.


        the youth development community block grant act of 1995

 Mrs. KASSEBAUM. Mr. President, I introduce the Youth 
Development Community Block Grant Act of 1995 on behalf of myself, 
Senator Domenici, Senator Inouye, Senator Stevens. The purpose of this 
initiative is to reallocate existing Federal funding for preventive 
youth program into a more effective and cohesive network of community-
based youth development services for 6- to 18-year-olds.
  The United States has concentrated most of its efforts on behalf of 
youth on specific problems that have captured the attention of the 
American public. This well-intentioned response has had two major 
results: First, the creation of a maze of narrowly defined categorical 
programs to address the 
[[Page S5152]] specific needs of a particular population; and second, a 
lack of local flexibility in determining how best to respond to the 
needs of youth in the community. These two factors, combined with our 
concern about the increasing vulnerability of the American family, have 
lead to the development of the Youth Development Community Block Grant 
Act.
  The central goal of the youth development community block grant 
[YDCBG] is to promote and support positive youth development. The bill 
will fund services focused on prevention--programs that help children 
and youth develop the values and life skills they need to succeed. It 
reflects the belief of leaders in the field of youth development, 
including the Carnegie Council on Adolescent Development and the Center 
for Youth Development and Policy Research, that youth programs should 
address the social, moral, emotional, and physical development of 
youth, in addition to their ability to think and reason.
  Likewise, the legislation reflects the strong consensus among these 
experts that youth development services should focus on the needs of 
youth in general, rather than segregate them into various categories of 
risk. It also emphasizes the use of participatory, hands-on-techniques 
which have been shown to be effective in getting youth involved and 
interested in learning critical life skills.
  Rather than wait until young people are in crisis, this legislation 
will fund preventive services. Rather than forcing service providers to 
define the needs of a youth to conform to the labyrinth of rules and 
regulations of a categorical program, they can identify the youth's 
needs based on what is actually needed. The youth development community 
block grant represents a comprehensive, coordinated approach to youth 
and to funding community-based services.
  The YDCBG incorporates many of the principles which policymakers and 
service providers have identified as necessary for effective Federal 
support for community-based human services--local control, flexibility, 
coordination, and accountability.
  Most existing youth development programs are provided not by 
government agencies but by community-based organizations. The youth 
development community block grant builds on the strength, credibility, 
and expertise of existing community-based resources.
  There is a broad and growing consensus among youth policy experts 
about the importance of increased investment in positive youth 
development programs. For example, in major studies, both the Chaplin 
Hall Center for Children at the University of Chicago and the Carnegie 
Council have concluded that, if youth are to succeed, there must be a 
well-developed infrastructure of youth development services in their 
communities. Provisions in the legislation concentrate on improving the 
quality of community-based youth development programs and improving the 
capacity of communities to design and deliver successful services for 
our youth.
  The YDCBG was developed in conjunction with the National 
Collaboration for Youth, a 15-member coalition of major youth-serving 
organizations. These organizations collectively provide direct services 
to over 25 million children and youth each year.
  Members of the National Collaboration for Youth endorsing the Youth 
Development Community Block Grant Act include: the American Red Cross, 
Association of Junior Leagues International, Big Brothers/Big Sisters 
of America, Boy Scouts of America, Boys and Girls Clubs of America, 
Camp Fire Boys and Girls, Child Welfare League of America, 4-H-
Extension Service, Girl Scouts of the USA, Girls Inc., National Network 
of Runaway and Youth Services, The Salvation Army, WAVE Inc., YMCA of 
the USA, and YWCA of the USA.
  While these and other community-based youth organizations are 
providing important services to millions of youth, millions more go 
unserved or underserved. It is critical that the existing Federal 
dollars allocated for youth prevention be used in the most effective 
and efficient way--to build a cohesive network of locally driven 
services and programs.
  The legislation authorizes the youth development community block 
grant for 3 years at $2 billion per year. This authorization level 
represents a 10-percent savings over current Federal spending for the 
various programs consolidated under the YDCBG, the sum of the fiscal 
year 1995 appropriations for existing programs combined with the 
estimated appropriations level for crime bill programs aimed at youth 
prevention, less 10 percent.
  I hope other Members of the Senate join with us as cosponsors of the 
Youth Development Community Block Grant Act.
  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:
            Summary--Youth Development Community Block Grant

       The Youth Development Community Block Grant (YDCBG) is an 
     effort to reallocate existing federal funding for preventive 
     youth programs into a more effective and efficient response 
     to the needs of young people, aged 6-18. The goal of youth 
     development programs is helping children and youth learn the 
     life skills which they need to succeed. This legislation 
     establishes a community driven, coordinated network of 
     positive youth development to accomplish this goal.
       In short, the youth development community block grant:
       Is community-based and flexible, with program 
     accountability
       Invests money in prevention rather than crisis intervention
       Transforms current categorical programs into a cohesive 
     network
       Can serve as a catalyst in building stronger communities to 
     support children and their families


        features of the youth development community block grant

     Community control of local programs
       This legislation supports the idea that the best place to 
     design and implement youth programs is within the community. 
     When created within the context of the community and by a 
     partnership of community members, the programs can draw upon 
     the strengths of existing resources and address the specific 
     needs of the youth living there.
       All YDCBG-funded programs must address community youth 
     development priorities as defined by the Local Board; 
     recognize the role of the family in youth development; 
     involve parents, youth, and community leaders in the program; 
     coordinate services with other programs in the community; and 
     establish process and outcome objectives responding to local 
     needs.
     Focus on prevention rather than crisis intervention
       The second part of the equation is that it is important to 
     redirect resources to prevention activities. Most government 
     funds are focused on solving problems rather than preventing 
     problems from occurring. There are a variety of activities 
     which help youth develop their social, emotion, and physical 
     abilities, along with their ability to think and reason. 
     These activities can involve mentoring, sports and 
     recreation, peer counseling, youth clubs, leadership 
     development, educationally based youth employment, and a 
     variety of other non-academic pursuits. youth development 
     programs provide youth with hands on, active way to learn 
     life skills which will help them make a successful transition 
     from childhood to adulthood.
       In addition, because these activities are not focused on 
     correcting a specific problem, but on providing basic life 
     skills, the programs do not need to be restricted to ``high 
     risk'' youth or a special target population. Local 
     communities and youth development agencies may choose to 
     focus the activities on a special group of children and 
     youth, such as low-income or at risk youth, in response to a 
     particular need of the community.
     Funds go Directly to Communities
       Nearly 95% of the YDCBG funds are funneled directly to 
     local communities; states serve as a pass through and 
     monitoring mechanism. Through a planning and priority setting 
     process, local communities determine the types of activities 
     which will be funded and who will provide those services. 
     Program accountability is demonstrated by measuring the 
     community's progress in meeting goals set in the planning and 
     priority setting process. This provides communities broad 
     flexibility to define local priorities and support local 
     initiatives, while at the same time encouraging community 
     partnerships comprehensive planning, and service integration.
     Existing funds are consolidated into a cohesive strategy
       Funding for the YDCBG is drawn from existing federal youth 
     prevention programs. The majority of existing youth 
     development and prevention programs are funded through 
     categorical grants awarded on a discretionary basis by the 
     federal agency administering the initiative. These 
     categorical programs are designed to respond to an identified 
     problem such as substance abuse or teen pregnancy. The YDCBG 
     recognizes that those problems are symptoms not only of youth 
     but of an ineffective service delivery system--and that the 
     new funding structure 
     [[Page S5153]] must transform the current potpourri of 
     narrowly defined categorical programs into a cohesive 
     community based strategy for youth. Current budget 
     constraints demand that existing federal funds be more 
     efficiently administered and more effectively used.
       Although the legislation includes the repeal of several 
     federal initiatives, a ``grandfather'' clause in the bill 
     permits communities to continue funding for any local program 
     currently receiving funding from the repealed programs. While 
     the federal administration and legislation will be 
     terminated, the programs themselves can continue to operate 
     at the community level--where the service is delivered.
     Funds will be allocated based on a formula, rather then good 
         grantwriting skills
       The majority of programs consolidated within the YDCBG are 
     currently distributed through the discretionary grant 
     process. Distribution among states and communities varies 
     widely and is determined, in large part, by the grantwriting 
     skills of the grantees. Through a formula based allocation of 
     YDCBG funds, every county will receive some level of funding 
     for youth development activities. This allocation formula 
     gives equal weight to the size of the youth population aged 
     6-18, the proportion of the youth population living below the 
     poverty line, and increases in the rate of serious juvenile 
     crime. A small state minimum and set aside for Native 
     American populations is included in the legislation.
     Administrative structures are streamlined
       The primary administrative structure of the YDCBG is the 
     Local Board. This Board, appointed jointly by the Chief 
     Executive Officer of the County and a representative of the 
     local youth development community, is responsible for setting 
     the goals, determining strategies for achieving those goals, 
     and distributing funds for youth development services in the 
     community. The state serves as a pass through for 
     distributing funds to counties based on the federal 
     allocation formula. In addition, the state is responsible for 
     basic monitoring, reporting and technical assistance 
     functions to assist the counties implementation of the act. 
     The federal role in the YDCBG consists of program oversight 
     as well as state and local capacity building through 
     technical assistance, and research-based demonstration 
     projects.
       Provisions in the bill promote the use of existing 
     administrative structures on the federal, state, and local 
     levels. Multi-county and other partnership efforts are 
     encouraged.
     Sources for federal funding of the YDCBG
       Department of Health and Human Services:
       Youth Gang Prevention Program.
       National Youth Sports Program.
       Demonstration Partnership Program.
       Community Coalition Demonstration Projects to Support HHS 
     Needs for Minority Males.
       Demonstration Grants for the Prevention of Alcohol and 
     Other Drug Abuse among High Risk Youth.
       Drug Abuse Prevention for Runaway and Homeless Youth.
       Drug Abuse Prevention and Education Relating to Youth 
     Gangs.
       Department of Labor: Summer Youth Employment and Training 
     Program.
       Department of Education:
       School Drop-Out Demonstration Assistance.
       Drug Free and Safe Schools and Communities National 
     Programs.
       Drug Free and Safe Schools and Communities--State Grants.
       Drug Free and Safe Schools and Communities--Regional 
     Centers
       Drug Free and Safe Schools and Communities--Emergency 
     Grants.
       Department of Justice-Office of Juvenile Justice and 
     Delinquency Prevention:
       Youth Gangs.
       Juvenile Mentoring.
       Delinquency Prevention Grants.
       From the Crime bill:
       Ounce of Prevention Council.
       Local Crime Prevention Block Grant Program.
       Family and Community Endeavor Schools Grant Program.
       Assistance for Delinquent and At-Risk Youth.
       Local Partnership Act.
       Urban Recreation and At-Risk Youth.
       Gang Resistance Education and Training.
       The $2 billion authorization amount for the YDCBG is the 
     sum of the fiscal year 1995 appropriations for existing 
     programs combined with the estimated appropriations for the 
     crime bill programs less 10%.
                                                                    ____

Youth Development Community Block Grant Act of 1995--Section-by-Section 
                              Description

       Section 1: Short Title; Table of Contents: This section 
     contains the table of contents for the Youth Development 
     Community Block Grant Act of 1995.
       Section 2: Findings: Section 2 enumerates Congressional 
     findings for the Youth Development Community Block Grant Act 
     of 1995.
       Section 3: Purposes: The purpose of this Act is set forth 
     in Section 3. The Act is designed to create a single, 
     comprehensive Federal strategy for community-based youth 
     development services, and to support communities in designing 
     community strategic plans for worthwhile youth development.
       Section 4: Definitions: Section 4 defines all relevant 
     terms and phrases referred to in the Act.
       Section 5: Distribution of Funds: Section 5 authorizes 
     appropriations up to $2,000,000,000 per fiscal year 1996 
     through 1998. This appropriation is to be allocated in the 
     following manner: 95.5 percent for allotments to States (for 
     distribution to the community boards); 1.5 percent for grants 
     to Native American organizations; and 3 percent for 
     activities by the Administration for Children and Families. 
     The formula for distributing the funds to states and to 
     counties equally weights three factors--youth population, 
     level of poverty, and increases in violent juvenile crime 
     since 1990.
       Section 6: Community Youth Development Board: Section 6 
     establishes a Community Youth Development Board and a 
     multicounty Community Board. These boards shall prepare and 
     submit to the State a community strategic plan for youth 
     development, shall be responsible for establishing monitoring 
     and evaluation procedures; and shall award grants. This 
     section also sets forth guidelines for the composition, 
     administration, and duties of community boards.
       Section 7: Duties of the State: State responsibilities are 
     set forth in Section 7. These duties include the designation 
     of a state entity to administer and conduct State activities; 
     the development of a mechanism through which to process 
     information, coordinate activities, assess program 
     effectiveness, and for the preparation and submission of an 
     annual report.
       Section 8: Duties of the Assistant Secretary: This section 
     specifies duties of the Assistant Secretary. The Assistant 
     Secretary shall establish and implement a mechanism to 
     receive information necessary to improve the effectiveness of 
     Federal
      youth development activities. Moreover, the Assistant 
     Secretary shall issue national policy goals and a national 
     strategic plan; shall monitor, evaluate, and coordinate 
     activities funded under this Act; and shall submit reports 
     to the President and Congress.
       Section 9: Repeals: Section 9 enumerates provisions of law 
     which are repealed by the Act. Several provisions in the 
     Violent Crime Control and Law Enforcement Act of 1994 are 
     repealed, along with several Department of Education 
     Programs. Various provisions from other programs are also 
     repealed.
       Section 10: Conforming Amendments: Section 10 sets forth 
     conforming amendments in the Elementary and Secondary 
     Education Act of 1965, the Anti-Drug Abuse Act of 1988, the 
     Job Training Partnership Act, and the National School Lunch 
     Act.
       Section 11: Transfer of Funds: Section 11 outlines the 
     transfer of funds. The total amount of funds shall be 
     transferred to the budget account for this Act. Any amounts 
     in the budget account that exceed $2,000,000,000 shall be 
     returned to the Treasury of the United States.

 Mr. DOMENICI. Mr. President, I am pleased to join the Senator 
from Kansas, the distinguished chairwoman of the Senate Labor 
Committee, and the Senator from Hawaii as an original sponsor of this 
legislation. Senator Kassebaum has summarized what is in this bill far 
more eloquently that I can, so I won't bother to summarize this bill 
section-by-section. But I would like to take a moment to review the 
provisions of this bill that I think deserve special attention.
  It has become especially obvious in recent years that there is no 
such thing as one size fits all when it comes to providing services to 
youth. Many of the programs we have put into place have the same noble 
intention of providing services to children and youth who need them, 
but vary in their approaches to delivery. Some programs work very well, 
others less so. Youth who qualify for one program out of the Department 
of Labor may not necessarily qualify for a program out of the 
Department of Human Services. Additionally, we have front-loaded the 
process with countless regulations to be followed and forms and 
applications to be completed. As a result, our good intentions are 
often followed with confusing procedure and time-consuming oversight 
and management procedures. Plainly, the current system is not 
delivering.
  Our bill is based upon two encroaching realities. First, that many of 
the problems in our current system are not always due to the nature of 
the population served, but because of an ineffective, confusing, 
contradictory, or overwhelming method of delivering services. Second, 
that States and local communities know best what works best in their 
States and local communities. Clearly, a new approach to delivering 
these services is needed.
  With this in mind, we did not approach this problem with the intent 
of block granting a number of Federal programs just for the sake of 
block granting. I know there are some who question the wisdom of block-
granting programs, and I share the view that there are some programs 
which, due 
[[Page S5154]] to their comprehensive nature, do not belong in a block 
grant. The issue is one of appropriateness--we should not lump together 
programs which are unrelated or serve substantially different 
populations, or deliver unrelated services. In other words, don't block 
grant your apples with your oranges.
  I am pleased, therefore, that our legislation focuses on block 
granting appropriate, and related, programs. These are programs with 
overlapping jurisdictions or which duplicate programs available in 
other agencies. And, unlike some proposals that often set our phones to 
ringing, the bill consolidates apples only with apples. The block grant 
established under this legislation would consolidate funding from 
existing Federal youth prevention programs. The list isn't long, and it 
may even turn out that we didn't include a program in here that others 
may think should be included. So, I think if you look carefully at what 
we have included in this block grant, you will see that we did not 
create a block grant just because everyone is doing it. We were very 
careful in the programs we chose.
  We are proposing a much simpler approach to delivering services to 
young people, and one that gives communities a much greater voice in 
determining what services are appropriate
 in their area. We are rejecting the current practice of moving funding 
for youth programs through a number of assistant secretaries at the 
Federal and State level, then gluing on layer after burdensome layer of 
regulations from a number of different agencies onto those funds. 
Instead, our bill would ensure that money flows directly to the 
States--and then directly to communities--and not to the Federal 
Government. Ninety-five percent of the funds available under this bill 
go directly to local communities, who know best what their specific 
needs are.

  The State would serve mainly as a flow-through point, with an 
appropriate entity in place to administer and conduct a few activities, 
including monitoring, reporting, and technical assistance to counties. 
Administration of the program is left largely to local boards, which 
would be appointed in each community by the chief executive officer of 
the county and a representative of the local youth development 
community. These boards would determine the goals of the programs 
within their community, how the community would pursue these goals, and 
then distribute the funds for the youth development services in the 
community.
  Further, the funds for this program are allocated to the States by 
formula, not through a discretionary grant process. We have found this 
approach is one that works in other large grants, such as the Community 
Development Block Grant. A formula ensures that every State, regardless 
of size or grant-writing ability, will receive some funding for their 
youth programs. We have also included a mandatory set-aside for native 
American, Hawaiian, and Alaskan populations to ensure that the young 
people in these populations will continue to receive services. I know 
Senator Kassebaum worked closely with members of the Indian Affairs 
Committee on this language, including the distinguished ranking member 
who is sponsoring this legislation with us, and I appreciate that 
committee's assistance in this matter as well.
  Unlike the current system, the funds made available under this block 
grant are not targeted at a narrowly defined group of young people. The 
non-targeted nature of this block grant means that communities do not 
necessarily have to target their programs to only at-risk, or only 
high-risk, or only no-risk youth. Rather, they can develop programs 
that serve all the youth in their community. These activities can be as 
broad or as narrow as the community chooses.
  Another objective of this legislation is to provide for our young 
people before they become lost in the system. Under our current system, 
we focus our efforts mainly on solving an existing problem. Now, I 
would certainly agree that there is an appropriate role for the 
Government in this area, but I do not think I exaggerate when I say 
that many of our programs are the equivalent of ambulance chasing. We 
seem to always arrive after the fact to help pick up the pieces.
  Again, I agree that this is an important function of Government--and 
our bill would certainly not prevent communities from operating these 
kinds of programs--but I think we serve our children and our 
communities better if we focus our efforts on preventing problems from 
occurring in the first place. Therefore, our bill is heavily tilted 
toward preventative programs, and would consolidate funding from a 
number of prevention programs under the jurisdictions of Labor, Health 
and Human Services, Education, and Justice.
  Let me reassure my colleagues that there is no hidden agenda here. We 
are not out to get any one of these programs. In fact, I have been a 
staunch supporter of many of the programs block granted in this bill, 
including the National Youth Sports Program under the Department of 
Health and Human Services, the Summer Youth Employment and Training 
Program under the Department of Labor, and Safe and Drug Free Schools 
under the Department of Education. However, I'm certain there are some 
in New Mexico listening to me right now who are saying, ``Wait a 
moment, Senator--you're proposing to put into your block grant a 
program that we already have. What will happen to our program?'' The 
answer to that is, nothing. The purpose of this bill is to let 
communities continue to make available and expand upon the kinds of 
services these programs provide, but without the Federal Government 
peeking over their shoulders. We have grandfathered existing programs, 
allowing the communities to continue funding for any local program 
currently in place, but without the Federal administration.
  Now, in all the talk about block grants, there is always the concern 
that we will be letting the States have completely free reign, with no 
accountability, and therefore States will be spending the money from 
block grants on unrelated items. I want to assure my colleagues and 
anyone listening that this cannot happen under our bill. Funds must be 
spent on youth development programs in the State. Period. Also, we will 
maintain some--minimal, but some--oversight of the program, as well as 
assisting the States in training and technical assistance, as needed.
  It has become alarmingly obvious that we will be unable to continue 
to fund programs at their existing rate of growth. However, we believe 
that under our proposed delivery system, States will be able to perform 
more with less funding. The funding authorized for this program is 
based on the current authorization levels for the 23 programs we 
consolidate, minus 10 percent. That amounts to $2 billion. That is not 
a huge reduction in funding, and we believe that without having to 
worry about complying with the strict letter of the law, without having 
to worry about complying with regulation after regulation, and without 
having to worry about reams of paperwork, the States will find they can 
continue to deliver services at their current rate, and may surprise 
themselves in finding they can do even more.
  Finally, I want to acknowledge a number of groups who are lending 
their support to this legislation, and who have been very helpful 
during this process. My thanks go especially to the Boys and Girls Club 
of America, Big Brothers/Big Sisters, the American Red Cross, YMCA, 
YWCA, and the Boy Scouts of America. These are groups I have worked 
with closely on my efforts with the Character Counts Coalition, and 
their support for this effort means as much to me as it does for my 
efforts with Character Counts. I look forward to continuing to work 
with them.
  I believe ours is a responsible approach that can work. I encourage 
my colleagues to give it a chance to do so.
                                 ______

      By Mr. EXON (for himself, Mr. Dorgan, Mr. Kerry, and Mr. 
        Moynihan):
  S. 674. A bill entitled the ``Rail Investment Act of 1995''; to the 
Committee on Commerce, Science, and Transportation.


                          rail investment act

  Mr. EXON. Mr. President, I am pleased to introduce the Rail 
Investment Act of 1995. This legislation will ensure that America's 
rail infrastructure continues to meet the needs of the Nation. This 
bill is an update version of S. 2002 which the Senate Commerce 
Committee unanimously approved last year and combines several 
important 
[[Page S5155]] rail initiatives including the reauthorization of 
Amtrak, the reauthorization of the Local Rail Freight Assistance 
Program and other rail initiatives of critical importance to a number 
of Members of the Senate.
  The bill before the Senate takes into account the cost-saving 
measures taken by the Amtrak Board and includes new provisions to help 
Amtrak generate more nontax revenues through advertising, concessions 
and intermodal coordination with America's bus companies. I know that 
this legislation is a starting place and not a finishing place. Many 
painful choices regarding Amtrak are just around the bend. With a few 
modifications, however, it is where the Senate left off last year.
  As the former chairman of the Surface Transportation Subcommittee, I 
am proud of the work we did last year. I have updated the effort to 
reflect the new political and financial realities which face both 
Amtrak and this body.
  The Senate Commerce Committee held a very good hearing on Amtrak and 
it is clear to me that there continues to be strong bipartisan support 
for a national passenger rail system. I look forward to working with 
both the new chairman of the full committee and the subcommittee to 
assure that Amtrak has a future.
  The key features of the Rail Investment Act include:
  First, an addition to the Amtrak mission statement that Amtrak should 
treat all passengers with respect, courtesy, and dignity and that 
Amtrak should manage its capital investment to provide world class 
service;
  Second, a study of proposed changes of the State-requested service 
program;
  Third, a renewal of the authorization for the Northeast Corridor 
Improvement Program [NECIP];
  Fourth, a technical amendment to settle a title problem for Reno, NV, 
rail properties;
  Fifth, the Missouri River Corridor Development Program to study the 
feasibility of service between Kansas City and Omaha, to authorize 
station projects and fund operation of new service in and around the 
States bordering the Missouri River;
  Sixth, a provision to assist Rhode Island with its double-stack 
freight service problems;
  Seventh, a provision which allows Amtrak to better manage its 
finances;
  Eighth, a provision to study D.C. to Bristol, VA, passenger rail 
service;
  Ninth, the addition of a passenger representative to the Amtrak Board 
of Directors;
  Tenth, a pilot program to generate more nontax revenues from 
advertising and concession sales; and
  Eleventh, a provision to authorize a rail project integral to service 
between Massachusetts and Maine;
  Twelfth, a continuation of the Amtrak labor management safety task 
force.
  The bill also includes the text of legislation I introduced with 
Senators Daschle, Pressler, Harkin, Conrad, Kerrey, and Dorgan last 
year to reauthorize the Local Rail Freight Assistance Program [LRFA] 
for $30 million each year. In addition, the LRFA Program is amended to 
give authorization for emergency appropriations, and to add explicit 
language to permit LRFA money to be used for crossing closures and 
upgrades.
  I urge my colleagues to endorse this much needed legislation.
  

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