[Congressional Record Volume 141, Number 127 (Wednesday, August 2, 1995)]
[Senate]
[Pages S11201-S11216]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mrs. BOXER (for herself and Mr. Grassley):
  S. 1102. A bill to amend title 10, United States Code, to make 
reimbursement of defense contractors for costs of excessive amounts of 
compensation for contractor personnel unallowable under Department of 
Defense contracts.

[[Page S11202]]



              department of defense contracts legislation

  Mrs. BOXER. Mr. President, I rise to introduce legislation that will 
cap taxpayer reimbursement for the salaries of defense contractor 
executives at $250,000 per year. This legislation will permanently 
extend the temporary CAP established in the Fiscal Year 1995 Defense 
Appropriations Act. I am very pleased to be joined in this effort by 
the Senator from Iowa [Mr. Grassley].
  I began investigating this issue after hearing reports of multi-
million-dollar bonuses awarded as a result of the Lockheed-Martin 
Marietta merger. As a result of that merger, $92 million in bonuses 
will be awarded--$31 million of which will be paid by the taxpayers.
  I think it is wrong that corporate executives make so much money at a 
time when their employees are struggling just to make ends meet. What 
makes it even worse in this case is that these multi-million-dollar 
bonuses were given as a reward for a business deal resulting in 12,000 
layoffs nationwide.
  So the taxpayers buy rich executives $31 million worth of champagne 
and caviar, while laid-off defense workers struggle just to feed their 
families. I think the defense industry employees--in California and 
across the Nation--are the ones who deserve a bonus. The CEO's and 
multimillionaire executives are doing just fine.
  As I investigated this issue further, I discovered that the problem 
was not limited to mergers or bonuses. Top defense industry executives 
routinely earn more than $1 million per year--sometimes even more than 
$5 million. And the taxpayers pick up most of the tab.
  This legislation sets a $250,000 maximum for compensation that is 
reimbursable by the taxpayers. It applies to all forms of compensation 
including bonuses and salary.
  It is important to understand that my bill sets no limit on the 
compensation that an executive can receive. That is an issue best left 
to the stockholders and directors of each company. If the stockholders 
believe that the Lockheed-Martin merger was such a fine business 
decision that they want to award their CEO a $9 million bonus--or for 
that matter a $90 million bonus--that is fine with me. All my 
legislation would do is stop them from passing the check to the 
taxpayers.
  My legislation would add ``excessive compensation''--defined as all 
pay over $250,000 in any fiscal year--to an existing list of expenses 
that cannot be reimbursed by the taxpayers. Under current law, the 
Pentagon cannot reimburse contractors for expenses ranging from small 
items such as concert tickets and alcoholic beverages to large items, 
like golden parachutes and stock option plans. My legislation would add 
compensation in excess of $250,000 to this list.
  Congress has studied this issue for a number of years and has noted 
with increasing concern that executive compensation seems to be 
spiraling out of control. In last year's DoD appropriations bill, 
Congress placed a 1-year $250,000 cap on executive compensation. This 
legislation takes the next logical step--making that cap permanent.
  I think this legislation addresses the issue fairly and responsibly. 
I hope my colleagues will support this bill.
  I ask unanimous consent that the full text of the bill be inserted in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1102

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

     SECTION 1. REIMBURSEMENT FOR EXCESSIVE COMPENSATION OF 
                   DEFENSE CONTRACTOR PERSONNEL PROHIBITED.

       Section 2324(e)(1) of title 10, United States Code, is 
     amended by adding at the end the following:
       ``(P) Costs of compensation (including bonuses and other 
     incentives) paid with respect to the services (including 
     termination of services) of any one individual to the extent 
     that the total amount of the compensation paid in a fiscal 
     year exceeds $250,000.''.
                                 ______

      By Mr. GLENN (for himself and Mr. DeWine):
  S. 1103. A bill to extend for 4 years the period of applicability of 
enrollment mix requirement to certain health maintenance organizations 
providing services under Dayton Area Health Plan; to the Committee on 
Finance.


                  DAYTON AREA HEALTH PLAN LEGISLATION

 Mr. GLENN. Mr. President, today, Senator DeWine and I are 
introducing legislation which is necessary for the continued operation 
of the Dayton Area Health Plan.
  The Dayton Area Health Plan is a mandatory managed care plan for 
24,000 Medicaid recipients in Montgomery County, OH, which has been 
operating very successfully for over 6 years. It emphasizes preventive 
care and has developed two programs--Baby's Birth Right and Neighbors 
in Touch--to increase the use of prenatal and after-delivery care. In 
partnership with the Dayton School Board, it brings HealthChek physical 
exams to schoolchildren in Dayton.
  Last fall, the Dayton Area Health Plan became the first Medicaid HMO 
in Ohio to publish a quality score card which assesses the plan's 
performance in the important areas of access to care, preventive care, 
success of medical care, consumer satisfaction, operational 
efficiencies, and quality assurance survey scores.
  The Dayton Area Health Plan is operating under a waiver of the 
Federal 75/25 enrollment mix requirement for HMO's--a requirement that 
for every three Medicaid enrollees a plan must have one non-Medicaid 
enrollee. The current waiver expires at the end of the year, and the 
legislation we are introducing today extends it until December 31, 
1999. This legislation is supported by the Ohio Department of Human 
Services, which received a waiver of the 75/25 enrollment mix 
requirement for HMO's participating in OhioCare, an 1115 Medicaid 
waiver program. However, the implementation of OhioCare has been 
delayed due to concerns about the level of Federal Medicaid funding for 
fiscal year 1996 and beyond.
  The Dayton Area Health Plan has widespread community support and has 
been increasingly successful in providing high-quality, cost-effective 
care to Medicaid recipients in Montgomery County, OH. I urge my 
colleagues to support this legislation which extends the plan's waiver 
for 4 years.
                                 ______

      By Mr. ROTH:
  S. 1104. A bill to suspend temporarily the duty on dichlorofopmethyl; 
to the Committee on Finance.
                                 ______

      By Mr. ROTH:
  S. 1105. A bill to suspend temporarily the duty on thidiazuron; to 
the Committee on Finance.


                      DUTY SUSPENSION LEGISLATION

  Mr. ROTH. Mr. President, I rise to introduce two temporary duty 
suspension bills. It is my understanding that they are 
noncontroversial. I am introducing these on behalf of AgrEvo, a company 
located in my home State of Delaware, because they will help improve 
the company's overall competitive posture by lowering its costs of 
doing business.
  While I recognize that it is exceedingly difficult to enact temporary 
duty suspensions, the administration has authority to proclaim certain 
tariff reductions in the context of additional progress in the WTO to 
harmonize chemical tariffs at lower levels. I urge the administration 
to achieve such progress, particularly through expanding the 
participation of other countries in the WTO's chemical tariff 
harmonization agreement. This would allow the administration to address 
growing demands for new duty suspensions on chemical products by 
utilizing existing tariff proclamation authority.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1106

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

     SECTION 1. INSURANCE RESERVE RULES FOR FINANCIAL GUARANTY 
                   INSURANCE.

       (a) In General.--Section 832(e)(6) of the Internal Revenue 
     Code of 1986 is amended--
       (1) by inserting ``or a company which writes financial 
     guaranty insurance'' after ``section 103'' in the first 
     sentence, and
       (2) in the second sentence--
       (A) by inserting ``and to financial guaranty insurance'' 
     after ``section 103,'',
       (B) by inserting ``financial guaranty insurance or'' after 
     ``in the case of'', and
       (C) by inserting ``such financial guaranty or'' after 
     ``revenues related to''.
       (b) Conforming Amendment.--The heading for section 
     832(e)(6) of such Code is amended by inserting ``; financial 
     guaranty insurance'' after ``obligations''.

[[Page S11203]]

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

      By Mr. D'AMATO (for himself and Mr. Moynihan):
  S. 1106. A bill to amend the Internal Revenue Code of 1986 to provide 
the same insurance reserve treatment to financial guaranty insurance as 
applies to mortgage guaranty insurance, lease guaranty insurance, and 
tax-exempt bond insurance; to the Committee on Finance.


              the financial guaranty insurance act of 1995

 Mr. D'AMATO. Mr. President, today my distinguished colleague, 
Senator Moynihan, and I are introducing legislation to amend Section 
832(e) of the Internal Revenue Code to extend the scope of its 
provisions to general financial guaranty insurance.
  Financial guaranty insurance, commonly called bond insurance, is an 
insurance contract that guarantees timely payment of principal and 
interest when due. The bond insurance contract generally provides that, 
in the event of a default by an insured issuer, principal and interest 
will be paid to the bond holder as originally scheduled.
  Originally enacted in 1967, currently, section 832(e) applies to 
underwriters of mortgage guaranty insurance, lease guaranty insurance, 
and state and local tax-exempt bond insurance. Congress enacted section 
832(e) to alleviate the significant drain on insurance providers' 
working capital that State financial regulations place on those firms. 
Under section 832(e), a company writing mortgage guaranty insurance, 
lease guaranty insurance and tax-exempt bond insurance may deduct, for 
Federal income tax purposes, amounts required by state law to be set 
aside in a reserve for losses resulting from adverse economic cycles. 
The deduction cannot exceed the lesser of, first, the company's taxable 
income or, second, 50 percent of the premiums earned on such guaranty 
contracts during the taxable year.
  Further, the deduction is available only to the extent that the 
taxpayer purchases non-interest-bearing tax and loss bonds equal to the 
tax savings attributable to the deduction. The taxpayer insurance 
company may redeem such bonds only as and when it restores to income 
the associated deduction for reserves. Reserves are restored to income 
as and when they are applied, according to state regulations, to cover 
losses, or to the extent that the company has a net operating loss in 
some subsequent year. In addition, the reserve deduction taken in any 
particular year must be fully restored to income by the end of the 10th 
subsequent year. For the tax-exempt bond insurance, this period is 
increased to 20 years.
  Mr. President, our proposed legislation would expand the scope of 
section 832(e) to include general financial guaranty insurance. This 
reflects the fact that the guaranty industry has expanded, and now 
provides other insurance guaranty instruments not offered at the time 
section 832(e) was enacted. These new guaranties are regulated by the 
same State financial regulations that apply to insurance guaranties 
currently covered by section 832(e); producing the same extraordinary 
tax burden that existed for earlier guaranty insurance instruments. 
Thus, the proposed legislation constitutes a sensible modification of 
the code to reflect new forms of bond insurance, and does so in a way 
which both Congress and Treasury have previously found acceptable.
  This bill would allow those insurance companies which are writing 
lease guarantee insurance and insurance guaranteeing the debt service 
of municipal bond issues, for example, obligations the interest on 
which is excludable from gross income under section 103 of the Code, to 
deduct additions to contingency reserves in accordance with the current 
treatment of such additions for mortgage guaranty insurance under 
section 832(e).
  Mr. President, I ask unanimous consent that the bill be printed in 
the Record.
                                 ______

      By Mr. DASCHLE (for himself, Mr. Simon, Ms. Moseley-Braun, Mr. 
        Leahy, and Mr. Pressler):
  S. 1107. A bill to extend COBRA continuation coverage to retirees and 
their dependents, and for other purposes; to the Committee on Labor and 
Human Resources.


             THE RETIREE CONTINUATION COVERAGE ACT OF 1995

  Mr. DASCHLE. Mr. President, in March I introduced a bill to address a 
serious problem brought to my attention by the retirees of the John 
Morrell meatpacking plant in Sioux Falls. Unfortunately, the situation 
has deteriorated in recent months and I feel that a new bill is needed 
to address the issues raised by this incident and to protect future 
retirees from being placed in a similar predicament.
  Last January more than 3,000 retirees of the Morrell Co. in Sioux 
Falls and around the country found out that their health benefits were 
being terminated by their former employer.
  With just a week's notice, these retirees, many of whom had accepted 
lower pensions in return for the promise of lifetime health benefits, 
were suddenly faced with the prospect of losing the benefits that they 
had assumed would be available for them and their spouses during their 
retirement years.
  The bill I introduced in March would have required employers to 
continue to provide retiree health benefits while a cancellation of 
coverage was being challenged in court. However, the Supreme Court 
recently refused to hear the Morrell case, leaving this group no 
possibility of a judicial remedy for their problems.
  Meanwhile, thousands of retirees and their families are left stranded 
without health coverage.
  I am introducing a bill today to allow early retirees and their 
dependents who lost their health benefits to purchase continuing group 
insurance coverage until they become eligible for Medicare.
  This would not prohibit employers from modifying their retiree health 
plans to implement cost-savings measures, such as utilization review or 
managed care. But it would protect retirees from suddenly losing their 
employer-sponsored health benefits.
  This legislation simply extends COBRA coverage to early retirees and 
their dependents whose employer-sponsored health care benefits are 
terminated or substantially reduced. There would be no direct cost to 
the employer.
  COBRA currently requires employers to offer temporary continuing 
health coverage for employees who leave their jobs. The employee is 
responsible for the entire cost of the premium, but is allowed to 
remain in the group policy, thus benefiting from lower group rates. 
This legislation would extend the COBRA law to cover early
 retirees and their families, until they are eligible for Medicare.

  This bill would help secure health coverage for the most vulnerable 
retirees, at no cost to the Federal Government. It simply allows those 
workers who may not be able to purchase coverage elsewhere to take 
advantage of their former employer's lower group insurance rate.
  These retirees deserve this kind of health security.
  Workers often give up larger pensions and other benefits in exchange 
for health benefits. It never occurs to these employees that their 
benefits could be taken away, with no increase in their pensions or 
other benefits to compensate for the loss.
  Early retirees have often been with the same company for decades, 
perhaps all of their adult lives. They rightfully believe that a 
company they help build will reward their loyalty, honesty and hard 
work.
  When these hard-working people abruptly lose their health coverage, 
they suddenly have to worry that high medical costs will impoverish 
them or force them to rely on their children or the Government for 
financial help. Each day without insurance they live in fear of illness 
and injury.
  In this particular case, Morrell retirees received a simple, yet 
unexpected, letter stating their health insurance plan was being 
terminated, effective midnight, January 31, 1995--only a week later. 
The benefits being terminated, the letter said, included all hospital, 
major medical and prescription drug coverage, Medicare supplemental 
insurance, vision care, and life insurance coverage.
  For those retirees under 65, this action poses a particular problem. 
While Morrell did give them the option of paying for their own coverage 
for up to 1 year, for many that is simply not 

[[Page S11204]]
enough time. For example, if a retiree leaves the company at age 59, he 
or she will not be eligible for Medicare for 6 years; the original 
offer from the company could have left him or her without coverage for 
5 years.
  This bill will help many Morrell retirees; but there are thousands of 
other workers who could also benefit from this legislation. A 1994 
Foster-Higgins report found that two-thirds of American companies 
surveyed had plans to reduce retiree health benefits or to shift more 
costs to retirees in the coming years, and 2 percent said that they 
were actually eliminating benefits altogether.
  The presence of preexisting conditions can make it impossible for 
elderly Americans to purchase health insurance; insurers may refuse to 
enroll people who they expect to be heavy users or they may price the 
policies so that they are simply unaffordable. Consequently, early 
retirees with medical conditions, such as heart disease and diabetes, 
need to be continuously covered until they become eligible for 
Medicare.
  This bill is not a cure, but it is a step in the right direction. It 
will help secure coverage for early retirees who cannot afford to buy 
an individual insurance policy. Under this legislation, Morrell 
retirees could be paying a premium of $500 a month per couple. While 
this is a lot of money for retirees on limited incomes, it is 
substantially less than if they purchased coverage on their own. And, 
of course, many are currently unable to purchase insurance at any 
price.
  As I have said repeatedly, the long-run solution is comprehensive 
health reform that guarantees every American citizen--and every 
American employer--access to affordable health care.
  I have fought over the years for comprehensive health reform and was 
deeply disappointed when the 103d Congress was unable to pass 
legislation addressing some of our health care system's most serious 
problems. If we had passed health reform, the Morrell retirees I have 
spoken about today would not face this loss of their health benefits.
  Clearly, the problems we talked about in last year's health reform 
debate did not solve themselves when the session ended.
  But some of these problems, like the one the Morrell retirees face, 
cannot wait for the long-run.
  I hope we can pass this measure expeditiously, to help alleviate the 
harshest aspects of the injustice created by the Morrell Co. decision 
to eliminate retiree health coverage, and so that others are helped as 
they face the problem Morrell retirees are grappling with today.
  Mr. President, I ask unanimous consent that the full text of the bill 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1107

       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 ``Retiree Continuation 
     Coverage Act of 1995''.

     SEC. 2. EXTENSION OF COBRA CONTINUATION COVERAGE.

       (a) Public Health Service Act.--
       (1) Period of coverage.--Section 2202(2)(A) of the Public 
     Health Service Act (42 U.S.C. 300bb-2(2)(A)) is amended by 
     adding at the end thereof the following new clause:
       ``(v) Qualifying event involving substantial reduction or 
     elimination of a retiree group health plan.--In the case of 
     an event described in section 2203(6), the date on which such 
     covered qualified beneficiary becomes entitled to benefits 
     under title XVIII of the Social Security Act.''.
       (2) Qualifying event.--Section 2203 of the Public Health 
     Service Act (42 U.S.C. 300bb-3) is amended by adding at the 
     end thereof the following new paragraph:
       ``(6) The substantial reduction or elimination of group 
     health coverage as a result of plan changes or termination 
     with respect to a qualified beneficiary described in section 
     2208(3)(A).''.
       (3) Notice.--Section 2206 of the Public Health Service Act 
     (42 U.S.C. 300bb-6) is amended--
         (A) in paragraph (2), by striking ``or (4)'' and 
     inserting ``(4), or (6)''; and
       (B) in paragraph (4)(A), by striking ``or (4)'' and 
     inserting ``(4), or (6)''.
       (4) Definition.--Section 2208(3) of the Public Health 
     Service Act (42 U.S.C. 300bb-8(3)) is amended by adding at 
     the end thereof the following new subparagraph:
       ``(C) Special rule for retirees.--In the case of a 
     qualifying event described in section 2203(6), the term 
     `qualified beneficiary' includes a covered employee who had 
     retired on or before the date of substantial reduction or 
     elimination of coverage and any other individual who, on the 
     day before such qualifying event, is a beneficiary under the 
     plan--
       ``(i) as the spouse of the covered employee;
       ``(ii) as the dependent child of the covered employee; or
       ``(iii) as the surviving spouse of the covered employee.''.
       (b) Employee Retirement Income Security Act of 1974.--
       (1) Period of coverage.--Section 602(2)(A) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1162(2)(A)) 
     is amended by adding at the end thereof the following new 
     clause:
       ``(vi) Qualifying event involving substantial reduction or 
     elimination of a group health plan covering retirees, spouses 
     and dependents.--In the case of an event described in section 
     603(7), the date on which such covered qualified beneficiary 
     employee becomes entitled to benefits under title XVIII of 
     the Social Security Act.''.
       (2) Qualifying event.--Section 603 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1163) is 
     amended by adding at the end thereof the following new 
     paragraph:
       ``(7) The substantial reduction or elimination of group 
     health plan coverage as a result of plan changes or 
     termination with respect to a qualified beneficiary described 
     in section 607(3)(C).''.
       (3) Notice.--Section 606(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1166) is amended--
       (A) in paragraph (2), by striking ``or (6)'' and inserting 
     ``(6), or (7)''; and
       (B) in paragraph (4)(A), by striking ``or (6)'' and 
     inserting ``(6), or (7)''.
       (4) Definition.--Section 607(3)(C) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1167(2)) is 
     amended by striking ``603(6)'' and inserting ``603(6) or 
     603(7)''.
       (c) Internal Revenue Code of 1986.--
       (1) Period of coverage.--Section 4980B(f)(2)(B)(i) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     thereof the following new subclause:
       ``(vi) Qualifying event involving substantial reduction or 
     elimination of a retiree group health plan.--In the case of 
     an event described in paragraph (3)(G), the date on which 
     such covered qualified beneficiary becomes entitled to 
     benefits under title XVIII of the Social Security Act.''.
       (2) Qualifying event.--Section 4980B(f)(3) of the Internal 
     Revenue Code of 1986 is amended by adding at the end thereof 
     the following new subparagraph:
       ``(G) The substantial reduction or elimination of group 
     health coverage as a result of plan changes or termination 
     with respect to a qualified beneficiary described in 
     subsection (g)(1)(D).''.
       (3) Notice.--Section 4980B(f)(6) of the Internal Revenue 
     Code of 1986 is amended--
       (A) in subparagraph (B), by striking ``or (F)'' and 
     inserting ``(F), or (G)''; and
       (B) in subparagraph (D)(i), by striking ``or (F)'' and 
     inserting ``(F), or (G)''.
       (4) Definition.--Section 4980B(g)(1)(D) of the Internal 
     Revenue Code of 1986 is amended by striking ``(f)(3)(F)'' and 
     inserting ``(f)(3)(F) or (f)(3)(G)''.

     SEC. 3. EFFECTIVE DATE.

       This Act shall take effect as if enacted on January 1, 
     1995.
                                 ______

      By Mr. SMITH:
  S. 1108. A bill to amend the Internal Revenue Code of 1986 to allow 
individuals to designate that up to 10 percent of their income tax 
liability be used to reduce the national debt, and to require spending 
reductions equal to the amounts so designated.


                     THE TAXPAYER DEBT BUY-DOWN ACT

 Mr. SMITH. Mr. President, today I am reintroducing the 
Taxpayer Debt Buy-Down Act. The proposal is specifically designed to 
give taxpayers an unprecedented role in the budget process and provide 
a mechanism for an annual national referendum on Federal spending. If 
Congress fails to reign in Federal spending, this bill allows the 
taxpayers of America to speak out every April 15.
  The proposal would amend the IRS Code to allow taxpayers the 
opportunity to voluntarily designate up to 10 percent of their income 
tax liability for the purpose of debt reduction. All moneys designated 
would be placed in a national debt reduction fund established in the 
Department of the Treasury, and used to retire the public debt, except 
obligations held by the Social Security trust fund, the civil service, 
and military retirement funds.
  On October 1, the Treasury Department would be required to estimate 
the amount designated through the checkoff. Congress would then have 
until September 30 of the following year to make the necessary cuts in 
Federal spending. The Debt Buy-Down Act does not micromanage the 
spending cuts. Congress retains complete authority to cut any Federal 
spending program it deems appropriate. 

[[Page S11205]]

  To coordinate this measure and the efforts to balance the budget, the 
checkoff will apply only if the amount designated is greater than the 
cuts that Congress has already implemented. For example, if Congress 
passes a reconciliation bill this year that designates cuts of $50 
billion in 1998, and the checkoff in 1998 totals $60 billion, the $50 
billion will count toward the checkoff and only an additional $10 
billion will need to be cut.
  If Congress failed to enact spending reductions to meet the amount 
designated by the taxpayers, an across-the-board sequester would occur 
of all accounts except the Social Security retirement benefits, 
interest of the debt, deposit insurance accounts and contractual 
obligations of the Federal Government. If Congress enacted only half of 
the necessary cuts, the sequester would ensure the other half. The Debt 
Buy-Down account would hold Congress's feet to the fire.
  All spending cuts required by the act would be permanent--the cuts 
would permanently reduce the spending baseline. For example, if $1 
billion of cuts are
 required and Congress eliminates a $1 billion program in the 
Department of Energy, that program would be gone forever. If Congress 
later decided that they needed the program, they would be required to 
cut $1 billion elsewhere. Although nothing in the legislation would 
prohibit Congress from increasing taxes, tax increases could not be 
used to substitute for the spending reductions designated by taxpayers.

  Mr. President, we cannot allow the current talk about balanced 
budgets to deter us from our ultimate goal--elimination of the $4.9 
trillion national debt. Yes, we must balance the budget first, and this 
proposal serves as a friendly enforcement mechanism to do just that. 
Balancing the budget, however, does not guarantee that we will begin to 
buy down our national debt. If our budget is balanced by the year 2002 
as required by the congressional budget resolution, what happens next?
  Under current law, the answer is: nothing. There is no requirement 
that Congress begin to attack the debt problem. This bill would change 
that. The American people would be allowed to tell us exactly how much 
debt reduction they believe is necessary and Congress would be required 
to act. That is the way our system of government is supposed to work.
  Mr. President, the Taxpayer Debt Buy-Down Act was endorsed by then-
President Bush at the 1992 Republican Convention. The House companion 
legislation, H.R. 429, is sponsored by Congressman Bob Walker, and 
passed the House earlier this year as part of the Contract With 
America.
  The legislation is supported by the National Federation of 
Independent Business [NFIB], Americans for a Balanced Budget, Americans 
for Tax Reform, The American Legislative Exchange Council [ALEC], The 
Council for Citizens Against Government Waste, Association of Concerned 
Taxpayers for a Fair and Simple Tax, the Institute for the Research on 
the Economics of Taxation [IRET], the National Taxpayers Union [NTU], 
and the U.S. Business and Industrial Council.
  I urge my colleagues to support the Taxpayer Debt Buy-Down Act. It is 
an innovative proposal that makes ``We the People'' an integral part of 
the Federal budget process.
                                 ______

      By Mr. CAMPBELL:
  S. 1109. A bill to direct the Secretary of the Interior to convey the 
Collbran reclamation project, Colorado, to the Ute Water Conservancy 
District and the Collbran Conservancy District, and for other purposes; 
to the Committee on Energy and Natural Resources.


              the collbran reclamation project legislation

 Mr. CAMPBELL. Mr. President, today I am joined by my colleague 
from Colorado, Senator Brown, in introducing legislation to transfer 
the Collbran project from the Federal Government to its real owners--
the people who have paid for and own the water produced by this 
project.
  This legislation will complete the repayment to the American people 
the amounts owed by the users of this project. Because this legislation 
involves a substantial payment from the Collbran and Ute Water 
Conservancy Districts to the Federal Treasury, this legislation helps 
us reduce the Federal deficit by a small, but important, amount.
  Millions of people live, work, and play in Colorado and the other 
Western States. People are drawn to the rural areas of the West because 
these communities offer an attractive mix of economic opportunity and 
access to world-class natural resources. This high quality of life 
would not exist if it were not for the water and power provided from 
Federal reclamation projects constructed under the 1902 Reclamation 
Act.
  The original vision of the Reclamation Act was that Congress would 
facilitate the construction of locally sponsored and locally 
controlled projects. Congress achieved this result by providing 
financing for these projects, subject to the requirement that a local 
entity repay the Federal investment in the irrigation portion of the 
project, and that power users in the West repay the remaining costs of 
the project.
  Congress explicitly stated the water rights for reclamation projects 
were to be obtained in accordance with State law, and Federal courts 
have consistently ruled that the real owners of the water from 
reclamation projects are the people who put the water to beneficial 
use. The important point is that Federal ownership of these projects 
was always for the purpose of ensuring that the Federal investment was 
repaid; the Federal partnership in reclamation of the west was never 
intended to perpetuate Federal control over the use of land and water 
at the local level.
  Water from reclamation projects allowed the development of irrigated 
agriculture, which provides an important complement to other industries 
such as mining, recreation, and tourism. Power from reclamation 
projects was and is an important part of extending the benefits of 
electricity beyond cities to people in the country. In short, the 
Reclamation Act has achieved its primary goal--the development of 
healthy and stable communities throughout the West.
  While there is a continuing obligation to honor previous Federal 
commitments to complete reclamation projects, it is now time to 
reassess the Federal involvement in those projects which have been 
completed. In particular, the Federal Government should not be spending 
scarce resources on the operation and maintenance of projects when the 
project beneficiaries have or will repay all of their financial 
obligations to the United States. In these cases, the Federal 
Government should transfer the project to the local beneficiaries, 
subject to the requirement that the project continue to be operated for 
the purposes for which it was authorized.
  The Collbran project meets these criteria. The project was authorized 
in 1952 for agricultural and municipal purposes, and included a power 
component. The project provides an important water supply for irrigated 
lands in the Collbran Conservancy District. In addition, the water 
released from the project provides an important domestic water supply 
for over 55,000 people in the Grand Valley served by the Ute Water 
Conservancy District. This legislation requires the districts to pay 
the net present value of the revenues which the United States would 
otherwise receive from the project, plus a premium of $2,000,000 and a 
significant contribution to promote additional protection for the 
Colorado River ecosystem.
  The Federal goals of the project have been attained. It is now 
appropriate to transfer the project to the districts, with the United 
States retaining only its commitment to the State of Colorado on 
recreational facilities. This legislation not only establishes a good 
precedent for transfer of projects to reduce the Federal debt, but also 
fulfills the original vision of the 1902 Reclamation Act by ensuring 
that the project will continue to be used to benefit the people and 
communities for whom it was built.
                                 ______

      By Mr. CAMPBELL:
  S. 1110. A bill to establish guidelines for the designation of 
national heritage areas, and for other purposes; to the Committee on 
Energy and Natural Resources.


                   the national heritage act of 1995

 Mr. CAMPBELL. Mr. President, I introduce the National Heritage 
Act of 1995.
  Today, most of my colleagues are aware that the opportunity to 
create 

[[Page S11206]]

new park units is most difficult in light of the current condition of 
the National Park System. The Park Service, facing a 37-year backlog in 
construction funding, a 25-year backlog for land acquisition, and a 
shortfall of over $846 million for park operation and management, is 
clearly in trouble.
  However, these difficulties are compounded by the growing popularity 
in Congress to recognize and designate important areas of our country 
for inclusion in the National Park System. Over the last 10 years 
alone, Congress has designated over 30 new units of the Park System. 
These new additions, while meritorious, have added significantly to 
this huge backlog of funding facing the agency.
  It is well known that when you create a new unit, limited fiscal and 
human resources must be taken away from existing park units. Unfunded 
and poorly managed parks will only contribute to the continued erosion 
of the existing Park System. As a result, it can be fairly stated that 
in our current system new additions can actually hinder rather than 
enhance the Park Service System.
  I am aware of approximately 110 areas, some of which have already 
been introduced in Congress, that may be suitable for inclusion into 
the Park System as heritage areas. I know of eight areas in my own 
State of Colorado, that may deserve recognition. However, under the 
current system, the National Park Service may not be able to afford any 
new area, no matter how deserved it may be.
  Thus, the question of how to lighten this overwhelming load on the 
Park Service, while maintaining Congress' ability to recognize and
 protect precious areas of our country's heritage is before us.

  I believe that my legislation will provide the solutions to this 
problem. National heritage areas can be created and established as an 
alternative to the traditional National Park Service designation. This 
can be accomplished in a very cost effective and efficient method, 
without creating unnecessary Federal management and expense to the 
taxpayer.
  My bill, when enacted, will encourage appropriate partnerships among 
Federal agencies, State, and local governments, nonprofit 
organizations, and the private sector, or combinations thereof, to 
conserve and manage these important resources.
  This bill will authorize the Secretary of the Interior to provide 
technical assistance and limited grants to State and local governments 
and private nonprofit organizations, to study and promote the potential 
for conserving, maintaining, and interpreting these areas for the 
benefit of all Americans--now and in the future.
  In addition, this legislation would direct the Secretary of the 
Interior to set the standards by which areas may be eligible and 
designated as national heritage areas.
  Mr. President, most important, this legislation, when enacted, will 
empower individuals, groups, and organizations to be true partners with 
the Federal Government. By giving the groups the decisionmaking 
authority, as well as a share of the fiscal responsibility, they will 
be able to maintain local control and ultimate oversight of the very 
areas they work so hard to save. Who better to manage our natural and 
cultural heritage, than those who are already going above and beyond 
their duties as Americans to preserve, restore, and protect these 
wonderful areas.
  Mr. President, I ask unanimous consent that a section-by-section 
analysis of the legislation be printed in the Record for the benefit of 
my colleagues.
  There being no objection, the section-by-section analysis was ordered 
to be printed in the Record, as follows:

       Section-by-Section Analysis--National Heritage Act of 1995

       Section 1 entitles the Act the ``National Heritage Act of 
     1995''.
       Section 2 sets forth Congressional findings.
       Section 3 states the purposes of the Act.
       Section 4 defines terms used in the Act.
       Section 5(a) establishes a National Heritage Areas 
     Partnership Program within the Department of the Interior to 
     promote nationally distinctive natural, historic, scenic, and 
     cultural resources and to provide opportunities for 
     conservation, education, and recreation through recognition 
     of and assistance to areas containing such resources.
       Subsection (b) authorizes the Secretary of the Interior 
     (the ``Secretary'' as used in this Act) (1) to evaluate areas 
     nominated under this Act for designation as National Heritage 
     Areas according to criteria established in subsection (c) 
     below, (2) to advise State and local governments and other 
     entities regarding suitable methods of recognizing and 
     conserving thematically and geographically linked natural, 
     historic, and cultural resources and recreational 
     opportunities, and (3) to make grants to units of government 
     and nonprofit organizations to prepare feasibility studies, 
     compacts, and management plans.
       Subsection (c) lists the eligibility criteria for 
     designation as a National Heritage Area.
       Subparagraph (1) states that the area shall be an 
     assemblage of natural, historic, cultural, or recreational 
     resources that represent distinctive aspects of American 
     heritage worthy of recognition, conservation, interpretation, 
     and continuing use and that such resources are best managed 
     as such an assemblage, through partnerships among public and 
     private entities.
       Subparagraph (2) states that the area shall reflect 
     traditions, customs, beliefs, or folklife, or some 
     combination thereof, that are a valuable part of the story of 
     the Nation.
       Subparagraph (3) states that the area shall provide 
     outstanding opportunities to conserve natural, cultural, 
     historic, or recreational features, or some combination 
     thereof.
       Subparagraph (4) states that the area shall provide 
     outstanding recreational and educational opportunities.
       Subparagraph (5) states that the area shall have an 
     identifiable theme or themes, and resource important to the 
     theme(s) shall retain integrity that will support 
     interpretation.
       Subparagraph (6) states that residents, nonprofit 
     organizations, other entities, and governments within the 
     proposed area shall demonstrate support for designation of 
     the area and appropriate management of the area.
       Subparagraph (7) requires that the principal organization 
     and units of government supporting the designation be willing 
     to enter into partnership agreements to implement the compact 
     for the area.
       Subparagraph (8) requires the compact to be consistent with 
     continued economic viability in the affected communities.
       Subparagraph (9) requires the consent of local governments 
     and notification of the Secretary for inclusion of private 
     property within the boundaries of the area.
       Subsection (d) states that designation of an area may only 
     be made by an Act of Congress, and requires that certain 
     conditions be met prior to designation. An entity requesting 
     designation must submit a feasibility study and compact, and 
     a statement of support from the governor of each state in 
     which the proposed area lies. The Secretary must approve the 
     compact
      and submit it and the feasibility study to Congress, along 
     with the Secretary's recommendation.
       Section 6 describes the feasibility studies, compacts, and 
     management plans.
       Subsection (a)(1) requires that each feasibility study be 
     prepared with public involvement and include a description of 
     resources and an assessment of their quality, integrity, and 
     public accessibility, the themes represented by such 
     resources, an assessment of impacts on potential partners, 
     units of government and others, boundary description, and 
     identification of a possible management entity for the area 
     if designated.
       Subparagraph (2) requires that compacts include a 
     delineation of boundaries for the area, goals and objectives 
     for the area, identification of the management entity, a list 
     of initial partners in developing and implementing a plan for 
     the area and statement of each entity's financial commitment 
     and a description of the role of the State(s) in which the 
     proposed National Heritage Area is located. This subsection 
     requires public participation in development of the compact 
     and a reasonable time table for actions noted in such 
     compact.
       Subparagraph (3) describes the plan for a proposed area. 
     Such plan must take into consideration existing Federal, 
     State, county, and local plans and include public 
     participation. The plan shall specify existing and potential 
     funding sources for the conservation, management, and 
     development of the area. The plan will also include a 
     resource inventory, policy recommendations for managing 
     resources within the area, an implementation program for the 
     plan by the management entity specified in the compact, an 
     analysis of Federal, State, and local program coordination, 
     and an interpretive plan for the National Heritage Area.
       Subsection (b) requires the Secretary to approve or 
     disapprove a compact within 90 days of receipt and directs 
     the Secretary to provide written justification for 
     disapproval of a compact to the submitter.
       Section 7(a) outlines the duties of the management entity 
     for a National Heritage Area. Duties include development of a 
     heritage plan to be submitted to the Secretary within three 
     years of designation. This section directs the management 
     entity to give priority to implementation of actions, goals, 
     and policies set forth in the compact and management plan for 
     the area. The management entity is directed to consider the 
     interests of diverse units of government, businesses, private 
     property owners, and nonprofit groups in the geographic area 
     in developing and implementing the plan, and requires 
     quarterly public meetings regarding plan implementation. 

[[Page S11207]]

       Section (b) states that eligibility for technical 
     assistance is suspended if a plan regarding a National 
     Heritage Area is not submitted in accordance with the above 
     provisions.
       Subsection (c) prohibits the management entity for a 
     National Heritage Area from using federal funding to acquire 
     real property or interest in real property.
       Subsection (d) states that a management entity is eligible 
     to receive technical assistance funding for 7 years following 
     area designation.
       Section 8(a) states that National Heritage Area designation 
     continues indefinitely unless the Secretary determines that 
     the area no longer meets the criteria in section 5(c), the 
     parties to the compact are not in compliance with the terms 
     of the compact, the management entity has not made reasonable 
     and appropriate progress in developing or implementing the 
     management plan, or the use, condition, or development of the 
     area is incompatible with the criteria in section 5(c) or 
     with the compact. If such determination is made, the 
     Secretary is directed to notify Congress with a 
     recommendation for designation withdrawal.
       Subsection (b) requires the Secretary to hold a public 
     hearing within the area before recommending designation 
     withdrawal.
       Subsection (c) states that withdrawal of National Heritage 
     Area designation shall become final 90 legislative days after 
     the Secretary submits notification to Congress.
       Section 9(a) outlines the duties and authorities of the 
     Secretary. The Secretary may provide technical assistance and 
     grants to units of government and private nonprofit 
     organizations for feasibility studies, compacts and 
     management plan development and implementation. The Secretary 
     is prohibited from requiring recipients, as a condition of 
     awarding technical assistance, to enact or modify land use 
     restrictions. This subsection directs the Secretary to 
     investigate, study, and monitor the welfare of all National 
     Heritage Areas whose eligibility for technical assistance 
     under this Act has expired and directs the Secretary to 
     report on the condition of such areas to Congress.
       Subsection (b) states that other Federal entities 
     conducting activities directly affecting any National 
     Heritage Area shall consider the potential effects of such 
     activities on the plan for the area and requires consultation 
     with the State containing the area.
       Section 10 states that this Act does not affect any 
     authority of Federal, State, or local governments to regulate 
     land use, nor does this Act grant zoning or land use powers 
     to any management entity for a National Heritage Area.
       Section 11 is a fishing and hunting savings clause.
       Section 12 authorizes an appropriation of not more than 
     $8,000,000 annually for technical assistance and grants as 
     outlined in section 9(a), and states that technical 
     assistance and grants under this Act for a feasibility study, 
     compact, or management plan may not exceed 75 percent of the 
     cost for such study, compact, or plan. This section also 
     places a total funding limit of $1,000,000 for each National 
     Heritage Area, with an annual limit of $150,000 for a 
     National Heritage Area for a fiscal year.
       Section 13 states that the authorities contained in this 
     Act shall expire on September 30 of the 15th fiscal year 
     beginning after the date of enactment of this Act.
       Section 14 requires the Secretary to submit a report of the 
     status of the National Heritage Areas Program to Congress 
     every 5 years.
       Section 15 is a savings clause, preserving existing 
     authorities contained in any law that designates an 
     individual National Heritage Area or Corridor prior to 
     enactment of this Act.
                                 ______

      By Mr. HATCH (for himself and Mr. Kennedy):
  S. 1111. A bill to amend title 35, United States Code, with respect 
to patents on biotechnological processes; to the Committee on Labor and 
Human Resources.


            THE BIOTECHNOLOGY PATENT PROTECTION ACT OF 1995

  Mr HATCH. Mr. President, today, I rise with Senator Kennedy to 
introduce the Biotechnology Patent Protection Act of 1995, S. 1111. 
This bill is similar to legislation which passed the Senate last year, 
and is identical to a measure reported by the House Judiciary Committee 
on June 7.
  It is abundantly clear that the current patent law is not adequate to 
protect our creative American inventors who are on the cutting edge of 
scientific experimentation. Through biotechnological research, for 
example, scientists are using recombinant processes to mass-produce 
proteins that are useful as human therapeutics.
  The potential for unfair foreign competition, however, threatens the 
capital base of the biotechnology research industry. Clearly, without a 
protected end product that can be sold or marketed, there is little 
incentive to invest millions of dollars in biotechnology research.
  The Hatch-Kennedy legislation extends patent protection in 
biotechnology cases to the process if there is a patentable starting 
product, offering the biotechnology research industry valuable and 
needed protection.
  Specifically, the Biotechnology Patent Protection Act modifies the 
test for obtaining a process patent by clarifying In Re Durden, 763 F. 
2d 1406 (Fed. Cir. 1985).
  In Durden, the Federal circuit held that the use of a novel and 
nonobvious starting material with a known chemical process, producing a 
new and nonobvious product, does not render the process itself 
patentable. The erroneous application of Durden, a nonbiotechnology 
process patent case, to biotechnology process patent cases has led to 
devastating results for the biotechnology industry.
  Under the current Patent Code, an inventor may hold a patent and 
still be unable to bar the importation of a product made abroad with 
the use of the patented material, if the inventor has been unable to 
obtain patent protection for the process of using such material.
  The biotechnology field is particularly vulnerable to abuse under
   Unfortunately, the naturally occurring human protein was extremely 
difficult to obtain or produce.

  Amgen scientists, using recombinant DNA technology and molecular 
biology, were able to produce an erythropoietin product, for the first 
time ever. Amgen was able to obtain a patent for the gene encoding and 
for the host cell, but not for the process of making the product, or 
for the final product.
  With knowledge of Amgen's development, Chugai, a Japanese company, 
began manufacturing a similar protein in Japan using the patented 
recombinant host cell. Since the process of placing genes in host cells 
is prior art, thus unpatentable, and the end product is a previously 
known human protein, thus unpatentable, Amgen was without any recourse 
under our patent law when Chugai imported the erythropoietin product.
  The proposed legislation would extend patent protection to the 
process of making new and nonobvious products. Thus, if a process makes 
or uses a patentable material, the process, too, will be patentable. 
The fact that the steps in the process, or most of the materials in the 
process are otherwise known in the art should not make a difference. 
Obviousness should be determined with regard to the subject matter as a 
whole, as the current Patent Code suggests.
  S. 1111 will also make our patent law consistent, at least in the 
field of biotechnology, with the patent examination standards now 
practiced by the European and Japanese patent offices. American 
technology and research has been exploited by the legal loophole that 
can no longer be tolerated.
  This bill is identical in substance to last year's Senate 
legislation, with one exception. This year's bill changes the 
definition of ``biotechnological process'' to include the wide range of 
technologies currently used by the biotechnology industry. New 
subparagraph 102(b)(3)(A) has been rewritten to cover the enhanced 
expression of a gene product--via the addition of promoter genes--and 
gene deletion and inhibition.
  We were very disappointed when the Senate bill, which passed last 
year, died in the House Judiciary Committee. The House version of the 
bill introduced last year was drafted to address issues broader than 
biotechnology industry, due to then Chairman Hughes' insistence that 
the measure not be industry specific, an approach which was not 
acceptable to the Senate.
  This Congress, Carlos Moorhead, chairman of the Courts and 
Intellectual Property Subcommittee, has shown great leadership in 
sponsoring the narrower version, which was reported by the Judiciary 
Committee June 7. The bill we introduce today is identical to the 
House-reported measure.
  Mr. President, the Hatch-Kennedy biotechnology process patent bill 
will restore fairness to inventors, promote and protect investment in 
biotechnology research, and eliminate the foreign piracy of our 
intellectual property. We commend this measure to our colleagues' 
attention.
                                 ______

      By Mr. LAUTENBERG (for himself and Mr. Simon):
  S. 1113. A bill to reduce gun trafficking by prohibiting bulk 
purchases of 

[[Page S11208]]
hand guns; to the Committee on the Judiciary.


                      the anti-gun trafficking act

 Mr. LAUTENBERG. Mr. President, today Senator Simon and I are 
introducing legislation, the Anti-Gun Trafficking Act, to reduce 
interstate gun trafficking by prohibiting bulk purchases of handguns. 
The bill generally would prohibit the purchase of more than one handgun 
during any 30-day period.
  Mr. President, the United States is suffering from an epidemic of gun 
violence. Tens of thousands of Americans die every year because of 
guns, and no communities are safe. Reducing the violence must be a top 
national priority,
  Mr. President, my State of New Jersey has adopted strict controls on 
guns. We have banned assault weapons, and we have established strict 
permitting requirements for handgun purchases. Yet the effectiveness of 
these restrictions is substantially reduced because the controls in 
other States are far less strict.
  Unfortunately, many criminals are making bulk purchases of handguns 
in States with weak firearm laws and transporting them to other States 
with tougher laws, like New Jersey. This has helped spread the plague 
of gun violence nationwide, and there is little that any one State can 
do about it.
  A few years ago, the State of Virginia enacted legislation that was 
designed to prevent gunrunners from buying large quantities of handguns 
in Virginia for export to other States.
 Under the legislation, handgun purchases were limited to one per 
month.

  The Virginia statute has proved very effective in controlling gun 
trafficking from Virginia. A study by the Center to Prevent Handgun 
Violence found that for guns purchased after the law's effective date, 
there was a 65-percent reduction in the likelihood that a gun traced 
back to the Southeast from the Northeast corridor would have originated 
in Virginia.
  Mr. President, Virginia's experience suggests that a ban on bulk 
purchases can substantially reduce gunrunning. However, to truly be 
effective, such a limit must be enacted nationwide. Otherwise, 
gunrunners simply will move their operations to other States.
  The legislation I am introducing today proposes such a nationwide 
limit.
  Under the legislation, an individual other than a licensed firearms 
dealer generally would be prohibited from purchasing more than one 
handgun in any 30-day period. Similarly, the bill would make it 
unlawful for any dealer, importer, or manufacturer to transfer a 
handgun to any individual who has received a handgun within the last 30 
days. Violators would be subject to a fine of up to $5,000 and a prison 
sentence of up to 1 year.
  The legislation would provide an exception in the rare case where a 
second handgun purchase is necessary because of a threat to the life of 
the individual or of any member of the individual's household.
  Mr. President, I do not claim that this bill will end all handgun 
violence. However, it is a reasonable and modest step in the right 
direction. I also would note that President Clinton has endorsed the 
adoption of a once-a-month handgun purchase limit.
  I hope my colleagues will support the legislation.
  I ask unanimous consent that a copy of the legislation be printed in 
the Record along with other related materials.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                S. 1113

       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 ``Anti-Gun Trafficking Act of 
     1995''.

     SEC. 2. MULTIPLE HANDGUN TRANSFER PROHIBITION.

       (a) In General.--Section 922 of title 18, United States 
     Code, is amended by adding at the end the following:
       ``(y)(1)(A)(i) It shall be unlawful for any licensed 
     importer, licensed manufacturer, or licensed dealer--
       ``(I) during any 30-day period, to transfer 2 or more 
     handguns to an individual who is not licensed under section 
     923; or
       ``(II) to transfer a handgun to an individual who is not 
     licensed under section 923 and who received a handgun during 
     the 30-day period ending on the date of the transfer.
       ``(ii) It shall be unlawful for any individual who is not 
     licensed under section 923 to receive 2 or more handguns 
     during any 30-day period.
       ``(iii) It shall be unlawful for any licensed importer, 
     licensed manufacturer, or licensed dealer to transfer a 
     handgun to an individual who is not licensed under section 
     923, unless, after the most recent proposal of the transfer 
     by the individual, the transferor has--
       ``(I) received from the individual a statement of the 
     individual containing the information described in paragraph 
     (3);
       ``(II) verified the identification of the individual by 
     examining the identification document presented; and
       ``(III) within 1 day after the individual furnishes the 
     statement, provided a copy of the statement to the chief law 
     enforcement officer of the place of residence of the 
     individual.
       ``(B) Subparagraph (A) shall not apply to the transfer of a 
     handgun to, or the receipt of a handgun by, an individual who 
     has presented to the transferor a written statement, issued 
     by the chief law enforcement officer of the place of 
     residence of the individual during the 10-day period ending 
     on the date of the transfer or receipt, which states that the 
     individual requires access to a handgun because of a threat 
     to the life of the individual or of any member of the 
     household of the individual.
       ``(2) Paragraph (1) shall not be interpreted to require any 
     action by a chief law enforcement officer which is not 
     otherwise required.
       ``(3) The statement referred to in paragraph (1)(A)(iii)(I) 
     shall contain only--
       ``(A) the name, address, and date of birth appearing on a 
     valid identification document (as defined in section 
     1028(d)(1)) of the individual containing a photograph of the 
     individual and a description of the identification used;
       ``(B) a statement that the individual--
       ``(i) is not under indictment for, and has not been 
     convicted in any court of, a crime punishable by imprisonment 
     for a term exceeding one year;
       ``(ii) is not a fugitive from justice;
       ``(iii) is not an unlawful user of or addicted to any 
     controlled substance (as defined in section 102 of the 
     Controlled Substances Act);
       ``(iv) has not been adjudicated as a mental defective or 
     been committed to a mental institution;
       ``(v) is not an alien who is illegally or unlawfully in the 
     United States;
       ``(vi) has not been discharged from the Armed Forces under 
     dishonorable conditions;
       ``(vii) is not a person who, having been a citizen of the 
     United States, has renounced such citizenship;
       ``(viii) has not received a handgun during the 30-day 
     period ending on the date of the statement; and
       ``(ix) is not subject to a court order that--
       ``(I) restrains the individual from harassing, stalking, or 
     threatening an intimate partner of the individual or child of 
     such intimate partner or of the individual, or engaging in 
     other conduct that would
      place an intimate partner in reasonable fear of bodily 
     injury to the partner or child;
       ``(II) was issued after a hearing of which the individual 
     received actual notice, and at which the individual had the 
     opportunity to participate; and
       ``(III)(aa) includes a finding that the individual 
     represents a credible threat to the physical safety of such 
     intimate partner or child; or
       ``(bb) by its terms explicitly prohibits the use, attempted 
     use, or threatened use of physical force against such 
     intimate partner or child that would reasonably be expected 
     to cause bodily injury;
       ``(C) the date the statement is made; and
       ``(D) notice that the individual intends to obtain a 
     handgun from the transferor.
       ``(4) Any transferor of a handgun who, after the transfer, 
     receives a report from a chief law enforcement officer 
     containing information that receipt or possession of the 
     handgun by the transferee violates Federal, State, or local 
     law shall immediately communicate all information the 
     transferor has about the transfer and the transferee to--
       ``(A) the chief law enforcement officer of the place of 
     business of the transferor; and
       ``(B) the chief law enforcement officer of the place of 
     residence of the transferee.
       ``(5) Any transferor who receives information, not 
     otherwise available to the public, with respect to an 
     individual in a report under this subsection shall not 
     disclose such information except to the individual, to law 
     enforcement authorities, or pursuant to the direction of a 
     court of law.
       ``(6) In the case of a handgun transfer to which paragraph 
     (1)(A) applies--
       ``(A) the transferor shall retain--
       ``(i) the copy of the statement of the transferee with 
     respect to the transfer; and
       ``(ii) evidence that the transferor has complied with 
     paragraph (1)(A)(iii)(III) with respect to the statement; and
       ``(B) the chief law enforcement officer to whom a copy of a 
     statement is sent pursuant to paragraph (1)(A)(iii)(III) 
     shall retain the copy for at least 30 calendar days after the 
     date the statement was made.
       ``(7) For purposes of this subsection, the term `chief law 
     enforcement officer' means the chief of police, the sheriff, 
     or an equivalent officer, or the designee of any such 
     individual.
       ``(8) This subsection shall not apply to the sale of a 
     firearm in the circumstances described in subsection (c).
       ``(9) The Secretary shall take necessary actions to assure 
     that the provisions of this 

[[Page S11209]]
     subsection are published and disseminated to dealers and to the 
     public.''.
       (b) Penalty.--Section 924(a) of such title is amended by 
     redesignating the 2nd paragraph (5) as paragraph (6) and by 
     adding at the end the following:
       ``(7) Whoever knowingly violates section 922(y) shall be 
     fined not more than $5,000, imprisoned for not more than 1 
     year, or both.''.
       (c) Effective Date.--The amendments made by this Act shall 
     apply to conduct engaged in 90 or more days after the date of 
     the enactment of this Act.
                                                                    ____

               [From the Washington Post, Mar. 10, 1993]

                     Virginia on Guns: Please Copy

       Virginia's new handgun law won't produce a cease-fire 
     across the state, nor will the Old Dominion benefit the most 
     from the state's one-handgun-a-month limit on most 
     purchasers. But what it should do--and can do--is more 
     important. As the supporters were saying all along, the 
     gunrunners up and down the East Coast won't have it so easy 
     anymore. It was the state's reputation as the favorite stop-
     and-shop outlet for concealable weapons along the Atlantic 
     Seaboard that propelled such strong bipartisan votes in 
     Richmond. And it is those votes that should now signal 
     Congress that a federal copy of the Virginia law would be 
     politically possible and immensely popular.
       For sure, the NRA will be all over Capitol Hill, warning 
     that one handgun a month is just a cover for total 
     disarmament of every peace-loving, government-fearing 
     individual. That's what the lobbyists said in Richmond, but 
     Republicans and Democrats--gun owners as well as those who 
     wouldn't touch a firearm--didn't buy it. The lawmakers heard 
     their constituents calling for reasonable ways to curb 
     traffic in weapons that most people don't stockpile. They 
     read polls showing intense public concern about the ease with 
     which guns could be bought and resold in huge quantities for 
     evil purposes. The legislators also learned that they could 
     infuriate the NRA leaders, enact this measure and survive 
     politically--with strong support from every major law 
     enforcement organization in the country.
       Now Virginia's delegation in Congress should spread the 
     word that a federal version of this law would curb the 
     trafficking of handguns that crosses state lines from coast 
     to coast. With this reasonable purchase limit--and with 
     passage of the Brady bill to establish a workable waiting 
     period--America, like Virginia, might begin to shake its 
     reputation as a global arsenal for criminals. The climate is 
     right.
                                                                    ____

                [From the New York Times, Feb. 4, 1993]

                           One Gun Per Month

       Effective gun control requires national laws because so 
     many firearms used in urban crime are smuggled across state 
     lines. The latest proposal growing out of concern over gun 
     trafficking in Virginia is simple and potentially powerful: 
     Limit purchases of handguns by an individual to one per 
     month.
       Virginia's Governor, Douglas Wilder, has been pushing a 
     one-gun-per-month bill for his state because it has become a 
     source for illegal gun smuggling on the East Coast. Dealers 
     from New York City, where local laws sharply restrict access 
     to guns, drive to Virginia and fill the trunks of their cars 
     with weapons purchased in stores with the help of local 
     residents. Then they haul the guns back to New York and sell 
     them illegally on the street at huge markups.
       Since it wouldn't pay to travel back and forth for one gun 
     at a time, limiting purchases to one per month could quickly 
     put the smugglers out of business in Virginia.
       But why put them out of business only there? Closing down 
     the pipeline from Virginia will most likely result only in 
     new ones opening elsewhere. After South Carolina enacted such 
     a law in 1975, it ceased to be a crime gun supermarket. 
     Smugglers apparently shifted much of their business to 
     Virginia and Florida.
       A Federal law imposing the limit for all states would shut 
     down all the potential pipelines at once. Representative 
     Robert Torricelli of New Jersey has introduced a bill to do 
     just that. Like the Virginia law, it imposes a one-gun-per-
     month limit with provisions for those few cases of people who 
     lose a recently purchased gun and have urgent need to buy 
     another.
       The gun lobby is already screaming about intolerable 
     trespass on individual and commercial freedom. Yet South 
     Carolina's law had no detrimental effects; it simply limited 
     interstate trafficking that had gotten out of hand.
       Even the most avid collector isn't likely to want--or be 
     able to afford--more than 12 handguns a year. Legitimate gun 
     dealers don't base their success on multiple sales to 
     individuals.
       Some supporters of gun control worry that the Torricelli 
     bill could distract from the Brady bill, which would impose a 
     national five-day waiting period between purchase and 
     delivery of a handgun. That bill remains important to reduce 
     both interstate trafficking and crime in general.
       But with gun crime out of control, why should the nation 
     have to choose? Both measures merit early attention in 
     Congress and the support of all Americans who favor a common-
     sense approach to public safety.
                                                                    ____

        Evaluating the Impact of Virginia's One-Gun-a-Month Law

(By Douglas S. Weil, Sc.D., and Rebecca Knox, M.P.H., M.S.W., Center to 
                       Prevent Handgun Violence)


                           executive summary

                              Introduction

       In response to a growing reputation as a principal supplier 
     of firearms to the illegal market--particularly in the 
     Northeastern United States--Virginia enacted a law (which was 
     implemented July 1993) restricting handgun purchases to one 
     per month per individual. The purpose of this study was to 
     determine whether limiting handgun purchases to one per month 
     is an effective way to disrupt the illegal movement of 
     firearms across state lines.

                               Hypothesis

       The hypothesis tested was that the odds of tracing a gun, 
     originally acquired in the Southeast region of the United 
     States, to a Virginia gun dealer, if it was recovered in a 
     criminal investigation outside of the region, would be 
     substantially lower for guns purchased after Virginia's one-
     gun-a-month law took effect, than for guns purchased prior to 
     implementation of the law.

                                Methods

       The principal analytic method used in this analysis was to 
     estimate the odds ratio for tracing a firearm to a gun dealer 
     in Virginia relative to a gun dealer in the other 
     Southeastern states (as defined by the Bureau of Alcohol, 
     Tobacco and Firearms (BATF)), for guns purchased prior to 
     Virginia's one-gun-a-month law's effective date compared to 
     guns purchased after the law was enacted. The data, including 
     information about 17,082 guns traced to the Southeast, come 
     from the firearms trace database compiled by the BATF.

                                Results

       The hypothesis was substantiated by the data. The odds of 
     tracing a gun, originally acquired in the Southeast region, 
     to a Virginia gun dealer, and not to a gun dealer in another 
     Southeastern state, were substantially lower for firearms 
     purchased after Virginia's one-gun-a-month law took effect, 
     than for firearms purchased prior to implementation of the 
     law.
       Specifically, for guns recovered: Anywhere in the United 
     States (including Virginia), the odds were reduced by 36%; in 
     the Northeast Corridor (NJ, NY, CT, RI, MA), the odds were 
     reduced by 66%; in New York, the odds were reduced by 71%; in 
     New Jersey, the odds were reduced by 57%; and in 
     Massachusetts, the odds were reduced by 72%.

                               Conclusion

       Most gun control policies currently advocated in the United 
     States (e.g., licensing, registration and one-gun-a-month) 
     could be described as efforts to limit the supply of guns 
     available in the illegal market. This study provides 
     persuasive evidence that restricting handgun purchases to one 
     per month per individual is an effective means of disrupting 
     the illegal interstate transfer of firearms. Based on the 
     results of this study, Congress should consider enacting a 
     federal version of the Virginia law.
                              introduction

       In July 1993, a Virginia law limiting handgun purchases by 
     an individual to one gun in a thirty day period took 
     effect.\1\ Prior to the one-gun-a-month law, individuals were 
     able to purchase an unlimited number of handguns from 
     licensed dealers.
     Footnotes at end of study.
---------------------------------------------------------------------------
       The law was passed in response to Virginia's growing 
     reputation as a principal supplier of guns to the illegal 
     market in the Northeastern United States.\2\ Statistics from 
     the Bureau of Alcohol, Tobacco, and Firearms (BATF) provided 
     evidence of the magnitude of gun trafficking from Virginia. 
     The BATF reported that 41% of a sample of guns seized in New 
     York City in 1991 were traced to Virginia gun dealers.\3\ 
     Virginia has long been a primary out-of-state source of 
     recovered crime guns traced in Washington, D.C.\4\ and 
     Boston.\5\
       Virginia is not the only out-of-state source of firearms 
     illegally trafficked along the Eastern Seaboard. In fact, the 
     BATF has identified the illegal movement of firearms from 
     states in the Southeast northward to states along Interstate 
     95 (sometimes referred to as the ``Iron Pipeline''\6\), as 
     one of three principal gun trafficking routes in the 
     country.\7\ The same BATF report that identified Virginia as 
     the principal out-of-state source of guns used in crime in 
     New York City noted that a high percentage of recovered guns 
     also came from Florida and Georgia. Together, the three 
     states accounted for 65% of all successfully traced firearms 
     in New York City. Investigators also found that 25% 
     successfully traced firearms recovered in Baltimore were 
     originally purchased in the Southeastern United States.\8\
       Interstate gun trafficking occurs, in part, because of the 
     disparity in state laws governing gun sales. As a result, the 
     ``street price'' of firearms in localities with restrictive 
     gun laws is significantly greater than the retail price for 
     the same guns purchased in states where laws are less 
     stringent. For example, low quality, easily concealable guns 
     like the Raven Arms MP-25, the Davis P-38 and the Bryco Arms 
     J-22 which retail less than $100 can net street prices 
     between $300 and $600.\9\ The ability to buy many guns at a 
     retail price to be sold elsewhere at a higher street price 
     suggests that the purchase of multiple firearms in a single 
     transaction is an integral part of the profit motive which 
     supports the illegal market.
       The objective behind Virginia's passage of the one-gun-a-
     month law was to undermine 

[[Page S11210]]
     the economic incentive created by the disparities in gun laws among the 
     states--an objective supported by historical evidence. In 
     1975, South Carolina limited purchases of firearms to one gun 
     in a thirty day period. Prior to enactment of the law, South 
     Carolina was a primary out-of-state source of guns used in 
     crime in New York City. After the passage of the law, South 
     Carolina was no longer a primary source of guns for New York 
     City.\10\


                          purpose of the study

       The objective of this study was to assess the effect of 
     Virginia's one-gun-a-month law on gun trafficking patterns, 
     particularly along the ``Iron Pipeline.''


                                  data

       The data\11\ used in the analysis come from the firearms 
     trace database compiled by the Bureau of Alcohol, Tobacco and 
     Firearms (BATF). Law enforcement agencies can request that 
     the BATF trace a gun which has been recovered in connection 
     with a criminal investigation. BATF staff at the National 
     Tracing Center (NTC) contact the manufacturer of the firearm 
     to identify which wholesaler or retail dealer received the 
     gun. NTC staff then contact each consecutive dealer who 
     acquired the firearm until the gun is either traced to the 
     most recent owner or, until the gun can be traced no further. 
     There is no requirement that records of gun transfer be 
     maintained by non-gun dealers who sell a firearm. 
     Consequently, the tracing process often ends with the first 
     retail sale of the gun.
       As part of the tracing process, information is collected on 
     several variables including the location of the gun dealer or 
     dealers who have handled the gun (by state and region); when 
     the gun was purchased; when and where the trace was 
     initiated; and, the manufacturer, model and caliber of the 
     firearm being traced.
       The firearms trace database contained in excess of a half 
     million records pertaining to approximately 295,000 firearms 
     (9/89 through 3/95). The database contains more records than 
     firearms because two or more traces can be of the same gun, 
     as part of the same criminal investigation. Multiple traces 
     of a particular gun is an indication that the weapon was 
     transferred from federally licensed firearms dealer to 
     another dealer before it was sold to a non-licensed 
     individual. Since 1990, the number of traces conducted each 
     year has more than doubled to approximately 85,000 in 1994.


                                methods

       The principal analytic method used in the study was to 
     estimate the odds ratio for tracing a firearm to a gun dealer 
     in Virginia relative to a dealer in the other Southeastern 
     states (as defined by the BATF), for guns purchased prior to 
     Virginia's one-gun-a-month law's effect date compared to guns 
     purchased after the law was enacted.
       In other words, the data were classified by two criteria: 
     (1) where the gun was purchased (from a gun dealer in 
     Virginia or from a dealer in another state in the Southeast 
     region of the country), and (2) when a traced firearm was 
     purchased (before or after implementation of the Virginia 
     law). The odds ratio was calculated by comparing the odds of 
     a gun being traced to a gun dealer
      in the state of Virginia relative to a dealer in another 
     part of this region, for guns purchased prior to the law's 
     implementation and for guns purchased after the law took 
     effect.
       The Southeast region was identified as the comparison group 
     for Virginia because the region has long been identified as a 
     principal source of out-of-state firearms for the Easter 
     Seaboard.\7\ In addition to Virginia, the Southeast region 
     includes North and South Carolina, Georgia, Florida, Alabama, 
     Mississippi and Tennessee. Only guns traced to a dealer in 
     the Southeast region were incorporated into the analysis.
       The BATF no longer traces firearms manufactured prior to 
     1985 without being specifically requested to do so. Results 
     are reported in this analysis only for guns purchased since 
     January 1985. However, a sensitivity analysis was conducted 
     incorporating data for all firearms for which date of 
     purchase information was available. The results of the 
     analysis were essentially unchanged by the sensitivity 
     analysis; the conclusions would not change.
       The period studied for which there is data after 
     implementation of the law was 20 months long. Consequently, 
     the possibility that seasonal variation in gun trafficking 
     patterns could have effected the results of the analysis was 
     studied. A sensitivity analysis was conducted excluding guns 
     purchased more than one full year after the Virginia law took 
     effect. The results of the sensitivity analysis were not 
     significantly different from those of the principal analysis; 
     the conclusions would not change.
       Date of purchase information was not available for all guns 
     in the firearms trace data set. The distribution of guns 
     traced to the Southeast region (to gun dealers in Virginia 
     relative to the rest of the region) is similar for the subset 
     of data for which date of purchase information was available 
     (24%), and the subset for which date of purchase information 
     was not available (21%).
       The Virginia law pertains to acquisition of handguns by 
     individuals who are not federally licensed firearms dealers. 
     Therefore, the origin of a gun which had been transferred 
     from a dealer in one state to a dealer in a second state was 
     considered to be the last dealer's location. In other words, 
     if a firearm was transferred by a dealer in Georgia to a 
     dealer in Virginia, who then sold the gun to an individual 
     who was not a licensed dealer, the gun would be considered a 
     Virginia gun.
       Odds ratios were estimated for traces initiated: (1) 
     anywhere in the United States; (2) the Northeast corridor 
     taken as whole (New Jersey, New York, Connecticut, Rhode 
     Island and Massachusetts); and, (3) for each of the Northeast 
     states individually considered. For each iteration, the 
     hypothesis being tested remained the same, and was that: the 
     odds of a gun, purchased after enactment of Virginia's one-
     gun-a-month law, being traced to a Virginia gun dealer 
     relative to a gun dealer in another part of the Southeast, 
     were significantly lower than for guns purchased prior to 
     enactment of the law.
       A significant reduction in the odds would provide evidence 
     that the Virginia law effectively helped to reduce gun 
     trafficking from the state.


                                results

       The date a gun was purchased and the date the trace request 
     was made was available for 55,856 (19%) of the guns in the 
     database. Of these guns, 17,082 (30.6%) were traced to a 
     dealer located in the Southeast region. Approximately one in 
     four guns (24%) traced to the Southeast were traced to a 
     Virginia gun dealer.
       Cross-tabulations indicate that there is an association 
     between when a firearm was acquired (before or after the 
     Virginia law went into effect) and where it was obtained 
     (either from a Virginia gun dealer or a gun dealer in another 
     state located in the Southeast). Twenty-sever percent of all 
     guns purchased prior to passage of the one-gun-a-month law 
     (including guns recovered in Virginia), which were traced to 
     a gun dealer in the Southeast, were acquired from a Virginia 
     gun dealer. Only 19% of guns purchased after the law went 
     into effect and similarly traced to a dealer in the Southeast 
     were acquired in Virginia. In other words, there was a 36% 
     reduction in the likelihood that a traced gun from anywhere 
     in the nation was acquired in Virginia relative to another 
     Southeastern state, for firearms purchased after the one-gun-
     a-month law took effect compared to guns purchased prior to 
     enactment of the law (Odds Ratio=0.64; p<0.0001) (Table 1).
       The magnitude of the association between when a gun was 
     purchased and where it was acquired was greater when the 
     analysis focused on gun traces initiated in the Northeast 
     corridor of the United States (New Jersey, New York, 
     Connecticut, Rhode Island or Massachusetts). For gun traces 
     originating in the Northeast, there was a 66% reduction in 
     the likelihood that a gun would be traced to Virginia 
     relative to a gun dealer elsewhere in the Southeast for guns 
     purchased after the one-gun-a-month law took effect when 
     compared to guns purchased prior to law's effective date 
     (OR=0.34;p<0.0001).
       Even stronger associations were identified for gun traces 
     initiated in individual states--specifically for traces of 
     guns recovered in New York and Massachusetts. Among the guns 
     from the Southeast recovered in New York, 38% purchased prior 
     to implementation of the Virginia law were traced to Virginia 
     gun dealers compared to 15% of guns from the Southeast which 
     were purchased after the law took effect (OR=0.29;p<0.0001). 
     In Massachusetts, the percentages were 18 and 6 
     (OR=0.28;p<0.32). In other words, implementation of the law 
     was associated with a 71% reduction in New York and a 72% 
     reduction in Massachusetts in the likelihood that a traced 
     gun originally purchased in the Southeast would be traced to 
     a Virginia gun dealer as opposed to a dealer in another 
     Southeastern state.

                                                     TABLE 1                                                    
 [Estimated odds ratio that a firearm, purchased after implementation of the Virginia one-gun-a-month law, would
 be traced to a Virginia gun dealer relative to a gun dealer in another state in the southeastern region of the 
                            country compared to firearms purchased prior to the law.]                           
----------------------------------------------------------------------------------------------------------------
                                                                   Guns                                         
                                                      Guns      purchased                                       
   Firearms recovered in       Guns traced to      purchased    after law     Odds ratio (95% CI)      p-value  
                                  dealer in         prior to   implemented                                      
                                                    law (%)        (%)                                          
----------------------------------------------------------------------------------------------------------------
All states (n=14606)\1\...  VA..................         27.0         19.0        0.64  (0.58-0.71)      <0.0001
                            SE-VA\2\............         73.0         81.0                                      
Northeast Corridor (NJ,     VA..................         34.8         15.5        0.34  (0.28-0.41)      <0.0001
 NY, CT, RI, MA) (n=4088).  SE-VA...............         65.2         84.5                                      
NJ (n=729)................  VA..................         28.7         17.7        0.53  (0.35-0.80)       =0.003
                            SE-VA...............         71.3         82.3                                      

[[Page S11211]]
                                                                                                                
NY (n=2991)...............  VA..................         38.2         15.3        0.29  (0.23-0.36)      <0.0001
                            SE-VA...............         61.8         84.7                                      
CT (n=53).................  VA..................         34.1         33.3        0.96  (0.21-4.39)        =0.97
                            SE-VA...............         65.9         66.7                                      
RI (n=14).................  VA..................          7.1        (\3\)       (\3\)    (\3\)            (\3\)
                            SE-VA...............         92.9        (\3\)                                      
MA (n=301)................  VA..................         18.0          5.9        0.28  (0.80-0.94)       =0.032
                            SE-VA...............         82.0         94.1                                      
----------------------------------------------------------------------------------------------------------------
\1\n=number of guns traced to the Southeast.    \2\SE-VA=all states of the Southeast except Virginia.    \3\Not 
  available.                                                                                                    




                                comment

       In 1993, 1.1 million violent crimes were committed with 
     handguns.\12\ Studies show that anywhere from 30% to 43% of 
     criminals identified the illegal market as the source of 
     their last handgun.\13\ The illegal market exists for several 
     reasons: would-be criminals may be unable to buy handguns 
     because prior criminal records disqualify them from over-the-
     counter purchases, or the gun laws in their states prevent 
     them from obtaining a handgun quickly and easily. In 
     addition, would-be criminals do not want to make over-the-
     counter purchases because the handgun eventually can be 
     traced back to them.
       Local and state legislative bodies have created a patchwork 
     of weak and strong laws regulating handgun sales across the 
     country. In some jurisdictions purchasers may need a permit 
     to possess a handgun,\14\ or may be required to wait before 
     the transfer is allowed to go forward.\15\ In other 
     jurisdictions, however, there are now restrictions on the 
     sale of handguns beyond the few imposed by federal law.\16\ 
     Consequently, the jurisdictions with ``weaker'' gun retail 
     laws attract gun traffickers who buy firearms in these 
     jurisdictions and transport their purchases illegally to 
     areas with ``stronger'' regulation. The guns are then sold 
     illegally on the street to ineligible buyers (e.g., felons or 
     minors), or to people who want guns that cannot be traced 
     back to them.
       The BATF recently completed a study on gun trafficking in 
     southern California where a 15-day waiting period applies. 
     The study found that more than 30% of the guns recovered in 
     crime in that region which could be traced back to a gun 
     dealer came from outside California.\17\ Almost a third of 
     these out-of-state guns were sold initially by dealers in 
     Nevada, Arizona, and Texas, where the most exacting rules 
     concerning handgun sales are the minimum restrictions set 
     forth in federal law.\18\ The experience in New York city is 
     the same. For example, the BATF reports that 66% of all the 
     guns recovered in crime in that city in 1991 and traced by 
     the Bureau were originally obtained in Virginia, Florida, 
     Ohio and Texas--states with ``weak'' gun laws compared to New 
     York.\19\
       The ability to purchase large numbers of firearms, which 
     have a much higher street value than their commercial price, 
     enables gun traffickers to make enormous profits and keep 
     their ``business'' costs to a minimum. For example, convicted 
     gun runner Edward Daily ``hired'' several straw purchasers to 
     buy approximately 150 handguns in Virginia and North 
     Carolina. Daily traded the handguns in New York City for cash 
     and drugs and reaped profits of $300 per gun on smaller 
     caliber handguns and $600 per gun for more powerful assault 
     pistols like the TEC-9 and MAC-11.\20\
       In March 1991, Owen Francis, a Bronx, New York, resident, 
     drove to Virginia and, without having to show proof of 
     residency, obtained a Virginia driver's license. Within a 
     short time, Francis had purchased five Davis Saturday Night 
     Specials--the most common handgun traced to crime between 
     1990-1991, according to the BATF\21\--and returned to New 
     York and sold the guns. Francis was arrested a few weeks 
     later when he returned to Virginia to buy four more Davis 
     handguns.\22\
       High-volume multiple sales are common. The BATF field 
     division for southern California recently reviewed over 5,700 
     instances of multiple sales. Almost 18% of these multiple 
     sales involved individual purchases of three or more 
     guns.\23\ Theoretically, prohibiting multiple purchase 
     transactions should be an effective policy means to disrupt 
     established gun trafficking patterns while ultimately 
     reducing the supply of firearms available in the illegal 
     market. The effects of the Virginia one-gun-a-month law seem 
     to support the theory.
       The results of this study provide strong evidence that 
     restricting purchases of handguns to one per month is an 
     effective way to disrupt the illegal movement of guns across 
     state lines. The analysis of the firearms trace database 
     shows a strong, consistent pattern in which guns originally 
     obtained in the Southeast are less likely to be recovered as 
     part of a criminal investigation and
      traced back to Virginia if they were purchased after the 
     Virginia law went into effect. There was a 65% reduction 
     in the likelihood that a gun traced back to the Southeast 
     would be traced to Virginia for guns recovered in the 
     Northeast Corridor; a 70% reduction for guns recovered in 
     either New York or Massachusetts; and, a 35% reduction for 
     guns recovered anywhere in the United States.
       While evidence generated from this study is strong, a 
     change in the laws governing gun purchases in the other 
     southeastern states (e.g., Florida or Georgia) which makes 
     the laws in those states more permissive after July 1993 
     could provide an alternative explanation for the findings. A 
     review of laws related to private gun ownership in the 
     southeastern region revealed no relevant changes, though 
     Georgia will move to an instant check system and preempt 
     local gun laws effective January 1996.\24\
       While there are many strengths of this analysis, there are 
     some limitations. First, additional research is needed to 
     clarify what, if any displacement effects were created by the 
     Virginia law (i.e., to what extent, if any, do gun 
     traffickers successfully shift their activities to the next 
     most attractive state for acquiring firearms). Second, all 
     types of firearms are included in the analysis even though 
     the Virginia law only restricts the purchase of handguns. 
     This potentially results in an underestimate of the effect of 
     the law. Third, the BATF does not trace all firearms 
     recovered as part of a criminal investigation, and, for the 
     firearms traced, some information (e.g., date of purchase) is 
     not always available. Though it is unlikely that there is a 
     systematic bias in the origin of guns from the Southeast 
     which are recovered outside of the region, or with respect to 
     which guns from the Southeast are traced (a gun's origin and 
     date of purchase are not known prior to the trace), such a 
     bias could alter the results leading to an over- or under-
     estimation of the association between passage of the Virginia 
     law and the relative likelihood of Virginia guns turning up 
     in the tracing data.


                               conclusion

       Most gun control policies currently being advocated in the 
     United States (e.g., licensing, registration, and one-gun-a-
     month) could, most fairly, be described as efforts to limit 
     the supply of guns available in the illegal market. In other 
     words, these are policies crafted to keep guns from 
     proscribed individuals. Once enacted, however, it is 
     important to demonstrate that they are effective. This study, 
     which looks at the impact of Virginia's one-gun-a-month law, 
     provides persuasive evidence that a prohibition on the 
     acquisition of more than one handgun per month by an 
     individual is an effective means of disrupting the illegal 
     interstate transfer of firearms. Based on the results of this 
     study, Congress should consider enacting a federal version of 
     the Virginia law.


                            acknowledgements

       This work was supported in part by the Overbrook Foundation 
     and the Educational Foundation of America.
       We thank David Hemenway, Ph.D. and Eric Rimm, Sc.D. of the 
     Harvard School of Public Health for their assistance with the 
     development of this report. We also thank Mark Polston, Rick 
     Bielke, Richard Aborn, Dennis Henigan, Bob Walker, Diana Weil 
     and James Willmuth for their comments.
                               Footnotes

     \1\``Code of Virginia,'' Section 18.2-308.2:2(Q). Often 
     referred to as ``one-gun-a-month.''
     \2\Larson, Erik, ``Lethal Passage: How the Travels of a 
     Single Handgun Expose the Roots of America's Gun Crisis'', 
     Crown Publishers, Inc., New York, 1994, p. 104
     \3\BATF memo, ``Firearm/Homicide Statistics,'' June 16, 1992.
     \4\Edds, Margaret, ``The Pipeline to the Streets of New 
     York,'' Virginian-Pilot, January 3, 1993: A9.
     \5\Montgomery, Bill, ``Guns Bought in Georgia Arm Northern 
     Criminals,'' Atlanta Constitution, October 11, 1993: A1, A4.
     \6\Id.
     \7\Personal communication with Joe Vince of the Bureau of 
     Alcohol, Tobacco, and Firearms, July 18, 1995.
     \8\BATF and the Baltimore Police Department, ``1994 Baltimore 
     Trace Study'', 1994: Appendix X.
     \9\Freedman, Alix, Wall Street Journal, February 28, 1992: 
     A1, A6.
     \10\BATF memo, ``Firearm/Homicide Statistics,'' June 16, 
     1992.
     \11\Obtained by the Center to Prevent Handgun Violence 
     through the Freedom of Information Act.
     \12\United States Department of Justice, Bureau of Justice 
     Statistics, ``Guns Used in Crime'', July 1995.
     \13\Sheley, Joseph F and Wright, James D, ``Gun Acquisition 
     and Possession in Selected Juvenile Samples,'' National 
     Institute of Justice and Office of Juvenile Justice and 
     Delinquency Prevention, December 1993: 6; Beck, Alan, 
     ``Survey of State Prison Inmates, 1991,'' National Institute 
     of Justice, Bureau of Justice Statistics, March 1993: 19.

[[Page S11212]]

     \14\N.Y. Penal Law Section 265.01, 265.20(f)(3) (no handgun 
     purchases without previously receiving a license to possess a 
     handgun). New York City law grants great discretion to the 
     police commissioner in determining whether to issue a license 
     to possess. N.Y.C. Admin. Code Section 10-131.
     \15\Cal. Penal Code, Section 12071(b)(3)(A) (15 day waiting 
     period for delivery of firearm).
     \16\For example, Georgia law places no additional 
     restrictions on the sale of handguns beyond those established 
     by federal law. In fact, as of January 1996, Georgia will 
     prohibit local jurisdictions from regulating handguns sales.
     \17\Bureau of Alcohol, Tobacco and Firearms, ``Sources of 
     Crime Guns in Southern California,'' 1995: 21-22.
     \18\Id.
     \19\BATF memo, ``Firearms/Homicide Statistics,'' June 16, 
     1992. See also Edds, Margaret, ``The Pipeline to the Streets 
     of New York,'' Virginian-Pilot, January 3, 1993 at A9 
     (describing Project Lead data).
     \20\``Federal Firearms Licensing: Hearing Before the Subcomm. 
     on Crime and Criminal Justice of the Committee on the 
     Judiciary House of Representatives.'' 103rd Cong., 1st Sess., 
     8-10 (June 17, 1993) (hereinafter ``Housing Hearing'').
     \21\Freedman, Alix, ``Fire Power: Behind the Cheap Guns 
     Flooding the Cities is a California Family,'' Wall Street 
     Journal, Feb. 28, 1992: A1, A6.
     \22\Thomas, Pierre, ``Virginia Driver's License Is Loophole 
     for Guns'', Washington Post, January 20, 1992: A1.
     \23\BATF. ``Sources of Crime Guns in Southern California,'' 
     1995: 16-17.
     \24\Laws reviewed included one-gun-a-month, bans on weapons, 
     background checks, waiting period, regulation of private 
     sales, license to purchase, and registration of 
     sales.
                                 ______

      By Mr. LEAHY:
  S. 1114. A bill to amend the Food Stamp Act of 1977 to reduce food 
stamp fraud and improve the Food Stamp Program through the elimination 
of food stamp coupons and the use of electronic benefits transfer 
systems, and for other purposes; to the Committee on Agriculture, 
Nutrition, and Forestry.


               the food stamp fraud reduction act of 1995

  Mr. LEAHY.
   Mr. President, I want to invite all Members to cosponsor legislation 
with me which will eliminate illegal trafficking in food stamp coupons 
by converting to electronic benefit transfer, often called EBT, 
systems. I may offer this bill as an amendment to welfare reform or as 
an amendment to the farm bill or the Reconciliation Act.

  Under President Bush, USDA noted that ``the potential savings are 
enormous'' if EBT is used in the Food Stamp Program.
  The bill is designed to save the States money. Issuing coupons is 
expensive to States. Some States mail coupons monthly and pay postage 
for which they receive only a partial Federal reimbursement. When 
coupons are lost or stolen in the mail, States are liable for some 
losses.
  It also saves State money by requiring that USDA pay for purchasing 
EBT card readers to be put in stores. Under current law, States pay 
half those costs.
  Some States issue coupons at State offices, which involves labor 
costs. Under the bill, USDA pays for the costs of the cards and 
recipients are responsible for replacements and much of the losses. The 
bill does not allow the Secretary of Agriculture to impose liability on 
States except for their own negligence or fraud, as under current law. 
Other welfare reform proposals allow the Secretary to impose liability 
on States consistent with this administration's views on regulation E. 
I disagree with that policy.
  The Federal EBT task force estimates that the bill will also save 
Federal taxpayers around $400 million over the next 10 years.
  Under current law, States are required to use coupons, with some 
exceptions. About 2.5 billion coupons per year are printed, mailed, 
shipped, issued to participants, counted, canceled, redeemed through 
the banking system by Treasury, shipped again, stored, and then 
destroyed. That cost can reach $60 million per year in Federal and 
State costs. Printing coupons alone costs USDA $35 million a year.
  EBT does not just cut State and Federal costs. The inspector general 
of USDA testified that EBT ``can be a powerful weapon to improve 
detection of trafficking and provide evidence leading to the 
prosecution of traffickers.''
  The special agent in charge of the financial crimes division of the 
U.S. Secret Service testified that ``the EBT system is a great 
advancement generally because it puts an audit trail relative to the 
user and the retail merchant.''
  Another Bush administration report determined that EBT promises ``a 
variety of Food Stamp Program improvements * * *. Program 
vulnerabilities to certain kinds of benefit loss and diversion can be 
reduced directly by EBT system features * * * [EBT] should facilitate 
investigation and prosecution of food stamp fraud.''
  A more recent Office of Technology Assessment [OTA] report determined 
that a national EBT system might reduce food stamp fraud losses and 
benefit diversion by as much as 80 percent.
  The bill is based on meetings with the U.S. Secret Service, the 
inspector general of USDA, the National Governors Association, the 
American Public Welfare Association, Consumers Union, the OTA, the 
Federal EBT task force, and the affected industries, and a full 
committee hearing last session of the Senate Agriculture Committee.
  Perhaps nothing is totally fraud-proof, but EBT is clearly much 
better than the current system of paper coupons, and EBT under my bill 
will cut State costs. Let us be bold.
  Under current law, 2.5 billion coupons are used once and then 
canceled--except for $1 coupons which may be used to make change. Would 
we consider it cost-efficient if all $5 bills, for example, could only 
be used once, then stored and destroyed?
  EBT has an added benefit--it eliminates cash change. Under current 
law, food stamp recipients get cash change in food stamp transactions 
if the cash does not exceed $1 per purchase. That cash can be used for 
anything.
  In conclusion, I am convinced that the single most important thing we 
can do to reduce fraud and State costs is to eliminate the use of 
coupons. I hope you will join with me in this effort.
  The following is the summary of my EBT bill.
  The bill alters the Food Stamp Act and requires that the Secretary of 
Agriculture no longer provide food stamp coupons to States within 3 
years of enactment. In general, under current law States are required 
to use a coupon system.
  Any Governor may grant his or her State an additional 2-year 
extension, and the Secretary can add another 6-month extension for a 
maximum of 5\1/2\ years.
  At the end of that time period, coupons will no longer be provided to 
the State. Food benefits instead will be provided through electronic 
benefits transfer [EBT] or in the form of cash if authorized by the 
Food Stamp Act--for example, under a bill reported out the Senate 
Agriculture Committee by Senator Lugar on June 14, 1995, States can 
cash out food stamp benefits as part of a wage supplementation program.
  The bill is designed to piggy-back onto the current expansion of 
point-of-sale terminals found in many stores. The bill requires that 
stores, financial institutions and States take the lead in the 
conversion to EBT.
  Under current law, States must pay for half the costs of the point-
of-sale equipment put in stores, but USDA pays for 100 percent of the 
costs of printing coupons. Under Senator Leahy's bill, USDA will pay 
for 100 percent of those equipment costs, and USDA will pay for 100 
percent of the costs of the EBT cards.
  My bill provides that regulation E will not apply to food stamp EBT 
transactions. Generally speaking, regulation E provides that credit 
card or debit card users are liable only up to the first $50 in 
unauthorized uses of lost or stolen debit cards--as long as such a loss 
is reported in a timely manner.
  Under current law the State is considered the card issuer for food 
stamp EBT purposes. Regulation E has been a major impediment to 
implementation of EBT by States because States are liable for household 
fraud and nonhousehold member fraud.
  While the risks are much lower for the Food Stamp Program than for 
debit cards--since EBT food cards only contain the balance of the 
unused food benefits rather than access to a bank account or a credit 
line, States are still worried about liability and oppose the 
application of regulation E rules.
  Under my bill, USDA and the Federal Reserve Board are precluded from 
making States liable for losses associated with lost or stolen EBT 
cards--unless due to State fraud or negligence as under current law for 
coupons.
  Under other welfare reform bills in the House and Senate, the 
Secretary of Agriculture would be allowed to impose additional 
liabilities on States for errors that should be charged to the 
recipient. For example, the Secretary could impose regulation E-type 
liabilities on States--although under these 

[[Page S11213]]
bills the Federal Reserve Board would be barred from imposing those 
liabilities.
  The bill specifically makes households liable for most EBT losses: 
however, they are not liable for losses after they report the loss or 
theft of the EBT card.
  As under current law, States are liable for their own fraud and 
negligence losses.
  The bill also provides that each recipient will be given a personal 
code number [PIN] to help prevent unauthorized use of the card.
  Most of the liability provisions, unlike those in other welfare 
reform proposals, are based on the May 11, 1992, EBT steering committee 
report under the Bush administration which represents an outstanding 
analysis of the liability issue.
  Under the bill, food stamp families will have to pay for replacement 
cards. However, once reported as lost or stolen, the old card will be 
voided, and a new card will be issued with the balance remaining.
  The card holder will be responsible for any unauthorized purchases 
made between the time of loss and the household's reporting of the lost 
or stolen card. The card cannot be used without the PIN number. 
Households will be able to obtain transaction records, upon request, 
from the benefit issuer and that issuer will have to establish error 
resolution procedures as recommended by the 1992 EBT steering committee 
report.
  Under the bill, USDA will no longer have to pay for the costs of 
printing, issuing, distributing, mailing and redeeming paper coupons--
this costs between $50 million and $60 million a year.
  Under the bill, in an effort to reduce the costs of implementing a 
nationwide EBT system, States and stores will look at the best way to 
maximize the use of existing point-of-sale terminals. They will follow 
technology, rather than lead technology.
  The Federal EBT task force estimated that Federal costs could be 
reduced by $400 million under the proposed bill. I do not have an 
official CBO estimate yet.
  Many stores now use or in the process of adding point-of-sale 
terminals which allow them to accept debit and credit cards. These 
systems can also be used for EBT.
  Stores which choose not to invest in their own systems will receive 
reimbursements for point-of-sale card readers. USDA will pay for those 
costs.
  If the store decides at a later date that it needs a commercial--
debit or credit card--reader, the store will have to bear all the 
costs. In very rural areas, or in other situations such as house-to-
house trade routes or farmers' markets, manual systems will be used and 
USDA will pay 100 percent of the costs of the equipment.
  It is planned that this restriction--only Federal and State program 
readers paid for, with the upgrade at store expense--will encourage the 
largest possible number of stores to invest in their own point-of-sale 
equipment.
  To the extent needed to cover costs of conversion to EBT, the 
Secretary is authorized to charge a transaction fee of up to 2 cents 
per EBT transaction--taken out of benefits. This provision is 
temporary. Households receiving the maximum benefit level--for that 
household size--may be charged a lower per transaction fee than other 
households.
  While it is unfortunate that recipients have to be charged this fee 
they are much, much better off under an EBT system. In studies 
conducted regarding EBT projects participants have strongly supported 
its application.
  In implementing the bill, the Secretary is required to consult with 
States, retail stores, the financial industry, the Federal EBT task 
force, the inspector general of USDA, the U.S. Secret Service, the 
National Governors Association, the Food Marketing Institute, and 
others.
  In designing the bill we met with the Director of the Maryland EBT 
System, they have Statewide food stamp EBT, the National Governors 
Association, American Public Welfare Association, the Federal EBT task 
force, USDA Food and Consumer Services, Office of the inspector general 
of USDA, Food Marketing Institute, U.S. Secret Service, OMB, Treasury, 
Consumers Union, Public Voice for Food and Health Policy, the American 
Bankers Association, and representatives of retail stores.
  I want to again invite each of you to cosponsor this legislation.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:
                                S. 1114

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

       (a) In General.--This Act may be cited as the ``Food Stamp 
     Fraud Reduction Act of 1995''.
       (b) References.--Except as otherwise expressly provided, 
     wherever in this title an amendment or repeal is expressed in 
     terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Food Stamp Act of 1977 (7 
     U.S.C. 2011 et seq.).

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) Roger Viadero, Inspector General of the United States 
     Department of Agriculture (USDA), testified before Congress 
     on February 1, 1995, that: ``For many years we have supported 
     the implementation of the Electronic Benefits Transfer, 
     commonly called EBT, of food stamp benefits as an alternative 
     to paper coupons....EBT also provides a useful tool in 
     identifying potential retail store violators. EBT-generated 
     records have enabled us to better monitor and analyze sales 
     and benefit activity at authorized retailers....[I]t can be a 
     powerful weapon to improve detection of trafficking and 
     provide evidence leading to the prosecution of 
     traffickers.'';
       (2) Robert Rasor, United States Secret Service, Special 
     Agent in Charge of Financial Crimes Division, testified 
     before Congress on February 1, 1995, that: ``The EBT system 
     is a great advancement generally because it puts an audit 
     trail relative to the user and the retail merchant.'';
       (3) Allan Greenspan, Chairman of the Board of Governors, 
     Federal Reserve System, has noted the ``importance of EBT for 
     the food stamp program, and the potential advantages offered 
     by EBT to government benefit program agencies, benefit 
     recipients, and food retailers. (Indeed, EBT also would help 
     reduce costs in the food stamp processing operations of the 
     Federal Reserve System.)'';
       (4) the Bush Administration strongly supported EBT for the 
     food stamp program, including 1 report that noted ``The 
     potential savings are enormous.'';
       (5) in February 1991, a USDA publication noted that 
     Secretary Yeutter proposed EBT as an element of the 
     ``Department's strategy to reduce food stamp loss, theft, and 
     trafficking.'';
       (6) in March 1992, USDA noted: ``EBT reduces program 
     vulnerability to some kinds of benefit diversion and provides 
     an audit trail that facilitates efficient investigation and 
     successful prosecution of fraudulent activity....Benefit 
     diversions estimated for an EBT system are almost 80 percent 
     less.'';
       (7) in tests of EBT systems, USDA reported during the Bush 
     Administration that: ``EBT also introduces new security 
     features that reduce the chance for unauthorized use of one's 
     benefits as a result of loss or theft....[R]etailer response 
     to actual EBT operations is very positive in all operational 
     EBT projects.'';
       (8) retail stores, the financial services industry, and the 
     States should take the lead in converting from food stamp 
     coupons to an electronic benefits transfer system;
       (9) in the findings of the report entitled ``Making 
     Government Work'' regarding the electronic benefits transfer 
     of food stamps and other government benefits, the Office of 
     Technology Assessment found that--
       (A) by eliminating cash change and more readily identifying 
     those who illegally traffic in benefits, a nationwide 
     electronic benefits transfer system might reduce levels of 
     food stamp benefit diversion by as much as 80 percent;
       (B) with use of proper security protections, electronic 
     benefits transfer is likely to reduce theft and fraud, as 
     well as reduce errors, paperwork, delays, and the stigma 
     attached to food stamp coupons;
       (C) electronic benefits transfer can yield significant cost 
     savings to retailers, recipients, financial institutions, and 
     government agencies; and
       (D) recipients, retailers, financial institutions, and 
     local program administrators who have tried electronic 
     benefits transfer prefer electronic benefits transfer to 
     coupons;
       (10) the food stamp program prints more than 375,000,000 
     food stamp booklets per year, including 2,500,000,000 paper 
     coupons;
       (11) food stamp coupons (except for $1 coupons) are used 
     once, and each 1 of the over 2,500,000,000 coupons per year 
     is then counted, canceled, shipped, redeemed through the 
     banking system by 10,000 commercial banks, 32 local Federal 
     reserve banks, and the Secretary of the Treasury, stored, and 
     destroyed;
       (12) food stamp recipients can receive cash change in food 
     stamp transactions if the cash does not exceed $1 per 
     purchase; and
       (13) the printing, distribution, handling, and redemption 
     of coupons costs at least $60,000,000 per year.

     SEC. 3. ELIMINATION OF FOOD STAMP COUPONS.

       Section 4 (7 U.S.C. 2013) is amended by adding at the end 
     the following:

[[Page S11214]]

       ``(d) Elimination of Food Stamp Coupons.--
       ``(1) In general.--Except as provided in paragraph (2) and 
     notwithstanding any other provision of this Act, effective 
     beginning on the date that is 3 years after the date of 
     enactment of this subsection, the Secretary shall not provide 
     any food stamp coupons to a State.
       ``(2) Exceptions.--
       ``(A) Extension.--Paragraph (1) shall not apply to the 
     extent that the chief executive officer of a State determines 
     that an extension is necessary and so notifies the Secretary 
     in writing, except that the extension shall not extend beyond 
     5 years after the date of enactment of this subsection.
       ``(B) Waiver.--In addition to any extension under 
     subparagraph (A), the Secretary may grant a waiver to a State 
     to phase-in or delay implementation of electronic benefits 
     transfer for good cause shown by the State, except that the 
     waiver shall not extend for more than 6 months.
       ``(C) Disaster relief.--The Secretary may provide food 
     stamp coupons for disaster relief under section 5(h).
       ``(3) Expiration of food stamp coupons.--Any food stamp 
     coupon issued under this Act shall expire 6 years after the 
     date of enactment of this Act.''.

     SEC. 4. IMPLEMENTATION OF ELECTRONIC BENEFITS TRANSFER 
                   SYSTEMS.

       Section 7 (7 U.S.C. 2016) is amended--
       (1) in subsection (i)--
       (A) by striking ``(i)(1)(A)'' and all that follows through 
     the end of paragraph (1) and inserting the following:
       ``(i) Phase-In of EBT Systems.--
       ``(1) In general.--Each State agency is encouraged to 
     implement an on-line or hybrid electronic benefits transfer 
     system as soon as practicable after the date of enactment of 
     the Food Stamp Fraud Reduction Act of 1995, under which 
     household benefits determined under section 8(a) are issued 
     electronically and accessed by household members at the point 
     of sale.'';
       (B) in paragraph (2)--
       (i) by striking ``final regulations'' and all that follows 
     through ``the approval of'' and inserting the following: 
     ``regulations that establish standards for'';
       (ii) by striking subparagraph (A); and
       (iii) by redesignating subparagraphs (B) through (H) as 
     subparagraphs (A) through (G), respectively;
       (C) in paragraph (3), by striking ``the Secretary shall not 
     approve such a system unless--'' and inserting ``the State 
     agency shall ensure that--''; and
       (D) by striking paragraphs (5) and (6) and inserting the 
     following:
       ``(5) Charging for electronic benefits transfer card 
     replacement.--
       ``(A) In general.--The Secretary shall reimburse a State 
     agency for the costs of purchasing and issuing electronic 
     benefits transfer cards.
       ``(B) Replacement cards.--The Secretary may charge a 
     household through allotment reduction or otherwise for the 
     cost of replacing a lost or stolen electronic benefits 
     transfer card, unless the card was stolen by force or threat 
     of force.''; and
       (2) by adding at the end the following:
       ``(j) Conversion to Electronic Benefits Transfer Systems.--
       ``(1) Coordination and law enforcement.--
       ``(A) Conversion.--The Secretary shall coordinate with, and 
     assist, each State agency in the elimination of the use of 
     food stamp coupons and the conversion to an electronic 
     benefits transfer system.
       ``(B) Standard operating rules.--The Secretary shall inform 
     each State of the generally accepted standard operating rules 
     for carrying out subparagraph (A), based on--
       ``(i) commercial electronic funds transfer technology;
       ``(ii) the need to permit interstate operation and law 
     enforcement monitoring; and
       ``(iii) the need to provide flexibility to States.
       ``(C) Law enforcement.--The Secretary, in consultation with 
     the Inspector General of the United States Department of 
     Agriculture and the United States Secret Service, shall 
     advise each State of proper security features, good 
     management techniques, and methods of deterring 
     counterfeiting for carrying out subparagraph (A).
       ``(2) Voluntary purchase.--The Secretary shall encourage 
     any retail food store to voluntarily purchase a point-of-sale 
     terminal.
       ``(3) Paper and other alternative transactions.--Beginning 
     on the date of the implementation of an electronic benefits 
     transfer system in a State, the Secretary shall permit the 
     use of paper or other alternative systems for providing 
     benefits to food stamp households in States that use special-
     need retail food stores.
       ``(4) State-provided equipment.--
       ``(A) In general.--A retail food store that does not have 
     point-of-sale electronic benefits transfer equipment, and 
     does not intend to obtain point-of-sale electronic benefits 
     transfer equipment in the near future, shall be provided by a 
     State agency with, or reimbursed for the costs of purchasing, 
     1 or more single-function point-of-sale terminals, which 
     shall be used only for Federal or State assistance programs.
       ``(B) Equipment.--
       ``(i) Operating principles.--Equipment provided under this 
     paragraph shall be capable of interstate operations and based 
     on generally accepted commercial electronic benefits transfer 
     operating principles that permit interstate law enforcement 
     monitoring.
       ``(ii) Multiple programs.--Equipment provided under this 
     paragraph shall be capable of providing a recipient with 
     access to multiple Federal and State benefit programs.
       ``(C) Voucher benefits transfer equipment.--A special-need 
     retail food store that does not obtain, and does not intend 
     to obtain in the near future, point-of-sale voucher benefits 
     transfer equipment capable of taking an impression of data 
     from an electronic benefits transfer card shall be provided 
     by a State agency with, or reimbursed for the costs of 
     purchasing, voucher benefits transfer equipment, which shall 
     be used only for Federal or State assistance programs.
       ``(D) Return of electronic benefits transfer equipment.--A 
     retail food store may at any time return the equipment to the 
     State and obtain equipment with funds of the store.
       ``(E) Prior system.--If a State has implemented an 
     electronic benefits transfer system prior to the date of 
     enactment of the Food Stamp Fraud Reduction Act of 1995, the 
     Secretary shall provide assistance to the State to bring the 
     system into compliance with this Act.
       ``(F) No charge for assistance.--Notwithstanding any other 
     provision of this Act, the Secretary shall be responsible for 
     all costs incurred in providing assistance under this 
     paragraph.
       ``(5) Applicable law.--
       ``(A) Disclosures, protections, responsibilities, and 
     remedies established by the Federal Reserve Board under 
     section 904 of the Electronic Fund Transfer Act (15 U.S.C. 
     1693b) shall not apply to benefits under this Act delivered 
     through any electronic benefits transfer system.
       ``(B) Fraud and related activities which arise in 
     connection with electronic benefit systems set forth in this 
     Act shall be governed by section 1029 of title 18, United 
     States Code, and other appropriate laws.
       ``(k) Conversion Fund.--
       ``(1) Establishment of ebt conversion account.--At the 
     beginning of each fiscal year during the 10-year period 
     beginning with the first full fiscal year following the date 
     of enactment of this subsection, the Secretary shall place 
     the funds made available under paragraph (2) into an account, 
     to be known as the EBT conversion account. Funds in the 
     account shall remain available until expended.
       ``(2) Transaction fee.--
       ``(A) In general.--During the 10-year period beginning on 
     the date of enactment of this subsection, the Secretary 
     shall, to the extent necessary, impose a transaction fee of 
     not more than 2 cents for each transaction made at a retail 
     food store using an electronic benefits transfer card 
     provided under the food stamp program, to be taken from the 
     benefits of the household using the card. The Secretary may 
     reduce the fee on a household receiving the maximum benefits 
     available under the program.
       ``(B) Fees limited to uses.--A fee imposed under 
     subparagraph (A) shall be in an amount not greater than is 
     necessary to carry out the uses of the EBT conversion account 
     in paragraph (3).
       ``(3) Use of account.--The Secretary may use amounts in the 
     EBT conversion account to--
       ``(A) provide funds to a State agency for--
       ``(i) the reasonable cost of purchasing and installing, or 
     for the cost of reimbursing a retail food store for the cost 
     of purchasing and installing, a single-function, inexpensive, 
     point-of-sale terminal, to be used only for a Federal or 
     States assistance programs, under rules and procedures 
     prescribed by the Secretary; or
       ``(ii) the reasonable start-up cost of installing telephone 
     equipment or connections for a single-function, point-of-sale 
     terminal, to be used only for Federal or State programs, 
     under rules and procedures prescribed by the Secretary;
       ``(B) pay for liabilities assumed by the Secretary under 
     subsection (l);
       ``(C) pay other costs or liabilities related to the 
     electronic benefits transfer system established under this 
     Act that are incurred by the Secretary, a participating 
     State, or a store that are--
       ``(i) required by this Act; or
       ``(ii) determined appropriate by the Secretary; or
       ``(D) expand and implement a nationwide program to monitor 
     compliance with program rules related to retail food stores 
     and the electronic delivery of benefits.
       ``(l) Liability or Replacements for Unauthorized Use of EBT 
     Cards or Lost or Stolen EBT Cards.--
       ``(1) In general.--The Secretary shall require State 
     agencies to advise any household participating in the food 
     stamp program how to promptly report a lost, destroyed, 
     damaged, improperly manufactured, dysfunctional, or stolen 
     electronic benefits transfer card.
       ``(2) Regulations.--The Secretary shall issue regulations 
     providing that--
       ``(A) a household shall not receive any replacement for 
     benefits lost due to the unauthorized use of an electronic 
     benefits transfer card; and
       ``(B) a household shall not be liable for any amounts in 
     excess of the benefits available to the household at the time 
     of a loss or theft of an electronic benefits transfer card 
     due to the unauthorized use of the card.

[[Page S11215]]

       ``(3) Special losses.--(A) Notwithstanding paragraph (2), a 
     household shall receive a replacement for any benefits lost 
     if the loss was caused by--
       ``(i) force or the threat of force;
       ``(ii) unauthorized use of the card after the State agency 
     receives notice that the card was lost or stolen; or
       ``(iii) a system error or malfunction, fraud, abuse, 
     negligence, or mistake by the service provider, the card 
     issuing agency, or the State agency, or an inaccurate 
     execution of a transaction by the service provider.
       ``(B) With respect to losses described in clauses A (ii) 
     and (iii) the State shall reimburse the Secretary.
       ``(m) Special Rule.--A State agency may require a household 
     to explain the circumstances regarding each occasion that--
       ``(1) the household reports a lost or stolen electronic 
     benefits transfer card; and
       ``(2) the card was used for an unauthorized transaction.
       ``(n) Establishment.--In carrying out this Act, the 
     Secretary shall--
       ``(1) take into account the lead role of retail food 
     stores, financial institutions, and States;
       ``(2) take into account the needs of law enforcement 
     personnel and the need to permit and encourage further 
     technological developments and scientific advances;
       ``(3) ensure that security is protected by appropriate 
     means such as requiring that a personal identification number 
     be issued with each electronic benefits transfer card to help 
     protect the integrity of the program;
       ``(4) provide for--
       ``(A) recipient protection regarding privacy, ease of use, 
     and access to and service in retail food stores;
       ``(B) financial accountability and the capability of the 
     system to handle interstate operations and interstate 
     monitoring by law enforcement agencies and the Inspector 
     General of the Department of Agriculture;
       ``(C) rules prohibiting store participation unless any 
     appropriate equipment necessary to permit households to 
     purchase food with the benefits issued under the Food Stamp 
     Act of 1977 is operational and reasonably available;
       ``(D) rules providing for monitoring and investigation by 
     an authorized law enforcement agency or the Inspector General 
     of the Department of Agriculture; and
       ``(E) rules providing for minimum standards; and
       ``(5) assign additional employees to investigate and 
     adequately monitor compliance with program rules related to 
     electronic benefits transfer systems and retail food store 
     participation.
       ``(o) Requests for Statements.--
       ``(1) In general.--On the request of a household receiving 
     electronic benefits transfer, the State, through a person 
     issuing benefits to the household, shall provide a statement 
     of electronic benefits transfer for the month preceding the 
     request.
       ``(2) Statement items.--A statement provided under 
     paragraph (1) shall include--
       ``(A) opening and closing balances for the account for the 
     statement period;
       ``(B) the date, the amount, and any fee charged for each 
     transaction; and
       ``(C) an address and phone number that the household may 
     use to make an inquiry regarding the account.
       ``(p) Errors.--
       ``(1) In general.--Not later than 10 days after the date a 
     household notifies a State agency of an alleged error, or the 
     State agency discovers an alleged error, the State agency or 
     a person issuing benefits to the household shall conduct an 
     investigation of the alleged error.
       ``(2) Correction.--If a State agency or person conducting 
     an investigation under paragraph (1) determines that an error 
     has been made, any account affected by the error shall be 
     adjusted to correct the error not later than 1 day after the 
     determination.
       ``(3) Temporary credit.--If an investigation under 
     paragraph (1) of an error does not determine whether an error 
     has occurred within 10 days after discovering or being 
     notified of the alleged error, a household affected by the 
     alleged error shall receive a temporary credit as though the 
     investigation had determined that an error was made. The 
     temporary credit shall be removed from the account on a 
     determination whether the error occurred.
       ``(q) Definitions.--In this section:
       ``(1) Retail food store.--The term `retail food store' 
     means a retail food store, a farmer's market, or a house-to-
     house trade route authorized to participate in the food stamp 
     program.
       ``(2) Special-need retail food store.--The term `special-
     need retail food store' means--
       ``(A) a retail food store located in a very rural area;
       ``(B) a retail food store without access to electricity or 
     regular telephone service; or
       ``(C) a farmers' market or house-to-house trade route that 
     is authorized to participate in the food stamp program.''.

     SEC. 5. LEAD ROLE OF INDUSTRY AND STATES.

       Section 17 (7 U.S.C. 2026) is amended by adding at the end 
     the following:
       ``(m) Lead Role of Industry and States.--The Secretary 
     shall consult with the Secretary of the Treasury, the 
     Secretary of Health and Human Services, the Inspector General 
     of the United States Department of Agriculture, the United 
     States Secret Service, the National Governor's Association, 
     the American Bankers Association, the Food Marketing 
     Institute, the National Association of Convenience Stores, 
     the American Public Welfare Association, the financial 
     services community, State agencies, and food advocates to 
     obtain information helpful to retail stores, the financial 
     services industry, and States in the conversion to electronic 
     benefits transfer, including information regarding--
       ``(1) the degree to which an electronic benefits transfer 
     system could be integrated with commercial networks;
       ``(2) the usefulness of appropriate electronic benefits 
     transfer security features and local management controls, 
     including features in an electronic benefits transfer card to 
     deter counterfeiting of the card;
       ``(3) the use of laser scanner technology with electronic 
     benefits transfer technology so that only eligible food items 
     can be purchased by food stamp participants in stores that 
     use scanners;
       ``(4) how to maximize technology that uses data available 
     from an electronic benefits transfer system to identify fraud 
     and allow law enforcement personnel to quickly identify or 
     target a suspected or actual program violator;
       ``(5) means of ensuring the confidentiality of personal 
     information in electronic benefits transfer systems and the 
     applicability of section 552a of title 5, United States Code, 
     to electronic benefits transfer systems;
       ``(6) the best approaches for maximizing the use of then 
     current point-of-sale terminals and systems to reduce costs; 
     and
       ``(7) the best approaches for maximizing the use of 
     electronic benefits transfer systems for multiple Federal 
     benefit programs so as to achieve the highest cost savings 
     possible through the implementation of electronic benefits 
     transfer systems.''.

     SEC. 6. CONFORMING AMENDMENTS.

       (a) Section 3 (42 U.S.C. 2012) is amended--
       (1) in subsection (a), by striking ``coupons'' and 
     inserting ``benefits'';
       (2) in the first sentence of subsection (c), by striking 
     ``authorization cards'' and inserting ``allotments'';
       (3) in subsection (d), by striking ``the provisions of this 
     Act'' and inserting ``sections 5(h) and 7(g)'';
       (4) in subsection (e)--
       (A) by striking ``Coupon issuer'' and inserting ``Benefit 
     issuer''; and
       (B) by striking ``coupons'' and inserting ``benefits'';
       (5) in the last sentence of subsection (i), by striking 
     ``coupons'' and inserting ``allotments''; and
       (6) by adding at the end the following:
       ``(v) `Electronic benefits transfer card' means a card 
     issued to a household participating in the program that is 
     used to purchase food.''.
       (b) Section 4(a) of such Act (7 U.S.C. 2013(a)) is 
     amended--
       (1) in the first sentence, by inserting ``and the 
     availability of funds made available under section 7'' after 
     ``of this Act'';
       (2) in the first and second sentences, by striking 
     ``coupons'' each place it appears and inserting ``electronic 
     benefits transfer cards or coupons''; and
       (3) by striking the third sentence and inserting the 
     following new sentence: ``The Secretary, through the 
     facilities of the Treasury of the United States, shall 
     reimburse the stores for food purchases made with electronic 
     benefits transfer cards or coupons provided under this 
     Act.''.
       (c) The first sentence of section 6(b)(1) of such Act (7 
     U.S.C. 2015(b)(1)) is amended--
       (1) by striking ``coupons or authorization cards'' and 
     inserting ``electronic benefits transfer cards, coupons, or 
     authorization cards''; and
       (2) in clauses (ii) and (iii), by inserting ``or electronic 
     benefits transfer cards'' after ``coupons'' each place it 
     appears.
       (d) Section 7 of such Act (7 U.S.C. 2016) is amended--
       (1) by striking the section heading and inserting the 
     following new section heading:


 ``ISSUANCE AND USE OF ELECTRONIC BENEFITS TRANSFER CARDS OR COUPONS'';

       (2) in subsection (a), by striking ``Coupons'' and all that 
     follows through ``necessary, and'' and inserting ``Electronic 
     benefits transfer cards or coupons'';
       (3) in subsection (b), by striking ``Coupons'' and 
     inserting ``Electronic benefits transfer cards'';
       (4) in subsection (e), by striking ``coupons to coupon 
     issuers'' and inserting ``benefits to benefit issuers'';
       (5) in subsection (f)--
       (A) by striking ``issuance of coupons'' and inserting 
     ``issuance of electronic benefits transfer cards or 
     coupons'';
       (B) by striking ``coupon issuer'' and inserting 
     ``electronic benefits transfer or coupon issuer''; and
       (C) by striking ``coupons and allotments'' and inserting 
     ``electronic benefits transfer cards, coupons, and 
     allotments'';
       (6) by striking subsections (g) and (h);
       (7) by redesignating subsections (i) through (q) (as added 
     by section 4) as subsections (g) through (o), respectively; 
     and
       (8) in subsection (j)(3)(B) (as added by section 4 and 
     redesignated by paragraph (7)), by striking ``(l)'' and 
     inserting ``(k)''.
       (e) Section 8(b) of such Act (7 U.S.C. 2017(b)) is amended 
     by striking ``coupons'' and inserting ``electronic benefits 
     transfer cards or coupons''.
       (f) Section 9 of such Act (7 U.S.C. 2018) is amended--

[[Page S11216]]

       (1) in subsections (a) and (b), by striking ``coupons'' 
     each place it appears and inserting ``coupons, or accept 
     electronic benefits transfer cards,''; and
       (2) in subsection (a)(1)(B), by striking ``coupon 
     business'' and inserting ``electronic benefits transfer cards 
     and coupon business''.
       (g) Section 10 of such Act (7 U.S.C. 2019) is amended--
       (1) by striking the section heading and inserting the 
     following:


    ``REDEMPTION OF COUPONS OR ELECTRONIC BENEFITS TRANSFER CARDS'';

     and
       (2) in the first sentence--
       (A) by inserting after ``provide for'' the following: ``the 
     reimbursement of stores for program benefits provided and 
     for'';
       (B) by inserting after ``food coupons'' the following: ``or 
     use their members' electronic benefits transfer cards''; and
       (C) by striking the period at the end and inserting the 
     following: ``, unless the center, organization, institution, 
     shelter, group living arrangement, or establishment is 
     equipped with a point-of-sale device for the purpose of 
     participating in the electronic benefits transfer system.''.
       (h) Section 11 of such Act (7 U.S.C. 2020) is amended--
       (1) in the first sentence of subsection (a), by striking 
     ``coupons'' and inserting ``electronic benefits transfer 
     cards or coupons,'';
       (2) in subsection (e)--
       (A) in paragraph (2)--
       (i) by striking ``a coupon allotment'' and inserting ``an 
     allotment''; and
       (ii) by striking ``issuing coupons'' and inserting 
     ``issuing electronic benefits transfer cards or coupons'';
       (B) in paragraph (7), by striking ``coupon issuance'' and 
     inserting ``electronic benefits transfer card or coupon 
     issuance'';
       (C) in paragraph (8)(C), by striking ``coupons'' and 
     inserting ``benefits'';
       (D) in paragraph (9), by striking ``coupons'' each place it 
     appears and inserting ``electronic benefits transfer cards or 
     coupons'';
       (E) in paragraph (11), by striking ``in the form of 
     coupons'';
       (F) in paragraph (16), by striking ``coupons'' and 
     inserting ``electronic benefits transfer card or coupons'';
       (G) in paragraph (17), by striking ``food stamps'' and 
     inserting ``benefits'';
       (H) in paragraph (21), by striking ``coupons'' and 
     inserting ``electronic benefits transfer cards or coupons'';
       (I) in paragraph (24), by striking ``coupons'' and 
     inserting ``benefits''; and
       (J) in paragraph (25), by striking ``coupons'' each place 
     it appears and inserting ``electronic benefits transfer cards 
     or coupons'';
       (3) in subsection (h), by striking ``face value of any 
     coupon or coupons'' and inserting ``value of any benefits''; 
     and
       (4) in subsection (n)--
       (A) by striking ``both coupons'' each place it appears and 
     inserting ``benefits under this Act''; and
       (B) by striking ``of coupons'' and inserting ``of 
     benefits''.
       (i) Section 12 of such Act (7 U.S.C. 2021) is amended--
       (1) in subsection (b)(3), by striking ``coupons'' each 
     place it appears and inserting ``electronic benefits transfer 
     cards or coupons'';
       (2) in subsection (d)--
       (A) in the first sentence--
       (i) by inserting after ``redeem coupons'' the following: 
     ``and to accept electronic benefits transfer cards''; and
       (ii) by striking ``value of coupons'' and inserting ``value 
     of benefits and coupons''; and
       (B) in the third sentence, by striking ``coupons'' each 
     place it appears and inserting ``benefits''; and
       (3) in the first sentence of subsection (f)--
       (A) by inserting after ``to accept and redeem food 
     coupons'' the following: ``electronic benefits transfer 
     cards, or to accept and redeem food coupons,''; and
       (B) by inserting before the period at the end the 
     following: ``or program benefits''.
       (j) Section 13 of such Act (7 U.S.C. 2022) is amended by 
     striking ``coupons'' each place it appears '' and inserting 
     ``benefits''.
       (k) Section 15 of such Act (7 U.S.C. 2024) is amended--
       (1) in subsection (a), by striking ``issuance or 
     presentment for redemption'' and inserting ``issuance, 
     presentment for redemption, or use of electronic benefits 
     transfer cards or'';
       (2) in the first sentence of subsection (b)(1)--
       (A) by inserting after ``coupons, authorization cards,'' 
     each place it appears the following: ``electronic benefits 
     transfer cards,''; and
       (B) by striking ``coupons or authorization cards'' each 
     place it appears and inserting the following: ``coupons, 
     authorization cards, or electronic benefits transfer cards'';
       (3) in the first sentence of subsection (c)--
       (A) by striking ``coupons'' and inserting ``a coupon or an 
     electronic benefits transfer card''; and
       (B) by striking ``such coupons are'' and inserting ``the 
     payment or redemption is'';
       (4) in subsection (d), by striking ``Coupons'' and 
     inserting ``Benefits'';
       (5) in subsection (e), by inserting ``or electronic 
     benefits transfer card'' after ``coupon'';
       (6) in subsection (f), by inserting ``or electronic 
     benefits transfer card'' after ``coupon'';
       (7) in the first sentence of subsection (g), by inserting 
     after ``coupons, authorization cards,'' the following: 
     ``electronic benefits transfer cards,''; and
       (8) by adding at the end the following:
       ``(h) Governing Law.--Fraud and related activities related 
     to electronic benefits transfer shall be governed by section 
     1029 of title 18, United States Code.''.
       (l) Section 16 (7 U.S.C. 2025) is amended--
       (1) in subsection (a)--
       (A) in paragraph (2), by inserting ``or electronic benefits 
     transfer cards'' after ``coupons''; and
       (B) in paragraph (3), by inserting after ``households'' the 
     following: ``, including the cost of providing equipment 
     necessary for retail food stores to participate in an 
     electronic benefits transfer system'';
       (2) by striking subsection (d);
       (3) by redesignating subsections (e) through (j) as 
     subsections (d) through (i), respectively;
       (4) in subsection (g)(5) (as redesignated by paragraph 
     (3))--
       (A) in subparagraph (A), by striking ``(A)''; and
       (B) by striking subparagraph (B);
       (5) in subsection (h) (as redesignated by paragraph (3)), 
     by striking paragraph (3); and
       (6) by striking subsection (i) (as redesignated by 
     paragraph (3)).
       (m) Section 17 of such Act (7 U.S.C. 2026) is amended--
       (1) in the last sentence of subsection (a)(2), by striking 
     ``coupon'' and inserting ``benefit'';
       (2) in subsection (b)(2), by striking the last sentence;
       (3) in subsection (c), by striking the last sentence;
       (4) in subsection (d)(1)(B), by striking ``coupons'' each 
     place it appears and inserting ``benefits'';
       (5) in subsection (e), by striking the last sentence;
       (6) by striking subsection (f); and
       (7) by redesignating subsections (g) through (k) as 
     subsections (f) through (j), respectively.
       (n) Section 21 of such Act (7 U.S.C. 2030) is amended--
       (1) by striking ``coupons'' each place it appears (other 
     than in subsections (b)(2)(A)(ii) and (d)) and inserting 
     ``benefits'';
       (2) in subsection (b)(2)(A)(ii), by striking ``coupons'' 
     and inserting ``electronic benefits transfer cards or 
     coupons''; and
       (3) in subsection (d)--
       (A) in paragraph (2), by striking ``Coupons'' and inserting 
     ``Benefits''; and
       (B) in paragraph (3), by striking ``in food coupons''.
       (o) Section 22 of such Act (7 U.S.C. 2031) is amended--
       (1) in subsection (b)--
       (A) in paragraph (3)(D)--
       (i) in clause (ii), by striking ``coupons'' and inserting 
     ``benefits''; and
       (ii) in clause (iii), by striking ``coupons'' and inserting 
     ``electronic benefits transfer benefits'';
       (B) in paragraph (9), by striking ``coupons'' and inserting 
     ``benefits''; and
       (C) in paragraph (10)(B)--
       (i) in the second sentence of clause (i), by striking 
     ``Food coupons'' and inserting ``Program benefits''; and
       (ii) in clause (ii)--

       (I) in the second sentence, by striking ``Food coupons'' 
     and inserting ``Benefits''; and
       (II) in the third sentence, by striking ``food coupons'' 
     each place it appears and inserting ``benefits'';

       (2) in subsection (d), by striking ``coupons'' each place 
     it appears and inserting ``benefits'';
       (3) in subsection (g)(1)(A), by striking ``coupon''; and
       (4) in subsection (h), by striking ``food coupons'' and 
     inserting ``benefits''.
       (p) Section 1956(c)(7)(D) of title 18, United States Code, 
     is amended by inserting ``electronic benefits transfer cards 
     or'' before ``coupons having''.
       (q) This section and the amendments made by this section 
     shall become effective on the date that the Secretary of 
     Agriculture implements an electronic benefits transfer system 
     in accordance with section 7 of the Food Stamp Act of 1977 (7 
     U.S.C. 2016) (as amended by this Act).
     

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