[Congressional Record Volume 141, Number 158 (Thursday, October 12, 1995)]
[Senate]
[Pages S15119-S15129]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. HATCH:
  S. 1314. A bill for the relief of Saeed Rezai; to the Committee on 
the Judiciary.


                       private relief legislation

  Mr. HATCH. Mr. President, I rise today to introduce private relief 
legislation on behalf of my constituents, Mr. Saeed Rezai, and his 
wife, Mrs. Julie Rezai.
  As my colleagues are aware, those immigration cases that warrant 
private legislation are extremely rare. In fact, it has been nearly 6 
years since I last introduced a bill to grant such relief. Indeed, I 
had hoped that this case would not require congressional intervention. 
Unfortunately, it is clear that private legislation is the only means 
remaining to ensure a thorough and comprehensive Justice Department 
review of a number of specific unresolved questions in Mr. Rezai's 
case.
  I wish to take a moment, Mr. President, to provide something by way 
of background to this somewhat complicated case and to explain the 
urgency of this legislation. Mr. Rezai first came to the United States 
in 1986. On June 15, 1991, he married his current wife, Julie, who is a 
U.S. citizen. Shortly thereafter, she filed an immigrant visa petition 
on behalf of her husband. Approval of this petition has been blocked, 
however, by the application of Sec. 204(c) of the Immigration and 
Nationality Act. Section 204(c) precludes the approval of a visa 
petition for anyone who entered, or conspired to enter, into a 
fraudulent marriage. The Immigration and Naturalization Service [INS] 
applied this provision in Mr. Rezai's case because his previous 
marriage ended in divorce before the conditions on his residence were 
lifted. In deportation proceedings following the divorce, the judge was 
very careful to mention that there was no proof of false testimony by 
Mr. Rezai, and he granted voluntary departure rather than ordering 
deportation because, in his words, Mr. Rezai ``may be eligible for a 
visa in the future.''
  Despite these comments by the immigration judge, the INS has refused 
to approve Mrs. Rezai's petition. An appeal of this decision is 
currently pending before the Board of Immigration Appeals [BIA]. In the 
meantime, Mr. Rezai appealed the initial termination of his lawful 
permanent resident status in 1990 and the denial of his application for 
asylum and withholding of deportation. In August of this year, the 
Tenth Circuit Court of Appeals denied this appeal and granted him 90 
days in which to leave the country voluntarily or be deported. Under 
current law, there is no provision to postpone Mr. Rezai's deportation 
pending the BIA's ruling on the current immigrant visa petition filed 
by his wife.
  Mr. President, there is no doubt that deportation would be the source 
of extraordinary hardship to both Mr. and Mrs. Rezai. Throughout all 
the proceedings of the past 4 years, no one including the INS, has 
questioned the validity of their current marriage. In fact, the many 
friends and acquaintances I have heard from have emphatically asserted 
that their marriage is as strong as any they have seen. Given the 
prevailing political and cultural climate in Iran, I would not expect 
that Mrs. Rezai will choose to make her home there. Mr. Rezai's 
deportation will thus cause either the destruction of their legitimate 
marriage or the forced removal of a U.S. citizen and her husband to a 
country unfamiliar to either of them, and in which they have neither 
friends nor family.
  It should also be noted that Mr. Rezai has been present in the United 
States for nearly a decade. During this time he has assimilated to 
American culture and has become a contributing member of his community. 
He has been placed in a responsible position of employment as the 
security field supervisor at Westminster College where he has gained 
the respect and admiration of both his peers and his superiors. In 
fact, I have received a letter from the interim president of 
Westminster College, signed by close to 150 of Mr. Rezai's associates, 
attesting to his many contributions to the college and the community. 
This is just one of the many, many letters and phone calls I have 
received from members of our community. Mr. Rezai's forced departure in 
light of these considerations would both unduly limit his own 
opportunities and deprive the community of his continued contributions.
  Finally, Mr. Rezai's deportation would be a particular hardship to 
his wife given the fact that she was diagnosed earlier this year with 
multiple sclerosis [MS]. She was severely ill for some time and was 
taking a number of medications for her condition. Although Mrs. Rezai's 
health since the initial diagnosis of MS has improved, her physician 
has stated that severe symptoms may return at any time and that rapid 
deterioration could ensue as a result of the stress being placed upon 
her by her husband's immigration proceedings.
  Mr. President, I firmly believe that we must think twice before 
enforcing an action that will result in such severe consequences as the 
destruction of Mr. and Mrs. Rezai's marriage and the endangering of 
Mrs. Rezai's already fragile health. At a minimum, the outstanding 
questions regarding the propriety of the denial of Mr. Rezai's current 
immigrant visa petition need to be addressed. The legislation I am 
introducing today will ensure that the necessary information is 
gathered to address these questions, that the Justice Department will 
conduct a comprehensive review of Mr. Rezai's case in light of this 
information and that Mr. Rezai's deportation will be stayed pending the 
outcome of this review.
                                 ______

      By Mr. DOLE (for himself, Mr. Moynihan, Mr. Warner, Mr. Heflin, 
        Mrs. Hutchison, Mr. Burns, Mr. D'Amato, Mr. DeWine, Mr. 
        Coverdell, Mr. Cochran, Mr. Faircloth, Mr. Brown, and Mr. 
        Stevens):
  S. 1315. A bill to designate the Federal Triangle Project under 
construction at 14th Street and Pennsylvania Avenue, Northwest, in the 
District of Columbia, as the ``Ronald Reagan Building and International 
Trade Center''; to the Committee on Environment and Public Works.


     the ronald reagan building and international trade center act

  Mr. DOLE. Mr. President, earlier today, I was joined by a number of 
my Senate colleagues, and by Congresswoman Andrea Seastrand of 
California in announcing the introduction of legislation to designate 
the Federal Triangle project as the ``Ronald Reagan Building and 
International Trade Center.''
  Like most who work in Washington, I have enjoyed watching the monthly 
progress made on the construction of what, upon its completion in 1997, 
will be an important addition to this city's architectural landscape.
  And in my view, Congresswoman Andrea Seastrand had come up with 
exactly the right name for the project.
  President Reagan always believed that Government and the private 
sector should be partners and not adversaries. And the Federal Triangle 
project--authorized during the Reagan administration--was constructed 
in that spirit.
  As Senator Moynihan, who is a cosponsor of this legislation, was the 
driving force behind congressional approval of the project. And he 
pointed out on the Senate floor in 1987 that the project's construction 
involved no appropriated Federal funds.
  Rather, money was borrowed from the Federal Financing Bank, and will 
be repaid with revenues derived from leasing office space. It is 
anticipated 

[[Page S 15120]]
that after 30 years, the Federal Government will own the building 
outright.
  It is also fitting to name a building that will house an 
international trade center after President Reagan, because no one stood 
stronger for free and fair trade than he did.
  While naming a building can certainly not repay the debt America owes 
to Ronald Reagan, it is a fitting tribute to a man who transformed this 
city, this country, and the entire world.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1315

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

     SECTION 1. DESIGNATION.

       The Federal Triangle Project under construction at 14th 
     Street and Pennsylvania Avenue, Northwest, in the District of 
     Columbia, shall be known and designated as the ``Ronald 
     Reagan Building and International Trade Center''.

     SEC. 2. REFERENCES.

       Any reference in a law, map, regulation, document, paper, 
     or other record of the United States to the building referred 
     to in section 1 shall be deemed to be a reference to the 
     ``Ronald Reagan Building and International Trade Center''.
                                 ______

      By Mr. KEMPTHORNE (for himself, Mr. Chafee, Mr. Baucus, Mr. Reid, 
        Mr. Kerrey, Mr. Dole, Mr. Daschle, Mr. Warner, Mr. Smith, Mr. 
        Faircloth, Mr. Inhofe, Mr. Thomas, Mr. McConnell, Mr. Jeffords, 
        Mr. Hatch, Mr. Simpson, Mr. Domenici, Mr. Burns, Mr. Craig, Mr. 
        Bennett, Mr. Exon, Mr. Conrad, Mr. Hatfield, and Mr. 
        Lautenberg):
  S. 1316. A bill to reauthorize and amend title XIV of the Public 
Health Service Act (commonly known as the ``Safe Drinking Water Act''), 
and for other purposes; to the Committee on Environment and Public 
Works.


                  the safer drinking water act of 1995

  Mr. KEMPTHORNE. Mr. President, just over a decade ago, the 
Environmental Protection Agency developed a research plan to improve 
our understanding about cryptosporidium, a tiny disease-carrying 
microbe that can show up in our drinking water supply. Not much 
happened with that study plan and cryptosporidium was not regulated by 
the agency. Unfortunately, the failure to carry out the research 
necessary to support a regulation led to a failure in public health 
protection. In the past several years, we have witnessed outbreaks of 
cryptosporidiosis, which we believe to have been water-borne, in Las 
Vegas, San Francisco, and Milwaukee. While not terribly harmful to most 
Americans, the microbe can prove fatal for those with weakened immune 
system.
  This tragedy could and should have been avoided. But the 
Environmental Protection Agency is not solely responsible for this 
failure of public health protection. The truth is that the current safe 
drinking law discourages the Environmental Protection Agency from 
concentrating its resources on regulating contaminants posing the 
highest health risks like cryptosporidium, a microbe scientists have 
known about since the 1970's. Instead of concentrating government 
resources on microbes causing acute and immediate health effects, the 
Safe Drinking Water Act requires EPA to regulate a long list of 
contaminants, regardless of whether or not they pose a threat to public 
health, regardless of whether they actually occur in drinking water, 
and oftentimes at the expense of regulating contaminants that pose a 
more serious and immediate health threat.
  After a 2\1/2\-year effort to reauthorize the present drinking water 
statute, I and my colleagues on the committee have come to the 
conclusion that we need a better, safer, smarter Safe Drinking Water 
Act. Congress must write a better law that ensures that the water 
Americans drink is safe, makes wiser use of government resources, 
corrects the mistakes and unintended consequences of existing law, and 
anticipates and addresses future drinking water concerns.
  Congress must write a law that gives EPA flexibility to set a 
drinking water standard based on peer reviewed science and the benefits 
and risks associated with contaminants. Congress must also commit the 
dollars to carry out the needed research to help identify those 
contaminants that pose the most serious health concern. Congress must 
insist on having a public record to educate the American public about 
the risks they face from a particular contaminant, and the costs to 
regulate it. Congress must also allow States and local governments to 
be full and independent partners in the development, implementation, 
and enforcement of drinking water regulations.
  Guided by these goals, supported by Republican and Democratic State 
and local officials who work every day to provide safe drinking water 
to their own families, friends, and neighbors, today I introduce 
legislation to renew and improve the Safe Drinking Water Act.
  I am joined in introducing this bill by Senator Chafee, the chairman 
of the Senate Environment and Public Works Committee; Senator Baucus, 
the ranking member of that committee; Senator Reid, the ranking member 
of the Senate Subcommittee on Drinking Water, Fisheries and Wildlife; 
and Senator Kerrey, who has been instrumental in negotiations last year 
and this year to bring sense into this particular public health 
statute. For 9 long months we have labored to produce a bill that we 
think will improve public health protection and is, at the same time, 
responsive to the need of States and communities across the country to 
be able to target scarce resources to high priority health risks, and 
not on trivial risks.
  This legislation combines the best provisions of the bill the Senate 
passed last year with improvements suggested by those responsible for 
providing safe drinking water. The bill protects public health better 
than current law, and it will not roll back or weaken existing 
standards and public health protection.
  I would like to touch on some of the highlights of the bill:
  First, the bill authorizes the commitment of Federal resources to 
assure that the Nation's drinking water supply is safe and makes sure 
that the money is targeted to our most serious problems. One billion 
dollars is authorized annually for a drinking water State revolving 
loan fund, which itself will be matched by the States with another 20 
percent. The committee recognizes that many communities are financially 
strapped and cannot afford to install treatment to ensure safe water 
supplies. This money will help fund compliance with drinking water 
standards, with special forgiveness provisions for disadvantaged 
communities.
  The bill also authorizes roughly $53 million for health effects 
research, especially research into the health effects of 
cryptosporidium, disinfectants and disinfection byproducts, arsenic, 
and related research on sensitive population groups, like children, 
elderly, pregnant women, and those with serious illnesses. As I 
reviewed our progress towards improving the quality of the Nation's 
drinking water, I was especially dismayed to learn how poor our 
research efforts have been. Poor research means poor standards, and 
either poor health protection or over-protection at an unnecessarily 
burdensome cost. Therefore, we have included in the bill a 10 percent 
set-aside of the top of the State revolving loan fund that the 
administrator may use to support essential health effects research.
  Third, the bill requires EPA to use the best available peer-reviewed 
science in identifying and regulating contaminants. It repeals the 
requirement that the agency regulate 25 new contaminants every 3 years, 
and sets up a process that will ensure that EPA has the authority and 
the resources to regulate those contaminants that pose the greatest 
risk, instead of doing those that pose a trivial risk. Furthermore, to 
help the agency set priorities, it is required to address only those 
contaminants that actually occur in drinking water, or have a 
substantial likelihood of doing so.
  Fourth, the bill makes modifications to the current method for 
setting drinking water standards. Today, the administrator is always 
required to set a standard at the level that is technologically 
feasible. In some instances, this does not make sense: The costs can be 
excessively high in relation to the health benefits. Under this bill, 
we 

[[Page S 15121]]
allow the administrator to set a standard at a different level when it 
makes sense to do so.
  In preparation for setting every new standard, the administrator will 
conduct a full analysis of the health risk reduction benefits that can 
be achieved from a maximum contaminant level that is technologically 
feasible, and other levels that might be appropriate to consider on the 
basis of risk, or benefit-cost. That analysis will be published for 
public comment and then becomes the basis for making a decision about 
whether the technologically feasible level is justified, or whether 
some other level is appropriate.
  If the technologically feasible level is not justified, looking at 
costs to those public water systems serving over 10,000 people and the 
costs to those systems that are not likely to get a variance, the 
administrator may propose a maximum contaminant level that is 
justified. If justified, however, the administrator will be required to 
promulgate a standard that is as close to the health goal as is 
feasible.
  Fifth, the bill establishes new deadlines for the issuance of some 
very important contaminants. These deadlines are consistent with the 
EPA's desire to have flexibility to focus on higher priority 
contaminants, and, where necessary, allows the administrator time to 
carry out critical research to support the standard setting process. 
The bill also preserves the negotiated rulemaking for disinfectants and 
disinfection byproducts, which includes cryptosporidium, and its makes 
clear that the administrator has the authority to consider and balance 
the risks between the disinfection byproducts and microbial 
contaminants.
  Sixth, the bill provides new authority for the administrator to 
regulate contaminants on an interim basis where there is an urgent 
public health concern.
  Seventh, the bill strengthens the existing partnership between the 
Federal Government and State government in the administration and 
implementation of the Safe Drinking Water Act. It preserves the strong 
role for the Federal Government in developing drinking water standards 
and supporting State primacy, but allows States the flexibility to 
tailor Federal monitoring and other requirements to meet the needs in 
their States. While the bill makes a few changes in enforcement 
provisions, the bill retains the current law's emphasis on compliance-
oriented strategies to encourage better compliance among public water 
systems, rather than formal, punitive enforcement actions.
  Eighth, the bill establishes a new process by which States may grant 
variances to small systems, those serving under 10,000, that are unable 
to comply with Federal drinking water requirements. As part of 
receiving a variance, a public water system will be required to install 
appropriate affordable technology that will result in an overall 
improvement in drinking water quality during the period of the 
variance. Rather than adjusting the overall national standard to a 
level that is affordable for the smallest of systems, the committee 
chose to help these same systems through a new variance provision. The 
variances must adequately protect public health, and citizens can 
petition EPA to overturn a variance granted by a State if that 
statutory requirement is not met.
  Ninth, the bill helps small water systems, usually in rural areas, 
provide safe and affordable drinking water to their communities. 
Technical assistance, State revolving loan funds, a requirement that 
EPA identify treatment technologies affordable for small systems, and a 
new emphasis on helping systems to develop the financial, managerial, 
and technical capacity to meet Federal drinking water requirements, 
will do much to encourage the States and EPA to redirect time and 
attention to the problems and concerns of these smallest water systems.
  Finally, I believe the bill looks toward the future, anticipates the 
drinking water needs and concerns of the 21st century, and establishes 
a framework to address these issues. In particular, the bill provides 
for voluntary, locally-driven, incentive based partnerships to provide 
for the protection of source water. It is crafted to avoid Federal 
involvement in local land-use planning issues and to allow real source 
water quality problems to be addressed in a cooperative, non-
adversarial process. We have seen great success with local watershed 
planning initiatives, and I believe empowering local communities to 
address source water concerns is the right way to go.
  Also, the bill recognizes that many public water systems are having 
trouble meeting Federal requirements. The reasons are many. Sometimes 
it is a lack of an adequately trained operator for the treatment 
system, or a lack of skill in capital planning, or an inadequate rate-
base to support the costs of compliance. Sometimes the problem is a 
result of the rapid pace at which new Federal regulations were being 
promulgated and the difficulties in understanding, financing, and 
implementing them.
  Whatever the reason, the bill includes a new section that asks the 
States to develop a strategy for helping public water systems meet the 
demands being made of them, to have the legal authority to prevent new 
water systems from starting that don't have the financial, technical, 
and managerial capacity to meet Federal requirements, and to report on 
those systems that have a significant history of noncompliance. States 
retain authority over training and certification of public water system 
operators, but the bill will increase the number of trained and 
certified operators.
  Like source water protection, the capacity development strategy 
depends largely on nonregulatory, noncommand, and control approaches to 
addressing a long-term problem. As such, I believe they will break new 
ground in terms of the Federal-State partnership, and in terms of 
building local community resources to address drinking water problems.
  Mr. President, I urge my colleagues to join Senators Chafee, Kerrey, 
Baucus, Reid, Inhofe, Warner, Faircloth, McConnell, Smith, Thomas, 
Jeffords, Simpson, Burns, Domenici, Craig, Exon, and I in sponsoring 
this bill. It has the strong support of State and local officials and 
water treatment experts. The National Governors Association, the U.S. 
Conference of Mayors, the National Conference of State Legislators, the 
League of Cities, the National Association of Counties, the American 
Water Works Association, the Association of Metropolitan Water 
Agencies, the Rural Water Association and the Association of State 
Drinking Water Administrators have united together to support this 
bill.
  These endorsements are important. Congress ought to listen to those 
directly responsible for implementing the Drinking Water Act. I have 
never met a single mayor, Governor, or public water official who would 
do anything to threaten public health. Not only do their own families 
drink the water they provide, they know that failure to provide safe 
water will have repercussions.
  In 9 months of discussions with these State and local leaders, two 
messages emerged. Their first message was that we must recognize the 
tremendous progress this country has made in providing Americans with 
safe drinking water. The United States is numbered among those 
countries of the world that enjoy the safest drinking water. Nowhere 
else can 243 million people turn on their taps and drink the water with 
confidence and without fear. We ought to be grateful for that, and 
proud of America's leadership in assuring that our drinking water is 
safe and in helping other countries to do the same for their people.
  It has not always been that way. There was a time when our 
grandparents and great grandparents regularly and routinely died of 
cholera and typhoid contracted through the water they drank. Their 
journals are filled with the sorrows of untimely deaths that swept 
through whole communities. In the United States today, that pain and 
suffering rarely occurs.
  But when it does happen, it points out the flaws of the current law, 
and why it must be reformed. And that leads to the second message from 
State and local leaders.

  State and local governments are overwhelmed by the new and changing 
administrative requirements imposed by the Federal Government, the 
rigidity with which they are applied, the lack of financial resources 
to do the job, and the micromanagement from Federal agencies. While 
many States, including Idaho, have fought difficult 

[[Page S 15122]]
battles to impose fees to cover drinking water program costs in their 
States, they see the Federal Government constantly increasing their 
work load and the administrative requirements. At the same time, the 
Federal financial commitment to the drinking water program, in relation 
to other environmental programs, is falling.
  The irony is that Federal water policy leaders agree with their State 
and local partners. President Clinton's former Deputy EPA Administrator 
Robert Sussman bluntly sums up the issue:

       Safe Drinking Water Act implementation has harmed the 
     agency's credibility by becoming a potent symbol of the 
     rigidity and costliness of federal mandates on local 
     governments and the overprotectiveness of the EPA standard-
     setting process. Reforms in both laws should strive for 
     maintaining environmental protection while achieving more 
     flexibility in priority setting, lower compliance costs, and 
     greater state and local involvement in decision making.

  Congress' own watchdog, the General Accounting Office agrees with Mr. 
Sussman. To quote from two recent reports:

       States often defer or eliminate important elements of their 
     drinking water programs in order to devote resources to 
     developing and implementing a growing list of regulations. 
     ``For example, 12 drinking water officials from 16 states 
     noted that they were spending more resources on developing 
     new programs and regulations, as required by the 1986 SDWA 
     amendments, than on conducting vital water system inspections 
     (sanitary surveys) or compliance reviews. These managers 
     expressed concern that, as a result, compliance rates as well 
     as water quality could be suffering.
       94% of the state drinking water program officials say that 
     mandatory implementation of new program requirements within 
     federally mandated time frames has caused fiscal stress in 
     their state programs and has caused some state programs to 
     discontinue or reduce activities they consider to be more 
     environmentally significant.

  Senators who need further confirmation need only consult water 
treatment experts in their States. In my own State, McCall, ID, 
population 2,000, must invest in a new wastewater treatment plant, a 
new filtration system and make improvements in its infrastructure to 
deliver drinking water. As one community leader told me the other day, 
``We've seen a 500 percent increase in our sewer rates, and we're 
struggling. If we have to go back and raise rates again, or float a 
bond, or whatever it takes to finance compliance with Federal 
requirements, we need to know that what we're being asked to do makes 
sense in terms of public health protection.''
  Or, as another public utility official told me, every week he meets 
with residents struggling to afford present utility rates. ``When I sit 
across from a woman with her three small children, trying to find ways 
to accommodate her limited budget so that she can cover other family 
necessities, I want to know that when I have to raise rates, I can tell 
her that it is really necessary to keep her kids from getting sick 
through the water they drink.''
  It is getting harder and harder to convince citizens that Federal 
drinking water regulations make sense. The current law's inflexibility 
and needless rigidity emphasizes quantity of regulation over quality of 
regulation. By law EPA must regulate a specific list of 83 
contaminants, plus an additional 25 contaminants every 3 years, 
regardless of whether those contaminants occur in drinking water or 
pose a threat to public health. EPA is absolutely precluded from 
concentrating its resources on those contaminants in drinking water 
that present the highest health risk. If it wants to do that, EPA has 
to persuade Federal judges and plaintiffs to let them extend their 
deadlines on lesser priority contaminants. So long as current law 
remains in place, it does not matter what we as Members of Congress 
think. It does not matter what the administrator thinks, nor what the 
mayor of Milwaukee and his residents think.
  Furthermore, under current law, it does not matter whether the 
Federal standard for a particular contaminant is appropriate. It does 
not allow EPA the time or the money to write regulations based on good, 
peer-reviewed science and good risk assessments, and EPA must always 
write the standard based on what is technologically feasible, without 
considering the benefits and risks of regulating to that strict level. 
As a result, EPA's credibility as a protector of public health is 
tarnished. Where the science and the costs do not justify the standard, 
EPA is forced either to manipulate the process to get a reasonable 
result, to avoid regulating until it has better information, or to 
regulate strictly.
  These are the problems the legislation being introduced today wants 
to solve. As I said earlier, this bill takes the best provisions of the 
bill the Senate passed last year and builds on them. It is a good bill 
that will improve public health protection. I ask unanimous consent 
that a section-by-section explanation of the bill be printed in the 
Record.
  In conclusion, recent outbreaks of cryptosporidiosis, the experience 
of our State and local partners, and the responsibility to provide safe 
drinking water into the 21st century require us to write a better, 
safer, smarter Safe Drinking Water Act. I look forward to working with 
all those who share this goal to achieve this goal.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Safe Drinking Water Act Amendments of 1995--Section-by-Section Analysis


         section 1. short title; table of contents; references

       The bill is entitled the ``Safe Drinking Water Act 
     Amendments of 1995''.


                          section 2. findings

       The Congress finds: that a substantial number of public 
     water systems are having difficulty meeting the requirements 
     of the Safe Drinking Water Act because of technical and 
     financial limitations and need greater assistance; that 
     modifications in administration of the program could promote 
     a more productive partnership with the States; that the 
     quality of the science supporting drinking water standards 
     needs improvement; and that risk assessment and benefit-cost 
     analysis are important and useful tools to improve the 
     efficiency and effectiveness of drinking water regulations.


                 section 3. state revolving loan funds

       The bill establishes a new State Revolving Loan Fund (SRF) 
     program. The Federal Government will provide capitalization 
     grants to State-run SRFs. States will use these funds, along 
     with their own contributions, to make grants and loans to 
     public water systems to facilitate compliance with the Safe 
     Drinking Water Act. The bill includes an authorization of $1 
     billion per year through 2003 for capitalization grants.
       The Administrator may enter into an agreement with a State 
     to provide capitalization grants for a Revolving Loan Fund, 
     if the State establishes a loan fund and agrees to 
     conditions, including providing a 20% State match, use of 
     loans in compliance with an intended use plan, and proper 
     financial management.
       All of the States already operate SRFs for wastewater 
     treatment construction under the Clean Water Act. A State may 
     consolidate management of the new drinking water SRF with its 
     existing clean water loan fund, provided that accounting for 
     drinking water loans and repayments remains separate. A 
     Governor of a State may transfer up to 50 percent of the 
     funds provided to the drinking water loan fund each year to 
     the loan fund authorized under the Clean Water Act. An equal 
     amount may be taken from the clean water fund in a State and 
     transferred to the drinking water fund. The authority to 
     establish priorities for loans and grants to public water 
     systems is to remain with the State agency implementing the 
     drinking water program.
       In fiscal years 1994 through 1997, funds are allocated 
     among the States based on a grant formula used to allocate 
     funds for Public Water System Supervision (PWSS) grants, a 
     long-standing grant program that provides funds to the States 
     to support administration and enforcement of the existing 
     law. After fiscal year 1998, funds are to be allocated 
     according to a new formula developed by the Administrator 
     based on a survey of drinking water needs in each State. This 
     needs assessment is already underway.
       In addition to the allocation for States, 1.5% of the 
     Federal grant funds are reserved for Indian tribes and 0.5% 
     of the funds are reserved for territories. Indian tribes, 
     territories, and the District of Columbia may receive direct 
     grants rather than loans.
       Each State is authorized to reserve up to 2 percent of its 
     grant or $300,000, whichever is greater, to provide technical 
     assistance to small water systems. Assistance may include 
     financial management, planning and design, source water 
     protection programs, system restructuring, and other measures 
     for capacity development or water treatment.
       Projects eligible to receive loan and grant assistance are 
     capital expenditures for: compliance with national primary 
     drinking water regulations; upgrading of drinking water 
     treatment systems; replacement of private wells where they 
     present a significant health threat; and restructuring of 
     systems and the development of alternative sources of water 
     supply.
       Drinking water systems eligible for assistance are 
     community water systems (whether publicly or privately owned) 
     and non-community water systems that are owned by a 

[[Page S 15123]]
     government or non-profit organization. States may not provide 
     assistance to systems with a history of noncompliance, unless 
     steps are taken to assure that the system will have the 
     capacity to comply with requirements of the Safe Drinking 
     Water Act over the long term.
       States may assist disadvantaged communities through grants 
     and forgiveness of loan principal. Each State is to develop 
     its own affordability criteria to determine which public 
     water systems are eligible for grants, rather than loans. 
     States may assist disadvantaged communities by forgiving a 
     part of a loan or by extending the repayment period for a 
     loan to up to 30 years. The total amount of grants and loan 
     forgiveness provided by a State in any fiscal year may not 
     exceed 30% of the amount of its capitalization grant from 
     EPA.
       Each State may reserve up to 4% of the capitalization grant 
     for administration of the SRF fund. In addition, a State may 
     use a portion of the capitalization grant to support its 
     Public Water System Supervision program. The State may use 
     up to 10 percent of its annual grant to support programs 
     for source water protection and capacity development.


             Section 4. Selection of contaminants; schedule

       The Safe Drinking Water Act Amendments of 1986 required EPA 
     to issue standards for 83 specific contaminants by not later 
     than 1989. That work has largely been completed, but EPA has 
     yet to issue new standards for arsenic, sulfate, radon and 
     other radionuclides. The 1986 Amendments also required EPA to 
     establish standards for an additional 25 contaminants every 3 
     years beginning in 1989. EPA has not issued any standards to 
     comply with this requirement but has proposed regulations for 
     12 disinfection byproducts and for Cryptosporidium in partial 
     fulfillment of this duty. An additional 13 contaminants 
     (Known as the Phase Vib rule) are under study.
       The bill repeals the requirement that EPA regulate an 
     additional 25 contaminants every 3 years. EPA is required to 
     complete regulations for 12 disinfectants and disinfection 
     byproducts, the Enhanced Surface Water Treatment Rule and a 
     national primary drinking water regulation for 
     Cryptosporidium.
       Not later than July 1, 1996, the Administrator is to 
     publish a list of high priority contaminants not currently 
     regulated. EPA is to develop a research plan for each of the 
     listed contaminants to acquire information on health effects 
     and the occurrence of the contaminant sufficient to determine 
     whether the contaminant should be regulated under the Act.
       Beginning in the year 2001, EPA is required to make a 
     regulatory decision with respect to at least 5 of the listed 
     contaminants every 5 years. EPA may decide that the 
     contaminant should not be regulated, that there is 
     insufficient information to make a determination, or that a 
     maximum contaminant level or treatment technique for the 
     contaminant should be promulgated under the Safe Drinking 
     Water Act. The Administrator is to establish national primary 
     drinking water regulations for those contaminants that occur 
     at concentration level and at frequencies of public health 
     concern.


        Section 5. Risk Assessment, management and communication

       The bill requires improvements in the scientific 
     foundations for drinking water standards and better public 
     communication of the potential risks of adverse health 
     effects associated with contaminants in drinking water.
       The Administrator is to conduct a benefit-cost analysis for 
     each national primary drinking water regulation containing a 
     maximum contaminant level (MCL) or treatment technique before 
     it is proposed. The analysis will also include 
     consideration of alternative MCLs or treatment 
     requirements. The study is to include a determination of 
     the costs and benefits associated with each alternative 
     MCL or treatment technique relative to the other standards 
     under consideration.
       The analysis is to incorporate information on risks to 
     subgroups that may be at greater risk than the general 
     population for adverse health effects as the result of 
     exposure to the contaminant. The Administrator is to publish 
     and seek comment on the study and is to use an advance notice 
     of proposed rulemaking to seek comment whenever the costs of 
     the national primary drinking water regulation are expected 
     to exceed $75 million.


            Section 6. Standard-setting; review of standards

       Standard-setting under the current Safe Drinking Water Act 
     is a two-step process. First, EPA identifies a concentration 
     level for a contaminant below which there will be no adverse 
     effect on human health. This is called the maximum 
     contaminant level goal or MCLG. For cancer-causing 
     substances, the MCLG has always been set at zero.
       In a second step, EPA sets the actual enforceable standard, 
     called the maximum contaminant level or MCL, as close to the 
     goal as feasible. Feasible means the level that can be 
     reached using the best available treatment technology that is 
     affordable for large, regional drinking water systems.
       This approach to standard-setting is taken because the 
     majority of Americans (80%) receive their drinking water from 
     large systems and economies of scale in treatment technology 
     make safe water very affordable.
       On the other hand, this approach to standard setting has 
     caused problems with implementation of the Act. First, 
     standards written under the approach taken by current law can 
     impose very high costs on households served by small systems. 
     Second, for some contaminants that occur at relatively low 
     concentrations and are regulated for their cancer-causing 
     effects with a goal of zero exposure, the current approach 
     has led to high costs per cancer case avoided. And third, 
     treatment techniques employed to reduce the risk from some 
     contaminants may actually increase the health risks posed by 
     other contaminants in drinking water. For instance, 
     chlorination of drinking water to kill pathogenic organisms 
     increases cancer risks from chemicals, called disinfection 
     byproducts, that form in reaction with the chlorine.
       To address these problems, the bill provides EPA with 
     discretion to consider the benefits and costs and the 
     potential for off-setting health risks associated with 
     proposed standards. In addition to this standard-setting 
     flexibility, the bill amends the variance provisions of the 
     law to ensure that small systems are not required to 
     employ treatment technologies that are unaffordable for 
     their consumers.
       The bill makes the following changes to the standard 
     setting authority of the Safe Drinking Water Act:
       1. EPA is authorized to set the maximum contaminant level 
     goal (MCLG) for a contaminant that is a known or probable 
     human carcinogen at a level other than zero, if the 
     Administrator determines that there is a threshold below 
     which there is unlikely to be any increase in cancer risk and 
     the MCLG is set at the threshold level with an adequate 
     margin of safety;
       2. At the time that the Administrator promulgates a maximum 
     contaminant level (MCL), the Administrator must also publish 
     a determination as to whether the benefits of the MCL justify 
     the costs;
       3. EPA is authorized to set a maximum contaminant level at 
     other than the level that is as close to the goal as 
     feasible, if application of the treatment techniques at the 
     feasible level would increase health risks from other 
     contaminants; this authority may be used to set the MCL or 
     treatment technique for the contaminant and for other 
     contaminants at a level that minimizes the overall health 
     risk;
       4. The Administrator is given discretionary authority to 
     establish less stringent standards (than feasible), when the 
     Administrator determines that the benefits of a maximum 
     contaminant level set at the feasible level would not justify 
     the costs to systems that must comply with the standard or 
     the contaminant occurs almost exclusively in small systems; 
     if EPA uses this authority, the standard is to be set at a 
     level that maximizes health risk reduction at a cost that is 
     justified by the benefits;
       5. The authority to set less stringent standards based on a 
     benefit-cost determination is not available for the 
     regulation of disinfectants and disinfection byproducts (in 
     Stage I or II) or to address the threat of Cryptosporidium; 
     and
       6. A determination that the health benefits of a standard 
     do or do not justify the costs can only be set aside by a 
     court, if it finds that the Administrator's determination is 
     arbitrary and capricious.
       The requirement in current law that the Administrator 
     periodically review and revise each national primary drinking 
     water regulation is extended from 3 years (in current law) to 
     6 years. Revision to standards are to maintain or provide for 
     greater protection of human health. Existing standards may 
     only be made less stringent in the future, if new science 
     demonstrates that the current level of health protection can 
     be achieved by a less stringent standard.


                           Section 7. Arsenic

       Arsenic is currently regulated under the Safe Drinking 
     Water Act. The MCL is 50 parts per billion. Although arsenic 
     is known human carcinogen by ingestion, the current standard 
     was not established to address this adverse effect. The 1986 
     Amendments required the arsenic standard to be revised. EPA 
     has not completed this duty because of substantial scientific 
     uncertainty about the cancer-causing effect of arsenic at 
     very low doses. If the arsenic standard were revised based on 
     current policy, the standard might be set as low as 5 parts 
     per billion. A standard at this level may impose unnecessary 
     compliance costs, if there is a threshold for the cancer-
     causing effect of arsenic that is substantially above this 
     level.
       This bill allows additional time for research to resolve 
     this scientific uncertainty. The deadline for revising the 
     national primary drinking water regulation for arsenic is 
     delayed until January 1, 2001. The Administrator is to adopt 
     a research plan to resolve the outstanding questions with 
     respect to the carcinogenic effects of low levels of exposure 
     to arsenic within 180 days of enactment. Prior to proposing a 
     revised arsenic standard, the Administrator is to conduct a 
     formal review of the research results and consult with the 
     Science Advisory Board.


                            Section 8. Radon

       The Safe Drinking Water Act Amendments of 1986 required EPA 
     to promulgate a national primary drinking water regulation 
     for radon by 1989. EPA proposed a standard at 300 picocuries 
     per liter (pC/L) in 1991. Congress suspended action on this 
     regulation pending a review of the costs and benefits of the 
     drinking water standard relative to other risks from radon in 
     the environment.
       The bill directs EPA to promulgate a standard for radon not 
     later than 180 days after enactment. The standard is to be 
     established at 3000 pcC/L, a concentration that 

[[Page S 15124]]
     will reduce the health risks from radon in drinking water caused by 
     inhalation (breathing radon that evaporates from water) to 
     levels commensurate with risks from radon in outdoor air.
       Under the provisions of the bill, EPA may subsequently 
     revise the standard, but only if the Administrator 
     determines, and the National Academy of Sciences and the 
     Science Advisory Board concur, that revision is appropriate 
     to address risks from ingestion (swallowing radon in the 
     drinking water). The revised standard is to be no more 
     stringent than necessary to reduce the combined inhalation 
     and ingestion risk from radon to a level equivalent to the 
     inhalation risk from radon in outdoor air at the national 
     average level.


                           section 9. sulfate

       The 1986 Amendments required EPA to establish a standard 
     for sulfate. EPA has not completed this duty for two reasons. 
     First, scientific information is not sufficient to determine 
     the dose-response relationship for sulfate with a high degree 
     of confidence. Second, because persons become quickly 
     acclimated to sulfate in their drinking water, the adverse 
     health effect from sulfate exposure (diarrhea) is experienced 
     primarily by travelers, new residents and infants. In a rule 
     proposed by EPA in December, 1994, the preferred option to 
     protect these special populations relies on bottled water and 
     public education.
       The bill authorizes the Administrator to use public 
     education and alternative water supplies (bottled water), 
     rather than centralized treatment, to reduce the costs of a 
     national primary drinking water regulation for sulfate. The 
     Administrator is directed to complete a rulemaking for 
     sulfate not later than 2 years after enactment.
       The maximum contaminant level for sulfate promulgated under 
     the Safe Drinking Water Act is not to be used by the 
     Administrator for ground water remediation decisions under 
     CERCLA or RCRA, unless the Administrator engages in a 
     separate rulemaking under the authority of those statutes to 
     establish a remediation standard for sulfate.


  section 10. technology and treatment techniques; technology centers

       At the time that the Administrator promulgates a national 
     primary drinking water regulation, the bill directs EPA to 
     identify the treatment technologies that are feasible for 
     systems of various sizes, including systems serving: between 
     3,300 and 10,000 persons; between 500 and 3,300 persons; and 
     between 25 and 500 persons. The list of feasible technologies 
     may also include package units for small systems and point of 
     entry treatment equipment.
       The Administrator is directed to make grants to 
     institutions of higher education to establish no fewer than 5 
     centers that will provide training and technical assistance 
     to small public water systems. Appropriations of $10 million 
     per year through the year 2003 are authorized for this 
     purpose.


                section 11. filtration and disinfection

       The 1986 Amendments required EPA to issue rules requiring 
     filtration for all systems served by surface water sources 
     and disinfection by all systems. The Surface Water Treatment 
     Rule implemented the filtration and disinfection requirements 
     for systems served by surface water sources and became 
     effective in 1991. The disinfection requirement for systems 
     served by ground water sources has not been promulgated.
       The bill postpones promulgation of rules for the 
     disinfection of drinking water from ground water sources 
     until the Stage II rule for disinfectants and disinfection 
     byproducts is issued. This will ensure that potential risks 
     from disinfection byproducts are balanced with the benefits 
     of disinfecting ground water supplies. The Administrator is 
     authorized, in consultation with the States, to develop 
     criteria to be applied by the States to determine which 
     systems relying on ground water sources are to use 
     disinfection.
       The Administrator is directed to publish guidance to 
     accompany the proposal of the Enhanced Surface Water 
     Treatment Rule that identifies filtration technologies that 
     are feasible for public water systems relying on surface 
     water serving fewer than 3,300 persons.


               section 12. effective date for regulations

       Section 1412(b)(1)) of current law is amended to require 
     compliance with national primary drinking water regulations 
     no later than 3 years after promulgation (extended from 18 
     months under current law). The compliance deadline can be 
     extended for up to 2 years in general (by the Administrator) 
     or for a particular public water system (by a State), if it 
     is determined that additional time is needed for the capital 
     improvement projects that will be necessary to meet new 
     treatment requirements.


                  section 13. variances and exemptions

       Public water systems may get a variance from a national 
     primary drinking water regulation under current law, if the 
     quality of their source water makes it impossible to comply 
     with the MCL even when best available treatment technology is 
     employed. However, under current law the variance may only be 
     granted after the best available treatment system has been 
     installed and has failed to achieve the standard. This 
     approach does not provide certainty for public water systems, 
     because it forces investments in costly treatment plants, 
     before the system can be assured that the investment will 
     allow the system to come into compliance with the Act. The 
     bill modifies the variance authority allowing public water 
     systems to receive a variance on the condition that they 
     install and operate best available treatment technology.


                       section 14. small systems

       The bill also modifies the variance provisions of the Act 
     to authorize variances for small systems that cannot afford 
     to comply with national primary drinking water regulations.
       This new variance authority is to be exercised by the 
     States. A State may grant the owner or operator of a public 
     drinking water system serving 10,000 or fewer persons a 
     variance from compliance with a maximum contaminant level 
     or treatment technique of a national primary drinking 
     water regulation if a system cannot afford to comply with 
     the regulation and adequate protection of public health is 
     ensured. The variance is to provide for the use of the 
     best available treatment technology that is affordable for 
     small systems.
       A system that applies for a variance from a regulation 
     under this subsection is not subject to enforcement for a 
     violation of the regulation, until a variance is either 
     granted or denied. If a variance is granted, the system has 
     up to 3 years to comply with the terms of the variance. The 
     variance is in effect for 5 years and reviewed every 5 years 
     thereafter. A person who is served by the system seeking a 
     variance may petition the Administrator to object to the 
     granting of a variance, if the provisions of the variance are 
     not in compliance with the Act.
       A variance is not available for any contaminant regulated 
     before January 1, 1986 or for an MCL or treatment technique 
     intended to reduce the risks from pathogenic organisms in 
     drinking water.


           section 15. capacity development; finance centers

       There are more than 200,000 public water systems in the 
     United States. Some small systems, most often those owned and 
     operated by groups of homeowners or other non-governmental 
     entities, do not have the technical, financial or managerial 
     capacity to comply with the requirements of the Safe Drinking 
     Water Act. The bill includes several provisions to assist 
     these systems to improve capacity.
       Within 4 years of enactment, each State is to develop and 
     implement a capacity development strategy to assist public 
     water systems that do not have the technical, managerial and 
     financial capacity. The drinking water primacy agency in the 
     State is to report to the Governor 2 years after the strategy 
     is adopted and every 3 years thereafter on progress toward 
     improving the technical, financial and managerial capacity of 
     public water systems in the State.
       Each State is to obtain the legal authority or other means 
     to prevent the startup of new public water systems that do 
     not have the technical, managerial or financial capacity to 
     comply with the requirements of the Safe Drinking Water Act. 
     States that have not adopted this authority lose 5% of their 
     SRF grant in 1999, 10% in 2000 and 15% each year thereafter.
       Within 1 year, each State is to prepare a list of public 
     water systems that are in significant noncompliance with the 
     requirements of the Safe Drinking Water Act. The State is to 
     report on its efforts to bring such systems into compliance, 
     through capacity development or enforcement actions, 5 years 
     after enactment.
       Grants to the existing network of Environmental Finance 
     Centers are authorized at $2.5 million per year through the 
     year 2003. The Centers are directed to establish a capacity 
     development clearinghouse for public water systems.


           section 16. operator and laboratory certification

       Each community water system or nontransient noncommunity 
     system receiving assistance from a State Revolving Loan Fund 
     is to be operated by a trained and certified operator. The 
     Administrator is to initiate a partnership with the States to 
     develop recommendations regarding operator certification and 
     to publish information for the States to use in designing 
     training programs. The determination as to the level of 
     training necessary to receive certification is to remain with 
     the States.
       If a system that has received assistance is operated by a 
     person who is not certified, the Administrator is to withhold 
     funds from the SRF capitalization grant of the State in an 
     amount equal to the assistance that was provided to the 
     system. Systems receiving assistance for the first time are 
     to make a commitment to train operators before new treatment 
     equipment supported by SRF loans or grants goes into 
     operation.
       The Administrator's guidance may also cover certification 
     for laboratories that perform testing to meet the monitoring 
     requirements of national primary drinking water regulations.


        section 17. source water quality protection partnerships

       As currently written, the Safe Drinking Water Act focuses 
     principally on monitoring and treatment of drinking water to 
     protect public health. Although the 1986 Amendments added 
     pollution prevention provisions for sole source aquifers and 
     the areas around wellfields for public systems, protecting 
     the quality of source water to avoid the expense of treating 
     contaminated water has not been 

[[Page S 15125]]
     a major part of the national program. Building on the lessons from the 
     wellhead protection efforts made under the 1986 Amendments, 
     the bill authorizes a new source water quality protection 
     partnership program to encourage the development of locally-
     driven, voluntary incentive-based efforts by public water 
     systems, local governments and private parties to respond to 
     contamination problems that would otherwise require 
     treatment.
       The bill provides for the delineation of source water 
     protection areas for each public water system and, for 
     priority source water areas, vulnerability assessments. The 
     delineations and assessments are to be completed within 60 
     months, but may be conducted on a priority-based schedule to 
     the extent that Federal funds are insufficient to pay for the 
     delineations and assessments.
       States may establish source water quality partnership 
     petition programs. The purpose of a State program is to 
     identify voluntary, incentive-based source protection 
     measures to protect drinking water from contamination and 
     to redirect Federal and State financial and technical 
     assistance to support those measures.
       Public water systems and local governments (in partnership 
     with other persons who may be affected by these measures) 
     many submit a petition to the State seeking assistance to 
     carry out the recommendations of the partnership.
       Petitions may only address contaminants that are subject to 
     promulgated or proposed regulations and that are detected at 
     levels that are not reliably and consistently below the 
     maximum contaminant level.
       State may use up to 10% of their annual SRF grants to 
     provide loans for projects that are recommended by petitions 
     approved under this program.


                section 18. state primacy; state funding

       Under the Safe Drinking Water Act, EPA establishes drinking 
     water quality standards that apply to all public water 
     systems. Assuring compliance with these standards is a task 
     achieved almost entirely by the States. Each State that 
     submits a regulation that is no less stringent than the 
     Federal standard is granted primary enforcement 
     responsibility. 49 States have primacy for most regulations 
     that have been issued under the Act.
       Under current law, the deadline for submitting State 
     regulations to retain primacy for new or revised drinking 
     water standards is 18 months. That deadline is extended to 24 
     months. In addition, the bill provides States with 
     ``interim'' primary enforcement authority during the period 
     after the State regulation is submitted until such time as it 
     is approved or disapproved by the Administrator. The State 
     regulation is effective during this interim period.
       EPA makes an annual grant to each State to support its 
     enforcement efforts. The bill reauthorizes the grants for the 
     Public Water System Supervision (PWSS) program at $100 
     million per year through the year 2003. In addition, States 
     are authorized (under part G) to set aside funds from their 
     SRF grants in amounts up to the amount the PWSS grant to use 
     in administration of the PWSS program.


            section 19. monitoring and information gathering

       Each national primary drinking water regulation includes 
     monitoring requirements to assure continuing compliance with 
     the maximum contaminant level. These monitoring requirements 
     impose substantial costs on pubic water systems. The bill 
     requires the Administrator to review and revise existing 
     monitoring requirements for not fewer than 12 contaminants 
     within 2 years.
       The bill authorizes States to develop and implement their 
     own monitoring regime for each containment. The State 
     requirements may be less stringent than Federal requirements 
     but are to assure compliance and enforcement. This authority 
     takes effect after the first cycle of monitoring under 
     Federal regulations. The authority does not apply to 
     contaminants that are pathogenic organisms. The State program 
     must provide for monitoring at a frequency consistent with 
     Federal requirements in systems where a contaminant has been 
     detected, unless monitoring indicates that the level of the 
     contaminant is reliably and consistently below the maximum 
     contaminant level. The Administrator may act to approve or 
     disapprove a State alternative monitoring program within 180 
     days of submission or may withdraw a State's authority to 
     establish monitoring requirements, if the State program does 
     not assure compliance and enforcement.
       The Administrator or a State may suspend quarterly 
     monitoring requirements applicable to small systems for any 
     contaminant (other than a pathogenic organism or a 
     contaminant that causes an acute effect, or a contaminant 
     formed in the treatment or distribution system) that is not 
     detected during the first quarterly sample in a monitoring 
     cycle.
       The Administrator is to establish a program of monitoring 
     for the presence of contaminants which may warrant regulation 
     in the future. The Administrator may list up to 20 
     contaminants. All systems serving more than 10,000 persons 
     would be required to monitor for these contaminants. Each 
     State would establish monitoring requirements for these 
     contaminants for a representative sample of small systems 
     within the State. An annual appropriation of $10 million is 
     authorized to offset the costs of this monitoring. In 
     addition, the Administrator may set aside $2 million per year 
     of any appropriation for the State Revolving Fund to pay for 
     testing costs associated with monitoring at small systems.
       The Administrator is to establish a national database 
     containing information on monitoring for regulated and 
     unregulated contaminants.


                    Section 20. Public notification

       Public water systems are required to notify their consumers 
     when the system violates important public health provisions 
     of the Act. The bill revises these requirements for public 
     notification. The new requirements provide for immediate 
     notification when a violation presents a serious threat to 
     public health; written notification not less often than 
     annually of violations of maximum contaminant levels or 
     treatment technique requirements; and publication by the 
     State of an annual report summarizing the status of 
     compliance with the State.
       States are authorized to modify the form and content of 
     public notices to reflect the health threat posed by a 
     violation and to ensure that the public understands the 
     threat.


                section 21. enforcement; judicial review

       Enforcement actions to correct violations of the Act can be 
     taken both by EPA and by a State with primary enforcement 
     responsibility. Several modifications to the enforcement 
     authorities of the Act are made by the bill.
       The Administrator is directed to notify local elected 
     officials before taking enforcement actions against public 
     water systems in non-primacy States.
       The Administrator or a State is authorized to suspend 
     enforcement action with respect to a violation for a period 
     of 2 years, if the violation is to be corrected through a 
     consolidation or a restructuring during that period.
       States are to adopt administrative penalties (of at least 
     $1000 per violation for large systems) to facilitate 
     enforcement of the Safe Drinking Water Act.
       The maximum amount for an administrative penalty imposed by 
     EPA is increased from $5000 to $25,000 per violation. 
     Penalties in this amount may only be imposed after a full on-
     the-record hearing.


                      section 22. federal agencies

       The Federal facilities provision of the Act is amended to 
     clearly waive the sovereign immunity of Federal agencies and 
     to allow citizens and States to seek penalties for all 
     violations of the Act at Federal facilities.


                          section 23. research

       The general research authorities are clarified and an 
     authorization of $25 million is provided for each fiscal year 
     to 2003. In addition, the Administrator is authorized to set 
     aside $10 million per year from appropriations for the State 
     Revolving Fund for the research on the health effects of 
     drinking water contaminants with priority given to research 
     on Cryptosporidium, disinfection byproducts, arsenic and 
     research on subpopulations at greater risk for adverse 
     effects. The bill includes new research programs for 
     interactive risks of pathogenic organisms and the 
     disinfection and disinfectant byproducts that result from 
     efforts to control the pathogens and for risks to 
     subpopulations that may be more sensitive to particular 
     contaminants than the general population.


                        section 24. definitions

       The definition of ``public water system'' is modified to 
     include some systems that provide water by means other than a 
     piped system (such as irrigation systems). The 
     modification would exclude from regulation those 
     connections to non-piped systems where alternative water 
     supplies or treatment to levels that are equivalent to 
     national primary drinking water regulations is provided 
     before the water is used for drinking or cooking.
       Definitions for `community water system' and `noncommunity 
     water system' are added to the law and the definitions of 
     `State' and `Indian tribes' are modified.


                  section 25. ground water protection

       The Administrator is authorized to make grants to the 
     States to support general ground water protection programs. 
     Federal grants may not be used for more than 50% of the cost 
     of the program. The bill authorizations $20 million per year 
     through 2003 for this grant program.
       Grants to support State administration of the Underground 
     Injection Control (UIC) program under part C are reauthorized 
     through the year 2003 at $20.85 million per year.
       Grants to support the wellhead protection program 
     established by section 1428 are reauthorized through the year 
     2003 at $35 million per year.
       Grants to support the critical aquifer protection program 
     under section 1427 are reauthorized at $20 million per year 
     through 2003. In addition, section 1427 is amended to reopen 
     the grant application period.
       The Administrator is to conduct a study of the extent and 
     seriousness of contamination of private sources of drinking 
     water not regulated under this Act and, within 3 years of the 
     date of enactment, provide a report to the Congress 
     describing the findings of the study and recommendations for 
     needed actions.


        section 26. lead plumbing, pipes and pumps; return flows

       Section 1417 is amended to ban the sale of pipe, plumbing 
     fittings and plumbing fixtures that do not meet voluntary 
     standards for lead leaching rates established by the National 
     Sanitation Foundation within 2 years of enactment. If NSF 
     fails to set lead leaching limits and establish testing 
     protocols for 

[[Page S 15126]]
     these items, the Administrator is authorized to set standards.
       Section 3013 of P.L. 102-486 encouraging the use of heat 
     pumps that return water to the distribution lines of public 
     water systems is repealed.


                       section 27. bottled water

       The Secretary of Health and Human Services is directed to 
     establish regulations for the quality of bottled water for 
     each contaminant for which a national primary drinking water 
     regulation is issued, unless the Secretary determines that 
     the contaminant is unlikely to present a risk to health 
     through bottled water. The regulations are to be issued 
     within 180 days after the tap water standard and are to be no 
     less stringent than the standards that apply to tap water 
     (drinking water supplied by public water systems).


   Section 28. Assessing environmental priorities, costs and benefits

       The Administrator is directed to identify and rank sources 
     of pollution with respect to the relative degree of risk to 
     public health and the environment. The Administrator is to 
     evaluate the public costs associated with each source of 
     pollution and the costs of complying with regulations 
     designed to protect against risks caused by the pollution. 
     The Administrator is to periodically report to Congress on 
     the assessments conducted under this section. The 
     Administrator's rankings and assessments of benefits and 
     costs are to be reviewed by the Science Advisory Board.


                      Section 29. Other Amendments

       The Chief of the Army Corps of Engineers is authorized to 
     modernize the Washington Aqueduct that provides drinking 
     water to the District of Columbia and several Virginia 
     cities.
       A requirement in section 1450 of current law for an annual 
     report to the Congress on the activities of the Administrator 
     is deleted.
       Membership on the National Drinking Water Advisory Council 
     is modified to include 2 members representing small, rural 
     water systems.

  Mr. CHAFEE. Mr. President, I am pleased to join with my colleagues to 
introduce this bill to reauthorize the Safe Drinking Water Act. 
Enacting this legislation is a high priority for the Environment and 
Public Works Committee. The bipartisan agreement that supports this 
bill gives us a great chance to achieve that goal.
  We all agree that reform of the Safe Drinking Water Act is necessary. 
Public health protection has been strengthened by the many new 
standards that have been issued over the past few years. But the pace 
of standard setting and the costs of new treatment and monitoring 
requirements have been a strain for water suppliers, especially smaller 
communities.
  This bill includes many provisions to ease the burden. There is the 
new grant program for drinking water revolving loan funds that 
President Clinton first recommended. States are authorized to reduce 
monitoring costs by developing their own testing requirements tailored 
to conditions in their region. Under this bill, States may also grant 
variances to the small systems that cannot afford to comply with the 
national standard.
  That's reform, but we're not rolling back health protection which is 
now provided. No existing standard will be weakened. And the bill 
includes many new initiatives that will keep the national program 
moving forward. In addition to the SRF grants, there are new programs 
to prevent pollution of source waters used for drinking water supply. 
There is a program to develop technical capacity at small systems. The 
bill pushes hard for more and better science, including a research 
program to determine whether some groups like children or pregnant 
women or people with particular illnesses are more likely to experience 
adverse effects from drinking water contaminants. EPA will continue to 
review new contaminants and to make decisions on the need for national 
standards.
  I want to thank each of my colleagues for the hard work they have put 
in on this bill. The star of this performance has been Senator 
Kempthorne. He has spent months going over every detail of the 
legislation. And Senator Baucus blazed the trail for us last year with 
his bill that passed the Senate with almost unanimous support. My thank 
you also extends to the Water Office at EPA and to the coalition of 
State and local drinking water organizations that have worked so long 
and hard on this bill. Their expertise has been available at every step 
and has been very helpful.
  I look forward to quick action by the committee and by the Senate on 
this bipartisan bill.
  Mr. REID. Mr. President. For several months now there has been tough 
bipartisan negotiation to find common ground on the Safe Drinking Water 
Act. We began with S. 2019 which the Senate passed last Congress. Now, 
however, we have industry and State and local governments expressing in 
legislative language their need for more local control drinking water 
systems. I am cosponsoring this bill for two primary reasons.
  First, there has been a great deal of compromise on both sides. Not 
everyone will be happy with some elements in this bill; both sides 
spent many hours working out the direction and the particulars of this 
bill. I am convinced that if this deliberative bipartisan process is 
going to produce legislation then this is how it will be done--through 
rational discussion and by taking the time to work out the 
disagreements. Through this process reasonable legislation will be 
passed out of the Senate.
  And second, I am convinced that if we are going to pass a safe 
drinking water bill this year, then given the process and the bill 
before us, we need to proceed further in the bipartisan effort. My 
principle concern is whether there will be safe drinking water in the 
taps of homes across the country; whether the contaminants will be 
monitored sufficiently to warn our communities; and whether there will 
be accountability in a process so essential to the health and well 
being of our citizens. As I noted, this bill contains a great deal of 
compromise, but I believe that what we have all been able to maintain 
is the integrity of the goals and the mechanics of safe drinking water.
  The EPA would still have the vital responsibility of regulating 
contaminants and setting standards while allowing for increased 
flexibility in implementing the regulations by the state and local 
water systems. A State revolving fund will be established to assist the 
States and rural systems. These and other provisions of the bill 
underscore the very deliberative compromise that has evolved. Perfect 
should not be an enemy to the good and looking for a perfect bill will 
not serve our constituents if we pass up a bill that will serve our 
communities well.
  I commend Senators Chafee and Kempthorne for their willingness to 
work together in this vital purpose. I appreciate Senator Baucus' 
leadership as the ranking member of the full Committee on Environment 
and Public Works.
  Mr. BAUCUS. Mr. President, this is a solid bill. It builds on the 
work that was done, during the last Congress, to reform the Safe 
Drinking Water Act. It will reduce regulatory burdens while fully 
protecting public health. And it reflects a careful, bipartisan 
approach that puts the public interest ahead of partisan politics.


                               background

  The Safe Drinking Water Act has guided Federal, State, and local 
efforts to assure that the water Americans drink is clean and pure. In 
the last several years, however, there has been growing concern that 
some provisions of the act misdirect Federal resources. There also has 
been concern that the act imposes regulatory burdens that local water 
systems simply can't comply with, no matter how hard they try. More 
specifically, critics of the act point to several flaws:
  Unlike the Clean Water Act, the Safe Drinking Water Act does not 
provide federal financial assistance to help local water systems meet 
environmental mandates.
  Small drinking water systems, including many small systems in my home 
State of Montana, have faced the greatest challenges in complying with 
the act's numerous and complex mandates.
  The limited economies of scale of small systems have caused household 
water rates to skyrocket in recent years as communities financed 
drinking water projects.
  Contaminant monitoring requirements have been overly prescriptive, 
and the requirement to regulate 25 new contaminants every 3 years is 
unrealistic and unnecessary.
  The enforcement and public notification provisions are inadequate.
  During the last Congress, the Environment and Public Works Committee 
unanimously reported legislation to reform the Safe Drinking Water Act, 
and 

[[Page S 15127]]
the Senate passed the legislation by a vote of 95 to 3. Unfortunately, 
the bill was not enacted into law.


             The Safe Drinking Water Act Amendments of 1995

  The bill that we are introducing today builds on the solid foundation 
created by last year's bill. The bill addresses each of the concerns 
with Safe Drinking Water Act. The bill expands funding, reduces 
regulatory burdens, and provides greater flexibility to those trying to 
provide safe drinking for all Americans--while not only maintaining but 
increasing public health protection.
  To begin with, the bill provides substantial and sustained funding 
for drinking water projects. The bill authorizes new drinking water 
loan funds. Moreover, the bill allows a State to use its existing Clean 
Water Act loan fund to meet drinking water needs and, if appropriate, 
to use the drinking water loan funds to meet Clean Water Act needs. 
And, in some cases, the bill allows States to give a public water 
system a grant rather than a loan. That way, a State can provide 
special assistance to small, disadvantaged communities that have a 
particularly hard time providing safe drinking water at an affordable 
cost.
  The bill reduces regulatory burdens, especially for small 
communities. It does so in several ways. Most significantly, the bill 
eliminates the requirement that EPA regulate 25 new contaminants every 
3 years, whether or not there is a public health need to do so. 
Instead, EPA will review the health effects of currently unregulated 
contaminants in drinking water and determine whether, based on sound 
science, those contaminants pose public health threats and should be 
regulated. In other words, the bill reforms the act by allowing EPA to 
target resources to the greatest threats to drinking water.
  The bill increases State flexibility. It authorizes a State to 
establish its own program for monitoring drinking water quality, and to 
reduce some monitoring requirements for small drinking water systems 
that have good compliance records. And it allows a State to take other 
steps to address the special needs of small communities. In Montana and 
elsewhere, the operators of small drinking water systems want to comply 
with the act, but cannot afford the cost of complying with many of the 
regulations. The bill's variance provision will allow small systems to 
provide safe, affordable water to their customers.
  So the bill reduces regulatory burdens, and increases flexibility, in 
many ways. But in doing so, it does not relax existing standards or 
weaken provisions of the Act that are necessary to protect public 
health. In fact, in addition to allowing EPA, States, and local 
communities to target resources to the greatest threats, the bill 
improves the act's enforcement and compliance provisions. And it 
improves the important provisions that require water system operators 
to alert people about drinking water problems in their communities, 
especially problems that create health threats.
  Putting all this together, the bill significantly reduces regulatory 
burdens and otherwise improves the operation of the Safe Drinking Water 
Act. At the same time, it not only maintains but increases public 
health protection.


                         A BIPARTISAN APPROACH

  Mr. President, during this Congress, most debates about the 
environment have deteriorated into partisan battles. As a result, we 
have missed the opportunity to develop a consensus, a support of 
reforms that reduce regulatory burdens while improving environmental 
protection.
  This bill that we are introducing today is a refreshing exception. 
Republicans and Democrats have worked together, cooperatively. There 
has been compromise, and nobody got everything that they wanted.
  This process has not been an easy one. It's taken time, and it's 
taken painstaking negotiation. But because we have taken a bipartisan, 
cooperative approach, we have been able to develop a bill that will 
attract widespread support and can, I believe, quickly be enacted into 
law.
  I very much appreciate the leadership and hard work of the committee 
chairman, Senator Chafee, the subcommittee chairman, Senator 
Kempthorne, and the subcommittee ranking member, Senator Reid. I look 
forward to working with them as we move forward to reform the Safe 
Drinking Water Act.
  Mr. KERREY. Mr. President, this moment comes only after hours of hard 
work by Chairman Chafee, Senator Kempthorne, Senator Baucus, and 
Senator Reid. I want to take this opportunity to thank them for all of 
their commitment to this much needed reauthorization. Coming to 
agreement on this bill has not been easy. It is the product of many 
different points of view and carries important public health protection 
while providing reasonable regulatory relief for small communities.
  Last year I became involved in the safe drinking water discussion 
because it is critical to the State of Nebraska. Ninety percent of our 
public water systems serve communities that are 2,500 or less in 
population. Those communities need and deserve flexibility to achieve 
the safest water possible for their citizens. This bill strikes an even 
balance between providing States with flexibility and the ability to 
affect decisionmaking; and allowing EPA to provide guidance and 
regulation.
  I am an advocate of cost-benefit analysis which this bill contains. 
It allows public water systems to allocate their limited resources to 
those contaminants that will cause the greatest threat to public 
health. I know the concept is a tough one to write into legislation and 
I expect there will be some, including me, that want to make small 
changes. Overall, I have to say the language looks fair and I believe 
this bill achieves a carefully crafted balance.
  For the last 2 years I have led the fight to keep EPA from publishing 
a drinking water standard for radon. The reason I did this is because 
the known health threat for radon is through inhalation, not ingestion. 
The greatest public threat from radon in drinking water is when you're 
in the shower. If left to the current process for setting standards, 
EPA would set the level for radon well below the level found in the air 
outside. The result of that standard would cost Nebraska's communities 
millions. I am quite pleased to see that the bill includes language 
that provides a permanent fix for the radon in drinking water issue.
  The Safe Drinking Water Act exists to protect public health. In 
reviewing how EPA sets standards I saw a need to involve the Department 
of Health and Human Services and the Centers for Disease Control. This 
bill includes an active role for HHS and I strongly support that. In 
fact, I would like to see a larger role for HHS and I'm willing to work 
with the chairman on that point.
  Again, I would like to thank Chairman Chafee, Senators Kempthorne, 
Baucus, and Reid and let them know that I am committed to helping them 
see this bill pass as quickly as possible. It is important to 
Nebraskans and all Americans.
                                 ______

      By Mr. D'AMATO (for himself, Mr. Murkowski, Mr. Dodd, Mr. 
        Johnston, Mr. Shelby, Mr. Mack, Mr. Faircloth, Mr. Dole, and 
        Mr. Lott):
  S. 1317. A bill to repeal the Public Utility Holding Company Act of 
1935, to enact the Public Utility Holding Company Act of 1995, and for 
other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.


             the public utility holding company act of 1995

  Mr. D'AMATO. Mr. President, today I introduce the Public Utility 
Holding Company Act of 1995. I am pleased to be joined by my colleagues 
on the Banking Committee, Senators Shelby, Mack, Faircloth, and Dodd; 
the chairman and ranking member of the Energy Committee, Senators 
Murkowski and Johnston respectively; and Senate Majority Leader Dole 
and Majority Whip Lott as sponsors of the bill.
  Mr. President, this bill would repeal the Public Utility Holding 
Company Act of 1935 (``the 1935 Act'') and transfer certain regulatory 
functions from the Securities and Exchange Commission to the Federal 
Energy Regulatory Commission and the Public Service Commissions of 
various States. The bill is supported by the SEC, the energy industry, 
and Senators on both sides of the aisle.
  In June, the SEC published a comprehensive report on the 1935 Act. In 
that report, ``The Regulation of Public-

[[Page S 15128]]
Utility Holding Companies,'' the division of investment management 
stated that:

       The 1935 Act had accomplished its basic purpose and that 
     its remaining provisions . . . either duplicated other State 
     or Federal regulation or otherwise were no longer necessary 
     to prevent recurrence of the abuses that led to its 
     enactment.

  The SEC Division of Investment Management reviewed the history of the 
1935 act and the energy industry along with other subsequent 
administrative and legislative changes. The report's recommendation 
suggests that Congress conditionally repeal the act since the current 
regulatory system imposes significant costs, in direct administrative 
charges and foregone economies of scale and scope, that often cannot be 
justified in terms of benefits to utility investors.
  In recommending a conditional repeal, the SEC noted that 
unconditional repeal of the 1935 act could expose consumers to some of 
the same abuses that it was enacted to prevent. As SEC Chairman, Arthur 
Levitt, cautions:

       [A]s long as electric and gas utilities continue to 
     function as monopolies, the need to protect against the 
     cross-subsidization of nonutility operations will continue to 
     exist . . . the best means of guarding against cross-
     subsidization is likely to be thorough audits of books and 
     records and federal oversight of affiliate transactions.

  Mr. President, the legislation I introduce today, the Public Utility 
Company Act of 1995, would maintain the provisions of the 1935 act 
essential to consumer protection.
  This bill would eliminate many of these burdensome and duplicative 
regulations while maintaining protection for energy consumers and 
ratepayers. For example, this legislation would allow holding companies 
to diversify into new business ventures. Diversification into utility 
or non utility business will increase competition and increase the flow 
of capital as non utility companies are able to enter into joint 
ventures with holding companies. Also, the integration requirements of 
the 1935 act, which prohibit any registered holding company from owning 
utility companies in more than one State, would be eliminated. 
Permitting ownership of utility companies in more than one state would 
allow holding companies to achieve greater efficiencies and lower 
administrative costs. The resulting savings can be passed on to 
consumers in lower energy rates.
  The Public Utility Holding Company Act of 1995 provides State and 
Federal regulators with the necessary authority to examine books and 
records and conduct audits of public utility companies. It is important 
that the States be given the authority to examine the books and records 
of public utilities and be given the authority to examine the books and 
records of public utilities and their affiliates, to make sure that 
retail electricity rates are set fairly and that the cost of other 
ventures are not passed on to the captive utility rate payer. To be 
certain that this burden does not fall on the States alone, the FERC 
will share this function.
  Transferring ratemaking functions to the States and the FERC also 
eliminates the regulatory gap created by the Supreme Court's Ohio Power 
decision, which effectively stripped the FERC of its authority to 
regulate holding company wholesale rate increases.
  Mr. President, this bill puts in place the proper consumer safeguards 
to protect electric and gas utility ratepayers and stockholders from 
bearing the costs of diversification by registered holding companies.
  Mr. President, the Public Utility Holding Company Act of 1935 has 
achieved the original congressional purpose--it broke up the mammoth 
holding company structures that existed more than half a century ago. 
The registration and disclosure requirements of the Securities Act of 
1933 and the Securities Exchange Act of 1934 have become effective 
tools for the SEC to protect investors and ensure the integrity of the 
market for public utility holding company securities. Further, State 
Public Service Commissions have become effective retail energy 
regulators, who can protect their ratepayers.
  Presently, only 11 electric utility companies and 9 gas companies are 
subject to the 1935 act; approximately 100 companies are exempt. The 20 
registered utility companies are also regulated by States and the FERC. 
The same provisions that were originally enacted to protect consumers 
and investors have become unnecessary impediments to business. For 
example, to ensure that holding companies do not further abuse power, 
the 1935 act requires that the SEC give prior approval to all utility 
acquisitions. However, these acquisitions are subject to FERC and State 
approval, as well as that of the SEC, and are reviewed to comply with 
antitrust laws. This duplicative approval system often delays the 
acquisition of a new company for months or years, while providing no 
added protection to consumers.
  Mr. President, the Banking Committee has consulted the Energy 
Committee, the SEC and the FERC as well as industry and consumer 
representatives in crafting this legislation to make sure appropriate 
regulatory authority is maintained in a new legal framework that allows 
holding companies to participate in new ventures and diversify without 
negative consequences to utility customers.
  The Banking Committee intends to hold hearings on this legislation in 
the near future. Although some would like to tie Public Utility Holding 
Company Act reform to other more controversial energy-related issues, 
the time for this legislation is now. The repeal of the 1935 act will 
increase competition in the public utility industry without 
compromising investor and consumer protection. I urge my colleagues' 
support.
  Mr. MURKOWSKI. Mr. President, I rise to cosponsor Senator D'Amato's 
legislation to reform the Public Utility Holding Company Act of 1935.
  Mr. President, this legislation is long overdue. The Public Utility 
Holding Company Act was enacted 60 years ago to curb serious abuses by 
public utilities that harmed consumers. PUHCA was needed in the 1930's, 
but now we live in a different world. By limiting activities and 
restricting corporate structure, PUHCA denies the companies that 
generate and sell electricity the flexibility necessary to respond to 
changing consumer needs and market circumstances. This legislation will 
eliminate unnecessary and costly regulation, retaining only that which 
is still needed to protect consumers.
  Over the past 60 years a comprehensive State-Federal regulatory 
system has been developed to protect consumers. In a nutshell, State 
public utility commissions regulate transactions that are intrastate in 
nature, and the Federal Energy Regulatory Commission regulates those 
that are interstate in nature.
  State public utility commissions perform their regulatory activities 
pursuant to State law, and the FERC performs its pursuant to the 
Federal Power Act. With the maturity of both State and Federal utility 
regulation--along with mature securities regulation by the Securities 
and Exchange Commission--PUHCA is now redundant at best.
  In this connection, it should be noted that in some instances PUHCA 
is counterproductive, actually interfering with effective utility rate 
regulation by the FERC. For example, in Ohio Power a Federal court held 
that the SEC's utility decisions under PUHCA preempt the FERC's 
authority over utility rates under the Federal Power Act. This 
legislation addresses that issue by giving the FERC clear and exclusive 
authority to address matters within its statutory jurisdiction. In 
short, the streamlining of the regulatory system proposed by this 
legislation will not diminish needed consumer protection. It will 
enhance it instead. If the regulatory system created by PUHCA 
benefitted consumers, then the regulatory burdens it imposes might be 
justified. But as everyone now acknowledges, PUHCA is no longer needed 
to protect consumers. There is adequate and comprehensive regulatory 
authority in other laws. As a result, regulatory costs caused by PUHCA 
are simply passed on to consumers as higher rates without any 
offsetting consumer benefits.
  Congress and the executive branch have long recognized that PUHCA 
creates serious regulatory problems, but up to now these problems have 
been addressed piecemeal. In 1978, the Public Utility Regulatory 
Policies Act provided an exemption from PUHCA for 

[[Page S 15129]]
certain types of electric power generators. In 1992, the Energy Policy 
Act gave additional exemptions to certain other types of electric power 
generators. The SEC is loosening its restrictions on non-utility 
activities as much as it can within the bounds of PUHCA. And the 
Congress is currently considering PUHCA exemptions to allow registered 
electric utilities to enter the telecommunications business, just the 
same as non-registered utilities.
  These are all Band-Aid fixes to PUHCA; they help, but they do not 
address the fundamental problem. The need to legislatively reform PUHCA 
was recognized by the SEC's July 1995 report ``The Regulation of 
Public-Utility Holding Companies.'' This legislation is based on its 
recommendations to Congress.
  Complete reform of PUHCA is needed, and it is justified. It is time 
to streamline and modernize the act. It is for these reasons that I am 
cosponsoring Senator D'Amato's legislation.
  Mr. President, there may be some who will try to use this legislation 
as a vehicle to restructure the electric utility industry, possibly to 
impose retail wheeling or to federally preempt State public utility 
commissions. I will strenuously resist any such effort. I have received 
assurances that Senator D'Amato is of like mind.
  This is not the time nor the place to make these kinds of changes. 
Retail wheeling and other competitive issues are not directly related 
to PUHCA reform. Moreover, retail wheeling and other Federal Power Act 
matters are entirely within the jurisdiction of the Committee on Energy 
and Natural Resources, not the Committee on Banking, Housing and Urban 
Affairs, to which this legislation will be referred. Electric utility 
issues are very complex, and they are very significant not only to 
consumers but also to this Nation's competitiveness and economic well 
being. These kinds of changes cannot, and will not be made without 
careful and complete consideration by the Committee on Energy and 
Natural Resources of all aspects of the issues and questions they 
raise.
  Mr. JOHNSTON. Mr. President, I am pleased today to join my colleagues 
in introducing the Public Utility Holding Company Act of 1995. This is 
the first step in changing a law of which I have urged reform for many 
years. The purpose of this bill is to bring into the 1990's a 60-year-
old, now-antiquated law: the Public Utility Holding Company Act of 1935 
[PUHCA]. Our goal is to do away with burdensome and duplicative 
regulation, which stifles our Nation's economic well-being, and yet 
still provide adequate protection for electricity consumers. In this 
regard, this bill effectively implements the recommendations of 
Securities and Exchange Commission Chairman Arthur Levitt.
  At the time of its enactment in 1935, PUHCA was clearly necessary. 
The aim of this New Deal era law was to eradicate the abuses of large, 
monopolistic public utility holding companies. The holding company 
structure permitted such companies to deceive investors and obstruct 
State utility regulation. Importantly, in 1935, Federal regulation of 
holding companies was nonexistent.
  Times have clearly changed. State regulators have the authority to 
protect retail ratepayers from monopolistic prices, and the Federal 
Energy Regulatory Commission [FERC] has similar authority with respect 
to wholesale ratepayers. This proposed bill does away with unnecessary 
regulation of public utility holding companies by the Securities and 
Exchange Commission, but augments the authorities of State and Federal 
utility regulators to do their jobs better.
  Times have clearly changed. State regulators have the authority to 
protect retail ratepayers from monopolistic prices, and the Federal 
Energy Regulatory Commission [FERC] has similar authority with respect 
to wholesale ratepayers. This proposed bill does away with unnecessary 
regulation of public utility holding companies by the Securities and 
Exchange Commission, but augments the authorities of State and Federal 
utility regulators to do their jobs better. Specifically, the bill 
gives FERC and the States augmented authority to review the books, 
records, and accounts of companies within holding company systems. The 
bill also gives FERC and State public utility commissions the ability 
to examine so-called affiliated transactions, that is, the authority to 
determine whether a public utility company may recover in rates any 
costs of an activity performed by an associate company, or any costs of 
goods or services acquired by public utilities from their associate 
companies.
  Although I support the goals of this bill, I wish to make one point 
clear. I understand that, in a letter to Senator D'Amato, the Federal 
Energy Regulatory Commission has raised several concerns regarding the 
specific provisions of any proposed bill which would reform PUHCA. I am 
in receipt of FERC's letter to Senator D'Amato, and am committed to 
working with the Banking Committee to achieve a resolution of any 
outstanding issues. Although I believe the bill introduced today goes a 
long way toward achieving reform of PUHCA, I believe a number of issues 
must be resolved, particularly, the way in which FERC will carry out 
its new authorities under the bill as proposed with respect to holding 
companies which were formerly exempt from PUHCA.

                          ____________________