[Congressional Record Volume 142, Number 127 (Monday, September 16, 1996)]
[Senate]
[Pages S10600-S10609]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. CHAFEE (for himself and Mr. Rockefeller):
  S. 2075. A bill to amend title XVIII of the Social Security Act to 
provide additional consumer protections for medicare supplemental 
insurance; to the Committee on Finance.


                  The Medigap Portability Act of 1996

 Mr. CHAFEE. Mr. President, last month, the President signed 
into law bipartisan legislation that provides greater portability of 
health insurance for working Americans. Today, I join with my 
colleague, Senator Rockefeller, in the introduction of a bipartisan 
bill that will provide some of the same guarantees for seniors who buy 
Medicare supplemental insurance or Medigap policies.
  Of the 37 million Medicare beneficiaries, 80 percent, or nearly 30 
million, have some form of Medicare supplemental insurance, whether 
covered through a retiree health plan or a private Medigap policy. 
Under current law, Medigap insurers must issue these policies without 
pre-existing condition limitations during the 6-month period 
immediately after the beneficiary becomes eligible for Medicare. Our 
bill does three things for seniors who have purchased Medigap 
insurance.
  First, it guarantees that if their plan goes out of business or the 
beneficiary moves out of a plan service area, he or she can buy another 
comparable policy. These rules also would apply to a senior who has had 
coverage under a retiree health plan if their plan goes out of 
business.
  Second, it encourages seniors to enroll in Medicare managed care by 
guaranteeing that they can return to Medicare fee-for-service and, 
during the first year of enrollment, get back their same Medigap policy 
if they decide they do not like managed care. Under current law, if a 
senior wishes to enroll in a Medicare managed care plan, they have two 
options. They may drop their Medigap policy, and hope they can get 
another if they go back to fee-for-service, or they can continue paying 
their Medigap premiums in the event that they may need the policy again 
some day--a very costly option for those on fixed incomes.
  Third, it provides a 6-month open enrollment period for those under 
65 who become Medicare beneficiaries because they are disabled. Under 
current Federal law, Medicare beneficiaries are offered a 6-month open 
enrollment period only if they are 65. There are approximately 4 
million Americans who are under 65 years of age and are enrolled in the 
Medicare Program. Currently, they do not currently have access to 
Medigap policies unless State laws require insurers to offer policies 
to them.
  It is true that this bill does not go as far as some advocacy groups 
would like. Our bill leaves to the States more controversial issues, 
such as continuous open enrollment and community rating of Medigap 
premiums. I believe, however, that this legislation will provide 
seniors the same guarantees that we provided to working Americans under 
the Kassebaum-Kennedy legislation. Thank you, Mr. President.
  I ask unanimous consent that the text of the bill be included in the 
Record immediately following my remarks.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2075

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medigap Portability Act of 
     1996''.

     SEC. 2. MEDIGAP AMENDMENTS.

       (a) Guaranteeing Issue Without Preexisting Conditions for 
     Continuously Covered Individuals.--Section 1882(s) of the 
     Social Security Act (42 U.S.C. 1395ss(s)) is amended--
       (1) in paragraph (3), by striking ``paragraphs (1) and 
     (2)'' and inserting ``this subsection'',
       (2) by redesignating paragraph (3) as paragraph (4), and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3)(A) The issuer of a medicare supplemental policy--
       ``(i) may not deny or condition the issuance or 
     effectiveness of a medicare supplemental policy described in 
     subparagraph (C);
       ``(ii) may not discriminate in the pricing of the policy on 
     the basis of the individual's health status, medical 
     condition (including both physical and mental illnesses), 
     claims experience, receipt of health care, medical history, 
     genetic information, evidence of insurability (including 
     conditions arising out of acts of domestic violence), or 
     disability; and
       ``(iii) may not impose an exclusion of benefits based on a 
     pre-existing condition,

     in the case of an individual described in subparagraph (B) 
     who seeks to enroll under the policy not later than 63 days 
     after the date of the termination of enrollment described in 
     such subparagraph.
       ``(B) An individual described in this subparagraph is an 
     individual described in any of the following clauses:
       ``(i) The individual is enrolled with an eligible 
     organization under a contract under section 1876 or with an 
     organization under an agreement under section 1833(a)(1)(A) 
     and such enrollment ceases either because the individual 
     moves outside the service area of the organization under the 
     contract or agreement or because of the termination or 
     nonrenewal of the contract or agreement.
       ``(ii) The individual is enrolled with an organization 
     under a policy described in subsection (t) and such 
     enrollment ceases either because the individual moves outside 
     the service area of the organization under the policy, 
     because of the bankruptcy or insolvency of the insurer, or 
     because the insurer closes the block of business to new 
     enrollment.

[[Page S10601]]

       ``(iii) The individual is covered under a medicare 
     supplemental policy and such coverage is terminated because 
     of the bankruptcy or insolvency of the insurer issuing the 
     policy, because the insurer closes the block of business to 
     new enrollment, or because the individual changes residence 
     so that the individual no longer resides in a State in which 
     the issuer of the policy is licensed.
       ``(iv) The individual is enrolled under an employee welfare 
     benefit plan that provides health benefits that supplement 
     the benefits under this title and the plan terminates or 
     ceases to provide (or significantly reduces) such 
     supplemental health benefits to the individual.
       ``(v)(I) The individual is enrolled with an eligible 
     organization under a contract under section 1876 or with an 
     organization under an agreement under section 1833(a)(1)(A) 
     and such enrollment is terminated by the enrollee during the 
     first 12 months of such enrollment, but only if the 
     individual never was previously enrolled with an eligible 
     organization under a contract under section 1876 or with an 
     organization under an agreement under section 1833(a)(1)(A).
       ``(II) The individual is enrolled under a policy described 
     in subsection (t) and such enrollment is terminated during 
     the first 12 months of such enrollment, but only if the 
     individual never was previously enrolled under such a policy 
     under such subsection.
       ``(C)(i) Subject to clause (ii), a medicare supplemental 
     policy described in this subparagraph, with respect to an 
     individual described in subparagraph (B), is a policy the 
     benefits under which are comparable or lesser in relation to 
     the benefits under the enrollment described in subparagraph 
     (B) (or, in the case of an individual described in clause 
     (ii), under the most recent medicare supplemental policy 
     described in clause (ii)(II)).
       ``(ii) An individual described in this clause is an 
     individual who--
       ``(I) is described in subparagraph (B)(v), and
       ``(II) was enrolled in a medicare supplemental policy 
     within the 63 day period before the enrollment described in 
     such subparagraph.
       ``(iii) As a condition for approval of a State regulatory 
     program under subsection (b)(1) and for purposes of applying 
     clause (i) to policies to be issued in the State, the 
     regulatory program shall provide for the method of 
     determining whether policy benefits are comparable or lesser 
     in relation to other benefits. With respect to a State 
     without such an approved program, the Secretary shall 
     establish such method.
       ``(D) At the time of an event described in subparagraph (B) 
     because of which an individual ceases enrollment or loses 
     coverage or benefits under a contract or agreement, policy, 
     or plan, the organization that offers the contract or 
     agreement, the insurer offering the policy, or the 
     administrator of the plan, respectively, shall notify the 
     individual of the rights of the individual, and obligations 
     of issuers of medicare supplemental policies, under 
     subparagraph (A).''.
       (b) Limitation on Imposition of Preexisting Condition 
     Exclusion During Initial Open Enrollment Period.--Section 
     1882(s)(2)(B) of such Act (42 U.S.C. 1395ss(s)(2)(B)) is 
     amended to read as follows:
       ``(B) In the case of a policy issued during the 6-month 
     period described in subparagraph (A), the policy may not 
     exclude benefits based on a pre-existing condition.''.
       (c) Clarifying the Nondiscrimination Requirements During 
     the 6-Month Initial Enrollment Period.--Section 1882(s)(2)(A) 
     of such Act (42 U.S.C. 1395ss(s)(2)(A)) is amended to read as 
     follows:
       ``(2)(A)(i) In the case of an individual described in 
     clause (ii), the issuer of a medicare supplemental policy--
       ``(I) may not deny or condition the issuance or 
     effectiveness of a medicare supplemental policy, and
       ``(II) may not discriminate in the pricing of the policy on 
     the basis of the individual's health status, medical 
     condition (including both physical and mental illnesses), 
     claims experience, receipt of health care, medical history, 
     genetic information, evidence of insurability (including 
     conditions arising out of acts of domestic violence), or 
     disability.
       ``(ii) An individual described in this clause is an 
     individual for whom an application is submitted before the 
     end of the 6-month period beginning with the first month as 
     of the first day on which the individual is 65 years of age 
     or older and is enrolled for benefits under part B.''.
       (d) Extending 6-Month Initial Enrollment Period to Non-
     Elderly Medicare Beneficiaries.--Section 1882(s)(2)(A)(ii) of 
     such Act (42 U.S.C. 1395ss(s)(2)(A)), as amended by 
     subsection (c), is amended by striking ``is submitted'' and 
     all that follows and inserting the following: ``is 
     submitted--
       ``(I) before the end of the 6-month period beginning with 
     the first month as of the first day on which the individual 
     is 65 years of age or older and is enrolled for benefits 
     under part B; and
       ``(II) for each time the individual becomes eligible for 
     benefits under part A pursuant to section 226(b) or 226A and 
     is enrolled for benefits under part B, before the end of the 
     6-month period beginning with the first month as of the first 
     day on which the individual is so eligible and so 
     enrolled.''.
       (e) Effective Dates.--
       (1) Guaranteed issue.--The amendment made by subsection (a) 
     shall take effect on July 1, 1997.
       (2) Limit on preexisting condition exclusions.--The 
     amendment made by subsection (b) shall apply to policies 
     issued on or after July 1, 1997.
       (3) Clarification of nondiscrimination requirements.--The 
     amendment made by subsection (c) shall apply to policies 
     issued on or after July 1, 1997.
       (4) Extension of enrollment period to disabled 
     individuals.--
       (A) In general.--The amendment made by subsection (d) shall 
     take effect on July 1, 1997.
       (B) Transition rule.--In the case of an individual who 
     first became eligible for benefits under part A of title 
     XVIII of the Social Security Act pursuant to section 226(b) 
     or 226A of such Act and enrolled for benefits under part B of 
     such title before July 1, 1997, the 6-month period described 
     in section 1882(s)(2)(A) of such Act shall begin on July 1, 
     1997. Before July 1, 1997, the Secretary of Health and Human 
     Services shall notify any individual described in the 
     previous sentence of their rights in connection with medicare 
     supplemental policies under section 1882 of such Act, by 
     reason of the amendment made by subsection (d).
       (f) Transition Provisions.--
       (1) In general.--If the Secretary of Health and Human 
     Services identifies a State as requiring a change to its 
     statutes or regulations to conform its regulatory program to 
     the changes made by this section, the State regulatory 
     program shall not be considered to be out of compliance with 
     the requirements of section 1882 of the Social Security Act 
     due solely to failure to make such change until the date 
     specified in paragraph (4).
       (2) NAIC standards.--If, within 9 months after the date of 
     the enactment of this Act, the National Association of 
     Insurance Commissioners (in this subsection referred to as 
     the ``NAIC'') modifies its NAIC Model Regulation relating to 
     section 1882 of the Social Security Act (referred to in such 
     section as the 1991 NAIC Model Regulation, as modified 
     pursuant to section 171(m)(2) of the Social Security Act 
     Amendments of 1994 (Public Law 103-432) and as modified 
     pursuant to section 1882(d)(3)(A)(vi)(IV) of the Social 
     Security Act, as added by section 271(a) of the Health Care 
     Portability and Accountability Act of 1996 (Public Law 104-
     191) to conform to the amendments made by this section, such 
     revised regulation incorporating the modifications shall be 
     considered to be the applicable NAIC model regulation 
     (including the revised NAIC model regulation and the 1991 
     NAIC Model Regulation) for the purposes of such section.
       (3) Secretary standards.--If the NAIC does not make the 
     modifications described in paragraph (2) within the period 
     specified in such paragraph, the Secretary of Health and 
     Human Services shall make the modifications described in such 
     paragraph and such revised regulation incorporating the 
     modifications shall be considered to be the appropriate 
     Regulation for the purposes of such section.
       (4) Date specified.--
       (A) In general.--Subject to subparagraph (B), the date 
     specified in this paragraph for a State is the earlier of--
       (i) the date the State changes its statutes or regulations 
     to conform its regulatory program to the changes made by this 
     section, or
       (ii) 1 year after the date the NAIC or the Secretary first 
     makes the modifications under paragraph (2) or (3), 
     respectively.
       (B) Additional legislative action required.--In the case of 
     a State which the Secretary identifies as--
       (i) requiring State legislation (other than legislation 
     appropriating funds) to conform its regulatory program to the 
     changes made in this section, but
       (ii) having a legislature which is not scheduled to meet in 
     1998 in a legislative session in which such legislation may 
     be considered,

     the date specified in this paragraph is the first day of the 
     first calendar quarter beginning after the close of the first 
     legislative session of the State legislature that begins on 
     or after July 1, 1998. For purposes of the previous sentence, 
     in the case of a State that has a 2-year legislative session, 
     each year of such session shall be deemed to be a separate 
     regular session of the State legislature.

     SEC. 3. INFORMATION FOR MEDICARE BENEFICIARIES.

       (a) Grant program.--
       (1) In general.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') is 
     authorized to provide grants to--
       (A) private, independent, non-profit consumer 
     organizations, and
       (B) State agencies,

     to conduct programs to prepare and make available to medicare 
     beneficiaries comprehensive and understandable information on 
     enrollment in health plans with a medicare managed care 
     contract and in medicare supplemental policies in which they 
     are eligible to enroll. Nothing in this section shall be 
     construed as preventing the Secretary from making a grant to 
     an organization under this section to carry out activities 
     for which a grant may be made under section 4360 of the 
     Omnibus Budget Reconciliation Act of 1990 (Public Law 101-
     508).
       (2) Consumer satisfaction surveys.--Any eligible 
     organization with a medicare managed care contract or any 
     issuer of a medicare supplemental policy shall--
       (A) conduct, in accordance with minimum standards approved 
     by the Secretary, a

[[Page S10602]]

     consumer satisfaction survey of the enrollees under such 
     contract or such policy; and
       (B) make the results of such survey available to the 
     Secretary and the State Insurance Commissioner of the State 
     in which the enrollees are so enrolled.

     The Secretary shall make the results of such surveys 
     available to organizations which receive grants under 
     paragraph (1).
       (3) Information.--
       (A) Contents.--The information described in paragraph (1) 
     shall include at least a comparison of such contracts and 
     policies, including a comparison of the benefits provided, 
     quality and performance, the costs to enrollees, the results 
     of consumer satisfaction surveys on such contracts and 
     policies, as described in subsection (a)(2), and such 
     additional information as the Secretary may prescribe.
       (B) Information standards.--The Secretary shall develop 
     standards and criteria to ensure that the information 
     provided to medicare beneficiaries under a grant under this 
     section is complete, accurate, and uniform.
       (C) Review of information.--The Secretary may prescribe the 
     procedures and conditions under which an organization that 
     has obtained a grant under this section may furnish 
     information obtained under the grant to medicare 
     beneficiaries. Such information shall be submitted to the 
     Secretary at least 45 days before the date the information is 
     first furnished to such beneficiaries.
       (4) Consultation with other organizations and providers.--
     An organization which receives a grant under paragraph (1) 
     shall consult with private insurers, managed care plan 
     providers and other health care providers, and public and 
     private purchasers of health care benefits in order to 
     provide the information described in paragraph (1).
       (5) Terms and conditions.--To be eligible for a grant under 
     this section, an organization shall prepare and submit to the 
     Secretary an application at such time, in such form, and 
     containing such information as the Secretary may require. 
     Grants made under this section shall be in accordance with 
     terms and conditions specified by the Secretary.
       (b) Cost-Sharing.--
       (1) In general.--Each organization which provides a 
     medicare managed care contract or issues a medicare 
     supplemental policy (including a medicare select policy) 
     shall pay to the Secretary its pro rata share (as determined 
     by the Secretary) of the estimated costs to be incurred by 
     the Secretary in providing the grants described in subsection 
     (a).
       (2) Limitation.--The total amount required to be paid under 
     paragraph (1) shall not exceed $35,000,000 in any fiscal 
     year.
       (3) Application of proceeds.--Amounts received under 
     paragraph (1) are hereby appropriated to the Secretary to 
     defray the costs described in such paragraph and shall remain 
     available until expended.
       (c) Definitions.--In this section:
       (1) Medicare managed care contract.--The term ``medicare 
     managed care contract'' means a contract under section 1876 
     or section 1833(a)(1)(A) of the Social Security Act.
       (2) Medicare supplemental policy.--The term ``medicare 
     supplemental policy'' has the meaning given such term in 
     section 1882(g) of the Social Security Act.

  Mr. ROCKEFELLER. Mr. President, I join my colleague from Rhode 
Island, Senator Chafee, in introducing a bill that aims at taking 
another significant step in extending the kind of health care security 
we want for all Americans. I believe the recent enactment of the 
Kassebaum-Kennedy health reform bill confirms that those of us who want 
to expand health care access, coverage, and quality for Americans have 
every reason to press on. And the Senator from Rhode Island and I have 
very deliberately adopted the same principles of bipartisanship and 
pragmatism in crafting this new bill to take the next steps forward in 
health reform.
  Our bill responds to a clear need among Medicare's beneficiaries, 
especially the 4 million disabled Americans who rely on Medicare, to be 
able to count on supplemental insurance when they seek it. As important 
as Medicare is, it covers less than one-half of beneficiaries' total 
health care costs. As a result, almost 80 percent of all Medicare 
beneficiaries buy private, supplemental insurance that gives them extra 
coverage and financial relief. But it turns out that seniors and the 
disabled are having all kinds of difficulties in obtaining or holding 
onto this supplemental insurance. Our bill solves some of these 
problems, by making Medigap policies portable, more reliable, and more 
accessible in different situations.
  Specifically, our bill requires insurers to issue a Medigap policy to 
a Medicare beneficiary who loses his or her Medigap coverage because he 
or she moves out of a plan's service area; because an HMO or managed 
care plan goes out of business or withdraws from the market; or because 
an employer drops, or substantially cuts back, retiree health benefits.
  This legislation responds to changes we are seeing that are hurting 
older and disabled Americans, which includes 50,000 disabled West 
Virginians. For example, more and more employers are cutting costs by 
cutting back on their retirees' health benefits. Between 1993 and 1995, 
the number of large employers who provided retiree health benefits 
dropped by 5 percent. When retirees lose employer-sponsored health 
benefits, they are forced to go to the private market and purchase 
individual coverage.
  If they have any type of preexisting medical condition, they will be 
lucky to find an insurance company who will sell them a Medigap policy 
without a lengthy pre-existing condition limitation. Others will not be 
so lucky. They won't find an insurer willing to sell them a policy at 
any price.
  Mr. President, our bill gives Medicare beneficiaries an opportunity 
to try a managed care plan without worrying about losing their ability 
to return to fee-for-service medicine. Our legislation would give 
Medicare beneficiaries a 12-month trial period to try a Medicare 
managed care option. Understandably, many seniors are very nervous 
about enrolling in a managed care organization if it means losing 
access to their lifelong doctor.
  Our bill lets Medicare beneficiaries see if a managed health care 
plan suits them and gives them a way back to fee-for-service medicine, 
if that is their personal preference.

  Mr. President, my preference would be to allow continuously insured 
Medicare beneficiaries to freely switch types of policies--fee-for-
service versus managed care--and insurers, on an annual basis. This 
would allow seniors the ability to switch insurers for customer service 
reasons or any other personal preference. But because the insurance 
companies are especially opposed to any type of continuous or annual 
open enrollment policy for Medigap insurance--even for individuals who 
are continuously insured--we have to have our bill aim for the more 
modest improvements in portability that we think we have a better 
chance of enacting.
  Our legislation bans insurance companies from imposing any 
preexisting condition limitation during the 6-month open enrollment 
period for Medigap insurance when a person first qualifies for 
Medicare. This makes the rules for Medigap policies consistent with the 
recently enacted Kassebaum-Kennedy bill, and with Medicare coverage 
which begins immediately, regardless of preexisting conditions.
  For the disabled, this bill is a big improvement over current law. In 
1990, Congress mandated that insurers must sell a Medigap policy to any 
senior wishing to buy coverage when that individual first becomes 
eligible for Medicare. The disabled were left out at that time because 
of insurance company-generated concerns about potentially huge premium 
hikes for current Medigap policyholders.
  Since then, at least 10 States went ahead and required insurers to 
issue policies to all Medicare beneficiaries in their States, including 
the disabled. My staff called those States, and not one State reported 
large hikes in premiums as a result of their new laws requiring access 
to Medigap for the disabled.
  The Health Care Financing Administration [HCFA] has also estimated 
that Medicare's average per-person cost for the disabled is actually 
less than Medicare's average per-person cost for the aged. So, Mr. 
President, I believe we can put concerns about large premium hikes to 
rest, and move to guarantee the disabled access to private Medigap 
policies.
  This bill will help people like a 44-year-old man from Capon Bridge, 
WV, who qualifies for Medicare because of a disability. He earns too 
much money to qualify for Medicaid and is unable to buy a private 
Medigap policy because of a chronic medical condition.
  Medigap insurers in West Virginia refuse to sell him a policy because 
of his medical condition. A 47-year-old woman from Slanesville, WV, is 
in a similar situation. She was uninsured before qualifying for 
Medicare because of a chronic kidney disease that requires dialysis. 
Her husband and she have too many assets to qualify for Medicaid and 
they cannot afford the $300 a month, or $3,600 a year premium for 
health insurance provided through

[[Page S10603]]

her husband's job. The average cost of a Medigap policy ranges from 
$700 to $1,000 a year. Access to a Medigap policy would be a more 
affordable option for this family.
  Mr. President, our bill also includes a section to help seniors 
choose the right health plan for them by ensuring that they get good 
information on what plans are available in their area.
  It allows them to compare different health plans based on results of 
consumer satisfaction surveys, and will include information on benefits 
and costs.
  Our bill does not directly address affordability. Just as the 
Kassebaum-Kennedy bill was not able to take that step, we leave it to 
the States to consider ways to promote affordable Medigap premiums. But 
Congress has some history in the Medigap market, with legislation 
passed in 1980, and again in 1990, to guarantee at least a minimal 
level of value across all Medigap policies. Under the current law that 
I helped enact back in 1990, individual and group Medigap policies must 
spend at least 65 percent and 75 percent, respectively, of all premium 
dollars collected, on benefits. If a Medigap plan fails to meet these 
minimum loss ratios, they must issue refunds or credits to their 
customers.
  Mr. President, while Federal loss ratio standards help assure a 
minimum level of value, they do not prevent insurance companies from 
annually upping premiums as a senior ages. This practice--known as 
attained age-rating--results in the frailest and the lowest income 
seniors facing large, annual premium hikes as they age. I would hope 
that more States would follow the lead of at least five other States 
who have banned attained age-rating. This would vastly improve the 
affordability of Medigap for the oldest and frailest of our seniors.
  Mr. President, our bill is a targeted, modest bill. But if and when 
we enact it, it will provide very real, very significant help to the 
seniors who, year in and year out, pay out billions of dollars in 
premiums in order to have the extra protection of Medigap protection.
  It is wrong and unfair when senior and disabled citizens in West 
Virginia and across the country are suddenly dropped by insurers or 
denied a Medigap policy just because they move to another State, or 
their employer cuts back on promised retiree health benefits, or 
because they're disabled.
  In the bipartisan and practical spirit of the Kassebaum-Kennedy bill, 
we now propose the same kind of commonsense, consumer protections and 
reforms, to help over 33 million senior citizens and almost 5 million 
disabled Americans. It is a great honor to be presenting this bill with 
the Senator from Rhode Island, someone who is responsible for many of 
the country's most important achievements in health care. I urge my 
colleagues to cosponsor this bill, and to help us extend the health 
care peace of mind that older and disabled Americans ask for and 
deserve.
                                 ______
                                 
      By Mr. MURKOWSKI:
  S. 2076. A bill to increase economic benefits to the United States 
from the activities of cruise ships visiting Alaska; to the Committee 
on Commerce, Science, and Transportation.


                        cruise ship legislation

 Mr. MURKOWSKI. Mr. President, today, I am reintroducing a very 
important measure--one that will unlock and open a door that Congress 
has kept barred for over 100 years.
  Opening that door will create a path to thousands of new jobs, to 
hundreds of millions of dollars in new economic activity and to 
millions in new Federal, State, and local government revenues. 
Furthermore, Mr. President, that door can be opened with no adverse 
impact on any existing U.S. industry, labor interest or on the 
environment, and it will cost the Government virtually nothing.
  There is no magic to this; in fact, it's a very simple matter. My 
bill merely allows United States ports to compete for the growing 
cruise ship trade to Alaska, and encourages the development of an all-
Alaska cruise business, as well.
  The bill amends the Passenger Service Act to allow foreign cruise 
ships to operate to and from Alaska, and between Alaska ports. However, 
it also very carefully protects all existing U.S. passenger vessels by 
using a definition of ``cruise ships'' designed to exclude any foreign-
flag vessels that could conceivably compete in the same market as U.S.-
flag tour boats or ferries. Finally, it provides a mechamism to 
guarantee that if a U.S. vessel ever enters this trade in the future, 
steps will be taken to ensure an ample pool of potential passengers.
  Mr. President, this is a straightforward approach to a vexing 
problem, and it deserves the support of this body.
  Let us look at the facts. U.S. ports currently are precluded from 
competing for the Alaska cruise ship trade by the Passenger Service Act 
of 1886, which bars foreign vessels from carrying passengers on one-way 
voyages between U.S. ports. However, it isn't 1886 anymore. These days, 
no one is building any U.S. passenger ships of this type, and no one 
has built one in over 40 years.
  Because there are no U.S. vessels in this important trade, the only 
real effect of the Passenger Service Act is to force all the vessels 
sailing to Alaska to base their operations in an foreign port instead 
of a U.S. city.
  Mr. President, what we have here is an act of Congress prohibiting 
U.S. cities from competing for thousands of jobs and hundreds of 
millions in business dollars. That is worse than absurd--in light of 
our ever-popular election-year promises to help the economy, it belongs 
in Letterman's ``Top Ten Reasons Why Congress Doesn't Know What It's 
Doing.''
  How, Mr. President, can anyone argue with a straight face for the 
continuation of a policy that fails utterly to benefit any identifiable 
American interst, while actively discouraging economic growth.
  Mr. President, this is not the first time I have introduced this 
legislation. When I began, Alaska-bound cruise passengers totaled about 
200,000 per year. By last year, almost three times that many people--
most of them American citizens--were making that voyage. Almost 600,000 
people joined an Alaska bound vessel in 1995, and almost all those 
sailings originated in Vancouver, BC--not because Vancouver is 
necessarily a better port, but because our own foolish policy demands 
it.
  The cash flow generated by this trade is enormous. Most passengers 
fly in or out of Seattle-Tacoma International Airport in Washington 
State, but because of the law, they spend little time there. Instead, 
they spend their pre- and post-sailing time in a Vancouver hotel, at 
Vancouver restaurants, and in Vancouver gift shops. And when their 
vessel sails, it sails with food, fuel general supplies, repair and 
maintenance needs taken care of by Vancouver vendors.
  According to some estimates the city of Vancouver receives benefits 
of well over $200 million per year. Others provide more modest 
estimates, such as a comprehensive study by the International Council 
of Cruise Lines, which indicated that in 1992 alone, the Alaska cruise 
trade generated over 2,400 jobs for the city of Vancouver, plus 
payments to Canadian vendors and employees of over $119 million. If 
that business had taken place inside the United States, it would have 
been worth additional Federal, State, and local tax revenues of 
approximately $60 million.
  In addition to the opportunities now being shunted to Vancouver, we 
are also missing an opportunity to create entirely new jobs and income 
through the potential to develop new cruising routes between Alaska 
ports. The city of Ketchikan, AK, was told a few years ago that two 
relatively small cruise ships were very interested in establishing 
short cruises within southeast Alaska. I'm told such a business could 
have contributed $2 million or more to that small community's economy, 
and created dozens of new jobs. But, because of the current policy, the 
opportunity simply evaporated.
  Why, Mr. President, do we allow this to happen? This is a market 
almost entirely focused on U.S. citizens going to see one of the United 
State's most spectacular places, and yet we force them to go to another 
country to do it. We are throwing away both money and jobs--and getting 
nothing whatsoever in return.
  Why is this allowed to happen? The answer is simple--but it is not 
rational. Although the current law is actually a job loser, there are 
those who argue that any change would weaken

[[Page S10604]]

U.S. maritime interests. I submit, Mr. President, that is not the case.
  For some inexplicable reason, paranoia runs deep among those who 
oppose this bill. They seem to feel that amending the Passenger Service 
Act so that it makes sense for the United States would create a threat 
to Jones Act vessels hauling freight between U.S. ports. Mr. President, 
there simply is no connection whatsoever between the two. I have 
repeatedly made clear that I have no intention of using this bill to 
create cracks in the Jones Act.
  This bill would actually enhance--not impede--opportunities for U.S. 
workers. Both shipyard workers and longshoremen--not to mention hotel 
and restaurant workers and many others--would have a great deal to gain 
from this legislation, and the bill has been carefully written to 
prevent the loss of any existing jobs in other trades.
  Finally, let me dispose of any suggestion that this bill might farm 
smaller U.S. tour or excursion boats. The industry featuring these 
smaller vessels is thriving, but it simply does not cater to the same 
client base as large cruise ships. For one thing, the tour boats 
operating in Alaska are all much smaller--under 1,000 tons compared to 
the 5,000 ton minimum for cruise ships in this bill. The larger vessels 
can offer unmatched luxury and personal service, on-board shopping, 
entertainment, and so forth. The smaller vessels offer more flexible 
routes, the ability to get closer to Alaska's natural attractions, and 
other benefits. There is no significant competition between the two 
types of vessel, because the passengers inclined to one are not likely 
to be inclined to the other.
  Mr. President, I cannot claim that this legislation would immediately 
lead to increased earnings for U.S. ports. I can only say that it would 
allow them to compete fairly, instead of being anchored by a rule that 
is actively harmful to U.S. interests. It is, as I said at the 
beginning of this statement, only a way to open the door.
  We have heard a lot of talk about growing the economy and creating 
jobs during the last few years, and we are bound to keep hearing those 
phrases even more often over the next few months. But we all know, Mr. 
President, that such changes are easier to talk about than they are to 
accomplish. Well, Mr. President, here is a bill that opens the door to 
thousands of jobs and hundreds of millions of new dollars, and does it 
without one red cent of taxpayer money.
  It has been 110 years since the current law was enacted, and it's 
time for a change.
                                 ______
                                 
      By Mr. LUGAR (for himself and Mr. Leahy):
  S. 2077. A bill to amend the Commodity Exchange Act to improve the 
act, and for other purposes; to the Committee on Agriculture, 
Nutrition, and Forestry.


             The Commodity Exchange Act Amendments of 1996

 Mr. LUGAR. Mr. President, today Senator Leahy and I are 
introducing legislation to amend the Commodity Exchange Act. This bill 
follows several months of hearings and informal consultations with 
industry, academics and regulators. The legislation streamlines U.S. 
futures trading law, conforming it to changing competitive realities.
  In many ways, regulation has benefited the U.S. futures industry. 
Prudent regulation enhances customer protection, prevents and punishes 
fraud and other abuses, and makes futures markets better able to 
provide risk management, price discovery and investment opportunity.
  Regulation, however, also has its costs. U.S. futures markets face 
competition that is, in some cases, less regulated or differently 
regulated. In the years ahead, our challenge is to balance the need for 
adequate regulation with the need to offer cost-competitive products.
  This bill tries to strike such a balance. It requires the Commodity 
Futures Trading Commission to consider the costs for industry of the 
regulations it imposes. The bill streamlines the process of introducing 
new futures contracts, reducing the time that is required to begin 
trading these new products. It makes similar reforms to the process by 
which exchanges' rules are reviewed by the CFTC.
  Where additional authority for the CFTC is needed, the bill provides 
it. The CFTC will have the authority to require delivery points for 
overseas futures markets to provide information that is also regularly 
demanded of American market participants. This is eminently reasonable, 
and may assist the CFTC and other regulators in the future if 
situations similar to the current copper market scandal recur.
  The bill will also provide greater legal certainty for swaps, over-
the-counter products that are of increasing importance to many 
businesses. It is important that these contracts' enforceability be 
made more certain, so that legal risk does not compound the other risks 
inherent in any financial transaction.
  The bill contains a number of other provisions. I have provided a 
descriptive summary which may be helpful to our colleagues. Mr. 
President, I ask unanimous consent that this document and the text of 
the introduced bill be printed in the Record.
  It is late in the session, and I do not expect the Commodity Exchange 
Act Amendments of 1996 to become law this year. Senator Leahy and I 
wanted to introduce it to spur discussion and debate, so that early in 
the next Congress we can again introduce the bill, with any refinements 
that may be developed in the interim. We both intend that the bill will 
be a major focus of attention for the Committee on Agriculture, 
Nutrition, and Forestry next year.
  As usual, I am indebted to Senator Leahy for his bipartisan 
cooperation in this as in so many other endeavors. I am honored that he 
is an original co-sponsor of the bill.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2077

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Commodity Exchange 
     Amendments Act of 1996''.

     SEC. 2. HEDGING.

       The fourth sentence of section 3 of the Commodity Exchange 
     Act (7 U.S.C. 5) is amended by striking ``through 
     fluctuations in price''.

     SEC. 3. DELIVERY POINTS FOR FOREIGN FUTURES CONTRACTS.

       Section 4(b) of the Commodity Exchange Act (7 U.S.C. 6(b)) 
     is amended--
       (1) in the third sentence--
       (A) by striking ``(1)'' and ``(2)'' and inserting ``(A)'' 
     and ``(B)'', respectively; and
       (B) by striking ``No rule'' and inserting ``Except as 
     provided in paragraph (2), no rule'';
       (2) by inserting ``(1)'' after ``(b)''; and
       (3) by adding at the end the following:
       ``(2)(A) The Commission shall consult with a foreign 
     government, foreign futures authority, or department, agency, 
     governmental body, or regulatory organization empowered by a 
     foreign government to regulate a board of trade, exchange, or 
     market located outside the United States, or a territory or 
     possession of the United States, that has 1 or more 
     established delivery points in the United States, or a 
     territory or possession of the United States, for a contract 
     of sale of a commodity for future delivery that is made or 
     will be made on or subject to the rules of the board of 
     trade, exchange, or market.
       ``(B) In the consultations, the Commission shall endeavor 
     to secure adequate assurances, through memoranda of 
     understanding or any other means the Commission considers 
     appropriate, that the presence of the delivery points will 
     not create the potential for manipulation of the price, or 
     any other disruption in trading, of a contract of sale of a 
     commodity for future delivery traded on or subject to the 
     rules of a contract market, or a commodity, in interstate 
     commerce.
       ``(C) Any warehouse or other facility housing an 
     established delivery point in the United States, or a 
     territory or possession of the United States, described in 
     subparagraph (A) shall--
       ``(i) keep books, records, and other information specified 
     by the Commission pertaining to all transactions and 
     positions in all contracts made or carried on the foreign 
     board of trade, exchange, or market in such form and manner 
     and for such period as may be required by the Commission;
       ``(ii) file such reports regarding the transactions and 
     positions with the Commission as the Commission may specify; 
     and
       ``(iii) keep the books and records open to inspection by a 
     representative of the Commission or the United States 
     Department of Justice.''.

     SEC. 4. EXEMPTION AUTHORITY AND SWAP EXEMPTION.

       (a) In General.--Section 4(c) of the Commodity Exchange Act 
     (7 U.S.C. 6(c)) is amended by adding at the end the 
     following:
       ``(6)(A) An agreement, contract, or transaction (or class 
     thereof) that is otherwise subject to this Act shall be 
     exempt from all

[[Page S10605]]

     provisions of this Act and any person or class of persons 
     offering, entering into, rendering advice, or rendering other 
     services with respect to the agreement, contract, or 
     transaction (or class thereof) shall be exempt for the 
     activity from all provisions of this Act (except in each case 
     the provisions of sections 2(a)(1)(B), 4b, and 4o, any 
     antifraud provision adopted by the Commission pursuant to 
     section 4c(b), and the provisions of section 6(c) and 9(a)(2) 
     to the extent the provisions prohibit manipulation of the 
     market price of any commodity in interstate commerce or for 
     future delivery on or subject to the rules of any contract 
     market): Provided, That prior to, on, or after the date of 
     enactment of this paragraph, the agreement, contract, or 
     transaction (or class thereof) satisfies the eligibility 
     conditions for an exemption under the regulations of the 
     Commission published in the Federal Register on January 22, 
     1993, and codified in sections 35.1(b)(2) and 35.2 of part 35 
     of title 17, Code of Federal Regulations.
       ``(B) This paragraph shall not restrict the authority of 
     the Commission to grant exemptions under this subsection that 
     are in addition to or independent of the exemption provided 
     in this paragraph. No such exemption shall be applied in a 
     manner that restricts an exemption provided under this 
     paragraph.
       ``(7)(A) The Commission may exempt an agreement, contract, 
     or transaction (or class thereof) under this subsection to 
     the extent that the agreement, contract, or transaction (or 
     class thereof) may be subject to this Act.
       ``(B) An exemption under this subsection shall not create a 
     presumption that the exempted agreement, contract, or 
     transaction (or class thereof) is subject to this Act.''.
       (b) Review.--Not later than 1 year after the date of 
     enactment of this Act, the Commodity Futures Trading 
     Commission shall complete a reconsideration of the 
     regulations contained in part 36 of title 17, Code of Federal 
     Regulations, with the goal of establishing exemptive 
     provisions that are consistent with subsection (c).
       (c) Sense of Congress.--It is the sense of Congress that--
       (1) the exemption provided under section 4(c) of the 
     Commodity Exchange Act (7 U.S.C. 6(c)), and codified in part 
     36 of title 17, Code of Federal Regulations, does not yet 
     sufficiently promote fair competition by affording exchange-
     traded instruments fair and even-handed treatment with 
     similar products traded over-the-counter among institutions 
     and professionals; and
       (2) the Commodity Futures Trading Commission should provide 
     for such fair competition by granting instruments traded on 
     or subject to the facilities of exchanges, exemptive 
     flexibility that is equitable in comparison to the exemptive 
     flexibility the Commission has granted to over-the-counter 
     transactions, while ensuring the protection of market 
     participants and financial and market integrity.
       (d) Report.--On completion of the review required by 
     subsection (b), the Commodity Futures Trading Commission 
     shall report on the results of the review to the Committee on 
     Agriculture of the House of Representatives and the Committee 
     on Agriculture, Nutrition, and Forestry of the Senate.

     SEC. 5. CONTRACT DESIGNATION.

       (a) In General.--Section 5 of the Commodity Exchange Act (7 
     U.S.C. 7) is amended--
       (1) by striking the matter preceding paragraph (1) and 
     inserting the following:

     ``SEC. 5. DESIGNATION OF A BOARD OF TRADE AS A CONTRACT 
                   MARKET.

       ``(a) In General.--The Commission shall designate a board 
     of trade as a contract market if the board of trade complies 
     with and carries out the following conditions and 
     requirements:'';
       (2) by striking paragraph (7);
       (3) by redesignating paragraph (8) as paragraph (7); and
       (4) by adding at the end the following:
       ``(b) Existing and Future Designations.--
       ``(1) In general.--If a board of trade is designated as a 
     contract market by the Commission under subsection (a) and 
     section 6, the board of trade shall retain the designation 
     for all existing or future contracts, unless the Commission 
     suspends or revokes the designation or the board of trade 
     relinquishes the designation.
       ``(2) Existing designations.--A board of trade that has 
     been designated as a contract market as of the date of 
     enactment of this subsection shall retain the designation 
     unless the Commission finds that a violation of this Act or a 
     rule, regulation, or order of the Commission by the contract 
     market justifies suspension or revocation of the designation 
     under section 6(b), or the board of trade relinquishes the 
     designation.
       ``(c) New Contract Submissions.--Except as provided in 
     subsection (e), a board of trade that has been designated as 
     a contract market under subsection (a) shall submit to the 
     Commission all rules that establish the terms and conditions 
     of a new contract of sale in accordance with subsection (d) 
     (referred to in this section as a `new contract'), other than 
     a rule relating to the setting of levels of margin and other 
     rules that the Commission may specify by regulation.
       ``(d) Procedures for New Contracts.--
       ``(1) Required submission to commission.--Except as 
     provided in subsection (e), a contract market shall submit 
     new contracts to the Commission in accordance with subsection 
     (c).
       ``(2) Effectiveness of new contracts.--A contract market 
     may make effective a new contract and may implement trading 
     in the new contract--
       ``(A) not earlier than 10 business days after the receipt 
     of the new contract by the Commission; or
       ``(B) earlier if authorized by the Commission by rule, 
     regulation, order, or written notice.
       ``(3) Notice to contract market.--The new contract shall 
     become effective and may be traded on the contract market, 
     unless, within the 10-business-day period beginning on the 
     date of the receipt of the new contract by the Commission, 
     the Commission notifies the contract market in writing--
       ``(A) of the determination of the Commission that the 
     proposed new contract appears to--
       ``(i) violate a specific provision of this Act (including 
     paragraphs (1) through (7) of section 5(a)) or a rule, 
     regulation, or order of the Commission; or
       ``(ii) be contrary to the public interest; and
       ``(B) that the Commission intends to review the new 
     contract.
       ``(4) Notice in the federal register.--Notwithstanding the 
     determination of the Commission to review a new contract 
     under paragraph (3) and except as provided in subsection (e), 
     the contract market may make the new contract effective, and 
     may implement trading in the new contract, on a date that is 
     not earlier than 15 business days after the determination of 
     the Commission to review the new contract unless within the 
     period of 15 business days the Commission institutes 
     proceedings to disapprove the new contract by providing 
     notice in the Federal Register of the information required 
     under paragraph (5)(A).
       ``(5) Disapproval proceedings.--
       ``(A) Notice of proposed violations.--If the Commission 
     institutes proceedings to determine whether to disapprove a 
     new contract under this subsection, the Commission shall 
     provide the contract market with written notice, including an 
     explanation and analysis of the substantive basis for the 
     proposed grounds for disapproval, of what the Commission has 
     reason to believe are the grounds for disapproval, including, 
     as applicable--
       ``(i) the 1 or more specific provisions of this Act or a 
     rule, regulation, or order of the Commission that the 
     Commission has reason to believe the new contract violates 
     or, if the new contract became effective, would violate; or
       ``(ii) the 1 or more specific public interests to which the 
     Commission has reason to believe the new contract is 
     contrary, or if the new contract became effective would be 
     contrary.
       ``(B) Disapproval proceedings and determination.--
       ``(i) Opportunity to participate; hearing.--Before deciding 
     to disapprove a new contract, the Commission shall give 
     interested persons (including the board of trade) an 
     opportunity to participate in the disapproval proceedings 
     through the submission of written data, views, or arguments 
     following appropriate notice and an opportunity for a hearing 
     on the record before the Commission.
       ``(ii) Determination of disapproval.--At the conclusion of 
     the disapproval proceeding, the Commission shall determine 
     whether to disapprove the new contract.
       ``(iii) Grounds for disapproval.--The Commission shall 
     disapprove the new contract if the Commission determines that 
     the new contract--

       ``(I) violates this Act or a rule, regulation, or order of 
     the Commission; or
       ``(II) is contrary to public interest.

       ``(iv) Specifications for disapproval.--Each disapproval 
     determination shall specify, as applicable--

       ``(I) the 1 or more specific provisions of this Act or a 
     rule, regulation, or order of the Commission, that the 
     Commission determines the new contract violates or, if the 
     new contract became effective, would violate; or
       ``(II) the 1 or more specific public interests to which the 
     Commission determines the new contract is contrary, or if the 
     new contract became effective would be contrary.

       ``(C) Failure to timely complete disapproval 
     determination.--If the Commission does not conclude a 
     disapproval proceeding as provided in subparagraph (B) for a 
     new contract by the date that is 120 calendar days after the 
     Commission institutes the proceeding, the new contract may be 
     made effective, and trading in the new contract may be 
     implemented, by the contract market until such time as the 
     Commission disapproves the new contract in accordance with 
     this paragraph.
       ``(D) Appeals.--A board of trade that has been subject to 
     disapproval of a new contract by the Commission under this 
     subsection shall have the right to an appeal of the 
     disapproval to the court of appeals as provided in section 
     6(b).
       ``(6) Contract market deemed designated.--A board of trade 
     shall be deemed to be designated a contract market for a new 
     contract of sale for future delivery when the new contract 
     becomes effective and trading in the new contract begins.
       ``(e) Required Interagency Review.--Notwithstanding 
     subsection (d), no board of trade may make effective a new 
     contract (or option on the contract) that is subject to the 
     requirements and procedures of clauses (ii) through (v) of 
     paragraph (1)(B), and paragraph (8)(B)(ii), of section 2(a) 
     until the requirements and procedures are satisfied and 
     carried out.''.

[[Page S10606]]

       (b) Conforming Amendment.--The first sentence of section 
     6(a) of the Commodity Exchange Act (7 U.S.C. 8(a)) is amended 
     by striking ``Any board of trade desiring'' and inserting ``A 
     board of trade that has not obtained any designation as a 
     contract market for a contract of sale for a commodity under 
     section 5 that desires''.

     SEC. 6. DELIVERY BY FEDERALLY LICENSED WAREHOUSES.

       Section 5a(a) of the Commodity Exchange Act (7 U.S.C. 
     7a(a)) is amended by striking paragraph (7) and inserting the 
     following:
       ``(7) Repealed;''.

     SEC. 7. SUBMISSION OF RULES TO COMMISSION.

       Section 5a(a) of the Commodity Exchange Act (7 U.S.C. 
     7a(a)(12)) is amended by striking paragraph (12) and 
     inserting the following:
       ``(12)(A)(i) except as otherwise provided in this 
     paragraph, submit to the Commission all bylaws, rules, 
     regulations, and resolutions (collectively referred to in 
     this subparagraph as `rules') made or issued by the contract 
     market, or by the governing board or committee of the 
     contract market (except those relating to the setting of 
     levels of margin, those submitted pursuant to section 5 or 
     6(a), and those the Commission may specify by regulation) and 
     may make a rule effective not earlier than 10 business days 
     after the receipt of the submission by the Commission or 
     earlier, if approved by the Commission by rule, regulation, 
     order, or written notice, unless, within the 10-business-day 
     period, the Commission notifies the contract market in 
     writing of its determination to review such rules for 
     disapproval and of the specific sections of this Act or the 
     regulations of the Commission that the Commission determines 
     the rule would violate. The determination to review such 
     rules for disapproval shall not be delegable to any employee 
     of the Commission. Not later than 45 calendar days before 
     disapproving a rule of major economic significance (as 
     determined by the Commission), the Commission shall publish a 
     notice of the rule in the Federal Register. The Commission 
     shall give interested persons an opportunity to participate 
     in the disapproval process through the submission of written 
     data, views, or arguments. The determination by the 
     Commission whether a rule is of major economic significance 
     shall be final and not subject to judicial review. The 
     Commission shall disapprove, after appropriate notice and 
     opportunity for hearing (including an opportunity for the 
     contract market to have a hearing on the record before the 
     Commission), a rule only if the Commission determines the 
     rule at any time to be in violation of this Act or a 
     regulation of the Commission. If the Commission institutes 
     proceedings to determine whether a rule should be disapproved 
     pursuant to this paragraph, the Commission shall provide the 
     contract market with written notice of the proposed grounds 
     for disapproval, including the specific sections of this Act 
     or the regulations of the Commission that would be violated. 
     At the conclusion of the proceedings, the Commission shall 
     determine whether to disapprove the rule. Any disapproval 
     shall specify the sections of this Act or the regulations of 
     the Commission that the Commission determines the rule has 
     violated or, if effective, would violate. If the Commission 
     does not institute disapproval proceedings with respect to a 
     rule within 45 calendar days after receipt of the rule by the 
     Commission, or if the Commission does not conclude a 
     disapproval proceeding with respect to a rule within 120 
     calendar days after receipt of the rule by the Commission, 
     the rule may be made effective by the contract market until 
     such time as the Commission disapproves the rule in 
     accordance with this paragraph.
       ``(B)(i) The Commission shall issue regulations to specify 
     the terms and conditions under which, in an emergency as 
     defined by the Commission, a contract market may, by a \2/3\-
     vote of the governing board of the contract market, make a 
     rule (referred to in this subparagraph as an `emergency 
     rule') immediately effective without compliance with the 10-
     day notice requirement under subparagraph (A), if the 
     contract market makes every effort practicable to notify the 
     Commission of the emergency rule, and provide a complete 
     explanation of the emergency involved, prior to making the 
     emergency rule effective.
       ``(ii) If the contract market does not provide the 
     Commission with the requisite notification and explanation 
     before making the emergency rule effective, the contract 
     market shall provide the Commission with the notification and 
     explanation at the earliest practicable date.
       ``(iii) The Commission may delegate the power to receive 
     the notification and explanation to such individuals as the 
     Commission determines necessary and appropriate.
       ``(iv) Not later than 10 days after the receipt from a 
     contract market of notification of such an emergency rule and 
     an explanation of the emergency involved, or as soon as 
     practicable, the Commission shall determine whether to 
     suspend the effect of the rule pending review by the 
     Commission under the procedures of subparagraph (A).
       ``(v)(I) The Commission shall submit a report on the 
     determination of the Commission on the emergency rule under 
     clause (iv), and the basis for the determination, to the 
     affected contract market, the Committee on Agriculture of the 
     House of Representatives, and the Committee on Agriculture, 
     Nutrition, and Forestry of the Senate.
       ``(II) If the report is submitted more than 10 days after 
     the Commission's receipt of notification of the emergency 
     rule from a contract market, the report shall explain why 
     submission within the 10-day period was not practicable.
       ``(III) A determination by the Commission to suspend the 
     effect of a rule under this subparagraph shall be subject to 
     judicial review on the same basis as an emergency 
     determination under section 8a(9).
       ``(IV) Nothing in this paragraph limits the authority of 
     the Commission under section 8a(9);''.

     SEC. 8. AUDIT TRAIL.

       Section 5a(b) of the Commodity Exchange Act (7 U.S.C. 
     7a(b)) is amended--
       (1) in paragraph (3), by inserting ``selected by the 
     contract market'' after ``means'' each place it appears; and
       (2) by adding at the end the following:
       ``(7) The requirements of this subsection establish 
     performance standards and do not mandate the use of a 
     specific technology to satisfy the requirements.''.

     SEC. 9. MISCELLANEOUS TECHNICAL AMENDMENTS.

       Section 8a of the Commodity Exchange Act (7 U.S.C. 12a) is 
     amended--
       (1) in paragraph (2)--
       (A) in subparagraph (B), by inserting ``this paragraph or'' 
     after ``the provisions of''; and
       (B) in subparagraph (D), by inserting ``pleaded guilty to 
     or'' after ``such person has''; and
       (2) in paragraph (3)(H), by striking ``or has been 
     convicted in a State court,'' and inserting ``or has pleaded 
     guilty to, or has been convicted, in a State court,''.

     SEC. 10. CONSIDERATION OF EFFICIENCY, COMPETITION, RISK 
                   MANAGEMENT, AND ANTITRUST LAWS.

       Section 15 of the Commodity Exchange Act (7 U.S.C. 19) is 
     amended--
       (1) by striking ``Sec. 15. The Commission'' and inserting 
     the following:
       ``Sec. 15. (a)(1) Prior to adopting a rule or regulation 
     authorized by this Act or adopting an order (except as 
     provided in subsection (b)), the Commission shall consider 
     the costs and benefits of the action of the Commission.
       ``(2) The costs and benefits of the proposed Commission 
     action shall be evaluated in light of considerations of 
     protection of market participants, the efficiency, 
     competitiveness, and financial integrity of futures markets, 
     price discovery, sound risk management practices, and other 
     appropriate factors, as determined by the Commission.
       ``(b) Subsection (a) shall not apply to the following 
     actions of the Commission:
       ``(1) An order that initiates, is part of, or is the result 
     of an adjudicatory or investigative process of the 
     Commission.
       ``(2) An emergency action.
       ``(3) A finding of fact regarding compliance with a 
     requirement of the Commission.
       ``(c) The Commission''; and
       (2) by striking ``requiring or approving'' and inserting 
     ``requiring, reviewing, or disapproving''.

     SEC. 11. DISCIPLINARY AND ENFORCEMENT ACTIVITIES.

       (a) In General.--It is the sense of Congress that the 
     Commodity Futures Trading Commission should--
       (1) to the extent practicable, avoid unnecessary 
     duplication of effort in pursuing disciplinary and 
     enforcement actions if adequate self-regulatory actions have 
     been taken by contract markets and registered futures 
     associations; and
       (2) retain an oversight and disciplinary role over the 
     self-regulatory activities by contract markets and registered 
     futures associations in a manner that is sufficient to 
     safeguard financial and market integrity and the public 
     interest.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Commission shall submit a report 
     to the Committee on Agriculture of the House of 
     Representatives and the Committee on Agriculture, Nutrition, 
     and Forestry of the Senate that evaluates the effectiveness 
     of the enforcement activities of the Commission, including an 
     evaluation of the experience of the Commission in preventing, 
     deterring, and disciplining violations of the Commodity 
     Exchange Act (7 U.S.C. 1 et seq.) and Commission regulations 
     involving fraud against the public through the bucketing of 
     orders and similar abuses.

     SEC. 12. DELEGATION OF FUNCTIONS BY THE COMMISSION.

       (a) In General.--It is the sense of Congress that the 
     Commodity Futures Trading Commission should--
       (1) review its rules and regulations that delegate any of 
     its duties or authorities under the Commodity Exchange Act (7 
     U.S.C. 1 et seq.) to contract markets or registered futures 
     associations;
       (2) consistent with the public interest and law, determine 
     which additional functions, if any, performed by the 
     Commission should be delegated to contract markets or 
     registered futures associations; and
       (3) establish procedures (such as spot checks, random 
     audits, reporting requirements, pilot projects, or other 
     means) to ensure adequate performance of the additional 
     functions that are delegated to contract markets or 
     registered futures associations.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Commission shall report the 
     results of its review and actions under subsection (a) to the 
     Committee on Agriculture of the House of Representatives and 
     the Committee on Agriculture, Nutrition, and Forestry of the 
     Senate.
                                                                    ____


[[Page S10607]]

  


 Summary and Discussion--The Commodity Exchange Act Amendments of 1996

       Section 1. Short title.
       The bill is entitled ``The Commodity Exchange Act 
     Amendments of 1996.''
       Section 2. Hedging.
       The CEA does not directly define the term ``hedging.'' In 
     Section 3 of the CEA, which contains various legislative 
     findings that justify regulation of futures markets, the 
     statute speaks of business operators ``hedging themselves 
     against possible loss through fluctuations in price.'' 
     Questions have been raised whether hedging can occur against 
     risks other than price risks--for instance, in new futures 
     contracts that are based on yields of specified crops in 
     particular states. The bill deletes the phrase ``through 
     fluctuations in price.'' It makes clear that risks to be 
     hedged may be risks other than those directly resulting from 
     price changes. This change will not affect the authority to 
     establish speculative limits, require reporting of large 
     trader positions and otherwise ensure market integrity.
       Section 3. Delivery Points for Foreign Futures Contracts.
       In recent years, some overseas futures exchanges have 
     established delivery points in the U.S. The implications of 
     making and taking delivery of a physical commodity that is 
     priced on a foreign exchange may differ, depending on the 
     comparability of price discovery on that exchange and on U.S. 
     exchanges, as well as other factors. Serious questions have 
     been raised, as the current scandal in the copper markets has 
     unfolded, about what role, if any, delivery points for 
     foreign futures contracts may have played in that affair. 
     These questions are not yet answered. However, the 
     legislation makes changes that will be appropriate regardless 
     of the outcome of specific investigations.
       The bill directs the CFTC to consult with overseas 
     regulators and other appropriate parties in countries where 
     futures exchanges have established U.S. delivery points. The 
     aim of the consultations will be to secure adequate 
     assurances against any adverse effect on U.S. markets because 
     of these delivery points. Such assurances could take the form 
     of changes to regulations or trading rules in the overseas 
     market.
       The bill also gives the CFTC authority to obtain 
     information from warehouses that are delivery points for 
     foreign exchanges. This information would be similar to that 
     which the CFTC may already require of persons making trades 
     on overseas futures markets, and will assist the CFTC in 
     ensuring market integrity, preventing abuses and otherwise 
     discharging its responsibilities.
       Section 4. Exemption Authority and Swap Exemption.
       The Act gives the CFTC authority to exempt transactions 
     from its regulatory requirements, either completely or on 
     stated terms. In 1993, the CFTC used this authority to exempt 
     swap agreements from most, but not all, portions of the Act. 
     This exemption generally seems to have worked well, 
     facilitating a climate in which swaps, which offer numerous 
     benefits to their users if properly and prudently employed, 
     could trade with secure legal status. (It was the lack of 
     such legal certainty which, in part, prompted Congress to 
     enact the exemptive authority.)
       The bill will provide additional legal certainty for swaps 
     transactions in two ways. First, the bill codifies the 
     present exemption from regulation for transactions that meet 
     its requirements, either now or in future. For these 
     qualifying instruments, a statutory change would be required 
     in order for the exemption to become more restrictive than it 
     now is. The codification does not affect the CFTC's power to 
     grant additional exemptions that would be less restrictive 
     than the current exemption. Nor does it limit the CFTC's 
     ability to enforce anti-manipulation or anti-fraud provisions 
     of the CEA as they may apply to these transactions or as the 
     present exemptions may be conditioned on compliance with 
     their provisions.
       Second, the bill codifies two important elements of the 
     present swaps exemptive authority, again to enhance legal 
     certainty. The legislation clarifies that the CFTC may issue 
     an exemption that is applicable to the extent the exempted 
     transaction may have been subject to the Act--i.e., without 
     requiring a prior decision on whether the transaction 
     actually was, in fact, subject to the Act. Relatedly, the 
     legislation states that the mere fact that a transaction was 
     exempted from the Act does not, in itself, create a 
     presumption that the transaction was one that would have 
     fallen under the Act's regulatory requirements had it not 
     been exempted. Both these clarifications are consistent with 
     present regulations for exemptions.
       This section of the bill also directs the CFTC to review 
     rules that permit futures exchanges, under narrowly defined 
     conditions, to operate less-regulated markets that are 
     restricted to professional and institutional participants. 
     These so-called ``Part 36'' rules have not, so far, resulted 
     in the active operation of such markets. The issue is an 
     especially important one because of the competitive 
     challenges futures exchanges face, both from overseas markets 
     and from over-the-counter products in the U.S. The 
     legislation does not contemplate greater regulation of the 
     latter markets, and indeed strives to achieve greater legal 
     certainty for O-T-C products. But it does express the view of 
     Congress that futures exchanges need to be able to compete in 
     today's financial marketplace, in a way that reduces 
     regulatory costs of doing business while assuring customer 
     protection. To this end, the CFTC is directed to re-examine 
     the Part 36 rules and report, within a year, to Congress on 
     what if any changes may be appropriate. This broad mandate, 
     as opposed to requirements for specific changes in the 
     current regulations, reflects a view that the CFTC should be 
     better able than Congress to assess necessary reforms. The 
     report will afford an opportunity for Congress to judge the 
     adequacy of any changes, and to contemplate any additional 
     statutory changes that may be required.
       Section 5. Contract Designation.
       The Act now requires futures exchanges to be ``designated'' 
     as a ``contract market'' for each futures contract they 
     trade. This process has been streamlined by the CFTC in 
     recent years, but the statute continues to reflect a rather 
     elaborate process in which, in many ways, the burden of proof 
     is placed on exchanges to demonstrate why they should be able 
     to offer new products for trading. Even for a regulated 
     financial sector like the futures industry, this implicit 
     presumption against new product development is out of date. 
     The bill streamlines the process of introducing new futures 
     contracts, both by compressing the time available for agency 
     review and by creating a presumption that products developed 
     by exchanges should be permitted to trade unless the CFTC 
     finds compellingly why they should not. The legislation 
     treats new contract applications as rules, albeit under 
     somewhat different procedures from other exchange rules. 
     Under the new procedure, an exchange submits a new contract 
     to the CFTC. The new contract may trade after 10 business 
     days, unless the CFTC states an intention to review it for 
     possible disapproval. After a further 15 business days, the 
     new contract can be traded unless the CFTC institutes 
     proceedings to disapprove it. These proceedings are to be 
     completed within 120 days; if not, the new contract can trade 
     until and unless it is finally disapproved. In contrast to 
     the present burden on an exchange to show that a contract is 
     in ``the public interest,'' the CFTC could only disapprove a 
     contract by showing that it was ``contrary to the public 
     interest'' (or by showing that it violated law or 
     regulations). The philosophy is a fairly simple one: Subject 
     to prudent regulatory limits, private futures exchanges can 
     more appropriately and efficiently decide which new products 
     are ripe for trading than can the government. The exchanges 
     may sometimes err in these judgments, but that is the way 
     markets work.
       Section 6. Delivery by Federally Licensed Warehouses.
       An obscure provision of the Act now allows any federally 
     licensed grain warehouse to make delivery against a futures 
     contract, on giving reasonable notice. Though seldom used, 
     this provision appears to conflict with the ability of 
     exchanges to establish their own trading procedures, 
     including delivery points. In an extremely tight market, the 
     current provision could in some circumstances facilitate 
     market manipulation. The bill repeals this provision.
       Section 7. Submission of Rules to Commission.
       The bill revises current requirements for submitting 
     exchange rules to the CFTC. These rules affect the everyday 
     procedures for doing business on the exchange, as well as the 
     ground rules for trading. They run the gamut from major to 
     minor. As with the procedures for approving new contracts, 
     the legislation compresses the time available for federal 
     review and generally streamlines procedures. Rules are to be 
     submitted to the CFTC and can become effective in 10 business 
     days unless the CFTC notifies the exchange that it will 
     review them for possible disapproval. If the CFTC does not 
     institute disapproval proceedings within 45 days of receiving 
     the proposed rule, or conclude its proceedings within 120 
     days, the rule can become effective until and unless 
     disapproved.
       The authors of the bill intend that its legislative history 
     will also discuss the implementation of statutory 
     requirements for the composition of exchange boards of 
     directors. The CFTC will be directed to report, on an ongoing 
     basis, its evaluation of how fully these requirements are 
     being met. The report language will provide further 
     clarification of Congressional intent with regard to the 
     qualification of individuals to satisfy particular 
     requirements for board representation.
       Section 8. Audit Trail.
       Futures exchanges are subject to audit trail requirements 
     that are intended to ensure market integrity, and to deter 
     and detect abuse. The bill clarifies these requirements in 
     one respect. It states--consistent with testimony by the CFTC 
     before Congress in 1995--that the audit trail requirements 
     establish a performance standard, not a mandate for any 
     particular technological means of achieving the standard. In 
     further support of this clarification, the bill speaks of the 
     ``means selected by the contract market'' for meeting audit 
     trail standards. The authors of the bill intend that its 
     legislative history will also note further CFTC testimony 
     that, in assessing the ``practicability'' of various 
     components of the audit trail standards, the cost to 
     exchanges of meeting the standards is one factor to be taken 
     into account.
       Section 9. Miscellaneous Technical Amendments.
       The bill makes several technical changes to correct 
     omissions in the current statute.
       Section 10. Consideration of Efficiency, Competition, Risk 
     Management, and Antitrust Laws.
       The bill requires the CFTC, in issuing rules, regulations 
     or some types of orders, to

[[Page S10608]]

     take into account the costs and benefits of the action it 
     contemplates. The requirement is not for a quantitative cost-
     benefit analysis, but a mandate to consider both costs and 
     benefits, as well as other enumerated factors. The authors of 
     the bill believe that in establishing its policies and giving 
     direction to market participants, the CFTC should weigh how 
     its actions may effect the participants' costs of doing 
     business, as well as what benefits may accrue from the 
     action.
       Some activities of the CFTC, of course, do not call for 
     this kind of approach, and indeed applying a cost-benefit 
     requirement to them would be inappropriate. Thus, the bill 
     exempts the CFTC's adjudicatory and investigative processes, 
     emergency actions and certain findings of fact that are 
     objective, quantitative or otherwise unsuitable for a cost-
     benefit approach. The bill's eventual legislative history 
     will further discuss Congressional intent in enacting this 
     requirement.
       Section 11. Disciplinary and enforcement activities.
       Enforcement is a priority for the CFTC. Like other 
     financial regulators, the CFTC is assisted in its enforcement 
     activities by the complementary rules, surveillance and 
     disciplinary actions of self-regulatory organizations (SROs). 
     These include both the futures exchanges themselves and the 
     National Futures Association. The bill provides guidance to 
     the CFTC on the deployment of enforcement resources, and 
     requires a report in 1 year on the overall enforcement 
     program. The legislation expresses the sense of Congress that 
     the CFTC should avoid unnecessary duplication of effort 
     where SROs have taken adequate action to deter abuse and 
     ensure customer protection. It further states that the 
     CFTC's oversight and disciplinary role should be 
     sufficient to safeguard market integrity and protect 
     public confidence in markets.
       Section 12. Delegation of functions by the Commission.
       The CFTC, under current law, has delegated some limited 
     duties to the National Futures Association. Today's austere 
     budget climate makes it prudent for the commission to assess 
     whether other functions could appropriately be delegated. The 
     bill calls on the CFTC to determine which, if any, additional 
     functions should be delegated to SROs, suggesting the use of 
     procedures like spot checks and random audits to ensure that 
     any delegated functions are adequately performed, and 
     requires a report in one year with the results of the review. 
     The authors intend that the bill's legislative history will 
     cite several current CFTC activities that could be considered 
     for delegation.
                                                                    ____


        Outline of the Commodity Exchange Act Amendments of 1996

       The Commodity Exchange Act has benefited the American 
     economy. It has helped encourage a dynamic, world-class 
     futures trading industry that allows farmers, ranchers and 
     other business operators to manage risk, provides investment 
     opportunities and offers protection to consumers of its 
     services. From time to time, Congress has re-examined the Act 
     to bring it up to date with changing markets. Such an update 
     is now opportune.
       On June 5, the Committee on Agriculture, Nutrition, and 
     Forestry heard testimony on the need to update the Commodity 
     Exchange Act. Since then, committee staff have consulted 
     extensively with federal agencies and private industry, 
     seeking to explore the implications of legislative proposals 
     by various groups.
       As a result of this thorough process, we announced on 
     August 2, 1996, our intention to introduce legislation to 
     amend the Commodity Exchange Act. Today we are introducing 
     that legislation. Because it is late in the legislative 
     session, we do not intend that the bill become law this year. 
     We intend it to spark discussion, so that the Congress can 
     make comprehensive revisions to the Act in 1997.
       There is a public interest in a strong, competitive U.S. 
     futures industry because of its critical role in price 
     discovery and business risk management. This public interest 
     implies, and requires, a degree of regulation. In recent 
     years, U.S. futures exchanges have also faced increasing 
     competition from foreign exchanges and from over-the-counter 
     derivative products.
       U.S. exchanges face some regulatory costs that are not 
     borne by their competitors. The Act, and the Commodity 
     Futures Trading Commission's actions to implement its 
     requirements, must strike an appropriate balance between 
     prudent regulation and the need for a cost-competitive 
     industry.
       In our August 2 statement, we noted the importance of a 
     provision of the Act called the ``Treasury amendment.'' This 
     amendment excludes interbank foreign exchange transactions 
     and some other enumerated transactions from the CFTC's 
     jurisdiction. It has been the subject of much more frequent 
     litigation than other sections of the Act. It was written, in 
     some haste, in 1974 at a time when many financial markets and 
     instruments were different or less fully developed than 
     today. The case for Congress to revisit, reassess and clarify 
     the Treasury amendment is compelling.
       We asked the CFTC and the Treasury Department to conclude 
     discussions which they had begun some months before, and 
     report their progress around Labor Day. Unfortunately, these 
     discussions have so far produced some points of agreement but 
     no overall consensus among the two agencies or among the 
     other members of the President's working group on financial 
     markets.
       We are disappointed that an agreement on the Treasury 
     amendment has not yet been forged. The issues raised by the 
     amendment seem to us substantial but not insurmountable. In 
     fairness to the Administration, there is not yet a consensus 
     in the private sector either about the appropriate scope of 
     the amendment's exclusions from the Act.
       With some reluctance, we have been persuaded to defer 
     addressing the Treasury amendment in this bill. The 
     Administration asserts that given furhter time, it will be 
     able to reach internal agreement. We are today informing the 
     Administration that, in our view, an agreement by the end of 
     this year is necessary so that the issue can be presented to 
     our colleagues at the beginning of the 105th Congress. If the 
     Administration is not able to present its ideas by the end of 
     1996, we will reluctantly conclude that no consensus in the 
     executive branch is likely, and not await further agency 
     deliberations.
       Deferring a provision of the Treasury amendment does not 
     diminish its importance. Since today's legislation will have 
     to be reintroduced in January 1997, we believe this course of 
     action is prudent, since not only the Administration but also 
     various interested private groups will have the opportunity 
     to confer between now and the end of the year. We urge them 
     to do so. Independent of both efforts, we are considering a 
     variety of specific reforms to the Treasury amendment, and 
     will be interested to compare these ideas to those of the 
     private sector and the Administration. We intend that the 
     reintroduced version of today's bill will propose a solution 
     to the Treasury amendment problem.
       We invite public comment on the Commodity Exchange Act 
     Amendments. We believe this bill represents sound policies. 
     We want to take full account, however, of other views. As we 
     said in August, the bill is neither an opening gambit nor a 
     least common denominator. It represents our best judgment of 
     how the Act should prudently be changed, but our minds remain 
     open.
       The Agriculture Committee's work on the Commodity Exchange 
     Act has been bipartisan and collegial. Like the 1996 farm 
     bill, the landmark new food safety law and other important 
     laws originated by the committee, this legislative effort is 
     one on which we have worked together. Our cooperation will 
     continue.

 Mr. LEAHY. Mr. President, today Senator Lugar and I are 
introducing legislation to amend the Commodity Exchange Act. This 
legislation updates and streamlines U.S. futures trading law.
  There is a strong interest in maintaining a viable futures market. 
Senator Lugar's and my review of committee testimony combined with the 
informal meetings with the industry, regulators, and interested 
academics has convinced us that it is appropriate to make these 
revisions to the CEA.
  I do not expect that this bill will become law during this session. 
But introducing it now will afford an opportunity to engage in an 
active public discussion and debate over the changes that we propose 
here today.
  It is my experience that such a dialog helps develop solid bipartisan 
legislation. As with most issues, there are many interests that must be 
balanced. And, Senator Lugar and I have strived to strike the right 
balance between these interests. But we will profit from the dicussions 
that this bill is sure to prompt.
  I am pleased to join my colleague in offering this bill. Senator 
Lugar and I have worked together on futures issues since we came to the 
Agriculture Committee. We did the same on this bill--working to ensure 
that these markets remain competitive while still maintaining effective 
provisions on customer protection and market integrity such as the 1992 
audit trail provisions.
  I look forward to continuing our discussions.
                                 ______
                                 
      By Mr. BINGAMAN (for himself, Mr. Kempthorne, and Mr. Craig):
  S. 2078. A bill to authorize the sale of excess Department of Defense 
aircraft to facilitate the suppression of wildfire; to the Committee on 
Armed Services.


             the wildfire suppression aircraft transfer act

 Mr. BINGAMAN. Mr. President, this Nation has had a very severe 
fire season this year. So far almost 6 million acres have burned. The 
average amount burned over the last 6 years is a little over 2 million 
acres per year. Airplanes, known as airtankers, play a critical role in 
fighting wildfires. Airtankers are used in the initial attack of 
wildfires in support of firefighters on the ground and, on large 
wildfires, to aid in the protection of lives and structures from 
rapidly advancing fires.

[[Page S10609]]

  Today, I and my colleagues, Senators Kempthorne and Craig, are 
introducing legislation that will help ensure that Federal firefighters 
continue to have access to airtanker services. The Wildfire Suppression 
Aircraft Transfer Act of 1996 will help facilitate the sale of former 
military aircraft to contractors who provide firefighting services to 
the Forest Service and the Department of the Interior. The existing 
fleet of available airtankers is aging rapidly and fleet modernization 
is critical to the continued success of the firefighting program.
  Currently, legislative authority does not exist for the transfer or 
sale of excess turbine-powered military aircraft, suitable for 
conversion to airtankers, to private operators. This greatly hampers 
efforts to modernize the airtanker fleet. This bill will require that 
the aircraft be used only for firefighting activities.
  Time is very short, but it is critical that this bill become law in 
this Congress. If we fail to pass this law, airtanker operators will 
not have access to the planes they need to update the aging airtanker 
fleet.
  I urge my colleagues to support our efforts to ensure that Federal 
firefighters have the resources they need to protect the public and 
their property from the threat of wildfires.
                                 ______
                                 
      By Mr. MOYNIHAN:
  S. 2079. A bill to repeal the prohibition against State restrictions 
on communications between government agencies and the INS; to the 
Committee on the Judiciary.


             alien information provision repeal legislation

 Mr. MOYNIHAN. Mr. President, on Wednesday, September 11, Mayor 
Rudolph W. Giuliani of New York City delivered an address at Georgetown 
University Law School about an obscure provision in the recently passed 
welfare legislation. The provision, section 434 of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996, states:

       Notwithstanding any other provision of Federal, State, or 
     local law, no State or local government entity may be 
     prohibited, or in any way restricted, from sending to or 
     receiving from the Immigration and Naturalization Service 
     (INS) information regarding the immigration status, lawful or 
     unlawful, of an alien in the United States.

Mayor Giuliani said it would ``create chaos in New York City.'' I agree 
with him that this provision is ill-advised and threatens the public 
health and safety of residents of New York City. It conflicts with a 
1985 executive order issued by then-Mayor Edward I. Koch prohibiting 
city employees from reporting suspected illegal aliens to the INS 
unless the alien was charged with a crime. That executive order, which 
is similar to local laws in other States and cities, was intended to 
ensure that fear of deportation does not deter illegal aliens from 
seeking emergency medical attention, reporting crimes, and so on.
  An earlier version of this provision was first introduced in welfare 
legislation during the 103d Congress as a part of H.R. 3500, the 
Responsibility and Empowerment Support Program Providing Employment, 
Child Care, and Training Act, sponsored by Representatives Michel, 
Gingrich, and Santorum. On September 8, 1995, during Senate 
consideration of H.R. 4, the Work Opportunity Act of 1995, Senator 
Santorum, along with Senator Nickles, offered a similar amendment. The 
amendment was adopted by the Senate by a vote of 91 to 6, but H.R. 4 
was later vetoed by President Clinton.
  This year, the provision was included in S. 1795, the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996, which 
was signed by President Clinton on August 22, 1996.
  Because this provision poses a threat to health and safety in New 
York City and elsewhere, I am today introducing legislation to repeal 
section 434 of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996. 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. 2079

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

     SECTION 1. REPEAL OF THE PROHIBITION AGAINST STATE 
                   RESTRICTIONS ON COMMUNICATIONS BETWEEN 
                   GOVERNMENT AGENCIES AND THE INS.

       Section 434 of the Personal Responsibility and Work 
     Opportunity Act of 1996 (Public Law 104-193) is 
     repealed.

                          ____________________