[Congressional Record Volume 142, Number 137 (Saturday, September 28, 1996)]
[Senate]
[Pages S11720-S11731]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

       By Mr. SPECTER (for himself, Mr. Johnston, Mr. Heflin and 
     Mr. Santorum):

  S. 2154. A bill to provide equitable treatment for pharmaceutical 
patents on certain pipeline drugs in order to encourage continued 
development of new drugs, and for other purposes; to the Committee on 
the Judiciary.


                 THE PHARMACEUTICAL EQUITY ACT OF 1996

  Mr. SPECTER. Mr. President, Pennsylvania is proud to host some of the 
world's most innovative pharmaceutical, biotechnology, medical device 
and health care product companies. The United States, of course, is the 
world's leader. These companies are developing the new medicines and 
new products that are extending and improving life for people around 
the world.
  Current law often unnecessarily slows the introduction of new 
technologies and new medicines and increases costs to producers, and 
therefore, ultimately, to consumers. I have consulted with consumer and 
other patient advocacy representatives, as well as pharmaceutical 
manufacturers and the biotechnology industry, in an effort to gather 
sufficiently diverse and constructive suggestions for meaningfully 
addressing this problem.
  While this is certainly an issue critical to Pennsylvania's economic 
future, it is most of all a critical issue for our citizens who suffer 
from costly and debilitating conditions for which no adequate drug 
therapies exist today, including Alzheimer's, AIDS, heart disease, 
cancer, et cetera. We cannot, and should not, keep these patients 
waiting any longer than absolutely necessary.
  We have a very basic problem in America about research expenditures 
for drugs that benefit sick people. These drugs benefit everybody, 
particularly the elderly and the young. We need medical research. We 
need these

[[Page S11721]]

wonder drugs to be produced. It is a matter of fairness as to how we 
are going to compensate those who produce them. If we are to have these 
drugs for consumers, we will have to be able to pay for them. If we are 
to have the kind of research, productivity, and the great miraculous 
advances in medical science, we are simply going to have to ensure a 
reasonable rate of return on the patent period.
  The purpose of the legislation I am introducing today, the 
Pharmaceutical Equity Act of 1996, is to provide a one-time adjustment 
to the patent terms of certain drugs that received unfair treatment as 
a result of the Drug Price Competition and Patent Term Restoration Act 
of 1984 (the Hatch-Waxman Act). Where applicable, these drugs would 
receive a 2-year extension of their patent terms. My legislation is 
intended to provide regulatory relief on a principled basis, as opposed 
to a piecemeal effort to address these concerns.
  Under the Hatch-Waxman Act, Congress provided patent term extensions 
to restore part of the patent lives of drugs that were lost due to 
approval time lags at the FDA. The Hatch-Waxman Act provides up to 5-
year extensions for most drugs. However, the statute also limited the 
patent term extension to 2 years for any drugs that had already begun 
clinical trials before September 24, 1984, and for which a patent had 
already been issued. Drugs falling into this category are often 
referred to as the pipeline drugs because they were in the regulatory 
pipeline at the FDA upon enactment of the Hatch-Waxman Act.
  In making the distinction between pipeline drugs and other drugs in 
1984, Congress believed that pipeline drugs would receive FDA approval 
shortly after 1984 and would not require lengthy patent term 
extensions. Although FDA approval times improved generally, for several 
drugs the delays were inordinantly long, in some cases involving over 
10 years of FDA review time. As a result, these drugs lost critical 
portions of their patent terms. Therefore, the limited 2-year Hatch-
Waxman patent extension for these drugs simply does not adequately 
compensate these companies for the lengthy regulatory delays incurred, 
particularly when other similarly situated companies with non-pipeline 
drugs could receive patent extensions as long as 5 years for such 
delays.
  The Pharmaceutical Equity Act covers any pipeline drug patent where 
the New Drug Application [NDA] for the drug was reviewed by the FDA for 
more than 5 years and where the total review time at the FDA, which 
includes the clinical trials for investigational new drugs [IND], 
exceeded 10 years. This limited extension period would thus only apply 
in those egregious cases where FDA approval times far exceeded average 
approval delays for other drugs. Even if granted, the additional patent 
extension would also still be less than the maximum 5-year extension 
allowable for post-pipeline drugs suffering FDA delays.

  This legislation is not intended to grant an extension to scores of 
drug patents. Rather, it will only apply in limited circumstances where 
FDA delays were inordinate long.
  One of the fundamental powers assigned to Congress under article I, 
section 8 of the Constitution, is the power to promote the progress of 
science by securing for limited times to inventors the exclusive right 
to their discoveries. This is a power which carries with it a 
tremendous obligation.
  In the pharmaceutical arena, for example, this obligation includes 
the need to ensure that our laws encourage the development of life-
saving and life-enhancing new drugs and technologies. My legislation 
fulfills this obligation by providing equitable treatment for 
pharmaceutical innovators, including the appropriate degree of market 
incentives for new innovation.
  Unless we have an equitable system of patent protection, including a 
mechanism for remedying delays by the FDA which deprive patent holders 
of their full patent terms, we will undermine the very incentives the 
law intends to give to research and development companies that 
undertake the enormously expensive and risky process of searching for 
the wonder cures of tomorrow.
  There should be no misunderstanding about the source of drug 
innovation. The vast majority of new drugs are discovered and developed 
by private for-profit research-based pharmaceutical companies. 
Incredibly, 90 percent of FDA-approved drugs that consumers use for 
every type of disease, from cholera to cancer, were first synthesized 
by private industry.
  A recent survey by the Pharmaceutical Research & Manufacturer's 
Association [PhRMA] shows that research-based pharmaceutical companies 
are in the process of developing 215 drugs for over 20 different types 
of cancer. There is also an enormous research and development effort 
aimed at combating AIDS and AIDS-related conditions, with more than 110 
products at various stages of development. Many more medicines for a 
wide range of diseases and human afflictions are also being developed, 
including 132 drugs for major diseases of aging, 118 for neurological 
disorders, 107 for heart disease and strokes, and 64 for mental 
illness. The list for other major medical ailments is virtually 
endless.
  Such innovation does not come cheaply. A recent study by the Boston 
Consulting Group found that pharmaceutical companies expend 
approximately $500 million and 15 years bringing a new drug to market. 
These innovative drug research companies will spend nearly $16 billion 
in research and development costs this year. That is more than the 
entire government budget for biomedical research, and represents an 
increase of 9.6 percent over 1995 levels. These pharmaceutical 
companies spend an average of almost 20 percent of their income from 
sales on research.
  Part of this research and development expense is due to the 
complexity of the diseases being fought--for every 6,000 new drugs that 
are researched and developed, only a single drug emerges as an approved 
new product. A large portion of the expense, however, is also due to 
the sheer volume and duration of FDA approval requirements for safety 
and efficacy. New drug applications by pharmaceutical innovators 
typically require hundreds of thousands of pages of information and 
years of clinical trials to complete. The time required to complete the 
clinical trials for new drugs has ballooned from an average of 2.5 
years in the 1960's to nearly 6 years in the 1990's.
  The high cost of drug development and the limited numbers of drugs 
that receive approval and actually are available to the public combine 
to create a system where the few successful drugs must pay for all the 
research and development expended on those drugs that did not succeed. 
More significant from a consumer standpoint, however, these successful 
drugs provide profits and incentives which support the research and 
development of the new cures for the diseases of tomorrow.

  Apart from the immeasurable benefits people around the world enjoy 
from improved health and the new cures made possible by pharmaceutical 
innovation, we must also realize that the pharmaceutical producers 
themselves provide great economic benefits to communities across the 
United States. One of these benefits is through high-paying, quality 
jobs.
  Recent data indicate that pharmaceutical companies employ over 33,000 
people in my State of Pennsylvania. Nationally, these companies provide 
over 150,000 jobs. A large portion of these jobs are scientific jobs in 
research and development, exactly the types of jobs we are trying to 
create to maintain American competitiveness in a global marketplace.
  Another economic benefit is through expanded exports. In 1994, the 
U.S. exported $7.565 billion in pharmaceutical products around the 
world.
  Use of proper drug treatments can also save consumers and the 
government millions if not billions of dollars every year. Experts have 
calculated that pharmaceutical products are often far more cost-
effective at treating disease than alternative treatments such as 
surgery or hospitalization. Several examples illustrate just how much 
money families can save through drug therapy in particular 
circumstances.
  Cancer patients whose immune systems are weakened by chemotherapy 
have been helped by a drug containing a colony stimulating factor. The 
treatment saves $30,000 per patient in hospitalization costs for bone 
marrow transplants.
  For heart disease, a New England Journal of Medicine study showed 
that

[[Page S11722]]

patients on ACE inhibitor drugs for heart failure avoided nearly $9,000 
per patient in hospitalization costs over a 3-year period. Nationwide, 
the potential savings from these drug treatments are up to $2 billion 
per year. More importantly, however, the drug also reduced patient 
deaths by over 15 percent.
  Drug therapy for schizophrenia, according to a 1990 study, has 
enabled many patients to receive treatment in nonhospital settings. 
Although annual drug costs for such treatment are approximately $4,500, 
the savings are tremendous when compared with annual costs of over 
$73,000 for treatment in state mental hospitals.
  Post-surgical recuperation is another area where the use of immuno-
suppressive drugs has improved the effectiveness of treatment and 
reduced costs. In organ transplants, for example, success rates were 
dramatically higher with the use of these drugs. One drug was found to 
reduce average hospital stays by as much as 10 days, and also reduced 
re-hospitalizations after surgery.
  In the case of ulcers, the advent of antacids and other products have 
led to a decline in surgeries from 97,000 in 1977 to 19,000 in 1987. 
The annual cost of drug therapy for each patient amounted to $900, 
versus approximately $28,000 for surgery. In the aggregate, use of 
these antacids and other products reduced medical costs by 
approximately $224 million per year.
  The evidence is irrefutable about the tremendous benefit our society 
enjoys, from the physiological to the financial, from pharmaceutical 
innovation. Without a strong and fair patent system which provides the 
necessary incentives to continue this innovation, we will lose these 
benefits. The Pharmaceutical Equity Act, with its narrowly-targeted fix 
of an unanticipated problem, will take an important step toward 
restoring the equity and incentives to ensure that we enjoy those 
benefits for many years to come.
  Mr. President, to reiterate, this legislation would provide fairness 
to pharmaceutical companies which research and develop lifesaving and 
health-improving pharmaceutical products. I am offering this 
legislation, and I do so at the very end of the legislative session.
  The point of this legislation is to deal with the problem which 
arises when the Food and Drug Administration [FDA] delays approval on 
patented pharmaceutical products for sometimes as long as 17 years, 11 
years, very lengthy periods of time. As I said earlier, these delays 
affect not only the companies which produce these drugs, but they also 
affect the consumers--people suffering from heart ailments, 
schizophrenia, ulcers, AIDS, Alzheimer's disease--the whole panoply of 
ailments that are affected when these products are not brought to 
market.
  It takes $500 million and 15 years to bring a new drug to market, and 
out of every 6,000 drugs subjected to research and development, only 
one new product is produced. In 1996 alone, some $16 billion will be 
spent in private investments by the pharmaceutical industry.
  I speak as a U.S. Senator, because it is a national issue. I also 
speak as a Pennsylvania Senator, where we have so many companies in my 
State which are involved in developing and producing new pharmaceutical 
products.
  Quite a number of Senators have expressed an interest in cosponsoring 
this legislation, but we have not had a chance to work through all the 
details. I wanted to put it in the Record at this time so it may be 
considered on all sides, by consumer groups, by the pharmaceutical 
industry and by my colleagues. I do so in the wake of a contentious 
issue which was raised on a product called Lodine, manufactured by my 
constituent, American Home Products, in a place I visited recently in 
the Philadelphia suburbs.
  The extension was added for Lodine in a way that was not known to the 
managers of the recent health reform bill and was stricken on the floor 
of the Senate. Some had contended that it was done secretly. I said at 
that time that I was not a party to that and would not be a party to 
that and, in fact, had raised this issue in a public way in the 
Agriculture appropriations conference report. What should be done is 
this issue should be tackled in a principled way by considering, not 
simply one product, but by considering the industry as a whole. This 
legislation seeks to advance and extend the patent time for some 2 
years, not 5 years, which is present under other circumstances by 
Hatch-Waxman, but for a more limited period of only 2 years.
  This is a matter of enormous importance to consumers. My record of 
protecting consumer interests is second to none in the U.S. Congress. 
In looking out for the protection and encouragement of pharmaceutical 
advances, I have the consumers at the top of the list. That is what the 
advances are for--for people to extend lives and to save lives. If we 
are to have these products, we are going to have to have a return on 
the enormous capital investment. When market approval on a patented 
drug is delayed for as long as 17 years, 11 years, other protracted 
periods of time, these products simply cannot be produced.
  Mr. President, I ask unanimous consent that the full text of my bill 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2154

       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 ``Pharmaceutical Equity Act of 
     1996''.

     SEC. 2. EXTENSION OF PATENTS RELATING TO CERTAIN PIPELINE 
                   DRUGS.

       (a) In General.--The term of any patent in force on 
     September 24, 1984, and on the effective date of this Act, 
     that claims a drug product, a method of using a drug product, 
     or a method of manufacturing a drug product, shall be 
     extended pursuant to subsection (b) from the expiration date 
     determined pursuant to section 154 of title 35, United States 
     Code, if:
       (1) an exemption described in section 156(g)(1)(B)(i) or 
     section 156(g)(4)(B)(i) of title 35, United States Code, 
     became effective for the drug product before September 24, 
     1984;
       (2) the regulatory review period set forth in section 
     156(g)(1)(B) or section 156(g)(4)(B) of title 35, United 
     States Code, for the drug product, exceeded 120 months; and
       (3) the regulatory review period described in section 
     156(g)(1)(B)(ii) or section 156(g)(4)(B)(ii) of title 35, 
     United States Code, for the drug product, exceeded 60 months.
       (b) Term.--The term of any patent described in subsection 
     (a) shall be extended by a period of two years.
       (c) Infringement.--During any extension granted pursuant to 
     subsection (b), the rights in the patent so extended shall be 
     determined in accordance with section 156(b) of title 35, 
     United States Code.
       (d) Definition.--For the purpose of the Act, the term 
     ``drug product'' shall be defined in accordance with section 
     156(f)(2) of title 35, United States Code.
       (e) Notification.--No later than 90 days after the date of 
     enactment of this Act, the patentee of a patent extended 
     pursuant to subsection (b) shall notify the Commissioner of 
     Patents and Trademarks of the number of any patent extended 
     pursuant to subsection (b). On receipt of this notice, the 
     Commissioner shall confirm the patent extension by placing a 
     notice thereof in the official file of the patent, and 
     publishing an appropriate notice of this extension in the 
     Official Gazette of the Patent and Trademark Office.
       By Mr. LEAHY (for himself, Mr. McConnell and Mr. Harkin):

  S. 2155. A bill to authorize the Secretary of Agriculture to transfer 
funds to the farmers' market nutrition program, and for other purposes; 
to the Committee on Agriculture, Nutrition, and Forestry.


           THE FARMERS' MARKET NUTRITION PROGRAM ACT OF 1996

  Mr. LEAHY. Mr. President, I am very happy to join with Senator 
McConnell, who is chairman of the Nutrition Subcommittee of the Senate 
Agriculture Committee, in introducing this bill to permit the Secretary 
of Agriculture to transfer up to $2 million of additional funding to 
the WIC Farmers' Market Program upon consultation with the 
Appropriations Committees of the other body and of the Senate.

  This program was funded up to $6.75 million in this year's 
appropriations bill. We greatly appreciate that the appropriations 
committees were able to provide that funding.
  We are advised by the Department of Agriculture that because of the 
way the language is technically worded that USDA cannot reprogram 
additional funds into that WIC Farmers' Market Program. As it turns out 
some states need additional funding as my colleague Senator McConnell 
points out in his floor statement and that a few States need funding to 
set up a WIC Farmers' Market Program.
  We recognize that we will need the support of all Senators to pass 
this bill at this stage. This bill does not mandate the spending of 
additional funds,

[[Page S11723]]

it simply permits USDA to transfer up to $2 million to this program if 
the Secretary determines that such transfer is a good idea. We assume 
they will fully consult with the appropriate members of the 
Appropriations Committees to assure that this is done in a manner that 
is satisfactory to them.
  It is important to us that this consultation take place.
  The WIC Farmers' Market Program provides vouchers to low-income 
families who are on the WIC program. They can use the vouchers to buy 
fresh fruits and vegetables or other farm products at farmers' markets. 
The authorizing law, passed without objection in the Senate, mandates 
that States contribute a significant share of the cost of the program. 
It thus leverages Federal money with State and local funding to provide 
farm products to children and their parents on the WIC program.
  This program has been an incentive in my home State of Vermont for 
farmers to work together and set up additional farmers' markets. This 
has been good for local communities, for the farmers selling their 
products and for families on the WIC program.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2155

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

     SECTION 1. AUTHORITY TO TRANSFER FUNDS TO FARMERS' MARKET 
                   NUTRITION PROGRAM.

       For fiscal year 1997, the Secretary of Agriculture may 
     transfer after consultation with the appropriations 
     committees of the House of Representatives and the Senate, 
     from any funds available to the Secretary, up to $2,000,000 
     to the farmers' market nutrition program under section 17(m) 
     of the Child Nutrition Act of 1966 (42 U.S.C. 1786(m)). 
     Amounts authorized to be transferred under the preceding 
     sentence shall be in addition to any amounts authorized to be 
     made available to the program under title IV of the 
     Agriculture, Rural Development, Food and Drug Administration, 
     and Related Agencies Appropriations Act, 1997 (110 Stat. 
     1590).

  Mr. McCONNELL. Mr. President, today along with my colleague Senator 
Leahy, we are introducing legislation that will permit the Secretary of 
Agriculture authority to transfer funds to the WIC Farmers' Market 
Nutrition Program.
  The WIC Farmers' Market Nutrition Program [FMNP] has become a very 
successful program in assisting low-income families, farmers, and local 
economies.
  A total of 28 States and three Indian tribal organizations now 
participate in the FMNP. Because of the limitation on funding, several 
States, including Kentucky, have been restricted in the size of the 
program that they can offer. Several States would like the opportunity 
to expand this program based on their experience and feedback from 
farmers that participate.
  For a State to have a FMNP requires the filing of an application in 
the fall with USDA, a commitment that the State will match 30 percent 
of the total Federal funds with either cash or in-kind services and 
support.
  The benefits of FMNP are significant. WIC participants enhance the 
nutrition in their diet from of fresh fruits and vegetables. In fiscal 
year 1995 the FMNP served nearly 1 million low-income mothers and 
children participating in the WIC program. As a result of the FMNP: 71 
percent of the WIC participants ate more fresh fruits and vegetables; 
40 percent tried fruits and vegetables they had never eaten before; 48 
percent spent cash and/or food stamps in addition to their FNMP 
coupons; 66 percent plan to continue shopping at farmers markets and; 
72 percent plan to eat more fresh fruits and vegetables year round.
  Farmers' incomes will increase because of the new market for their 
products. A survey of participants in 1995 revealed that: 84 percent of 
farmers increased their sales; 23 percent increased their fruit and 
vegetable production; 36 percent grew additional types of fruits and 
vegetables and; 37 percent said they would increase their production in 
1996.
  The Kentucky Farm Bureau has initiated a new program to boost sales 
of Kentucky farm products involving 25 roadside farm markets. Studies 
confirm that consumers prefer to buy locally-grown produce.
  This is another example of organizations and State agencies working 
together to provide a service to consumers, it introduces fresh fruit 
and vegetables that are locally grown, and it enhances farmer income.
  Mr. President, this is a good bill that benefits everyone and I hope 
we are able to pass this important legislation before we adjourn.
  Mr. HARKIN. Mr. President, this legislation providing transfer 
authority to the Secretary of Agriculture is designed to help address 
the wide gap that exists between the need within the WIC Farmers' 
Market Nutrition Program and the level of resources that we have been 
able to appropriate for it. I welcome this opportunity to join as an 
original cosponsor of this bill.
  The WIC Farmers' Market Nutrition Program has been an immensely 
popular and successful initiative, benefiting both farmers and WIC 
recipients. In fiscal 1995, nearly 1 million low-income mothers and 
children received benefits allowing them to purchase fresh, nutritious 
unprepared foods at 1,143 qualifying farmers' markets that were 
supplied by over 8,000 farmers. Currently, 27 States, including my 
State of Iowa, along with the District of Columbia and three American 
Indian tribal organizations, participate in the WIC Farmers' Market 
Nutrition Program. To take part, States must agree to provide at least 
30 percent of the total cost of the program through State, local, or 
private funds.
  The nutritional benefits of the WIC Farmers' Market Nutrition Program 
are excellent. The 1995 survey showed that among WIC participants 
receiving farmers' market benefits, 71 percent ate more fresh fruits 
and vegetables, 40 percent tried fruits and vegetables they had never 
eaten before, 48 percent spent cash or food stamps in addition to their 
WIC farmers' Market coupons or checks, 66 percent planned to continue 
shopping at farmers' markets, and 72 percent planned to eat more fresh 
fruits and vegetables year round.
  The benefits to farmers are also substantial. Over $9 million was 
earned in 1995 by the more than 8,000 participating farmers. The 1995 
survey also showed that 84 percent of participating farmers increased 
their sales, 23 percent increased their fruit and vegetable production, 
36 percent grew additional types of fruits and vegetables, and 37 
percent planned to increase their production in 1996.
  In my State of Iowa the WIC Farmers' Market Nutrition Program has 
been very popular and successful. There is a great deal of interest in 
expanding the number of WIC recipients and farmers' markets that may 
take part, but the limited available Federal funding has prevented 
expansion. This situation also exists in the other States now in the 
program. Of any additional Federal funding provided for the Farmers' 
Market Nutrition Program, 75 percent would go to States that currently 
participate in it, with 25 percent to be used for adding new States.
  Unfortunately, the lack of needed Federal funding has prevented a 
number of States from joining the WIC Farmers' Market Nutrition 
Program. Thirteen other States, along with other American Indian tribal 
organizations, have expressed interest in offering the program.
  This legislation would allow, but not require, the Secretary of 
Agriculture to transfer funds within the Department of Agriculture 
budget to provide up to $2 million in additional funding for the WIC 
Farmers' Market Nutrition Program, where it could be put to very good 
use in expanding the number of WIC recipients, farmers, and farmers' 
markets participating in this outstanding program.
  I urge my colleagues to support this important bill.
                                 ______
                                 
      By Mr. STEVENS:
  S. 2156. A bill to protect the rights of the States and the people 
from abuse by the Federal Government; to strengthen the partnership and 
the intergovernmental relationship between State and Federal 
Governments; to restrain Federal agencies from exceeding their 
authority; to enforce the 10th amendment to the Constitution; and for 
other purposes; to the Committee on Governmental Affairs.


              the tenth amendment enforcement act of 1996

  Mr. STEVENS. Mr. President, the 10th amendment was a promise to the

[[Page S11724]]

States and to the American people that the Federal Government would be 
limited, and that the people of the States could, for the most part, 
govern themselves as they saw fit.
  Unfortunately, in the last half century, that promise has been 
broken. The American people have asked us to start honoring that 
promise again: to return power to State and local governments which are 
closer to and more sensitive to the needs of the people.
  The 104th Congress and in particular, the Unfunded Mandates Reform 
Act, started to shift power out of Washington by returning it to our 
States and to the American people. As chairman of the Governmental 
Affairs Committee, I wanted to continue its shift of power. More than a 
dozen colleagues and I introduced S. 1629 on March 20 of this year. 
Within 5 months of its introduction, the bill had 32 cosponsors. On May 
8 of this year, a House companion bill was also introduced.
  I want to introduce a bill today which is the product of work by the 
Governmental Affairs Committee over the past several months. 
Unfortunately, the session is ending before we can complete action. 
However, before adjourning I wanted to provide a summary of the 
committee's consideration of this issue, and put forward a bill that 
reflects revisions made as a result of our hearings and discussions 
with interested parties. The legislation that I offer today is a 
starting point for when we reconvene next year. This is an 
important issue and I intend to pursue it in the next Congress.

  The purpose of out legislation is to return power to the States and 
to our people by placing safeguards in the legislative process, by 
restricting the power of Federal agencies and by instructing the 
Federal courts to enforce the 10th amendment.
  This would be accomplished in five ways. The act includes a specific 
congressional finding that the 10th amendment means what it says: The 
Federal Government has no powers not delegated by the Constitution, and 
the States may exercise all powers not withheld by the Constitution.
  The act states that Federal laws may not interfere with State or 
local powers unless Congress declares its intent to do so and Congress 
cites its specific Constitutional authority to do so.
  The act gives Members of the House and Senate the ability to raise a 
point of order challenging a bill that lacks such a declaration or that 
cites insufficient constitutional authority.
  The act requires that Federal agency rules and regulations not 
interfere with State or local powers without Constitutional authority 
cited by Congress. Agencies must allow States notice an opportunity to 
be heard in the rulemaking process.
  The act, further, directs courts to strictly construe Federal laws 
and regulations that interfere with State powers, with a presumption in 
favor of State authority and against Federal preemption.
  During the course of the past year, we received bipartisan 
expressions of support from many Governors and State attorneys general, 
State legislatures, groups including the National Conference of State 
Legislatures [NCSL] and the Council of State Governments [CSG].
  As the Supreme Court stated in 1991 when Justice Sandra Day O'Connor 
delivered the majority opinion of the court in the case Gregory versus 
Aschroft:

       If Congress intends to alter the usual constitutional 
     balance between the states and the Federal Government, it 
     must make its intention to do so unmistakably clear in the 
     language of the statute. Congress should make its intention 
     clear and manifest if it intends to preempt the historic 
     powers of the States. In traditionally sensitive areas such 
     as legislation affecting the federal balance, the requirement 
     of clear statement assures that the legislature has in fact 
     faced, and intended to bring into issue, the critical matters 
     involved in the judicial decision.

  The Tenth Amendment Enforcement Act that I have introduced will 
prevent overstepping by all three branches of the Federal Government, 
and will focus attention on what State and local officials have been 
advocating for so long: the need to return the power of our democracy 
to the States and to our people.
  The Governmental Affairs Committee held three hearings on the Tenth 
Amendment Enforcement Act:
  March 21, 1996, featured Senators Dole, Hatch, and Nickles. Attorneys 
general from Virginia and South Carolina, the solicitor general of 
Colorado, and elected representatives from Alaska, Ohio, and New York 
appeared, as well as Professors Nelson Lund and John Kincaid. Senator 
Dole said:

       I don't care what your party is. This isn't a Republican or 
     a Democratic issue. Even the President has said ``The era of 
     big government is over.'' . . . This is a bipartisan issue 
     and this is a bipartisan bill.

  June 3, 1996 in Nashville, TN, cochaired by Senator Thompson, 
included elected representatives for Tennessee State and local 
governments, as well as the director of the Tennessee Advisory Council 
on Intergovernmental Relations and the deputy director of the Tennessee 
Division of Water Supply. This hearing enlightened us to the wisdom 
that resides in Tennessee. State legislators, mayors, and 
administrators know how to solve most problems, but Federal 
overreaching often prevents them from doing that. One of our witnesses 
offered an update on a familiar saying in Washington. To this 
Tennessean, it's not just all politics that are local, ``All solutions 
are local.''
  July 16, 1996, testimony was presented by NCSL President-Elect 
Michael Box and constitutional lawyer Roger Marzulla speaking in favor 
of the bill, while Professors Mary Brigid McManamon and Ed Rubin spoke 
in opposition. Mr. Marzulla pointed out that Congress is the only 
branch of the Federal Government that does not analyze the source of 
its power before it acts. Courts and Federal agencies both do. We in 
Congress can do our jobs better by looking at our constitutional 
jurisdiction and authority first, then exercising or power 
appropriately to solve the Nation's problems.
  Let me conclude by saving, as a result of our work throughout this 
year and with input form the National Conference of State Legislatives, 
we have made the following changes to the Tenth Amendment Enforcement 
Act.
  We have removed the supermajority requirement on the point of 
order. It would take a simple majority to remove the point of order, 
not just a supermajority.

  It will require the Congressional Research Service to report on 
Federal preemption at the close of each Congress. It will exempt 
participation by State officials in agency rulemaking from the Federal 
Advisory Committee Act and allow State and Federal officials to work 
together on preemption issues without following the Federal Advisory 
Committee Act's detailed notice and reporting procedures. It would make 
funds received by States under Federal law subject to appropriation by 
the State legislatures.
  I ask unanimous consent, Mr. President, the text of this bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2156

       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 referred to as the ``Tenth Amendment 
     Enforcement Act of 1996''.

     SEC. 2. FINDINGS.

       The Congress finds that--
       (1) in most areas of governmental concern, State 
     governments possess both the Constitutional authority and the 
     competence to discern the needs and the desires of the People 
     and to govern accordingly;
       (2) Federal laws and agency regulations, which have 
     interfered with State powers in areas of State jurisdiction, 
     should be restricted to powers delegated to the Federal 
     Government by the Constitution;
       (3) the framers of the Constitution intended to bestow upon 
     the Federal Government only limited authority over the States 
     and the people;
       (4) under the Tenth Amendment to the Constitution, the 
     powers not delegated to the United States by the 
     Constitution, nor prohibited by it to the States, are 
     reserved to the States respectively, or to the people; and
       (5) the courts, which have in general construed the Tenth 
     Amendment not to restrain the Federal Government's power to 
     act in areas of State jurisdiction, should be directed to 
     strictly construe Federal laws and regulations which 
     interfere with State powers with a presumption in favor of 
     State authority and against Federal preemption.

     SEC. 3. CONGRESSIONAL DECLARATION.

       (a) In General.--On or after January 1, 1997, any statute 
     enacted by Congress shall include a declaration--
       (1) that authority to govern in the area addressed by the 
     statute is delegated to Congress by the Constitution, 
     including a citation to the specific Constitutional authority 
     relied upon;

[[Page S11725]]

       (2) if the statute interferes with State powers or preempts 
     any State or local government law, regulation or ordinance, 
     that Congress specifically finds that the Federal Government 
     is the better level of government to govern in the area 
     addressed by the statute; and
       (3) if the statute interferes with State powers or preempts 
     any State or local government law, regulation or ordinance, 
     that Congress specifically intends to interfere with State 
     powers or preempt State or local government law, regulation, 
     or ordinance, and that such preemption is necessary.
       (b) Factual Findings.--The Congress shall make specific 
     factual findings in support of the declarations described in 
     this section.

     SEC. 4. POINT OF ORDER.

       (a) In General.--It shall not be in order in either the 
     Senate or House of Representatives to consider any bill, 
     joint resolution, or amendment that does not include a 
     declaration of Congressional intent as required under section 
     3.
       (b) Rulemaking.--This section is enacted--
       (1) as an exercise of the rulemaking power of the Senate 
     and House of Representatives, and as such, it is deemed a 
     part of the rules of the Senate and House of Representatives, 
     but is applicable only with respect to the matters described 
     in section 3 and supersedes other rules of the Senate or 
     House of Representatives only to the extent that such 
     sections are inconsistent with such rules; and
       (2) with full recognition of the constitutional right of 
     the Senate or House of Representatives to change such rules 
     at any time, in the same manner as in the case of any rule of 
     the Senate or House of Representatives.

     SEC. 5. ANNUAL REPORT ON STATUTORY PREEMPTION.

       (a) Report.--Within 90 days after each Congress adjourns 
     sine die, the Congressional Research Service shall prepare 
     and make available to the public a report on the extent of 
     Federal statutory preemption of State and local government 
     powers enacted into law during the preceding Congress or 
     adopted through judicial interpretation of Federal statutes.
       (b) Contents.--The report shall contain--
       (1) a cumulative list of the Federal statutes preempting, 
     in whole or in part, State and local government powers;
       (2) a summary of Federal legislation enacted during the 
     previous Congress preempting, in whole or in part, State and 
     local government powers;
       (3) an overview of recent court cases addressing Federal 
     preemption issues; and
       (4) other information the Director of the Congressional 
     Research Service determines appropriate.
       (c) Transmittal.--Copies of the report shall be sent to the 
     President and the chairman of the appropriate committees in 
     the Senate and House of Representatives.

     SEC. 6. EXECUTIVE PREEMPTION OF STATE LAW.

       (a) In General.--Chapter 5 of title 5, United States Code, 
     is amended by inserting after section 559 the following new 
     section:

     ``SEC. 560. PREEMPTION OF STATE LAW.

       ``(a) No executive department or agency or independent 
     agency shall construe any statutory authorization to issue 
     regulations as authorizing preemption of State law or local 
     ordinance by rulemaking or other agency action unless--
       ``(1) the statute expressly authorizes issuance of 
     preemptive regulations; and
       ``(2) the executive department, agency or independent 
     agency concludes that the exercise of State power directly 
     conflicts with the exercise of Federal power under the 
     Federal statute, such that the State statutes and the Federal 
     rule promulgated under the Federal statute cannot be 
     reconciled or consistently stand together.
       ``(b) Any regulatory preemption of State law shall be 
     narrowly tailored to achieve the objectives of the statute 
     pursuant to which the regulations are promulgated and shall 
     explicitly describe the scope of preemption.
       ``(c)(1) When an executive department or agency or 
     independent agency proposes to act through rulemaking or 
     other agency action to preempt State law, the department or 
     agency shall provide all affected States notice and an 
     opportunity for meaningful and timely input by duly elected 
     or appointed State and local government officials or their 
     designated representatives in the proceedings.
       ``(2) The notice of proposed rulemaking shall be forwarded 
     to the Governor, the Attorney General and the presiding 
     officer of each chamber of the legislature of each State 
     setting forth the extent and purpose of the preemption.
       ``(3) In the table of contents of each Federal Register, 
     there shall be a separate list of preemptive regulations 
     contained within that Register.
       ``(4) The Federal Advisory Committee Act (5 U.S.C. App.) 
     shall not apply to participation in rulemaking or other 
     agency action by duly elected or appointed State and local 
     government officials or their designated representatives 
     acting in their official capacities.
       ``(d) Unless a final executive department or agency or 
     independent agency rule or regulation contains an explicit 
     provision declaring the Federal Government's intent to 
     preempt State or local government powers and an explicit 
     description of the extent and purpose of that preemption, the 
     rule or regulation shall not be construed to preempt any 
     State or local government law, ordinance or regulation.
       ``(e)(1) Each executive department or agency or independent 
     agency shall review the rules and regulations issued by the 
     department or agency that preempt, in whole or in part, State 
     or local government powers. Each executive department or 
     agency or independent agency shall publish in the Federal 
     Register a plan for such review. Such plan may be amended by 
     the department or agency at any time by publishing a revision 
     in the Federal Register.
       ``(2) The purpose of the review under paragraph (1) shall 
     be to determine whether and to what extent such rules are to 
     continue without change, consistent with the stated 
     objectives of the applicable statutes, or are to be altered 
     or repealed to minimize the effect of the rules on State or 
     local government powers.
       ``(3) The plan under paragraph (1) shall provide for the 
     review of all such department or agency rules and regulations 
     within 10 years after the date of publication of such rules 
     and regulations as final rules. For rules and regulations in 
     effect more than 10 years on the effective date of this 
     section, the plan shall provide for review within 3 years 
     after such effective date.
       ``(f) Any Federal rule or regulation promulgated after 
     January 1, 1997, that is promulgated in a manner inconsistent 
     with this section shall not be binding on any State or local 
     government, and shall not preempt any State or local 
     government law, ordinance, or regulation.''.
       (b) Conforming Amendment.--The table of sections for 
     chapter 5 of title 5, United States Code, is amended by 
     adding after the item for section 559 the following:

``560. Preemption of State law.''.

     SEC. 7. CONSTRUCTION.

       (a) In General.--No statute, or rule promulgated under such 
     statute, enacted after the date of enactment of this Act, 
     shall be construed by courts or other adjudicative entities 
     to preempt, in whole or in part, any State or local 
     government law, ordinance or regulation unless the statute, 
     or rule promulgated under such statute, contains an explicit 
     declaration of intent to preempt, or unless there is a direct 
     conflict between such statute and a State or local government 
     law, ordinance, or regulation, such that the two cannot be 
     reconciled or consistently stand together.
       (b) Construction in Favor of States and People.--
     Notwithstanding any other provisions of law, any ambiguities 
     in this Act, or in any other law of the United States, shall 
     be construed in favor of preserving the authority of the 
     States and the people.
       (c) Severability.--If any provision of this Act, or the 
     application thereof to any person or circumstance, is held 
     invalid, the validity of the remainder of the Act and the 
     application of such provision to other persons and 
     circumstances shall not be affected thereby.

     SEC. 8. APPROPRIATION BY STATE LEGISLATURES.

       Any funds received by a State under Federal law shall be 
     subject to appropriation by the State legislature, consistent 
     with the terms and conditions required under such applicable 
     provisions of law.
                                 ______
                                 
      By Mr. SMITH:
  S. 2157. A bill to amend the Solid Waste Disposal Act to provide for 
the efficient collection and recycling of spent lead-acid batteries and 
educate the public concerning the collection and recycling of such 
batteries, and for other purposes; to the Committee on Environment and 
Public Works.


                  THE LEAD ACID BATTERY RECYCLING ACT

  Mr. SMITH. Mr. President, I introduce lead-acid battery recycling 
legislation. This legislation, entitled the ``Lead-Acid Battery 
Recycling Act,'' is intended to strengthen and make uniform the 
existing lead-acid battery recycling infrastructure by establishing a 
mandatory recycling program for lead-acid batteries.
  This legislation would prohibit the incineration and landfill 
disposal of used lead-acid batteries and require that these batteries 
be managed through a reverse distribution system. Under this 
legislation, used lead-acid batteries would have to be delivered in 
reverse order to battery retailers, wholesalers, manufacturers, 
recycling facilities or automotive dismantlers and ultimately to 
secondary smelters for recycling.
  There is little doubt that lead-acid batteries are an extremely 
useful product. They are used in a variety of applications ranging from 
lighting and ignition systems for automobiles, power sources for 
electric vehicles, emergency lighting, and standby telecommunication 
systems. The lead contained in these batteries is, however, a cause for 
concern. Furthermore, given the fact that lead-acid batteries account 
for approximately 80 percent of all the lead consumed in the United 
States, they merit special attention.
  This special attention has resulted in implementation of aggressive 
lead-acid battery recycling programs by many State and local 
governments as well as

[[Page S11726]]

the battery industry. Lead-acid batteries have now become the Nation's 
most successfully recycled commodity. According to the most recent 
statistics, over the last 5 years the lead-acid battery recycling rate 
in the United States has been at least 95 percent. This rate is 
unparalleled among any other recyclable commodity.
  Forty-two States have adopted lead battery recycling legislation 
similar to this legislation. These 42 States account for over 85 
percent of the Nation's population. However, there are variations among 
the State programs that create problems for the free flow of batteries 
in interstate commerce. My bill would reenforce the existing lead-acid 
battery recycling infrastructure now in place throughout the United 
States while making it more uniform nationwide.
  This legislation is self-implementing, and does not require further 
development through regulation. Rather, this legislation builds upon 
the existing lead-acid battery collection and recycling system now in 
place in many States.
  Upon enactment, the incineration and landfill disposal of used lead-
acid batteries will be expressly prohibited. However, owners and 
operators of a municipal solid waste landfills, incinerators or 
collection programs that inadvertently receive used lead-acid batteries 
that are not readily removable from municipal solid waste would not be 
liable for violating the recycling provisions of this bill.
  In general, this legislation would require used lead-acid batteries 
to be delivered to battery retailers, wholesalers, manufacturers, 
automotive dismantlers, secondary lead smelters, or recycling 
facilities regulated by a State or subject to regulation by the 
Administrator under the Solid Waste Disposal Act (42 U.S.C. 6901 et 
seq.). Used lead-acid batteries could continue to be lawfully collected 
through community collection and recycling programs set up by States 
and localities.
  Although recycling is becoming an every day fact of life in the minds 
of the public, to ensure further consumer participation in the program, 
retailers are required to accept used lead acid batteries from 
consumers without requiring the purchase of a new lead-acid battery. In 
addition, battery manufacturers or their authorized representatives--
such as shippers delivering new batteries--will be required to accept 
used lead-acid batteries from their customers.
  I have included provisions for labeling and notification that are 
intended to ensure that consumers are aware of the recycling 
requirements under law. These provisions are not intended to affect or 
limit in any way the battery industry's efforts to display recycling 
symbols intended to encourage recycling.
  Mr. President, as I discussed above, my legislation is substantially 
similar to battery recycling legislation adopted in 42 States. The bill 
is strongly supported by the Battery Council International. I believe 
this legislation provides a substantial improvement in our ability to 
remove these batteries from our Nation's solid waste stream and I would 
encourage all of my colleagues to cosponsor this legislation.
  Mr. President, I realize that, in the twilight of this legislative 
session, there is virtually no chance of this bill will become law 
before this Congress adjourns. Yet, I am introducing it today with the 
desire that the States, the Environmental Protection Agency, 
environmental groups, and the regulated entities will have a chance to 
review it, judge its merits, and provide me with comments on how this 
legislation could be improved. It is my desire, that upon our return in 
January, to hold hearings on this legislation and to move it to the 
full Senate for passage early in 1997.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2157

       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 ``Lead-Acid Battery Recycling 
     Act''.

      SEC. 2. RECYCLING OF LEAD-ACID BATTERIES.

       (a) In General.--Subtitle D of the Solid Waste Disposal Act 
     (42 U.S.C. 6941 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 4011. RECYCLING OF LEAD-ACID BATTERIES.

       ``(a) Definitions.--In this section:
       ``(1) Lead-acid battery.--The term `lead-acid battery' 
     means a battery that--
       ``(A) contains lead and sulfuric acid;
       ``(B) is used as a power source; and
       ``(C) is not a rechargeable battery.
       ``(2) Municipal solid waste.--The term `municipal solid 
     waste' means--
       ``(A) solid waste generated by the general public or from a 
     residential, commercial, institutional, or industrial source, 
     consisting of paper, wood, yard waste, plastics, leather, 
     rubber, and other combustible material and noncombustible 
     material such as metal and glass, including residue remaining 
     after recyclable material has been separated from waste 
     destined for disposal, and including waste material removed 
     from a septic tank, septage pit, or cesspool (other than from 
     portable toilets); but
       ``(B) does not include--
       ``(i) waste identified or listed as a hazardous waste under 
     section 3001 of this Act or waste regulated under the Toxic 
     Substances Control Act (15 U.S.C. 2601 et seq.);
       ``(ii) waste, including contaminated soil and debris, 
     resulting from a response action taken under section 104 or 
     106 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9604, 
     9606) or any corrective action taken under this Act;
       ``(iii) medical waste listed in section 11002;
       ``(iv) industrial waste generated by manufacturing or 
     industrial processes, including waste generated during scrap 
     processing and scrap recycling;
       ``(v) recyclable material; or
       ``(vi) sludge.
       ``(3) Rechargeable battery.--The term `rechargeable 
     battery'--
       ``(A) means 1 or more voltaic or galvanic cells, 
     electrically connected to produce electric energy, that is 
     designed to be recharged for repeated uses; and
       ``(B) includes any type of enclosed device or sealed 
     container consisting of 1 or more such cells, including what 
     is commonly called a battery pack; but
       ``(C) does not include--
       ``(i) a battery that is used to start an internal 
     combustion engine or is used as the principal electrical 
     power source for a vehicle, such as an automobile, truck, 
     construction equipment, motorcycle, garden tractor, golf 
     cart, wheelchair, or boat;
       ``(ii) a battery that is used for load leveling or for 
     storage of electricity generated by an alternative energy 
     source, such as a solar cell or wind-driven generator;
       ``(iii) a battery that is used as a backup power source for 
     memory or program instruction storage, timekeeping, or any 
     similar purpose that requires uninterrupted electrical power 
     in order to function if the primary energy supply fails or 
     fluctuates momentarily; or
       ``(iv) a rechargeable alkaline battery.
       ``(b) Prohibition.--
       ``(1) In general.--A person shall not--
       ``(A) place a lead-acid battery in a landfill;
       ``(B) incinerate a lead-acid battery; or
       ``(C) otherwise dispose of a lead-acid battery in a manner 
     other than in accordance with subsection (c).
       ``(2) Commingled waste.--A person that is an owner or 
     operator of a municipal solid waste landfill, incinerator, or 
     collection program that receives a lead-acid battery that--
       ``(A) is commingled with municipal solid waste (other than 
     lead-acid batteries); and
       ``(B) is not readily removable from the waste stream,

     shall not be considered to violate paragraph (1) if the owner 
     or operator has established contractual requirements or other 
     appropriate notification or inspection procedures that are 
     reasonably designed to ensure that no lead-acid battery is 
     received at, or burned in, the landfill or incinerator 
     facility or accepted through the collection program.
       ``(c) Lawful Disposal.--
       ``(1) By persons in general.--
       ``(A) In general.--A person (other than a person described 
     in paragraph (2), (3), or (4)) shall return a spent lead-acid 
     battery by delivering the battery to 1 of the authorized 
     recipients described in subparagraph (B).
       ``(B) Authorized recipients.--The authorized recipients 
     described in this subparagraph are--
       ``(i) a person that sells lead-acid batteries at retail or 
     wholesale;
       ``(ii) a lead smelter regulated by a State or the 
     Administrator under this Act or the Clean Air Act (42 U.S.C. 
     7401 et seq.);
       ``(iii) an automotive dismantler or scrap dealer (as 
     defined by the Administrator);
       ``(iv) a collection entity, program, or facility designated 
     by a State to accept spent lead-acid batteries; and
       ``(v) a manufacturer of lead-acid batteries of the same 
     general type as the type delivered.
       ``(2) By retailers.--
       ``(A) In general.--A person that sells lead-acid batteries 
     at retail shall return a spent lead-acid battery by 
     delivering the battery to 1 of the authorized recipients 
     described in subparagraph (B).
       ``(B) Authorized recipients.--The authorized recipients 
     described in this subparagraph are--
       ``(i) a person that sells lead-acid batteries at wholesale;
       ``(ii) a lead smelter regulated by a State or the 
     Administrator under this Act or the Clean Air Act (42 U.S.C. 
     7401 et seq.);

[[Page S11727]]

       ``(iii) an automotive dismantler or scrap dealer (as 
     defined by the Administrator);
       ``(iv) a manufacturer of lead-acid batteries of the same 
     general type as the type delivered; and
       ``(v) a collection entity, program, or facility designated 
     by a State to accept spent lead-acid batteries.
       ``(3) By wholesalers, automotive dismantlers, and 
     collection programs, entities and facilities.--
       ``(A) In general.--A person that sells lead-acid batteries 
     at wholesale, an automotive dismantler, and a collection 
     entity, program, or facility designated by a State to accept 
     spent lead-acid batteries shall return a spent lead-acid 
     battery by delivering the battery to 1 of the authorized 
     recipients described in subparagraph (B).
       ``(B) Authorized recipients.--The authorized recipients 
     described in this subparagraph are--
       ``(i) a lead smelter regulated by a State or the 
     Administrator under this Act or the Clean Air Act (42 U.S.C. 
     7401 et seq.); and
       ``(ii) a manufacturer of lead-acid batteries of the same 
     general type as the type delivered.
       ``(4) By manufacturers.--
       ``(A) In general.--A person that manufactures lead-acid 
     batteries shall return a spent lead-acid battery by 
     delivering the battery to the authorized recipient described 
     in subparagraph (B).
       ``(B) Authorized recipient.--The authorized recipient 
     described in this subparagraph is a lead smelter regulated by 
     a State or the Administrator under this Act or the Clean Air 
     Act (42 U.S.C. 7401 et seq.).
       ``(d) Collection requirements.--
       ``(1) Retailers.--
       ``(A) In general.--A person that sells or offers for sale 
     lead-acid batteries at retail shall accept spent lead-acid 
     batteries of the same general type as the batteries sold in a 
     quantity that is approximately equal to the number of 
     batteries sold.
       ``(B) Exemption.--Subparagraph (A) shall not apply to a 
     retailer that sells not more than 5 lead-acid batteries per 
     month on average over a calendar year, if a collection 
     entity, program, or facility is in operation for the 
     collection of spent lead-acid batteries in the locality of 
     the retailer.
       ``(2) Wholesalers.--
       ``(A) In general.--A person that sells or offers for sale 
     lead-acid batteries at wholesale shall accept spent lead-acid 
     batteries of the same general type as the batteries sold and 
     in a quantity approximately equal to the number of batteries 
     sold.
       ``(B) Acceptance from retailers.--A wholesaler that sells 
     or offers for sale lead-acid batteries to a retailer shall 
     provide for the removal of spent lead-acid batteries at the 
     place of business of the retailer--
       ``(i) not later than 90 days after the retailer notifies 
     the wholesaler of the existence of the spent lead-acid 
     batteries for removal; or
       ``(ii) if the quantity of batteries to be removed is less 
     than 5, not later than 180 days after notification.
       ``(3) Manufacturers.--A person that manufactures lead-acid 
     batteries shall accept spent lead-acid batteries of the same 
     general type as the batteries sold and in a quantity 
     approximately equal to the number of batteries sold.
       ``(e) Notice Requirements.--
       ``(1) Posted notice by retailers.--A person that sells or 
     offers for sale lead-acid batteries at retail shall post a 
     written notice that--
       ``(A) is clearly visible in a public area of the 
     establishment in which the lead-acid batteries are sold or 
     offered for sale;
       ``(B) is at least 8\1/2\ inches by 11 inches in size; and
       ``(C) contains the following text:
       ``(i) It is illegal to throw away a motor vehicle battery 
     or other lead-acid battery.
       ``(ii) Recycle your used lead-acid batteries.
       ``(iii) Federal (or State) law requires battery retailers 
     to accept used lead-acid batteries for recycling when a lead-
     acid battery is purchased.
       ``(2) State requirements.--Nothing in paragraph (1) shall 
     be construed to prohibit a State from requiring the posting 
     of substantially similar notice in lieu of that required 
     under paragraph (1).
       ``(3) Labeling.--
       ``(A) In general.--Each lead-acid battery manufactured on 
     or after the date that is 1 year after the date of enactment 
     of this Act, whether produced domestically or imported, shall 
     bear a label comprised of--
       ``(i) the 3 chasing arrow recycling symbol; and
       ``(ii) immediately adjacent to the recycling symbol, the 
     words `LEAD', `RETURN', `RECYCLE'.
       ``(B) International symbols.--
       ``(i) Application.--On application by a person subject to 
     the labeling requirements of this paragraph, the 
     Administrator shall certify that a different label meets the 
     requirements of this paragraph if the label conforms with a 
     recognized international standard that is consistent with the 
     overall purposes of this section.
       ``(ii) Failure to act.--If the Administrator fails to act 
     on an application under clause (i) within 120 days after the 
     date on which the application is filed, the Administrator 
     shall be considered to have certified that the label proposed 
     in the application meets the requirements of this paragraph.
       ``(4) Uniformity.--No State or political subdivision of a 
     State may enforce any labeling requirement intended to 
     communicate information about the recyclability of lead-acid 
     batteries that is not identical to the requirements contained 
     in paragraph (3).
       ``(5) Recycling information.--Nothing in this subsection 
     shall be construed to prohibit the display on a label of a 
     lead-acid battery of any other information intended by the 
     manufacturer to encourage recycling or warn consumers of the 
     potential hazards associated with lead-acid batteries.
       ``(f) Publication of Notice.--Not later than 180 days after 
     the date of enactment of this section, the Administrator 
     shall publish in the Federal Register a notice of the 
     requirements of this section and such other related 
     information as the Administrator determines to be 
     appropriate.
       ``(g) Export for Purposes of Recycling.--Notwithstanding 
     any other provision of this section, a person may export a 
     spent lead-acid battery for the purposes of recycling.
       ``(h) Enforcement.--The Administrator may issue a warning 
     or citation to any person that fails to comply with the 
     requirements of this section.
       ``(i) Civil Penalty.--
       ``(1) In general.--When on the basis of any information the 
     Administrator determines that a person is in violation of 
     this section, the Administrator--
       ``(A) in the case of a willful violation, may issue an 
     order assessing a civil penalty of not more than $1,000 for 
     each violation and requiring compliance immediately or within 
     a reasonable specified time period, or both; or
       ``(B) in the case of any violation, may commence a civil 
     action in the United States district court in which the 
     violation occurred for appropriate relief, including a 
     temporary or permanent injunction.
       ``(2) Contents of order.--An order under paragraph (1) 
     shall State with reasonable specificity the nature of the 
     violation.
       ``(3) Considerations.--In assessing a civil penalty under 
     paragraph (1), the Administrator shall take into account the 
     seriousness of the violation and any good faith efforts to 
     comply with applicable requirements.
       ``(4) Finality of order; request for hearing.--An order 
     under paragraph (1) shall become final unless, not later than 
     30 days after the date on which the order is served, a person 
     named in the order requests a hearing on the record.
       ``(5) Hearing.--On receiving a request under paragraph (4), 
     the Administrator shall promptly conduct a hearing on the 
     record.
       ``(6) Subpoena power.--In connection with any hearing on 
     the record under this subsection, the Administrator may issue 
     subpoenas for the attendance and testimony of witnesses and 
     for the production of relevant papers, books, and documents.
       ``(7) Continued violation after expiration of period for 
     compliance.--If a violator fails to take corrective action 
     within the time specified in an order under paragraph (1), 
     the Administrator may assess a civil penalty of not more than 
     $1,000 for the continued noncompliance with the 
     order.''.
                                 ______
                                 
      By Mr. LIEBERMAN:
  S. 2160. A billto provide for alternative procedures for achieving 
superior environmental performance, and for other purposes; to the 
Committee on Environment and Public Works.


                     The Innovative Compliance Act

 Mr. LIEBERMAN. Mr. President, I am pleased to introduce today 
the Innovative Compliance Act of 1996. Title I of this legislation 
authorizes the Environmental Protection Agency to approve a 
demonstration program allowing companies who show superior 
environmental performance to use flexible methods of achieving 
environmental goals. Title II of the legislation requires the EPA, when 
developing a new program to control a pollutant to consider, where 
appropriate, basing the regulatory scheme on market-based trading 
programs. The legislation builds on President Clinton's project XL 
which stands for excellence and leadership, and on the successful 
market-based program for controlling acid rain established under the 
Clean Air Act Amendments of l990.
  Mr. President, I am introducing this bill at the end of this session 
in the hope that it will lead to a continued dialog among interested 
parties on the best way to implement these two programs. I view this 
bill as an initial draft, discussion draft and welcome all proposals 
and suggestions on how to alter and improve it. I hope to resubmit the 
bill reflecting suggestions made over the next few months early next 
session.
  This Congress has been marked by debate about the future of 
Government's role in environmental protection. At times, it appeared 
that the bipartisan support of environmental laws and regulation that 
has evolved over the past three decades was at serious risk. Efforts to 
undermine our environmental laws initially had support from some in 
this Congress, despite the absence of any public demand for 
retrenchment on the environmental

[[Page S11728]]

front. Those efforts have been stemmed.
  In fact, our laws and regulations have performed remarkably well in 
improving the quality of America's environment. As Gregg Easterbrook 
has pointed out, environmental protection is probably the single 
greatest success story of American Government in the period since World 
War II.
  In many cases, however, we need to do more to provide the level of 
environmental protection most Americans expect from Government. For 
example, 62 million Americans still live in neighborhoods where the air 
does not meet Federal health-based standards. Forty percent of our 
rivers and lakes still do not fully meet water quality standards. The 
number of people suffering from asthma has increased 40 percent in the 
past decade. In some communities, it has reached epidemic proportions, 
especially among children. Health advisories for eating fish increased 
by 14 percent between l994 and l995. In light of these serious 
problems, there is clearly a need to improve protection of our 
environment. But there is just as clearly a need to review our methods 
of environmental protection in order to find better, more efficient, 
more innovative and fairer ways to achieve greater progress toward 
meeting our environmental goals. In some cases, the traditional 
approaches to environmental protection have hindered companies from 
developing more innovative approaches, such as pollution prevention, 
that can result in larger benefits for the environment.

  While combining these two goals may appear illusive, a significant 
consensus has emerged that alternative compliance and market-based 
trading programs can form the basis for a new approach to environmental 
protection that will achieve superior results at less cost while 
encouraging innovation. This consensus can be seen, for example, in the 
work of the President's Council on Sustainable Development which 
brought together leaders from government, business, environmental, 
civil rights, labor and Native American organizations in an effort to 
achieve consensus national environmental, economic and social goals. 
The Council's report supports both these approaches. The Aspen 
Institute also undertook a 3-year effort to reach consensus among a 
wide group of divergent interests on an alternative path to achieving a 
cleaner, cheaper way to protect and enhance the environment. This 
legislation seeks to adopt many of the principles agreed to by the 
participants in the Aspen process.
  Title I of this bill establishes an alternative compliance program at 
EPA. The Administrator of EPA is authorized to consider up to 50 
petitions from companies seeking modifications or waivers from 
environmental rules and to grant petitions if certain criteria are met. 
The basic premise of this title is that superior environmental 
performance can be achieved by allowing environmental managers at 
companies, in partnership with an active group of community 
stakeholders, to devise their own means of reaching environmental 
goals. This approach recognizes that the regulated industry is now in 
an excellent position to experiment and decide what approaches will 
yield better environmental results than can be achieved under existing 
or reasonably foreseeable regulation. Allowing flexibility can 
substantially reduce compliance costs and make industries more 
competitive, provide for much greater community involvement in the 
decisions of their neighboring industrial plants, foster more 
cooperative partnerships, and encourage greater innovation in meeting 
environmental goals.
  Let me discuss a few important provisions of the bill.
  First, the Administrator may only grant flexibility if a company 
demonstrates that it will achieve better overall environmental results 
under the alternative compliance strategy than would be achieved under 
existing or reasonably anticipated rules. The bill establishes 
benchmarks from which to determine whether better environmental results 
will be achieved under the alternative compliance strategies. For 
example, for existing facilities, the benchmark generally will be 
either the level of releases into the environment actually being 
achieved by the facility or the level of releases allowed under the 
applicable regulatory requirements and reasonably foreseeable future 
requirements, whichever is lower. The bill also sets forth benchmarks 
for existing facilities being modified to significantly expand 
production and for new facilities, section 105(b). In addition to 
determining if the benchmark is met, the Administrator must find, based 
on a well-accepted, documented methodology, that the alternative 
compliance strategy will not result in a significant increase in the 
risk of adverse effects or shift any significant risks of adverse 
effects, to the health of an individual, population, or natural 
resource affected by the strategy.

  There are a number of different types of alternative compliance 
strategies. For example, in some cases, a facility may demonstrate 
better overall environmental results by showing a reduction in releases 
of all pollutants and, in exchange, seek a modification of reporting or 
other paperwork requirements. In other cases, a facility may 
demonstrate better overall environmental results by showing a reduction 
in releases of all pollutants, but seek modification of a rule to allow 
for flexibility with respect to emission levels at different sources 
within the facility. There may be some cases where the alternative 
compliance strategy would result in very large decreases in one 
pollutant while resulting in a very small increase in another 
pollutant. But it is particularly important that the Administrator only 
approve such a strategy upon a finding, based on a well-accepted, 
documented methodology, that there will be no significant increase in 
the risk of adverse effects resulting from the strategy.
  As I've described, before granting a petition, the Administrator must 
find that certain quantitative requirements for measuring better 
environmental performance have been met by the petitioner. After making 
this determination, the Administrator may also consider other 
significant environmental, economic and social benefits that the 
petitioner offers in the petition, section l05(b)(2).
  Under the bill, the alternative compliance strategy must provide 
accountability, monitoring, enforceability and public access to 
information at least equal to that provided by the rule that is being 
modified or waived. A related and very important requirement is that 
adequate information must be made accessible so that any member of the 
public can determine if a company is complying with an alternative 
compliance agreement, sections 105(b) (4), (5). Other requirements that 
must be met by the petitioner are set forth in section 105.

  Another critical provision of the bill, section 104 establishes that 
any company submitting a petition must undertake a stakeholder 
participation process and work to ensure that adequate resources exist 
to make the process effective. Involving citizens, particularly members 
of the local community, in the development of an alternative compliance 
strategy is absolutely critical. Companies that have formulated 
successful alternative compliance strategies have told me that without 
the support of the local community these strategies simply will not 
work. Empowerment of the local community through stakeholder processes 
will help build trust and make implementation of the agreement easier. 
It is also important that State and local regulators be part of the 
stakeholder process.
  Under the bill, a more structured stakeholder process is set out for 
more complex agreements--those involving more than one pollutant or one 
medium. The stakeholders have a greater decisional role in more complex 
agreements. Nevertheless, in all cases, stakeholder acceptance will be 
critical to success of the alternative compliance strategy.
  Title II of the legislation seeks to build on the successful acid 
rain program established under the Clean Air Act Amendments of l990. It 
requires that prior to promulgating a new program for controlling 
emissions or discharges of a pollutant, EPA consider, where 
appropriate, the adoption of a market-based trading program. The 
program would include a cap on total emissions or discharges of the 
pollutant. Each source of a pollutant would be required to meet an 
emission or discharge limit based on a share of the total limit on 
emissions or discharges

[[Page S11729]]

allowed from all sources. Sources could meet their performance 
objective though a variety of methods, including by acquiring excess 
emission or discharge reductions from other sources that have achieved 
levels of performance beyond that required to meet their discharge or 
emission limits.
  The bill recognizes that trading programs are not appropriate in 
every case. Trading programs should only be implemented where they 
would result in levels of emissions or discharges greater than those 
that would be achieved under alternative programs. Additionally, there 
are circumstances where a trading program is not appropriate because 
the environmental or human health reasons for which the pollutant is 
regulated can only be addressed through source-specific emission 
controls.
  As I have mentioned, this title is intended to build on the success 
of the acid rain program of the Clean Air Act. That program set a cap 
on the total amount of emissions of sulfur dioxide that electric 
utilities can emit and allows flexibility for individual units to 
select their own method of compliance. The mechanism for allocating 
reductions is a comprehensive permit and emission allowance system. An 
allowance is a limited authorization to emit a ton of sulfur dioxide. 
Facilities receive allowance based on a specific formula contained in 
the law. Allowances may be traded or banked for future use or sale. 
Thirty days after the end of the year, each utility must have a number 
of allowances equal to the tonnage actually emitted during the previous 
year. Allowances may be purchased to cover each unit's emissions for 
the year. The system rewards utilities that go beyond the law's 
requirement by enabling them to earn profits from the sale of their 
extra allowances.

  The program is being implemented in two phases: Phase I began in l995 
and will last until 1999. It covers 445 utility units.
  In July, EPA issued a report on the compliance results of phase I. 
The results are extremely impressive and far exceed the expectations of 
those of us involved in the drafting of the legislation--both in terms 
of emission reductions achieved and cost of those reductions.
  First, EPA reports that the compliance level for all the units under 
Phase I was l00 percent. Second, EPA reports that the emissions for 
these units was 39 percent below what the law allowed for l995. Third, 
EPA and the U.S. Geological Survey report environmental success--
reductions in sulfur dioxide emissions have resulted in rainfall being 
less acidic in l995 as a result of the first year of the acid rain 
program. The U.S. Geological Survey study reports a 10-25 percent drop 
in rainfall acidity, particularly at some sites located in the mid-
west, northeast and mid-Atlantic regions. Fourth, the cost of reducing 
a ton of sulfur dioxide continues to decline. In just two years, 
allowance prices have dropped from $150 a ton to less than $80 a ton. 
At the time of enactment of the Clean Air Act Amendments, it was 
estimated that the cost of an allowance would be $500 to $600 a ton. 
The General Accounting Office has estimated that $2 to $3 billion will 
be saved with the implementation of the acid rain program through its 
allowance trading program.
  In other words, the acid rain program has achieved greater reductions 
than anticipated at far lower costs than anticipated. This is a win-
win--for the environment and the regulated community. The legislation I 
am introducing today would require EPA, where appropriate, to consider 
basing future environmental programs on the same type of successful 
program established for acid rain.
  Mr. President, I ask unanimous consent that the full text of the 
legislation be included in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2160

       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 ``Innovative Compliance Act of 
     1996''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) superior environmental performance can be achieved in 
     some cases by granting regulated industries the flexibility 
     to develop alternative strategies for achieving environmental 
     results;
       (2) alternative strategies also have the potential to--
       (A) substantially reduce compliance costs;
       (B) foster cooperative partnerships among industry, 
     government, and local communities;
       (C) encourage greater innovation and greater pollution 
     prevention in meeting environmental goals; and
       (D) increase the involvement of members of the local 
     community and citizens in decisions relating to the approach 
     taken by a facility for achieving environmental goals; and
       (3) the acid deposition control program established under 
     title IV of the Clean Air Act (42 U.S.C. 7651 et seq.), the 
     stratospheric ozone protection program established under 
     title VI of the Act (42 U.S.C. 7671 et seq.), and other 
     initiatives demonstrate that properly designed market-based 
     approaches can achieve greater environmental performance and 
     encourage innovation while saving money for regulated 
     industries and government when compared with more traditional 
     control approaches.
 TITLE I--ALTERNATIVE STRATEGIES FOR ACHIEVING SUPERIOR ENVIRONMENTAL 
                              PERFORMANCE

     SEC. 101. DEFINITIONS.

       In this title:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Environmental Protection Agency.
       (2) Agency.--The term ``Agency'' means the Environmental 
     Protection Agency.
       (3) Agency rule.--The term ``Agency rule''--
       (A) means a rule (as defined in section 551 of title 5, 
     United States Code) issued by the Agency; but
       (B) does not include any emissions reduction requirement of 
     any rule under title IV of the Clean Air Act (relating to 
     acid deposition control) (42 U.S.C. 7651 et seq.) or any 
     other requirement pursuant to any other enforceable trading 
     program.

     SEC. 102. PETITION.

       A person that owns or operates a facility that is subject 
     to an Agency rule may petition the Administrator to modify or 
     waive the Agency rule with respect to the facility and to 
     enter into an enforceable compliance agreement with the 
     person establishing an alternative compliance strategy with 
     respect to the facility in accordance with this title.

     SEC. 103. CONTENTS OF PETITION.

       A petition under section 102 shall--
       (1) identify the Agency rule for which the modification or 
     waiver is sought and the alternative compliance strategy that 
     is proposed;
       (2) identify the facility to which the modification or 
     waiver would pertain; and
       (3) demonstrate that the alternative compliance strategy 
     meets the requirements of section 105.

     SEC. 104. STAKEHOLDER PARTICIPATION PROCESS.

       (a) In General.--A person that submits a petition under 
     section 102 shall--
       (1) undertake a stakeholder participation process in 
     accordance with this section; and
       (2) work to ensure that there is adequate technical support 
     for an effective process.
       (b) Requirements.--The stakeholder participation process 
     shall--
       (1) be balanced and representative of interests likely to 
     be affected by the proposed alternative compliance strategy;
       (2) ensure options for public access to the process and 
     make publicly available the proceedings of the stakeholder 
     participation process, except with respect to confidential 
     information of the petitioner;
       (3) establish procedures for conducting the stakeholder 
     participation process, including open meetings as 
     appropriate; and
       (4) if necessary, provide for appropriate agreements to 
     protect confidential information of the petitioner proposing 
     the alternative compliance strategy.
       (c) Public Notice of Petition.--A person that submits a 
     petition under section 102 shall provide effective public 
     notice of the intent of the petitioner to pursue the 
     alternative compliance strategy to--
       (1) community groups;
       (2) environmental groups;
       (3) potentially affected employees;
       (4) persons living near the facility; and
       (5) Federal, State, and local government agencies in areas 
     that may be affected by the alternative compliance strategy, 
     including areas that may be affected by transport of a 
     pollutant.
       (d) Participation.--
       (1) In general.--Any person may participate in the 
     stakeholder participation process, except that a person that 
     has a business interest in competition with that of the 
     petitioner may be excluded.
       (2) Government officials.--Federal, State, and local 
     government officials in areas that may be affected by the 
     proposed alternative compliance strategy may participate in 
     the stakeholder participation process.
       (3) Limitation on number of participants.--In order to 
     provide for a manageable stakeholder process, a petitioner 
     may propose a limit on the number of stakeholder participants 
     if the petitioner demonstrates to the satisfaction of the 
     Administrator that the stakeholder participants adequately 
     represent, in a balanced manner, the full range of interests 
     (excluding competitive business interests) that may be 
     affected by the alternative compliance strategy.
       (e) Modification or Waiver of Process.--

[[Page S11730]]

       (1) Request.--A petitioner may request that the 
     Administrator modify or waive 1 or more of the requirements 
     of this section.
       (2) Criteria.--The Administrator may grant a request under 
     paragraph (1) if, after notice and opportunity for public 
     comment, the Administrator determines that--
       (A) there is insufficient interest in convening stakeholder 
     participants; and
       (B) the stakeholder participation process would not be 
     useful in view of the routine or noncontroversial nature of 
     the proposal.

     SEC. 105. REQUIREMENTS FOR APPROVAL.

       (a) In General.--The Administrator may approve a petition 
     under section 107 if the Administrator determines that--
       (1) the facility is in compliance with all applicable 
     environmental and public health regulations and other 
     requirements;
       (2) the alternative compliance strategy will achieve better 
     overall environmental results than would be achieved under 
     the current regulatory requirements and any reasonably 
     anticipated future regulatory requirements;
       (3) the alternative compliance strategy will not result in 
     adverse cross-media impacts;
       (4) the alternative compliance strategy provides 
     accountability, monitoring, enforceability, and public and 
     Agency access to information at least equal to that provided 
     under the Agency rule that is modified or waived;
       (5) the alternative compliance strategy provides for access 
     to information adequate to enable verification of 
     environmental performance by any interested person;
       (6) the alternative compliance strategy ensures worker 
     health and safety;
       (7) no person or population would be subjected to unjust or 
     disproportionate environmental impacts as a result of 
     implementation of the alternative compliance strategy;
       (8) the alternative compliance strategy will not result in 
     transport of a pollutant to another area;
       (9) the alternative compliance strategy will not result in 
     a violation of a national environmental or health standard;
       (10) all State and local environmental agencies in areas 
     that may be affected by the alternative compliance strategy 
     support the petition;
       (11) the stakeholder participation process met the 
     requirements of section 104;
       (12) as determined on the basis of a well accepted, 
     documented methodology, the alternative compliance strategy 
     will not result in any significant increase in the risks of 
     adverse effects, or shift any significant risks of adverse 
     effects, to the health of an individual, population, or 
     natural resource affected by the alternative compliance 
     strategy;
       (13) the agreement is for a specified term not to exceed 10 
     years; and
       (14) in the case of a petition involving more than 1 
     pollutant or more than 1 medium, a broad consensus of the 
     stakeholder participants has approved the alternative 
     compliance strategy.
       (b) Better Overall Results.--
       (1) Criteria.--For the purposes of subsection (a)(2), the 
     achievement of better overall environmental results shall be 
     measured as follows:
       (A) For existing facilities, the benchmark shall be the 
     lesser of--
       (i) the level of releases of pollutants into the 
     environment being achieved prior to the date of submission of 
     the petition; or
       (ii) the level of releases of pollutants into the 
     environment allowed under the current regulatory requirements 
     and any reasonably anticipated future regulatory 
     requirements;

     except that the Administrator may modify the benchmark on a 
     case-by-case basis for a facility that has reduced releases 
     significantly below applicable regulatory requirements prior 
     to the date of submission of the petition.
       (B) For existing facilities being modified to significantly 
     expand production, the benchmark shall be the lesser of--
       (i) the level of releases of pollutants into the 
     environment being achieved (on a per unit of production 
     basis) prior to the date of submission of the petition; or
       (ii) the level of releases of pollutants into the 
     environment allowed under the current regulatory requirements 
     and any reasonably anticipated future regulatory requirements 
     on a per unit of production basis.
       (C) For new facilities, the benchmark shall be based on the 
     lesser of--
       (i) the level of releases of pollutants into the 
     environment allowed under the current regulatory requirements 
     and any reasonably anticipated future regulatory 
     requirements; or
       (ii) the level of releases of pollutants into the 
     environment being achieved by the best performance practices 
     of similarly situated facilities.
       (2) Other considerations.--In addition to determining that 
     the criteria of paragraph (1) are met, the Administrator may 
     consider other factors supporting superior environmental, 
     social, and economic benefits set forth in the petition.
       (c) Objection by Stakeholder.--Notwithstanding subsection 
     (a)(14), the Administrator shall deny a petition involving 
     more than 1 pollutant or more than 1 medium if--
       (1) 1 or more stakeholders object to the alternative 
     compliance strategy; and
       (2) the Administrator determines, based on the objection, 
     any response to the objection, and all other relevant facts, 
     that--
       (A) the objection relates to any of the criteria stated in 
     paragraphs (1) through (13) of subsection (a); and
       (B) the objection has a clear and reasonable foundation.

     SEC. 106. PRIORITY.

       The Administrator shall give priority to petitions with 
     alternative compliance strategies using pollution prevention 
     approaches and to petitions submitted by persons with a 
     strong record of outstanding environmental performance and 
     worker health and safety protection.

     SEC. 107. DETERMINATION OF PETITION.

       Not later than 180 days after receiving a petition under 
     section 102, the Administrator, subject to section 112, 
     shall--
       (1) propose to approve the petition and enter into an 
     enforceable compliance agreement; or
       (2) submit a written explanation to the petitioner of the 
     basis for determining that the requirements of section 105 
     are not met.

     SEC. 108. PUBLIC NOTICE OF INTENT TO APPROVE PETITION.

       The Administrator shall publish notice of the intent to 
     approve a petition in the Federal Register at least 60 days 
     prior to approving the petition.

     SEC. 109. ENFORCEABILITY.

       (a) In General.--If the Administrator and a person enter 
     into an enforceable compliance agreement under this title, 
     the person shall comply with the agreement in lieu of any 
     Agency rule modified or waived by the agreement, and 
     compliance with the agreement shall be considered to be 
     compliance with the Agency rule for all purposes.
       (b) Specification of Agency Rules to Which Agreement 
     Applies.--An agreement under subsection (a) shall specify 
     each Agency rule that is modified or waived.

     SEC. 110. PRELIMINARY COMMENT PROCESS.

       The Administrator shall establish a process for providing 
     preliminary comments by the Administrator on a petition.

     SEC. 111. JUDICIAL REVIEW.

       A decision by the Administrator to approve or disapprove a 
     petition under this title shall constitute final agency 
     action and shall be subject to judicial review.

     SEC. 112. LIMITATION ON PETITIONS CONSIDERED.

       The Administrator shall not consider more than 50 petitions 
     for alternative compliance strategies unless--
       (1) a petitioner demonstrates that, because the petitioner 
     is situated in a position that is virtually identical to that 
     of another person that has been granted approval of a 
     petition, the petitioner may be at a substantial competitive 
     disadvantage if the petition is not considered; or
       (2) at the sole discretion of the Administrator and taking 
     into account the full range of the Agency's obligations, the 
     Administrator determines that adequate resources exist to 
     evaluate a greater number of petitions and to oversee 
     implementation of a greater number of enforceable compliance 
     agreements.

     SEC. 113. SMALL BUSINESS PROPOSALS.

       The Administrator shall establish a program to facilitate 
     development of proposals for alternative means of compliance 
     from groups of small businesses and to provide expedited 
     review of proposals for alternative means of compliance from 
     groups of small businesses.
     SEC. 114. REPORT AND EVALUATION.
       Not later than 3 years after the date of enactment of this 
     Act, the Administrator shall submit a report to Congress on 
     the aggregate effect of the enforceable compliance agreements 
     entered into under this title, including--
       (1) the number and characteristics of the agreements;
       (2) estimates of the environmental and public health 
     benefits, including any reduction in quantities or types of 
     emissions and wastes generated;
       (3) estimates of the effect on compliance costs and jobs 
     creation;
       (4) the degree and nature of public participation and 
     accountability;
       (5) the incidence of noncompliance with the agreements 
     entered into under this title compared to the incidence of 
     noncompliance with relevant Agency rules by similarly 
     situated facilities;
       (6) conclusions on the functioning of stakeholder 
     participation processes; and
       (7) recommendations for legislative action.

     SEC. 115. SAVINGS CLAUSE.

       A decision by the Administrator to enter into an 
     enforceable compliance agreement under this title shall not 
     create any obligation of the Agency to modify any Agency rule 
     insofar as the rule applies to any facility other than the 
     facility subject to the enforceable compliance agreement. 
     Nothing in this title shall affect the ability of the 
     Administrator to enter into or carry out enforceable 
     alternative compliance agreements under other law.

     SEC. 116. COMPUTER ACCESS.

       The Administrator shall establish, and provide on-line 
     computer access to, a national repository of enforceable 
     compliance agreements entered into under this title.

     SEC. 117. FUNDING.

       (a) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Agency to carry out this title such 
     sums as are necessary for fiscal years 1997 through 2000.
       (b) Authorization of Fees.--
       (1) In general.--The Administrator may assess reasonable 
     fees for consideration of petitions.
       (2) Offset.--Fees assessed under paragraph (1) shall offset 
     the expenses incurred by the

[[Page S11731]]

     Administrator and may be used only for processing, 
     administering, implementing, and enforcing enforceable 
     compliance agreements.
       (3) Other fees.--Fees assessed under this subsection shall 
     be collected in lieu of fees associated with otherwise 
     applicable rules or requirements modified by an enforceable 
     compliance agreement.
       (4) Waiver.--The Administrator may waive any fees under 
     this subsection for any proposal for an alternative means of 
     compliance from a small entity (as defined under section 601 
     of title 5, United States Code) or group of small entities.
            TITLE II--ENVIRONMENTAL MARKET-BASED STRATEGIES

     SEC. 201. CONSIDERATION OF MARKET-BASED MECHANISMS.

       Before issuing a rule establishing a new program intended 
     to limit the discharge or emission of a pollutant into the 
     environment, the Administrator of the Environmental 
     Protection Agency shall, in appropriate circumstances, 
     consider including market-based mechanisms in the design and 
     implementation of the program.

     SEC. 202. MARKET-BASED MECHANISMS.

       (a) In General.--Subject to subsection (b), a market-based 
     mechanism shall include--
       (1) the imposition, on each regulated person, of express 
     legal accountability for an explicit performance objective 
     expressed as a quantity of actual discharges or emissions 
     (and each such person's emissions or discharge limit shall 
     represent a share of a total limit on emissions or discharges 
     from all sources affected by the rule); and
       (2) the authorization of the regulated person to comply 
     with the requirements described in paragraph (1) by 
     transferring or acquiring increments of emissions or 
     discharge reductions, which shall represent reductions in 
     emissions or discharges in excess of those required to be 
     made by a regulated entity to meet its emissions or discharge 
     limits.
       (b) Other Appropriate Factors.--
       (1) In general.--If the Administrator of the Environmental 
     Protection Agency determines that a program with the elements 
     specified in subsection (a) is not appropriate, the 
     Administrator may include in a market-based mechanism a 
     method by which a regulated person subject to emissions or 
     discharge limits that are not expressed as a quantity of 
     total emissions or discharges may--
       (A) elect to meet the applicable emissions or discharge 
     limits by limiting the person's total emissions or discharges 
     to a specified quantity that corresponds to the regulated 
     person's initial emissions or discharge limits; and
       (B) achieve compliance with the emissions or discharge 
     limits established under subparagraph (A) by acquiring or 
     transferring increments of emissions or discharge reductions.
       (2) Incremental reductions.--Subject to paragraph (3), 
     increments described in paragraph (1)(B) shall--
       (A) represent reductions in emissions or discharges in 
     excess of reductions required to be made by a regulated 
     entity to meet its emissions or discharge limits; and
       (B) be permanent, enforceable, and nondiscrete.
       (3) Exclusion as part of mechanism.--A rule permitting 
     sources to acquire increments of emissions or discharge 
     reductions when increments represent reductions that are 
     discrete, nonpermanent, or discontinuous and are generated by 
     sources the total emissions or discharges of which are not 
     subject to a quantified emissions or discharge limitation 
     requirement shall not be part of a market-based mechanism.
       (c) Limitation.--Notwithstanding any other provision of 
     this title, the Administrator of the Environmental Protection 
     Agency may not consider market-based mechanisms for a program 
     if--
       (1) the program would result in levels of emissions or 
     discharges of the pollutant regulated by the rule in excess 
     of those that would be achieved under an alternative program, 
     taking into account any incentives for generating and 
     retaining excess reductions created by the opportunity to 
     acquire and transfer increments of emissions or discharge 
     reductions as a means of meeting the emissions or discharge 
     limitation requirement applicable to the source; or
       (2) the program pertains to a pollutant the properties of 
     which are such that the environmental or human health 
     purposes for which the pollutant is subject to regulation, 
     taking into account any disproportionate or unjust 
     environmental impacts to an individual, population, or 
     natural resource, and any transport of the pollutant that may 
     result, may be achieved only through the imposition of 
     nontransferable source-specific emissions or discharge 
     limitation requirements.

                          ____________________