[Congressional Record Volume 143, Number 4 (Tuesday, January 21, 1997)]
[Senate]
[Pages S163-S234]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. COVERDELL (for himself, Mr. Coats, Mr. Gregg, Mr. Lott, 
        Mr. Bond, Mr. Abraham, Mr. Allard, Mr. Ashcroft, Mr. Craig, Mr. 
        DeWine, Mr. Domenici, Mr. Faircloth, Mr. Gorton, Mr. Grams, Mr. 
        Hagel, Mr. Hatch, Mrs. Hutchison, Mr. Hutchinson, Mr. Kyl, Mr. 
        McCain, Mr. McConnell, Mr. Murkowski, Mr. Nickles, Mr. Smith, 
        Mr. Thurmond, and Mr. Warner):
  S. 1. A bill to provide for safe and affordable schools; to the 
Committee on Finance.


              THE SAFE AND AFFORDABLE SCHOOLS ACT OF 1997

  Mr. COVERDELL. Mr. President, for people to remain free, they must be 
educated. It is at the foundation of our liberty. This bill that has 
just been referred owes a great debt to Senator Coats of Indiana, 
Senator Gregg of New Hampshire, Senator Roth of Delaware, Senator 
Jeffords of Vermont, Senator Bond of Missouri, Senator Shelby of 
Alabama, and Senator Grassley of Iowa.
  Mr. President, there is a grave condition in our elementary and high 
schools across the land. Forty-six percent of our students have made at 
least one change in daily routine because of concerns about personal 
safety. Twenty-nine percent said it was easy to get illegal drugs. 
Seventy-nine percent have friends who are regular drinkers. Sixty-eight 
percent can buy marijuana within a day. Sixty-two percent have friends 
who use marijuana.
  During the last 15 years, Mr. President, tuition at 4-year public 
colleges and universities rose 234 percent. In contrast, median 
household income rose only 82 percent, putting an ever tighter squeeze 
on those families that choose to and desire to send their children to 
college.
  Since 1990, American college students have borrowed over $100 
billion, and borrowing among students and families to seek their higher 
education has skyrocketed.
  Mr. President, since 1965, the United States has spent half a 
trillion dollars--$500 billion--on Federal education

[[Page S164]]

programs, yet 66 percent of 17-year-olds do not read at a proficient 
level, and reading scores have been declining for three decades. 
Moreover, 75 percent of fourth graders nationally scored below the 
proficient level of reading.
  Mr. President, the Safe and Affordable Schools Act believes that no 
family--no family--in America should be forced to send their student to 
an unsafe, violent, and drug-infested school. I repeat, no family 
should be forced--forced--to put their child in a school that is 
certifiably unsafe, certifiably drug ridden.
  This act will provide choice for children attending unsafe schools 
and provide an escape route from those kinds of schools. This act will 
ensure safe and drug-free schools and offers a grant program to those 
schools who are building better safety in the school place.
  It is hard to believe, Mr. President, that 40 percent of our students 
today do not feel safe in school. One in five are taking a weapon to 
school. There are 2,000 acts of violence every hour in American 
classrooms.
  Every student who chooses to go to college ought to have an 
affordable plan to do it. At the center point of this legislation is 
the Bob Dole Educational Investment Account. This will allow a family 
to put $1,000 a year, after tax, into an investment account of their 
choice, and when they are ready to send their child to school, the 
funds withdrawn from that account will occur with no tax liability. In 
other words, a plan setting forth, under the name of our former 
colleague, an opportunity for families to plan for their child's future 
education.
  It will provide for the deduction of student loan interest. It will 
protect State prepaid tuition plans. It will provide and extend 
employer-provided educational assistance, and it will make nontaxable 
work-study awards, all geared toward making it possible for that 
family, that student, to provide for their higher education.
  The Presiding Officer is very familiar with the Federal Government's 
propensity to force unfunded mandates on State and local governments. 
Such is the case with the individuals in the Disabilities Education 
Act, which was mandated by the Federal Government but never really paid 
for by the Federal Government. We are only making about a 7 percent to 
8 percent contribution.
  This act will authorize spending up to $10 billion over the next 7 
years so that the Federal Government will be a true partner in that 
mandate and fund upwards to 40 percent of this act that was imposed on 
State government, freeing those State governments of funds that they 
can use to better improve their educational system.
  Mr. President, when students arrive at college they ought to be 
proficient in the basic skills. I just cited figures that said they are 
not. This act will promote adult education and family literacy. The 
legislation provides $400 million in the form of block grants to States 
to establish programs to combat illiteracy. The bill creates a separate 
$100 million fund to provide incentive grants to encourage local 
innovation in addressing the problem of illiteracy.
  Mr. President, I began my remarks by saying that one of the 
fundamental extensions of freedom is education. This has always been 
the case in America. We have come to a time when the schoolroom is not 
safe. Therefore, the education that must emanate there is severely 
impaired. This education is a function of the States. The Federal 
Government has a role in leadership and innovation and assistance. That 
is at the core of this legislation we are offering today.
  Mr. President, I appreciate the opportunity to describe the act 
today.
  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. 1

       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 ``Safe and Affordable Schools 
     Act of 1997''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that--
       (1) in too many of our Nation's elementary and secondary 
     schools the test confronting our Nation's children is 
     survival, not learning;
       (2) our Nation's schools will not be restored to excellence 
     unless parents, States, and local communities take the lead; 
     and
       (3) the Federal Government's role in education is quite 
     properly to encourage, not to mandate.
       (b) Purpose.--The purpose of this Act is--
       (1) to ensure that parents, local communities and States 
     have the primary role in educating our Nation's children;
       (2) to restore excellence to our Nation's schools;
       (3) to give local communities and States maximum 
     flexibility in administering Federal education programs;
       (4) to allow education reforms to be tailored to the unique 
     needs of local communities and States;
       (5) to place the highest priority on providing our Nation's 
     students with safe, drug-free learning environments;
       (6) to ensure that the choice of whether to attend college 
     is to the greatest extent possible the result of individual 
     student desire and initiative, not the result of economic 
     circumstances that leave young parents wondering how they can 
     best provide such an education in the face of staggering 
     college tuition costs;
       (7) to focus resources on adult education, realizing that 
     education often is a lifelong process; and
       (8) to promote literacy by attacking our Nation's 
     unacceptably high level of illiteracy.
             TITLE I--SAFE AND DRUG-FREE SCHOOLS INITIATIVE
               Subtitle A--Student Opportunity and Safety

     SEC. 111. SHORT TITLE.

       This subtitle may be cited as the ``Student Opportunity and 
     Safety Act''.

     SEC. 112. FINDINGS AND PURPOSE.

       (a) Findings.--The Congress finds as follows:
       (1) Violence, crime, and illegal drug activity have 
     increased significantly in our Nation's public schools.
       (2) It is estimated that 3,000,000 violent acts or thefts 
     occur in or near schools, and that one in five public high 
     school students carries a weapon.
       (3) The incidence of violence, and criminal and illegal 
     drug activity within public elementary and secondary schools 
     threatens the school environment and interferes with the 
     learning process.
       (4) 2,000,000 more children are using drugs in 1997 than 
     were doing so in 1993. For the first time in the 1990s, over 
     half of our Nation's graduating high school seniors have 
     experimented with drugs and approximately 1 out of every 4 of 
     the students have used drugs in the past month.
       (5) After 11 years of declining marijuana use among 
     children aged 12 to 17, such use doubled between 1992 and 
     1995. The number of 8th graders who have used marijuana in 
     the past month has more than tripled since 1991.
       (6) More of our Nation's school children are becoming 
     involved with hard core drugs at earlier ages, as use of 
     heroin and cocaine by 8th graders has more than doubled since 
     1991.
       (7) Students have a right to be safe and secure in their 
     persons while attending school.
       (8) Low-income families whose children attend high poverty 
     public schools generally lack the financial ability to enroll 
     their children in private schools or the opportunity to 
     choose to enroll their children in public schools less 
     impacted by poverty, illegal drugs, or violence, while such 
     alternatives are typically available to more affluent 
     families.
       (9) Numerous research studies, including the 1993 National 
     Assessment of the Chapter 1 Program, have concluded that 
     students attending high poverty public schools have much 
     lower levels of academic achievement than other students, 
     regardless of the income level of the family of such 
     students.
       (10) Federally supported efforts to meet the educational 
     needs of disadvantaged children attending high poverty 
     schools have had little, if any, success in improving student 
     achievement, especially in the highest poverty schools and 
     school districts.
       (11) Evidence obtained from systematic evaluations of 
     school choice demonstration projects that involve public and 
     private, including sectarian, schools will make an important 
     contribution toward resolving debates over the most effective 
     means of improving the academic achievement of disadvantaged 
     children.
       (12) It is increasingly important that children from 
     families of all income levels meet high standards of academic 
     achievement, in order to exercise the responsibilities of 
     citizenship and to compete in globally competitive markets.
       (b) Purpose.--It is the purpose of this subtitle--
       (1) to provide children from low-income families who attend 
     unsafe schools with the option of attending safer schools;
       (2) to improve schools and academic programs by providing 
     certain low-income parents with increased consumer power and 
     dollars to choose safer and drug-free schools and programs 
     that such parents determine best fit the needs of their 
     children;
       (3) to engage more fully certain low-income parents in 
     their children's schooling;
       (4) through families, to provide at the school site new 
     dollars that teachers and principals may use to help certain 
     children achieve high educational standards; and
       (5) to demonstrate, through a discretionary demonstration 
     grant program, the effects of

[[Page S165]]

     projects that provide certain low-income families with more 
     of the same choices regarding all schools, including public, 
     private, or sectarian schools, that wealthier families have.

     SEC. 113. DEFINITIONS.

       As used in this subtitle--
       (1) the term ``choice school'' means any public or private 
     school, including a private sectarian school or a public 
     charter school, that--
       (A) is involved in a demonstration project assisted under 
     this subtitle; and
       (B) is not an unsafe school;
       (2) the term ``eligible child'' means a child in any of the 
     grades 1 through 12--
       (A) whose family income does not exceed 185 percent of the 
     poverty line; and
       (B) who would normally be assigned to attend an unsafe 
     school in the absence of--
       (i) a demonstration project under this subtitle; or
       (ii) participation, prior to the date of enactment of this 
     Act, in a school choice program;
       (3) the term ``eligible entity'' means a public agency, 
     institution, or organization, such as a State, a State or 
     local educational agency, a consortium of public agencies, or 
     a consortium of public and private nonprofit organizations, 
     that can demonstrate, to the satisfaction of the Secretary, 
     its ability to--
       (A) receive, disburse, and account for Federal funds; and
       (B) carry out the activities described in its application 
     under this subtitle;
       (4) the term ``evaluating agency'' means any academic 
     institution, consortium of professionals, or private or 
     nonprofit organization, with demonstrated experience in 
     conducting evaluations, that is not an agency or 
     instrumentality of the Federal Government;
       (5) the term ``local educational agency'' has the same 
     meaning given such term in section 14101 of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 8801);
       (6) the term ``parent'' includes a legal guardian or other 
     individual acting in loco parentis;
       (7) the term ``poverty line'' means the poverty line (as 
     defined by the Office of Management and Budget, and revised 
     annually in accordance with section 673(2) of the Community 
     Services Block Grant Act (42 U.S.C. 9902(2))) applicable to a 
     family of the size involved;
       (8) the term ``school'' means a school that provides 
     elementary education or secondary education (through grade 
     12), as determined under State law;
       (9) the term ``Secretary'' means the Secretary of 
     Education;
       (10) the term ``State'' means each of the 50 States of the 
     United States, the District of Columbia, and the Commonwealth 
     of Puerto Rico; and
       (11) the term ``unsafe school'' means a school that has 
     serious crime, violence, illegal drug, and discipline 
     problems, as indicated by conditions that may include high 
     rates of--
       (A) expulsions and suspensions of students from school;
       (B) referrals of students to alternative schools for 
     disciplinary reasons, to special programs or schools for 
     delinquent youth, or to juvenile court;
       (C) victimization of students or teachers by criminal acts, 
     including robbery, assault and homicide;
       (D) enrolled students who are under court supervision for 
     past criminal behavior;
       (E) possession, use, sale or distribution of illegal drugs;
       (F) enrolled students who are attending school while under 
     the influence of illegal drugs;
       (G) possession or use of guns or other weapons;
       (H) participation in youth gangs; or
       (I) crimes against property, such as theft or vandalism.

     SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated $50,000,000 for the 
     fiscal year 1998, and such sums as may be necessary for each 
     of the fiscal years 1999 through 2002, to carry out this 
     subtitle.

     SEC. 115. PROGRAM AUTHORIZED.

       (a) Reservation.--From the amount appropriated pursuant to 
     the authority of section 114 in any fiscal year, the 
     Secretary shall reserve and make available to the Comptroller 
     General of the United States 2 percent for evaluation of 
     programs assisted under this subtitle in accordance with 
     section 121.
       (b) Grants.--
       (1) In general.--From the amount appropriated pursuant to 
     the authority of section 114 and not reserved under 
     subsection (a) for any fiscal year, the Secretary shall award 
     grants to eligible entities to enable such entities to carry 
     out at least 20, but not more than 30, demonstration projects 
     under which low-income parents receive education certificates 
     for the costs of enrolling their eligible children in a 
     choice school.
       (2) Amount.--The Secretary shall award grants under 
     paragraph (1) for fiscal year 1998 so that--
       (A) not more than 2 grants are awarded in amounts of 
     $5,000,000 or less; and
       (B) grants not described in subparagraph (A) are awarded in 
     amounts of $3,000,000 or less.
       (3) Continuing eligibility.--The Secretary shall continue a 
     demonstration project under this subtitle by awarding a grant 
     under paragraph (1) to an eligible entity that received such 
     a grant for a fiscal year preceding the fiscal year for which 
     the determination is made, if the Secretary determines that 
     such eligible entity was in compliance with this subtitle for 
     such preceding fiscal year.
       (4) Priority.--The Secretary shall give priority to 
     awarding a grant under paragraph (1) to an eligible entity 
     that--
       (A) is conducting a school choice program, involving public 
     or private schools, on the date of enactment of this Act; and
       (B) operates a school choice program, involving public and 
     private schools, that is authorized by Federal law.
       (c) Use of Grants.--Grants awarded under subsection (b) 
     shall be used to pay the costs of--
       (1) providing education certificates to low-income parents 
     to enable such parents to pay the tuition, the fees, the 
     allowable costs of transportation, if any, and the costs of 
     complying with section 119(a)(1), if any, for their eligible 
     children to attend a choice school; and
       (2) administration of the demonstration project, which 
     shall not exceed 15 percent of the amount received in the 
     first fiscal year for which the eligible entity provides 
     education certificates under this subtitle or 10 percent in 
     any subsequent year, including--
       (A) seeking the involvement of choice schools in the 
     demonstration project;
       (B) providing information about the demonstration project, 
     and the schools involved in the demonstration project, to 
     parents of eligible children;
       (C) making determinations of eligibility for participation 
     in the demonstration project for eligible children;
       (D) selecting students to participate in the demonstration 
     project;
       (E) determining the amount of, and issuing, education 
     certificates;
       (F) compiling and maintaining such financial and 
     programmatic records as the Secretary may prescribe; and
       (G) collecting such information about the effects of the 
     demonstration project as the evaluating agency may need to 
     conduct the evaluation described in section 121.
       (d) Special Rule.--Any school participating in the 
     demonstration program under this subtitle shall comply with 
     title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et 
     seq.) and not discriminate on the basis of race, color, or 
     national origin.
       (e) Supplement Not Supplant.--Each eligible entity 
     receiving funds under this subtitle shall use such funds to 
     supplement and not supplant the amount of funds that would, 
     in the absence of such Federal funds, be made available from 
     other sources to carry out the activities assisted under this 
     subtitle.
       (f) Supplementation of Funding.--Each eligible entity 
     receiving funds under this section is encouraged to 
     supplement the funding received under this subtitle with 
     funding received from State, local, or private sources.
       (g) Education Certificates.--
       (1) Assistance to families, not choice schools.--Education 
     certificates provided under this subtitle shall be considered 
     to be aid to families, not choice schools. A parent's use of 
     an education certificate at a choice school under this 
     subtitle shall not be construed to be Federal financial aid 
     or assistance to that choice school.
       (2) Taxes and determinations of eligibility for other 
     federal programs.--Education certificates provided under this 
     subtitle shall not be considered as income to an eligible 
     child or the parent of such eligible child for Federal, 
     State, or local tax purposes or for determining eligibility 
     for any other Federal program.

     SEC. 116. AUTHORIZED PROJECTS; PRIORITY.

       (a) Authorized Projects.--The Secretary may award a grant 
     under this subtitle only for a demonstration project that--
       (1) involves at least one local educational agency that--
       (A) receives funds under section 1124A of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 6334); and
       (B) is among the 20 percent of local educational agencies 
     receiving funds under section 1124A of such Act (20 U.S.C. 
     6334) in the State and having the highest number or greatest 
     percentage of children described in section 1124(c) of such 
     Act (20 U.S.C. 6333(c)); and
       (2) includes the involvement of a sufficient number of 
     public and private choice schools, including sectarian 
     schools, to allow for a valid demonstration project.
       (b) Priority.--In awarding grants under this subtitle, the 
     Secretary shall give priority to demonstration projects--
       (1) in which choice schools offer an enrollment opportunity 
     to the broadest range of eligible children;
       (2) that involve diverse types of choice schools; and
       (3) that will contribute to the geographic diversity of 
     demonstration projects assisted under this subtitle, 
     including awarding grants for demonstration projects in 
     States that are primarily rural and awarding grants for 
     demonstration projects in States that are primarily urban.

     SEC. 117. APPLICATIONS.

       (a) In General.--Any eligible entity that wishes to receive 
     a grant under this subtitle shall submit an application to 
     the Secretary at such time and in such manner as the 
     Secretary may prescribe.
       (b) Contents.--Each application described in subsection (a) 
     shall contain--

[[Page S166]]

       (1) information demonstrating the eligibility for 
     participation in the demonstration program of the eligible 
     entity;
       (2) a description of how the eligible entity will determine 
     a school to be a unsafe school in accordance with section 
     113(11);
       (3) with respect to choice schools--
       (A) a description of the types of potential choice schools 
     that will be involved in the demonstration project;
       (B)(i) a description of the procedures used to encourage 
     public and private schools to be involved in the 
     demonstration project; and
       (ii) a description of how the eligible entity will annually 
     determine the number of spaces available for eligible 
     children in each choice school;
       (C) an assurance that each choice school will not impose 
     higher standards for admission or participation in its 
     programs and activities for eligible children provided 
     education certificates under this subtitle than the choice 
     school does for other children;
       (D) an assurance that the eligible entity will terminate 
     the involvement of any choice school that fails to comply 
     with the conditions of its involvement in the demonstration 
     project; and
       (E) a description of the extent to which choice schools 
     will accept education certificates under this subtitle as 
     full or partial payment for tuition and fees;
       (4) with respect to the participation in the demonstration 
     project of eligible children--
       (A) a description of the procedures to be used to make a 
     determination of eligibility for participation in the 
     demonstration project for an eligible child;
       (B) a description of the procedures to be used to ensure 
     that, in selecting eligible children to participate in the 
     demonstration project, the eligible entity will--
       (i) apply the same criteria to both public and private 
     school eligible children; and
       (ii) give priority to eligible children from the lowest 
     income families;
       (C) a description of the procedures to be used to ensure 
     maximum choice of schools for participating eligible 
     children; and
       (D) a description of the procedures to be used to ensure 
     compliance with section 119(a)(1), which may include--
       (i) the direct provision of services by a local educational 
     agency; and
       (ii) arrangements made by a local educational agency with 
     other service providers;
       (5) with respect to the operation of the demonstration 
     project--
       (A) a description of the procedures to be used for the 
     issuance and redemption of education certificates under this 
     subtitle;
       (B) a description of the procedures by which a choice 
     school will make a pro rata refund of the education 
     certificate under this subtitle for any participating 
     eligible child who withdraws from the school for any reason, 
     before completing 75 percent of the school attendance period 
     for which the education certificate was issued;
       (C) a description of the procedures to be used to provide 
     the parental notification described in section 120;
       (D) an assurance that the eligible entity will place all 
     funds received under this subtitle into a separate account, 
     and that no other funds will be placed in such account;
       (E) an assurance that the eligible entity will cooperate 
     with the Comptroller General of the United States and the 
     evaluating agency in carrying out the evaluations described 
     in section 121; and
       (F) an assurance that the eligible entity will--
       (i) maintain such records as the Secretary may require; and
       (ii) comply with reasonable requests from the Secretary for 
     information; and
       (6) such other assurances and information as the Secretary 
     may require.

     SEC. 118. EDUCATION CERTIFICATES.

       (a) Education Certificates.--
       (1) Amount.--The amount of an eligible child's education 
     certificate under this subtitle shall be determined by the 
     eligible entity, but shall be an amount that provides to the 
     recipient of the education certificate the maximum degree of 
     choice in selecting the choice school the eligible child will 
     attend.
       (2) Considerations.--
       (A) In general.--Subject to such regulations as the 
     Secretary shall prescribe, in determining the amount of an 
     education certificate under this subtitle an eligible entity 
     shall consider--
       (i) the additional reasonable costs of transportation 
     directly attributable to the eligible child's participation 
     in the demonstration project; and
       (ii) the cost of complying with section 119(a)(1).
       (B) Schools charging tuition.--If an eligible child 
     participating in a demonstration project under this subtitle 
     was attending a public or private school that charged tuition 
     for the year preceding the first year of such participation, 
     then in determining the amount of an education certificate 
     for such eligible child under this subtitle the eligible 
     entity shall consider--
       (i) the tuition charged by such school for such eligible 
     child in such preceding year; and
       (ii) the amount of the education certificates under this 
     subtitle that are provided to other eligible children.
       (3) Special rule.--An eligible entity may provide an 
     education certificate under this subtitle to the parent of an 
     eligible child who chooses to attend a school that does not 
     charge tuition or fees, to pay the additional reasonable 
     costs of transportation directly attributable to the eligible 
     child's participation in the demonstration project or the 
     cost of complying with section 119(a)(1).
       (b) Adjustment.--The amount of the education certificate 
     for a fiscal year may be adjusted in the second and third 
     years of an eligible child's participation in a demonstration 
     project under this subtitle to reflect any increase or 
     decrease in the tuition, fees, or transportation costs 
     directly attributable to that eligible child's continued 
     attendance at a choice school, but shall not be increased for 
     this purpose by more than 10 percent of the amount of the 
     education certificate for the fiscal year preceding the 
     fiscal year for which the determination is made. The amount 
     of the education certificate may also be adjusted in any 
     fiscal year to comply with section 119(a)(1).
       (c) Maximum Amount.--Notwithstanding any other provision of 
     this section, the amount of an eligible child's education 
     certificate shall not exceed the per pupil expenditure for 
     elementary or secondary education, as appropriate, by the 
     local educational agency in which the public school to which 
     the eligible child would normally be assigned is located for 
     the fiscal year preceding the fiscal year for which the 
     determination is made.

     SEC. 119. EFFECT ON OTHER PROGRAMS.

       (a) Effect on Other Programs.--
       (1) In general.--An eligible child participating in a 
     demonstration project under this subtitle, who, in the 
     absence of such a demonstration project, would have received 
     services under part A of title I of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6311 et seq.) 
     shall be provided such services.
       (2) Part b of the individuals with disabilities education 
     act.--Nothing in this subtitle shall be construed to affect 
     the requirements of part B of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1411 et seq.).
       (b) Counting of Eligible Children.--Notwithstanding any 
     other provision of law, any local educational agency 
     participating in a demonstration project under this subtitle 
     may count eligible children who, in the absence of such a 
     demonstration project, would attend the schools of such 
     agency, for purposes of receiving funds under any program 
     administered by the Secretary.
       (c) Sectarian Institutions.--Nothing in this subtitle shall 
     be construed to supersede or modify any provision of a State 
     constitution that prohibits the expenditure of public funds 
     in or by sectarian institutions.

     SEC. 120. PARENTAL NOTIFICATION.

       Each eligible entity receiving a grant under this subtitle 
     shall provide timely notice of the demonstration project to 
     parents of eligible children residing in the area to be 
     served by the demonstration project. At a minimum, such 
     notice shall--
       (1) describe the demonstration project;
       (2) describe the eligibility requirements for participation 
     in the demonstration project;
       (3) describe the information needed to make a determination 
     of eligibility for participation in the demonstration project 
     for an eligible child;
       (4) describe the selection procedures to be used if the 
     number of eligible children seeking to participate in the 
     demonstration project exceeds the number that can be 
     accommodated in the demonstration project;
       (5) provide information about each choice school, including 
     information about any admission requirements or criteria for 
     each choice school participating in the demonstration 
     project; and
       (6) include the schedule for parents to apply for their 
     eligible children to participate in the demonstration 
     project.

     SEC. 121. EVALUATION.

       (a) Annual Evaluation.--
       (1) Contract.--The Comptroller General of the United States 
     shall enter into a contract, with an evaluating agency that 
     has demonstrated experience in conducting evaluations, for 
     the conduct of an ongoing rigorous evaluation of the 
     demonstration program under this subtitle.
       (2) Annual evaluation requirement.--The contract described 
     in paragraph (1) shall require the evaluating agency entering 
     into such contract to annually evaluate each demonstration 
     project under this subtitle in accordance with the evaluation 
     criteria described in subsection (b).
       (3) Transmission.--The contract described in paragraph (1) 
     shall require the evaluating agency entering into such 
     contract to transmit to the Comptroller General of the United 
     States--
       (A) the findings of each annual evaluation under paragraph 
     (1); and
       (B) a copy of each report received pursuant to section 
     122(a) for the applicable year.
       (b) Evaluation Criteria.--The Comptroller General of the 
     United States, in consultation with the Secretary, shall 
     establish minimum criteria for evaluating the demonstration 
     program under this subtitle. Such criteria shall provide 
     for--
       (1) a description of the implementation of each 
     demonstration project under this subtitle and the 
     demonstration project's effects on all participants, schools, 
     and communities in the demonstration project area, with 
     particular attention given to the effect of parent 
     participation in the life of the school and the level of 
     parental satisfaction with the demonstration program; and

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       (2) a comparison of the educational achievement of, and the 
     incidences of violence and drug activity related to, all 
     students in the demonstration project area, including a 
     comparison of similar--
       (A) students receiving education certificates under this 
     subtitle; and
       (B) students not receiving education certificates under 
     this subtitle.

     SEC. 122. REPORTS.

       (a) Report by Grant Recipient.--Each eligible entity 
     receiving a grant under this subtitle shall submit to the 
     evaluating agency entering into the contract under section 
     121(a)(1) an annual report regarding the demonstration 
     project under this subtitle. Each such report shall be 
     submitted at such time, in such manner, and accompanied by 
     such information, as such evaluating agency may require.
       (b) Reports by Comptroller General.--
       (1) Annual reports.--The Comptroller General of the United 
     States shall report annually to the Congress on the findings 
     of the annual evaluation under section 121(a)(2) of each 
     demonstration project under this subtitle. Each such report 
     shall contain a copy of--
       (A) the annual evaluation under section 121(a)(2) of each 
     demonstration project under this subtitle; and
       (B) each report received under subsection (a) for the 
     applicable year.
       (2) Final report.--The Comptroller General shall submit a 
     final report to the Congress within 6 months after the 
     conclusion of the demonstration program under this subtitle 
     that summarizes the findings of the annual evaluations 
     conducted pursuant to section 121(a)(2).
                 Subtitle B--Common Sense School Safety

     SEC. 141. SHORT TITLE.

       This subtitle may be cited as the ``Common Sense School 
     Safety Act''.

               CHAPTER I--PUPIL SAFETY AND FAMILY CHOICE

     SEC. 151. PUPIL SAFETY AND FAMILY SCHOOL CHOICE.

       Subpart 1 of part A of title I of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6311 et seq.) is 
     amended by inserting after section 1115A of such Act (20 
     U.S.C. 6316) the following:

     ``SEC. 1115B. PUPIL SAFETY AND FAMILY SCHOOL CHOICE.

       ``(a) In General.--If a student is eligible to be served 
     under section 1115(b), or attends a school eligible for a 
     schoolwide program under section 1114, and becomes a victim 
     of a violent criminal offense while in or on the grounds of a 
     public elementary school or secondary school that the student 
     attends and that receives assistance under this part, then 
     the local educational agency may use funds provided under 
     this part to pay the supplementary costs for such student to 
     attend another school. The agency may use the funds to pay 
     for the supplementary costs of such student to attend any 
     other public or private elementary school or secondary 
     school, including a sectarian school, in the same State as 
     the school where the criminal offense occurred, that is 
     selected by the student's parent. The State educational 
     agency shall determine what actions constitute a violent 
     criminal offense for purposes of this section.
       ``(b) Supplementary Costs.--The supplementary costs 
     referred to in subsection (a) shall not exceed--
       ``(1) in the case of a student for whom funds under this 
     section are used to enable the student to attend a public 
     elementary school or secondary school served by a local 
     educational agency that also serves the school where the 
     violent criminal offense occurred, the costs of supplementary 
     educational services and activities described in section 
     1114(b) or 1115(c) that are provided to the student;
       ``(2) in the case of a student for whom funds under this 
     section are used to enable the student to attend a public 
     elementary school or secondary school served by a local 
     educational agency that does not serve the school where the 
     violent criminal offense occurred but is located in the same 
     State--
       ``(A) the costs of supplementary educational services and 
     activities described in section 1114(b) or 1115(c) that are 
     provided to the student; and
       ``(B) the reasonable costs of transportation for the 
     student to attend the school selected by the student's 
     parent; and
       ``(3) in the case of a student for whom funds under this 
     section are used to enable the student to attend a private 
     elementary school or secondary school, including a sectarian 
     school, the costs of tuition, required fees, and the 
     reasonable costs of such transportation.
       ``(c) Construction.--Nothing in this Act or any other 
     Federal law shall be construed to prevent a parent assisted 
     under this section from selecting the public or private 
     elementary school or secondary school that a child of the 
     parent will attend within the State.
       ``(d) Consideration of Assistance.--Assistance used under 
     this section to pay the costs for a student to attend a 
     private school shall not be considered to be Federal aid to 
     the school, and the Federal Government shall have no 
     authority to influence or regulate the operations of a 
     private school as a result of assistance received under this 
     section.
       ``(e) Continuing Eligibility.--A student assisted under 
     this section shall remain eligible to continue receiving 
     assistance under this section for at least 3 academic years 
     without regard to whether the student is eligible for 
     assistance under section 1114 or 1115(b).
       ``(f) State Law.--All actions undertaken under this section 
     shall be undertaken in accordance with State law and may be 
     undertaken only to the extent such actions are permitted 
     under State law.
       ``(g) Tuition Charges.--Assistance under this section may 
     not be used to pay tuition or required fees at a private 
     elementary school or secondary school in an amount that is 
     greater than the tuition and required fees paid by students 
     not assisted under this section at such school.
       ``(h) Special Rule.--Any school receiving assistance 
     provided under this section shall comply with title VI of the 
     Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.) and not 
     discriminate on the basis of race, color, or national origin.
       ``(i) Assistance; Taxes and Other Federal Programs.--
       ``(1) Assistance to families, not schools.--Assistance 
     provided under this section shall be considered to be aid to 
     families, not schools. Use of such assistance at a school 
     shall not be construed to be Federal financial aid or 
     assistance to that school.
       ``(2) Taxes and determinations of eligibility for other 
     federal programs.--Assistance provided under this section to 
     a student shall not be considered to be income of the student 
     or the parent of such student for Federal, State, or local 
     tax purposes or for determining eligibility for any other 
     Federal program.
       ``(j) Part B of the Individuals With Disabilities Education 
     Act.--Nothing in this section shall be construed to affect 
     the requirements of part B of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1411 et seq.).
       ``(k) Sectarian Institutions.--Nothing in this section 
     shall be construed to supersede or modify any provision of a 
     State constitution that prohibits the expenditure of public 
     funds in or by sectarian institutions.
       ``(l) Maximum Amount.--Notwithstanding any other provision 
     of this section, the amount of assistance provided under this 
     part for a student shall not exceed the per pupil expenditure 
     for elementary or secondary education, as appropriate, by the 
     local educational agency that serves the school where the 
     criminal offense occurred for the fiscal year preceding the 
     fiscal year for which the determination is made.''.

     SEC. 152. TRANSFER OF REVENUES.

       (a) In General.--Notwithstanding any other provision of 
     Federal law, a State, a State educational agency, or a local 
     educational agency may transfer any non-Federal public funds 
     associated with the education of a student who is a victim of 
     a violent criminal offense while in or on the grounds of a 
     public elementary school or secondary school served by a 
     local educational agency to another local educational agency 
     or to a private elementary school or secondary school, 
     including a sectarian school.
       (b) Definitions.--For the purpose of subsection (a), the 
     terms ``elementary school'', ``secondary school'', ``local 
     educational agency'', and ``State educational agency'' have 
     the meanings given such terms in section 14101 of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     8801).

                 CHAPTER II--VICTIM ASSISTANCE PROGRAMS

     SEC. 161. AMENDMENTS TO VICTIMS OF CRIME ACT OF 1984.

       (a) Victim Compensation.--Section 1403 of the Victims of 
     Crime Act of 1984 (42 U.S.C. 10602) is amended by adding at 
     the end the following:
       ``(f) Victims of School Violence.--Notwithstanding any 
     other provision of law, an eligible crime victim compensation 
     program may expend funds granted under this section to offer 
     compensation to elementary and secondary school students who 
     are victims of elementary and secondary school violence (as 
     school violence is defined under applicable State law).''.
       (b) Victim and Witness Assistance.--Section 1404(c) of the 
     Victims of Crime Act of 1984 (42 U.S.C. 10603(c)) is amended 
     by adding at the end the following:
       ``(4) Assistance for victims of and witnesses to school 
     violence.--Notwithstanding any other provision of law, the 
     Director may make a grant under this section for a 
     demonstration project or for training and technical 
     assistance services to a program that assists local 
     educational agencies (as local educational agency is defined 
     in section 14101 of the Elementary and Secondary Education 
     Act of 1965 (20 U.S.C. 8801)) in developing, establishing, 
     and operating programs that are designed to protect victims 
     of and witnesses to incidents of elementary and secondary 
     school violence (as school violence is defined under 
     applicable State law), including programs designed to protect 
     witnesses testifying in school disciplinary proceedings.''.

       CHAPTER III--INNOVATIVE PROGRAMS TO IMPROVE UNSAFE SCHOOLS

     SEC. 171. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that--
       (1) the continued presence in schools of violent students 
     who are a thereat to both teachers and other students is 
     incompatible with a safe learning environment;
       (2) unsafe school environments place students who are 
     already at risk of school failure for other reasons in 
     further jeopardy;
       (3) recently, over one-forth of high school students 
     surveyed reported being threatened at school;

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       (4) 2,000,000 more children are using drugs in 1997 than 
     were doing so a few short years prior to 1997;
       (5) nearly 1 out of every 20 students in 6th through 12th 
     grade uses drugs on school grounds;
       (6) more of our children are becoming involved with hard 
     drugs at earlier ages, as use of heroin and cocaine by 8th 
     graders has more than doubled since 1991; and
       (7) greater cooperation between schools, parents, law 
     enforcement, the courts, and the community is essential to 
     making our schools safe from drugs and violence.

     SEC. 172. PURPOSE.

       It is the purpose of this chapter--
       (1) to urge States, State educational agencies, and local 
     educational agencies to provide comprehensive services to 
     victims and witnesses of school violence;
       (2) to urge States, State educational agencies, and local 
     educational agencies to remove violent and drug selling 
     student offenders from school premises;
       (3) to urge States, State educational agencies, and local 
     educational agencies to report violent crimes and drug 
     dealing on school grounds to appropriate law enforcement 
     authorities;
       (4) to provide incentive grants for States, State 
     educational agencies, and local educational agencies to 
     involve parents, former armed forces personnel, and community 
     volunteers in efforts to improve school safety; and
       (5) to provide incentive grants to States, State 
     educational agencies, and local educational agencies to 
     develop innovative programs to improve the safety of our 
     Nation's schools and to better serve at-risk students.

     SEC. 173. DEFINITIONS.

       In this chapter:
       (1) Elementary school, local educational agency, secondary 
     school, and state educational agency.--The terms ``elementary 
     school'', ``local educational agency'', ``secondary school'', 
     and State educational agency'' have the meanings given the 
     terms in section 14101 of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 8801).
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of Education.

     SEC. 174. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as may be 
     necessary to carry out this chapter.

     SEC. 175. PROGRAM AUTHORIZED.

       (a) In General.--The Secretary is authorized to award 
     grants to States, State educational agencies, and local 
     educational agencies to develop, establish, or conduct 
     innovative programs to improve unsafe elementary schools or 
     secondary schools.
       (b) Priority.--The Secretary shall give priority to 
     awarding grants under subsection (a) to programs that--
       (1) provide parent and teacher notification of crimes or 
     drug activity occurring at school;
       (2) provide for the suspension, delay, or restriction of 
     driving privileges of persons under the age of 18 who have a 
     conviction, an adjudication in a juvenile proceeding, or a 
     finding in a school disciplinary proceeding, involving 
     illegal drugs;
       (3) programs that link local educational agencies with 
     community-based mentoring programs in order to link 
     individual at-risk youth with responsible, individual adults 
     who serve as mentors for the purpose of--
       (A) discouraging at-risk youth from--
       (i) using illegal drugs;
       (ii) violence;
       (iii) using dangerous weapons;
       (iv) criminal activity; and
       (v) involvement in gangs;
       (B) increasing youth participation in, and enhancing the 
     ability of such youth to benefit from, elementary and 
     secondary education;
       (C) promoting personal and social responsibility;
       (D) encouraging at-risk youth participation in community 
     service and community activities; and
       (E) providing general guidance to at-risk youth;
       (4) programs that include cooperative efforts between the 
     Secretary and the Secretary of Defense to share the training 
     and salary costs of former members of the Armed Forces who 
     are hired as teachers and assigned to teach in public 
     elementary schools and secondary schools, especially those 
     programs located in communities that are adversely affected 
     by the recent closing or substantial downsizing of a military 
     base or facility; and
       (5) programs to enhance school security measures that may 
     include--
       (A) equipping schools with metal detectors, fences, closed 
     circuit cameras, and other physical security measures;
       (B) providing increased police patrols in and around 
     elementary schools and secondary schools, including canine 
     patrols;
       (C) mailings to parents at the beginning of the school year 
     stating that the possession of a gun or other weapon, or the 
     sale of drugs in school, will not be tolerated by school 
     authorities; and
       (D) gun hotlines.

     SEC. 176. APPLICATION.

       (a) In General.--Each State, State educational agency, or 
     local educational agency desiring a grant under this chapter 
     shall submit an application to the Secretary at such time, in 
     such manner, and accompanied by such information as the 
     Secretary may require.
       (b) Contents.--Each application submitted under subsection 
     (a) shall contain an assurance that the State or agency has 
     implemented or will implement policies that--
       (1) provide protections for victims and witnesses to school 
     crime, including protections for attendance at school 
     disciplinary proceedings;
       (2) expel students who, on school grounds, sell drugs, or 
     who commit a violent offense that causes serious bodily 
     injury of another student or teacher; and
       (3) require referral to law enforcement authorities or 
     juvenile authorities of any student who on school grounds--
       (A) commits a violent offense resulting in serious bodily 
     injury; or
       (B) sells drugs.
       (c) Special Rule.--For purposes of paragraphs (2) and (3) 
     of subsection (b), State law shall determine what constitutes 
     a violent offense or serious bodily injury.

   CHAPTER IV--NOTIFICATION FOR JUVENILE JUSTICE AND LAW ENFORCEMENT 
                                PURPOSES

     SEC. 181. NOTIFICATION FOR JUVENILE JUSTICE AND LAW 
                   ENFORCEMENT PURPOSES.

       The Secretary of Education, not later than 90 days after 
     the date of enactment of this Act, shall prepare and 
     distribute to State educational agencies and local 
     educational agencies a notice regarding the extent of 
     permissible disclosure of educational records under 
     subparagraphs (E) and (J) of section 444(b) of the General 
     Education Provisions Act (20 U.S.C. 1232g), including under 
     the regulations issued pursuant to such subparagraphs.
 TITLE II--AMENDMENTS TO THE ELEMENTARY AND SECONDARY EDUCATION ACT OF 
                                  1965

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``State Education 
     Flexibility Act''.

     SEC. 202. AMENDMENTS TO ESEA.

       Subsection (b) of section 6301 of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 7351) is amended--
       (1) in paragraph (7), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (8), by striking the period and inserting 
     a semicolon; and
       (3) by adding at the end the following:
       ``(9) programs using scholarships or vouchers provided to a 
     parent by a local educational agency that permit the parent 
     to select the public or private, including sectarian, school 
     that the parent's child will attend, which programs may be 
     similar to the program assisted under title I of the Safe and 
     Affordable Schools Act of 1997, except that the provisions of 
     sections 6402 and 14507, and any generally applicable 
     provision relating to a prohibition against the use of 
     Federal funds for religious worship or instruction, shall not 
     apply to any program operated pursuant to this paragraph;
       ``(10) education reform projects that provide same gender 
     schools, as long as comparable educational opportunities are 
     offered for students of both sexes; and
       ``(11) education reform projects that reward teachers, 
     administrators, and schools with cash bonuses and other 
     incentives for significantly improving the academic 
     performance of their students.''.
             TITLE III--TAX INCENTIVES FOR HIGHER EDUCATION

     SEC. 300. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This title may be cited as the 
     ``Affordable College Act''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this title an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 301. BOB DOLE EDUCATION INVESTMENT ACCOUNTS.

       (a) In General.--Part VIII of subchapter F of chapter 1 
     (relating to qualified State tuition programs) is amended by 
     adding at the end the following new section:

     ``SEC. 530. BOB DOLE EDUCATION INVESTMENT ACCOUNTS.

       ``(a) General Rule.--A Bob Dole education investment 
     account (hereafter in this section referred to as an 
     `education investment account') shall be exempt from taxation 
     under this subtitle. Notwithstanding the preceding sentence, 
     the education investment account shall be subject to the 
     taxes imposed by section 511 (relating to imposition of tax 
     on unrelated business income of charitable organizations).
       ``(b) Limitations on Accounts.--
       ``(1) Account may not be established for benefit of more 
     than 1 individual.--An education investment account may not 
     be established for the benefit of more than 1 individual.
       ``(2) Special rule where more than 1 account.--If, at any 
     time during a calendar year, 2 or more education investment 
     accounts are maintained for the benefit of an individual, 
     only the account first established shall be treated as a Bob 
     Dole education investment account for purposes of this 
     section. This paragraph shall not apply to the extent more 
     than 1 account exists solely by reason of a rollover 
     contribution.

[[Page S169]]

       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Bob dole education investment account.--The term `Bob 
     Dole education investment account' means a trust created or 
     organized in the United States exclusively for the purpose of 
     paying the qualified higher education expenses of the account 
     holder, but only if the written governing instrument creating 
     the trust meets the following requirements:
       ``(A) No contribution will be accepted--
       ``(i) unless it is in cash,
       ``(ii) except in the case of rollover contributions from 
     another education investment account, in excess of $1,000 for 
     any calendar year, and
       ``(iii) after the date on which the account holder attains 
     age 18.
       ``(B) The trustee is a bank (as defined in section 408(n)) 
     or another person who demonstrates to the satisfaction of the 
     Secretary that the manner in which that person will 
     administer the trust will be consistent with the requirements 
     of this section.
       ``(C) No part of the trust assets will be invested in life 
     insurance contracts (other than contracts the beneficiary of 
     which is the trust and the face amount of which does not 
     exceed the amount by which the maximum amount which can be 
     contributed to the education investment account exceeds the 
     sum of the amounts contributed to the account for all taxable 
     years).
       ``(D) The assets of the trust shall not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       ``(E) Any balance in the education investment account on 
     the day after the date on which the individual for whose 
     benefit the trust is established attains age 30 (or, if 
     earlier, the date on which such individual dies) shall be 
     distributed within 30 days of such date to the account holder 
     (or in the case of death, the beneficiary).
       ``(2) Time when contributions deemed made.--A taxpayer 
     shall be deemed to have made a contribution on the last day 
     of the preceding taxable year if the contribution is made on 
     account of such taxable year and is made not later than the 
     time prescribed by law for filing the return for such taxable 
     year (including extensions thereof).
       ``(3) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' has the same meaning given such term by section 
     529(e)(3), except that such expenses shall be reduced by any 
     amount described in section 135(d)(1) (relating to certain 
     scholarships and veterans benefits).
       ``(B) State tuition plans.--Such term shall include amounts 
     paid or incurred to purchase tuition credits or certificates, 
     or to make contributions to an account, under a qualified 
     State tuition program (as defined in section 529(b)).
       ``(4) Eligible educational institution.--The term `eligible 
     educational institution' has the meaning given such term by 
     section 135(c)(3).
       ``(5) Account holder.--The term `account holder' means the 
     individual for whose benefit the education investment account 
     is established.
       ``(d) Tax Treatment of Distributions.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, any amount paid or distributed out of an 
     education investment account shall be included in gross 
     income of the payee or distributee for the taxable year in 
     the manner prescribed by section 72. For purposes of the 
     preceding sentence, rules similar to the rules of section 
     408(d)(2) shall apply.
       ``(2) Distribution used to pay educational expenses.--
     Paragraph (1) shall not apply to any payment or distribution 
     out of an education investment account to the extent such 
     payment or distribution is used exclusively to pay the 
     qualified higher education expenses of the account holder.
       ``(3) Special rule for applying section 2503.--If any 
     payment or distribution from an education investment account 
     is used exclusively for the payment to an eligible 
     educational institution of the qualified higher education 
     expenses of the account holder, such payment shall be treated 
     as a qualified transfer for purposes of section 2503(e).
       ``(4) Additional tax for distributions not used for 
     educational expenses.--
       ``(A) In general.--The tax imposed by this chapter for any 
     taxable year on any taxpayer who receives a payment or 
     distribution from an education investment account which is 
     includible in gross income under paragraph (1) shall be 
     increased by 10 percent of the amount which is so includible.
       ``(B) Exception for disability, death, or scholarship.--
     Subparagraph (A) shall not apply if the payment or 
     distribution is--
       ``(i) made on account of the death or disability of the 
     account holder, or
       ``(ii) made on account of a scholarship (or allowance or 
     payment described in section 135(d)(1) (B) or (C)) received 
     by the account holder to the extent the amount of the payment 
     or distribution does exceed the amount of the scholarship, 
     allowance, or payment.
       ``(C) Excess contributions returned before due date of 
     return.--Subparagraph (A) shall not apply to the distribution 
     to a contributor of any contribution paid during a taxable 
     year to an education investment account to the extent that 
     such contribution, when added to previous contributions to 
     the account during the taxable year, exceeds $1,000 if--
       ``(i) such distribution is received on or before the day 
     prescribed by law (including extensions of time) for filing 
     such contributor's return for such taxable year, and
       ``(ii) such distribution is accompanied by the amount of 
     net income attributable to such excess contribution.
     Any net income described in clause (ii) shall be included in 
     the gross income of the contributor for the taxable year in 
     which such excess contribution was made.
       ``(5) Rollover contributions.--Paragraph (1) shall not 
     apply to any amount paid or distributed from an education 
     investment account to the extent that the amount received is 
     paid into another education investment account for the 
     benefit of the account holder not later than the 60th day 
     after the day on which the holder receives the payment or 
     distribution. The preceding sentence shall not apply to any 
     payment or distribution if it applied to any prior payment or 
     distribution during the 12-month period ending on the date of 
     the payment or distribution.
       ``(6) Special rules for death and divorce.--Rules similar 
     to the rules of section 220(f) (7) and (8) shall apply.
       ``(e) Tax Treatment of Accounts.--Rules similar to the 
     rules of paragraphs (2) and (4) of section 408(e) shall apply 
     to any education investment account, and any amount treated 
     as distributed under such rules shall be treated as not used 
     to pay qualified higher education expenses.
       ``(f) Community Property Laws.--This section shall be 
     applied without regard to any community property laws.
       ``(g) Custodial Accounts.--For purposes of this section, a 
     custodial account shall be treated as a trust if the assets 
     of such account are held by a bank (as defined in section 
     408(n)) or another person who demonstrates, to the 
     satisfaction of the Secretary, that the manner in which he 
     will administer the account will be consistent with the 
     requirements of this section, and if the custodial account 
     would, except for the fact that it is not a trust, constitute 
     an account described in subsection (b)(1). For purposes of 
     this title, in the case of a custodial account treated as a 
     trust by reason of the preceding sentence, the custodian of 
     such account shall be treated as the trustee thereof.
       ``(h) Reports.--The trustee of an education investment 
     account shall make such reports regarding such account to the 
     Secretary and to the account holder with respect to 
     contributions, distributions, and such other matters as the 
     Secretary may require under regulations. The reports required 
     by this subsection shall be filed at such time and in such 
     manner and furnished to such individuals at such time and in 
     such manner as may be required by those regulations.''
       (b) Tax on Prohibited Transactions.--Section 4975 (relating 
     to prohibited transactions) is amended--
       (1) by adding at the end of subsection (c) the following 
     new paragraph:
       ``(5) Special rule for education investment accounts.--An 
     individual for whose benefit an education investment account 
     is established and any contributor to such account shall be 
     exempt from the tax imposed by this section with respect to 
     any transaction concerning such account (which would 
     otherwise be taxable under this section) if, with respect to 
     such transaction, the account ceases to be an education 
     investment account by reason of the application of section 
     530 to such account.''; and
       (2) in subsection (e)(1), by striking ``or'' at the end of 
     subparagraph (D), by redesignating subparagraph (E) as 
     subparagraph (F), and by inserting after subparagraph (D) the 
     following new subparagraph:
       ``(E) a education investment account described in section 
     530, or''.
       (c) Failure To Provide Reports on Education Investment 
     Accounts.--Section 6693 (relating to failure to provide 
     reports on individual retirement accounts or annuities) is 
     amended--
       (1) by inserting ``OR ON EDUCATION INVESTMENT ACCOUNTS'' 
     after ``ANNUITIES'' in the heading of such section, and
       (2) in subsection (a)(2), by striking ``and'' at the end of 
     subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(C) section 530(h) (relating to education investment 
     accounts).''
       (d) Coordination with Savings Bond Exclusion.--Section 
     135(d)(1) is amended by striking ``or'' at the end of 
     subparagraph (C), by striking the period at the end of 
     subparagraph (D) and inserting ``, or'' , and by inserting at 
     the end the following new subparagraph:
       ``(E) a payment or distribution from an education 
     investment account (as defined in section 530).''
       (e) Clerical Amendments.--
       (1) The table of sections for part VIII of subchapter F of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Sec. 530. Bob Dole education investment accounts.''
       (2)(A) The heading for part VIII of subchapter F of chapter 
     1 is amended to read as follows:

           ``PART VIII--HIGHER EDUCATION SAVINGS ENTITIES''.

       (B) The table of parts for subchapter F of chapter 1 is 
     amended by striking the item relating to part VIII and 
     inserting:

``Part VIII. Higher education savings entities.''
       (3) The table of sections for subchapter B of chapter 68 is 
     amended by striking the item

[[Page S170]]

     relating to section 6693 and inserting the following new 
     item:

``Sec. 6693. Failure to provide reports on individual retirement 
              accounts or annuities or on education investment 
              accounts.''
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 302. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE PROGRAMS.

       (a) Permanent Extension.--Section 127 of the Internal 
     Revenue Code of 1986 (relating to exclusion for educational 
     assistance programs) is amended by striking subsection (d) 
     and by redesignating subsection (e) as subsection (d).
       (b) Repeal of Limitation on Graduate Education.--The last 
     sentence of section 127(c)(1) of such Code is amended by 
     striking ``, and such term also does not include any payment 
     for, or the provision of any benefits with respect to, any 
     graduate level course of a kind normally taken by an 
     individual pursuing a program leading to a law, business, 
     medical, or other advanced academic or professional degree''.
       (c) Effective Dates.--
       (1) Extension.--The amendments made by subsection (a) shall 
     apply to taxable years beginning after December 31, 1996.
       (2) Graduate education.--The amendment made by subsection 
     (b) shall apply with respect to expenses relating to courses 
     beginning after June 30, 1996.

     SEC. 303. MODIFICATIONS OF TAX TREATMENT OF QUALIFIED STATE 
                   TUITION PROGRAMS.

       (a) Exclusion of Distributions Used for Educational 
     Purposes.--Subparagraph (B) of section 529(c)(3) is amended 
     to read as follows:
       ``(B) Distributions for qualified higher education 
     expenses.--Subparagraph (A) shall not apply to any 
     distribution to the extent--
       ``(i) the distribution is used exclusively to pay qualified 
     higher education expenses of the distributee, or
       ``(ii) the distribution consists of providing a benefit to 
     the distributee which, if paid for by the distributee, would 
     constitute payment of a qualified higher education expense.''
       (b) Qualified Higher Education Expenses To Include Room and 
     Board.--Section 529(e)(3) is amended to read as follows:
       ``(3) Qualified higher education expenses.--The term 
     `qualified higher education expenses' means the cost of 
     attendance (within the meaning of section 472 of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ll), as in effect on the 
     date of the enactment of the Affordable College Act) of a 
     designated beneficiary at an eligible educational institution 
     (as defined in section 135(c)(3)).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 304. DEDUCTION FOR INTEREST ON EDUCATION LOANS.

       (a) In General.--Part VII of subchapter B of chapter 1 
     (relating to additional itemized deductions for individuals) 
     is amended by redesignating section 221 as section 222 and by 
     inserting after section 220 the following new section:

     ``SEC. 221. INTEREST ON EDUCATION LOANS.

       ``(a) Allowance of Deduction.--In the case of an 
     individual, there shall be allowed as a deduction for the 
     taxable year an amount equal to the interest paid by the 
     taxpayer during the taxable year on any qualified education 
     loan.
       ``(b) Maximum Deduction.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     deduction allowed by subsection (a) for the taxable year 
     shall not exceed $2,500.
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--If the modified adjusted gross income of 
     the taxpayer for the taxable year exceeds $45,000 ($65,000 in 
     the case of a joint return), the amount which would (but for 
     this paragraph) be allowable as a deduction under this 
     section shall be reduced (but not below zero) by the amount 
     which bears the same ratio to the amount which would be so 
     allowable as such excess bears to $20,000.
       ``(B) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income 
     determined--
       ``(i) without regard to this section and sections 135, 911, 
     931, and 933, and
       ``(ii) after application of sections 86, 219, and 469.
     For purposes of sections 86, 135, 219, and 469, adjusted 
     gross income shall be determined without regard to the 
     deduction allowed under this section.
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 1997, the $45,000 and $65,000 amounts 
     referred to in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `1996' for `1992'.
       ``(D) Rounding.--If any amount as adjusted under 
     subparagraph (C) is not a multiple of $50, such amount shall 
     be rounded to the nearest multiple of $50.
       ``(c) Dependents Not Eligible for Deduction.--No deduction 
     shall be allowed by this section to an individual for the 
     taxable year if a deduction under section 151 with respect to 
     such individual is allowed to another taxpayer for the 
     taxable year beginning in the calendar year in which such 
     individual's taxable year begins.
       ``(d) Limit on Period Deduction Allowed.--A deduction shall 
     be allowed under this section only with respect to interest 
     paid on any qualified education loan during the first 60 
     months (whether or not consecutive) in which interest 
     payments are required. For purposes of this paragraph, any 
     loan and all refinancings of such loan shall be treated as 1 
     loan.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Qualified education loan.--The term `qualified 
     education loan' means any indebtedness incurred to pay 
     qualified higher education expenses--
       ``(A) which are incurred on behalf of the taxpayer, the 
     taxpayer's spouse, or any dependent of the taxpayer as of the 
     time the indebtedness was incurred,
       ``(B) which are paid or incurred within a reasonable period 
     of time before or after the indebtedness is incurred, and
       ``(C) which are attributable to education furnished during 
     a period during which the recipient was at least a half-time 
     student.
     Such term includes indebtedness used to refinance 
     indebtedness which qualifies as a qualified education loan. 
     The term `qualified education loan' shall not include any 
     indebtedness owed to a person who is related (within the 
     meaning of section 267(b) or 707(b)(1)) to the taxpayer.
       ``(2) Qualified higher education expenses.--The term 
     `qualified higher education expenses' means the cost of 
     attendance (as defined in section 472 of the Higher Education 
     Act of 1965, 20 U.S.C. 1087ll, as in effect on the day before 
     the date of the enactment of this Act) of the taxpayer or the 
     taxpayer's spouse at an eligible educational institution, 
     reduced by the sum of--
       ``(A) the amount excluded from gross income under section 
     135 by reason of such expenses, and
       ``(B) the amount of the reduction described in section 
     135(d)(1).
     For purposes of the preceding sentence, the term `eligible 
     educational institution' has the same meaning given such term 
     by section 135(c)(3), except that such term shall also 
     include an institution conducting an internship or residency 
     program leading to a degree or certificate awarded by an 
     institution of higher education, a hospital, or a health care 
     facility which offers postgraduate training.
       ``(3) Half-time student.--The term `half-time student' 
     means any individual who would be a student as defined in 
     section 151(c)(4) if `half-time' were substituted for `full-
     time' each place it appears in such section.
       ``(4) Dependent.--The term `dependent' has the meaning 
     given such term by section 152.
       ``(f) Special Rules.--
       ``(1) Denial of double benefit.--No deduction shall be 
     allowed under this section for any amount for which a 
     deduction is allowable under any other provision of this 
     chapter.
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     deduction shall be allowed under subsection (a) only if the 
     taxpayer and the taxpayer's spouse file a joint return for 
     the taxable year.
       ``(3) Marital status.--Marital status shall be determined 
     in accordance with section 7703.''.
       (b) Deduction Allowed Whether or Not Taxpayer Itemizes 
     Other Deductions.--Subsection (a) of section 62 is amended by 
     inserting after paragraph (16) the following new paragraph:
       ``(17) Interest on education loans.--The deduction allowed 
     by section 221.''
       (c) Reporting Requirement.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 (relating to information concerning transactions 
     with other persons) is amended by inserting after section 
     6050R the following new section:

     ``SEC. 6050S. RETURNS RELATING TO EDUCATION LOAN INTEREST 
                   RECEIVED IN TRADE OR BUSINESS FROM INDIVIDUALS.

       ``(a) Education Loan Interest of $600 or More.--Any 
     person--
       ``(1) who is engaged in a trade or business, and
       ``(2) who, in the course of such trade or business, 
     receives from any individual interest aggregating $600 or 
     more for any calendar year on 1 or more qualified education 
     loans,
     shall make the return described in subsection (b) with 
     respect to each individual from whom such interest was 
     received at such time as the Secretary may by regulations 
     prescribe.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe,
       ``(2) contains--
       ``(A) the name, address, and TIN of the individual from 
     whom the interest described in subsection (a)(2) was 
     received,
       ``(B) the amount of such interest received for the calendar 
     year, and
       ``(C) such other information as the Secretary may 
     prescribe.
       ``(c) Application to Governmental Units.--For purposes of 
     subsection (a)--
       ``(1) Treated as persons.--The term `person' includes any 
     governmental unit (and any agency or instrumentality 
     thereof).
       ``(2) Special rules.--In the case of a governmental unit or 
     any agency or instrumentality thereof--

[[Page S171]]

       ``(A) subsection (a) shall be applied without regard to the 
     trade or business requirement contained therein, and
       ``(B) any return required under subsection (a) shall be 
     made by the officer or employee appropriately designated for 
     the purpose of making such return.
       ``(d) Statements To Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each individual whose name is required to be set forth in 
     such return a written statement showing--
       ``(1) the name and address of the person required to make 
     such return, and
       ``(2) the aggregate amount of interest described in 
     subsection (a)(2) received by the person required to make 
     such return from the individual to whom the statement is 
     required to be furnished.
     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) was required to be made.
       ``(e) Qualified Education Loan Defined.--For purposes of 
     this section, except as provided in regulations prescribed by 
     the Secretary, the term `qualified education loan' has the 
     meaning given such term by section 221(e)(1).
       ``(f) Returns Which Would Be Required To Be Made by 2 or 
     More Persons.--Except to the extent provided in regulations 
     prescribed by the Secretary, in the case of interest received 
     by any person on behalf of another person, only the person 
     first receiving such interest shall be required to make the 
     return under subsection (a).''.
       (2) Assessable penalties.--Section 6724(d) (relating to 
     definitions) is amended--
       (A) in paragraph (1)(B), by redesignating clauses (x) 
     through (xv) as clauses (xi) through (xvi), respectively, and 
     by inserting after clause (ix) the following new clause:
       ``(x) section 6050S (relating to returns relating to 
     education loan interest received in trade or business from 
     individuals),'', and
       (B) in paragraph (2), by striking ``or'' at the end of the 
     next to last subparagraph, by striking the period at the end 
     of the last subparagraph and inserting ``, or'', and by 
     adding at the end the following new subparagraph:
       ``(Z) section 6050S(d) (relating to returns relating to 
     education loan interest received in trade or business from 
     individuals).''
       (d) Clerical Amendment.--The table of sections for part VII 
     of subchapter B of chapter 1 is amended by striking the last 
     item and inserting the following new items:

``Sec. 221. Interest on education loans.
``Sec. 222. Cross reference.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to any qualified education loan (as defined in 
     section 221(e)(1) of the Internal Revenue Code of 1986, as 
     added by this section) incurred on, before, or after the date 
     of the enactment of this Act, but only with respect to any 
     loan interest payment due after December 31, 1996.

     SEC. 305. EXCLUSION OF FEDERAL WORK STUDY PAYMENTS.

       (a) In General.--Section 117 (relating to exclusion of 
     qualified scholarships) is amended by adding at the end the 
     following new subsection:
       ``(e) Exclusion for Work Study Payments.--Notwithstanding 
     any other provision of this section, gross income does not 
     include any amount received for services performed under a 
     Federal work study program operated under section 441 of the 
     Higher Education Act of 1965 (42 U.S.C. 2751), as in effect 
     on the date of the enactment of this subsection.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.
   TITLE IV--FUNDING FOR PART B OF THE INDIVIDUALS WITH DISABILITIES 
                             EDUCATION ACT

     SEC. 401. FUNDING FOR PART B OF THE INDIVIDUALS WITH 
                   DISABILITIES EDUCATION ACT.

       Section 611(h) of the Individuals with Disabilities 
     Education Act (20 U.S.C. 1411(h)) is amended by striking 
     ``such sums as may be necessary'' and inserting ``not less 
     than $4,107,522 for fiscal year 1998, not less than 
     $5,607,522 for fiscal year 1999, not less than $7,107,522 for 
     fiscal year 2000, not less than $8,607,522 for fiscal year 
     2001, not less than $10,107,522 for fiscal year 2002, not 
     less than $11,607,522 for fiscal year 2003, not less than 
     $13,107,522 for fiscal year 2004, and such sums as may be 
     necessary for each succeeding fiscal year.''.
              TITLE V--ADULT EDUCATION AND FAMILY LITERACY
                    Subtitle A--Adult Education Act

     SEC. 511. AUTHORIZATION OF ADULT EDUCATION ACT.

       The Adult Education Act (20 U.S.C. 1201 et seq.) is amended 
     to read as follows:
                 ``TITLE III--ADULT EDUCATION PROGRAMS

     ``SEC. 301. SHORT TITLE.

       ``This title may be cited as the ``Adult Education Act''.

     ``SEC. 302. STATEMENT OF PURPOSE.

       ``It is the purpose of this title to assist the States and 
     the outlying areas to provide--
       ``(1) to adults, the basic educational skills necessary for 
     employment and self-sufficiency; and
       ``(2) to adults who are parents, the educational skills 
     necessary to be full partners in the educational development 
     of their children.

     ``SEC. 303. DEFINITIONS.

       ``As used in this title:
       ``(1) Adult education.--The term `adult education' means 
     services or instruction below the postsecondary level for 
     individuals--
       ``(A) who have attained 16 years of age;
       ``(B) who are not enrolled or required to be enrolled in 
     secondary school;
       ``(C)(i) who lack sufficient mastery of basic educational 
     skills to enable the individuals to function effectively in 
     society; or
       ``(ii) who do not have a certificate of graduation from a 
     school providing secondary education and who have not 
     achieved an equivalent level of education; and
       ``(D) who lack a mastery of basic skills and are therefore 
     unable to speak, read, or write the English language.
       ``(2) Adult education and literacy activities.--The term 
     `adult education and literacy activities' means the 
     activities authorized in section 315.
       ``(3) Community-based organization.--The term `community-
     based organization' means a private nonprofit organization of 
     demonstrated effectiveness that is representative of a 
     community or a significant segment of a community.
       ``(4) Eligible agency.--The term `eligible agency' means--
       ``(A) the individual, entity, or agency in a State or an 
     outlying area responsible for administering or setting 
     policies for adult education and literacy services in such 
     State or outlying area pursuant to the law of the State or 
     outlying area; or
       ``(B) if no individual, entity, or agency is responsible 
     for administering or setting such policies pursuant to the 
     law of the State or outlying area, the individual, entity, or 
     agency in a State or outlying area responsible for 
     administering or setting policies for adult education and 
     literacy services in such State or outlying area on the date 
     of enactment of this Act.
       ``(5) Eligible provider.--The term `eligible provider', 
     used with respect to adult education and literacy activities 
     described in section 315(b), means a provider determined to 
     be eligible for assistance in accordance with section 314.
       ``(6) English literacy program.--The term `English literacy 
     program' means a program of instruction designed to help 
     individuals of limited English proficiency achieve full 
     competence in the English language.
       ``(7) Family literacy services.--The term `family literacy 
     services' means services that are of sufficient intensity in 
     terms of hours, and of sufficient duration, to make 
     sustainable changes in a family and that integrate all of the 
     following activities:
       ``(A) Interactive literacy activities between parents and 
     their children.
       ``(B) Training for parents on how to be the primary teacher 
     for their children and full partners in the education of 
     their children.
       ``(C) Parent literacy training.
       ``(D) An age-appropriate education program for children.
       ``(8) Individual of limited english proficiency.--The term 
     `individual of limited English proficiency' means an 
     individual--
       ``(A) who has limited ability in speaking, reading, or 
     writing the English language; and
       ``(B)(i) whose native language is a language other than 
     English; or
       ``(ii) who lives in a family or community environment where 
     a language other than English is the dominant language.
       ``(9) Individual with a disability.--
       ``(A) In general.--The term `individual with a disability' 
     means an individual with any disability (as defined in 
     section 3 of the Americans with Disabilities Act of 1990 (42 
     U.S.C. 12102)).
       ``(B) Individuals with disabilities.--The term `individuals 
     with disabilities' means more than 1 individual with a 
     disability.
       ``(10) Literacy.--The term `literacy', used with respect to 
     an individual, means the ability of the individual to speak, 
     read, and write English, and compute and solve problems, at 
     levels of proficiency necessary--
       ``(A) to function on the job, in the family of the 
     individual, and in society;
       ``(B) to achieve the goals of the individual; and
       ``(C) to develop the knowledge potential of the individual.
       ``(11) Local educational agency.--The term `local 
     educational agency' has the meaning given such term in 
     section 14101 of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 8801).
       ``(12) Outlying area.--The term `outlying area' means the 
     United States Virgin Islands, Guam, American Samoa, the 
     Commonwealth of the Northern Mariana Islands, the Republic of 
     the Marshall Islands, the Federated States of Micronesia, and 
     the Republic of Palau.
       ``(13) Postsecondary educational institution.--The term 
     `postsecondary educational institution' means an institution 
     of higher education (as such term is defined in section 481 
     of the Higher Education Act of 1965 (20 U.S.C. 1088)) that 
     continues to meet the eligibility and certification 
     requirements under title IV of such Act (20 U.S.C. 1070 et 
     seq.).
       ``(14) Secretary.--The term `Secretary' means the Secretary 
     of Education.
       ``(15) State.--The term `State' means each of the several 
     States of the United States,

[[Page S172]]

     the District of Columbia, and the Commonwealth of Puerto 
     Rico.

     ``SEC. 304. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--There are authorized to be appropriated 
     to carry out this title (except section 321) $400,000,000 for 
     fiscal year 1998, and such sums as may be necessary for each 
     of the fiscal years 1999 through 2003.
       ``(b) Reservation of Funds for National Leadership 
     Activities.--For any fiscal year, the Secretary may reserve 
     not more than $4,500,000 of the amount appropriated under 
     subsection (a) to establish and carry out the program of 
     national leadership and evaluation activities described in 
     section 322.
       ``(c) Program Year.--Appropriations for any fiscal year for 
     programs and activities carried out under part A shall be 
     available for obligation only on the basis of a program year. 
     The program year shall begin on July 1 in the fiscal year for 
     which the appropriation is made.

                 ``PART A--GRANTS TO ELIGIBLE AGENCIES

     ``SEC. 311. AUTHORITY TO MAKE GRANTS.

       ``(a) In General.--In the case of each eligible agency that 
     in accordance with section 313 submits to the Secretary a 
     plan for a fiscal year, the Secretary shall make a grant for 
     the year to the eligible agency for the purpose specified in 
     subsection (b). The grant shall consist of the initial and 
     additional allotments determined for the eligible agency 
     under section 312.
       ``(b) Purpose of Grants.--The Secretary may make a grant 
     under subsection (a) only if the applicant involved agrees to 
     expend the grant for adult education and literacy activities 
     in accordance with the provisions of this part.

     ``SEC. 312. ALLOTMENTS.

       ``(a) Initial Allotments.--From the sums available for the 
     purpose of making grants under this part for any fiscal year, 
     the Secretary shall allot to each eligible agency that in 
     accordance with section 313 submits to the Secretary a plan 
     for the year an initial amount as follows:
       ``(1) $100,000, in the case of an eligible agency of the 
     United States Virgin Islands, Guam, American Samoa, the 
     Commonwealth of the Northern Mariana Islands, the Republic of 
     the Marshall Islands, the Federated States of Micronesia, and 
     the Republic of Palau.
       ``(2) $250,000, in the case of any other eligible agency.
       ``(b) Additional Allotments.--
       ``(1) In general.--From the remainder available for the 
     purpose of making grants under this part for any fiscal year 
     after the application of subsection (a), the Secretary shall 
     allot to each eligible agency that receives an initial 
     allotment under such subsection an additional amount that 
     bears the same relationship to such remainder as the number 
     of qualifying adults in the State or outlying area of the 
     agency bears to the number of such adults in all States and 
     outlying areas.
       ``(2) Qualifying adult.--For purposes of this subsection, 
     the term `qualifying adult' means an adult who--
       ``(A) is at least 16 years of age, but less than 61 years 
     of age;
       ``(B) is beyond the age of compulsory school attendance 
     under the law of the State or outlying area;
       ``(C) does not have a certificate of graduation from a 
     school providing secondary education and has not achieved an 
     equivalent level of education; and
       ``(D) is not currently enrolled in secondary school.
       ``(c) Special Rule.--
       ``(1) In general.--Notwithstanding any other provision of 
     this section and using funds allotted for the Republic of the 
     Marshall Islands, the Federated States of Micronesia, and the 
     Republic of Palau under this section, the Secretary shall 
     award grants to Guam, American Samoa, the Commonwealth of the 
     Northern Mariana Islands, the Republic of the Marshall 
     Islands, the Federated States of Micronesia, or the Republic 
     of Palau to carry out activities described in this part in 
     accordance with the provisions of this part that the 
     Secretary determines are not inconsistent with this 
     subsection.
       ``(2) Award basis.--The Secretary shall award grants 
     pursuant to paragraph (1) on a competitive basis and pursuant 
     to recommendations from the Pacific Region Educational 
     Laboratory in Honolulu, Hawaii.
       ``(3) Termination of eligibility.--Notwithstanding any 
     other provision of law, the Republic of the Marshall Islands, 
     the Federated States of Micronesia, and the Republic of Palau 
     shall not receive any funds under this part for any fiscal 
     year that begins after September 30, 2001.
       ``(4) Administrative costs.--The Secretary may provide not 
     more than 5 percent of the funds made available for grants 
     under this subsection to pay the administrative costs of the 
     Pacific Region Educational Laboratory regarding activities 
     assisted under this subsection.

     ``SEC. 313. AGENCY PLAN.

       ``For an eligible agency to be eligible to receive a grant 
     under this part for any fiscal year, the agency shall submit 
     to the Secretary a plan for the year that includes the 
     following:
       ``(1) A description of the adult education and literacy 
     activities that will be carried out with funds received under 
     the grant.
       ``(2) A description of how such activities will be 
     integrated with other adult education and career development 
     activities in the State or outlying area of the agency.
       ``(3) A description of how the eligible agency annually 
     will evaluate the effectiveness of the adult education and 
     literacy activities that are carried out with funds received 
     under the grant.
       ``(4) A description of the benchmarks required under 
     section 317 and how such benchmarks will ensure continuous 
     improvement of adult education and literacy services in the 
     State or outlying area of the agency.
       ``(5) An assurance that the funds received under the grant 
     will not be expended for any purpose other than the 
     activities described in sections 314 and 315.
       ``(6) An assurance that the eligible agency will expend the 
     funds received under the grant only in a manner consistent 
     with the fiscal requirements in section 316.

     ``SEC. 314. USE OF FUNDS.

       ``(a) In General.--Of the sum that is made available under 
     this part to an eligible agency for any program year--
       ``(1) not less than 85 percent shall be made available to 
     award grants in accordance with this section to carry out 
     adult education and literacy activities;
       ``(2) not more than 10 percent shall be made available to 
     carry out activities described in section 315(a); and
       ``(3) subject to paragraph (1), not more than 5 percent, or 
     $50,000, whichever is greater, shall be made available for 
     administrative expenses at the State level (or the level of 
     the outlying area).
       ``(b) Grants.--
       ``(1) In general.--Except as provided in paragraph (2), 
     from the amount made available to an eligible agency for 
     adult education and literacy under subsection (a)(1) for a 
     program year, such agency shall award grants, on a 
     competitive basis, to local educational agencies, 
     correctional education agencies, community-based 
     organizations of demonstrated effectiveness, volunteer 
     literacy organizations, libraries, public or private 
     nonprofit agencies, postsecondary educational institutions, 
     public housing authorities, and other nonprofit institutions, 
     that have the ability to provide literacy services to adults 
     and families, or consortia of agencies, organizations, or 
     institutions described in this subsection, to enable such 
     agencies, organizations, institutions, and consortia to carry 
     out adult education and literacy activities.
       ``(2) Consortia.--An eligible agency may award a grant 
     under this section to a consortium that includes a provider 
     described in paragraph (1) and a for-profit agency, 
     organization, or institution, if such agency, organization, 
     or institution--
       ``(A) can make a significant contribution to carrying out 
     the objectives of this title; and
       ``(B) enters into a contract with such provider to carry 
     out adult education and literacy activities.
       ``(c) Grant Requirements.--
       ``(1) Required local activities.--An eligible agency shall 
     require that each provider receiving a grant under this 
     section use the grant in accordance with section 315(b).
       ``(2) Equitable access.--Each eligible agency awarding a 
     grant under this section for adult education and literacy 
     activities shall ensure that the providers described in 
     subsection (b) will be provided direct and equitable access 
     to all Federal funds provided under this section.
       ``(3) Special rule.--Each eligible agency awarding a grant 
     under this section shall not use any funds made available 
     under this title for adult education and literacy activities 
     for the purpose of supporting or providing programs, 
     services, or activities for individuals who are not 
     individuals described in subparagraphs (A) and (B) of section 
     303(1), except that such agency may use such funds for such 
     purpose if such programs, services, or activities are related 
     to family literacy services.
       ``(4) Considerations.--In awarding grants under this 
     section, the eligible agency shall consider--
       ``(A) the past effectiveness of a provider described in 
     subsection (b) in providing services (especially with respect 
     to recruitment and retention of educationally disadvantaged 
     adults and the learning gains demonstrated by such adults);
       ``(B) the degree to which the provider will coordinate 
     services with other literacy and social services available in 
     the community; and
       ``(C) the commitment of the provider to serve individuals 
     in the community who are most in need of literacy services.
       ``(d) Local Administrative Cost Limits.--
       ``(1) In general.--Except as provided in paragraph (2), of 
     the funds provided under this section by an eligible agency 
     to a provider described in subsection (b), not less than 95 
     percent shall be expended for provision of adult education 
     and literacy activities. The remainder shall be used for 
     planning, administration, personnel development, and 
     interagency coordination.
       ``(2) Special rule.--In cases where the cost limits 
     described in paragraph (1) will be too restrictive to allow 
     for adequate planning, administration, personnel development, 
     and interagency coordination supported under this section, 
     the eligible agency shall negotiate with the provider 
     described in subsection (b) in order to determine an adequate 
     level of funds to be used for noninstructional purposes.

     ``SEC. 315. ADULT EDUCATION AND LITERACY ACTIVITIES.

       ``(a) Permissible Agency Activities.--An eligible agency 
     may use not more than 10

[[Page S173]]

     percent of the funds made available to the eligible agency 
     under this part for activities that may include--
       ``(1) the establishment or operation of professional 
     development programs to improve the quality of instruction 
     provided pursuant to local activities required under 
     subsection (b), including instruction provided by volunteers 
     or by personnel of a State or outlying area;
       ``(2) the provision of technical assistance to eligible 
     providers of activities authorized in this section;
       ``(3) the provision of technology assistance to eligible 
     providers of activities authorized in this section to enable 
     the providers to improve the quality of such activities;
       ``(4) the support of State or regional networks of literacy 
     resource centers; and
       ``(5) the monitoring and evaluation of the quality of and 
     the improvement in activities authorized in this section.
       ``(b) Required Local Activities.--The eligible agency shall 
     require that each eligible provider receiving a grant under 
     section 314 use the grant to establish or operate 1 or more 
     programs that provide instruction or services in 1 or more of 
     the following categories:
       ``(1) Adult education and literacy services.
       ``(2) Family literacy services.
       ``(3) English literacy programs.

     ``SEC. 316. FISCAL REQUIREMENTS AND RESTRICTIONS RELATED TO 
                   USE OF FUNDS.

       ``(a) Supplement not Supplant.--Funds made available under 
     this part for adult education and literacy activities shall 
     supplement, and may not supplant, other public funds expended 
     to carry out activities described in section 315.
       ``(b) Maintenance of Effort.--
       ``(1) Determination.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), and paragraph (2), no payments shall be made under 
     this part for any program year to an eligible agency for 
     adult education and literacy activities unless the Secretary 
     of Education determines that the fiscal effort per student or 
     the aggregate expenditures of such eligible agency for 
     activities described in section 315 for the program year 
     preceding the program year for which the determination is 
     made, equaled or exceeded such effort or expenditures for 
     activities described in such section for the second program 
     year preceding the fiscal year for which the determination is 
     made.
       ``(B) Computation.--In computing the fiscal effort or 
     aggregate expenditures pursuant to subparagraph (A), the 
     Secretary of Education shall exclude capital expenditures, 
     special one-time project costs, and similar windfalls.
       ``(C) Decrease in federal support.--If the amount made 
     available for adult education and literacy activities under 
     this part for a fiscal year is less than the amount made 
     available for adult education and literacy activities under 
     this part for the preceding fiscal year, then the fiscal 
     effort per student or the aggregate expenditures of an 
     eligible agency required by subparagraph (A) for such 
     preceding fiscal year shall be decreased by the same 
     percentage as the percentage decrease in the amount so made 
     available.
       ``(2) Waiver.--The Secretary of Education may waive the 
     requirements of paragraph (1) (with respect to not more than 
     5 percent of expenditures required for the preceding fiscal 
     year by any eligible agency) for 1 program year only, after 
     making a determination that such waiver would be equitable 
     due to exceptional or uncontrollable circumstances affecting 
     the ability of the eligible agency to meet such requirements, 
     such as a natural disaster or an unforeseen and precipitous 
     decline in financial resources. No level of funding permitted 
     under such a waiver may be used as the basis for computing 
     the fiscal effort or aggregate expenditures required under 
     this subsection for years subsequent to the year covered by 
     such waiver. The fiscal effort or aggregate expenditures for 
     the subsequent years shall be computed on the basis of the 
     level of funding that would, but for such waiver, have been 
     required.
       ``(c) Expenditures of non-Federal Funds for Adult Education 
     and Literacy Activities.--For any program year for which a 
     grant is made to an eligible agency under this part, the 
     eligible agency shall expend, on programs and activities 
     relating to adult education and literacy activities, an 
     amount, derived from sources other than the Federal 
     Government, equal to 25 percent of the amount made available 
     to the eligible agency under this part for adult education 
     and literacy activities.

     ``SEC. 317. ACCOUNTABILITY AND CONTINUOUS IMPROVEMENT.

       ``(a) Goal.--Each eligible agency that receives a grant 
     under this part shall use such grant to meet the goal of 
     enhancing and developing more fully the literacy skills of 
     the adult population in the State or outlying area of the 
     agency.
       ``(b) Benchmarks.--To be eligible to receive a grant under 
     this part, an eligible agency shall develop and identify in 
     the agency plan, submitted under section 313, proposed 
     quantifiable benchmarks to measure the progress of the 
     eligible agency toward meeting the goal described in 
     subsection (a) throughout the State or outlying area of the 
     agency, which shall include, at a minimum, measures for 
     participants of--
       ``(1) demonstrated improvements in literacy skill levels;
       ``(2) attainment of secondary school diplomas or general 
     equivalency diplomas;
       ``(3) placement in, retention in, or completion of, 
     postsecondary education, training, or employment; and
       ``(4) attainment of the literacy skills and knowledge 
     individuals need to be productive and responsible citizens 
     and to become more actively involved in the education of 
     their children.
       ``(c) Populations.--
       ``(1) Performance measures.--In developing and identifying 
     measures of progress of the eligible agency toward meeting 
     the goal described in subsection (a), an eligible agency 
     shall develop and identify in the agency plan, in addition to 
     the benchmarks described in subsection (b), proposed 
     quantifiable benchmarks for populations that include, at a 
     minimum--
       ``(A) low-income individuals;
       ``(B) at-risk youth and young adults;
       ``(C) individuals with disabilities; and
       ``(D) individuals of limited literacy, as determined by the 
     eligible agency.
       ``(2) Additional measures.--In addition to the benchmarks 
     described in paragraph (1), an eligible agency may develop 
     and identify in the agency plan proposed quantifiable 
     benchmarks to measure the progress of the eligible agency 
     toward meeting the goal described in subsection (a) for 
     populations with multiple barriers to educational 
     enhancement.

                      ``PART B--NATIONAL PROGRAMS

     ``SEC. 321. NATIONAL INSTITUTE FOR LITERACY.

       ``(a) Establishment.--
       ``(1) In general.--There is established the National 
     Institute for Literacy (in this section referred to as the 
     ``Institute''). The Institute shall be administered under the 
     terms of an interagency agreement entered into by the 
     Secretary of Education with the Secretary of Labor and the 
     Secretary of Health and Human Services (in this section 
     referred to as the ``Interagency Group''). The Interagency 
     Group may include in the Institute any research and 
     development center, institute, or clearinghouse established 
     within the Department of Education, the Department of Labor, 
     or the Department of Health and Human Services whose purpose 
     is determined by the Interagency Group to be related to the 
     purpose of the Institute.
       ``(2) Offices.--The Institute shall have offices separate 
     from the offices of the Department of Education, the 
     Department of Labor, and the Department of Health and Human 
     Services.
       ``(3) Board recommendations.--The Interagency Group shall 
     consider the recommendations of the National Institute for 
     Literacy Advisory Board (in this section referred to as the 
     ``Board'') established under subsection (d) in planning the 
     goals of the Institute and in the implementation of any 
     programs to achieve such goals.
       ``(4) Daily operations.--The daily operations of the 
     Institute shall be carried out by the Director of the 
     Institute appointed under subsection (g).
       ``(b) Duties.--
       ``(1) In general.--The Institute shall improve the quality 
     and accountability of the adult basic skills and literacy 
     delivery system by--
       ``(A) providing national leadership for the improvement and 
     expansion of the system for delivery of literacy services;
       ``(B) coordinating the delivery of such services across 
     Federal agencies;
       ``(C) identifying effective models of basic skills and 
     literacy education for adults and families that are essential 
     to success in job training, work, the family, and the 
     community;
       ``(D) supporting the creation of new methods of offering 
     improved literacy services;
       ``(E) funding a network of State or regional adult literacy 
     resource centers to assist State and local public and private 
     nonprofit efforts to improve literacy by--
       ``(i) encouraging the coordination of literacy services;
       ``(ii) carrying out evaluations of the effectiveness of 
     adult education and literacy activities;
       ``(iii) enhancing the capacity of State and local 
     organizations to provide literacy services; and
       ``(iv) serving as a reciprocal link between the Institute 
     and providers of adult education and literacy activities for 
     the purpose of sharing information, data, research, 
     expertise, and literacy resources;
       ``(F) supporting the development of models at the State and 
     local level of accountability systems that consist of goals, 
     performance measures, benchmarks, and assessments that can be 
     used to improve the quality of adult education and literacy 
     activities;
       ``(G) providing technical assistance, information, and 
     other program improvement activities to national, State, and 
     local organizations, such as--
       ``(i) improving the capacity of national, State, and local 
     public and private organizations that provide literacy and 
     basic skills services, professional development, and 
     technical assistance, such as the State or regional adult 
     literacy resource centers referred to in subparagraph (E); 
     and
       ``(ii) establishing a national literacy electronic database 
     and communications network;
       ``(H) working with the Interagency Group, Federal agencies, 
     and the Congress to ensure that such Group, agencies, and the 
     Congress have the best information available on literacy and 
     basic skills programs in formulating Federal policy with 
     respect to the issues of literacy, basic skills, and 
     workforce and career development; and

[[Page S174]]

       ``(I) assisting with the development of policy with respect 
     to literacy and basic skills.
       ``(2) Grants, contracts, and agreements.--The Institute may 
     make grants to, or enter into contracts or cooperative 
     agreements with, individuals, public or private institutions, 
     agencies, organizations, or consortia of such institutions, 
     agencies, or organizations to carry out the activities of the 
     Institute. Such grants, contracts, or agreements shall be 
     subject to the laws and regulations that generally apply to 
     grants, contracts, or agreements entered into by Federal 
     agencies.
       ``(c) Literacy Leadership.--
       ``(1) Fellowships.--The Institute, in consultation with the 
     Board, may award fellowships, with such stipends and 
     allowances as the Director considers necessary, to 
     outstanding individuals pursuing careers in adult education 
     or literacy in the areas of instruction, management, 
     research, or innovation.
       ``(2) Use of fellowships.--Fellowships awarded under this 
     subsection shall be used, under the auspices of the 
     Institute, to engage in research, education, training, 
     technical assistance, or other activities to advance the 
     field of adult education or literacy, including the training 
     of volunteer literacy providers at the national, State, or 
     local level.
       ``(3) Interns and volunteers.--The Institute, in 
     consultation with the Board, may award paid and unpaid 
     internships to individuals seeking to assist the Institute in 
     carrying out its mission. Notwithstanding section 1342 of 
     title 31, United States Code, the Institute may accept and 
     use voluntary and uncompensated services as the Institute 
     determines necessary.
       ``(d) National Institute for Literacy Advisory Board.--
       ``(1) Establishment.--
       ``(A) In general.--There is established a National 
     Institute for Literacy Advisory Board. The Board shall 
     consist of 10 individuals appointed by the President, with 
     the advice and consent of the Senate, from individuals who--
       ``(i) are not otherwise officers or employees of the 
     Federal Government; and
       ``(ii) are representative of entities or groups described 
     in subparagraph (B).
       ``(B) Entities or groups described.--The entities or groups 
     referred to in subparagraph (A) are--
       ``(i) literacy organizations and providers of literacy 
     services, including--

       ``(I) nonprofit providers of literacy services;
       ``(II) providers of programs and services involving English 
     language instruction; and
       ``(III) providers of services receiving assistance under 
     this title;

       ``(ii) businesses that have demonstrated interest in 
     literacy programs;
       ``(iii) literacy students;
       ``(iv) experts in the area of literacy research;
       ``(v) State and local governments; and
       ``(vi) representatives of employees.
       ``(2) Duties.--The Board--
       ``(A) shall make recommendations concerning the appointment 
     of the Director and staff of the Institute;
       ``(B) shall provide independent advice on the operation of 
     the Institute; and
       ``(C) shall receive reports from the Interagency Group and 
     the Director.
       ``(3) Federal advisory committee act.--Except as otherwise 
     provided, the Board established by this subsection shall be 
     subject to the provisions of the Federal Advisory Committee 
     Act (5 U.S.C. App.).
       ``(4) Terms.--
       ``(A) In general.--Each member of the Board shall be 
     appointed for a term of 3 years, except that the initial 
     terms for members may be 1, 2, or 3 years in order to 
     establish a rotation in which \1/3\ of the members are 
     selected each year. Any such member may be appointed for not 
     more than 2 consecutive terms.
       ``(B) Vacancy appointments.--Any member appointed to fill a 
     vacancy occurring before the expiration of the term for which 
     the member's predecessor was appointed shall be appointed 
     only for the remainder of that term. A member may serve after 
     the expiration of that member's term until a successor has 
     taken office. A vacancy in the Board shall be filled in the 
     manner in which the original appointment was made. A vacancy 
     in the Board shall not affect the powers of the Board.
       ``(5) Quorum.--A majority of the members of the Board shall 
     constitute a quorum but a lesser number may hold hearings. 
     Any recommendation of the Board may be passed only by a 
     majority of the Board's members present.
       ``(6) Election of officers.--The Chairperson and Vice 
     Chairperson of the Board shall be elected by the members of 
     the Board. The term of office of the Chairperson and Vice 
     Chairperson shall be 2 years.
       ``(7) Meetings.--The Board shall meet at the call of the 
     Chairperson or a majority of the members of the Board.
       ``(e) Gifts, Bequests, and Devises.--The Institute may 
     accept, administer, and use gifts or donations of services, 
     money, or property, both real and personal.
       ``(f) Mails.--The Board and the Institute may use the 
     United States mails in the same manner and under the same 
     conditions as other departments and agencies of the Federal 
     Government.
       ``(g) Director.--The Interagency Group, after considering 
     recommendations made by the Board, shall appoint and fix the 
     pay of a Director.
       ``(h) Applicability of Certain Civil Service Laws.--The 
     Director and staff of the Institute may be appointed without 
     regard to the provisions of title 5, United States Code, 
     governing appointments in the competitive service, and may be 
     paid without regard to the provisions of chapter 51 and 
     subchapter III of chapter 53 of that title relating to 
     classification and General Schedule pay rates, except that an 
     individual so appointed may not receive pay in excess of the 
     maximum rate payable under section 5376 of title 5, United 
     States Code.
       ``(i) Experts and Consultants.--The Board and the Institute 
     may procure temporary and intermittent services under section 
     3109(b) of title 5, United States Code.
       ``(j) Report.--The Institute shall submit a report 
     biennially to the Committee on Economic and Educational 
     Opportunities of the House of Representatives and the 
     Committee on Labor and Human Resources of the Senate. Each 
     report submitted under this subsection shall include--
       ``(1) a comprehensive and detailed description of the 
     Institute's operations, activities, financial condition, and 
     accomplishments in the field of literacy for the period 
     covered by the report;
       ``(2) a description of how plans for the operation of the 
     Institute for the succeeding two fiscal years will facilitate 
     achievement of the goals of the Institute and the goals of 
     the literacy programs within the Department of Education, the 
     Department of Labor, and the Department of Health and Human 
     Services; and
       ``(3) any additional minority, or dissenting views 
     submitted by members of the Board.
       ``(k) Funding.--Any amounts appropriated to the Secretary 
     of Education, the Secretary of Labor, or the Secretary of 
     Health and Human Services for purposes that the Institute is 
     authorized to perform under this section may be provided to 
     the Institute for such purposes.
       ``(l) Authorization of Appropriations.--There are 
     authorized to be appropriated $10,000,000 for fiscal year 
     1998 and such sums as may be necessary for each of the fiscal 
     years 1999 through 2003 to carry out this section.

     ``SEC. 322. NATIONAL LEADERSHIP ACTIVITIES.

       ``The Secretary shall establish and carry out a program of 
     national leadership activities to enhance the quality of 
     adult education and family literacy programs nationwide. Such 
     activities shall include the following:
       ``(1) Providing technical assistance to recipients of 
     assistance under part A in developing and using benchmarks 
     and performance measures for improvement of adult education 
     and literacy activities, including family literacy services.
       ``(2) Awarding grants, on a competitive basis, to an 
     institution of higher education, a public or private 
     organization or agency, or a consortium of such institutions, 
     organizations, or agencies to carry out research and 
     technical assistance--
       ``(A) for the purpose of developing, improving, and 
     identifying the most successful methods and techniques for 
     addressing the education needs of adults; and
       ``(B) to increase the effectiveness of, and improve the 
     quality of, adult education and literacy activities, 
     including family literacy services.
       ``(3) Providing for the conduct of an independent 
     evaluation and assessment of adult education and literacy 
     activities, through studies and analyses conducted 
     independently through grants and contracts awarded on a 
     competitive basis. Such evaluation and assessment shall 
     include descriptions of--
       ``(A) the effect of benchmarks, performance measures, and 
     other measures of accountability on the delivery of adult 
     education and literacy activities, including family literacy 
     services;
       ``(B) the extent to which the adult education and literacy 
     activities, including family literacy services, increase the 
     literacy skills of adults (and of children, in the case of 
     family literacy services), lead the participants in such 
     activities to involvement in further education and training, 
     enhance the employment and earnings of such participants, 
     and, if applicable, lead to other positive outcomes, such as 
     reductions in recidivism in the case of prison-based adult 
     education and literacy services; and
       ``(C) the extent to which eligible agencies have 
     distributed funds part A to meet the needs of adults through 
     community-based organizations.
       ``(4) Carrying out demonstration programs, replicating 
     model programs, disseminating best practices information, and 
     providing technical assistance, for the purposes of 
     developing, improving, and identifying the most successful 
     methods and techniques for providing the activities assisted 
     under part A.''.

     SEC. 512. EXTENSION OF FUNCTIONAL LITERACY AND LIFE SKILLS 
                   PROGRAM FOR STATE AND LOCAL PRISONERS.

       Paragraph (3) of section 601(i) of the National Literacy 
     Act of 1991 (20 U.S.C. 1211-2(i)) is amended--
       (1) by striking ``1994, and'' and inserting ``1994,''; and
       (2) by inserting ``, and such sums as may be necessary for 
     each of the fiscal years 1998, 1999, 2000, 2001, 2002, and 
     2003'' before the period.

     SEC. 513. CONFORMING ADULT EDUCATION ACT AMENDMENTS.

       (a) Refugee Education Assistance Act.--Subsection (b) of 
     section 402 of the Refugee

[[Page S175]]

     Education Assistance Act of 1980 (8 U.S.C. 1522 note) is 
     repealed.
       (b) Elementary and Secondary Education Act of 1965.--
       (1) Section 1206 of esea.--Section 1206(a)(1)(A) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6366(a)(1)(A)) is amended by striking ``an adult basic 
     education program'' and inserting ``adult education and 
     literacy activities''.
       (2) Section 3113 of esea.--Section 3113(1) of such Act (20 
     U.S.C. 6813(1)) is amended by striking ``section 312'' and 
     inserting ``section 303''.
       (3) Section 9161 of esea.--Section 9161(2) of such Act (20 
     U.S.C. 7881(2)) is amended by striking ``section 312(2)'' and 
     inserting ``section 303''.
  Subtitle B--Demonstration Programs and Projects To Promote Literacy

     SEC. 521. SHORT TITLE.

       Title X of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 8001 et seq.) is amended by adding at the end 
     the following:

   ``PART N--DEMONSTRATION PROGRAMS AND PROJECTS TO PROMOTE LITERACY

     ``SEC. 10996. DEMONSTRATION PARTNERSHIPS TO PROMOTE LITERACY.

       ``(a) Training Demonstration Programs and Projects.--The 
     Secretary is authorized to make grants to, and enter into 
     contracts and cooperative agreements with, State educational 
     agencies, local educational agencies, institutions of higher 
     education, and other public and private agencies, 
     organizations, and institutions to--
       ``(1) provide in-service training for teachers, and, where 
     appropriate, other staff such as teacher's aides, in language 
     acquisition skills and systematic phonics;
       ``(2) provide pre-service training for teachers, and, where 
     appropriate, other staff, in language acquisition skills and 
     systematic phonics; and
       ``(3) provide training opportunities for parents, community 
     volunteers, and other persons interested in obtaining 
     language acquisition and systematic phonics skills for the 
     purpose of improving their literacy or the literacy skills of 
     children or other adults.
       ``(b) Other Demonstration Programs and Projects.--The 
     Secretary is authorized to make grants to, and enter into 
     contracts with, State educational agencies, local educational 
     agencies, and private nonprofit agencies or organizations 
     that use practices determined by replicated experimental 
     research to be effective in preventing and responding to 
     illiteracy in children and adults. Such grants shall be 
     awarded for time-limited, demonstration programs and projects 
     as follows:
       ``(1) Family literacy programs.--The Secretary shall award 
     grants for programs that encourage parental involvement with 
     their children in family literacy services (as defined in 
     section 303 of the Adult Education Act). Such programs may 
     combine literacy activities with parent training, in order to 
     emphasize the parent's role as their child's primary teacher.
       ``(2) School and community partnerships.--The Secretary 
     shall award grants to local educational agencies and private 
     nonprofit organizations for the development of partnerships 
     among schools, parents, private, nonprofit community 
     volunteer organizations, and other community associations. 
     Such partnerships shall demonstrate in the application 
     submitted under subsection (c) the partnership's commitment 
     to, and participation in, programs involving voluntary 
     tutoring sessions for--
       ``(A) children in kindergarten through 4th grade; and
       ``(B) the parents of such children, where requested by the 
     parent.
       ``(c) Application.--Each entity desiring assistance under 
     this section shall submit an application to the Secretary, at 
     such time, in such manner, and accompanied by such 
     information as the Secretary may require.
       ``(d) Annual Evaluation.--
       ``(1) In general.--In making grants and entering into 
     contracts and cooperative agreements for demonstration 
     programs and projects under this section, the Secretary, in 
     cooperation with the Comptroller General, shall require all 
     such programs and projects to be evaluated for their 
     effectiveness using nationally recognized standardized 
     assessments which measure reading achievement.
       ``(2) Funding.--The Secretary may provide funding for the 
     evaluations described in paragraph (1) through--
       ``(A) a stated percentage of funds awarded under a grant or 
     contracted under this subsection; or
       ``(B) a separate grant made by the Secretary for evaluating 
     an individual demonstration program or project, or group of 
     demonstration programs or projects.
       ``(3) Reservation.--The Secretary is authorized to reserve 
     not more than 2 percent of the amount appropriated under 
     subsection (e) for each fiscal year to fund the evaluations 
     under this subsection.
       ``(e) Authorization of Appropriations.--There are 
     authorized to be appropriated $100,000,000 for fiscal year 
     1998 and such sums as may be necessary for each of the 4 
     succeeding fiscal years.''.
              Subtitle C--National Commission on Literacy

     SEC. 531. SHORT TITLE.

       This subtitle may be cited as the ``National Commission on 
     Literacy''.

     SEC. 532. FINDINGS.

       Congress finds as follows:
       (1) Since 1965, the United States has spent over 
     $500,000,000,000 on Federal education programs, yet 66 
     percent of 17-year olds do not read at a proficient level and 
     reading scores have been declining for 3 decades. More over 
     75 percent of 4th graders, nationally, scored below the 
     proficient level of reading.
       (2) 85 percent of juvenile delinquents cannot read.
       (3) American businesses are spending more than 
     $30,000,000,000 in retraining employees, primarily because 
     the employees cannot read at an adult level.
       (4) In most junior colleges, at least one-third of the 
     students must take remedial English because the students are 
     not able to read at college level.

     SEC. 533. NATIONAL COMMISSION ON LITERACY.

       (a) Establishment.--There is hereby established a 
     commission to be known as the ``National Commission on 
     Literacy'' (in this subtitle referred to as the 
     ``Commission'').
       (b) Membership.--
       (1) In general.--The Commission shall consist of--
       (A) 5 members to be appointed by the President of the 
     United States;
       (B) 5 members to be appointed by the Speaker of the House 
     of Representatives; and
       (C) 5 members to be appointed by the Majority Leader of the 
     Senate.
       (2) Appointments.--
       (A) In general.--The President, the Speaker of the House of 
     Representatives, and the Majority Leader of the Senate shall 
     each appoint as members of the Commission any United States 
     citizen, including educators and other professionals involved 
     in the research, study, and analysis of illiteracy.
       (B) Prohibition.--An individual with a direct financial 
     interest in the outcome of the Commission shall not be 
     appointed to the Commission.
       (3) Consultation.--The appointments made pursuant to 
     subparagraphs (B) and (C) of paragraph (1) shall be made in 
     consultation with the chairpersons of the Committee on 
     Education and the Workplace of the House of Representatives 
     and the Committee on Labor and Human Resources of the Senate.
       (c) Duties.--
       (1) In general.--The Commission shall--
       (A) conduct a comprehensive review of the social and 
     economic impact of illiteracy in the United States and any 
     correlation between such impact and welfare costs, juvenile 
     delinquency, special education, adult literacy programs, drug 
     addiction, and underemployment;
       (B) examine matters including--
       (i) a review of--

       (I) requirements set for prospective reading teachers 
     studying at colleges of education; and
       (II) whether such requirements include obtaining knowledge 
     about direct, intensive, and systematic phonics with 
     decodable text as an important step in reading instruction;

       (ii) a review of the available testing instruments that 
     determine whether, and to what extent, children can decode 
     the English language;
       (iii) an assessment of the extent to which the use of 
     experimentally unverified methods and teaching materials 
     contributes to illiteracy;
       (iv) a review of medical and neurological evidence 
     regarding how individuals acquire the skill of reading;
       (v) a review of the cost of illiteracy to business and 
     industry;
       (vi) an assessment of the negative impact of illiteracy on 
     the economy in general, and in particular the impact of 
     illiteracy on economically depressed areas; and
       (vii) other issues that a majority of the members of the 
     Commission deem appropriate to investigate in accordance with 
     this subtitle.
       (2) Public hearings.--The Commission (and any committees 
     the Commission may form) shall conduct public hearings in 
     different geographic areas of the United States, both urban 
     and rural, in order to receive the views of a broad spectrum 
     of the public on the issue of literacy and on ways to enhance 
     the reading proficiency of children, adults, and families in 
     the United States.
       (3) Testimony.--The Commission is authorized to receive 
     testimony from individuals, including--
       (A) representatives of public and private organizations and 
     institutions with an interest in the literacy of children, 
     adults, and families in the United States;
       (B) educators;
       (C) religious leaders;
       (D) providers of social services;
       (E) representatives of organizations with children as 
     members;
       (F) elected and appointed public officials; and
       (G) other individuals speaking on their own behalf.
       (d) Interim and Final Reports to President and Congress; 
     Recommendations.--
       (1) Interim reports.--The Commission may submit to the 
     President, the Committee on Labor and Human Resources of the 
     Senate, the Committee on Education and the Workplace of the 
     House of Representatives, and to the public, interim reports 
     regarding the duties of the Commission undertaken pursuant to 
     subsection (c).
       (2) Final report.--The Commission shall submit to the 
     President, the Committee on Labor and Human Resources of the 
     Senate, and the Committee on Education and the Workplace of 
     the House of Representatives a final report no later than 
     September 30, 2000.

[[Page S176]]

     The final report shall set forth recommendations regarding 
     the findings of the Commission.
       (3) Availability.--Copies of interim reports and the final 
     report of the Commission shall be made available in 
     sufficient quantity for public review.
       (e) Time of Appointment of Members; Vacancies; Selection of 
     Chairman; Quorum; Calling of Meetings; Number of Meetings; 
     Voting; Compensation and Expenses.--
       (1) In general.--The President, the Speaker of the House of 
     Representatives, and the Majority Leader of the Senate shall 
     make their respective appointments to the Commission not 
     later than 60 days after the date of enactment of this Act, 
     for terms ending 60 days after the Commission issues its 
     final report.
       (2) Vacancy.--Any vacancy that occurs during the life of 
     the Commission shall not affect the powers of the Commission, 
     and shall be filled in the same manner as the original 
     appointment not later than 30 days after the vacancy occurs.
       (3) Chairman.--The Majority Leader of the Senate, in 
     consultation with the Speaker of the House of Representatives 
     and with the President shall designate one member of the 
     Commission as Chairman of the Commission no later than 60 
     days after the establishment of the Commission.
       (4) Quorum.--A majority of the members of the Commission 
     shall constitute a quorum for the transaction of business, 
     but the Commission may establish a lesser quorum for 
     conducting hearings scheduled by the Commission.
       (5) Meetings.--The Commission shall meet at the call of the 
     Chairman of the Commission, or at the call of a majority of 
     the members of the Commission. The initial meeting of the 
     Commission shall be conducted no later than 30 days after the 
     appointment of the last member of the Commission, or no later 
     than 30 days after the date on which funds are made available 
     for the Commission.
       (6) Voting.--Decisions of the Commission shall be according 
     to the vote of a simple majority of the members of the 
     Commission present and voting at a properly called meeting.
       (7) Rules.--The Commission may establish by majority vote 
     any other rules for the conduct of the Commission's business, 
     if such rules are not inconsistent with this subtitle or 
     other applicable law.
       (8) Compensation.--Each member of the Commission who is not 
     an officer or employee of the Federal Government, or whose 
     compensation as a member of the Commission is not precluded 
     by a Federal, State, or local law, shall be compensated at a 
     rate equal to the daily equivalent of the annual rate of 
     basic pay prescribed for Level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code, for each 
     day (including travel time) during which such member is 
     engaged in the performance of the duties of the Commission. 
     All members of the Commission who are officers or employees 
     of the United States shall serve without compensation in 
     addition to the compensation received for their services as 
     officers or employees of the United States.
       (9) Travel expenses.--The members of the Commission shall 
     be allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of service for the Commission.
       (f) Executive Director and Additional Personnel; 
     Appointment and Compensation; Consultants.--
       (1) Executive director and additional personnel.--The 
     Commission may appoint an Executive Director of the 
     Commission, and the Commission may appoint and fix the 
     compensation of such personnel as the Commission deems 
     advisable. The Executive Director shall be compensated at a 
     rate not to exceed the rate payable for Level V of the 
     Executive Schedule under section 5316 of title 5, United 
     States Code. Compensation of other personnel may be set 
     without regard to the provisions of such title 5 that govern 
     appointments in the competitive services, and the provisions 
     of chapter 51 and subchapter III of chapter 53 of such title 
     5 that relate to classifications and the General Schedule pay 
     rates, except that the rate of pay for such personnel may not 
     exceed the rate payable for Level V of the Executive Schedule 
     under section 5316 of such title.
       (2) Detailees.--Any Federal Government employee, with the 
     approval of the head of the appropriate Federal agency, may 
     be detailed to the Commission without reimbursement, and such 
     detail shall be without interruption or loss of civil service 
     status, benefits, or privilege.
       (3) Temporary or intermittent services.--The Commission may 
     procure temporary and intermittent services under section 
     3109(b) of title 5, United States Code, at rates for 
     individuals not to exceed the daily equivalent of the annual 
     rate of basic pay prescribed for Level V of the Executive 
     Schedule under section 5316 of such title.
       (4) Construction.--Nothing in this section shall be 
     construed to limit the ability of the Commission to enter 
     into contracts with public or private organizations, for 
     research necessary to carry out the Commission's duties under 
     subsection (c).
       (g) Time and Place of Hearings and Nature of Testimony 
     Authorized.--
       (1) In general.--The Commission may hold such hearings, sit 
     and act at such times and places, administer such oaths, take 
     such testimony, and receive such evidence as the Commission 
     considers advisable.
       (2) Witnesses.--Witnesses requested to appear before the 
     Commission shall be paid the same fees as are paid to 
     witnesses under section 1821 of title 28, United States Code. 
     The per diem and mileage allowances for witnesses shall be 
     paid from funds appropriated to the Commission.
       (3) Subpoenas.--If a person fails to supply information 
     requested by the Commission, the Commission may by majority 
     vote require by subpoena the production of any written or 
     recorded information, document, report, answer, record, 
     account, paper, computer file, or other data or documentary 
     evidence necessary to carry out its duties under subsection 
     (c).
       (4) Information.--The Commission may secure directly from 
     any Federal department or agency such information as the 
     Commission considers necessary to carry out its duties under 
     subsection (c). Upon the request of the Commission, the head 
     of such department or agency may furnish such information to 
     the Commission.
       (5) Disclosure of confidential information.--The Commission 
     shall be considered an agency of the Federal Government for 
     purposes of section 1905 of title 18, United States Code, and 
     any individual employed by an entity or organization under 
     contract to the Commission shall be subject to such section. 
     Information obtained by the Commission, other than 
     information available to the public, shall not be disclosed 
     to any person in any manner, except--
       (A) to Commission employees or employees of any individual, 
     entity, or organization under contract to the Commission 
     under subsection (f) for the purpose of receiving, reviewing, 
     or processing such information;
       (B) upon court order; or
       (C) when publicly released by the Commission in an 
     aggregate or summary form that does not directly or 
     indirectly disclose--
       (i) the identity of any person or business entity; or
       (ii) any information which could not be released under 
     section 1905 of title 18, United States Code.
       (h) Support Services.--The Comptroller General shall 
     provide to the Commission, on a reimbursable basis, such 
     administrative support services as the Commission may 
     request.
       (i) Definitions.--In this subtitle:
       (1) Illiteracy.--The term ``illiteracy'' means the lack of 
     ability to read and write competently.
       (2) State.--The term ``State'' means each of the several 
     States of the United States, the District of Columbia, the 
     Commonwealth of Puerto Rico, the United States Virgin 
     Islands, Guam, American Samoa, and the Commonwealth of the 
     Northern Mariana Islands.
       (3) Systematic phonics.--The term ``systematic phonics'' 
     means the direct teaching of a pre-planned sequence of 
     relationships between speech sounds and all their letter 
     equivalents.
       (j) Authorization of Appropriations.--There are authorized 
     to be appropriated for each of the fiscal years 1998, 1999, 
     and 2000, such sums as may be necessary to carry out this 
     section.
                                 ______
                                 
      By Mr. ROTH (for himself and Mr. Lott):
  S. 2. A bill to amend the Internal Revenue Code of 1986 to provide 
tax relief for American families, and for other purposes; to the 
Committee on Finance.


                   the american family tax relief act

  Mr. ROTH. Mr. President, the comedian Henny Youngman told a joke that 
highlights America's family friendly tax system.
  ``The people who make our taxes are very nice,'' he said. ``They're 
letting me keep my mother.''
  Certainly, our tax laws were never quite this bad, but the humor 
hinted at the fact that the laws were not altogether family friendly. 
The family, in fact, has taken it right in the pocketbook. More and 
more, we are hearing that oft-quoted fact that today the average 
American family spends more on taxes than it spends on food, clothing 
and shelter combined. Today, many families need a second earner to make 
ends meet, because too much of their income is taken by Government.
  At the end of World War II, the median income for a family of four 
was $3,468. At the time, the first $2,667 of income for such families 
were tax exempt, meaning that three-quarters of median family income 
was exempt from taxation.
  Over the years, inflation ate away at the value of the standard 
deduction and personal exemptions. The result was that average families 
paid more and more of their income in taxes.
  In 1983, the median family income for a family of four was $29,184, 
but only the first $8,783 of income was exempt from tax--less than one-
third. As my good friend and distinguished colleague, Daniel Patrick 
Moynihan, has

[[Page S177]]

pointed out with these statistics, Government tax policies have 
adversely affected family life.
  In 1948, a family of four at the median income level paid 2 percent--
2 percent--of its income in Federal taxes. Today, a family of four pays 
24 percent.
  The time has come to address this disturbing trend. Our tax policies 
must be changed in light of current realities and critical needs. The 
American family has been shackled with the excess burden of taxes, I 
believe, in part because family was such a constant and stable 
foundation for our society, an enduring unit that could be depended on 
to carry the burden. But the consequences of that burden and other 
economic and social factors have succeeded in ravaging the family. 
Indeed, in society today, the family is under assault, and too many of 
the policies that are coming out of Washington are increasing the 
problem rather than providing the solution.
  As chairman of the Senate Finance Committee, I intend to work with my 
colleagues to address these policies and trends, and I laud the spirit 
of the tax bill introduced today and believe that we can build 
bipartisan support to advance its overall objectives. The American 
Family Tax Relief Act is a strong first step towards restoring a sense 
of economic equilibrium to our families and offers a $500-per-child tax 
credit, a capital gains tax cut, estate and gift tax relief, and 
expanded individual retirement accounts.
  At one time or another, each of these proposals has found bipartisan 
support, and I believe Senators on both sides of the aisle will see 
this bill as a strong first step toward achieving a mutually shared 
objective. This legislation sets the spirit for debate. It has the 
welfare and future of the family at heart.
  As introduced, this bill calls for a permanent $500-per-child tax 
credit for children under 18 years of age. The capital gains tax cut 
allows individuals to deduct 50 percent of their capital gains and 
allows families that sell their homes at a loss to treat it as a 
capital loss for purposes of a tax deduction. This bill allows an 
individual to pass up to $1 million tax free as a gift during life or 
at the time of death. It excludes from estate taxes the first $1.5 
million in value of certain qualified family-owned businesses or farm 
interests and 50 percent of the value in excess of $1.5 million.
  The American Family Tax Relief Act expands the power and availability 
of IRAs by permitting homemakers to have IRAs, regardless of their 
spouse's participation in a pension program, and by raising income 
limits to include more families. It also creates a backloaded IRA that 
permits after-tax contribution and tax-free withdrawals of earnings 
after the taxpayer reaches age 59\1/2\. This is a provision I have 
sought for some time, along with allowing for penalty-free withdrawal 
for education expenses, which is also included in the package.
  Again, Mr. President, this is a strong place to start. I appreciate 
the leadership--particularly our majority leader Trent Lott--for 
working with us to establish this foundation. Now we must go about the 
legislative process, building the consensus we need to see it 
implemented and achieving the real tax relief American families not 
only desire but need.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  There being no objection, the materials were ordered to be printed in 
the Record, as follows:

                                  S. 2

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

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF 
                   CONTENTS.

       (a) Short Title.--This Act may be cited as the ``American 
     Family Tax Relief Act''.
       (b) Amendment of  1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

                       TITLE I--CHILD TAX CREDIT

Sec. 101. Child tax credit.

                     TITLE II--CAPITAL GAINS REFORM

             Subtitle A--Taxpayers Other Than Corporations

Sec. 201. Capital gains deduction.
Sec. 202. Indexing of certain assets acquired after December 31, 1996, 
              for purposes of determining gain.
Sec. 203. Modifications to exclusion of gain on certain small business 
              stock.

                  Subtitle B--Corporate Capital Gains

Sec. 211. Reduction of alternative capital gain tax for corporations.

  Subtitle C--Capital Loss Deduction Allowed With Respect to Sale or 
                    Exchange of Principal Residence

Sec. 221. Capital loss deduction allowed with respect to sale or 
              exchange of principal residence.

                 TITLE III--ESTATE AND GIFT PROVISIONS

Sec. 301. Increase in unified estate and gift tax credit.
Sec. 302. Family-owned business exclusion.
Sec. 303. 20-year installment payment where estate consists largely of 
              interest in closely held business.
Sec. 304. No interest on certain portion of estate tax extended under 
              6166.

                      TITLE IV--SAVINGS INCENTIVES

Sec. 401. Restoration of IRA deduction.
Sec. 402. IRA allowed for spouses who are not active plan participants.
Sec. 403. Establishment of nondeductible tax-free individual retirement 
              accounts.
Sec. 404. Tax-free withdrawals from individual retirement plans for 
              business startups.
Sec. 405. Tax-free withdrawals from individual retirement plans for 
              long-term unemployed.
Sec. 406. Distributions from certain plans may be used without penalty 
              to pay higher education expenses.
                       TITLE I--CHILD TAX CREDIT

     SEC. 101. CHILD TAX CREDIT.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 (relating to nonrefundable personal credits) is 
     amended by inserting after section 23 the following new 
     section:

     ``SEC. 24. CHILD TAX CREDIT.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to $500 multiplied by the number 
     of qualifying children of the taxpayer.
       ``(b) Limitation.--
       ``(1) In general.--The amount of the credit which would 
     (but for this subsection) be allowed by subsection (a) shall 
     be reduced (but not below zero) by $25 for each $1,000 (or 
     fraction thereof) by which the taxpayer's adjusted gross 
     income exceeds the threshold amount.
       ``(2) Threshold amount.--For purposes of paragraph (1), the 
     term `threshold amount' means--
       ``(A) $110,000 in the case of a joint return,
       ``(B) $75,000 in the case of an individual who is not 
     married, and
       ``(C) $55,000 in the case of a married individual filing a 
     separate return.

     For purposes of this paragraph, marital status shall be 
     determined under section 7703.
       ``(c) Qualifying Child.--For purposes of this section--
       ``(1) In general.--The term `qualifying child' means any 
     individual if--
       ``(A) the taxpayer is allowed a deduction under section 151 
     with respect to such individual for such taxable year,
       ``(B) such individual has not attained the age of 18 as of 
     the close of the calendar year in which the taxable year of 
     the taxpayer begins, and
       ``(C) such individual bears a relationship to the taxpayer 
     described in section 32(c)(3)(B) (determined without regard 
     to clause (ii) thereof).
       ``(2) Exception for certain noncitizens.--The term 
     `qualifying child' shall not include any individual who would 
     not be a dependent if the first sentence of section 152(b)(3) 
     were applied without regard to all that follows `resident of 
     the United States'.
       ``(d) Taxable Year Must Be Full Taxable Year.--Except in 
     the case of a taxable year closed by reason of the death of 
     the taxpayer, no credit shall be allowable under this section 
     in the case of a taxable year covering a period of less than 
     12 months.''
       (b) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 23 the 
     following new item:

``Sec. 24. Child tax credit.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.
                     TITLE II--CAPITAL GAINS REFORM
             Subtitle A--Taxpayers Other Than Corporations

     SEC. 201. CAPITAL GAINS DEDUCTION.

       (a) In General.--Part I of subchapter P of chapter 1 
     (relating to treatment of capital gains) is amended by 
     redesignating section 1202 as section 1203 and by inserting 
     after section 1201 the following new section:

     ``SEC. 1202. CAPITAL GAINS DEDUCTION.

       ``(a) General Rule.--If for any taxable year a taxpayer 
     other than a corporation has a net capital gain, 50 percent 
     of such gain shall be a deduction from gross income.
       ``(b) Estates and Trusts.--In the case of an estate or 
     trust, the deduction shall be computed by excluding the 
     portion (if any) of the gains for the taxable year from sales 
     or

[[Page S178]]

     exchanges of capital assets which, under sections 652 and 662 
     (relating to inclusions of amounts in gross income of 
     beneficiaries of trusts), is includible by the income 
     beneficiaries as gain derived from the sale or exchange of 
     capital assets.
       ``(c) Coordination With Treatment of Capital Gain Under 
     Limitation on Investment Interest.--For purposes of this 
     section, the net capital gain for any taxable year shall be 
     reduced (but not below zero) by the amount which the taxpayer 
     takes into account as investment income under section 
     163(d)(4)(B)(iii).
       ``(d) Adjustments to Net Capital Gain.--For purposes of 
     subsection (a)--
       ``(1) Collectibles.--
       ``(A) In general.--Net capital gain shall be computed 
     without regard to collectibles gain.
       ``(B) Collectibles gain.--
       ``(i) In general.--The term `collectibles gain' means gain 
     from the sale or exchange of a collectible (as defined in 
     section 408(m) without regard to paragraph (3) thereof) which 
     is a capital asset held for more than 1 year but only to the 
     extent such gain is taken into account in computing gross 
     income.
       ``(ii) Coordination with section 1022.--Gain from the 
     disposition of a collectible which is an indexed asset to 
     which section 1022(a) applies shall be disregarded for 
     purposes of this section. A taxpayer may elect to treat any 
     collectible specified in such election as not being an 
     indexed asset for purposes of section 1022. Any such election 
     (and specification) once made, shall be irrevocable.
       ``(iii) Partnerships, etc.--For purposes of clause (i), any 
     gain from the sale of an interest in a partnership, S 
     corporation, or trust which is attributable to unrealized 
     appreciation in the value of collectibles shall be treated as 
     gain from the sale or exchange of a collectible. Rules 
     similar to the rules of section 751 shall apply for purposes 
     of the preceding sentence.
       ``(2) Gain from small business stock.--Net capital gain 
     shall be computed without regard to any gain from the sale or 
     exchange of any qualified small business stock (within the 
     meaning of section 1203(b)) held more than 5 years which is 
     taken into account in computing gross income.
       ``(3) Pre-1997 gain.--
       ``(A) In general.--In the case of a taxable year which 
     includes January 1, 1997, net capital gain shall be computed 
     without regard to pre-1997 gain.
       ``(B) Pre-1997 gain.--The term `pre-1997 gain' means the 
     amount which would be net capital gain under subsection (a) 
     for a taxable year if such net capital gain were determined 
     by taking into account only gain or loss properly taken into 
     account for the portion of the taxable year before January 1, 
     1997.
       ``(C) Special rules for pass-thru entities.--
       ``(i) In general.--In applying subparagraph (A) with 
     respect to any pass-thru entity, the determination of when 
     gains and losses are properly taken into account shall be 
     made at the entity level.
       ``(ii) Pass-thru entity defined.--For purposes of clause 
     (i), the term `pass-thru entity' means--

       ``(I) a regulated investment company,
       ``(II) a real estate investment trust,
       ``(III) an S corporation,
       ``(IV) a partnership,
       ``(V) an estate or trust, and
       ``(VI) a common trust fund.

       ``(e) Maximum Rate on Nondeductible Capital Gain.--
       ``(1) In general.--If a taxpayer other than a corporation 
     has a nondeductible net capital gain for any taxable year, 
     then the tax imposed by section 1 for the taxable year shall 
     not exceed the sum of--
       ``(A) a tax computed on the taxable income reduced by the 
     amount of the nondeductible net capital gain, at the same 
     rates and in the same manner as if this subsection had not 
     been enacted, plus
       ``(B) a tax of 28 percent of the nondeductible net capital 
     gain.
       ``(2) Nondeductible net capital gain.--For purposes of 
     paragraph (1), the term `nondeductible net capital gain' 
     means an amount equal to the amount of the reduction in net 
     capital gain under subsection (a) by reason of subsection 
     (d).''
       (b) Deduction Allowable in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 is amended by inserting 
     after paragraph (16) the following new paragraph:
       ``(17) Long-term capital gains.--The deduction allowed by 
     section 1202.''
       (c) Technical and Conforming Changes.--
       (1)(A) Section 1 is amended by striking subsection (h).
       (B)(i) Section 641(d)(2)(A) is amended by striking ``Except 
     as provided in section 1(h), the'' and inserting ``The''.
       (ii) Section 641(d)(2)(C) is amended by inserting after 
     clause (iii) the following new clause:
       ``(iv) The deduction under section 1202.''
       (2) Paragraph (1) of section 170(e) is amended by striking 
     ``the amount of gain'' in the material following subparagraph 
     (B)(ii) and inserting ``50 percent (80 percent in the case of 
     a corporation) of the amount of gain''.
       (3) Subparagraph (B) of section 172(d)(2) is amended to 
     read as follows:
       ``(B) the deduction under section 1202 shall not be 
     allowed.''
       (4) The last sentence of section 453A(c)(3) is amended by 
     striking all that follows ``long-term capital gain,'' and 
     inserting ``the maximum rate on net capital gain under 
     section 1201 or the deduction under section 1202 (whichever 
     is appropriate) shall be taken into account.''
       (5) Paragraph (4) of section 642(c) is amended to read as 
     follows:
       ``(4) Adjustments.--To the extent that the amount otherwise 
     allowable as a deduction under this subsection consists of 
     gain from the sale or exchange of capital assets held for 
     more than 1 year, proper adjustment shall be made for any 
     deduction allowable to the estate or trust under section 1202 
     (relating to capital gains deduction). In the case of a 
     trust, the deduction allowed by this subsection shall be 
     subject to section 681 (relating to unrelated business 
     income).''
       (6) The last sentence of section 643(a)(3) is amended to 
     read as follows: ``The deduction under section 1202 (relating 
     to capital gains deduction) shall not be taken into 
     account.''
       (7) Subparagraph (C) of section 643(a)(6) is amended by 
     inserting ``(i)'' before ``there shall'' and by inserting 
     before the period ``, and (ii) the deduction under section 
     1202 (relating to capital gains deduction) shall not be taken 
     into account''.
       (8)(A) Paragraph (2) of section 904(b) is amended by 
     striking subparagraph (A), by redesignating subparagraph (B) 
     as subparagraph (A), and by inserting after subparagraph (A) 
     (as so redesignated) the following new subparagraph:
       ``(B) Other taxpayers.--In the case of a taxpayer other 
     than a corporation, taxable income from sources outside the 
     United States shall include gain from the sale or exchange of 
     capital assets only to the extent of foreign source capital 
     gain net income.''
       (B) Subparagraph (A) of section 904(b)(2), as so 
     redesignated, is amended--
       (i) by striking all that precedes clause (i) and inserting 
     the following:
       ``(A) Corporations.--In the case of a corporation--'', and
       (ii) by striking in clause (i) ``in lieu of applying 
     subparagraph (A),''.
       (C) Paragraph (3) of section 904(b) is amended by striking 
     subparagraphs (D) and (E) and inserting the following new 
     subparagraph:
       ``(D) Rate differential portion.--The rate differential 
     portion of foreign source net capital gain, net capital gain, 
     or the excess of net capital gain from sources within the 
     United States over net capital gain, as the case may be, is 
     the same proportion of such amount as the excess of the 
     highest rate of tax specified in section 11(b) over the 
     alternative rate of tax under section 1201(a) bears to the 
     highest rate of tax specified in section 11(b).''
       (D) Clause (v) of section 593(b)(2)(D) is amended--
       (i) by striking ``if there is a capital gain rate 
     differential (as defined in section 904(b)(3)(D)) for the 
     taxable year,'', and
       (ii) by striking ``section 904(b)(3)(E)'' and inserting 
     ``section 904(b)(3)(D)''.
       (9) The last sentence of section 1044(d) is amended by 
     striking ``1202'' and inserting ``1201(b) or 1203''.
       (10)(A) Paragraph (2) of section 1211(b) is amended to read 
     as follows:
       ``(2) the sum of--
       ``(A) the excess of the net short-term capital loss over 
     the net long-term capital gain, and
       ``(B) one-half of the excess of the net long-term capital 
     loss over the net short-term capital gain.''
       (B) So much of paragraph (2) of section 1212(b) as precedes 
     subparagraph (B) thereof is amended to read as follows:
       ``(2) Special rules.--
       ``(A) Adjustments.--
       ``(i) For purposes of determining the excess referred to in 
     paragraph (1)(A), there shall be treated as short-term 
     capital gain in the taxable year an amount equal to the 
     lesser of--

       ``(I) the amount allowed for the taxable year under 
     paragraph (1) or (2) of section 1211(b), or
       ``(II) the adjusted taxable income for such taxable year.

       ``(ii) For purposes of determining the excess referred to 
     in paragraph (1)(B), there shall be treated as short-term 
     capital gain in the taxable year an amount equal to the sum 
     of--

       ``(I) the amount allowed for the taxable year under 
     paragraph (1) or (2) of section 1211(b) or the adjusted 
     taxable income for such taxable year, whichever is the least, 
     plus
       ``(II) the excess of the amount described in subclause (I) 
     over the net short-term capital loss (determined without 
     regard to this subsection) for such year.''

       (C) Subsection (b) of section 1212 is amended by adding at 
     the end the following new paragraph:
       ``(3) Transitional rule.--
       ``(A) In general.--The amount determined under subclause 
     (II) of paragraph (2)(A)(ii) for any taxable year shall be 
     reduced (but not below zero) by the excess of--
       ``(i) the amount of the unused pre-1998 long-term capital 
     loss for such year, over
       ``(ii) the sum of the long-term capital gain and the net 
     short-term capital gain for such taxable year.
     Section 1211(b)(2)(B) shall be applied without regard to 
     `one-half of' with respect to such excess for such taxable 
     year.
       ``(B) Unused pre-1998 long-term capital loss.--For purposes 
     of this paragraph, the term `unused pre-1998 long-term 
     capital loss' means, with respect to a taxable year, the 
     excess of--
       ``(i) the amount which under paragraph (1)(B) (as in effect 
     for taxable years beginning before January 1, 1998) is 
     treated as a

[[Page S179]]

     long-term capital loss for the taxpayer's first taxable year 
     beginning after December 31, 1997, over
       ``(ii) the sum of--

       ``(I) the aggregate amount determined under subparagraph 
     (A)(ii) for all prior taxable years beginning after December 
     31, 1997, and
       ``(II) the aggregate reductions under subparagraph (A) for 
     all such prior taxable years.''

       (11) Paragraph (1) of section 1402(i) is amended by 
     inserting ``, and the deduction provided by section 1202 
     shall not apply'' before the period at the end thereof.
       (12) Subsection (e) of section 1445 is amended--
       (A) in paragraph (1) by striking ``35 percent (or, to the 
     extent provided in regulations, 28 percent)'' and inserting 
     ``28 percent (or, to the extent provided in regulations, 19.8 
     percent)'', and
       (B) in paragraph (2) by striking ``35 percent'' and 
     inserting ``28 percent''.
       (13)(A) The second sentence of section 7518(g)(6)(A) is 
     amended--
       (i) by striking ``during a taxable year to which section 
     1(h) or 1201(a) applies'', and
       (ii) by striking ``28 percent (34 percent'' and inserting 
     ``19.8 percent (28 percent''.
       (B) The second sentence of section 607(h)(6)(A) of the 
     Merchant Marine Act, 1936 is amended--
       (i) by striking ``during a taxable year to which section 
     1(h) or 1201(a) of such Code applies'', and
       (ii) by striking ``28 percent (34 percent'' and inserting 
     ``19.8 percent (28 percent''.
       (d) Clerical Amendment.--The table of sections for part I 
     of subchapter P of chapter 1 is amended by striking the item 
     relating to section 1202 and by inserting after the item 
     relating to section 1201 the following new items:

``Sec. 1202. Capital gains deduction.
``Sec. 1203. 50-percent exclusion for gain from certain small business 
              stock.''

       (e) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years ending after December 31, 1996.
       (2) Contributions.--The amendment made by subsection (c)(2) 
     shall apply to contributions after December 31, 1996.
       (3) Use of long-term losses.--The amendments made by 
     subsection (c)(10) shall apply to taxable years beginning 
     after December 31, 1997.
       (4) Withholding.--The amendments made by subsection (c)(12) 
     shall apply only to amounts paid after the date of the 
     enactment of this Act.

     SEC. 202. INDEXING OF CERTAIN ASSETS ACQUIRED AFTER DECEMBER 
                   31, 1996, FOR PURPOSES OF DETERMINING GAIN.

       (a) In General.--Part II of subchapter O of chapter 1 
     (relating to basis rules of general application) is amended 
     by inserting after section 1021 the following new section:

     ``SEC. 1022. INDEXING OF CERTAIN ASSETS ACQUIRED AFTER 
                   DECEMBER 31, 1996, FOR PURPOSES OF DETERMINING 
                   GAIN.

       ``(a) General Rule.--
       ``(1) Indexed basis substituted for adjusted basis.--Solely 
     for purposes of determining gain on the sale or other 
     disposition by a taxpayer (other than a corporation) of an 
     indexed asset which has been held for more than 3 years, the 
     indexed basis of the asset shall be substituted for its 
     adjusted basis.
       ``(2) Exception for depreciation, etc.--The deductions for 
     depreciation, depletion, and amortization shall be determined 
     without regard to the application of paragraph (1) to the 
     taxpayer or any other person.
       ``(b) Indexed Asset.--
       ``(1) In general.--For purposes of this section, the term 
     `indexed asset' means--
       ``(A) common stock in a C corporation (other than a foreign 
     corporation), and
       ``(B) tangible property,
     which is a capital asset or property used in the trade or 
     business (as defined in section 1231(b)).
       ``(2) Stock in certain foreign corporations included.--For 
     purposes of this section--
       ``(A) In general.--The term `indexed asset' includes common 
     stock in a foreign corporation which is regularly traded on 
     an established securities market.
       ``(B) Exception.--Subparagraph (A) shall not apply to--
       ``(i) stock of a foreign investment company (within the 
     meaning of section 1246(b)),
       ``(ii) stock in a passive foreign investment company (as 
     defined in section 1296),
       ``(iii) stock in a foreign corporation held by a United 
     States person who meets the requirements of section 
     1248(a)(2), and
       ``(iv) stock in a foreign personal holding company (as 
     defined in section 552).
       ``(C) Treatment of american depository receipts.--An 
     American depository receipt for common stock in a foreign 
     corporation shall be treated as common stock in such 
     corporation.
       ``(c) Indexed Basis.--For purposes of this section--
       ``(1) General rule.--The indexed basis for any asset is--
       ``(A) the adjusted basis of the asset, increased by
       ``(B) the applicable inflation adjustment.
       ``(2) Applicable inflation adjustment.--The applicable 
     inflation adjustment for any asset is an amount equal to--
       ``(A) the adjusted basis of the asset, multiplied by
       ``(B) the percentage (if any) by which--
       ``(i) the gross domestic product deflator for the last 
     calendar quarter ending before the asset is disposed of, 
     exceeds
       ``(ii) the gross domestic product deflator for the last 
     calendar quarter ending before the asset was acquired by the 
     taxpayer.
     The percentage under subparagraph (B) shall be rounded to the 
     nearest \1/10\ of 1 percentage point.
       ``(3) Gross domestic product deflator.--The gross domestic 
     product deflator for any calendar quarter is the implicit 
     price deflator for the gross domestic product for such 
     quarter (as shown in the last revision thereof released by 
     the Secretary of Commerce before the close of the following 
     calendar quarter).
       ``(d) Suspension of Holding Period Where Diminished Risk of 
     Loss; Treatment of Short Sales.--
       ``(1) In general.--If the taxpayer (or a related person) 
     enters into any transaction which substantially reduces the 
     risk of loss from holding any asset, such asset shall not be 
     treated as an indexed asset for the period of such reduced 
     risk.
       ``(2) Short sales.--
       ``(A) In general.--In the case of a short sale of an 
     indexed asset with a short sale period in excess of 3 years, 
     for purposes of this title, the amount realized shall be an 
     amount equal to the amount realized (determined without 
     regard to this paragraph) increased by the applicable 
     inflation adjustment. In applying subsection (c)(2) for 
     purposes of the preceding sentence, the date on which the 
     property is sold short shall be treated as the date of 
     acquisition and the closing date for the sale shall be 
     treated as the date of disposition.
       ``(B) Short sale period.--For purposes of subparagraph (A), 
     the short sale period begins on the day that the property is 
     sold and ends on the closing date for the sale.
       ``(e) Treatment of Regulated Investment Companies and Real 
     Estate Investment Trusts.--
       ``(1) Adjustments at entity level.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the adjustment under subsection (a) shall be 
     allowed to any qualified investment entity (including for 
     purposes of determining the earnings and profits of such 
     entity).
       ``(B) Exception for corporate shareholders.--Under 
     regulations--
       ``(i) in the case of a distribution by a qualified 
     investment entity (directly or indirectly) to a corporation--

       ``(I) the determination of whether such distribution is a 
     dividend shall be made without regard to this section, and
       ``(II) the amount treated as gain by reason of the receipt 
     of any capital gain dividend shall be increased by the 
     percentage by which the entity's net capital gain for the 
     taxable year (determined without regard to this section) 
     exceeds the entity's net capital gain for such year 
     determined with regard to this section, and

       ``(ii) there shall be other appropriate adjustments 
     (including deemed distributions) so as to ensure that the 
     benefits of this section are not allowed (directly or 
     indirectly) to corporate shareholders of qualified investment 
     entities.

     For purposes of the preceding sentence, any amount includible 
     in gross income under section 852(b)(3)(D) shall be treated 
     as a capital gain dividend and an S corporation shall not be 
     treated as a corporation.
       ``(C) Exception for qualification purposes.--This section 
     shall not apply for purposes of sections 851(b) and 856(c).
       ``(D) Exception for certain taxes imposed at entity 
     level.--
       ``(i) Tax on failure to distribute entire gain.--If any 
     amount is subject to tax under section 852(b)(3)(A) for any 
     taxable year, the amount on which tax is imposed under such 
     section shall be increased by the percentage determined under 
     subparagraph (B)(i)(II). A similar rule shall apply in the 
     case of any amount subject to tax under paragraph (2) or (3) 
     of section 857(b) to the extent attributable to the excess of 
     the net capital gain over the deduction for dividends paid 
     determined with reference to capital gain dividends only. The 
     first sentence of this clause shall not apply to so much of 
     the amount subject to tax under section 852(b)(3)(A) as is 
     designated by the company under section 852(b)(3)(D).
       ``(ii) Other taxes.--This section shall not apply for 
     purposes of determining the amount of any tax imposed by 
     paragraph (4), (5), or (6) of section 857(b).
       ``(2) Adjustments to interests held in entity.--
       ``(A) Regulated investment companies.--Stock in a regulated 
     investment company (within the meaning of section 851) shall 
     be an indexed asset for any calendar quarter in the same 
     ratio as--
       ``(i) the average of the fair market values of the indexed 
     assets held by such company at the close of each month during 
     such quarter, bears to
       ``(ii) the average of the fair market values of all assets 
     held by such company at the close of each such month.
       ``(B) Real estate investment trusts.--Stock in a real 
     estate investment trust (within the meaning of section 856) 
     shall be an indexed asset for any calendar quarter in the 
     same ratio as--

[[Page S180]]

       ``(i) the fair market value of the indexed assets held by 
     such trust at the close of such quarter, bears to
       ``(ii) the fair market value of all assets held by such 
     trust at the close of such quarter.
       ``(C) Ratio of 80 percent or more.--If the ratio for any 
     calendar quarter determined under subparagraph (A) or (B) 
     would (but for this subparagraph) be 80 percent or more, such 
     ratio for such quarter shall be 100 percent.
       ``(D) Ratio of 20 percent or less.--If the ratio for any 
     calendar quarter determined under subparagraph (A) or (B) 
     would (but for this subparagraph) be 20 percent or less, such 
     ratio for such quarter shall be zero.
       ``(E) Look-thru of partnerships.--For purposes of this 
     paragraph, a qualified investment entity which holds a 
     partnership interest shall be treated (in lieu of holding a 
     partnership interest) as holding its proportionate share of 
     the assets held by the partnership.
       ``(3) Treatment of return of capital distributions.--Except 
     as otherwise provided by the Secretary, a distribution with 
     respect to stock in a qualified investment entity which is 
     not a dividend and which results in a reduction in the 
     adjusted basis of such stock shall be treated as allocable to 
     stock acquired by the taxpayer in the order in which such 
     stock was acquired.
       ``(4) Qualified investment entity.--For purposes of this 
     subsection, the term `qualified investment entity' means--
       ``(A) a regulated investment company (within the meaning of 
     section 851), and
       ``(B) a real estate investment trust (within the meaning of 
     section 856).
       ``(f) Other Pass-Thru Entities.--
       ``(1) Partnerships.--
       ``(A) In general.--In the case of a partnership, the 
     adjustment made under subsection (a) at the partnership level 
     shall be passed through to the partners.
       ``(B) Special rule in the case of section 754 elections.--
     In the case of a transfer of an interest in a partnership 
     with respect to which the election provided in section 754 is 
     in effect--
       ``(i) the adjustment under section 743(b)(1) shall, with 
     respect to the transferor partner, be treated as a sale of 
     the partnership assets for purposes of applying this section, 
     and
       ``(ii) with respect to the transferee partner, the 
     partnership's holding period for purposes of this section in 
     such assets shall be treated as beginning on the date of such 
     adjustment.
       ``(2) S corporations.--In the case of an S corporation, the 
     adjustment made under subsection (a) at the corporate level 
     shall be passed through to the shareholders. This section 
     shall not apply for purposes of determining the amount of any 
     tax imposed by section 1374 or 1375.
       ``(3) Common trust funds.--In the case of a common trust 
     fund, the adjustment made under subsection (a) at the trust 
     level shall be passed through to the participants.
       ``(4) Indexing adjustment disregarded in determining loss 
     on sale of interest in entity.--Notwithstanding the preceding 
     provisions of this subsection, for purposes of determining 
     the amount of any loss on a sale or exchange of an interest 
     in a partnership, S corporation, or common trust fund, the 
     adjustment made under subsection (a) shall not be taken into 
     account in determining the adjusted basis of such interest.
       ``(g) Dispositions Between Related Persons.--
       ``(1) In general.--This section shall not apply to any sale 
     or other disposition of property between related persons 
     except to the extent that the basis of such property in the 
     hands of the transferee is a substituted basis.
       ``(2) Related persons defined.--For purposes of this 
     section, the term `related persons' means--
       ``(A) persons bearing a relationship set forth in section 
     267(b), and
       ``(B) persons treated as single employer under subsection 
     (b) or (c) of section 414.
       ``(h) Transfers To Increase Indexing Adjustment.--If any 
     person transfers cash, debt, or any other property to another 
     person and the principal purpose of such transfer is to 
     secure or increase an adjustment under subsection (a), the 
     Secretary may disallow part or all of such adjustment or 
     increase.
       ``(i) Special Rules.--For purposes of this section--
       ``(1) Treatment of improvements, etc.--If there is an 
     addition to the adjusted basis of any tangible property or of 
     any stock in a corporation during the taxable year by reason 
     of an improvement to such property or a contribution to 
     capital of such corporation--
       ``(A) such addition shall never be taken into account under 
     subsection (c)(1)(A) if the aggregate amount thereof during 
     the taxable year with respect to such property or stock is 
     less than $1,000, and
       ``(B) such addition shall be treated as a separate asset 
     acquired at the close of such taxable year if the aggregate 
     amount thereof during the taxable year with respect to such 
     property or stock is $1,000 or more.

     A rule similar to the rule of the preceding sentence shall 
     apply to any other portion of an asset to the extent that 
     separate treatment of such portion is appropriate to carry 
     out the purposes of this section.
       ``(2) Assets which are not indexed assets throughout 
     holding period.--The applicable inflation adjustment shall be 
     appropriately reduced for periods during which the asset was 
     not an indexed asset.
       ``(3) Treatment of certain distributions.--A distribution 
     with respect to stock in a corporation which is not a 
     dividend shall be treated as a disposition.
       ``(4) Acquisition date where there has been prior 
     application of subsection (a)(1) with respect to the 
     taxpayer.--If there has been a prior application of 
     subsection (a)(1) to an asset while such asset was held by 
     the taxpayer, the date of acquisition of such asset by the 
     taxpayer shall be treated as not earlier than the date of the 
     most recent such prior application.
       ``(5) Collapsible corporations.--The application of section 
     341(a) (relating to collapsible corporations) shall be 
     determined without regard to this section.
       ``(j) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''
       (b) Clerical Amendment.--The table of sections for part II 
     of subchapter O of chapter 1 is amended by inserting after 
     the item relating to section 1021 the following new item:

``Sec. 1022. Indexing of certain assets acquired after December 31, 
              1996, for purposes of determining gain.''

       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to the disposition of any property the holding period 
     of which begins after December 31, 1996.
       (2) Certain transactions between related persons.--The 
     amendments made by this section shall not apply to the 
     disposition of any property acquired after December 31, 1996, 
     from a related person (as defined in section 1022(g)(2) of 
     the Internal Revenue Code of 1986, as added by this section) 
     if--
       (A) such property was so acquired for a price less than the 
     property's fair market value, and
       (B) the amendments made by this section did not apply to 
     such property in the hands of such related person.
       (d) Election To Recognize Gain on Assets Held on January 1, 
     1997.--For purposes of the Internal Revenue Code of 1986--
       (1) In general.--A taxpayer other than a corporation may 
     elect to treat--
       (A) any readily tradable stock (which is an indexed asset) 
     held by such taxpayer on January 1, 1997, and not sold before 
     the next business day after such date, as having been sold on 
     such next business day for an amount equal to its closing 
     market price on such next business day (and as having been 
     reacquired on such next business day for an amount equal to 
     such closing market price), and
       (B) any other indexed asset held by the taxpayer on January 
     1, 1997, as having been sold on such date for an amount equal 
     to its fair market value on such date (and as having been 
     reacquired on such date for an amount equal to such fair 
     market value).
       (2) Treatment of gain or loss.--
       (A) Any gain resulting from an election under paragraph (1) 
     shall be treated as received or accrued on the date the asset 
     is treated as sold under paragraph (1) and shall be 
     recognized notwithstanding any provision of the Internal 
     Revenue Code of 1986.
       (B) Any loss resulting from an election under paragraph (1) 
     shall not be allowed for any taxable year.
       (3) Election.--An election under paragraph (1) shall be 
     made in such manner as the Secretary of the Treasury or his 
     delegate may prescribe and shall specify the assets for which 
     such election is made. Such an election, once made with 
     respect to any asset, shall be irrevocable.
       (4) Readily tradable stock.--For purposes of this 
     subsection, the term ``readily tradable stock'' means any 
     stock which, as of January 1, 1997, is readily tradable on an 
     established securities market or otherwise.
       (e) Treatment of Principal Residences.--Property held and 
     used by the taxpayer on January 1, 1997, as his principal 
     residence (within the meaning of section 1034 of the Internal 
     Revenue Code of 1986) shall be treated--
       (1) for purposes of subsection (c)(1) of this section and 
     section 1022 of such Code, as having a holding period which 
     begins on January 1, 1997, and
       (2) for purposes of section 1022(c)(2)(B)(ii) of such Code, 
     as having been acquired on January 1, 1997.

     Subsection (d) shall not apply to property to which this 
     subsection applies.

     SEC. 203. MODIFICATIONS TO EXCLUSION OF GAIN ON CERTAIN SMALL 
                   BUSINESS STOCK.

       (a) Repeal of Minimum Tax Preference.--
       (1) Subsection (a) of section 57 is amended by striking 
     paragraph (7).
       (2) Subclause (II) of section 53(d)(1)(B)(ii) is amended by 
     striking ``, (5), and (7)'' and inserting ``and (5)''.
       (b) Stock of Larger Businesses Eligible for Reduced 
     Rates.--Paragraph (1) of section 1203(d), as redesignated by 
     section 201, is amended by striking ``$50,000,000'' each 
     place it appears and inserting ``$100,000,000''.
       (c) Repeal of Per-Issuer Limitation.--Section 1203, as so 
     redesignated, is amended by striking subsection (b).
       (d) Other Modifications.--
       (1) Repeal of working capital limitation.--Paragraph (6) of 
     section 1203(e), as so redesignated, is amended--
       (A) by striking ``2 years'' in subparagraph (B) and 
     inserting ``5 years'', and

[[Page S181]]

       (B) by striking the last sentence.
       (2) Exception from redemption rules where business 
     purpose.--Paragraph (3) of section 1203(c), as so 
     redesignated, is amended by adding at the end the following 
     new subparagraph:
       ``(D) Waiver where business purpose.--A purchase of stock 
     by the issuing corporation shall be disregarded for purposes 
     of subparagraph (B) if the issuing corporation establishes 
     that there was a business purpose for such purchase and one 
     of the principal purposes of the purchase was not to avoid 
     the limitations of this section.''
       (e) Conforming Amendments.--
       (1) Subsection (c) of section 1203, as so redesignated, is 
     amended by striking ``subsections (f) and (h)'' and inserting 
     ``subsections (e) and (g)''.
       (2) Paragraph (2) of section 1203(c), as so redesignated, 
     is amended--
       (A) by striking ``subsection (e)'' each place it appears 
     and inserting ``subsection (d)'', and
       (B) by striking ``subsection (e)(4) in subparagraph (B)(ii) 
     and inserting ``subsection (d)(4)''.
       (3) Paragraph (1) of section 1203(e), as so redesignated, 
     is amended by striking ``subsection (c)(2)'' and inserting 
     ``subsection (b)(2)''.
       (4) Paragraph (1) of section 1203(g), as so redesignated, 
     is amended to read as follows:
       ``(1) In general.--If any amount included in gross income 
     by reason of holding an interest in a pass-thru entity meets 
     the requirements of paragraph (2), such amount shall be 
     treated as gain from the sale or exchange of any qualified 
     small business stock held for more than 5 years.''
       (5) Section 1203, as so redesignated, as amended by the 
     preceding provisions of this section, is amended by 
     redesignating subsections (c) through (k) as subsections (b) 
     through (j), respectively.
       (f) Clerical Amendment.--Section 1203, as so redesignated, 
     is amended by adding at the end the following new subsection:
       ``(k) Cross Reference.--

  ``For reduced rates on gain of qualified small business stock held 
more than 5 years, see sections 1201(b) and 1202(e).''

       (g) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to stock issued 
     after August 10, 1993.
       (2) Increase in size.--The amendment made by subsection (b) 
     shall apply to stock issued after the date of the enactment 
     of this Act.
                  Subtitle B--Corporate Capital Gains

     SEC. 211. REDUCTION OF ALTERNATIVE CAPITAL GAIN TAX FOR 
                   CORPORATIONS.

       (a) In General.--Section 1201 is amended to read as 
     follows:

     ``SEC. 1201. ALTERNATIVE TAX FOR CORPORATIONS.

       ``(a) General Rule.--If for any taxable year a corporation 
     has a net capital gain, then, in lieu of the tax imposed by 
     sections 11, 511, and 831 (a) and (b) (whichever is 
     applicable), there is hereby imposed a tax (if such tax is 
     less than the tax imposed by such sections) which shall 
     consist of the sum of--
       ``(1) a tax computed on the taxable income reduced by the 
     amount of the net capital gain, at the rates and in the 
     manner as if this subsection had not been enacted, plus
       ``(2) a tax of 28 percent of the net capital gain.
       ``(b) Special Rules for Qualified Small Business Gain.--
       ``(1) In general.--If for any taxable year a corporation 
     has gain from the sale or exchange of any qualified small 
     business stock held for more than 5 years, the amount 
     determined under subsection (a)(2) for such taxable year 
     shall be equal to the sum of--
       ``(A) 21 percent of the lesser of such gain or the 
     corporation's net capital gain, plus
       ``(B) 28 percent of the net capital gain reduced by the 
     gain taken into account under subparagraph (A).
       ``(2) Qualified small business stock.--For purposes of 
     paragraph (1), the term `qualified small business stock' has 
     the meaning given such term by section 1203(b), except that 
     stock shall not be treated as qualified small business stock 
     if such stock was at any time held by a member of the parent-
     subsidiary controlled group (as defined in section 
     1203(c)(3)) which includes the qualified small business.
       ``(c) Transitional Rule.--
       ``(1) In general.--In applying this section, net capital 
     gain for any taxable year shall not exceed the net capital 
     gain determined by taking into account only gains and losses 
     properly taken into account for the portion of the taxable 
     year after December 31, 1996.
       ``(2) Special rule for pass-thru entities.--Section 
     1202(d)(3)(C) shall apply for purposes of paragraph (1).
       ``(d) Cross References.--

  ``For computation of the alternative tax--
  ``(1) in the case of life insurance companies, see section 801(a)(2),
  ``(2) in the case of regulated investment companies and their 
shareholders, see section 852(b)(3) (A) and (D), and
  ``(3) in the case of real estate investment trusts, see section 
857(b)(3)(A).''

       (b) Technical Amendment.--Clause (iii) of section 
     852(b)(3)(D) is amended by striking ``65 percent'' and 
     inserting ``72 percent''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after December 31, 1996.
       (2) Qualified small business stock.--Section 1201(b) of the 
     Internal Revenue Code of 1986 (as added by subsection (a)) 
     shall apply to gain from qualified small business stock 
     acquired on or after the date of the enactment of this Act.
  Subtitle C--Capital Loss Deduction Allowed With Respect to Sale or 
                    Exchange of Principal Residence

     SEC. 221. CAPITAL LOSS DEDUCTION ALLOWED WITH RESPECT TO SALE 
                   OR EXCHANGE OF PRINCIPAL RESIDENCE.

       (a) In General.--Subsection (c) of section 165 (relating to 
     limitation on losses of individuals) is amended by striking 
     ``and'' at the end of paragraph (2), by striking the period 
     at the end of paragraph (3) and inserting ``; and'', and by 
     adding at the end the following new paragraph:
       ``(4) losses arising from the sale or exchange of the 
     principal residence (within the meaning of section 1034) of 
     the taxpayer.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to sales and exchanges after December 31, 1996, 
     in taxable years ending after such date.
                 TITLE III--ESTATE AND GIFT PROVISIONS

     SEC. 301. INCREASE IN UNIFIED ESTATE AND GIFT TAX CREDIT.

       (a) Estate Tax Credit.--
       (1) In general.--Section 2010(a) (relating to unified 
     credit against estate tax) is amended by striking 
     ``$192,800'' and inserting ``the applicable credit amount''.
       (2) Applicable Credit Amount.-- Section 2010 is amended by 
     redesignating subsection (c) as subsection (d) and by 
     inserting after subsection (b) the following new subsection:
       ``(c) Applicable Credit Amount.--For purposes of this 
     section, the applicable credit amount is the amount of the 
     tentative tax which would be determined under the rate 
     schedule set forth in section 2001(c) if the amount with 
     respect to which such tentative tax is to be computed were 
     the applicable exclusion amount determined in accordance with 
     the following table:

``In the case of estates of decedentThe applicable exclusion amount is:
      1997....................................................$650,000 
      1998....................................................$700,000 
      1999....................................................$750,000 
      2000....................................................$800,000 
      2001....................................................$850,000 
      2002....................................................$900,000 
      2003....................................................$950,000 
      2004 or thereafter..................................$1,000,000.''

       (3) Conforming amendments.--
       (A) Section 6018(a)(1) is amended by striking ``$600,000'' 
     and inserting ``the applicable exclusion amount in effect 
     under section 2010(c) for the calendar year which includes 
     the date of death''.
       (B) Section 2001(c)(2) is amended by striking 
     ``$21,040,000'' and inserting ``the amount at which the 
     average tax rate under this section is 55 percent''.
       (C) Section 2102(c)(3)(A) is amended by striking 
     ``$192,800'' and inserting ``the applicable credit amount in 
     effect under section 2010(c) for the calendar year which 
     includes the date of death''.
       (b) Unified Gift Tax Credit.--Section 2505(a)(1) (relating 
     to unified credit against gift tax) is amended by striking 
     ``$192,800'' and inserting ``the applicable credit amount in 
     effect under section 2010(c) for such calendar year''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 1996.

     SEC. 302. FAMILY-OWNED BUSINESS EXCLUSION.

       (a) In General.--Part III of subchapter A of chapter 11 
     (relating to gross estate) is amended by inserting after 
     section 2033 the following new section:

     ``SEC. 2033A. FAMILY-OWNED BUSINESS EXCLUSION.

       ``(a) In General.--In the case of an estate of a decedent 
     to which this section applies, the value of the gross estate 
     shall not include the lesser of--
       ``(1) the adjusted value of the qualified family-owned 
     business interests of the decedent otherwise includible in 
     the estate, or
       ``(2) the sum of--
       ``(A) $1,500,000, plus
       ``(B) 50 percent of the excess (if any) of the adjusted 
     value of such interests over $1,500,000.
       ``(b) Estates to Which Section Applies.--
       ``(1) In general.--This section shall apply to an estate 
     if--
       ``(A) the decedent was (at the date of the decedent's 
     death) a citizen or resident of the United States,
       ``(B) the sum of--
       ``(i) the adjusted value of the qualified family-owned 
     business interests described in paragraph (2), plus
       ``(ii) the amount of the gifts of such interests determined 
     under paragraph (3),
     exceeds 50 percent of the adjusted gross estate, and
       ``(C) during the 8-year period ending on the date of the 
     decedent's death there have been periods aggregating 5 years 
     or more during which--
       ``(i) such interests were owned by the decedent or a member 
     of the decedent's family, and
       ``(ii) there was material participation (within the meaning 
     of section 2032A(e)(6)) by the decedent or a member of the 
     decedent's family in the operation of the business to which 
     such interests relate.
       ``(2) Includible qualified family-owned business 
     interests.--The qualified family-

[[Page S182]]

     owned business interests described in this paragraph are the 
     interests which--
       ``(A) are included in determining the value of the gross 
     estate (without regard to this section), and
       ``(B) are acquired by any qualified heir from, or passed to 
     any qualified heir from, the decedent (within the meaning of 
     section 2032A(e)(9)).
       ``(3) Includible gifts of interests.--The amount of the 
     gifts of qualified family-owned business interests determined 
     under this paragraph is the excess of--
       ``(A) the sum of--
       ``(i) the amount of such gifts from the decedent to members 
     of the decedent's family taken into account under subsection 
     2001(b)(1)(B), plus
       ``(ii) the amount of such gifts otherwise excluded under 
     section 2503(b),
     to the extent such interests are continuously held by members 
     of such family (other than the decedent's spouse) between the 
     date of the gift and the date of the decedent's death, over
       ``(B) the amount of such gifts from the decedent to members 
     of the decedent's family otherwise included in the gross 
     estate.
       ``(c) Adjusted Gross Estate.--For purposes of this section, 
     the term `adjusted gross estate' means the value of the gross 
     estate (determined without regard to this section)--
       ``(1) reduced by any amount deductible under paragraph (3) 
     or (4) of section 2053(a), and
       ``(2) increased by the excess of--
       ``(A) the sum of--
       ``(i) the amount of gifts determined under subsection 
     (b)(3), plus
       ``(ii) the amount (if more than de minimis) of other 
     transfers from the decedent to the decedent's spouse (at the 
     time of the transfer) within 10 years of the date of the 
     decedent's death, plus
       ``(iii) the amount of other gifts (not included under 
     clause (i) or (ii)) from the decedent within 3 years of such 
     date, other than gifts to members of the decedent's family 
     otherwise excluded under section 2503(b), over
       ``(B) the sum of the amounts described in clauses (i), 
     (ii), and (iii) of subparagraph (A) which are otherwise 
     includible in the gross estate.
     For purposes of the preceding sentence, the Secretary may 
     provide that de minimis gifts to persons other than members 
     of the decedent's family shall not be taken into account.
       ``(d) Adjusted Value of the Qualified Family-Owned Business 
     Interests.--For purposes of this section, the adjusted value 
     of any qualified family-owned business interest is the value 
     of such interest for purposes of this chapter (determined 
     without regard to this section), reduced by the excess of--
       ``(1) any amount deductible under paragraph (3) or (4) of 
     section 2053(a), over
       ``(2) the sum of--
       ``(A) any indebtedness on any qualified residence of the 
     decedent the interest on which is deductible under section 
     163(h)(3), plus
       ``(B) any indebtedness to the extent the taxpayer 
     establishes that the proceeds of such indebtedness were used 
     for the payment of educational and medical expenses of the 
     decedent, the decedent's spouse, or the decedent's dependents 
     (within the meaning of section 152), plus
       ``(C) any indebtedness not described in clause (i) or (ii), 
     to the extent such indebtedness does not exceed $10,000.
       ``(e) Qualified Family-Owned Business Interest.--
       ``(1) In general.--For purposes of this section, the term 
     `qualified family-owned business interest' means--
       ``(A) an interest as a proprietor in a trade or business 
     carried on as a proprietorship, or
       ``(B) an interest in an entity carrying on a trade or 
     business, if--
       ``(i) at least--

       ``(I) 50 percent of such entity is owned (directly or 
     indirectly) by the decedent and members of the decedent's 
     family,
       ``(II) 70 percent of such entity is so owned by members of 
     2 families, or
       ``(III) 90 percent of such entity is so owned by members of 
     3 families, and

       ``(ii) for purposes of subclause (II) or (III) of clause 
     (i), at least 30 percent of such entity is so owned by the 
     decedent and members of the decedent's family.
       ``(2) Limitation.--Such term shall not include--
       ``(A) any interest in a trade or business the principal 
     place of business of which is not located in the United 
     States,
       ``(B) any interest in an entity, if the stock or debt of 
     such entity or a controlled group (as defined in section 
     267(f)(1)) of which such entity was a member was readily 
     tradable on an established securities market or secondary 
     market (as defined by the Secretary) at any time within 3 
     years of the date of the decedent's death,
       ``(C) any interest in a trade or business not described in 
     section 542(c)(2), if more than 35 percent of the adjusted 
     ordinary gross income of such trade or business for the 
     taxable year which includes the date of the decedent's death 
     would qualify as personal holding company income (as defined 
     in section 543(a)),
       ``(D) that portion of an interest in a trade or business 
     that is attributable to--
       ``(i) cash or marketable securities, or both, in excess of 
     the reasonably expected day-to-day working capital needs of 
     such trade or business, and
       ``(ii) any other assets of the trade or business (other 
     than assets used in the active conduct of a trade or business 
     described in section 542(c)(2)), the income of which is 
     described in section 543(a) or in subparagraph (B), (C), (D), 
     or (E) of section 954(c)(1) (determined by substituting 
     `trade or business' for `controlled foreign corporation').
       ``(3) Rules regarding ownership.--
       ``(A) Ownership of entities.--For purposes of paragraph 
     (1)(B)--
       ``(i) Corporations.--Ownership of a corporation shall be 
     determined by the holding of stock possessing the appropriate 
     percentage of the total combined voting power of all classes 
     of stock entitled to vote and the appropriate percentage of 
     the total value of shares of all classes of stock.
       ``(ii) Partnerships.--Ownership of a partnership shall be 
     determined by the owning of the appropriate percentage of the 
     capital interest in such partnership.
       ``(B) Ownership of tiered entities.--For purposes of this 
     section, if by reason of holding an interest in a trade or 
     business, a decedent, any member of the decedent's family, 
     any qualified heir, or any member of any qualified heir's 
     family is treated as holding an interest in any other trade 
     or business--
       ``(i) such ownership interest in the other trade or 
     business shall be disregarded in determining if the ownership 
     interest in the first trade or business is a qualified 
     family-owned business interest, and
       ``(ii) this section shall be applied separately in 
     determining if such interest in any other trade or business 
     is a qualified family-owned business interest.
       ``(C) Individual ownership rules.--For purposes of this 
     section, an interest owned, directly or indirectly, by or for 
     an entity described in paragraph (1)(B) shall be considered 
     as being owned proportionately by or for the entity's 
     shareholders, partners, or beneficiaries. A person shall be 
     treated as a beneficiary of any trust only if such person has 
     a present interest in such trust.
       ``(f) Tax Treatment of Failure To Materially Participate in 
     Business or Dispositions of Interests.--
       ``(1) In general.--There is imposed an additional estate 
     tax if, within 10 years after the date of the decedent's 
     death and before the date of the qualified heir's death--
       ``(A) the material participation requirements described in 
     section 2032A(c)(6)(B) are not met with respect to the 
     qualified family-owned business interest which was acquired 
     (or passed) from the decedent,
       ``(B) the qualified heir disposes of any portion of a 
     qualified family-owned business interest (other than by a 
     disposition to a member of the qualified heir's family or 
     through a qualified conservation contribution under section 
     170(h)),
       ``(C) the qualified heir loses United States citizenship 
     (within the meaning of section 877) or with respect to whom 
     an event described in subparagraph (A) or (B) of section 
     877(e)(1) occurs, and such heir does not comply with the 
     requirements of subsection (g), or
       ``(D) the principal place of business of a trade or 
     business of the qualified family-owned business interest 
     ceases to be located in the United States.
       ``(2) Additional estate tax.--
       ``(A) In general.--The amount of the additional estate tax 
     imposed by paragraph (1) shall be equal to--
       ``(i) the applicable percentage of the adjusted tax 
     difference attributable to the qualified family-owned 
     business interest (as determined under rules similar to the 
     rules of section 2032A(c)(2)(B)), plus
       ``(ii) interest on the amount determined under clause (i) 
     at the underpayment rate established under section 6621 for 
     the period beginning on the date the estate tax liability was 
     due under this chapter and ending on the date such additional 
     estate tax is due.
       ``(B) Applicable percentage.--For purposes of this 
     paragraph, the applicable percentage shall be determined 
     under the following table:

                                            ``If the event described in
                                                paragraph (1) occurs in
                                                  the folThe applicable
                                                material percentage is:
  1 through 6..................................................100 ....

  7.............................................................80 ....

  8.............................................................60 ....

  9.............................................................40 ....

  10............................................................20.....

       ``(g) Security Requirements for Noncitizen Qualified 
     Heirs.--
       ``(1) In general.--Except upon the application of 
     subparagraph (F) or (M) of subsection (h)(3), if a qualified 
     heir is not a citizen of the United States, any interest 
     under this section passing to or acquired by such heir 
     (including any interest held by such heir at a time described 
     in subsection (f)(1)(C)) shall be treated as a qualified 
     family-owned business interest only if the interest passes or 
     is acquired (or is held) in a qualified trust.
       ``(2) Qualified trust.--The term `qualified trust' means a 
     trust--
       ``(A) which is organized under, and governed by, the laws 
     of the United States or a State, and
       ``(B) except as otherwise provided in regulations, with 
     respect to which the trust instrument requires that at least 
     1 trustee of the trust be an individual citizen of the United 
     States or a domestic corporation.
       ``(h) Other Definitions and Applicable Rules.--For purposes 
     of this section--
       ``(1) Qualified heir.--The term `qualified heir'--
       ``(A) has the meaning given to such term by section 
     2032A(e)(1), and

[[Page S183]]

       ``(B) includes any active employee of the trade or business 
     to which the qualified family-owned business interest relates 
     if such employee has been employed by such trade or business 
     for a period of at least 10 years before the date of the 
     decedent's death.
       ``(2) Member of the family.--The term `member of the 
     family' has the meaning given to such term by section 
     2032A(e)(2).
       ``(3) Applicable rules.--Rules similar to the following 
     rules shall apply:
       ``(A) Section 2032A(b)(4) (relating to decedents who are 
     retired or disabled).
       ``(B) Section 2032A(b)(5) (relating to special rules for 
     surviving spouses).
       ``(C) Section 2032A(c)(2)(D) (relating to partial 
     dispositions).
       ``(D) Section 2032A(c)(3) (relating to only 1 additional 
     tax imposed with respect to any 1 portion).
       ``(E) Section 2032A(c)(4) (relating to due date).
       ``(F) Section 2032A(c)(5) (relating to liability for tax; 
     furnishing of bond).
       ``(G) Section 2032A(c)(7) (relating to no tax if use begins 
     within 2 years; active management by eligible qualified heir 
     treated as material participation).
       ``(H) Section 2032A(e)(10) (relating to community 
     property).
       ``(I) Section 2032A(e)(14) (relating to treatment of 
     replacement property acquired in section 1031 or 1033 
     transactions).
       ``(J) Section 2032A(f) (relating to statute of 
     limitations).
       ``(K) Section 6166(b)(3) (relating to farmhouses and 
     certain other structures taken into account).
       ``(L) Subparagraphs (B), (C), and (D) of section 6166(g)(1) 
     (relating to acceleration of payment).
       ``(M) Section 6324B (relating to special lien for 
     additional estate tax).
       ``(4) Coordination with other estate tax benefits.--If 
     there is a reduction in the value of the gross estate under 
     this section--
       ``(A) the dollar limitation applicable under section 
     2032A(a)(2), and
       ``(B) the $1,000,000 amount under section 6601(j)(3) (as 
     adjusted),
     shall each be reduced (but not below zero) by the amount of 
     such reduction.''
       (b) Clerical Amendment.--The table of sections for part III 
     of subchapter A of chapter 11 is amended by inserting after 
     the item relating to section 2033 the following new item:

``Sec. 2033A. Family-owned business exclusion.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     1996.

     SEC. 303. 20-YEAR INSTALLMENT PAYMENT WHERE ESTATE CONSISTS 
                   LARGELY OF INTEREST IN CLOSELY HELD BUSINESS.

       (a) In General.--Section 6166(a) (relating to extension of 
     time for payment of estate tax where estate consists largely 
     of interest in closely held business) is amended by striking 
     ``10'' in paragraph (1) and the heading thereof and inserting 
     ``20''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     1996.

     SEC. 304. NO INTEREST ON CERTAIN PORTION OF ESTATE TAX 
                   EXTENDED UNDER 6166.

       (a) In General.--Section 6601(j) (relating to 4-percent 
     rate on certain portion of estate tax extended under section 
     6166) is amended--
       (1) by striking the first sentence of paragraph (1) and 
     inserting the following new sentence: ``If the time for 
     payment of an amount of tax imposed by chapter 11 is extended 
     as provided in section 6166, no interest on the no-interest 
     portion of such amount shall (in lieu of the annual rate 
     provided by subsection (a)) be paid.'',
       (2) by striking ``4-percent'' each place it appears in 
     paragraphs (2) and (3) and inserting ``no-interest'',
       (3) by striking ``4-percent'' in the heading of paragraph 
     (2) and inserting ``No interest'', and
       (4) by striking ``4-Percent Rate'' in the heading thereof 
     and inserting ``No Interest''.
       (b) Conforming Amendments.--
       (1) Section 6166(b)(7)(A)(iii) is amended by striking ``4-
     percent rate of interest'' and inserting ``no-interest 
     portion''.
       (2) Section 6166(b)(8)(A)(iii) is amended to read as 
     follows:
       ``(iii) No-interest portion not to apply.--Section 6601(j) 
     (relating to no-interest portion) shall not apply.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     1996.
                      TITLE IV--SAVINGS INCENTIVES

     SEC. 401. RESTORATION OF IRA DEDUCTION.

       (a) Modifications of Restrictions on Active Participants.--
     Subparagraph (B) of section 219(g)(3) (relating to applicable 
     dollar amount) is amended to read as follows:
       ``(B) Applicable dollar amount.--The term `applicable 
     dollar amount' means the following:
       ``(i) In the case of a taxpayer filing a joint return:

                                                         The applicable
``For taxable years beginning in:                     dollar amount is:
  1997......................................................$65,000....

  1998......................................................$90,000....

  1999.....................................................$115,000....

  2000.....................................................$140,000....

       ``(ii) In the case of any other taxpayer (other than a 
     married individual filing a separate return):

                                                         The applicable
``For taxable years beginning in:                     dollar amount is:
  1997......................................................$50,000....

  1998......................................................$75,000....

  1999.....................................................$100,000....

  2000.....................................................$125,000....

       ``(iii) In the case of a married individual filing a 
     separate return, zero.''.
       (b) Repeal of Restrictions on Active Participants.--
       (1) In general.--Section 219 (relating to deduction for 
     retirement savings), as amended by section 402, is amended by 
     striking subsection (g) and by redesignating subsection (h) 
     as subsection (g).
       (2) Technical and conforming amendments.--
       (A) Subsection (f) of section 219 is amended by striking 
     paragraph (7).
       (B) Paragraph (5) of section 408(d) is amended by striking 
     the last sentence.
       (C) Section 408(o) is amended by adding at the end the 
     following new paragraph:
       ``(5) Termination.--This subsection shall not apply to any 
     designated nondeductible contribution for any taxable year 
     beginning after December 31, 2000.''.
       (D) Sections 408A(c)(2)(A) and 4973(b)(2)(B)(ii), as added 
     by section 403, are each amended by striking ``(computed 
     without regard to subsection (g) of such section)''.
       (c) Coordination of IRA Deduction Limit with Elective 
     Deferral Limit.--Section 219(b) (relating to maximum amount 
     of deduction) is amended by adding at the end the following 
     new paragraph:
       ``(5) Coordination with elective deferral limit.--The 
     amount determined under paragraph (1) with respect to any 
     individual for any taxable year shall not exceed the excess 
     (if any) of--
       ``(A) the limitation applicable for the taxable year under 
     section 402(g)(1), over
       ``(B) the elective deferrals (as defined in section 
     402(g)(3)) of such individual for such taxable year.''
       (d) Effective Dates.--
       (1) In general.--The amendments made by subsections (a) and 
     (c) shall apply to taxable years beginning after December 31, 
     1996.
       (2) Termination.--The amendments made by subsection (b) 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 402. IRA ALLOWED FOR SPOUSES WHO ARE NOT ACTIVE PLAN 
                   PARTICIPANTS.

       (a) In General.--Section 219(g)(1) of the Internal Revenue 
     Code of 1986 is amended by striking ``or the individual's 
     spouse''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 403. ESTABLISHMENT OF NONDEDUCTIBLE TAX-FREE INDIVIDUAL 
                   RETIREMENT ACCOUNTS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 (relating to pension, profit-sharing, stock bonus 
     plans, etc.) is amended by inserting after section 408 the 
     following new section:

     ``SEC. 408A. IRA PLUS ACCOUNTS.

       ``(a) General Rule.--Except as provided in this section, an 
     IRA Plus account shall be treated for purposes of this title 
     in the same manner as an individual retirement plan.
       ``(b) IRA Plus Account.--For purposes of this title, the 
     term `IRA Plus account' means an individual retirement plan 
     (as defined in section 7701(a)(37)) which is designated (in 
     such manner as the Secretary may prescribe) at the time of 
     establishment of the plan as an IRA Plus account.
       ``(c) Treatment of Contributions.--
       ``(1) No deduction allowed.--No deduction shall be allowed 
     under section 219 for a contribution to an IRA Plus account.
       ``(2) Contribution limit.--The aggregate amount of 
     contributions for any taxable year to all IRA Plus accounts 
     maintained for the benefit of an individual shall not exceed 
     the excess (if any) of--
       ``(A) the maximum amount allowable as a deduction under 
     section 219 with respect to such individual for such taxable 
     year (computed without regard to subsection (g) of such 
     section), over
       ``(B) the amount so allowed.
       ``(3) Contributions permitted after age 70\1/2\.--
     Contributions to an IRA Plus account may be made even after 
     the individual for whom the account is maintained has 
     attained age 70\1/2\.
       ``(4) Mandatory distribution rules not to apply, etc.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     subsections (a)(6) and (b)(3) of section 408 (relating to 
     required distributions) and section 4974 (relating to excise 
     tax on certain accumulations in qualified retirement plans) 
     shall not apply to any IRA Plus account.
       ``(B) Post-death distributions.--Rules similar to the rules 
     of section 401(a)(9) (other than subparagraph (A) thereof) 
     shall apply for purposes of this section.
       ``(5) Rollover contributions.--
       ``(A) In general.--No rollover contribution may be made to 
     an IRA Plus account unless it is a qualified rollover 
     contribution.
       ``(B) Coordination with limit.--A qualified rollover 
     contribution shall not be taken into account for purposes of 
     paragraph (2).
       ``(6) Time when contributions made.--For purposes of this 
     section, the rule of section 219(f)(3) shall apply.
       ``(d) Distribution Rules.--For purposes of this title--
       ``(1) General rules.--

[[Page S184]]

       ``(A) Exclusions from gross income.--Any qualified 
     distribution from an IRA Plus account shall not be includible 
     in gross income.
       ``(B) Nonqualified distributions.--In applying section 72 
     to any distribution from an IRA Plus account which is not a 
     qualified distribution, such distribution shall be treated as 
     made from contributions to the IRA Plus account to the extent 
     that such distribution, when added to all previous 
     distributions from the IRA Plus account, does not exceed the 
     aggregate amount of contributions to the IRA Plus account. 
     For purposes of the preceding sentence, all IRA Plus accounts 
     maintained for the benefit of an individual shall be treated 
     as 1 account.
       ``(C) Exception from penalty tax.--Section 72(t) shall not 
     apply to any qualified distribution from an IRA Plus account.
       ``(2) Qualified distribution.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified distribution' means 
     any payment or distribution--
       ``(i) made on or after the date on which the individual 
     attains age 59\1/2\,
       ``(ii) made to a beneficiary (or to the estate of the 
     individual) on or after the death of the individual,
       ``(iii) attributable to the individual's being disabled 
     (within the meaning of section 72(m)(7)), or
       ``(iv) which is a qualified special purpose distribution.
       ``(B) Certain distributions within 5 years.--A payment or 
     distribution shall not be treated as a qualified distribution 
     under clause (i) of subparagraph (A) if--
       ``(i) it is made within the 5-taxable year period beginning 
     with the 1st taxable year for which the individual made a 
     contribution to an IRA Plus account (or such individual's 
     spouse made a contribution to an IRA Plus account) 
     established for such individual, or
       ``(ii) in the case of a payment or distribution properly 
     allocable (as determined in the manner prescribed by the 
     Secretary) to a qualified rollover contribution (or income 
     allocable thereto), it is made within the 5-taxable year 
     period beginning with the taxable year in which the rollover 
     contribution was made.
     Clause (ii) shall not apply to a qualified rollover 
     contribution from an IRA plus account.
       ``(3) Rollovers.--
       ``(A) In general.--Paragraph (1) shall not apply to any 
     distribution which is transferred in a qualified rollover 
     contribution to an IRA Plus account.
       ``(B) Income inclusion for rollovers from non-plus iras.--
     In the case of any qualified rollover contribution from an 
     individual retirement plan (other than an IRA Plus account) 
     to an IRA Plus account established for the benefit of the 
     payee or distributee, as the case may be--
       ``(i) sections 72(t) and 408(d)(3) shall not apply, and
       ``(ii) in any case where such contribution is made before 
     January 1, 1999, any amount required to be included in gross 
     income by reason of this paragraph shall be so included 
     ratably over the 4-taxable year period beginning with the 
     taxable year in which the payment or distribution is made.
       ``(C) Additional reporting requirements.--The Secretary 
     shall require that trustees of IRA Plus accounts, trustees of 
     individual retirement plans, or both, whichever is 
     appropriate, shall include such additional information in 
     reports required under section 408(i) as is necessary to 
     ensure that amounts required to be included in gross income 
     under subparagraph (B) are so included.
       ``(4) Qualified special purpose distribution.--For purposes 
     of this section, the term `qualified special purpose 
     distribution' means any distribution to which subparagraph 
     (B), (D), (E), or (F) of section 72(t)(2) applies.
       ``(e) Qualified Rollover Contribution.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified rollover 
     contribution' means a rollover contribution to an IRA Plus 
     account from another such account, or from an individual 
     retirement plan, but only if such rollover contribution meets 
     the requirements of section 408(d)(3). For purposes of 
     section 408(d)(3)(B), there shall be disregarded any 
     qualified rollover contribution from an individual retirement 
     plan to an IRA Plus account.
       ``(2) Conversions.--The conversion of an individual 
     retirement plan to an IRA Plus account shall be treated as if 
     it were a qualified rollover contribution.''
       (b) Excess Distributions Tax Not To Apply.--
       (1) Subparagraph (A) of section 4980A(d)(3) is amended by 
     inserting ``(other than IRA Plus accounts described in 
     section 408A(b))'' after ``retirement plans''.
       (2) Section 4980A(e)(1) is amended by adding at the end the 
     following flush sentence:
     ``Such term shall not include any amount distributed from an 
     IRA Plus account or any qualified rollover contribution (as 
     defined in section 408A(e)) from an individual retirement 
     plan to an IRA Plus account.''
       (c) Excess Contributions.--Section 4973(b) is amended to 
     read as follows:
       ``(b) Excess Contributions.--For purposes of this section--
       ``(1) In general.--In the case of individual retirement 
     accounts or individual retirement annuities, the term `excess 
     contributions' means the sum of--
       ``(A) the amount determined under paragraph (2) for the 
     taxable year, plus
       ``(B) the carryover amount determined under paragraph (3) 
     for the taxable year.
       ``(2) Current year.--The amount determined under this 
     paragraph for any taxable year is an amount equal to the sum 
     of--
       ``(A) the excess (if any) of--
       ``(i) the amount contributed for the taxable year to the 
     accounts or for the annuities or bonds (other than IRA Plus 
     accounts), over
       ``(ii) the amount allowable as a deduction under section 
     219 for the taxable year, plus
       ``(B) the excess (if any) of--
       ``(i) the amount described in clause (i) (taking into 
     account contributions to IRA Plus accounts) contributed for 
     the taxable year, over
       ``(ii) the amount allowable as a deduction under section 
     219 for the taxable year (computed without regard to 
     subsection (g) of such section).
       ``(3) Carryover amount.--The carryover amount determined 
     under this paragraph for any taxable year is the amount 
     determined under paragraph (2) for the preceding taxable 
     year, reduced by the sum of--
       ``(A) the distributions out of the account for the taxable 
     year which were included in the gross income of the payee 
     under section 408(d)(1),
       ``(B) the distributions out of the account for the taxable 
     year to which section 408(d)(5) applies, and
       ``(C) the excess (if any) of the amount determined under 
     paragraph (2)(B)(ii) over the amount determined under 
     paragraph (2)(B)(i).
       ``(4) Special rules.--For purposes of this subsection--
       ``(A) Rollover contributions.--Rollover distributions 
     described in sections 402(c), 403(a)(4), 403(b)(8), 
     408(d)(3), and 408A(e) shall not be taken into account.
       ``(B) Contributions returned before due date.--Any 
     contribution which is distributed from an individual 
     retirement plan in a distribution to which section 408(d)(4) 
     applies shall not be taken into account.
       ``(C) Excess contributions treated as contributions.--In 
     applying paragraph (3)(C), the determination as to amounts 
     contributed for a taxable year shall be made without regard 
     to section 219(f)(6).''
       (d) Spousal IRA.--Clause (ii) of section 219(c)(1)(B) is 
     amended to read as follows:
       ``(ii) the compensation includible in the gross income of 
     such individual's spouse for the taxable year reduced by--

       ``(I) the amount allowed as a deduction under subsection 
     (a) to such spouse for such taxable year, and
       ``(II) the amount of any contribution on behalf of such 
     spouse to an IRA Plus account under section 408A for such 
     taxable year.''

       (e) Conforming Amendment.--The table of sections for 
     subpart A of part I of subchapter D of chapter 1 is amended 
     by inserting after the item relating to section 408 the 
     following new item:

``Sec. 408A. IRA Plus accounts.''

       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 404. TAX-FREE WITHDRAWALS FROM INDIVIDUAL RETIREMENT 
                   PLANS FOR BUSINESS STARTUPS.

       (a) Exclusion.--Section 408(d) is amended by adding at the 
     end the following new paragraph:
       ``(8) Distributions used for business start-up expenses.--
       ``(A) In general.--Paragraph (1) shall not apply to any 
     payments or distributions from an individual retirement plan 
     during any taxable year to the extent the aggregate amount of 
     such payments and distributions does not exceed the business 
     start-up costs of the taxpayer for the taxable year.
       ``(B) Business start-up costs.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `business start-up costs' means 
     any amount which is paid or incurred--

       ``(I) in connection with a trade or business with respect 
     to which the taxpayer is a 50-percent owner, and
       ``(II) on or before the date which is one year after the 
     date on which the active conduct of such trade or business 
     began (as determined under section 195(c)).

       ``(ii) Certain costs included.--The term `business start-up 
     costs' shall include--

       ``(I) any start-up expenditures (as defined in section 
     195(c)), and
       ``(II) any organizational expenses (as defined in section 
     709(b)).

       ``(C) Denial of double benefit.--
       ``(i) Deductions.--No deduction otherwise allowable under 
     this chapter with respect to any business start-up costs 
     taken into account under subparagraph (A) shall be allowed to 
     the extent of the amount which would have been includible in 
     gross income but for the application of this paragraph.
       ``(ii) Basis reductions.--If any portion of the business 
     start-up costs taken into account under subparagraph (A) are 
     properly chargeable to capital account, the basis of the 
     property to which such costs are chargeable shall be reduced 
     by the amount which would have been includible in gross 
     income but for the application of this paragraph.
       ``(iii) Allocation.--The Secretary shall provide rules for 
     the allocation of amounts excluded from gross income by 
     reason of this paragraph to business start-up costs for 
     purposes for applying this subparagraph.
       ``(D) 50-percent owner.--For purposes of clause (i), the 
     term `50-percent owner' means any individual if the 
     individual--
       ``(i) in the case of a corporation, own more than 50 
     percent of the value of the outstanding stock of the 
     corporation or stock possessing more than 50 percent of the 
     total

[[Page S185]]

     combined voting power of all stock of the corporation, or
       ``(ii) in the case of a trade or business other than a 
     corporation, own more than 50 percent of the capital or 
     profits interest in the trade or business.
     For purposes of this subparagraph, an individual shall be 
     treated as owning stock and capital or profits interests 
     owned by the individual's spouse.''
       (b) Exemption From Additional Tax.--
       (1) In general.--Section 72(t)(2) is amended by adding at 
     the end the following new subparagraph:
       ``(E) Distributions used for business start-up expenses.--
     Distributions from an individual retirement plan to the 
     extent such distributions do not exceed the business start-up 
     costs (as defined in section 408(d)(8)) of the taxpayer for 
     the taxable year.''
       (2) Conforming amendment.--Section 72(t)(2)(B) is amended 
     by striking ``(C) or (D)'' and inserting ``(C), (D), or 
     (E)''.
       (c) Exemption From Prohibited Transaction.--Section 4975(d) 
     is amended by striking ``or'' at the end of paragraph (14), 
     by striking the period at the end of paragraph (15) and 
     inserting ``; or'', and by adding after paragraph (15) the 
     following new paragraph:
       ``(16) any distribution from an individual retirement plan 
     which is used for the payment of any business start-up costs 
     (as defined in section 408(d)(8)) of the distributee.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 1996.

     SEC. 405. TAX-FREE WITHDRAWALS FROM INDIVIDUAL RETIREMENT 
                   PLANS FOR LONG-TERM UNEMPLOYED.

       (a) Exclusion.--Section 408(d), as amended by section 404, 
     is amended by adding at the end the following new paragraph:
       ``(9) Distributions to long-term unemployed.--
       ``(A) In general.--Paragraph (1) shall not apply to any 
     payments or distributions from an individual retirement plan 
     during any taxable year to an individual if--
       ``(i) such individual has received unemployment 
     compensation for 12 consecutive weeks under any Federal or 
     State unemployment compensation law by reason of such 
     separation, and
       ``(ii) such payments and distributions are made during the 
     taxable year in which such unemployment compensation was paid 
     or the succeeding taxable year.
       ``(B) Distributions after reemployment.--Subparagraph (A) 
     shall not apply to any distribution or payment made after the 
     individual has been employed for at least 60 days after the 
     separation from employment to which subparagraph (A) applies.
       ``(C) Self-employed individuals.--To the extent provided in 
     regulations, a self-employed individual shall be treated as 
     meeting the requirements of subparagraph (A)(i) if, under 
     Federal or State law, the individual would have received 
     unemployment compensation but for the fact the individual was 
     self-employed.''
       (b) Exemption From Additional Tax.--Section 72(t)(2)(D) is 
     amended to read as follows:
       ``(D) Distributions to unemployed individuals.--
     Distributions from an individual retirement plan which are 
     described in section 408(d)(9).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 1996.

     SEC. 406. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED 
                   WITHOUT PENALTY TO PAY HIGHER EDUCATION 
                   EXPENSES.

       (a) Exclusion.--Section 408(d), as amended by sections 404 
     and 405, is amended by adding at the end the following new 
     paragraph:
       ``(10) Distributions used for qualified higher education 
     expenses.--
       ``(A) In general.--Paragraph (1) shall not apply to any 
     payments or distributions from an individual retirement plan 
     during any taxable year to the extent the aggregate amount of 
     such payments and distributions does not exceed the qualified 
     higher education expenses of the taxpayer for the taxable 
     year.
       ``(B) Qualified higher education expenses.--For purposes of 
     subparagraph (A)--
       ``(i) In general.--The term `qualified higher education 
     expenses' means the cost of attendance (within the meaning of 
     section 472 of the Higher Education Act of 1965 (20 U.S.C. 
     1087ll)) of--

       ``(I) the taxpayer,
       ``(II) the taxpayer's spouse, or
       ``(III) any child (as defined in section 151(c)(3)), 
     grandchild, or ancestor of the taxpayer or the taxpayer's 
     spouse,

     at an eligible educational institution (as defined in section 
     135(c)(3)).
       ``(ii) Coordination with other provisions.--The amount of 
     qualified higher education expenses for any taxable year 
     shall be reduced by--

       ``(I) any amount excludable from gross income under section 
     135, and
       ``(II) any amount described in section 135(d)(1) (relating 
     to certain scholarships and veterans benefits).''

       (b) Exemption From Additional Tax.--
       (1) In general.--Paragraph (2) of section 72(t) (relating 
     to exceptions to 10-percent additional tax on early 
     distributions from qualified retirement plans), as amended by 
     section 402, is amended by adding at the end the following 
     new subparagraph:
       ``(F) Distributions from individual retirement plans for 
     educational expenses.--Distributions to an individual from an 
     individual retirement plan to the extent such distributions 
     do not exceed the qualified higher education expenses (as 
     defined in section 408(d)(10)(B)) of the taxpayer for the 
     taxable year.''
       (2) Conforming amendment.--Section 72(t)(2)(B), as amended 
     by section 402, is amended by striking ``or (E)'' and 
     inserting ``, (E), or (F)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

          Description of S. 2--American Family Tax Relief Act


                              introduction

       This document,\1\ prepared by the staff of the Joint 
     Committee on Taxation, provides a description of S. 2 
     (``American Family Tax Relief Act''). S. 2 was introduced on 
     January 21, 1997, by Senators Roth and Lott.
---------------------------------------------------------------------------
     \1\ This document may be cited as follows: Joint Committee on 
     Taxation, Description of S. 2 (``American Family Tax Relief 
     Act'') (JCX-2-97), January 21, 1997.
---------------------------------------------------------------------------
       Part I of the document is a summary of the bill. Part II is 
     a description of the provisions of the bill: Title I of the 
     bill provides a child tax credit for children under age 18; 
     Title II relates to capital gains and loss provisions; Title 
     III relates to estate and gift tax provisions; and Title IV 
     relates to individual retirement account (``IRA'') 
     provisions.
       The document (Part III) also provides estimated revenue 
     effects of the bill for fiscal years 1997-2007.


        i. summary of s. 2 (``american family tax relief act'')

                       Child tax credit (title I)

       The bill would allow taxpayers a nonrefundable tax credit 
     of $500 for each qualifying child under the age of 18. The 
     credit amount would not be indexed for inflation. For 
     taxpayers with AGI in excess of certain thresholds, the 
     allowable child credit would be reduced by $25 for each 
     $1,000 of AGI (or fraction thereof) in excess of the 
     threshold. For married taxpayers filing joint returns, the 
     threshold would be $110,000. For taxpayers filing single or 
     head of household returns, the threshold would be $75,000. 
     For married taxpayers filing separate returns, the threshold 
     would be $55,000. These thresholds are not indexed for 
     inflation. The provision would be effective for taxable years 
     beginning after December 31, 1996.

                  Capital gains provisions (title II)

       This bill would allow individuals a deduction equal to 50 
     percent of net capital gain for the taxable year. The bill 
     repeals the present-law maximum 28-percent rate. Thus, the 
     effective rate under the regular tax on the net capital gain 
     of an individual in the highest (i.e., 39.6 percent) marginal 
     rate bracket would be 19.8 percent. In addition, the bill 
     would provide an alternative tax of 28 percent on the net 
     capital gain of a corporation if that rate is less than the 
     corporation's regular tax rate.
       The bill generally would provide for an inflation 
     adjustment to (i.e., indexing of) the adjusted basis of 
     certain assets for purposes of determining gain (but not 
     loss) upon a sale or other disposition of such assets by a 
     taxpayer other than a C corporation. To be eligible for 
     indexing, an asset must be held by the taxpayer for more than 
     three years.
       In addition, the bill would make certain modifications 
     related to the present-law exclusion for gain from certain 
     small business stock. The bill would repeal the minimum tax 
     preference applicable to such gain, increase the size of an 
     eligible corporation from gross assets of $50 million to 
     gross assets of $100 million, repeal the limitation on the 
     amount of gain an individual can exclude with respect to the 
     stock of any corporation, modify the working capital 
     requirements, and provide corporate taxpayers an alternative 
     rate of 21 percent on the gain from the sale or exchange of 
     qualified small business stock (other than stock of a 
     subsidiary corporation).
       The bill would provide that losses recognized by a taxpayer 
     on the sale of his or her personal residence may be deducted 
     as capital losses rather than be treated as nondeductible 
     personal losses.
       The changes generally would be effective for dispositions 
     occurring after December 31, 1996. In the case of the 
     indexing of the basis of assets, the bill would be effective 
     for dispositions occurring after December 31, 1996, with 
     respect to assets the holding period of which begins after 
     December 31, 1996.

               Estate and gift tax provisions (title III)

            Increases in Estate and Gift Tax Unified Credit

       The bill would increase ratably the present-law unified 
     estate and gift tax credit over an 8-year period beginning in 
     1997, from an effective exemption of $600,000 to an effective 
     exemption of $1,000,000. The full $1,000,000 effective 
     exemption would be available for decedents dying, and gifts 
     made, after December 31, 2003.

       Estate Tax Exclusion for Qualified Family-Owned Businesses

       The bill would provide special estate tax treatment for 
     qualified ``family-owned business interests'' if such 
     interests comprise more than 50 percent of a decedent's 
     estate. Subject to certain requirements, the bill would 
     exclude the first $1,500,000 in value of qualified family-
     owned business interests from the decedent's estate and would 
     also exclude 50 percent of the remaining value of qualified 
     family-owned business interests. In general, a qualified 
     family-owned business interest would be any nonpublicly-
     traded interest in a trade or business (regardless of

[[Page S186]]

     the form in which it is held) with a principal place of 
     business in the United States if ownership of the trade or 
     business is held at least 50 percent by one family, 70 
     percent by two families, or 90 percent by three families, as 
     long as the decedent's family owns at least 30 percent of the 
     trade or business. To qualify for the beneficial treatment, 
     the decedent (or a member of the decedent's family) must have 
     owned and materially participated in the trade or business 
     for at least five of the eight years preceding the decedent's 
     death, and each qualified heir (or a member of the qualified 
     heir's family) would be required to materially participate in 
     the trade or business for at least five years of each eight-
     year period ending within ten years after the decedent's 
     death.
       The provision would be effective for decedents dying after 
     December 31, 1996.

    Installment Payments of Estate Tax Attributable to Closely Held 
                                Business

       The bill would extend the period for which Federal estate 
     tax installments could be made under section 6166 to a 
     maximum period of 24 years. If the election were made, the 
     estate would pay only interest for the first four years, 
     followed by up to 20 annual installments of principal and 
     interest. Under the bill, there would be no interest imposed 
     on the amount of deferred estate tax attributable to the 
     first $1,000,000 in value of the closely held business. The 
     interest rate imposed on the amount of deferred estate tax 
     attributable to the value of the closely held business in 
     excess of $1,000,000 would remain as under present law (i.e., 
     the rate applicable to underpayments of tax under section 
     6621, which is the Federal short-term rate plus 3 percentage 
     points). The provision would be effective for decedents dying 
     after December 31, 1996.

                       IRA provisions (title IV)

             Restoration of IRA Deduction for All Taxpayers

       The bill would increase the AGI limits applicable to 
     deductible IRA contributions for active participants in 1997, 
     1998, 1999, and 2000. Thereafter, the bill would repeal the 
     limits on IRA deductions for active participants in employer-
     sponsored retirement plans. Thus, under the bill, after 2000, 
     an individual would be entitled to make a $2,000 deductible 
     IRA contribution without regard to whether the individual was 
     an active participant in an employer-sponsored retirement 
     plan. The bill would be effective for taxable years beginning 
     after December 31, 1996.

        Allow Full Spousal IRA Deduction for Nonworking Spouses

       The bill would permit nonworking spouses to make a full 
     deductible IRA contribution, effective for taxable years 
     beginning after December 31, 1996.

       Nondeductible Contributions to Tax-Free IRA Plus Accounts

       The bill would permit taxpayers to make nondeductible 
     contributions to new IRA Plus accounts. Generally, IRA Plus 
     accounts would be treated in the same manner as and be 
     subject to the same rules applicable to deductible IRAs.
       Under the bill, any qualified distribution from an IRA Plus 
     account would not be included in gross income and would not 
     be subject to the 10-percent additional income tax on early 
     withdrawals. A qualified distribution from an IRA Plus 
     account would include any payment or distribution (1) made on 
     or after the date the IRA Plus owner attains age 59\1/2\, (2) 
     made to a beneficiary of the IRA Plus owner after death, (3) 
     on account of disability of the IRA Plus owner, or (4) which 
     is a qualified special purpose distribution (i.e., a 
     distribution for medical expenses, the costs of starting a 
     business of the IRA Plus owner or the owner's spouse, long-
     term unemployment, and higher education expenses).
       The bill would permit amounts withdrawn from IRAs to be 
     transferred into an IRA Plus. The amount transferred would be 
     includible in gross income in the year the withdrawal was 
     made, except that amounts transferred to an IRA Plus before 
     January 1, 1999, would be includible in income rapidly over a 
     4-year period. The 10-percent early withdrawal tax would not 
     apply to amounts transferred from an IRA to an IRA Plus 
     account.
       The provisions of the bill relating to IRA Plus accounts 
     would be effective for taxable years beginning after December 
     31, 1996.

    Penalty-Free IRA Withdrawals for Starting a Business, Long-Term 
          Unemployment, and Post Secondary Education Expenses

       The bill would permit penalty-free and tax-free withdrawals 
     from an individual retirement arrangement (IRA) for starting 
     a business of the IRA owner, starting a business of the 
     spouse of the IRA owner, in the case of long-term 
     unemployment of the IRA owner, for any reason, and for the 
     post-secondary education expenses of the IRA owner, the 
     spouse of the IRA owner, or a dependent child of the IRA 
     owner or spouse. The provision would be effective for 
     distributions after December 31, 1996.


                      ii. description of the bill

        A. Child tax credit for children under age 18 (title I)

                              Present Law

       Present law does not provide tax credits based solely on 
     the taxpayer's number of dependent children. Taxpayers with 
     dependent children, however, generally are able to claim a 
     personal exemption for each of these dependents. The total 
     amount of personal exemptions is subtracted (along with 
     certain other items) from adjusted gross income (AGI) in 
     arriving at taxable income. The amount of each personal 
     exemption is $2,650 for 1997, and is adjusted annually for 
     inflation. In 1997, the amount of the personal exemption is 
     phased out for taxpayers with AGI in excess of $121,200 for 
     single taxpayers, $151,500 for heads of household, and 
     $181,800 for married couples filing joint returns. These 
     phaseout thresholds are adjusted annually for inflation.

                        Description of the Bill

       The bill would allow taxpayers a nonrefundable tax credit 
     of $500 for each qualifying child under the age of 18. The 
     credit amount would not be indexed for inflation.
       For taxpayers with AGI in excess of certain thresholds, the 
     allowable child credit would be reduced by $25 for each 
     $1,000 of AGI (or fraction thereof) in excess of the 
     threshold. For married taxpayers filing joint returns, the 
     threshold would be $110,000. For taxpayers filing single or 
     head of household returns, the threshold would be $75,000. 
     For married taxpayers filing separate returns, the threshold 
     would be $55,000. These thresholds would not be indexed for 
     inflation.

                             Effective Date

       The provision would be effective for taxable years 
     beginning after December 31, 1996.

                 B. Capital gains provisions (title II)

1. 50-Percent Capital Gains Deduction for Individuals (Sec. 201 of the 
                                 Bill)

                              Present Law

       In general, gain or loss reflected in the value of an asset 
     is not recognized for income tax purposes until a taxpayer 
     disposes of the asset. On the sale or exchange of capital 
     assets, the net capital gain is taxed at the same rate as 
     ordinary income, except that individuals are subject to a 
     maximum marginal rate of 28 percent of the net capital gain. 
     Net capital gain is the excess of the net long-term capital 
     gain for the taxable year over the net short-term capital 
     loss for the year. Gain or loss is treated as long-term if 
     the asset is held for more than one year.
       A capital asset generally means any property except (1) 
     inventory, stock in trade, or property held primarily for 
     sale to customers in the ordinary course of the taxpayer's 
     trade or business, (2) depreciable or real property used in 
     the taxpayer's trade or business, (3) specified literary or 
     artistic property, (4) business accounts or notes receivable, 
     or (5) certain U.S. publications. In addition, the net gain 
     from the disposition of certain property used in the 
     taxpayer's trade or business is treated as long-term capital 
     gain. However, gain is not treated as capital gain to the 
     extent of previous depreciation allowances (in the case of 
     real property, generally one to the extent in excess of the 
     allowances that would have been available under the straight-
     line method).
       Prior to the enactment of the Tax Reform Act of 1986, 
     individuals were allowed a deduction equal to 60 percent of 
     net capital gain. The deduction resulted in a maximum 
     effective tax rate of 20 percent on such gains.
       Capital losses are generally deductible in full against 
     capital gains. In addition, individuals may deduct capital 
     losses against up to $3,000 of ordinary income in each year. 
     Capital losses in excess of the amount deductible are carried 
     forward indefinitely. Prior to the Tax Reform Act of 1986, 
     individuals were required to use two dollars of long-term 
     capital loss to offset each dollar of ordinary income.

                        Description of the Bill

       The bill would allow individuals a deduction equal to 50 
     percent of net capital gain for the taxable year. The bill 
     would repeal the present-law maximum 28-percent rate. Thus, 
     under the bill, the effective rate under the regular tax on 
     the net capital gain of an individual in the highest (i.e., 
     39.6 percent) marginal rate bracket would be 19.8 percent.
       Collectibles would not be allowed the capital gains 
     deduction; instead a maximum rate of 28 percent would apply 
     to the gain of an individual from the sale or exchange of 
     collectibles held for more than one year.
       The bill would reinstate the rule in effect prior to the 
     1986 Tax Reform Act that required two dollars of the long-
     term capital loss of an individual to offset one dollar of 
     ordinary income. The $3,000 limitation on the deduction of 
     capital losses against ordinary income would continue to 
     apply.

                             Effective Date

       The provision would generally apply to taxable years ending 
     after December 31, 1996.
       For a taxpayer's taxable year that includes January 1, 
     1997, the 50-percent capital gains deduction would not apply 
     to any amount properly taken into account before January 1, 
     1997. In the case of gain taken into account by a pass-
     through entity (i.e., a RIC, a REIT, a partnership, an estate 
     or trust, or a common trust fund), the date taken into 
     account by the entity would be the appropriate date for 
     applying this rule.
       The capital loss rule would apply to taxable years 
     beginning after December 31, 1997, but would not apply to the 
     carryover of capital losses sustained in taxable years 
     beginning before January 1, 1998.
       The bill would not affect the capital gains treatment of 
     lump sum distributions grandfathered by the Tax Reform Act of 
     1986.

2. Indexing of Basis of Certain Assets for Purposes of Determining Gain 
                         (Sec. 202 of the Bill)

                              Present Law

       Under present law, gain or loss from the disposition of any 
     asset generally is the sales

[[Page S187]]

     price of the asset reduced by the taxpayer's adjusted basis 
     in that asset. The taxpayer's adjusted basis generally is the 
     taxpayer's cost in the asset adjusted for depreciation, 
     depletion, and certain other amounts. No adjustment is 
     allowed for inflation.

                        Description of the Bill

                               In general

       The bill generally would provide for an inflation 
     adjustment to (i.e., indexing of) the adjusted basis of 
     certain assets (called ``indexed assets'') for purposes of 
     determining gain (but not loss) upon a sale or other 
     disposition of such assets by a taxpayer other than a C 
     corporation. Assets held by trusts, estates, S corporations, 
     regulated investment companies (``RICs''), real estate 
     investment trusts (``REITs''), and partnerships are eligible 
     for indexing, to the extent gain on such assets is taken into 
     account by taxpayers other than C corporations.

                             Indexed assets

       Assets eligible for the inflation adjustment generally 
     would include common (but not preferred) stock of C 
     corporations and tangible property that are capital assets or 
     property used in a trade or business. To be eligible for 
     indexing, an asset must be held by the taxpayer for more than 
     three years.

                  Computation of inflation adjustment

       The inflation adjustment under the provision would be 
     computed by multiplying the taxpayer's adjusted basis in the 
     indexed asset by an inflation adjustment percentage. The 
     inflation adjustment percentage would be the percentage by 
     which the gross domestic product deflator for the last 
     calendar quarter ending before the disposition exceeds the 
     gross domestic product deflator for the last calendar quarter 
     ending before the asset was acquired by the taxpayer. The 
     inflation adjustment percentage would be rounded to the 
     nearest one-tenth of a percent. No adjustment would be made 
     if the inflation adjustment is one or less.

                            Special entities

                             RICs and REITs

       In the case of a RIC or a REIT, the indexing adjustments 
     generally would apply in computing the taxable income and the 
     earnings and profits of the RIC or REIT. The indexing 
     adjustments, however, would not be applicable in determining 
     whether a corporation qualifies as a RIC or REIT.
       In the case of shares held in a RIC or REIT, partial 
     indexing generally would be provided by the provision based 
     on the ratio of the value of indexed assets held by the 
     entity to the value of all its assets. The ratio of indexed 
     assets to total assets would be determined quarterly (for 
     RICs, the quarterly ratio would be based on a three-month 
     average). If the ratio of indexed assets to total assets 
     exceeds 80 percent in any quarter, full indexing of the 
     shares would be allowed for that quarter. If less than 20 
     percent of the assets are indexed assets in any quarter, no 
     indexing would be allowed for that quarter for the shares. 
     Partnership interests held by a RIC or REIT would be subject 
     to a look-through test for purposes of determining whether, 
     and to what degree, the shares in the RIC or REIT are 
     indexed.
       A return of capital distribution by a RIC or REIT generally 
     would be treated by a shareholder as allocable to stock 
     acquired by the shareholder in the order in which the stock 
     was acquired.

                  Partnership and S corporations, etc.

       Under the bill, stock in an S corporation or an interest in 
     a partnership or common trust fund would not be an indexed 
     asset. Under the provision, the individual owner would 
     receive the benefit of the indexing adjustment when the S 
     corporation, partnership, or common trust fund disposes of 
     indexed assets. Under the provision, any inflation 
     adjustments at the entity level would flow through to the 
     holders and result in a corresponding increase in the 
     basis of the holder's interest in the entity. Where a 
     partnership has a section 754 election in effect, a 
     partner transferring his interest in the partnership would 
     be entitled to any indexing adjustment that has accrued at 
     the partnership level with respect to the partner and the 
     transferee partner is entitled to the benefits of indexing 
     for inflation occurring after the transfer.
       The indexing adjustment would be disregarded in determining 
     any loss on the sale of an interest in a partnership, S 
     corporation or common trust fund.

                          Foreign corporations

       Common stock of a foreign corporation generally would be an 
     indexed asset if the stock is regularly traded on an 
     established securities market. Indexed assets, however, would 
     not include stock in a foreign investment company, a passive 
     foreign investment company (including a qualified electing 
     fund), a foreign personal holding company, or, in the hands 
     of a shareholder who meets the requirements of section 
     1248(a)(2) (generally pertaining to 10-percent shareholders 
     of controlled foreign corporations), any other foreign 
     corporation. An American Depository Receipt (ADR) for common 
     stock in a foreign corporation would be treated as common 
     stock in the foreign corporation and, therefore, the basis in 
     an ADR for common stock generally would be indexed.

                              Other rules

               Improvements and contributions to capital

       No indexing would be provided for improvements or 
     contributions to capital if the aggregate amount of the 
     improvements or contributions to capital during the taxable 
     year with respect to the property or stock is less than 
     $1,000. If the aggregate amount of such improvements or 
     contributions to capital is $1,000 or more, each addition 
     would be treated as a separate asset acquired at the close of 
     the taxable year.

                      Suspension of holding period

       No indexing adjustment would be allowed during any period 
     during which there is a substantial diminution of the 
     taxpayer's risk of loss from holding the indexed asset by 
     reason of any transaction entered into by that taxpayer, or a 
     related party.

                              Short sales

       In the case of a short sale of an indexed asset with a 
     short sale period in excess of three years, the bill would 
     require that the amount realized be indexed for inflation for 
     the short sale period.

                            Related parties

       The bill would not index the basis of property for sales or 
     dispositions between related persons, except to the extent 
     the adjusted basis of property in the hands of the transferee 
     is a substituted basis (e.g. gifts).

                        Collapsible corporations

       Under the bill, indexing would not reduce the amount of 
     ordinary gain that would be recognized in cases where a 
     corporation is treated as a collapsible corporation (under 
     Code sec. 341) with respect to a distribution or sale of 
     stock.

                             Effective Date

       The provision would apply to dispositions of property the 
     holding period of which begins after December 31, 1996. The 
     provision also would apply to a principal residence held by 
     the taxpayer on January 1, 1997 (as if the holding period 
     began on that date). An individual holding any indexed asset 
     (other than a personal residence) on January 1, 1997, may 
     elect to treat the indexed asset as having been sold and 
     reacquired for its fair market value.

             3. Small Business Stock (Sec. 203 of the Bill)

                              Present Law

       The Revenue Reconciliation Act of 1993 provided individuals 
     a 50-percent exclusion for the sale of certain small business 
     stock acquired at original issue and held for at least five 
     years. One-half of the excluded gain is a minimum tax 
     preference.
       The amount of gain eligible for the 50-percent exclusion by 
     an individual with respect to any corporation is the greater 
     of (1) ten times the taxpayer's basis in the stock or (2) $10 
     million.
       In order to qualify as a small business, when the stock is 
     issued, the gross assets of the corporation may not exceed 
     $50 million. The corporation also must meet an active trade 
     or business requirement.

                        Description of the Bill

       Under the bill, the maximum rate of regular tax on the 
     qualifying gain from the sale of small business stock by a 
     taxpayer other than a corporation would remain at 14 percent. 
     The minimum tax preference would be repealed.
       The bill would increase the size of an eligible corporation 
     from gross assets of $50 million to gross assets of $100 
     million. The bill would also repeal the limitation on the 
     amount of gain an individual can exclude with respect to the 
     stock of any corporation.
       The bill would provide that certain working capital must be 
     expended within 5 years (rather than two years) in order to 
     be treated as used in the active conduct of a trade or 
     business. No limit on the percent of the corporation's assets 
     that are working capital would be imposed.
       The bill would provide that if the corporation establishes 
     a business purpose for a redemption of its stock, the 
     redemption is disregarded in determining whether other newly 
     issued stock could qualify as eligible stock.

                             Effective Date

       The increase in the size of corporations whose stock is 
     eligible for the exclusion would apply to stock issued after 
     the date of the enactment of the bill. The remaining 
     provisions would apply to stock issued after August 10, 1993 
     (the original effective date of the small business stock 
     provision).

4. 28-Percent Corporate Alternative Tax for Capital Gains (Sec. 204 of 
                               the Bill)

                              Present Law

       Under present law, the net capital gain of a corporation is 
     taxed at the same rate as ordinary income, and subject to tax 
     at graduated rates up to 35 percent. Prior to the Tax Reform 
     Act of 1986, the net capital gain of a corporation was 
     subject to a maximum effective tax rate of 28 percent.

                        Description of the Bill

       The bill would provide an alternative tax of 28 percent on 
     the net capital gain of a corporation if that rate is less 
     than the corporation's regular tax rate.
       The bill would also provide an alternative rate of 21 
     percent on the gain from the sale or exchange of qualified 
     small business stock (other than stock of a subsidiary 
     corporation) held more than 5 years.

                             Effective Date

       The provision would generally apply to taxable years ending 
     after December 31, 1996. For a taxable year which includes 
     January 1, 1997, the 28-percent rate would apply to the 
     lesser of (1) the net capital gain for the taxable year or 
     (2) the net capital gain taking into account only gain or 
     loss properly taken into account for the portion of the 
     taxable year after December 31, 1996.

[[Page S188]]

       The small business stock provision would apply to stock 
     issued after the date of enactment.

   5. Capital Loss Deduction on the Sale or Exchange of a Principal 
                    Residence (Sec. 205 of the Bill)

                              Present Law

       Under present law, the sale or exchange of a principal 
     residence is treated as a nondeductible personal loss.

                        Description of the Bill

       The bill would provide that a loss from the sale or 
     exchange of a principal residence would be treated as a 
     deductible capital loss.

                             Effective Date

       The provision would apply to sales and exchanges after 
     December 31, 1996.

             C. Estate and gift tax provisions (title III)

 1. Increase Estate and Gift Tax Unified Credit (Sec. 301 of the Bill)

                              Present Law

       A unified credit is available with respect to taxable 
     transfers by gift and at death. Since 1987, the unified 
     credit amount has been fixed at $192,800, which effectively 
     exempts a total of $600,000 in cumulative taxable transfers 
     from the estate and gift tax. The benefits of the unified 
     credit (and the graduated estate and gift tax rates) are 
     phased out by a 5-percent surtax imposed upon cumulative 
     taxable transfers over $10 million and not exceeding 
     $21,040,000.\2\
---------------------------------------------------------------------------
     \2\ Thus, if a taxpayer has made cumulative taxable transfers 
     exceeding $21,040,000, his or her effective transfer tax rate 
     is 55 percent under present law.
---------------------------------------------------------------------------
       The unified credit was originally enacted in the Tax Reform 
     Act of 1976. The unified credit has not been increased since 
     1987.

                        Description of the Bill

       The bill would increase the present-law unified credit over 
     an eight-year period beginning in 1997, from an effective 
     exemption of $600,000 to an effective exemption of 
     $1,000,000. The increase would be phased in as follows:


                       Decedents Dying and Gifts


        Made in                                     Effective exemption
1997...........................................................$650,000
1998............................................................700,000
1999............................................................750,000
2000............................................................800,000
2001............................................................850,000
2002............................................................900,000
2003............................................................950,000
2004 and thereafter...........................................1,000,000

       Conforming amendments to reflect the increased unified 
     credit are made (1) to the general filing requirements for an 
     estate tax return under section 6018(a), and (2) to the 
     amount of the unified credit allowed under section 2102(c)(3) 
     with respect to nonresident aliens with U.S. situs property 
     who are residents of certain treaty countries.

                             Effective Date

       The provision would apply to the estates of decedents 
     dying, and gifts made, after December 31, 1996.

2. Estate Tax Exclusion for Qualified Family-Owned Businesses (Sec. 302 
                              of the Bill)

                              Present Law

       There are no special estate tax rules for qualified family-
     owned businesses. All taxpayers are allowed a unified credit 
     in computing the taxpayer's estate and gift tax, which 
     effectively exempts a total of $600,000 in cumulative taxable 
     transfers from the estate and gift tax (sec. 2010). An 
     executor also may elect, under section 2032A, to value 
     certain qualified real property used in farming or another 
     qualifying closely-held trade or business at its current use 
     value, rather than its highest and best use value (up to a 
     maximum reduction of $750,000). In addition, an executor may 
     elect to pay the Federal estate tax attributable to a 
     qualified closely-held business in installments over, at 
     most, a 14-year period (sec. 6166). The tax attributable to 
     the first $1,000,000 in value of a closely-held business is 
     eligible for a special 4-percent interest rate (sec. 
     6601(j)).

                        Description of the Bill

       The bill would provide special estate tax treatment for 
     qualified ``family-owned business interests'' if such 
     interests comprise more than 50 percent of a decedent's 
     estate. Subject to certain requirements, the bill would 
     exclude the first $1.5 million of value in qualified family-
     owned business interests from a decedent's estate, and also 
     would exclude 50 percent of the remaining value of qualified 
     family-owned business interests. This new exclusion for 
     qualified family-owned business interests would be provided 
     in addition to the unified credit.
       A qualified family-owned business interest would be defined 
     as any interest in a trade or business (regardless of the 
     form in which it is held) with a principal place of business 
     in the United States if one family owns at least 50 percent 
     of the trade or business, two families own 70 percent, or 
     three families own 90 percent, as long as the decedent's 
     family owns at lest 30 percent of the trade or business. An 
     interest in a trade or business would not qualify if any 
     interest in the business (or a related entity) was publicly-
     traded at any time within three years of the decedent's 
     death. An interest in a trade or business also would not 
     qualify if more than 35 percent of the adjusted ordinary 
     gross income of the business for the year of the decedent's 
     death was personal holding company income (as defined in sec. 
     543). In the case of a trade or business that owns an 
     interest in another trade or business (i.e., ``tiered 
     entities''), special look-through rules would apply. The 
     value of a trade or business qualifying as a family-owned 
     business interest would be reduced to the extent the business 
     holds passive assets or excess cash or marketable securities.
       To qualify for the beneficial treatment provided under the 
     bill the decedent (or a member of the decedent's family) must 
     have owned and materially participated in the trade or 
     business for at least five of the eight years preceding the 
     decedent's date of death. In addition, each qualified heir 
     (or a member of the qualified heir's family) would be 
     required to materially participate in the trade or business 
     for at least five years of each eight-year period ending 
     within ten years following the decedent's death.
       The benefit of the exclusion for qualified family-owned 
     business interests would be subject to recapture if, within 
     10 years of the decedent's death and before the qualified 
     heir's death, one of the following ``recapture events'' 
     occurs: (1) the qualified heir ceases to meet the material 
     participation requirements; (2) the qualified heir disposes 
     of any portion of his or her interest in the family-owned 
     business, other than by a disposition to a member of the 
     qualified heir's family or through a qualified conservation 
     contribution; (3) the principal place of business of the 
     trade or business ceases to be located in the United States; 
     or (4) the qualified heir loses U.S. citizenship.
       The portion of the reduction in estate taxes that is 
     recaptured would depend upon the number of years that the 
     qualified heir (or members of the qualified heir's family) 
     materially participated in the trade or business between the 
     date of the decedent's death and the date of the recapture 
     event. If the qualified heir (or his or her family members) 
     materially participated in the trade or business after the 
     decedent's death for less than six years, 100 percent of the 
     reduction in estate taxes attributable to that heir's 
     interest would be recaptured; if the participation was for at 
     least six years but less than seven years, 80 percent of the 
     reduction in estate taxes would be recaptured; if the 
     participation was for at least seven years but less than 
     eight years, 60 percent would be recaptured; if the 
     participation was for at least eight years but less than nine 
     years, 40 percent would be recaptured; and if the 
     participation was for at least nine years but less than ten 
     years, 20 percent of the reduction in estate taxes would be 
     recaptured. In general, there would be no requirement that 
     the qualified heir (or members of his or her family) continue 
     to hold or participate in the trade or business more than 10 
     years after the decedent's death. As under present-law 
     section 2032A, however, the 10-year recapture period could be 
     extended for a period of up to two years if the qualified 
     heir did not begin to use the property for a period of up to 
     two years after the decedent's death.
       In addition, the bill would coordinate the benefit for 
     qualified family-owned business interests with the present-
     law benefits relating to special-use valuation (sec. 2032A) 
     and the special 4-percent interest rate available for 
     closely-held businesses (sec. 6601(j)). The bill would 
     provide that any amount excluded from a decedent's estate 
     under the qualified family-owned business provision would 
     reduce the ceilings with respect to both section 2032A and 
     section 6601(j). Thus, for example, if a decedent had 
     $100,000 of qualified family-owned business interests, the 
     entire value of his qualified family-owned business property 
     would be excluded from the estate; if the decedent's estate 
     also qualified for treatment under 2032A or 6601(j), the 
     executor could take a maximum reduction under section 2032A 
     of $650,000 (i.e., $750,000 less $100,000), and/or could use 
     the special 4-percent rate provided in section 6601(j) with 
     respect to the Federal estate tax liability attributable to 
     the first $900,000 in value of a qualifying business (i.e., 
     $1,000,000 less $100,000).

                             Effective Date

       The provision would be effective with respect to the 
     estates of decedents dying after December 31, 1996.

  3. Installment Payments of Estate Tax Attributable to Closely Held 
                 Businesses (Secs. 303-304 of the Bill)

                              Present Law

       In general, the Federal estate tax is due within nine 
     months of a decedent's death. Under Code section 6166, an 
     executor generally may elect to pay the estate tax 
     attributable to an interest in a closely held business in 
     installments over, at most, a 14-year period. If the election 
     is made, the estate may pay only interest for the first four 
     years, followed by up to 10 annual installments of principal 
     and interest. Interest generally is imposed at the rate 
     applicable to underpayments of tax under section 6621 (i.e., 
     the Federal short-term rate plus 3 percentage points). Under 
     section 6601(j), however, a special 4-percent interest rate 
     applies to the amount of deferred estate tax attributable to 
     the first $1,000,000 in value of the closely-held business.
       To qualify for the installment payment election, the 
     business must be an active trade or business and the value of 
     the decedent's interest in the closely held business must 
     exceed 35 percent of the decedent's adjusted gross estate. An 
     interest in a closely held business includes: (1) any 
     interest as a proprietor in a business carried on as a 
     proprietorship; (2) any interest in a partnership carrying on 
     a trade or business if the partnership has 15 or fewer 
     partners, or if at least

[[Page S189]]

     20 percent of the partnership's assets are included in 
     determining the decedent's gross estate; or (3) stock in a 
     corporation if the corporation has 15 or fewer shareholders, 
     of if at least 20 percent of the value of the voting stock is 
     included in determining the decedent's gross estate.

                        Description of the Bill

       The bill would extend the period for which Federal estate 
     tax installments could be made under section 6166 to a 
     maximum period of 24 years. If the election were made, the 
     estate could pay only interest for the first four years, 
     followed by up to 20 annual installments of principal and 
     interest. Under the bill, there would be no interest imposed 
     on the amount of deferred estate tax attributable to the 
     first $1,000,000 in value of the closely held business. The 
     interest rate imposed on the amount of deferred estate tax 
     attributable to the value of the closely held business in 
     excess of $1,000,000 would remain as under present law (i.e., 
     the Federal short-term rate plus 3 percentage points).

                             Effective Date

       The provision would be effective for decedents dying after 
     December 31, 1996.

                      D. IRA provisions (title IV)

  1. Restoration of IRA Deduction for All Taxpayers (Sec. 401 of the 
                                 Bill)

                              Present Law

       Under present law, under certain circumstances, an 
     individual is allowed to deduct contributions up to the 
     lesser of $2,000 or 100 percent of the individual's 
     compensation (or earned income) to an individual retirement 
     arrangement (IRA). The amounts held in an IRA, including 
     earnings on contributions, generally are not included in 
     taxable income until withdrawn.
       The $2,000 deduction limit is phased out over certain 
     adjusted gross income (AGI) levels if the individual or the 
     individual's spouse is an active participant in an employer-
     sponsored retirement plan. The phaseout is between $25,000 
     and $35,000 of AGI for single taxpayers and between $40,000 
     and $50,000 of AGI for married taxpayers. There is no 
     phaseout of the deduction limit if the individual and the 
     individual's spouse are not active participants in an 
     employer-sponsored retirement plan.

                        Description of the Bill

       The bill would increase the AGI limits applicable to 
     deductible IRA contributions for active participants in 1997, 
     1998, 1999, and 2000. Thereafter, the bill would repeal the 
     limits on IRA deductions for active participants in employer-
     sponsored retirement plans. Thus, under the bill, after 2000, 
     an individual would be entitled to make a $2,000 deductible 
     IRA contribution without regard to whether the individual was 
     an active participant in an employer-sponsored retirement 
     plan.
       In the case of married taxpayers filing a joint return, for 
     years before 2001, the IRA deduction for active participants 
     would be phased out between the following AGI amounts: for 
     1997, $65,000 and $75,000; for 1998, $90,000 and $100,000; 
     for 1999, $115,000 and $125,000; and for 2000, $140,000 and 
     $150,000.
       In the case of single taxpayers, for years before 2001, the 
     IRA deduction for active participants would be phased out 
     between the following AGI amounts: for 1997, $50,000 and 
     $60,000; for 1998, $75,000 and $85,000; for 1999, $100,000 
     and $110,000; and for 2000, $125,000 and $135,000.
       The bill would provide that the IRA deduction limit for any 
     individual is coordinated with the limit on elective 
     deferrals. Thus, an individual's deductible contributions to 
     an IRA and elective deferrals could not exceed the annual 
     limit on elective deferrals.

                             Effective Date

       The provision would be effective for taxable years 
     beginning after December 31, 1996.

    2. Deductible IRAs for Nonworking Spouses (Sec. 402 of the Bill)

                              Present Law

       Within limits, an individual is allowed a deduction for 
     contributions to an individual retirement arrangement 
     (``IRA''). An individual generally is not subject to income 
     tax on amounts held in an IRA, including earnings on 
     contributions, until the amounts are withdrawn from the IRA.
       The maximum deductible contribution that can be made to an 
     IRA generally is the lesser of $2,000 or 100 percent of an 
     individual's compensation (earned income in the case of a 
     self-employed individual). In the case of a married 
     individual, a deductible contribution of up to $2,000 may be 
     made for each spouse (including, for example, a homemaker who 
     does not work outside the home) if the combined compensation 
     of both spouses is at least equal to the contributed amount.
       The maximum permitted IRA deduction is phased out if the 
     individual (or the individual's spouse) is an active 
     participant in an employer-sponsored retirement plan. The 
     phase-out range is from $25,000 to $35,000 of adjusted gross 
     income for single taxpayers and from $40,000 to $50,000 for 
     married taxpayers filing a joint return.

                        Description of the Bill

       Under the bill, an individual would not be considered an 
     active participant in an employer-sponsored retirement plan 
     merely because the individual's spouse is such an active 
     participant. Thus, the bill would permit a nonworking spouse 
     to make a deductible IRA contribution of up to $2,000 without 
     regard to the present-law income phaseouts.

                             Effective Date

       The provision would be effective for taxable years 
     beginning after December 31, 1996.

3. Nondeductible Contributions to Tax-Free IRA Plus Accounts (Sec. 403 
                              of the Bill)

                              Present Law

       Under present law, under certain circumstances, an 
     individual is allowed to deduct contributions up to the 
     lesser of $2,000 or 100 percent of the individual's 
     compensation (or earned income) to an individual retirement 
     arrangement (IRA). The amounts held in an IRA, including 
     earnings on contributions, generally are not included in 
     taxable income until withdrawn.
       An individual may make nondeductible contributions (up to 
     the $2,000 or 100 percent of compensation limit) to an IRA to 
     the extent the individual is not permitted to make deductible 
     IRA contributions. Nondeductible contributions provide the 
     same tax benefits as deferred annuities, that is, earnings 
     are not includible in income until withdrawn. However, 
     deferred annuities are not subject to contribution limits.
       Distributions from IRAs are generally includible in income 
     when withdrawn. Distributions prior to death, disability, or 
     attainment of age 59\1/2\ are subject to an additional 10-
     percent tax. The 10-percent tax does not apply to 
     distributions made in the form of an annuity.

                        Description of the Bill

       The bill would permit taxpayers to make nondeductible 
     contributions to new IRA Plus accounts. Generally, IRA Plus 
     accounts would be treated in the same manner as and be 
     subject to the same rules applicable to deductible IRAs. 
     However, a number of special rules would apply.
       Contributions to an IRA Plus would be nondeductible. The 
     amount of nondeductible contributions to an IRA Plus that 
     could be made for any taxable year would be tied to the 
     limits for deductible IRAs, so that the aggregate amount of 
     contributions to an IRA Plus could not exceed the excess of 
     (1) the IRA deduction limit for the year (determined without 
     regard to the rule coordinating the IRA deduction limit with 
     the elective deferral limit) over (2) the amount of IRA 
     contributions actually deducted for the year.
       Under the bill, any qualified distribution from an IRA Plus 
     account would not be included in gross income and would not 
     be subject to the 10-percent additional income tax on early 
     withdrawals. A qualified distribution from an IRA Plus would 
     include any payment or distribution (1) made on or after the 
     date the IRA Plus owner attains age 59\1/2\, (2) made to a 
     beneficiary of the IRA Plus owner after death, (3) on account 
     of disability of the IRA Plus owner, or (4) which is a 
     qualified special purpose distribution (i.e., a distribution 
     for medical expenses; the costs of starting a business of the 
     IRA Plus owner or the owner's spouse, long-term unemployment, 
     and higher education expenses)
       The bill provides that a distribution would not be treated 
     as a qualified distribution if it is made within the 5-
     taxable year period beginning with the first taxable year for 
     which the individual made a contribution to an IRA Plus 
     account (or such individual's spouse made a contribution to 
     an IRA Plus account). In addition, the bill provides that a 
     distribution would not be treated as a qualified distribution 
     if, in the case of a distribution attributable to a qualified 
     rollover contribution, the distribution is made within the 5-
     taxable year period beginning with the taxable year in which 
     the rollover contribution was made.
       In the case of a distribution from an IRA Plus account that 
     is not a qualified distribution, in applying the rules of 
     section 72, the distribution would be treated as made from 
     contributions to the IRA Plus account to the extent that such 
     distribution, when added to all previous distributions from 
     the IRA Plus account, does not exceed the aggregate amount of 
     contributions to the IRA Plus account. Thus, nonqualified 
     distributions from an IRA Plus account would not be included 
     in income (and subject to the additional 10-percent tax on 
     early withdrawals) until the IRA owner had withdrawn amounts 
     in excess of all contributions to the IRA Plus account.
       Rollover contributions would be permitted to an IRA Plus 
     only to the extent such contributions consist of a payment or 
     distribution from another IRA Plus or from an individual 
     retirement plan. Such rollover contributions would not be 
     taken into account in determining the contribution limit for 
     a taxable year. The normal IRA rollover rules would otherwise 
     govern the eligibility of withdrawals from IRA Plus accounts 
     to be rolled over.
       The bill would permit amounts withdrawn from IRAs to be 
     transferred into an IRA Plus. The amount transferred would be 
     includible in gross income in the year the withdrawal was 
     made, except that amounts transferred to an IRA Plus before 
     January 1, 1999, would be includible in income ratably over a 
     4-year period. The 10-percent early withdrawal tax would not 
     apply to amounts transferred from an IRA to an IRA Plus 
     account.
       Under the bill, the excise tax on excess distributions from 
     qualified retirement plans (sec. 4980A) would not apply to 
     distributions from the IRA Plus account or to any qualified 
     rollover contribution from an individual retirement plan to 
     an IRA Plus account.

                             Effective Date

       The provisions of the bill relating to IRA Plus accounts 
     would be effective for taxable years beginning after December 
     31, 1996.

[[Page S190]]

 4. IRA Withdrawals for Business Startup, Long-Term Unemployment, and 
     Post-Secondary Education Expenses (Secs. 404-406 of the Bill)

                              Present Law

       Amounts withdrawn from an individual retirement arrangement 
     (``IRA'') are includible in income (except to the extent of 
     any nondeductible contributions). In addition, a 10-percent 
     additional tax applies to withdrawals from IRAs made before 
     age 59\1/2\, unless the withdrawal is made on account of 
     death or disability or is made in the form of annuity 
     payments or is made for medical expenses that exceed 7.5 
     percent of adjusted gross income (``AGI'') or is made for 
     medical insurance (without regard to the 7.5 percent of AGI 
     floor) if the individual has received unemployment 
     compensation for at least 12 weeks, and the withdrawal is 
     made in the year such unemployment compensation is received 
     or the following year. If a self-employed individual is not 
     eligible for unemployment compensation under applicable law, 
     then, to the extent provided in regulations, a self-employed 
     individual is treated as having received unemployment 
     compensation for at least 12 weeks if the individual would 
     have received unemployment compensation but for the fact that 
     the individual was self-employed. The exception to the 
     additional tax ceases to apply if the individual has been 
     reemployed for at least 60 days.

                        Description of the Bill

       The bill would permit withdrawals to be made income tax 
     free and exempt from the 10-percent additional tax if made 
     (1) for the business start-up expenses of the individual or 
     the spouse of the individual; (2) in the event of long-term 
     unemployment, for any reason; or (3) for the post-secondary 
     education expenses of the individual, the spouse of the 
     individual, or a dependent child of the individual or the 
     individual's spouse.
       For purposes of this provision, business start-up expenses 
     include expenses associated with the establishment of the 
     business that are incurred on or before the business start 
     date and on or before the date which is one year after the 
     business start date, such as start-up expenditures within the 
     meaning of section 195(c), organizational expenses within the 
     meaning of sections 248(b) and 709(b) and other expenses 
     related to starting a business (e.g., purchasing a computer, 
     software, inventory, etc.). No deduction otherwise allowable 
     with respect to any business start-up expense will be allowed 
     to the extent this provision applies to such expense. In 
     addition, to the extent this provision applies to any portion 
     of business start-up expenses which are properly chargeable 
     to capital account, the basis of the property to which such 
     expenses are chargeable will be reduced by the amount taken 
     into account under this provision.
       For purposes of this provision, long-term unemployment has 
     the same meaning as under present law (i.e., the individual 
     has received unemployment compensation for at least 12 
     weeks).
       For purposes of this provision, post-secondary education 
     expenses would be defined as the student's cost of attendance 
     as defined in section 472 of the Higher Education Act of 1965 
     (generally, tuition, fees, room and board, and related 
     expenses).

                             Effective Date

       The provision would be effective for distributions after 
     December 31, 1996.
                                 ______
                                 
      By Mr. HATCH (for himself, Mr. Lott, Mr. Abraham, Mr. Allard, Mr. 
        Ashcroft, Mr. Craig, Mr. D'Amato, Mr. DeWine, Mr. Domenici, Mr. 
        Enzi, Mr. Faircloth, Mr. Gorton, Mr. Grams, Mr. Grassley, Mr. 
        Hagel, Mr. Helms, Mr. Hutchinson, Mr. Kyl, Mr. Murkowski, Mr. 
        Nickles, Mr. Roberts, Mr. Smith, Mr. Thomas, Mr. Thurmond, Mr. 
        Warner, and Mr. Coverdell):
  S. 3. A bill to provide for fair and accurate criminal trials, reduce 
violent juvenile crime, promote accountability by juvenile criminals, 
punish and deter violent gang crime, reduce the fiscal burden imposed 
by criminal alien prisoners, promote safe citizen self-defense, combat 
the importation, production, sale, and use of illegal drugs, and for 
other purposes; to the Committee on the Judiciary.


                 the omnibus crime control act of 1997

  Mr. HATCH. Mr. President, this is a very important bill. We know 
juvenile crime is on the increase. Gang violence is on the increase. 
This bill would take care of both of those problems, and it does it in 
an intelligent, official, and decent way. I hope that our colleagues on 
the other side will look at it carefully. We will certainly work with 
them and with Senator Biden and others on the Judiciary Committee to 
try and make sure that we do the best we can.
  This is an excellent bill. It would make immediate inroads into the 
problems of juvenile violence and crime and gang violence. I hope all 
of our colleagues will get behind this and support it.
  Mr. President, this is a very important omnibus crime bill if we want 
to do something about crime in this society. In addition to what we 
have done in the past, this is an excellent Republican alternative to 
the violent crime that we have in the streets, the drugs permeating our 
society, and, of course, the many other difficulties that are literally 
making our society a less wonderful society to live in.
  Mr. President, I ask unanimous consent that the remainder of my 
remarks be printed in the Record at this point.
  There being no objection, the remarks were ordered to be printed in 
the Record, as follows:

       Mr. President, I rise today along with the distinguished 
     Majority Leader and other Republicans to introduce S. 3, the 
     Hatch-Lott Omnibus Crime Control Act of 1997 and S. 10, the 
     Hatch-Sessions Violent and Repeat Juvenile Offender Act of 
     1997. Together, these two bills build on the successful 
     Republican 104th Congress, in which we passed habeas corpus 
     reform, truth-in-sentencing reform, prison litigation reform, 
     federal mandatory victim restitution, and the toughest 
     antiterrorism law in our nation's history. These initiatives 
     continue the Republican commitment to enacting the kind of 
     serious laws that the American people want, that the American 
     people need, and that the American people deserve to continue 
     the fight against crime, and in particular, crime committed 
     by violent youths.
       Each year, our nation's violent crime problem tops the list 
     of concerns for the American people, and their concerns are 
     valid. According to the Uniform Crime Reports, recently 
     published by the FBI, there was virtually no change in 
     violent crime between 1994 and 1995. In fact, on average, one 
     violent crime is committed every 18 seconds in this country.
       This crisis is not limited to our major cities. In my home 
     state of Utah, the number of violent crimes per 100,000 
     persons increased by eight percent in 1995, while the rate 
     decreased by 12.8 percent in New York City that same year. In 
     Utah, reported violent crimes increased by more than 10 
     percent, from 5,810 in 1994, to 6,415 in 1995. Property 
     crimes in Utah increased by 17.9 percent, and murder by a 
     depressing 35.7 percent during the same time period. Mr. 
     President, we need to do something to curb this wave of 
     violent crime affecting my State of Utah and every other 
     State and community across America. The bill we introduce 
     today will help law enforcement stem this tide of crime.
       This legislation attacks the nations crime problem on many 
     fronts including: Initiatives to revive the faltering war on 
     drugs; stepping up the fight on terrorism; strengthening 
     juvenile justice reform; increasing personal security; 
     encouraging sensible prison reform; continuing the fight 
     against child pornography; improving criminal justice reform; 
     and continuing support for the successful Violence Against 
     Women Act.


                       REVIVING THE WAR ON DRUGS

       This bill takes several steps toward reviving the war on 
     drugs. First, it enhances drug penalties for drug 
     traffickers. Republicans want to ensure that large-scale drug 
     traffickers face punishment that is commensurate with the 
     harm they inflict on society. Second, the bill addresses the 
     increasing menace of street level drug traffickers. This bill 
     lowers the quantity of cocaine in powder form that triggers 
     the mandatory minimums under title 21. It also creates 
     mandatory minimum penalties for methamphetamine traffickers 
     and dealers.
       S. 3 also makes a strong statement about the nation's new 
     problem with drug legalization. California and Arizona 
     recently passed initiatives legalizing marijuana for 
     medicinal purposes. But there is no legitimate medicinal use 
     for marijuana, and the use of marijuana and other Schedule I 
     drugs still violates federal law. In order to discourage the 
     medical community from violating federal drug laws, S. 3 
     requires that HMO's and other recipients of federal Medicare 
     and Medicaid funds certify that none of their participating 
     physicians prescribed marijuana or other Schedule I 
     controlled substances for medical purposes. This bill also 
     combats recent lax attitudes toward drug use by education. 
     This bill requires that the FCC encourage public service 
     programs to emphasize the importance of anti-drug abuse 
     announcements and attack the pro-legalization movement. This 
     bill will also reauthorize the Drug Czar with an emphasis 
     on enforcement, prevention, interdiction and effective 
     treatment for juveniles who use drugs.


                           fighting terrorism

       This legislation toughens the anti-terrorism initiatives 
     that the Republican 104th Congress enacted. It demands 
     bombing laws to ensure that all uses of a bomb to commit 
     murder can be punished capitally. This bill also establishes 
     a National Commission on Terrorism to examine a long-term 
     strategy against terrorism. This legislation also makes it a 
     federal offense to stockpile chemical weapons, and it 
     tightens restrictions on human pathogens. This bill also 
     makes it a federal offense to murder, or attempt to murder, 
     athletes, guests, and spectators at Olympic games, and 
     centralizes in the Attorney General federal authority for 
     their security.

[[Page S191]]

                        juvenile justice reform

       The youth violence bill will ensure that violent and repeat 
     juvenile offenders are treated as adults by authorizing US 
     Attorneys to prosecute 14-year-olds for any federal felony 
     that is a crime of violence or a serious drug trafficking 
     offense. This legislation also confines juveniles prosecuted 
     in the federal system for the length of their sentence. New 
     federal penalties for offenses committed by criminal street 
     gangs will create a sustained effort to target violent youth 
     gang activity. Federal prosecutors will be able to charge 
     gang leaders or members under this bill if they engage in two 
     or more criminal gang offenses. It will also be a crime to 
     recruit someone into a gang, or solicit their participation 
     in a gang crime.
       This legislation also will reform federal aid to State 
     youth crime programs by eliminating needless federal mandates 
     on state criminal justice systems that have stifled 
     innovative state efforts to address violent youth crime. This 
     bill also requires that states not exclude religious 
     organizations from participating in juvenile 
     rehabilitative programs. In an effort to encourage the 
     states to undertake progressive responses to violent youth 
     crime, this bill authorizes funding for a variety of 
     programs, such as fingerprinting, DNA testing, and 
     improved record keeping practices for juvenile offenders. 
     The Juvenile Justice bill also fosters youth crime 
     prevention that works by ensuring that there are 2,000 
     Boys & Girls Clubs by the year 2000, and by permitting 
     some federal grant funds to be used to establish a role 
     model speakers program.


                           personal security

       Recent studies show that the adoption by more than 30 
     states of laws allowing citizens to carry firearms has had, 
     and will have, a material and positive effect in preventing 
     violent crime. S. 3 will empower current and retired law 
     enforcement officers to carry firearms in other states, and 
     will authorize states to enter into interstate compacts 
     recognizing each other's citizen carry laws. It will also 
     create an exception to federal firearm purchase waiting 
     periods for persons protected under a protective order. Thus, 
     for instance, no longer will a threatened and abused woman be 
     forced to wait in fear for the right to protect herself.


                         sensible prison reform

       American taxpayers should not be saddled with the burden of 
     paying for the cost of incarcerating aliens convicted of 
     crimes in this country. In an effort to lessen this burden, 
     this legislation requires the Department of State to 
     negotiate treaties with all foreign governments that receive 
     U.S. aid. Under these treaties, receipt of American aid will 
     be contingent upon foreign governments receiving and 
     incarcerating their citizens and nationals who are convicted 
     of crimes in the United States for a majority of their 
     sentences.
       This legislation also continues the authorization for the 
     pilot project on privatization of federal prisons. It will 
     also build on the Prison Litigation Reform Act enacted last 
     Congress by amending and clarifying features of the PLRA. 
     Provisions of this bill will also make it more difficult 
     for prisoners to pursue their criminal careers while in 
     prison by making it more difficult to conduct criminal 
     activity by phone.
       Importantly, this bill also eliminates inappropriate and 
     counter-productive ``incentives'' of early release for 
     federal inmates to get drug treatment. Further, our bill will 
     require all federal prisoners to work, and impose no-frills 
     prisons in the federal system.


                           child pornography

       This legislation also builds on the advances made in the 
     104th Congress by requiring the Secretary of State to 
     renegotiate extradition treaties with foreign governments to 
     ensure that child pornography offenses under federal law are 
     extraditable offenses. It also modifies current federal law 
     so that the statute of limitations is tolled when the federal 
     child pornography laws are violated, in whole or in part, by 
     persons beyond the jurisdiction of the United States.


                        criminal justice reform

       S. 3 will improve public confidence in the criminal justice 
     system by enhancing the accuracy of the trial process. The 
     current exclusionary rule often unjustifiably bars use of 
     probative evidence at trial. This law will amend the 
     exclusionary rule to allow evidence to be admitted if law 
     enforcement officers had an objectively reasonable belief 
     that their conduct was lawful. Further, 18 U.S.C. Sec. 3501 
     provides that judges must admit a confession as long as it is 
     voluntary. This bill will direct the Justice Department to 
     ensure this provision is enforced. This bill also proposes 
     various reforms to ensure fairness for both the defendant 
     and the victim in criminal trials. These reforms to the 
     criminal justice process that are critical if we are to 
     prevent our cherished liberties from further devolving 
     into merely a cynical shield for the guilty to avoid just 
     punishment.
       Mr. President, these bills alone will not solve our crime 
     problem. That must be done community by community. Crime 
     cannot thrive in a society that will not tolerate it. But by 
     enacting these common sense reforms, we can signal our 
     determination to build such a society. I urge my colleagues 
     to support these bills.

  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. 3

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Omnibus 
     Crime Control Act of 1997''.

       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Severability.

                  TITLE I--TRANSFER OF ALIEN PRISONERS

Sec. 101. Short title.
Sec. 102. Transfers of alien prisoners.
Sec. 103. Consent unnecessary.
Sec. 104. Certification transfer requirement.
Sec. 105. International prisoner transfer report.
Sec. 106. Annual reports on foreign assistance.
Sec. 107. Annual certification procedures.
Sec. 108. Prisoner transfers treaties.
Sec. 109. Judgments unaffected.
Sec. 110. Definition.
Sec. 111. Repeals.

                   TITLE II--EXCLUSIONARY RULE REFORM

                  Subtitle A--Exclusionary Rule Reform

Sec. 201. Short title.
Sec. 202. Admissibility of certain evidence.

                     Subtitle B--Confession Reform

Sec. 211. Enforcement of confession reform statute.

             TITLE III--VIOLENT CRIME, DRUGS, AND TERRORISM

Sec. 301. Short title.

             Subtitle A--Criminal Penalties and Procedures

Sec. 311. Protection of the Olympics.
Sec. 312. Federal responsibility for security at international athletic 
              competitions.
Sec. 313. Technical revision to penalties for crimes committed by 
              explosives.
Sec. 314. Chemical weapons restrictions.

                  Subtitle B--International Terrorism

Sec. 321. Multilateral sanctions.
Sec. 322. Information on cooperation with United States antiterrorism 
              efforts in annual country reports on terrorism.
Sec. 323. Report on international terrorism.
Sec. 324. Revision of Department of State rewards program.

                  Subtitle C--Commissions and Studies

Sec. 331. National commission on terrorism.

                     TITLE IV--COMMUNITY PROTECTION

Sec. 401. Short title.

                 Subtitle A--Law Enforcement Assistance

Sec. 411. Exemption of qualified current and former law enforcement 
              officers from State laws prohibiting the carrying of 
              concealed firearms.

                    Subtitle B--Citizens' Assistance

Sec. 421. Short title.
Sec. 422. Authorization to enter into interstate compacts.
Sec. 423. Authorized uses of Federal grant funds.
Sec. 424. Self defense for victims of abuse.

                TITLE V--CRIMINAL PROCEDURE IMPROVEMENTS

                Subtitle A--Equal Protection for Victims

Sec. 501. The right of the victim to an impartial jury.
Sec. 502. Jury trial improvements.
Sec. 503. Rebuttal of attacks on the character of the victim.
Sec. 504. Use of notice concerning release of offender.
Sec. 505. Balance in the composition of rules committees.

                          Subtitle B--Firearms

Sec. 521. Mandatory minimum sentences for criminals possessing 
              firearms.
Sec. 522. Firearms possession by violent felons and serious drug 
              offenders.
Sec. 523. Use of firearms in connection with counterfeiting or forgery.
Sec. 524. Possession of an explosive during the commission of a felony.
Sec. 525. Second offense of using an explosive to commit a felony.
Sec. 526. Increased penalties for international drug trafficking.

                   Subtitle C--Federal Death Penalty

Sec. 541. Strengthening of Federal death penalty standards and 
              procedures.
Sec. 542. Murder of witness as aggravating factor.
Sec. 543. Death penalty for murders committed in the district of 
              columbia.

   TITLE VI--INCREASED PENALTIES FOR TRAFFICKING AND MANUFACTURE OF 
                     METHAMPHETAMINE AND PRECURSORS

Sec. 601. Trafficking in methamphetamine penalty increases.
Sec. 602. Reduction of sentence for providing useful investigative 
              information.
Sec. 603. Implementation of a sentence of death.
Sec. 604. Limitation on drug enforcement administrator tenure.
Sec. 605. Serious juvenile drug offenses as armed career criminal act 
              predicates.

[[Page S192]]

Sec. 606. Mandatory minimum prison sentences for persons who use minors 
              in drug trafficking activities or sell drugs to minors.
Sec. 607. Penalty increases for trafficking in listed chemicals.

        TITLE VII--COMBATING VIOLENCE AGAINST WOMEN AND CHILDREN

                      Subtitle A--General Reforms

Sec. 701. Participation of religious organizations in violence against 
              women act programs.
Sec. 702. Domestic violence arrest grants.
Sec. 703. Rural domestic violence and child abuse enforcement 
              assistance.
Sec. 704. Runaway, homeless, and street youth assistance grants.

                     Subtitle B--Domestic Violence

Sec. 711. Death penalty for fatal interstate domestic violence 
              offenses.
Sec. 712. Death penalty for fatal interstate violations of protective 
              orders.
Sec. 713. Evidence of disposition of defendant toward victim in 
              domestic violence cases and other cases.
Sec. 714. HIV testing of defendants in sexual assault cases.

                TITLE VIII--VIOLENT CRIME AND TERRORISM

                Subtitle A--Violent Crime and Terrorism

Sec. 801. Amendments to anti-terrorism statutes.
Sec. 802. Kidnapping; death of victim before crossing State line as not 
              defeating prosecution, and other changes.
Sec. 803. Expansion of section 1959 of title 18 to cover commission of 
              all violent crimes in aid of racketeering activity and 
              increased penalties.
Sec. 804. Conforming amendment to conspiracy penalty.
Sec. 805. Inclusion of certain additional serious drug offenses as 
              armed career criminal act predicates.
Sec. 806. Increased penalties for violence in the course of riot 
              offenses.
Sec. 807. Elimination of unjustified scienter element for carjacking.
Sec. 808. Criminal offenses committed outside the United States by 
              persons accompanying the armed forces.
Sec. 809. Assaults or other crimes of violence for hire.
Sec. 810. Penalty enhancement for certain offenses resulting in death.
Sec. 811. Violence directed at dwellings in indian country.

                   Subtitle B--Courts and Sentencing

Sec. 821. Allowing a reduction of sentence for providing useful 
              investigative information although not regarding a 
              particular individual.
Sec. 822. Appeals from certain dismissals.
Sec. 823. Elimination of outmoded certification requirement.
Sec. 824. Improvement of hate crimes sentencing procedure.
Sec. 825. Clarification of length of supervised release terms in 
              controlled substance cases.
Sec. 826. Authority of court to impose a sentence of probation or 
              supervised release when reducing a sentence of 
              imprisonment in certain cases.
Sec. 827. Technical correction to assure compliance of sentencing 
              guidelines with provisions of all Federal statutes.

                     Subtitle C--White Collar Crime

Sec. 841. Clarification of scienter requirement for receiving property 
              stolen from an indian tribal organization.
Sec. 842. Larceny involving post office boxes and postal stamp vending 
              machines.
Sec. 843. Theft of vessels.
Sec. 844. Conforming amendment to law punishing obstruction of justice 
              by notification of existence of a subpoena for records in 
              certain types of investigations.
Sec. 845. Injunctions against counterfeiting and forgery.

                  Subtitle D--Miscellaneous Provisions

Sec. 861. Increased maximum penalty for certain rico violations. 
Sec. 862. Clarification of inapplicability to certain disclosures.
Sec. 863. Conforming amendments relating to supervised release.
Sec. 864. Addition of certain offenses as money laundering predicates.
Sec. 865. Clarification of jurisdictional base involving the mail.
Sec. 866. Coverage of foreign bank branches in the territories.
Sec. 867. Conforming statute of limitations amendment for certain bank 
              fraud offenses.
Sec. 868. Clarifying amendment to section 704.

                        TITLE IX--PRISON REFORM

                  Subtitle A--Prison Litigation Reform

Sec. 901. Amendment to the prison litigation reform act.
Sec. 902. Appropriate remedies for prison conditions.
Sec. 903. Civil rights of institutionalized persons.
Sec. 904. Proceedings in forma pauperis.
Sec. 905. Notice to State authorities of malicious filing by prisoner.
Sec. 906. Payment of damage award in satisfaction of pending 
              restitution awards.
Sec. 907. Earned release credit or good time credit revocation.
Sec. 908. Release of prisoner.
Sec. 909. Effective date.

                      Subtitle B--Federal Prisons

Sec. 911. Prison communications.
Sec. 912. Prison amenities and prisoner work requirement.
Sec. 913. Elimination of sentencing inequities and aftercare for 
              Federal inmates.

                   TITLE X--MISCELLANEOUS PROVISIONS

Sec. 1001. Sense of the Senate regarding ondcp.
Sec. 1002. Restrictions on doctors prescribing schedule i substances..
Sec. 1003. Anti-drug use public service requirement.
Sec. 1004. Child pornography.
Sec. 1005. 2,000 boys & girls clubs before 2000.
Sec. 1006. Cellular telephone interceptions.

            TITLE XI--VIOLENT AND REPEAT JUVENILE OFFENDERS

Sec. 1101. Short title.
Sec. 1102. Findings and purposes.
Sec. 1103. Severability.

                  Subtitle A--Juvenile Justice Reform

Sec. 1111. Repeal of general provision.
Sec. 1112. Treatment of Federal juvenile offenders.
Sec. 1113. Capital cases.
Sec. 1114. Definitions.
Sec. 1115. Notification after arrest.
Sec. 1116. Detention prior to disposition.
Sec. 1117. Speedy trial.
Sec. 1118. Dispositional hearings.
Sec. 1119. Use of juvenile records.
Sec. 1120. Incarceration of violent offenders.
Sec. 1121. Federal sentencing guidelines.

                       Subtitle B--Juvenile Gangs

Sec. 1141. Short title.
Sec. 1142. Increase in offense level for participation in crime as a 
              gang member.
Sec. 1143. Amendment of title 18 with respect to criminal street gangs.
Sec. 1144. Interstate and foreign travel or transportation in aid of 
              criminal street gangs.
Sec. 1145. Solicitation or recruitment of persons in criminal gang 
              activity.
Sec. 1146. Crimes involving the recruitment of persons to participate 
              in criminal street gangs and firearms offenses as rico 
              predicates.
Sec. 1147. Prohibitions relating to firearms.
Sec. 1148. Amendment of sentencing guidelines with respect to body 
              armor.
Sec. 1149. Additional prosecutors.

         Subtitle C--Juvenile Crime Control and Accountability

Sec. 1161. Findings; declaration of purpose; definitions.
Sec. 1162. Youth crime control and accountability block grants.
Sec. 1163. Runaway and homeless youth.
Sec. 1164. Authorization of appropriations.
Sec. 1165. Repeal.
Sec. 1166. Transfer of functions and savings provisions.
Sec. 1167. Repeal of unnecessary and duplicative programs.
Sec. 1168. Housing juvenile offenders.
Sec. 1169. Civil monetary penalty surcharge.

     SEC. 2. SEVERABILITY.

       If any provision of this Act, an amendment made by this 
     Act, or the application of such provision or amendment to any 
     person or circumstance is held to be unconstitutional, the 
     remainder of this Act, the amendments made by this Act, and 
     the application of the provisions of such to any person or 
     circumstance shall not be affected thereby.
                  TITLE I--TRANSFER OF ALIEN PRISONERS

     SEC. 101. SHORT TITLE.

       This title may be cited as the ``Transfer of Alien 
     Prisoners Act of 1997''.

     SEC. 102. TRANSFERS OF ALIEN PRISONERS.

       (a) In General.--Not later than December 31, 1998, the 
     Attorney General shall begin transferring undocumented aliens 
     who are in the United States, incarcerated in a Federal, 
     State, or local prison, whose convictions have become final, 
     to the custody of the government of the alien's country of 
     nationality for service of the duration of the alien's 
     sentence in the alien's country.
       (b) Inapplicability To Certain Aliens.--This section does 
     not apply to aliens who are nationals of a foreign country 
     that the Secretary of State has determined under section 6(j) 
     of the Export Administration Act of 1979 has repeatedly 
     provided support for acts of international terrorism.

     SEC. 103. CONSENT UNNECESSARY.

       (a) Treaty Renegotiation.--The Secretary of State shall 
     renegotiate all treaties requiring the consent of an alien 
     who is in the United States, whether present lawfully or 
     unlawfully, who is, or who is about to be, incarcerated in a 
     Federal, State, or local prison or jail before such person 
     may be transferred to the country of nationality of that 
     person to ensure that no such consent is required in any case 
     under any treaty. If the Secretary of State is unable to 
     negotiate with a foreign nation a new treaty that would go 
     into effect by December 31, 1998, that does not require such 
     consent, the Secretary shall withdraw the United States as a

[[Page S193]]

     party to any existing treaty requiring such consent.
       (b) General Repeal.--Notwithstanding any other provision of 
     law, the consent of an alien covered by this title shall not 
     be required before such alien may be designated for transfer 
     or before such alien may be transferred to the country of 
     nationality of that alien.

     SEC. 104. CERTIFICATION TRANSFER REQUIREMENT.

       Not later than March 1 of each year, the President shall 
     submit to Congress a certification as to whether each foreign 
     country has accepted, and has confined for the duration of 
     their sentences, the persons described in section 403(a).

     SEC. 105. INTERNATIONAL PRISONER TRANSFER REPORT.

       (a) In General.--Not later than March 1 of each year, the 
     President shall transmit to the Majority Leader of the 
     Senate, the Speaker of the House of Representatives, the 
     chairmen and ranking members of the Committee on the 
     Judiciary and the Committee on Foreign Relations of the 
     Senate and the Committee on the Judiciary and the Committee 
     on International Relations of the House of Representatives a 
     report that--
       (1) describes the operation of the provisions of this 
     title; and
       (2) highlights the effectiveness of those provisions with 
     regard to the 10 countries having the greatest number of 
     their nationals incarcerated in the United States, both in 
     transferring such persons from the United States to their 
     country of nationality and in confining such persons for the 
     duration of their sentences.
       (b) Contents of Report.--The report prepared under 
     subsection (a) shall set forth--
       (1) the number of aliens convicted of a Federal, State, or 
     local criminal offense in the United States, and the types of 
     offenses involved, during the preceding calendar year;
       (2) the number of aliens described in paragraph (1) who 
     were sentenced to terms of incarceration;
       (3) the number of aliens described in paragraph (1) who 
     were eligible for transfer pursuant to those provisions;
       (4) the number of aliens described in paragraph (2) who 
     were transferred pursuant to the provisions of this title;
       (5) the number, location, length of their period of 
     incarceration in the United States, and present status of 
     aliens described in paragraph (2) who have not yet been 
     transferred to the country of nationality;
       (6) the extent to which each foreign country whose 
     nationals have been convicted of a Federal, State, or local 
     criminal offense in the United States has accepted the 
     transfer of such persons, including the percentage of such 
     persons accepted by each foreign country;
       (7) the extent to which each foreign country described in 
     paragraph (6) has confined such persons for 85 percent of the 
     duration of their sentences, including the percentage of such 
     persons confined by each foreign country;
       (8) the extent to which each foreign country described in 
     paragraph (5) has accomplished (or has failed to accomplish) 
     the goals described in any applicable bilateral or 
     multilateral agreement to which the United States is a party 
     that deals with the subject of the transfer of alien 
     prisoners;
       (9) for each foreign country described in paragraph (6)--
       (A) a description of the plans, programs, and timetables 
     adopted by such country to accept its own nationals for 
     crimes committed in the United States;
       (B) a description of the plans, programs, and timetables 
     adopted by such country for the continued incarceration of 
     its own nationals for crimes committed in the United States;
       (C) a list of those countries that are negotiating in good 
     faith with the United States to establish a mechanism for the 
     transfer, receipt, and continued incarceration of such 
     country's nationals;
       (D) a list of those countries that have adopted laws or 
     regulations that ensure the transfer, receipt, and 
     incarceration of its nationals in accordance with the 
     provisions of this title; and
       (E) a list of those countries that have adopted laws or 
     regulations that ensure the availability to appropriate 
     United States Government personnel of adequate records in 
     connection with the transfer, receipt, and continued 
     incarceration of prisoners pursuant to this title;
       (10) a description of the policies adopted, agreements 
     concluded, and plans and programs implemented or proposed by 
     the Federal Government in pursuit of its responsibilities for 
     the prompt transfer of aliens described in subsection (b)(1), 
     as well as for identifying and preventing the re-entry of 
     such persons after their transfer from the United States; and
       (11) a description of instances of refusals to cooperate 
     with the United States Government regarding the transfer of 
     aliens described in subsection (b)(1).

     SEC. 106. ANNUAL REPORTS ON FOREIGN ASSISTANCE.

       At the time that the report required by section 634 of the 
     Foreign Assistance Act of 1961 is submitted each year, the 
     Secretary of State shall submit a copy of such report to the 
     Chairmen and Ranking Members of the Committees on the 
     Judiciary of the House of Representatives and the Senate, the 
     Chairman and Ranking Member of the Committee on Foreign 
     Relations of the Senate, and the Chairman and Ranking Member 
     of the Committee on International Relations of the House of 
     Representatives.

     SEC. 107. ANNUAL CERTIFICATION PROCEDURES.

       (a) Withholding of Bilateral Assistance, Opposition to 
     Multilateral Development Assistance, and Withholding of 
     Visas.--
       (1) Bilateral assistance.--
       (A) In general.--Fifty percent of the United States 
     assistance allocated each fiscal year for each foreign 
     country shall be withheld from obligation and expenditure to 
     any such country if that country has refused to accept not 
     less than 75 percent of nationals covered by this title and 
     designated for transfer by the Attorney General within either 
     of the 2 immediately preceding fiscal years or to confine 
     such transferred persons for not less than 85 percent of 
     their sentence, except as provided in subsection (b).
       (B) Inapplicability to certain countries.--This paragraph 
     does not apply with respect to a country if the President 
     determines in accordance with subsection (b) that its 
     application to that country would be contrary to the vital 
     national interests of the United States, except that any such 
     determination shall not take effect until not less than 30 
     days after the President submits written notification of that 
     determination to the congressional committees listed in 
     section 306 in accordance with the procedures applicable to 
     reprogramming notifications under section 634A of the Foreign 
     Assistance Act of 1961.
       (C) Bilateral assistance exemption.--In this subsection, 
     the term ``bilateral assistance'' does not include--
       (i) narcotics-related assistance under the Foreign 
     Assistance Act of 1961;
       (ii) disaster relief assistance;
       (iii) assistance that involves the provision of food 
     (including monetization of food) or medicine; or
       (iv) assistance for refugees.
       (2) Multilateral assistance.--
       (A) In general.--The Secretary of the Treasury may instruct 
     the United States Executive Directors of each multilateral 
     development bank to vote against any loan or other 
     utilization of the funds of such bank or institution for the 
     benefit of any country if that country has refused to accept 
     not less than 75 percent of its nationals covered by this 
     title and designated for transfer by the Attorney General or 
     to confine such transferred persons for not less than 85 
     percent of their sentences within either of the 2 immediately 
     preceding fiscal years, except as provided in subsection (b).
       (B) Definition of ``multilateral development bank''.--In 
     this paragraph, the term ``multilateral development bank'' 
     means the International Bank for Reconstruction and 
     Development, the International Development Association, the 
     Inter-American Development Bank, the Asian Development Bank, 
     the African Development Bank, and the European Bank for 
     Reconstruction and Development.
       (3) Visas.--All visas shall be denied to nationals employed 
     by the government of any foreign country if that country has 
     refused to accept not fewer than 75 percent of its nationals 
     covered by this title and designated for transfer by the 
     Attorney General within either of the 2 immediately preceding 
     fiscal years or to confine such transferred persons for not 
     less than 85 percent of their sentences, except as provided 
     in subsection (b), except that the President or the Secretary 
     of State nonetheless may grant visas to heads of state, 
     certified diplomats, or members of a foreign country's 
     mission to the United Nations.
       (b) Certification Procedures.--
       (1) What must be certified.--Subject to subsection (d), the 
     assistance withheld from a country pursuant to subsection 
     (a)(1) may be obligated and expended, the requirement of 
     subsection (a)(2) to vote against multilateral development 
     bank assistance to a country shall not apply, and the 
     withholding of visas from nationals of a country of 
     subsection (a)(3) shall not apply, if the President 
     determines and certifies to Congress, at the time of the 
     submission of the report required by section 305, that--
       (A) during the previous year the country has cooperated 
     fully with the United States, or has taken adequate steps on 
     its own, to achieve full compliance with the goals and 
     objectives established by this title, except that the 
     President may make such a finding only once during any 5-year 
     period;
       (B) for a country that would not otherwise qualify for 
     certification under subparagraph (A), the vital national 
     interests of the United States require that the assistance 
     withheld pursuant to subsection (a)(1) be provided, that the 
     United States not vote against multilateral development bank 
     assistance for that country pursuant to subsection (a)(2), 
     and that visas not be withheld pursuant to subsection (a)(3); 
     or
       (C) only in the case of multilateral development bank 
     assistance, such assistance is directed specifically to 
     programs that provide, or support a foreign country's ability 
     itself to provide, food, water, clothing, shelter, and 
     medical care of that country.
       (2) Considerations regarding cooperation.--In making the 
     determinations described in subsection (b)(1), the President 
     shall consider the extent to which the country has--
       (A) met the goals and objectives of this title;
       (B) accomplished the goals described in an applicable 
     bilateral agreement with the United States or a multilateral 
     agreement to

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     implement the provisions and purposes of this title; and
       (C) taken domestic legal and law enforcement measures to 
     implement the provisions and purposes of this title;
       (3) Case-by-case waiver authority.--
       (A) Authority.--The President or the Secretary of State 
     may, on a case-by-case basis, allow an alien subject to 
     transfer under section 402 to remain in the custody of the 
     Attorney General if the President or Secretary of State 
     determines that doing so is necessary to serve the vital 
     interests of the United States or to protect the life or 
     health of the citizen or national. It is the sense of 
     Congress that such case-by-case determinations rarely should 
     be made.
       (B) Nondelegation of authority.--The authority to make a 
     determination under subparagraph (A) may not be delegated.
       (4) Information to be included in national interest 
     certification.--If the President makes a certification with 
     respect to a country pursuant to subsection (b)(1), the 
     President shall include in such certification--
       (A) a full and complete description of the vital national 
     interests placed at risk if United States bilateral 
     assistance to that country is terminated pursuant to this 
     section, multilateral development bank assistance is not 
     provided to such country, and visas are not issued to the 
     nationals of such country; and
       (B) a statement weighing the risk described in subparagraph 
     (A) against the risks posed to the vital national interests 
     of the United States by the failure of such country to 
     cooperate fully with the United States in implementing the 
     provisions and purposes of this title.
       (c) Congressional Review.--Subsection (d) shall apply if, 
     not later than 30 calendar days after receipt of a 
     certification submitted under subsection (b) at the time of 
     submission of the report required by this title, Congress 
     enacts a joint resolution disapproving the determination of 
     the President contained in such certification.
       (d) Denial of Assistance for Countries Decertified.--If the 
     President does not make a certification under subsection (b) 
     with respect to a country or Congress enacts a joint 
     resolution disapproving such certification, then until such 
     time as the conditions specified in subsection (e) are 
     satisfied--
       (1) funds may not be obligated for United States assistance 
     for that government, and funds previously appropriated, but 
     unobligated, for United States assistance for that government 
     may not be expended for the purpose of providing assistance 
     for that government;
       (2) the requirement to vote against multilateral 
     development bank assistance pursuant to subsection (a)(2) 
     shall apply with respect to that country, without regard to 
     the date specified in that subsection; and
       (3) no visas may be issued to nationals of that country, 
     and no visas already issued shall be held valid by the 
     Department of State, the Immigration and Naturalization 
     Service, or any other department or agency of the Federal 
     Government.
       (e) Recertification.--Subsection (d) shall apply to a 
     country described in that subsection until--
       (1) the President, at the time of submission of the report 
     required by this title, makes a certification under 
     subsection (b)(1)(A) or (b)(1)(B) with respect to that 
     country, and Congress does not enact a joint resolution under 
     subsection (c) disapproving the determination of the 
     President contained in that certification; or
       (2) the President, at any other time, makes the 
     certification described in subsection (b)(1)(A) or subsection 
     (b)(1)(B) with respect to that country, except that this 
     paragraph applies only if either--
       (A) the President also certifies that--
       (i) that country has undergone a fundamental change in 
     government, or
       (ii) there has been a fundamental change in the conditions 
     that were the reasons--

       (I) why the President had not made a certification with 
     respect to that country under subsections (b)(1) (A) or (B); 
     or
       (II) if the defendant had made such a certification and 
     Congress enacted a joint resolution disapproving the 
     determination contained in the certification, why Congress 
     enacted that joint resolution; or

       (B) Congress enacts a joint resolution approving the 
     determination contained in the certification under subsection 
     (b)(1) (A) or (B).
     Any certification under subparagraph (A) of paragraph (2) 
     shall discuss the justification for the certification.
       (f) Senate Procedures.--Any joint resolution under this 
     section shall be considered in the Senate in accordance with 
     the provisions of section 601(b) of the International 
     Security Assistance and Arms Export Control Act of 1976.

     SEC. 108. PRISONER TRANSFERS TREATIES.

       (a) Negotiation.--The Secretary of State shall begin to 
     negotiate and renegotiate, not later than 90 days after the 
     date of enactment of this Act, bilateral prisoner transfer 
     treaties. The focus of such negotiations should be--
       (1) to expedite the transfer of aliens unlawfully in the 
     United States who are (or are about to be) incarcerated in 
     United States prisons;
       (2) to ensure that a transferred prisoner serves the 
     balance of the sentence imposed by the United States courts; 
     and
       (3) to allow the Federal Government or the States to 
     maintain their original prison sentences in effect so that 
     transferred prisoners who return to the United States prior 
     to the completion of their original United States sentences 
     can be returned to custody for the balance of their prison 
     sentences.
       (b) Certification.--The President shall submit to Congress, 
     annually, a certification as to whether each prisoner 
     transfer treaty in force is effective in returning aliens 
     unlawfully in the United States who have committed offenses 
     for which they are incarcerated in the United States to their 
     country of nationality for further incarceration.

     SEC. 109. JUDGMENTS UNAFFECTED.

       Nothing in this title shall in any way be construed to 
     nullify or reduce the effect of a judgment of conviction and 
     sentence entered by a Federal, State, or local court in the 
     United States.

     SEC. 110. DEFINITION.

       In this title, the term ``United States assistance'' means 
     any assistance under the Foreign Assistance Act of 1961.

     SEC. 111. REPEALS.

       The following provisions of law are repealed:
       (1) The first sentence in section 4100(a) of title 18, 
     United States Code, is repealed.
       (2) The first, third, fourth, fifth, and sixth sentences in 
     section 4100(b) of title 18, United States Code, are 
     repealed.
       (3) Subsection (c) of section 4100 of title 18, United 
     States Code is repealed.
       (4) Subsection (d) of section 4100(a) of title 18, United 
     States Code, is redesignated as subsection (c).
       (5) Subsection (a)(2) of section 330 of the Illegal 
     Immigration Reform and Immigrant Responsibility Act of 1996 
     is amended by inserting ``during fiscal years 1997 and 
     1998,'' after ``compensation,''.
       (6) Section 330(c) of the Illegal Immigration Reform and 
     Immigrant Responsibility Act of 1996 is amended by striking 
     ``, except as required by treaty,''.
       (7) Section 332 of the Illegal Immigration Reform and 
     Immigrant Responsibility Act of 1996 is repealed.
                   TITLE II--EXCLUSIONARY RULE REFORM
                  Subtitle A--Exclusionary Rule Reform

     SEC. 201. SHORT TITLE.

       This subtitle may be cited as the ``Exclusionary Rule 
     Reform Act of 1997''.

     SEC. 202. ADMISSIBILITY OF CERTAIN EVIDENCE.

       (a) In General.--Chapter 223 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 3510. Admissibility of evidence obtained by search or 
       seizure

       ``(a) Evidence Obtained by Objectively Reasonable Search or 
     Seizure.--
       ``(1) In general.--Evidence that is obtained as a result of 
     a search or seizure shall not be excluded in a proceeding in 
     a court of the United States on the ground that the search or 
     seizure was in violation of the fourth amendment to the 
     Constitution of the United States, if the search or seizure 
     was carried out in circumstances justifying an objectively 
     reasonable belief that the search or seizure was in 
     conformity with the fourth amendment.
       ``(2) Prima facie evidence.--The fact that evidence was 
     obtained pursuant to and within the scope of a warrant 
     constitutes prima facie evidence of the existence of 
     circumstances justifying an objectively reasonable belief 
     that it was in conformity with the fourth amendment.
       ``(b) Evidence Not Excludable by Statute or Rule.--
       ``(1) In General.--Evidence shall not be excluded in a 
     proceeding in a court of the United States on the ground that 
     it was obtained in violation of a statute, an administrative 
     rule or regulation, or a rule of procedure unless the 
     exclusion is expressly authorized by statute or by a rule 
     prescribed by the Supreme Court pursuant to statutory 
     authority.
       ``(2) Special rule relating to objectively reasonable 
     searches an seizures.--Evidence that is otherwise excludable 
     under paragraph (1) shall not be excluded if the search or 
     seizure was carried out in circumstances justifying an 
     objectively reasonable belief that the search or seizure was 
     in conformity with the statute, administrative rule or 
     regulation, or rule of procedure, the violation of which 
     occasioned its being excludable.''.
       (b) Rules of Construction.--This section and the amendments 
     made by this section shall not be construed to require or 
     authorize the exclusion of evidence in any proceeding. 
     Nothing in this section or the amendments made by this 
     section shall be construed so as to violate the fourth 
     amendment to the Constitution of the United States.
       (c) Clerical Amendment.--The chapter analysis for chapter 
     223 of title 18, United States Code, is amended by adding at 
     the end the following:

``3510. Admissibility of evidence obtained by search or seizure.''.
                     Subtitle B--Confession Reform

     SEC. 211. ENFORCEMENT OF CONFESSION REFORM STATUTE.

       (a) In General.--Section 3501 of title 18, United States 
     Code, is amended by adding at the end the following:
       ``(f) Enforcement of Confession Reform.--
       ``(1) In general.--Not later than 90 days after the date of 
     enactment of the Omnibus Crime Control Act of 1997, the 
     Attorney General shall promulgate guidelines that require

[[Page S195]]

     the Department of Justice to enforce, and defend nationally, 
     the legality of this section. Specifically, the Department 
     shall pursue the admission into evidence of confessions that 
     are voluntarily given.
       ``(2) Voluntariness.--In determining the issue of 
     voluntariness for purposes of this subsection--
       ``(A) the Department shall take into consideration all the 
     circumstances surrounding the giving of the confession, 
     including--
       ``(i) the time elapsing between arrest and arraignment of 
     the defendant making the confession, if the confession was 
     made after arrest and before arraignment;
       ``(ii) whether the defendant knew the nature of the offense 
     with which he was charged or of which he was suspected at the 
     time of making the confession;
       ``(iii) whether the defendant was advised or knew that he 
     was not required to make any statement and that any such 
     statement could be used against him; and
       ``(iv) whether the defendant was without the assistance of 
     counsel when he was questioned and when he made a confession;
       ``(B) the presence or absence of any of the factors 
     described in paragraph (1) shall not be conclusive in the 
     Department's determination of whether a confession was 
     voluntary; and
       ``(C) the fact that the defendant had not been advised 
     prior to questioning of his or her right to silence and to 
     the assistance of counsel shall not be dispositive.
       ``(g) Definition of any criminal prosecution by the united 
     states.--In this section--
       ``(1) the term `any criminal prosecution by the United 
     States' includes any prosecution by the United States under 
     the Uniform Code of Military Justice; and
       ``(2) the term `offenses against the laws of the United 
     States' includes offense defined by the Uniform Code of 
     Military Justice.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act and 
     shall apply to any criminal prosecution brought by or under 
     the authority of the United States, including a military 
     prosecution or a prosecution brought by the District of 
     Columbia, regardless of whether that prosecution has begun or 
     has concluded and has yet to become final.
             TITLE III--VIOLENT CRIME, DRUGS, AND TERRORISM

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``Drug Investigation Support 
     and Antiterrorism Act of 1997''.
             Subtitle A--Criminal Penalties and Procedures

     SEC. 311. PROTECTION OF THE OLYMPICS.

       (a) In General.--Section 1111 of title 18, United States 
     Code, is amended by adding at the end the following:
       ``(c) Olympic Games.--
       ``(1) In general.--Whoever kills a person during and in 
     relation to any international Olympic Games that are held 
     within any State shall be punished in accordance with 
     subsection (b) and section 1112.
       ``(2) Amendment.--Whoever attempts to violate this 
     subsection shall be punished in accordance with section 1113.
       ``(3) State defined.--In this subsection, the term `State' 
     means each of the several States, the District of Columbia, 
     and any territory or possession of the United States.''.
       (b) Internationally Protected Persons.--Section 1116 (b)(4) 
     of title 18, United States Code, is amended--
       (1) by striking ``or at the end of subparagraph (A)'';
       (2) by striking the period at the end of subparagraph (B), 
     and inserting ``; or''; and
       (3) by adding at the end the following:
       ``(C) any participant or guest attending any international 
     sporting event sponsored or sanctioned by the International 
     Olympic Committee or the United States Olympic Committee 
     incorporated under the Act entitled `An Act to incorporate 
     the United States Olympic Association', approved September 
     21, 1950 (36 U.S.C. 371 et seq.).''.

     SEC. 312. FEDERAL RESPONSIBILITY FOR SECURITY AT 
                   INTERNATIONAL ATHLETIC COMPETITIONS.

       (a) In General.--
       (1) Duty of attorney general.--The Attorney General, in 
     consultation with the Secretary of State and the Secretary of 
     the Treasury, shall supervise other Federal authorities and 
     personnel in the provision of security services (including 
     conducting a comprehensive review of plans for the housing of 
     athletes and other eligible guests) by establishing a task 
     force to be known as the ``Olympic Security Task Force'' 
     (referred to in this subsection as the ``task force'').
       (2) Duties of task force.--The task force shall assist the 
     Attorney General in overseeing security for any international 
     Olympic Games held in any State.
       (3) State defined.--In this section, the term ``State'' 
     means each of the several States, the District of Columbia, 
     and any territory or possession of the United States.
       (b) Task Force Composition.--
       (1) In general.--The Attorney General shall determine the 
     number of members and composition of the task force in 
     accordance with this section. The Attorney General shall 
     appoint representatives from State and local law enforcement 
     to serve as members of the task force.
       (2) Representatives.--In addition to the members referred 
     to in paragraph (1), the Attorney General may appoint as 
     members representatives of--
       (A) the Federal Bureau of Investigation;
       (B) the Department of Defense;
       (C) the Secret Service;
       (D) the United States Marshals Service;
       (E) the United States Attorney with jurisdiction over a 
     venue for Olympic Games (referred to in this section as an 
     ``Olympic venue'');
       (F) the Bureau of Alcohol, Tobacco, and Firearms;
       (G) the Central Intelligence Agency; and
       (H) any other appropriate agency of the Federal Government, 
     as the Attorney General determines to be appropriate.
       (c) Disbanding of Task Force.--The President may disband 
     the task force and relieve the Attorney General of 
     responsibility for supervising security at international 
     Olympic Games, if the President finds that appropriate State 
     or local law enforcement officials refused, or otherwise 
     failed adequately to participate in, the planning, 
     preparation, or execution of a plan providing for security 
     under this section.
       (d) Assistance.--
       (1) In general.--In carrying out this section, the Attorney 
     General may request assistance from--
       (A) the head of any department or agency of the United 
     States; and
       (B) the appropriate officials of any appropriate department 
     or agency of the State in which an Olympic venue is located 
     (referred to in this section as the ``host State''), or any 
     political subdivision of such State, including State and 
     local law enforcement officials in the host State to ensure 
     the effective implementation of security under this 
     subsection.
       (2) United states olympic organizing committee.--The 
     Attorney General may request the United States Olympic 
     Committee (incorporated under the Act entitled ``An Act to 
     incorporate the United States Olympic Association'', approved 
     September 21, 1950 (36 U.S.C. 371 et seq.)) and the Olympic 
     organizing committee of the city in which an Olympic venue is 
     located (referred to in this section as a ``host city'') to 
     provide all reasonable cooperation and assistance required to 
     carry out this subsection. Upon receipt of such a request, 
     the United States Olympic Committee and organizing committees 
     shall endeavor to provide that assistance.
       (e) Agreements and Regulations.--To carry out this section, 
     the Attorney General may enter into interagency or 
     intergovernmental agreements and promulgate regulations.
       (f) Expedited Review.--In the case of Olympic Games that 
     occur after the date of enactment of this Act in the United 
     States with respect to which the Olympic venue is selected 
     before the date of enactment of this section, the review of 
     housing required by paragraph (1) shall be conducted not 
     later than 120 days after such date of enactment. The review 
     shall consider the suitability of the proposed Olympic 
     Village site, building options, and any other issue the 
     Attorney General considers appropriate to ensure maximum 
     security for the Olympic Village, its residents, and its 
     environs.
       (g) Construction.--Nothing in this section shall be 
     construed to create a cause of action against the United 
     States or any officer or employee of the United States in 
     favor of any person who is not otherwise authorized.

     SEC. 313. TECHNICAL REVISION TO PENALTIES FOR CRIMES 
                   COMMITTED BY EXPLOSIVES.

       Section 844 of title 18, United States Code, is amended--
       (1) in subsection (f)(1), by inserting ``or any institution 
     or organization receiving Federal financial assistance,'' 
     after ``or agency thereof,''; and
       (2) by striking subsection (i) and inserting the following:
       ``(i) Malicious Destruction by Fire or Explosives.--
       ``(1) In general.--Whoever maliciously damages or destroys, 
     or attempts to damage or destroy, by means of fire or an 
     explosive, any building, vehicle, public place, or other 
     personal or real property used in interstate or foreign 
     commerce or used in any activity affecting interstate or 
     foreign commerce, shall be imprisoned for a period of not 
     less than 5 years and not more than 20 years, fined under 
     this title, or both.
       ``(2) Personal injury.--Whoever engages in conduct 
     prohibited by this subsection, and as a result of such 
     conduct, directly or proximately causes personal injury or 
     creates a substantial risk of injury to any person, including 
     any public safety officer performing duties, shall be 
     imprisoned for a period of not less than 7 years and not more 
     than 40 years, fined under this title, or both.
       ``(3) Death.--Whoever engages in conduct prohibited by this 
     subsection, and as a result of such conduct directly or 
     proximately causes the death of any person, including any 
     public safety officer performing duties, shall be subject to 
     the death penalty, or imprisoned for not less than 20 years 
     or for life, fined under this title, or both.''.

     SEC. 314. CHEMICAL WEAPONS RESTRICTIONS.

       (a) In General.--Section 2332c of title 18, United States 
     Code, is amended--
       (1) in subsection (a), by inserting after paragraph (2) the 
     following:
       ``(3) Restrictions.--
       ``(A) In general.--Whoever without lawful authority 
     knowingly develops, produces, acquires, stockpiles, retains, 
     transfers, owns, or possesses any chemical weapon, or 
     knowingly assists, encourages or induces any person to do so, 
     or attempts or conspires to do so, shall be punished under 
     paragraph (2).

[[Page S196]]

       ``(B) Jurisdiction.--The United States has jurisdiction 
     over an offense under this paragraph if--
       ``(i) the prohibited activity takes place in the United 
     States; or
       ``(ii) the prohibited activity takes place outside the 
     United States and is committed by a national of the United 
     States.
       ``(C) Additional penalty.--The court shall order any person 
     convicted of an offense under this paragraph to pay to the 
     United States any expenses incurred incident to the seizure, 
     storage, handling, transportation, and destruction or other 
     disposition of property seized for violation of this 
     section.'';
       (2) by adding at the end the following:
       ``(c) Criminal Forfeiture.--
       ``(1) Property subject to criminal forfeiture.--A person 
     who is convicted of an offense under this section shall 
     forfeit to the United States the interest of that person in--
       ``(A) any chemical weapon, including any component thereof;
       ``(B) any property, real or personal, constituting or 
     traceable to gross profits or other proceeds obtained from 
     such offense; and
       ``(C) any property, real or personal, used or intended to 
     be used to commit or to promote the commission of the 
     offense.
       ``(2) Third party transfers.--
       ``(A) In general.--All right, title, and interest in 
     property described in subsection (a) of this section vests in 
     the United States upon the commission of the act giving rise 
     to forfeiture under this section.
       ``(B) Forfeiture.--Except as provided in subparagraph (C), 
     any property referred to in subparagraph (A) that is 
     subsequently transferred to a person other than the defendant 
     may be the subject of a special verdict of forfeiture and 
     thereafter shall be ordered forfeited to the United States.
       ``(C) Exception.--The property referred to in subparagraph 
     (B) shall not be ordered forfeited if the transferee 
     establishes in a hearing conducted pursuant to subsection (l) 
     that the party is a bona fide purchaser for value of such 
     property who, at the time of purchase, was reasonably without 
     cause to believe that the property was subject to forfeiture 
     under this section.
       ``(3) Protective orders.--
       ``(A) In general.--Upon application of the United States, 
     the court may enter a restraining order or injunction, 
     require the execution of a satisfactory performance bond, or 
     take any other action to preserve the availability of 
     property described in subsection (a) for forfeiture under 
     this section--
       ``(i) upon the filing of an indictment or information--

       ``(I) charging a violation of this chapter for which 
     criminal forfeiture may be ordered under this section; and
       ``(II) alleging that the property with respect to which the 
     order is sought would, in the event of conviction, be subject 
     to forfeiture under this section; or

       ``(ii) prior to the filing of an indictment or information 
     referred to in clause (i), if, after providing notice to 
     persons appearing to have an interest in the property and 
     opportunity for a hearing, the court determines that--

       ``(I) there is a substantial probability that the United 
     States will prevail on the issue of forfeiture and that 
     failure to enter the order will result in the property being 
     destroyed, removed from the jurisdiction of the court, or 
     otherwise made unavailable for forfeiture; and
       ``(II) the need to preserve the availability of the 
     property through the entry of the requested order outweighs 
     the hardship on any party against whom the order is to be 
     entered;

     except that an order entered pursuant to subparagraph (B) 
     shall be effective for a period not to exceed 90 days, unless 
     extended by the court for good cause shown or unless an 
     indictment or information described in this subparagraph has 
     been filed.
       ``(B) Temporary restraining orders.--
       ``(i) In general.--A temporary restraining order under this 
     subsection may be entered upon application of the United 
     States without notice or opportunity for a hearing when an 
     information or indictment has not yet been filed with respect 
     to the property, if the United States demonstrates that there 
     is probable cause to believe that--

       ``(I) the property with respect to which the order is 
     sought would, in the event of conviction, be subject to 
     forfeiture under this section; and
       ``(II)(aa) exigent circumstances exist that place the life 
     or health of any person in danger; or
       ``(bb) that provision of notice will jeopardize the 
     availability of the property for forfeiture.

       ``(ii) Expiration.--A temporary restraining order described 
     in clause (i) shall expire not later than 10 days after the 
     date on which the order is entered, unless--

       ``(I) the order is extended for good cause shown; or
       ``(II) the party against whom it is entered consents to an 
     extension for a longer period.

       ``(iii) Hearing.--A hearing requested concerning an order 
     entered under this paragraph shall be held at the earliest 
     possible time and prior to the expiration of the temporary 
     order.
       ``(C) Inapplicability of federal rules of evidence.--The 
     court may receive and consider, at a hearing held pursuant to 
     this paragraph, evidence and information that would otherwise 
     be inadmissible under the Federal Rules of Evidence.
       ``(d) Warrant of Seizure.--
       ``(1) In general.--The Government of the United States may 
     request the issuance of a warrant authorizing the seizure of 
     property subject to forfeiture under this section in the same 
     manner as provided for a search warrant.
       ``(2) Determinations by court.--The court shall issue a 
     warrant authorizing the seizure of the property referred to 
     in paragraph (1) if the court determines that there is 
     probable cause to believe that--
       ``(A) the property to be seized would, in the event of 
     conviction, be subject to forfeiture; and
       ``(B) an order under subsection (c) may not be sufficient 
     to ensure the availability of the property for forfeiture.
       ``(e) Order of Forfeiture.--The court shall order 
     forfeiture of property referred to in subsection (a) if the 
     trier of fact determines, by a preponderance of the evidence, 
     that the property is subject to forfeiture.
       ``(f) Execution.--
       ``(1) In general.--Upon entry of an order of forfeiture or 
     temporary restraining order under this section, the court 
     shall authorize the Attorney General to seize all property 
     ordered forfeited or restrained on such terms and conditions 
     as the court determines to be appropriate.
       ``(2) Actions by court.--Following entry of an order 
     declaring the property forfeited, the court may, upon 
     application of the United States, enter such appropriate 
     restraining orders or injunctions, require the execution of 
     satisfactory performance bonds, appoint receivers, 
     conservators, appraisers, accountants, or trustees, or take 
     any other action to protect the interest of the United States 
     in the property ordered forfeited.
       ``(3) Offset.--Any income accruing to or derived from 
     property ordered forfeited under this section may be used to 
     offset ordinary and necessary expenses to the property that--
       ``(A) are required by law; or
       ``(B) are necessary to protect the interests of the United 
     States or third parties.
       ``(g) Disposition of Property.--
       ``(1) In general.--Following the seizure of property 
     ordered forfeited under this section, the Attorney General 
     shall, making due provision for the rights of any innocent 
     persons--
       ``(A) destroy or retain for official use any article 
     described in paragraph (1) of subsection (a); and
       ``(B) retain for official use or direct the disposition of 
     any property described in paragraph (2) or (3) of subsection 
     (a) by sale or any other commercially feasible means.
       ``(2) Reversion prohibited.--With respect to the 
     forfeiture, any property right or interest not exercisable 
     by, or transferable for value to, the United States shall 
     expire and shall not revert to the defendant, nor shall the 
     defendant or any person acting in concert with the defendant 
     or on behalf of the defendant be eligible to purchase 
     forfeited property at any sale held by the United States.
       ``(3) Restraint of sale or disposition.--Upon application 
     of a person, other than the defendant or person acting in 
     concert with the defendant or on behalf of the defendant, the 
     court may restrain or stay the sale or disposition of the 
     property pending the conclusion of any appeal of the criminal 
     case giving rise to the forfeiture, if the applicant 
     demonstrates that proceeding with the sale or disposition of 
     the property will result in irreparable injury, harm, or loss 
     to the applicant.
       ``(h) Authority of Attorney General.--With respect to 
     property ordered forfeited under this section, the Attorney 
     General may--
       ``(1) grant petitions for mitigation or remission of 
     forfeiture, restore forfeited property to victims of a 
     violation of this section, or take any other action to 
     protect the rights of innocent persons that--
       ``(A) is in the interest of justice; and
       ``(B) is not inconsistent with this section;
       ``(2) compromise claims arising under this section;
       ``(3) award compensation to persons providing information 
     resulting in a forfeiture under this section;
       ``(4) direct the disposition by the United States, under 
     section 616 of the Tariff Act of 1930 (19 U.S.C. 1616a), of 
     all property ordered forfeited under this section by public 
     sale or any other commercially feasible means, making due 
     provision for the rights of innocent persons; and
       ``(5) take such appropriate measures as are necessary to 
     safeguard and maintain property ordered forfeited under this 
     section pending the disposition of that property.
       ``(i) Bar on Intervention.--Except as provided in 
     subsection (l), no party claiming an interest in property 
     subject to forfeiture under this section may--
       ``(1) intervene in a trial or appeal of a criminal case 
     involving the forfeiture of that property under this section; 
     or
       ``(2) commence an action at law or equity against the 
     United States concerning the validity of the alleged interest 
     of that party in the property subsequent to the filing of an 
     indictment or information alleging that the property is 
     subject to forfeiture under this section.
       ``(j) Jurisdiction To Enter Orders.--Each district court of 
     the United States shall have jurisdiction to enter an order 
     of forfeiture under this section without regard to the 
     location of any property that--
       ``(1) may be subject to forfeiture under this section; or

[[Page S197]]

       ``(2) has been ordered forfeited under this section.
       ``(k) Depositions.--In order to facilitate the 
     identification and location of property declared forfeited 
     under this section and to facilitate the disposition of 
     petitions for remission or mitigation of forfeiture, after 
     the entry of an order declaring property forfeited to the 
     United States under this section, the court may, upon 
     application of the United States, order that--
       ``(1) the testimony of any witness relating to the property 
     forfeited be taken by deposition; and
       ``(2) any designated book, paper, document, record, 
     recording, or other material that is not privileged be 
     produced at the same time and place, and in the same manner, 
     as provided for the taking of depositions under rule 15 of 
     the Federal Rules of Criminal Procedure.
       ``(l) Third Party Interests.--
       ``(1) In general.--
       ``(A) Notice.--Following the entry of an order of 
     forfeiture under this section, the United States Government 
     shall publish notice of the order and of the intent of the 
     Government to dispose of the property in such manner as the 
     Attorney General may direct.
       ``(B) Direct written notice.--In addition to providing the 
     notice described in subparagraph (A), the Government may, to 
     the extent practicable, provide direct written notice to any 
     person known to have alleged an interest in the property that 
     is the subject of the order of forfeiture as a substitute for 
     published notice as to those persons so notified.
       ``(2) Petition by person other than defendant.--
       ``(A) In general.--Any person, other than the defendant, 
     who asserts a legal interest in property that has been 
     ordered forfeited to the United States pursuant to this 
     section may petition the court for a hearing to adjudicate 
     the validity of his alleged interest in the property not 
     later than the earlier of--
       ``(i) the date that is 30 days after the final publication 
     of notice; or
       ``(ii) the date that is 30 days after the receipt of notice 
     by the person under paragraph (1).
       ``(B) Requirements for hearing.--A hearing described in 
     subparagraph (A) shall be held before the court without a 
     jury.
       ``(3) Requirements for petition.--A petition referred to in 
     paragraph (2) shall--
       ``(A) be signed by the petitioner under penalty of perjury; 
     and
       ``(B) set forth--
       ``(i) the nature and extent of the petitioner's right, 
     title, or interest in the property;
       ``(ii) the time and circumstances of the petitioner's 
     acquisition of the right, title, or interest in the property;
       ``(iii) the relief sought; and
       ``(iv) any additional facts supporting the petitioner's 
     claim.
       ``(4) Date; consolidation.--
       ``(A) Date of hearing.--The hearing on a petition referred 
     to in paragraph (2) shall, to the extent practicable and 
     consistent with the interests of justice, be held not later 
     than 30 days after the filing of the petition.
       ``(B) Consolidation.--The court may consolidate the hearing 
     on the petition with a hearing on any other petition filed by 
     a person other than the defendant under this subsection.
       ``(5) Actions at hearings.--
       ``(A) In general.--At a hearing referred to in paragraph 
     (4)--
       ``(i) the petitioner may testify and present evidence and 
     witnesses on his or her own behalf, and cross-examine 
     witnesses who appear at the hearing; and
       ``(ii) the Government may present evidence and witnesses in 
     rebuttal and in defense of its claim to the property that is 
     the subject and cross-examine witnesses who appear at the 
     hearing.
       ``(B) Consideration by court.--In addition to considering 
     testimony and evidence presented at the hearing, the court 
     shall consider the relevant portions of the record of the 
     criminal case that resulted in the order of forfeiture.
       ``(6) Amendment of order of forfeiture.--If, after holding 
     a hearing under this subsection, the court determines that a 
     petitioner has established by a preponderance of the evidence 
     that--
       ``(A)(i) the petitioner has a legal right, title, or 
     interest in the property that is the subject of the hearing; 
     and
       ``(ii) that right, title, or interest renders the order of 
     forfeiture invalid in whole or in part because the right, 
     title, or interest--
       ``(I) was vested in the petitioner rather than the 
     defendant; or
       ``(II) was superior to any right, title, or interest of the 
     defendant at the time of the commission of the acts which 
     gave rise to the forfeiture of the property under this 
     section; or
       ``(B) the petitioner is a bona fide purchaser for value of 
     the right, title, or interest in the property and was at the 
     time of purchase reasonably without cause to believe that the 
     property was subject to forfeiture under this section;

     the court shall amend the order of forfeiture in accordance 
     with its determination.
       ``(7) Actions of court after disposition of petition.--
     After the disposition of the court of all petitions filed 
     under this subsection, or if no such petitions are filed 
     after the expiration of the period specified in paragraph 
     (2), the United States--
       ``(A) shall have clear title to property that is the 
     subject of the order of forfeiture; and
       ``(B) may warrant good title to any subsequent purchaser or 
     transferee.
       ``(m) Construction.--This section shall be liberally 
     construed in such manner as to effectuate the remedial 
     purposes of this section.
       ``(n) Substitute Assets.--
       ``(1) In general.--In accordance with paragraph (2), the 
     court shall order the forfeiture of property of a defendant 
     other than property described in subsection (a) if, as a 
     result of an act or omission of the defendant, any of the 
     property of the defendant that is described in subsection 
     (a)--
       ``(A) cannot be located upon the exercise of due diligence;
       ``(B) has been transferred or sold to, or deposited with, a 
     third party;
       ``(C) has been placed beyond the jurisdiction of the court;
       ``(D) has been substantially diminished in value; or
       ``(E) has been commingled with other property which cannot 
     be divided without difficulty.
       ``(2) Value of property.--The value of any property subject 
     to forfeiture under paragraph (1) shall not exceed the value 
     of property of the defendant with respect to which 
     subparagraph (A), (B), (C), (D), or (E) of paragraph (1) 
     applies.''; and
       (3) by amending the section heading to read as follows:

     ``SEC. 2332c. USE AND STOCKPILING OF CHEMICAL WEAPONS.''.

       (b) Conforming Amendment to Federal Rules of Evidence.--
     Section 1101(d)(3) of the Federal Rules of Evidence is 
     amended by striking ``; and proceedings with respect to 
     release on bail or otherwise'' and inserting ``, proceedings 
     with respect to release on bail or otherwise; and proceedings 
     under section 2232c(c)(3) of title 18, United States Code 
     (except that the rules with respect to privilege under 
     subsection (c) of this section also shall apply).''.
       (c) Conforming Amendment.--The chapter analysis for chapter 
     113B of title 18, United States Code, is amended by striking 
     the item relating to section 2332b and inserting the 
     following:

``2332c. Use and stockpiling of chemical weapons.''.
                  Subtitle B--International Terrorism

     SEC. 321. MULTILATERAL SANCTIONS.

       (a) Policy on Establishment of Sanctions Regimes.--
       (1) Policy.--Congress urges the President to commence 
     immediately after the date of enactment of this Act 
     diplomatic efforts, in appropriate international fora 
     (including the United Nations) and bilaterally, with allies 
     of the United States, to establish, as appropriate, a 
     multilateral sanctions regime against each country that the 
     Secretary of State determines under section 6(j) of the 
     Export Administration Act of 1979 (50 U.S.C. App. 2405(j)) to 
     have repeatedly provided support for acts of international 
     terrorism.
       (2) Report.--The President shall include in the annual 
     report on patterns of global terrorism prepared under section 
     143 a description of the extent to which the diplomatic 
     efforts referred to in paragraph (1) have been carried out 
     and the degree of success of those efforts.
       (b) Action Plans for Designated Terrorist Nations.--The 
     President shall provide to Congress as a part of each report 
     on patterns of global terrorism prepared under section 143 a 
     plan of action (to be known as an ``action plan'') for 
     inducing each country referred to in paragraph (1) to cease 
     the support of that country for acts of international 
     terrorism.

     SEC. 322. INFORMATION ON COOPERATION WITH UNITED STATES 
                   ANTITERRORISM EFFORTS IN ANNUAL COUNTRY REPORTS 
                   ON TERRORISM.

       Section 140 of the Foreign Relations Authorization Act, 
     Fiscal Years 1988 and 1989 (22 U.S.C. 2656f) is amended--
       (1) in subsection (a)--
       (A) by striking ``and'' at the end of paragraph (1);
       (B) by striking the period at the end of paragraph (2) and 
     inserting a semicolon; and
       (C) by adding at the end the following:
       ``(3) with respect to each foreign country from which the 
     United States Government has sought cooperation during the 
     preceding 5-year period in the investigation or prosecution 
     of an act of international terrorism against United States 
     citizens or interests, information on--
       ``(A) the extent to which the government of the foreign 
     country is cooperating with the United States Government in 
     apprehending, convicting, and punishing each individual 
     responsible for the act; and
       ``(B) the extent to which the government of the foreign 
     country is cooperating in preventing further acts of 
     terrorism against United States citizens in the foreign 
     country; and
       ``(4) with respect to each foreign country from which the 
     United States Government has sought cooperation during the 
     preceding 5-year period in the prevention of an act of 
     international terrorism against such citizens or interests, 
     the information described in paragraph (3)(B).''; and
       (2) in subsection (c)--
       (A) by striking ``The report'' and inserting the following:
       ``(1) In general.--Except as provided in paragraph (2), the 
     report'';
       (B) by adding at the end the following:
       ``(2) Classified form.--If the Secretary of State 
     determines that the transmittal of the information under 
     paragraph (3) or (4) of subsection (a) in classified form 
     with respect to

[[Page S198]]

     a foreign country would increase the likelihood of 
     cooperation of the government of the foreign country (as 
     specified in that paragraph), the Secretary may transmit the 
     information under that paragraph in classified form.''.

     SEC. 323. REPORT ON INTERNATIONAL TERRORISM.

       (a) Annual Report.--Not later than 60 days after the date 
     of enactment of this Act, and annually thereafter, at the 
     same time as the Secretary of State submits the report 
     required by section 140 of the Foreign Relations 
     Authorization Act, Fiscal Years 1988 and 1989 (22 U.S.C. 
     2656f), the Secretary of State, in consultation with the 
     Director of Central Intelligence, shall submit, in classified 
     and unclassified versions, to the Speaker and the Minority 
     Leader of the House of Representatives, the Majority Leader 
     and the Minority Leader of the Senate, the chairman and the 
     ranking minority member of the Committee on International 
     Relations of the House of Representatives, and the chairman 
     and the ranking minority member of the Committee on Foreign 
     Relations of the Senate a report that includes--
       (1) an assessment of--
       (A) the magnitude of the anticipated threat from 
     international terrorism to United States interests, persons, 
     and property in the United States and abroad, including the 
     names and background of major terrorist groups and the 
     leadership of those groups;
       (B) the sources of financial and logistical support of the 
     groups;
       (C) the nature and scope of the human and technical 
     infrastructure;
       (D) the goals, doctrine, and strategies of the groups;
       (E) the quality and type of education and training of the 
     groups;
       (F) the level of advancement of the groups;
       (G) the bases of operation and training of the groups;
       (H) the operational capabilities of the groups;
       (I) the bases of recruitment of the groups;
       (J) the linkages with governmental and nongovernmental 
     actors (such as ethnic groups, religious communities, or 
     criminal organizations) of the groups; and
       (K) the intent and capability of each of the groups to 
     access and use weapons of mass destruction;
       (2) a detailed assessment of any country that provided 
     support of any type for international terrorism, terrorist 
     groups, or individual terrorists, including any country with 
     respect to which the government of that country knowingly 
     allowed terrorist groups or individuals to transit or reside 
     in the territory of that country, without regard to whether 
     terrorist acts were committed by the terrorist groups or 
     individuals in that territory;
       (3) a detailed assessment of efforts of individual 
     countries to take effective action against countries that the 
     Secretary of State determines under section 6(j) of the 
     Export Administration Act of 1979 (50 U.S.C. App. 2405(j)) to 
     have repeatedly supported acts of international terrorism, 
     including the status of--
       (A) compliance with international sanctions; and
       (B) bilateral economic relations; and
       (4)(A) a detailed assessment of efforts of the United 
     States Government to carry out this section; and
       (B) an identification of any failure or insufficient action 
     on the part of the Government to carry out this section.
       (b) Content of Assessments.--An assessment under subsection 
     (a)(1) shall--
       (1) characterize the quality of the information that 
     supports the assessment and identify areas that require 
     enhanced information; and
       (2) identify and analyze potential vulnerabilities of 
     terrorist groups that could serve to guide the development of 
     governmental policy.
       (c) Submission to the Commission on Terrorism.--During the 
     period that the National Commission on Terrorism established 
     under section 341 is operating, the President shall submit a 
     property of each report prepared under subsection (a).

     SEC. 324. REVISION OF DEPARTMENT OF STATE REWARDS PROGRAM.

       (a) In General.--Section 36 of the State Department Basic 
     Authorities Act of 1956 (22 U.S.C. 2708) is amended to read 
     as follows:

     ``SEC. 36. DEPARTMENT OF STATE REWARDS PROGRAM.

       ``(a) Establishment.--
       ``(1) In general.--The Secretary of State shall establish a 
     program for the payment of rewards by the Secretary in 
     accordance with this section.
       ``(2) Consultation.--The rewards program established under 
     paragraph (1) shall be administered by the Secretary of 
     State, in consultation (as appropriate), with the Attorney 
     General.
       ``(b) Rewards Program.--
       ``(1) The rewards program established under subsection 
     (a)(1) shall be designed to assist in the prevention of acts 
     of international terrorism, international narcotics 
     trafficking, and other related criminal acts.
       ``(2) At the sole discretion of the Secretary of State and 
     in consultation, as appropriate, with the Attorney General, 
     the Secretary of State may pay a reward to any individual who 
     furnishes information leading to--
       ``(A) the arrest or conviction in any country of any 
     individual for the commission of an act of international 
     terrorism against a person or property;
       ``(B) the arrest or conviction in any country of any 
     individual conspiring or attempting to commit an act of 
     international terrorism against a United States person or 
     United States property;
       ``(C) the arrest or conviction in any country of any 
     individual for committing, primarily outside the territorial 
     jurisdiction of the United States, any narcotics-related 
     offense if that offense involves or is a significant part of 
     conduct that involves--
       ``(i) a violation of United States narcotics laws which is 
     such that the individual would be a major violator of such 
     laws;
       ``(ii) the killing or kidnapping of--

       ``(I) any officer, employee, or contract employee of the 
     United States Government while that individual is engaged in 
     official duties, or on account of the performance of official 
     duties of that individual, in connection with--

       ``(aa) the enforcement of United States narcotics laws; or
       ``(bb) the implementation of United States narcotics 
     control objectives; or

       ``(II) a member of the immediate family of any individual 
     described in subclause (I) on account of the official duties 
     of that individual in connection with--

       ``(aa) the enforcement of United States narcotics laws; or
       ``(bb) the implementation of United States narcotics 
     control objectives; or
       ``(iii) an attempt or conspiracy to commit any act 
     described in clause (i) or (ii);
       ``(D) the arrest or conviction in any country of any 
     individual who aids or abets in the commission of an act 
     described in subparagraph (A), (B), or (C); or
       ``(E) the prevention, frustration, or favorable resolution 
     of an act described in subparagraph (A), (B), or (C).
       ``(c) Coordination.--
       ``(1) In general.--To ensure that the payment of rewards 
     under this section does not duplicate or interfere with the 
     payment of informants or the obtaining of evidence or 
     information, as authorized for the Department of Justice, the 
     offering, administration, and payment of rewards under this 
     section shall be conducted in accordance with procedures that 
     the Secretary of State, in consultation with the Attorney 
     General, shall establish.
       ``(2) Contents of procedures.--The procedures referred to 
     in paragraph (2) shall include procedures for--
       ``(A) identifying individuals, organizations, and offenses 
     with respect to which rewards are to be offered;
       ``(B) the publication of rewards;
       ``(C) the offering of joint rewards with the governments of 
     foreign countries;
       ``(D) the receipt and analysis of data; and
       ``(E) the payment and approval of payment.
       ``(3) Consultation with attorney general.--Before making a 
     reward under this section in a matter subject to Federal 
     criminal jurisdiction, the Secretary of State shall advise 
     and consult with the Attorney General.
       ``(d) Authorization of Appropriations.--
       ``(1) In general.--Notwithstanding section 102 of the 
     Foreign Relations Authorization Act, Fiscal Years 1986 and 
     1987 (99 Stat. 408), and subject to paragraph (2), there are 
     authorized to be appropriated to the Department of State such 
     sums as may be necessary to carry out this section.
       ``(2) Limitation.--No amount of funds may be appropriated 
     to the Department of State for the purpose specified in 
     paragraph (1) in excess of the difference between $15,000,000 
     and the amount of unobligated funds available for that 
     purpose to the Secretary of State for the fiscal year 
     involved.
       ``(3) Distribution of funds.--To the maximum extent 
     practicable, funds made available to carry out this section 
     shall be distributed in equal amounts for the purpose of 
     preventing acts of international terrorism and for the 
     purpose of preventing international narcotics trafficking.
       ``(4) Availability of funds.--Amounts appropriated pursuant 
     to the authorization under paragraph (1) are authorized to 
     remain available until expended.
       ``(e) Limitation and Certification.--
       ``(1) Limitation.--A reward made under this section by the 
     Secretary of State may not exceed $5,000,000.
       ``(2) Approval of president or secretary of state.--A 
     reward under this section in an amount greater than $100,000 
     may not be made under the program under this section without 
     the approval of the President or the Secretary of State.
       ``(3) Approval of secretary of state.--Any reward granted 
     under the program under this section shall be approved and 
     certified for payment by the Secretary of State.
       ``(4) Prohibition.--Neither the President nor the Secretary 
     of State may delegate the authority under paragraph (2) to 
     any other officer or employee of the United States 
     Government.
       ``(5) Protection.--If the Secretary of State determines 
     that it is necessary to protect the identity of the recipient 
     of a reward or of the members of the recipient's immediate 
     family, the Secretary may take such measures in connection 
     with the payment of the reward as the Secretary considers 
     necessary to effect that protection.
       ``(f) Ineligibility.--An officer or employee of any 
     governmental entity who, while in the performance of the 
     official duties of that officer, furnishes information 
     described in subsection (b) shall not be eligible for a 
     reward under this section.

[[Page S199]]

       ``(g) Reports.--
       ``(1) In general.--
       ``(A) Post-award report.--Not later than 30 days after the 
     payment of any reward under this section, the Secretary of 
     State shall submit a report to the appropriate congressional 
     committees with respect to that reward.
       ``(B) Classified form.--If necessary, a report under 
     subparagraph (A) may be submitted in classified form.
       ``(C) Content of report.--A report submitted under 
     subparagraph (A) shall specify--
       ``(i) the amount of the reward paid;
       ``(ii) the recipient of the reward;
       ``(iii) the acts related to the information for which the 
     reward was paid; and
       ``(iv) the significance of the information for which the 
     reward was paid in dealing with the acts described under 
     clause (iii).
       ``(2) Annual report.--
       ``(A) In general.--Not later than 60 days after the end of 
     each fiscal year, the Secretary of State shall submit a 
     report to the appropriate congressional committees concerning 
     the operation of the rewards program under this section.
       ``(B) Contents of reports.--Each report under subparagraph 
     (A), shall provide information concerning--
       ``(i) the total amounts expended during the fiscal year 
     that is the subject of the report to carry out this section, 
     including amounts spent to publicize the availability of 
     rewards; and
       ``(ii) all requests made for the payment of rewards under 
     this section, including the reasons for the denial of any 
     such request.
       ``(h) Definitions.--In this section:
       ``(1) Act of international terrorism.--The term `act of 
     international terrorism' includes--
       ``(A) any act substantially contributing to the acquisition 
     of unsafeguarded special nuclear material (as that term is 
     defined in section 830(8) of the Nuclear Proliferation 
     Prevention Act of 1994 (108 Stat. 521)) or any nuclear 
     explosive device (as that term is defined in section 830(4) 
     of that Act (108 Stat. 521)) by an individual, group, or non-
     nuclear weapon state (as that term is defined in section 
     830(5) of that Act (108 Stat. 521));
       ``(B) any act, as determined by the Secretary of State, 
     that materially supports the conduct of international 
     terrorism, including the counterfeiting of United States 
     currency or the illegal use of other monetary instruments by 
     an individual, group, or country supporting international 
     terrorism as determined under section 6(j) of the Export 
     Administration Act of 1979; and
       ``(C) any act that would be a violation of chapter 113B of 
     title 18, United States Code, relating to terrorism.
       ``(2) Appropriate congressional committees.--The term 
     `appropriate congressional committees' means the Committee on 
     International Relations of the House of Representatives and 
     the Committee on Foreign Relations of the Senate.
       ``(3) Member of the immediate family.--The term `member of 
     the immediate family' includes--
       ``(A) a spouse, parent, brother, sister, or child of the 
     individual;
       ``(B) a person to whom the individual stands in loco 
     parentis; and
       ``(C) any other person living in the individual's household 
     and related to the individual by blood or marriage.
       ``(4) United states narcotics laws.--The term `United 
     States narcotics laws' means the laws of the United States 
     for the prevention and control of illicit traffic in 
     controlled substances (as such term is defined in section 
     102(6) of the Controlled Substances Act (21 U.S.C. 802(6))).
       ``(i) Judicial Review.--A determination made by the 
     Secretary of State concerning whether to authorize a reward 
     under this section, or the amount of a reward, shall not be 
     subject to judicial review.''.
       (b) Sense of Congress.--It is the sense of Congress that 
     the Secretary of State should pursue additional means of 
     funding the program established by section 36 of the State 
     Department Basic Authorities Act of 1956 (22 U.S.C. 2708), 
     including the authority--
       (1) to seize and dispose of assets used in the commission 
     of any offense under sections 1028, 1541 through 1544, and 
     1546 of title 18, United States Code;
       (2) to retain the proceeds derived from the disposition of 
     the assets referred to in paragraph (1);
       (3) to participate in asset-sharing programs conducted by 
     the Department of Justice; and
       (4) to retain earnings accruing on all assets of foreign 
     countries blocked by the President pursuant to the 
     International Emergency Powers Act (50 U.S.C. 1701 et seq.) 
     to carry out the purposes of section 36 of the State 
     Department Basic Authorities Act of 1956.
                  Subtitle C--Commissions and Studies

     SEC. 331. NATIONAL COMMISSION ON TERRORISM.

       (a) Establishment.--There is established a commission to be 
     known as the ``National Commission on Terrorism'' (in this 
     section referred to as the ``Commission'').
       (b) Membership.--
       (1) Number and appointment.--
       (A) In general.--The Commission shall be composed of 11 
     members, appointed from persons specially qualified by 
     training and experience to perform the duties of the 
     Commission, of whom--
       (i) 3 shall be appointed by the Speaker of the House of 
     Representatives, and 1 shall be appointed by the Minority 
     Leader of the House of Representatives;
       (ii) 3 shall be appointed by the Majority Leader of the 
     Senate, and 1 shall be appointed by the Minority Leader of 
     the Senate; and
       (iii) 3 shall be appointed by the President.
       (B) Timing of appointments.--The appointing authorities 
     shall make their appointments to the Commission not later 
     than 45 days after the date of enactment of this Act.
       (2) Designation of the chairperson and vice chairperson.--
     The Majority Leader of the Senate, in consultation with 
     Speaker of the House of Representatives, shall designate a 
     chairperson from the members of the Commission (in this 
     section referred to as the ``Chairperson''). The Speaker of 
     the House of Representatives and the Majority Leader of the 
     Senate shall jointly designate a vice chairperson from the 
     members of the Commission (in this section referred to as the 
     ``Vice Chairperson'').
       (3) Period of appointment; vacancies.--Members shall be 
     appointed for the life of the Commission. Any vacancy in 
     Commission membership shall not affect the exercise of the 
     Commission's powers, and shall be filled in the same manner 
     as the original appointment.
       (c) Meetings.--
       (1) In general.--Not later than 60 days after the date on 
     which all initial members of the Commission are appointed 
     under subsection (b), the Commission shall hold its initial 
     meeting. Each subsequent meeting of the Commission shall be 
     held at the call of the Chairperson.
       (2) Quorum.--A majority of the members of the Commission 
     shall constitute a quorum, but a lesser number of members may 
     hold hearings.
       (d) Security Clearances.--Appropriate security clearances 
     shall be required for each member of the Commission. Each 
     such clearance shall--
       (1) be processed and completed on an expedited basis by 
     appropriate elements of the executive branch of the Federal 
     Government; and
       (2) to the extent practicable, be completed not later than 
     90 days after the date on which the member is appointed.
       (e) Application of Certain Provisions of Law.--
       (1) Federal advisory committee act.--The Federal Advisory 
     Committee Act (5 U.S.C. App.), and the regulations issued 
     pursuant to that Act, shall not apply to the Commission.
       (2) Freedom of information act.--
       (A) In general.--Except as provided in subparagraph (B), 
     section 552 of title 5, United States Code (commonly known as 
     the ``Freedom of Information Act''), shall not apply to the 
     Commission.
       (B) Exceptions.--Records of the Commission shall be subject 
     to chapters 21 through 31 of title 44, United States Code. 
     Any such record that is transferred to the National Archives 
     and Records Agency shall not be exempt from section 552 of 
     title 5, United States Code.
       (f) Duties of the Commission.--
       (1) In general.--The Commission shall--
       (A) prepare and transmit the reports described in paragraph 
     (2);
       (B) examine the long-term strategy of the Federal 
     Government in addressing the threat of international 
     terrorism, including intelligence capabilities, international 
     cooperation, military responses, and technological 
     capabilities;
       (C) examine the efficacy and appropriateness of efforts of 
     the Federal Government to prevent, detect, investigate, and 
     prosecute acts of terrorism, including--
       (i) the coordination of counter terrorism efforts among 
     Federal departments and agencies, and coordination by the 
     Federal Government of law enforcement with State and local 
     law enforcement entities in responding to terrorist threats 
     and acts;
       (ii) the ability and utilization of counterintelligence or 
     counterterrorism efforts to infiltrate and disable or disrupt 
     international terrorist organizations and the activities of 
     those organizations;
       (iii) the impact of Federal immigration laws and policies 
     on acts of terrorism transcending national boundaries;
       (iv) the effectiveness of regulations and practices in 
     effect at the time of the examination relating to civil 
     aviation safety and security to prevent acts of terrorism, 
     including a study of--

       (I) the desirability of assigning, on a permanent basis, 
     personnel of the Federal Bureau of Investigation at high-risk 
     airports; and
       (II) the practicality and desirability of transferring 
     authority for United States airport security to an entity 
     other than the Federal Aviation Administration;

       (v) the extent and effectiveness of present cooperative 
     efforts with foreign nations to prevent, detect, investigate, 
     and prosecute acts of terrorism; and
       (vi)(I) the impact on counterterrorism efforts in use at 
     the time of the examination attributable to the failure to 
     expend and utilize resources made available, and authority 
     delegated by law for the implementation of enhanced counter 
     terrorism activities; and
       (II) the reasons why the resources referred to in subclause 
     (I) have not been expended in a timely manner; and
       (D) examine all laws (including statutes and regulations) 
     relating to--
       (i) the collection and dissemination of personal 
     information concerning individuals by

[[Page S200]]

     law enforcement or other governmental entities; and
       (ii) the necessity for additional protections to prevent 
     and deter the inappropriate collection and dissemination of 
     the information referred to in clause (i).
       (2) Reports.--
       (A) Initial report.--Not later than 2 months after the date 
     on which the initial meeting of the Commission is held, the 
     Commission shall transmit to the Committees on the Judiciary 
     of the House of Representatives and the Senate, the Committee 
     on Foreign Relations of the Senate, the Committee on 
     International Relations of the House of Representatives, the 
     Select Committee on Intelligence of the Senate, and the 
     Permanent Select Committee on Intelligence of the House of 
     Representatives a report setting forth a plan for the work of 
     the Commission.
       (B) Interim reports.--Prior to the submission of the report 
     under subparagraph (C), the Commission may issue such interim 
     reports as the Commission determines to be necessary or 
     appropriate.
       (C) Final report.--
       (i) In general.--

       (I) Submission.--Not later than January 31, 1999, the 
     Commission shall submit to the President and to the Committee 
     on the Judiciary of the Senate, the Committee on the 
     Judiciary of the House of Representatives, the Committee on 
     Foreign Relations of the Senate, the Committee on 
     International Relations of the House of Representatives, the 
     Select Committee on Intelligence of the Senate, and the 
     Permanent Select Committee on Intelligence of the House of 
     Representatives, a report that describes the activities, 
     findings, and recommendations of the Commission, including 
     any recommendations for the enactment of legislation that the 
     Commission considers advisable.
       (II) Availability of report.--To the extent feasible, the 
     final report shall be unclassified and made available to the 
     public. The report shall be supplemented as necessary by a 
     classified report or annex that shall be provided separately 
     to the President and the committees of the Congress listed in 
     subclause (I).

       (ii) Protection of individuals.--Prior to the submission of 
     a report under this paragraph--

       (I) the Commission shall forward a draft of the report to 
     the Director of Central Intelligence; and
       (II) the Director of Central Intelligence shall--

       (aa) review the report to ensure that disclosure of its 
     contents will not endanger the life or safety of any person; 
     and
       (bb) upon completion of the review, promptly provide 
     conclusions and recommendations to the Commission.
       (g) Powers.--
       (1) Hearings.--The Commission or, at its direction, any 
     panel or member of the Commission, may, for the purpose of 
     carrying out this section, hold hearings, sit and act at 
     times and places, take testimony, receive evidence, and 
     administer oaths to the extent that the Commission or any 
     panel or member considers advisable.
       (2) Information from federal agencies.--The Commission may 
     secure directly from any intelligence agency or from any 
     other Federal department or agency any information that the 
     Commission considers necessary to enable the Commission to 
     carry out the responsibilities of the Commission under this 
     section. Upon request of the Chairperson, the head of any 
     such department or agency expeditiously shall furnish such 
     information to the Commission, unless the head of the 
     department or agency determines that providing such 
     information would threaten national security, the health or 
     safety of any individual, or the integrity of an ongoing 
     investigation or prosecution.
       (3) Postal, printing, and binding services.--The Commission 
     may use the United States mails and obtain printing and 
     binding services in the same manner and under the same 
     conditions as other departments and agencies of the Federal 
     Government.
       (4) Subcommittees.--
       (A) In general.--The Commission may establish panels 
     composed of less than the full membership of the Commission 
     for the purpose of carrying out the duties of the Commission.
       (B) Actions of panels.--The actions of each such panel 
     shall be subject to the review and control of the Commission.
       (C) Findings and determinations of panel.--Any findings and 
     determinations made by such a panel shall not be considered 
     the findings and determinations of the Commission unless 
     approved by the Commission.
       (5) Authority of individuals to act for commission.--Any 
     member or agent of the Commission may, if authorized by the 
     Commission, take any action that the Commission is authorized 
     to take under this section.
       (h) Personnel Matters.--
       (1) Compensation of members.--Each member of the Commission 
     who is not otherwise employed by the Federal Government shall 
     be paid, if requested, at a rate equal to the daily 
     equivalent of the annual rate of basic pay payable for level 
     V of the Executive Schedule under section 5316 of title 5, 
     United States Code, for each day (including travel time) 
     during which the member is engaged in the performance of the 
     duties of the Commission. Each Federal officer or member of 
     the Commission who is otherwise an officer or employee of the 
     Federal Government (including any Member of Congress or 
     member of the Federal Judiciary) shall serve without 
     compensation in addition to that received for services as an 
     officer or employee of the Federal Government.
       (2) Travel expenses.--Each member of the Commission shall 
     be allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Commission.
       (3) Staff.--
       (A) In general.--
       (i) In general.--The Chairperson may, without regard to the 
     provisions of title 5, United States Code, governing 
     appointments in the competitive service, appoint a staff 
     director and such additional personnel as may be necessary to 
     enable the Commission to perform its duties.
       (ii) Staff director.--The staff director of the Commission 
     shall be a representative of the private sector. The 
     appointment shall be subject to the approval of the 
     Commission as a whole.
       (B) Compensation.--The Chairperson may fix the pay of the 
     staff director and other personnel without regard to the 
     provisions of chapter 51 and subchapter III of chapter 53 of 
     title 5, United States Code, relating to classification of 
     positions and General Schedule pay rates, except that--
       (i) the rate of pay fixed under this paragraph for the 
     staff director may not exceed the rate payable for level V of 
     the Executive Schedule under section 5316 of such title; and
       (ii) the rate of pay for other personnel may not exceed the 
     maximum rate payable for grade GS-15 of the General Schedule.
       (4) Detail of government employees.--Upon the request of 
     the Chairperson, the head of any Federal department or agency 
     may detail, on a nonreimbursable basis, any personnel of that 
     department or agency to the Commission to assist it in 
     carrying out its administrative and clerical functions.
       (5) Procurement of temporary and intermittent services.--
     The Chairperson may procure temporary and intermittent 
     services under section 3109(b) of title 5, United States 
     Code, at rates for individuals which do not exceed the daily 
     equivalent of the annual rate of basic pay payable for level 
     V of the Executive Schedule under section 5316 of such title.
       (i) Payment of Commission Expenses.--The compensation, 
     travel expenses, per diem allowances of members and employees 
     of the Commission, and other expenses of the Commission shall 
     be paid equally out of funds available to the Attorney 
     General, the Secretary of Defense, and the Secretary of State 
     for the payment of compensation, travel allowances, and per 
     diem allowances, respectively, of employees of the Department 
     of Justice, the Department of Defense, and the Department of 
     State.
       (j) Termination of the Commission.--The Commission shall 
     terminate 1 month after the date on which the final report is 
     submitted under subsection (f)(2)(C).
                     TITLE IV--COMMUNITY PROTECTION

     SEC. 401. SHORT TITLE.

       This title may be cited as the ``Community Protection 
     Initiative of 1997''.
                 Subtitle A--Law Enforcement Assistance

     SEC. 411. EXEMPTION OF QUALIFIED CURRENT AND FORMER LAW 
                   ENFORCEMENT OFFICERS FROM STATE LAWS 
                   PROHIBITING THE CARRYING OF CONCEALED FIREARMS.

       (a) In General.--Chapter 44 of title 18, United States 
     Code, is amended by inserting after section 926A the 
     following:

     ``Sec. 926B. Carrying of concealed firearms by qualified 
       current and former law enforcement officers

       ``(a) In General.--Notwithstanding any provision of the law 
     of any State or any political subdivision of a State, an 
     individual may carry a concealed firearm if that individual 
     is--
       ``(1) a qualified law enforcement officer or a qualified 
     former law enforcement officer; and
       ``(2) carrying appropriate written identification.
       ``(b) Effect on Other Laws.--
       ``(1) Common carriers.--Nothing in this section shall be 
     construed to exempt from section 46505(B)(1) of title 49--
       ``(A) a qualified law enforcement officer who does not meet 
     the requirements of section 46505(D) of title 49; or
       ``(B) a qualified former law enforcement officer.
       ``(2) Federal laws.--Nothing in this section shall be 
     construed to supersede or limit any Federal law or regulation 
     prohibiting or restricting the possession of a firearm on any 
     Federal property, installation, building, base, or park.
       ``(3) State laws.--Nothing in this section shall be 
     construed to supersede or limit the laws of any State that--
       ``(A) grant rights to carry a concealed firearm that are 
     broader than the rights granted under this section;
       ``(B) permit private persons or entities to prohibit or 
     restrict the possession of concealed firearms on their 
     property; or
       ``(C) prohibit or restrict the possession of firearms on 
     any State or local government property, installation, 
     building, base, or park.
       ``(4) Definitions.--In this section:
       ``(A) Appropriate written identification.--The term 
     `appropriate written identification' means, with respect to 
     an individual, a document that--

[[Page S201]]

       ``(i) was issued to the individual by the public agency 
     with which the individual serves or served as a qualified law 
     enforcement officer; and
       ``(ii) identifies the holder of the document as a current 
     or former officer, agent, or employee of the agency.
       ``(B) Qualified law enforcement officer.--The term 
     `qualified law enforcement officer' means an individual who--
       ``(i) is presently authorized by law to engage in or 
     supervise the prevention, detection, or investigation of any 
     violation of criminal law;
       ``(ii) is authorized by the agency to carry a firearm in 
     the course of duty;
       ``(iii) meets any requirements established by the agency 
     with respect to firearms; and
       ``(iv) is not the subject of a disciplinary action by the 
     agency that prevents the carrying of a firearm.
       ``(C) Qualified former law enforcement officer.--The term 
     `qualified former law enforcement officer' means, an 
     individual who is--
       ``(i) retired from service with a public agency, other than 
     for reasons of mental disability;
       ``(ii) immediately before such retirement, was a qualified 
     law enforcement officer with that public agency;
       ``(iii) has a nonforfeitable right to benefits under the 
     retirement plan of the agency;
       ``(iv) was not separated from service with a public agency 
     due to a disciplinary action by the agency that prevented the 
     carrying of a firearm;
       ``(v) meets the requirements established by the State in 
     which the individual resides with respect to--

       ``(I) training in the use of firearms; and
       ``(II) carrying a concealed weapon; and

       ``(vi) is not prohibited by Federal law from receiving a 
     firearm.
       ``(D) Firearm.--The term `firearm' means, any firearm that 
     has, or of which any component has, traveled in interstate or 
     foreign commerce.''.
       (b) Clerical Amendment.--The chapter analysis for chapter 
     44 of title 18, United States Code, is amended by inserting 
     after the item relating to section 926A the following:

``926B. Carrying of concealed firearms by qualified current and former 
              law enforcement officers.''.
                    Subtitle B--Citizens' Assistance

     SEC. 421. SHORT TITLE.

       This subtitle may be cited as the ``Citizens' Assistance 
     Act of 1997''.

     SEC. 422. AUTHORIZATION TO ENTER INTO INTERSTATE COMPACTS.

       (a) In General.--The consent of Congress is hereby given to 
     any 2 or more States--
       (1) to enter into compacts or agreements for cooperative 
     effort in enabling individuals to carry concealed weapons as 
     dictated by laws of the State within which the owner of the 
     weapon resides and is authorized to carry a concealed weapon; 
     and
       (2) to establish agencies or guidelines as they may 
     determine to be appropriate for making effective such 
     agreements and compacts.
       (b) Reservation of Rights.--The right to alter, amend, or 
     repeal this section is hereby expressly reserved by Congress.

     SEC. 423. AUTHORIZED USES OF FEDERAL GRANT FUNDS.

       (a) In General.--Section 501(b) of the Omnibus Crime 
     Control and Safe Streets Act of 1968 (42 U.S.C. 3751(b)) is 
     amended--
       (1) in paragraph (25), by striking ``and'' at the end;
       (2) in paragraph (26), by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(27) at the discretion of State or local law enforcement 
     authorities, to train members of the public in the safe 
     possession, ownership, handling, carry, and use of firearms, 
     including handguns.''.
       (b) Evaluating Data Ban.--Section 501(c) of the Omnibus 
     Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
     3751(c)) is amended--
       (1) by striking ``Each'' and inserting the following:
       ``(1) In general.--Each'';
       (2) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively, and indenting 
     appropriately;
       (2) adding at the end the following:
       ``(2) Collection and Use of data.--
       ``(A) In general.--As a part of any evaluation required by 
     paragraph (1) or otherwise, the Attorney General may not 
     require the collection, and a grant recipient may not 
     undertake any collection, of any data about any person who 
     participates in any program funded under this section for the 
     purpose of training members of the public in the safe 
     possession, ownership, handling, carry, and use of firearms, 
     including handguns, other than data necessary to determine 
     whether such a member lawfully may possess a firearm.
       ``(B) Destruction of data.--Any data described in 
     subparagraph (A) shall be destroyed by any party in 
     possession of that data not later than 7 days after the date 
     on which it is collected or once a member of the public 
     receives the training offered, whichever comes first.''.

     SEC. 424. SELF DEFENSE FOR VICTIMS OF ABUSE.

       Section 922(s)(1)(B) of title 18, United States Code, is 
     amended--
       (1) by striking ``the transferee has'' and inserting ``the 
     transferee--
       ``(i) has''; and
       (2) by adding at the end the following: ``or
       ``(ii) is named as a person protected under a court order 
     described in subsection (g)(8).''.
                TITLE V--CRIMINAL PROCEDURE IMPROVEMENTS
                Subtitle A--Equal Protection for Victims

     SEC. 501. THE RIGHT OF THE VICTIM TO AN IMPARTIAL JURY.

       Rule 24(b) of the Federal Rules of Criminal Procedure is 
     amended by striking ``the government is entitled to 6 
     peremptory challenges and the defendant or defendants jointly 
     to 10 peremptory challenges'' and inserting ``each side is 
     entitled to 10 peremptory challenges''.

     SEC. 502. JURY TRIAL IMPROVEMENTS.

       (a) Juries of 6.--
       (1) In general.--Rule 23(b) of the Federal Rules of 
     Criminal Procedure is amended--
       (A) by striking ``Jury of Less than Twelve. Juries'' and 
     inserting the following:
       ``(b) Number of Jurors.--
       ``(1) In general.--Except as provided in subsection (2), 
     juries''; and
       (B) by adding at the end the following:
       ``(2) Juries of 6.--Juries may be of 6 upon request in 
     writing by the defendant with the approval of the court and 
     the consent of the government.''.
       (2) Alternate jurors.--Rule 24(c) of the Federal Rules of 
     Criminal Procedure is amended by inserting after the first 
     sentence the following: ``In the case of a jury of 6, the 
     court shall direct that not more than 3 jurors in addition to 
     the regular jury be called and impanelled to sit as alternate 
     jurors.''.
       (b) Capital Cases.--Section 3593(b) of title 18, United 
     States Code, is amended by striking the last sentence and 
     inserting the following: ``A jury impanelled pursuant to 
     paragraph (2) may be made of 6 upon request in writing by the 
     defendant with the approval of the court and the consent of 
     the government. Otherwise, such jury shall be made of 12, 
     unless, at any time before the conclusion of the hearing, the 
     parties stipulate, with the approval of the court, that it 
     shall consist of a lesser number.''.

     SEC. 503. REBUTTAL OF ATTACKS ON THE CHARACTER OF THE VICTIM.

       Rule 404(a)(1) of the Federal Rules of Evidence is amended 
     by inserting before the semicolon the following: ``, or, if 
     an accused offers evidence of a pertinent trait of character 
     of the victim of the crime, evidence of a pertinent trait of 
     character of the accused offered by the prosecution''.

     SEC. 504. USE OF NOTICE CONCERNING RELEASE OF OFFENDER.

       Section 4042(b) of title 18, United States Code, is amended 
     by striking paragraph (4).

     SEC. 505. BALANCE IN THE COMPOSITION OF RULES COMMITTEES.

       Section 2073 of title 28, United States Code, is amended--
       (1) in subsection (a)(2), by adding at the end the 
     following: ``On each such committee that makes 
     recommendations concerning rules that affect criminal cases, 
     including the Federal Rules of Criminal Procedure, the 
     Federal Rules of Evidence, the Federal Rules of Appellate 
     Procedure, the Rules Governing Section 2254 Cases, and the 
     Rules Governing Section 2255 Cases, the number of members who 
     represent or supervise the representation of defendants in 
     the trial, direct review, or collateral review of criminal 
     cases shall not exceed the number of members who represent or 
     supervise the representation of the Government or a State in 
     the trial, direct review, or collateral review of criminal 
     cases.''; and
       (2) in subsection (b), by adding at the end the following: 
     ``The number of members of the standing committee who 
     represent or supervise the representation of defendants in 
     the trial, direct review, or collateral review of criminal 
     cases shall not exceed the number of members who represent or 
     supervise the representation of the Government or a State in 
     the trial, direct review, or collateral review of criminal 
     cases.''.
                          Subtitle B--Firearms

     SEC. 521. MANDATORY MINIMUM SENTENCES FOR CRIMINALS 
                   POSSESSING FIREARMS.

       Section 924(c) of title 18, United States Code, is 
     amended--
       (1) by striking ``(c)'' and all that follows through 
     ``(2)'' and inserting the following:
       ``(c) Possession of Firearm During Commission of Crime of 
     Violence or Drug Trafficking Crime.--
       ``(1) Term of imprisonment.--
       ``(A) In general.--Except to the extent that a greater 
     minimum sentence is otherwise provided by this subsection or 
     by any other provision of law, any person who, during and in 
     relation to any crime of violence or drug trafficking crime 
     (including a crime of violence or drug trafficking crime that 
     provides for an enhanced punishment if committed by the use 
     of a deadly or dangerous weapon or device) for which a person 
     may be prosecuted in a court of the United States, uses, 
     carries, or possesses a firearm shall, in addition to the 
     punishment provided for such crime of violence or drug 
     trafficking crime--
       ``(i) be sentenced to a term of imprisonment of not less 
     than 5 years;
       ``(ii) if the firearm is discharged, be sentenced to a term 
     of imprisonment of not less than 10 years; and
       ``(iii) if the death of any person results, be sentenced to 
     a term of imprisonment for life or sentenced to death.
       ``(B) Exception for certain offenses.--If the firearm 
     possessed by a person convicted of a violation of this 
     subsection--

[[Page S202]]

       ``(i) is a short-barreled rifle, short-barreled shotgun, or 
     semiautomatic assault weapon, the person shall be--

       ``(I) sentenced to a term of imprisonment of not less than 
     10 years; and
       ``(II) if the death of any person results, sentenced to a 
     term of imprisonment for life or sentenced to death; and

       ``(ii) is a machinegun or a destructive device, or is 
     equipped with a firearm silencer or firearm muffler, the 
     person shall be--

       ``(I) sentenced to a term of imprisonment of not less than 
     30 years; and
       ``(II) if the death of any person results, sentenced to a 
     term of imprisonment for life or sentenced to death.

       ``(C) Exception for certain offenders.--In the case of a 
     second or subsequent conviction under this subsection, a 
     person shall be sentenced to a term of imprisonment for life.
       ``(D) Probation and concurrent sentences.--Notwithstanding 
     any other provision of law--
       ``(i) a court shall not place on probation or suspend the 
     sentence of any person convicted of a violation of this 
     subsection; and
       ``(ii) no term of imprisonment imposed on a person under 
     this subsection shall run concurrently with any other term of 
     imprisonment imposed on the person, including any term of 
     imprisonment imposed for the crime of violence or drug 
     trafficking crime during which the firearm was used, carried, 
     or possessed.
       ``(2) Definition of `drug trafficking crime'.--''; and
       (2) in paragraph (3)--
       (A) by striking ``(3) For'' and inserting the following:
       ``(3) Definition of `crime of violence'.--For''; and
       (B) by indenting each of subparagraphs (A) and (B) 2 ems to 
     the right.

     SEC. 522. FIREARMS POSSESSION BY VIOLENT FELONS AND SERIOUS 
                   DRUG OFFENDERS.

       Section 924 of title 18, United States Code, is amended--
       (1) in subsection (a)(1), by inserting before the period 
     the following: ``, and if the violation is of section 
     922(g)(1) by a person who has a previous conviction for a 
     violent felony (as defined in subsection (e)(2)(B)) or a 
     serious drug offense (as defined in subsection (e)(2)(A)), a 
     sentence imposed under this paragraph shall include a term of 
     imprisonment of not less than 10 years''; and
       (2) by adding at the end the following:
       ``(o)(1) Notwithstanding paragraph (2), any person who 
     violates section 922(g) and has 2 previous convictions by any 
     court referred to in section 922(g)(1) for a violent felony 
     (as defined in subsection (e)(2)(B)) or a serious drug 
     offense (as defined in subsection (e)(2)(A)) committed on 
     different occasions shall be fined as provided in this title, 
     imprisoned not less than 20 years.
       ``(2) Notwithstanding any other law, the court shall not 
     grant a probationary sentence to a person described in 
     paragraph (1) with respect to the conviction under section 
     922(g).''.

     SEC. 523. USE OF FIREARMS IN CONNECTION WITH COUNTERFEITING 
                   OR FORGERY.

       Section 924(c)(1) of title 18, United States Code, is 
     amended in the first sentence by inserting ``or during and in 
     relation to any felony punishable under chapter 25,'' after 
     ``United States,''.

     SEC. 524. POSSESSION OF AN EXPLOSIVE DURING THE COMMISSION OF 
                   A FELONY.

       Section 844(h) of title 18, United States Code, is 
     amended--
       (1) in paragraph (2), by striking ``carries an explosive 
     during'' and inserting ``uses, carries, or otherwise 
     possesses an explosive during''; and
       (2) by striking ``used or carried'' and inserting ``used, 
     carried, or possessed''.

     SEC. 525. SECOND OFFENSE OF USING AN EXPLOSIVE TO COMMIT A 
                   FELONY.

       Section 844(h) of title 18, United States Code, is amended 
     by striking ``10'' and inserting ``20''.

     SEC. 526. INCREASED PENALTIES FOR INTERNATIONAL DRUG 
                   TRAFFICKING.

       (a) In General.--Section 1010 of the Controlled Substances 
     Import and Export Act (21 U.S.C. 960) is amended by adding at 
     the end the following:
       ``(e)(1) Notwithstanding any other provision of law, the 
     court shall sentence a person convicted of a violation of 
     subsection (a), consisting of bringing into the United States 
     a mixture or substance--
       ``(A) which is described in subsection (b)(1); and
       ``(B) in an amount the Attorney General by rule has 
     determined is equal to 100 usual dosage amounts of such 
     mixture or substance;
     to imprisonment for life without possibility of release. If 
     the defendant has violated this subsection on more than one 
     occasion and the requirements of chapter 228 of title 18, 
     United States Code, are satisfied, the court shall sentence 
     the defendant to death.
       ``(2) The maximum fine that otherwise may be imposed, but 
     for this subsection, shall not be reduced by operation of 
     this subsection.''
       (b) Inclusion of Offense.--Section 3591(b) of title 18, 
     United States Code, is amended--
       (1) by striking ``or'' at the end of paragraph (1);
       (2) by striking the comma at the end of paragraph (2) and 
     inserting ``; or'' at the end of paragraph (2); and
       (3) by inserting after paragraph (2) the following:
       ``(3) an offense described in section 1010(e)(1) of the 
     Controlled Substances Import and Export Act;''
       (c) Additional Aggravating Factor.--Section 3592(d) of 
     title 18, United States Code, is amended by inserting after 
     paragraph (8) the following:
       ``(9) Second Importation Offense.--The offense consisted of 
     a second or subsequent violation of section 1010(a) of the 
     Controlled Substances Import and Export Act consisting of 
     bringing a controlled substance into the United States.''.
                   Subtitle C--Federal Death Penalty

     SEC. 541. STRENGTHENING OF FEDERAL DEATH PENALTY STANDARDS 
                   AND PROCEDURES.

       (a) Amendments to Chapter 228.--Chapter 228 of title 18, 
     United States Code, is amended--
       (1) in section 3592(c), by striking paragraph (2) and 
     inserting the following:
       ``(2) Involvement of a firearm or previous conviction of 
     violent felony involving a firearm.--For any offense, other 
     than an offense for which a sentence of death is sought on 
     the basis of section 924(c), the defendant--
       ``(A) during and in relation to the commission of the 
     offense or in escaping or attempting to escape apprehension 
     used or possessed a firearm (as defined in section 921); or
       ``(B) has previously been convicted of a Federal or State 
     offense punishable by a term of imprisonment of more than 1 
     year, involving the use or attempted or threatened use of a 
     firearm (as defined in section 921) against another 
     person.'';
       (2) in section 3593--
       (A) in subsection (a)--
       (i) in the heading, by inserting ``and the Defendant'' 
     after ``Government'';
       (ii) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively, and indenting 
     appropriately;
       (iii) by striking ``If, in a case'' and inserting the 
     following:
       ``(1) In general.--If, in a case'';
       (iv) by designating the matter immediately following 
     subparagraph (B), as redesignated, as paragraph (3), and 
     indenting appropriately;
       (v) by inserting after paragraph (1) as redesignated, the 
     following:
       ``(2) Notice of any mitigating factors.--The defendant 
     shall, during a reasonable period of time before a hearing 
     under subsection (b), sign and file with the court a notice 
     setting forth the mitigating factor or factors, if any, upon 
     which the defendant intends to present information at the 
     hearing.''; and
       (vi) in paragraph (3), as redesignated--

       (I) by inserting ``by the attorney for the Government'' 
     after ``this subsection'';
       (II) by striking ``, and may include'' and all that follows 
     through ``relevant information'';
       (III) by inserting ``or the defendant'' after ``permit the 
     attorney for the government''; and
       (IV) by inserting ``under this subsection'' after ``to 
     amend the notice''.

       (B) in subsection (c)--
       (i) in the fourth sentence, by inserting ``for which notice 
     has been provided under subsection (a)'' after ``The 
     defendant may present any information relevant to a 
     mitigating factor''; and
       (ii) by inserting after the fifth sentence the following: 
     ``The information presented by the government in support of 
     factors concerning the effect of the offense on the victim 
     and the family of the victim may include oral testimony, a 
     victim impact statement that identifies the victim of the 
     offense and the nature and extent of harm and loss suffered 
     by the victim and the family of the victim, and any other 
     relevant information.''; and
       (C) in subsection (e), by striking ``shall consider'' and 
     all that follows through ``lesser sentence.'' and inserting 
     ``shall then consider whether the aggravating factor or 
     factors found to exist outweigh any mitigating factors. The 
     jury, or if there is no jury, the court shall recommend a 
     sentence of death if it unanimously finds not less than 1 
     aggravating factor and no mitigating factor or if it finds 
     one or more aggravating factors that outweigh any mitigating 
     factors. In any other case, it shall not recommend a sentence 
     of death. The jury shall be instructed that it must avoid any 
     influence of sympathy, sentiment, passion, prejudice, or 
     other arbitrary factors in its decision, and shall make such 
     a recommendation as the information warrants. The jury shall 
     be instructed that its recommendation concerning a sentence 
     of death is to be based on the aggravating factor or factors 
     and any mitigating factor or factors, but that the final 
     decision whether any evidence, in fact, is aggravating or 
     mitigating and concerning the balance of aggravating and 
     mitigating factors is a matter for the judgment of the 
     jury.''; and
       (3) in section 3595(c)(2), by striking the last sentence.
       (b) Uniformity of Procedures.--Section 408 of the 
     Controlled Substances Act (21 U.S.C. 848) is amended--
       (1) by striking subsections (g) through (p), (q) (1) 
     through (3), and (r); and
       (2) in subsection (q) by--
       (A) redesignating paragraphs (4) through (10) as paragraphs 
     (1) through (7), respectively; and
       (B) inserting ``(g)'' before ``(1)'' as redesignated.
       (c) Death During Commission of Another Crime.--Section 
     3592(c)(1) of title 18, United States Code, is amended by 
     striking ``of, or during the immediate flight from the 
     commission of,'' and inserting ``of a felony, or

[[Page S203]]

     during the immediate flight from the commission of a felony, 
     including''.
       (d) Aggravating Factors.--Section 3592(c) of title 18, 
     United States Code, is amended by inserting immediately after 
     paragraph (15) the following:
       ``(16) Other circumstances.--With regard to the capital 
     offense--
       ``(A) the victim was a custodial parent or legal guardian 
     of a child who was less than 18 years of age;
       ``(B) the offense was committed by a person imprisoned as a 
     result of a felony conviction;
       ``(C) the offense was committed for the purpose of 
     disrupting or hindering the lawful exercise of any government 
     or political function;
       ``(D) the victim was found to have been murdered due to the 
     association of the victim with a particular group, gang, 
     organization, or other entity;
       ``(E) the offense was committed by a person lawfully or 
     unlawfully at liberty after being sentenced to imprisonment 
     as a result of a felony conviction;
       ``(F) the offense was committed by means of a destructive 
     device, bomb, explosive, or similar device that the defendant 
     planted, hid, or concealed in any place, area, dwelling, 
     building, or structure, or mailed or delivered, or caused to 
     be planted, hidden, concealed, mailed, or delivered, and the 
     defendant knew that the actions of the defendant would create 
     a great risk of death to human life;
       ``(G) the offense was committed for the purpose of avoiding 
     or preventing an arrest or effecting an escape from custody;
       ``(H) the victim was a current or former judge or judicial 
     officer of any civilian, military, or tribal court of record 
     in the United States or the territories of the United States, 
     a law enforcement officer or official, and the murder was 
     intentionally carried out in retaliation for, or to prevent 
     the performance of, the official duties of the victim;
       ``(I) the defendant has been convicted of more than one 
     offense of murder in the first or second degree either in the 
     proceeding at bar or as the result of any prior proceeding;
       ``(J) the victim was a witness or a relative of a witness--
       ``(i) to a crime who was intentionally killed for the 
     purpose of preventing the testimony of any person in any 
     judicial or administrative proceeding, and the killing was 
     not committed during the commission or attempted commission 
     of the crime to which the testimony would be relevant; or
       ``(ii) in a judicial or administrative proceeding and was 
     intentionally killed in retaliation for the testimony of any 
     person in such proceeding;
       ``(K) the victim was an elected or appointed official of 
     former official of the Federal, State, local, or tribal 
     government, or a relative of such an official, and the 
     killing was intentionally carried out in retaliation for, or 
     to prevent the performance of, the official duties of the 
     victim;
       ``(L) the defendant intentionally killed the victim while 
     lying in wait;
       ``(M) the victim was intentionally killed because of the 
     race, color, gender, religion, nationality, or country of 
     origin of the victim;
       ``(N) the victim was a juror in any court of record in the 
     Federal, State, or local system in any State or judicial 
     district, and the murder was intentionally carried out in 
     retaliation for, or to prevent the performance of the 
     official duties of the victim;
       ``(O) the murder was intentional and was perpetrated by 
     means of discharging a firearm from a motor vehicle, whether 
     or not the motor vehicle was moving, intentionally at another 
     person or persons outside the vehicle;
       ``(P) the murder was committed against a person who was 
     held or otherwise detained as a shield or hostage;
       ``(Q) the murder was committed against a person who was 
     held or detained by the defendant for ransom or reward;
       ``(R) the defendant caused or directed another to commit 
     murder or committed murder as an agent or employee of another 
     person;
       ``(S) the victim was pregnant;
       ``(T) the victim was handicapped or severely disabled;
       ``(U) the victim was a child 16 years of age or younger;
       ``(V) at the time of the killing, the victim, or a relative 
     of the victim, was or had been a nongovernmental informant or 
     had otherwise provided any investigative, law enforcement, or 
     police agency with information concerning criminal activity, 
     and the killing was in retaliation for the activities of any 
     person as a nongovernmental informant or in providing 
     information concerning criminal activity to an investigative, 
     law enforcement, or police agency;
       ``(W) the murder was committed for the purpose of 
     interfering with the free exercise or enjoyment by the victim 
     of any right, privilege, or immunity protected by the first 
     amendment to the Constitution of the United States or because 
     the victim exercised or enjoyed said right; and
       ``(X) the victim was employed in a jail, correctional 
     facility, or halfway house, and was murdered while in the 
     lawful performance of the duties of the victim or in 
     retaliation for the lawful performance of the duties of the 
     victim.''.

     SEC. 542. MURDER OF WITNESS AS AGGRAVATING FACTOR.

       Section 3592(c)(1) of title 18, United States Code, is 
     amended by inserting ``section 1512 (witness tampering), 
     section 1513 (retaliation against witness),'' after 
     ``(hostage taking),''.

     SEC. 543. DEATH PENALTY FOR MURDERS COMMITTED IN THE DISTRICT 
                   OF COLUMBIA.

       (a) In General.--Chapter 51 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 1123. Capital punishment for murders in the District 
       of Columbia

       ``(a) Offense.--It shall be unlawful to cause the death of 
     a person intentionally, knowingly, or through recklessness 
     manifesting extreme indifference to human life, or to cause 
     the death of a person through the intentional infliction of 
     serious bodily injury.
       ``(b) Federal Jurisdiction.--There is Federal jurisdiction 
     over an offense described in this section if the conduct 
     resulting in death or the death occurs in the District of 
     Columbia.
       ``(c) Penalty.--An offense described in this section is a 
     class A felony. A sentence of death may be imposed for an 
     offense described in this section as provided in this 
     section. Sections 3591 and 3592 of this title shall apply in 
     relation to capital sentencing for an offense described in 
     this section.
       ``(d) Definitions.--In this section--
       ``(1) the term `State' has the meaning stated in section 
     513;
       ``(2) the term `offense', as used in paragraphs (2), (5), 
     and (13) of subsection (e), and in paragraph (5) of this 
     subsection, means an offense under the law of a state or the 
     United States.
       ``(e) Other Charges.--If an offense is charged under this 
     section, the government may join any charge under the 
     District of Columbia Code that arises from the same 
     incident.''.
       (b) Technical Amendment.--The chapter analysis for chapter 
     51 of title 18, United States Code, is amended by adding at 
     the end the following:

``1123. Capital punishment for murders in the District of Columbia.''.
   TITLE VI--INCREASED PENALTIES FOR TRAFFICKING AND MANUFACTURE OF 
                     METHAMPHETAMINE AND PRECURSORS

     SEC. 601. TRAFFICKING IN METHAMPHETAMINE PENALTY INCREASES.

       (a) Controlled Substances Act.--
       (1) Large amounts.--Section 401(b)(1)(A)(viii) of the 
     Controlled Substances Act (21 U.S.C. 841(b)(1)(A)(viii)) is 
     amended by--
       (A) striking ``100 grams or more of methamphetamine,'' and 
     inserting ``50 grams or more of methamphetamine,''; and
       (B) striking ``1 kilogram or more of a mixture or substance 
     containing a detectable amount of methamphetamine'' and 
     inserting ``500 grams or more of a mixture or substance 
     containing a detectable amount of methamphetamine''.
       (2) Smaller amounts.--Section 401(b)(1)(B)(viii) of the 
     Controlled Substances Act (21 U.S.C. 841(b)(1)(B)(viii)) is 
     amended by--
       (A) striking ``10 grams or more of methamphetamine,'' and 
     inserting ``5 grams or more of methamphetamine,''; and
       (B) striking ``100 grams or more of a mixture or substance 
     containing a detectable amount of methamphetamine'' and 
     inserting ``50 grams or more of a mixture or substance 
     containing a detectable amount of methamphetamine''.
       (b) Import and Export Act.--
       (1) Large amounts.--Section 1010(b)(1)(H) of the Controlled 
     Substances Import and Export Act (21 U.S.C. 960(b)(1)(H)) is 
     amended by--
       (A) striking ``100 grams or more of methamphetamine,'' and 
     inserting ``50 grams or more of methamphetamine,''; and
       (B) striking ``1 kilogram or more of a mixture or substance 
     containing a detectable amount of methamphetamine'' and 
     inserting ``500 grams or more of a mixture or substance 
     containing a detectable amount of methamphetamine''.
       (2) Smaller amounts.--Section 1010(b)(2)(H) of the 
     Controlled Substances Import and Export Act (21 
     U.S.C.960(b)(2)(H)) is amended by--
       (A) striking ``10 grams or more of methamphetamine,'' and 
     inserting ``5 grams or more of methamphetamine,''; and
       (B) striking ``100 grams or more of a mixture or substance 
     containing a detectable amount of methamphetamine'' and 
     inserting ``50 grams or more of a mixture or substance 
     containing a detectable amount of methamphetamine''.

     SEC. 602. REDUCTION OF SENTENCE FOR PROVIDING USEFUL 
                   INVESTIGATIVE INFORMATION.

       Section 3553(e) of title 18, United States Code, section 
     994(n) of title 28, United State Code, and Rule 35(b) of the 
     Federal Rules of Criminal Procedure are each amended by 
     striking ``substantial assistance in the investigation or 
     prosecution of another person who has committed an offense'' 
     and inserting ``substantial assistance in an investigation of 
     any offense or substantial assistance in an investigation or 
     prosecution of another person who has committed an offense''.

     SEC. 603. IMPLEMENTATION OF A SENTENCE OF DEATH.

       (a) In General.--Section 3596(a) of title 18, United States 
     Code, is amended--
       (1) by striking ``pursuant to this chapter''; and
       (2) in the second sentence, by striking ``in the manner'' 
     and all that follows through the

[[Page S204]]

     end of the subsection and inserting ``pursuant to regulations 
     promulgated by the Attorney General.''.
       (b) Regulations.--Not later than 6 months after the date of 
     enactment of this Act, the Attorney General shall promulgate 
     regulations to provide for the implementation of a sentence 
     of death under section 3596 of title 18, United State Code.
       (c) In General.--Section 3597 of title 18, United States 
     Code, is amended--
       (1) by striking the section designation and the section 
     heading and inserting the following:

     ``Sec. 3597. Use of facilities and employees'';

       (2) by striking subsection (a) and inserting the following:
       ``(a) In General.--A United States marshal charged with 
     supervising the implementation of a sentence of death shall 
     use appropriate Federal facilities for that purpose.''; and
       (3) in subsection (b), by striking ``any State department 
     of corrections,''.
       (d) Technical Amendment.--The chapter analysis for chapter 
     228 of title 18, United States Code, is amended by striking 
     item relating to section 3597 and inserting the following:

``3597. Use of facilities and employees.''.

     SEC. 604. LIMITATION ON DRUG ENFORCEMENT ADMINISTRATOR 
                   TENURE.

       (a) In General.--The term of office of the Administrator of 
     the Drug Enforcement Agency (as established by section 5(a) 
     of the Reorganization Plan No. 2 of 1973 (5 U.S.C. App.)) 
     shall be for not more than a single 10-year period.
       (b) Applicability.--This section does not apply to the 
     individual who is serving as the Administrator of the Drug 
     Enforcement Agency on the date of enactment of this Act, 
     unless that individual is reappointed to the position on or 
     after the date of enactment of this Act.

     SEC. 605. SERIOUS JUVENILE DRUG OFFENSES AS ARMED CAREER 
                   CRIMINAL ACT PREDICATES.

       Section 924(e)(2)(A) of title 18, United States Code, is 
     amended--
       (1) in clause (i), by striking ``or'' at the end;
       (2) in clause (ii), by adding ``or'' at the end; and
       (3) by adding at the end the following:
       ``(iii) any act of juvenile delinquency, under Federal or 
     State law, that, if committed by an adult, would be an 
     offense described in clause (i) or (ii).''.

     SEC. 606. MANDATORY MINIMUM PRISON SENTENCES FOR PERSONS WHO 
                   USE MINORS IN DRUG TRAFFICKING ACTIVITIES OR 
                   SELL DRUGS TO MINORS.

       (a) Employment of Persons Under 18 Years of Age.--Section 
     420 of the Controlled Substances Act (21 U.S.C. 861) is 
     amended--
       (1) in subsection (b), by striking the second sentence and 
     inserting the following: ``Except to the extent that a 
     greater minimum sentence is otherwise provided, a term of 
     imprisonment of a person 21 or more years of age convicted 
     under this subsection shall be not less than 10 years, and a 
     term of imprisonment of a person between the ages of 18 and 
     21 convicted under this subsection shall be not less than 3 
     years. Notwithstanding any other provision of law, the court 
     shall not place on probation or suspend the sentence of any 
     person sentenced under the preceding sentence.''; and
       (2) in subsection (c)--
       (A) by striking ``one year'' and inserting ``6 years'';
       (B) by inserting after the second sentence the following: 
     ``Except to the extent that a greater minimum sentence is 
     otherwise provided, a term of imprisonment of a person 21 or 
     more years of age convicted under this subsection shall be a 
     mandatory term of life imprisonment. Notwithstanding any 
     other provision of law, the court shall not place on 
     probation or suspend the sentence of any person sentenced 
     under the preceding sentence.''; and
       (C) in the third sentence, by striking ``Penalties'' and 
     inserting: ``Except to the extent that a greater minimum 
     sentence is otherwise provided, penalties''.
       (b) Mandatory Minimum Prison Sentences for Persons 
     Convicted of Distribution of Drugs to Minors.--
       (1) In general.--Section 418 of the Controlled Substances 
     Act (21 U.S.C. 859) is amended--
       (A) in subsection (a)
       (i) by striking ``at least eighteen'' and inserting ``not 
     less than 21'';
       (ii) by striking ``twenty-one'' and inserting ``18'';
       (iii) by striking ``not less than one year'' and inserting 
     ``not less than 10 years''; and
       (iv) by striking the last sentence;
       (B) in subsection (b)--
       (i) by striking ``at least eighteen'' and inserting ``not 
     less than 21'';
       (ii) by striking ``twenty-one'' and inserting ``18'';
       (iii) by striking ``not less than one year'' and inserting 
     ``a mandatory term of life imprisonment''; and
       (iv) by striking the last sentence; and
       (C) in the section heading, by striking ``twenty-one'' and 
     inserting ``18''.
       (2) Technical amendment.--The table of contents for the 
     Comprehensive Drug Abuse Prevention and Control Act of 1970 
     is amended in the item relating to section 418 by striking 
     ``twenty-one'' and inserting ``18''.
       (c) Penalties for Drug Offenses in Drug-Free Zones.--
       (1) Increased penalties.--Section 419 of the Controlled 
     Substances Act (21 U.S.C. 860) is amended--
       (A) in subsection (a)--
       (i) by striking ``not less than one year'' and inserting 
     ``not less than 5 years''; and
       (ii) by striking the last sentence;
       (B) in subsection (b), by striking ``not less than three 
     years'' and inserting ``not less than 10 years''; and
       (C) by redesignating subsections (c), (d), and (e) as 
     subsections (d), (e), and (f), respectively.

     SEC. 607. PENALTY INCREASES FOR TRAFFICKING IN LISTED 
                   CHEMICALS.

       (a) Controlled Substances Act.--Section 401(d) of the 
     Controlled Substances Act (21 U.S.C. 841(d)) is amended by 
     inserting before the period at the end the following: ``or, 
     with respect to a violation of paragraph (1) or (2) of this 
     subsection involving a list I chemical, if the government 
     proves the quantity of controlled substance that could 
     reasonably have been manufactured in a clandestine setting 
     using the quantity of list I chemicals possessed or 
     distributed, the penalty corresponding to the quantity of 
     controlled substance that could have been produced under 
     subsection (b)''.
       (b) Controlled Substance Import and Export Act.--Section 
     1010(d) of the Controlled Substances Import and Export Act 
     (21 U.S.C. 960(d)) is amended by inserting before the period 
     at the end the following: ``, or, with respect to an 
     importation violation of paragraph (1) or (3) of this 
     subsection involving a list I chemical, if the government 
     proves the quality of controlled substance that could 
     reasonably have been manufactured in a clandestine setting 
     using the quantity of list I chemicals imported, the penalty 
     corresponding to the quantity of controlled substance that 
     could have been produced under title II''.
       (c) Determination of Quantity.--
       (1) In general.--For the purpose of this section and the 
     amendments made by this section, the quantity of controlled 
     substance that could reasonably have been provided shall be 
     determined by using a table of manufacturing conversion 
     ratios for list I chemicals.
       (2) Table.--The table described in paragraph (1) shall be--
       (A) established by the United States Sentencing Commission 
     based on scientific, law enforcement, and other data the 
     Sentencing Commission determines to be appropriate; and
       (B) dispositive of this issue.
        TITLE VII--COMBATING VIOLENCE AGAINST WOMEN AND CHILDREN
                      Subtitle A--General Reforms

     SEC. 701. PARTICIPATION OF RELIGIOUS ORGANIZATIONS IN 
                   VIOLENCE AGAINST WOMEN ACT PROGRAMS.

       Notwithstanding any other provision of law, religious 
     organizations shall be eligible to participate in any grant 
     program authorized pursuant to the Violence Against Women Act 
     of 1994 (Title IV of Public Law 103-322) which allow for the 
     participation of nongovernmental entities, programs, or 
     agencies, or any private organizations. No Federal or State 
     governmental agency receiving funds under any such program 
     shall discriminate against an organization on the basis that 
     the organization has a religious character. Nothing in this 
     section shall be construed to preempt any provision of a 
     State constitution or State statute that prohibits or 
     restricts the expenditure of State funds in or by religious 
     organizations.

     SEC. 702. DOMESTIC VIOLENCE ARREST GRANTS.

       Paragraph (20) of section 1001(a) of title I of the Omnibus 
     Crime Control and Safe Streets Act of 1968 is amended by 
     striking ``fiscal year 1998'' and inserting ``for each of the 
     fiscal years 1998 and 1999.''

     SEC. 703. RURAL DOMESTIC VIOLENCE AND CHILD ABUSE ENFORCEMENT 
                   ASSISTANCE.

       Section 13971(c) of title 42 United States Code is amended 
     by striking ``fiscal year 1998'' and inserting ``for each of 
     the fiscal years, 1998 and 1999.''

     SEC. 704. RUNAWAY, HOMELESS, AND STREET YOUTH ASSISTANCE 
                   GRANTS.

       Section 319(c)(3) of part A of the Runaway and Homeless 
     Youth Act (42 U.S.C. 5711 et seq.) is amended by striking 
     ``fiscal year 1998'' and inserting ``for each of the fiscal 
     years 1998 and 1999''.
                     Subtitle B--Domestic Violence

     SEC. 711. DEATH PENALTY FOR FATAL INTERSTATE DOMESTIC 
                   VIOLENCE OFFENSES.

       Sections 2261(b)(1) and 2262(b)(1) of title 18, United 
     States Code, are each amended by inserting ``or may be 
     sentenced to death,'' after ``years,''.

     SEC. 712. DEATH PENALTY FOR FATAL INTERSTATE VIOLATIONS OF 
                   PROTECTIVE ORDERS.

       Section 2262 of title 18, United States Code, is amended by 
     inserting ``or may be sentenced to death,'' after ``years,''.

     SEC. 713. EVIDENCE OF DISPOSITION OF DEFENDANT TOWARD VICTIM 
                   IN DOMESTIC VIOLENCE CASES AND OTHER CASES.

       Rule 404(b) of the Federal Rules of Evidence is amended by 
     striking ``or absence of mistake or accident'' and inserting 
     ``absence of mistake or accident, or a disposition toward a 
     particular individual,''.

     SEC. 714. HIV TESTING OF DEFENDANTS IN SEXUAL ASSAULT CASES.

       (a) In General.--Chapter 109A of title 18, United States 
     Code, is amended by adding at the end the following:


[[Page S205]]



     ``Sec. 2249. Testing for human immunodeficiency virus; 
       disclosure of test results to victim; effect on penalty

       ``(a) Testing at Time of Pretrial Release Determination.--
       ``(1) In general.--In a case in which a person is charged 
     with an offense under this chapter, upon request of the 
     victim, a judicial officer issuing an order pursuant to 
     section 3142(a) shall include in the order a requirement that 
     a test for the human immunodeficiency virus be performed upon 
     the person, and that followup tests for the virus be 
     performed 6 months and 12 months following the date of the 
     initial test, unless the judicial officer determines that the 
     conduct of the person created no risk of transmission of the 
     virus to the victim, and so states in the order.
       ``(2) Timing.--The order shall direct that the initial test 
     be performed within 24 hours, or as soon thereafter as 
     feasible.
       ``(3) No release from custody.--Any person upon whom a test 
     is performed under this section--
       ``(A) shall not be released from custody until the test is 
     performed; and
       ``(B) unless indigent, shall be responsible for paying for 
     the test at the time the test is performed.
       ``(b) Testing at Later Time.--
       ``(1) In general.--If a person charged with an offense 
     under this chapter was not tested for the human 
     immunodeficiency virus pursuant to subsection (a), the court 
     may at a later time direct that such a test be performed upon 
     the person, and that followup tests be performed 6 months and 
     12 months following the date of the initial test, if it 
     appears to the court that the conduct of the person may have 
     risked transmission of the virus to the victim.
       ``(2) Timing.--A testing requirement under this subsection 
     may be imposed at any time while the charge is pending, or 
     following conviction at any time prior to the completion of 
     service of the sentence by the person.
       ``(c) Termination of Testing Requirement.--A requirement of 
     followup testing imposed under this section shall be canceled 
     if any test is positive for the virus or the person obtains 
     an acquittal on, or dismissal of, all charges under this 
     chapter.
       ``(d) Disclosure of Test Results.--
       ``(1) In general.--The results of any test for the human 
     immunodeficiency virus performed pursuant to an order under 
     this section shall be provided to the judicial officer or 
     court.
       ``(2) Disclosure to victim.--The judicial officer or court 
     shall ensure that the results are disclosed to the victim (or 
     to the parent or legal guardian of the victim, as 
     appropriate), the attorney for the government, and the person 
     tested.
       ``(3) Applicability of other law.--Test results disclosed 
     pursuant to this subsection shall be subject to section 
     40503(b) (5) through (7) of the Violent Crime Control Act of 
     1994 (42 U.S.C. 14011(b)).
       ``(4) Counseling.--Any test result of the defendant given 
     to the victim or the defendant must be accompanied by 
     appropriate counseling, unless the recipient does not wish to 
     receive such counseling.
       ``(e) Effect on Penalty.--The United States Sentencing 
     Commission shall amend the Federal sentencing guidelines for 
     sentences for offenses under this chapter to enhance the 
     sentence if the offender knew or had reason to know that the 
     offender was infected with the human immunodeficiency virus, 
     except if the offender did not engage or attempt to engage in 
     conduct creating a risk of transmission of the virus to the 
     victim.''.
       (b) Technical Amendment.--The chapter analysis for chapter 
     109A of title 18, United States Code, is amended by inserting 
     at the end the following:

``2249. Testing for human immunodeficiency virus; disclosure of test 
              results to victim; effect on penalty.''.
       (c) Amendments to Testing Provisions.--Section 40503(b) of 
     the Violent Crime Control and Law Enforcement Act of 1994 (42 
     U.S.C. 14011(b)) is amended--
       (1) by striking the subsection heading and inserting the 
     following:
       ``(b) Testing of Defendants.--'';
       (2) in paragraph (1)--
       (A) by inserting ``, or the Government in such a case,'' 
     after ``subsection (a)'';
       (B) by inserting ``(or to the parent or legal guardian of 
     the victim, as appropriate)'' after ``communicated to the 
     victim''; and
       (C) by inserting ``, unless the recipient does not wish to 
     receive such counseling'' after ``counseling''; and
       (3) in paragraph (2)--
       (A) by striking ``to obtain an order under paragraph (1), 
     the victim must demonstrate that'' and inserting ``the victim 
     or the Government may obtain an order under paragraph (1) by 
     showing that'';
       (B) in subparagraph (A)--
       (i) by striking ``the offense'' and inserting ``a sexual 
     assault involving alleged conduct that poses a risk of 
     transmission of the etiologic agent for acquired immune 
     deficiency syndrome''; and
       (ii) by inserting ``and'' after the semicolon;
       (C) in subparagraph (B), by striking ``after appropriate 
     counseling; and'' and inserting a period; and
       (D) by striking subparagraph (C).
                TITLE VIII--VIOLENT CRIME AND TERRORISM
                Subtitle A--Violent Crime and Terrorism

     SEC. 801. AMENDMENTS TO ANTI-TERRORISM STATUTES.

       (a) Explosive Materials.--Section 844(f)(1) of title 18, 
     United States Code, is amended by inserting ``or any 
     institution or organization receiving Federal financial 
     assistance'' after ``or agency thereof,''; and
       (b) Biological Weapons.--(1)Section 178 of title 18, United 
     States Code, is amended by--
       (A) in paragraph (1), striking ``means any microorganism, 
     virus, or infectious substance, or biological product that 
     may be engineered as a result of biotechnology or any 
     naturally occurring or bioengineered component of any such 
     microorganism, virus, infectious substance, or biological 
     product'' and inserting ``means any microorganism (including 
     bacteria, viruses, fungi, rickettsiae or protozoa), or 
     infectious substance, or any naturally occurring, 
     bioengineered or synthesized component of any such 
     microorganism or infectious substance'';
       (B) in paragraph (2), striking ``means the toxic material 
     of plants, animals, microorganisms, viruses, fungi, or 
     infectious substances, or a recombinant molecule, whatever 
     its origin or method of production, including'' and inserting 
     ``means the toxic material or product of plants, animals, 
     microorganisms (including, but not limited to, bacteria, 
     viruses, fungi, rickettsiae or protozoa), or infectious 
     substances, or a recombinant or synthesized molecule, 
     whatever their origin and method of production, and 
     includes''; and
       (C) in paragraph (4), striking ``recombinant molecule, or 
     biological product that may be engineered as a result of 
     biotechnology'' and inserting ``recombinant or synthesized 
     molecule''.
       (2) Section 2332a of title 18, United States Code, is 
     amended by--
       (A) in subsection (a), striking ``, including any 
     biological agent, toxin, or vector (as those terms are 
     defined in section 178)''; and
       (B) in subsection (b)(2)(C), striking ``disease organism'' 
     and inserting ``any biological agent, toxin, or vector (as 
     those terms are defined in section 178 of this title)''.

     SEC. 802. KIDNAPPING; DEATH OF VICTIM BEFORE CROSSING STATE 
                   LINE AS NOT DEFEATING PROSECUTION, AND OTHER 
                   CHANGES.

       Section 1201(a) of title 18, United States Code, is 
     amended--
       (1) by striking ``or'' at the end of paragraph (4); and
       (2) by adding the following new paragraphs:
       ``(6) an individual travels in interstate or foreign 
     commerce in furtherance of the offense; or
       ``(7) the mail or a facility in interstate or foreign 
     commerce is used in furtherance of the offense;''.

     SEC. 803. EXPANSION OF SECTION 1959 OF TITLE 18 TO COVER 
                   COMMISSION OF ALL VIOLENT CRIMES IN AID OF 
                   RACKETEERING ACTIVITY AND INCREASED PENALTIES.

       Section 1959(a) of title 18, United States Code, is 
     amended--
       (1) by inserting ``or commits any other crime of violence'' 
     before ``or threatens to commit a crime of violence 
     against'';
       (2) in paragraph (4), by inserting ``committing any other 
     crime of violence or for'' before ``threatening to commit a 
     crime of violence'', and by striking ``five'' and inserting 
     ``ten'';
       (3) in paragraph (5) by striking ``ten'' and inserting 
     ``twenty'';
       (4) in paragraph (6) by striking ``or'' before ``assault 
     resulting in serious bodily injury,'', by inserting ``or any 
     other crime of violence'' after those same words, and by 
     striking ``three'' and inserting ``ten''; and
       (5) by inserting ``(as defined in section 1365 of this 
     title)'' after ``serious bodily injury'' the first place it 
     appears.

     SEC. 804. CONFORMING AMENDMENT TO CONSPIRACY PENALTY.

       (a) Firearms.--Section 924 of title 18, United States Code, 
     is amended by adding at the end the following new subsection:
       ``(o) Except as otherwise provided in this section, a 
     person who conspires to commit any offense defined in this 
     chapter shall be subject to the same penalties (including the 
     penalty of death) as those prescribed for the offense the 
     commission of which was the object of the conspiracy.''.
       (b) Explosives.--Section 844(n) of title 18, United States 
     Code, is amended by striking ``other than'' and inserting 
     ``including''.

     SEC. 805. INCLUSION OF CERTAIN ADDITIONAL SERIOUS DRUG 
                   OFFENSES AS ARMED CAREER CRIMINAL ACT 
                   PREDICATES.

       Section 924(e)(2)(A)(ii) of title 18, United States Code, 
     is amended by inserting before the semicolon the following: 
     ``or which, if it had been prosecuted as a violation of the 
     Controlled Substances Act (21 U.S.C. 801 et seq.) at the time 
     of the offense and because of the type and quantity of the 
     controlled substance involved, would have been punishable by 
     a maximum term of imprisonment of ten years or more''.

     SEC. 806. INCREASED PENALTIES FOR VIOLENCE IN THE COURSE OF 
                   RIOT OFFENSES.

       Section 2101(a) of title 18, United States Code, is amended 
     by striking ``Shall be fined under this title, or imprisoned 
     not more than five years, or both'' and inserting ``Shall be 
     fined under this title or (i) if death results from such act, 
     be imprisoned for any term of years or for life, or both, or 
     may be sentenced to death; (ii) if serious bodily injury (as 
     defined in section 1365 of this title) results from such act, 
     be imprisoned for not more than twenty years, or both; or 
     (iii) in any other case, be imprisoned for not more than five 
     years, or both''.

[[Page S206]]

     SEC. 807. ELIMINATION OF UNJUSTIFIED SCIENTER ELEMENT FOR 
                   CARJACKING.

       Section 2119 of title 18, United States Code, is amended by 
     striking ``, with the intent to cause death or serious bodily 
     harm''.

     SEC. 808. CRIMINAL OFFENSES COMMITTED OUTSIDE THE UNITED 
                   STATES BY PERSONS ACCOMPANYING THE ARMED 
                   FORCES.

       Title 18, United States Code, is amended by adding after 
     chapter 211 the following:


  ``CHAPTER 212--CRIMINAL OFFENSES COMMITTED OUTSIDE THE UNITED STATES

     ``Sec. 3261. Criminal offenses committed by persons formerly 
       serving with, or presently employed by or accompanying, the 
       armed forces outside the United States

       ``(a) Whoever, while serving with, employed by, or 
     accompanying the armed forces outside the United States, 
     engages in conduct which would constitute an offense 
     punishable by imprisonment for more than one year if the 
     conduct had been engaged in within the special maritime and 
     territorial jurisdiction of the United States, shall be 
     guilty of a like offense and subject to a like punishment.
       ``(b) Nothing contained in this chapter deprives courts-
     martial, military commissions, provost courts, or other 
     military tribunals of concurrent jurisdiction with respect of 
     offenders or offenses that by statute or by the law of war 
     may be tried by courts-martial, military commissions, provost 
     courts, or other military tribunals.
       ``(c) No prosecution may be commenced under this section if 
     a foreign government, in accordance with jurisdiction 
     recognized by the United States, has prosecuted or is 
     prosecuting such person for the conduct constituting such 
     offense, except upon the approval of the Attorney General of 
     the United States or the Deputy Attorney General of the 
     United States (or a person acting in either such capacity), 
     which function of approval may not be delegated.''
       ``(d)(1) The Secretary of Defense may designate and 
     authorize any person serving in a law enforcement position in 
     the Department of Defense to arrest outside the United States 
     any person described in subsection (a) of this section who 
     there is probable cause to believe engaged in conduct which 
     constitutes a criminal offense under such section.
       ``(2) A person arrested under paragraph (1) of this section 
     shall be released to the custody of civilian law enforcement 
     authorities of the United States for removal to the United 
     States for judicial proceedings in relation to conduct 
     referred to in such paragraph unless--
       ``(A) such person is delivered to authorities of a foreign 
     country under section 3262 of this title; or
       ``(B) such person has had charges preferred against him 
     under chapter 47 of title 10 for such conduct.

     ``Sec. 3262. Delivery to authorities of foreign countries

       ``(a) Any person designated and authorized under section 
     3261(d) of this title may deliver a person described in 
     section 3261(a) of this title to the appropriate authorities 
     of a foreign country in which such person is alleged to have 
     engaged in conduct described in such subsection (a) of this 
     section if--
       ``(1) the appropriate authorities of that country request 
     the delivery of the person to such country for trial for such 
     conduct as an offense under the laws of that country; and
       ``(2) the delivery of such person to that country is 
     authorized by a treaty or other international agreement to 
     which the United States is a party.
       ``(b) The Secretary of Defense shall determine what 
     officials of a foreign country constitute appropriate 
     authorities for the purpose of this section.

     ``Sec. 3263. Regulations

       ``The Secretary of Defense shall issue regulations 
     governing the apprehension, detention, and removal of persons 
     under this chapter. Such regulations shall be uniform 
     throughout the Department of Defense.

     ``Sec. 3264. Definitions for chapter

       As used in this chapter--
       ``(1) a person is ``employed by the armed forces outside 
     the United States''--
       (i) if he or she is employed as a civilian employee of a 
     military department or of the Department of Defense, as a 
     Department of Defense contractor, or as an employee of a 
     Department of Defense contractor;
       (ii) is present or residing outside the United States in 
     connection with such employment; and
       (iii) is not a national of the host nation.
       ``(2) a person is ``accompanying the armed forces outside 
     the United States'' if he or she--
       (i) is a dependent of a member of the armed forces;
       (ii) is a dependent of a civilian employee of a military 
     department or of the Department of Defense;
       (iii) is residing with the member or civilian employee 
     outside the United States; and
       (iv) is not a national of the host nation.''.

     SEC. 809. ASSAULTS OR OTHER CRIMES OF VIOLENCE FOR HIRE.

       Section 1958(a) of title 18, United States Code, is amended 
     by inserting ``or other felony crime of violence against the 
     person'' after ``murder''.

     SEC. 810. PENALTY ENHANCEMENT FOR CERTAIN OFFENSES RESULTING 
                   IN DEATH.

       (a) Mailmen.--Section 2114 of title 18, United States Code, 
     is amended--
       (1) by designating the existing matter as subsection (a); 
     and
       (2) by adding a new subsection (b) as follows:
       ``(b) Whoever, in committing an offense described in this 
     section, or in avoiding or attempting to avoid apprehension 
     for the commission of such offense, kills any person shall be 
     punished by death or by imprisonment for life.'';
       (b) Controlled Substances.--Section 2118(c)(2) of title 18, 
     United States Code, is amended by striking all after ``kills 
     any person'' and inserting ``shall be punished by death or by 
     imprisonment for life.'';
       (c) Interstate Domestic Violence.--Sections 2261(b)(1) and 
     2262(b)(1) of title 18, United States Code, are each amended 
     by inserting before the semicolon ``, and may be sentenced to 
     death'';
       (d) Animal Enterprise Terrorism.--Section 43(b)(2) of title 
     l8, United States Code, is amended by inserting ``or may be 
     sentenced to death'' after ``imprisoned for life or for any 
     term of years''; and
       (e) Racketeering.--Section 1952(a)(3)(B) of title 18, 
     United States Code, is amended by inserting ``or may be 
     sentenced to death'' after ``imprisoned for any term of years 
     or for life''.

     SEC. 811. VIOLENCE DIRECTED AT DWELLINGS IN INDIAN COUNTRY.

       Section 1153(a) of title 18, United States Code, is amended 
     by inserting ``or 1363'' after ``section 661''.
                   Subtitle B--Courts and Sentencing

     SEC. 821. ALLOWING A REDUCTION OF SENTENCE FOR PROVIDING 
                   USEFUL INVESTIGATIVE INFORMATION ALTHOUGH NOT 
                   REGARDING A PARTICULAR INDIVIDUAL.

       Section 3553(e) of title 18, United States Code, section 
     994(n) of title 28, United States Code, and Rule 35(b) of the 
     Federal Rules of Criminal Procedure are each amended by 
     striking ``substantial assistance in the investigation or 
     prosecution of another person who has committed an offense'' 
     and inserting ``substantial assistance in an investigation of 
     any offense or the prosecution of another person who has 
     committed an offense''.

     SEC. 822. APPEALS FROM CERTAIN DISMISSALS.

       Section 3731 of title 18, United States Code, is amended by 
     inserting ``or any part thereof'' after ``as to any one or 
     more counts''.

     SEC. 823. ELIMINATION OF OUTMODED CERTIFICATION REQUIREMENT.

       Section 3731 of title 18, United States Code, is amended in 
     the second paragraph by striking ``, if the United States 
     attorney certifies to the district court that the appeal is 
     not taken for purpose of delay and that the evidence is a 
     substantial proof of a fact material in the proceeding''.

     SEC. 824. IMPROVEMENT OF HATE CRIMES SENTENCING PROCEDURE.

       Section 280003(b) of the Violent Crime Control and Law 
     Enforcement Act of 1994 (28 U.S.C. 994 note) is amended by 
     striking ``the finder of fact at trial'' and inserting ``the 
     court at sentencing''.

     SEC. 825. CLARIFICATION OF LENGTH OF SUPERVISED RELEASE TERMS 
                   IN CONTROLLED SUBSTANCE CASES.

       Section 401(b)(1) of the Controlled Substances Act (21 
     U.S.C. 841(b)(1)) is amended in each of subparagraphs (A), 
     (B), (C), and (D), by striking ``Any sentence'' and inserting 
     ``Notwithstanding section 3583 of title 18, United States 
     Code, any sentence''.

     SEC. 826. AUTHORITY OF COURT TO IMPOSE A SENTENCE OF 
                   PROBATION OR SUPERVISED RELEASE WHEN REDUCING A 
                   SENTENCE OF IMPRISONMENT IN CERTAIN CASES.

       Section 3582(c)(1)(A) of title 18, United States Code, is 
     amended by inserting ``(and may impose a sentence of 
     probation or supervised release with or without conditions)'' 
     after ``may reduce the term of imprisonment''.

     SEC. 827. TECHNICAL CORRECTION TO ASSURE COMPLIANCE OF 
                   SENTENCING GUIDELINES WITH PROVISIONS OF ALL 
                   FEDERAL STATUTES.

       Section 994(a) of title 28, United States Code, is amended 
     by striking ``consistent with all pertinent provisions of 
     this title and title 18, United States Code,'' and inserting 
     ``consistent with all pertinent provisions of any Federal 
     statute''.
                     Subtitle C--White Collar Crime

     SEC. 841. CLARIFICATION OF SCIENTER REQUIREMENT FOR RECEIVING 
                   PROPERTY STOLEN FROM AN INDIAN TRIBAL 
                   ORGANIZATION.

       Section 1163 of title 18, United States Code, is amended in 
     the second paragraph by striking ``so''.

     SEC. 842. LARCENY INVOLVING POST OFFICE BOXES AND POSTAL 
                   STAMP VENDING MACHINES.

       Section 2115 of title 18, United States Code, is amended--
       (1) by striking ``or'' before ``any building'';
       (2) by inserting ``or any post office box or postal stamp 
     vending machine for the sale of stamps owned by the Postal 
     Service,'' after ``used in whole or in part as a post 
     office,'';
       (3) by inserting ``or in such box or machine,'' after ``so 
     used''.

     SEC. 843. THEFT OF VESSELS.

       (a) Definitions.--Section 2311 of title 18, United States 
     Code, is amended by adding at the end the following:
       `` `Vessel' means any watercraft or other contrivance used 
     or designed for transportation or navigation on, under, or 
     immediately above, water.''.
       (b) Transportation, Sale, or Receipt of Stolen Vehicles.--
     Sections 2312 and 2313 of

[[Page S207]]

     title 18, United States Code, are each amended by striking 
     ``motor vehicle or aircraft'' and inserting ``motor vehicle, 
     vessel, or aircraft''.

     SEC. 844. CONFORMING AMENDMENT TO LAW PUNISHING OBSTRUCTION 
                   OF JUSTICE BY NOTIFICATION OF EXISTENCE OF A 
                   SUBPOENA FOR RECORDS IN CERTAIN TYPES OF 
                   INVESTIGATIONS.

       Section 1510(b)(3)(B) of title 18, United States Code, is 
     amended--
       (1) in clause (i), by striking ``or'' at the end;
       (2) in clause (ii), by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(iii) the Controlled Substances Act, the Controlled 
     Substances Import and Export Act, or section 6050I of the 
     Internal Revenue Code of 1986.''.

     SEC. 845. INJUNCTIONS AGAINST COUNTERFEITING AND FORGERY.

       (a) In General.--Chapter 25 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 514. Injunctions against counterfeiting and forgery

       ``(a)(1) If a person is violating or about to violate any 
     provision of this chapter, the Attorney General may commence 
     a civil action in any Federal court to enjoin such violation.
       ``(2) A permanent or temporary injunction or restraining 
     order shall be granted without bond.
       ``(b) The court shall proceed as soon as practicable to the 
     hearing and determination of such an action, and may, at any 
     time before final determination, enter such a restraining 
     order or prohibition, or take such other action as is 
     warranted in its discretion. A proceeding under this section 
     is governed by the Federal Rules of Civil Procedure, except 
     that, if an indictment has been returned against the 
     respondent, discovery is governed by the Federal Rules of 
     Criminal Procedure.''.
       (b) Clerical Amendment.--The chapter analysis for chapter 
     25 of title 18, United States Code, is amended by adding at 
     the end:

     ``Sec. 514. Injunctions against counterfeiting and 
       forgery.''.

                  Subtitle D--Miscellaneous Provisions

     SEC. 861. INCREASED MAXIMUM PENALTY FOR CERTAIN RICO 
                   VIOLATIONS.

       Section 1963(a) of title 18, United States Code, is amended 
     by striking ``or imprisoned not more than 20 years (or for 
     life if the violation is based on a racketeering activity for 
     which the maximum penalty includes life imprisonment)'' and 
     inserting ``or imprisoned not more than the greater of 20 
     years or the statutory maximum term of imprisonment 
     (including life) applicable to a racketeering activity on 
     which the violation is based''.

     SEC. 862. CLARIFICATION OF INAPPLICABILITY TO CERTAIN 
                   DISCLOSURES.

       Section 2515 of title 18, United States Code, is amended by 
     adding at the end the following: ``This section shall not 
     apply to the disclosure by the United States, a State, or 
     political subdivision in a criminal trial or hearing or 
     before a grand jury of the contents of a wire or oral 
     communication, or evidence derived therefrom, the 
     interception of which was in violation of section 
     2511(2)(d)(relating to certain interceptions not involving 
     governmental misconduct).''.

     SEC. 863. CONFORMING AMENDMENTS RELATING TO SUPERVISED 
                   RELEASE.

       (a) Sections 1512(a)(1)(C), 1512(b)(3), 1512(c)(2), 
     1513(a)(1)(B), and 1513(b)(2) are each amended by striking 
     ``violation of conditions of probation, parole or release 
     pending judicial proceedings'' and inserting ``violation of 
     conditions of probation, supervised release, parole, or 
     release pending judicial proceedings''.
       (b) Section 3142 of title 18, United States Code, is 
     amended--
       (1) in subsection (d)(1), by inserting ``, supervised 
     release,'' ``probation''; and
       (2) in subsection (g)(3), by inserting ``or supervised 
     release'' after ``probation''.

     SEC. 864. ADDITION OF CERTAIN OFFENSES AS MONEY LAUNDERING 
                   PREDICATES.

       Section 1956(c)(7)(D) of title 18, United States Code, is 
     amended by inserting ``or section 2339B (relating to 
     providing material support to designated foreign terrorist 
     organizations)'' before ``of this title''.

     SEC. 865. CLARIFICATION OF JURISDICTIONAL BASE INVOLVING THE 
                   MAIL.

       Section 2422(b) of title 18, United States Code, is 
     amended--
       (1) by inserting ``the mail'' after ``using''; and
       (2) by striking ``including the mail,''.

     SEC. 866. COVERAGE OF FOREIGN BANK BRANCHES IN THE 
                   TERRITORIES.

       Section 20(9) of title 18, United States Code, is amended 
     by inserting before the period the following: ``, except that 
     for purposes of this section the definition of the term 
     `State' in such Act shall be deemed to include a 
     commonwealth, territory, or possession of the United 
     States''.

     SEC. 867. CONFORMING STATUTE OF LIMITATIONS AMENDMENT FOR 
                   CERTAIN BANK FRAUD OFFENSES.

       Section 3293 of title 18, United States Code, is amended--
       (1) by inserting ``225,'' after ``215,''; and
       (2) by inserting ``1032,'' before ``1033''.

     SEC. 868. CLARIFYING AMENDMENT TO SECTION 704.

       Section 704(b)(2) of title 18, United States Code, is 
     amended by striking ``with respect to a Congressional Medal 
     of Honor''.
                        TITLE IX--PRISON REFORM
                  Subtitle A--Prison Litigation Reform

     SEC. 901. AMENDMENT TO THE PRISON LITIGATION REFORM ACT.

       Section 801 of the Prison Litigation Reform Act of 1995 is 
     amended by striking ``1995'' and inserting ``1996''.

     SEC. 902. APPROPRIATE REMEDIES FOR PRISON CONDITIONS.

       Section 3626 of title 18, United States Code is amended--
       (1) in subsection (a)--
       (A) in paragraph (1)(B)(i), by striking ``permits'' and 
     inserting ``requires''; and
       (B) in paragraph (3)--
       (i) in subparagraph (A), by striking ``no prisoner release 
     order shall be entered unless--'' and inserting ``no court 
     shall enter a prisoner release order unless--'';
       (ii) in subparagraph (B), by--

       (I) striking ``(B) In'' and inserting ``(B)(i) In''; and
       (II) striking ``title 28 if the requirements of 
     subparagraph (E) have been met'' and inserting ``title 28'';

       (iii) by redesignating subparagraph (C) as clause (ii);
       (iv) by redesignating subparagraph (D) as clause (iii);
       (v) in subparagraph (E), by striking ``The three-judge 
     court shall enter a prisoner release order only if'' and 
     inserting ``In any civil action with respect to prison 
     conditions, no court shall enter a prisoner release order 
     unless the requirements of subparagraph (A) have been met 
     and'';
       (vi) by redesignating subparagraph (E) as subparagraph (B) 
     and redesignating current subparagraph (B) as subparagraph 
     (C) and current subparagraph (F) as subparagraph (D); and
       (vii) in subparagraph (D), as redesignated, by striking 
     ``program'' and inserting ``prison'';
       (2) in subsection (b)--
       (A) in paragraph (3), by striking ``the court makes written 
     findings based on the record that prospective relief remains 
     necessary to correct a current or ongoing violation of the 
     Federal right, extends no further than necessary to correct 
     the violation of the Federal right, and that the prospective 
     relief is narrowly drawn and the least intrusive means to 
     correct the violation'' and inserting ``the plaintiff 
     establishes by a preponderance of the evidence and the court 
     makes written findings based on the record that there is a 
     current and ongoing violation of a Federal right, that 
     prospective relief remains necessary to correct the current 
     and ongoing violation of that Federal right, and that the 
     relief extends no further than necessary to correct the 
     current and ongoing violation of the Federal right, is 
     narrowly drawn, and is the least intrusive means to correct 
     the current and ongoing violation of the Federal right''; and
       (B) by striking ``or (2)'' in paragraph 5, as redesignated;
       (3) in subsection (e)--
       (A) in paragraph (2), by striking ``Any prospective relief 
     subject to a pending motion shall be automatically stayed 
     during the period--'' and inserting ``Any motion to modify or 
     terminate prospective relief made under subsection (b) shall 
     operate as a stay during the period--'' ; and
       (B) by adding the following:
       ``(3) Order refusing to impose stay.--Any order staying or 
     suspending the operation of the automatic stay described in 
     paragraph (2) shall be treated as an order refusing to 
     dissolve or modify an injunction and shall be appealable 
     pursuant to section 1292(a)(1) of title 28, United States 
     Code, regardless of how the order is styled and whether it is 
     termed a preliminary or a final ruling.
       ``(4) Intervention.--The court shall rule within 30 days on 
     any motion to intervene as of right under subsection 
     (a)(3)(D). Mandamus shall lie to remedy any failure to act on 
     such a motion. Any State or local official or unit of 
     government seeking to intervene as of right pursuant to 
     subsection (a)(3)(D) may simultaneously file a motion to 
     modify or terminate a prisoner release order. If the motion 
     to intervene has not been denied by the 30th day after the 
     motion to modify or terminate has been filed, in the case of 
     a motion made under paragraph (1) or (2), or by the 180th day 
     after the motion to modify or terminate has been filed, in 
     the case of a motion made pursuant to any other law, the 
     motion to modify or terminate shall operate as a stay of the 
     prospective relief pursuant to the provisions of paragraph 
     (2) beginning on the 30th or 180th day, respectively, and 
     ending either on the date the court enters a final order 
     denying the motion to intervene, or, if the court grants the 
     motion to intervene, on the date that the court enters a 
     final order ruling on the motion to terminate or modify the 
     relief.'';
       (6) in subsection (f)--
       (A) after ``Special Masters'' by inserting ``In any civil 
     action in a federal court with respect to prison 
     conditions'';
       (B) In paragraph (1)(A), by striking from ``In any civil 
     action'' through ``prison conditions, the'' and inserting 
     ``The'';
       (C) in paragraphs (1)(B) and (3), by striking ``under this 
     subsection'';
       (D) in paragraph (4), by striking ``under this section''; 
     and
       (E) in paragraph (6), by striking ``appointed under this 
     subsection'';
       (F) in paragraph (2)(A), by striking ``institution''; and

[[Page S208]]

       (G) in paragraph (2), by adding at the end the following:
       ``(D) The requirements of this paragraph shall apply only 
     to special masters appointed after the date of enactment of 
     the Prison Litigation Reform Act of 1995.'';
       (H) in paragraph (4), by adding at the end the following: 
     ``In no event shall the court require the parties to pay the 
     compensation, expenses or costs of the special master.'';
       (I) in paragraph (5), by striking from ``In any civil 
     action'' through ``subsection, the'' and inserting ``The''; 
     and
       (J) in paragraph (6)--
       (i) in subparagraph (A), by striking ``hearings'' and 
     inserting ``hearings on the record''; and by striking ``and 
     prepare proposed findings of fact, which shall be made on the 
     record'' and inserting ``, and shall make any findings based 
     on the record as a whole'';
       (ii) in subparagraph (B), by adding ``and'' at the end;
       (iii) by striking subparagraph (C); and
       (iv) by redesignating subparagraph (D) as subparagraph (C); 
     and
       (7) in subsection (g)--
       (A) in paragraph (1), by striking ``settlements'' and 
     inserting ``settlement agreements'';
       (B) in paragraph (3)--
       (i) by inserting ``Federal, State, local, or other'' before 
     ``facility'';
       (ii) by striking ``violations'' and inserting ``a 
     violation'';
       (iii) by striking ``terms and conditions'' and inserting 
     ``terms or conditions''; and
       (iv) by inserting ``or other post-conviction conditional or 
     supervised release,'' after ``probation,'';
       (C) in paragraph (5), by striking ``or local facility'' and 
     inserting ``local, or other facility'';
       (D) in paragraph (8), by striking ``inherent'';
       (E) in paragraph (9), by striking ``agreements.'' and 
     inserting ``agreements;'';
       (F) by reversing the order of paragraphs (8) and (9);
       (G) by inserting at the end of the subsection the following 
     new paragraph:
       ``(10)(A) the term `violation of a Federal right' means a 
     violation of a Federal constitutional or Federal statutory 
     right;
       ``(B) The term `violation of a Federal right' does not 
     include a violation of a court order that is not 
     independently a violation of a Federal statutory or Federal 
     constitutional right;
       ``(C) The term `violation of a Federal right' shall not be 
     interpreted to expand the authority of any individual or 
     class to enforce the legal rights that individual or class 
     may have pursuant to existing law with regard to 
     institutionalized persons, or to expand the authority of the 
     United States to enforce those rights on behalf of any 
     individual or class.''; and
       (H) by renumbering the paragraphs.

     SEC. 903. CIVIL RIGHTS OF INSTITUTIONALIZED PERSONS.

       (a) In General.--Section 7 of the Civil Rights of 
     Institutionalized Persons Act (42 U.S.C. 1997e), as amended 
     by section 803(d) of the Prison Litigation Reform Act of 
     1995, is amended--
       (1) by amending the title of the section to read ``Civil 
     Actions with Respect to Prison Conditions'';
       (2) in subsections (a),(c), and (d), by striking ``by a 
     prisoner confined in any jail, prison, or other correctional 
     facility''
       (3) in subsection (a), by striking ``No action shall be 
     brought with respect to prison conditions'' and inserting 
     ``No civil action with respect to prison conditions shall be 
     brought''; and by striking ``until such administrative 
     remedies as are available are exhausted.'' and inserting in 
     its place ``until the plaintiff has exhausted such 
     administrative remedies as are available.'';
       (4) in subsection (c), by striking ``any action brought 
     with'' and inserting ``any civil action with'';
       (5) in subsection (d)
       (A) in paragraph (1)
       (i) by striking ``any action brought by a prisoner who is'' 
     and inserting ``any civil action with respect to prison 
     conditions brought by a plaintiff who is or has been'';
       (ii) by amending subparagraph (A) to read as follows:
       ``(A) the fee was directly and reasonably incurred in--
       ``(i) proving an actual violation of the plaintiff's 
     Federal rights;
       ``(ii) successfully obtaining contempt sanctions for a 
     violation of previously ordered prospective relief that meets 
     the standards set forth in section 3626 of title 18, United 
     States Code, if the plaintiff made a good faith effort to 
     resolve the matter without court action; or
       ``(iii) successfully obtaining court ordered enforcement of 
     previously ordered prospective relief that meets the 
     standards set forth in section 3626 of title 18, United 
     States Code, if the enforcement order was necessary to 
     prevent an imminent risk of serious bodily injury to the 
     plaintiff and the plaintiff made a good faith attempt to 
     resolve the matter without court action; and''; and
       (iii) by amending subparagraph (B) to read as follows:
       ``(B) the amount of the fee is proportionately related to 
     the court ordered relief for the violation.'';
       (B) in paragraph (2), by striking the last sentence and 
     inserting ``If a monetary judgment is the sole or principal 
     relief awarded, the award of attorney's fees shall not exceed 
     100% of the judgment.''; and
       (C) in paragraph (3)--
       (i) by striking ``greater than 150 percent'' and inserting 
     ``greater than the lesser of--
       ``(A) 150 percent''; and
       (ii) by striking ``counsel.'' and inserting ``counsel; or
       ``(B) a rate of $100 per hour.'';
       (D) in paragraph (4), by striking ``prisoner'' and 
     inserting ``plaintiff'';
       (6) in subsection (e), by striking ``Federal civil action'' 
     and inserting ``civil action arising under federal law'';
       (7) in subsection (f), by striking ``action brought with 
     respect to prison conditions'' and inserting ``civil action 
     with respect to prison conditions brought'';
       (8) in subsection (g)--
       (i) by amending the heading to read as follows: ``Waiver of 
     Response'';
       (ii) by amending paragraph (1) to read as follows:
       ``(1) Any defendant may waive the right to respond to any 
     complaint in any civil action arising under federal law 
     brought by a prisoner. Notwithstanding any other law or rule 
     of procedure, such waiver shall not constitute an admission 
     of the allegations contained in the complaint or waive any 
     affirmative defense available to the defendant. No relief 
     shall be granted to the plaintiff unless a response has been 
     filed. The court may direct any defendant to file a 
     response.''; and
       (iii) by striking paragraph (2); and
       (9) by amending subsection (h) to read as follows:
       ``(h) As used in this section, the terms `civil action with 
     respect to prison conditions', `prison', and `prisoner' have 
     the meanings given those terms in section 3626(g) of title 
     18, United States Code.''.

     SEC. 904. PROCEEDINGS IN FORMA PAUPERIS.

       (a) In General.--Section 1915(b)(1)(B) of title 28, United 
     States Code is amended--
       (1) by inserting after ``average'' the following: ``of the 
     highest'';
       (2) by inserting after ``balance'' the following: 
     ``recorded for'';
       (3) by striking ``in''; and
       (4) by striking ``the 6-month period'' and inserting ``each 
     of the 6 months''.
       (b) Section 1915(b)(2) of title 28, United States Code, is 
     amended--
       (1) by striking ``forward'' and inserting ``deduct'';
       (2) by striking ``to the clerk of the court''; and
       (3) by adding at the end the following: ``The agency having 
     custody of the prisoner shall forward the deducted payments 
     to clerk of the court either upon deduction or on a monthly 
     basis accompanied by appropriate documentation.''.
       (c) Section 1915(f)(2)(A) of title 28, United States Code, 
     is amended by inserting ``provides for or'' before 
     ``includes'';
       (d) Section 1915(f)(2)(B), of title 28, United States Code, 
     is amended to add the following sentence at the end: ``If the 
     judgment for costs is held by the agency, or the employees of 
     the agency, having custody of the prisoner, the agency may 
     withdraw 20 percent of each deposit to the prisoner's account 
     and apply that amount to payment of the judgment until the 
     judgment is paid in full.'';
       (e) Section 1915(g) of title 28, United States Code, is 
     amended--
       (1) by striking ``is frivolous'' and inserting ``was 
     frivolous''; and
       (2) by striking ``fails'' and inserting ``failed''.
       (f) Section 1915(h) of title 28, United States Code, as 
     added by section 804(e) of the Prison Litigation Reform Act 
     of 1995, is amended--
       (1) by inserting ``Federal, State, local, or other'' before 
     ``facility'';
       (2) by striking ``violations'' and inserting ``a 
     violation'';
       (3) by striking ``terms and conditions'' and inserting 
     ``terms or conditions''; and
       (4) by inserting ``or other post-conviction conditional or 
     supervised release,'' after ``probation,''.
       (g) Section 1915A of title 28, United States Code, is 
     amended by striking ``, before docketing, if feasible or, in 
     any event,''.

     SEC. 905. NOTICE TO STATE AUTHORITIES OF MALICIOUS FILING BY 
                   PRISONER.

       (a)Amendment.--Chapter 123 of title 28, United States Code, 
     is amended--
       (1) by inserting after section 1915A the following new 
     section:

     ``Sec. 1915B. Notice to state authorities of finding of 
       malicious filing by a prisoner

       ``(1) Finding.--In any civil action brought in Federal 
     court by a prisoner (other than a prisoner confined in a 
     Federal correctional facility), the court may, on its own 
     motion or the motion of any adverse party, make a finding 
     whether--
       ``(A) the claim was filed for a malicious purpose;
       ``(B) the claim was filed to harass the party against which 
     it was filed; or
       ``(C) the claimant testified falsely or otherwise knowingly 
     presented false evidence or information to the court.
       ``(2) The court shall transmit to the State Department of 
     Corrections or other appropriate authority any affirmative 
     finding under paragraph (1). If the court makes such a 
     finding, the Department of Corrections or other appropriate 
     authority may, pursuant to State or local law--
       (A) revoke such amount of good time credit or the 
     institutional equivalent accrued to the prisoner as is deemed 
     appropriate; or
       (B) consider such finding in determining whether the 
     prisoner should be released from

[[Page S209]]

     prison under any other state or local program governing the 
     release of prisoners, including parole, probation, other 
     post-conviction or supervised release, or diversionary 
     program.'';
       (2) by redesignating subsection 1915A(c) as section 1915C, 
     and in that section, as redesignated--
       (A) by striking "this section" and inserting "sections 
     1915A and 1915B";
       (B) by inserting ``Federal, State, local, or other'' before 
     ``facility'';
       (C) by striking ``violations'' and inserting ``a 
     violation'';
       (D) by striking ``terms and conditions'' and inserting 
     ``terms or conditions''; and
       (E) by inserting ``or other post-conviction conditional or 
     supervised release,'' after ``probation,''; and
       (3) by inserting in the analysis for chapter 123 of title 
     28, United States Code, and as further amended by this Act, 
     after the item relating to section 1915A the following new 
     items:

     ``1915B. Notice to State authorities of malicious filing by 
       prisoner."; and

     ``1915C. Definition.''.

     SEC. 906. PAYMENT OF DAMAGE AWARD IN SATISFACTION OF PENDING 
                   RESTITUTION AWARDS.

       (a) Section 807 of the Prison Litigation Reform Act of 1995 
     is designated as section 1915D(a) of chapter 123 of title 28, 
     United States Code.
       (b) That section is amended by striking the word 
     ``compensatory'' and the last sentence of that section.
       (c) Section 808 of the Prison Litigation Reform Act of 1995 
     is designated as section 1915D(b) of chapter 123 of title 28, 
     United States Code.
       (d) The analysis for chapter 123 of title 28, United States 
     Code, is amended by inserting after the item relating to 
     Section 1915C the following new item:

     ``Sec. 1915D. Payment of damage award in satisfaction of 
       pending restitution order.''.

     SEC. 907. EARNED RELEASE CREDIT OR GOOD TIME CREDIT 
                   REVOCATION.

       (a) Section 1932 of title 28, United States Code, is 
     redesignated as section 3624A of title 18, United States 
     Code.
       (b) Section 3624A of title 18, United States Code, as 
     redesignated by subsection (a) of this section, is amended--
       (1) by striking ``In any'' and inserting ``(a) Finding--In 
     any'';
       (2) by striking ``an adult'' and inserting ``a person'';
       (3) by striking ``order the revocation'' and all that 
     follows through ``finds that--'' and inserting ``, on its own 
     motion or the motion of any adverse party, make a finding 
     whether--'';
       (4) in paragraph (2), by striking "solely";
       (5) in paragraph (3)--
       (A) by striking ``testifies'' and inserting ``testified''; 
     and
       (B) by striking ``presents'' and inserting ``presented''; 
     and
       (6) by adding at the end the following:
       ``(b) Transmission of Finding.--The court shall transmit to 
     the Bureau of Prisons any affirmative finding under 
     subsection (a). If the court makes such a finding, the Bureau 
     of Prisons shall revoke an amount of unvested good time 
     credit or the institutional equivalent accrued to the 
     prisoner pursuant to section 3264 as is deemed appropriate by 
     the Director of the Bureau of Prisons.''.
       (c)(1) The analysis for chapter 123 of title 28, United 
     States Code, is amended by striking the item relating to 
     section 1932.
       (2) The analysis for chapter 229 of title 18, United States 
     Code, is amended by inserting after the item relating to 
     section 3624 the following:

     ``Sec. 3624A. Revocation of earned release credit.''.

     SEC. 908. RELEASE OF PRISONER.

       Section 3624(b) of title 18, United States Code, is 
     amended--
       (1) in paragraph (1), by amending the fifth sentence to 
     read as follows: ``Credit that has not been earned may not 
     later be granted, and credit that has been revoked pursuant 
     to section 3624A may not later be reinstated.''; and
       (2) in paragraph (2), by inserting before the period at the 
     end the following: ``, and may be revoked by the Bureau of 
     Prisons for noncompliance with institutional disciplinary 
     regulations at any time before vesting''.

     SEC. 909. EFFECTIVE DATE.

       This subtitle and the amendments made by this subtitle 
     shall take effect on the date of enactment of this Act, and 
     shall apply to all proceedings in all pending cases on the 
     date of enactment of this Act.
                      Subtitle B--Federal Prisons

     SEC. 911. PRISON COMMUNICATIONS.

       Section 2522 of title 18, United States Code, is amended by 
     adding at the end the following:
       ``(e) Exemption.--
       ``(1) In general.--This chapter and chapter 121 do not 
     apply with respect to the interception by a law enforcement 
     officer of any wire, oral, or electronic communication, or 
     the use of a pen register, a trap and trace device, or a 
     clone pager, if--
       ``(A) in the case of any wire, oral, or electronic 
     communication, at least one of the parties to the 
     communication is, an inmate or detainee in the custody of the 
     Attorney General of the United States or is in the custody of 
     a State or political subdivision thereof; or
       ``(B) in the case of a pen register, a trap and trace 
     device, or a clone pager, the facility is regularly used by, 
     an inmate or detainee in the custody of the Attorney General 
     of the United States or is in the custody of a State or 
     political subdivision thereof.
       ``(2) State defined.--As used in this subsection, the term 
     `State' means each of the several States of the United 
     States, the District of Columbia, and the territories and 
     possessions of the United States.
       ``(f) Regulations.--The Attorney General shall promulgate 
     regulations governing interceptions described in subsection 
     (e) in order to protect communications protected by the 
     attorney-client privilege and the right to counsel guaranteed 
     by the sixth amendment to Constitution of the United 
     States.''.

     SEC. 912. PRISON AMENITIES AND PRISONER WORK REQUIREMENT.

       (a) In General.--Chapter 303 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 4048. Certain amenities for prisoners prohibited

       ``(a) In General.--Except as provided in subsection (b), 
     the Bureau of Prisons shall ensure that no prisoner or 
     detainee under its jurisdiction--
       ``(1) engages in any physical activity designed to increase 
     or enhance the fighting ability of the prisoner or detainee;
       ``(2) engages in any physical activity designed to increase 
     the physical strength of such prisoner or detainee; or
       ``(3) is permitted--
       ``(A) access to in-cell television viewing, except for 
     prisoners segregated from the general prison population for 
     their own safety;
       ``(B) access to the viewing of any movie or film, through 
     whatever medium presented, that has been given a Motion 
     Picture Association of America rating of NC-17, R, or X;
       ``(C) possession of any in-cell coffee pot, hot plate, or 
     other heating element;
       ``(D) access to any pornographic or other sexually explicit 
     printed material;
       ``(E) access to any bodybuilding or weightlifting 
     equipment; or
       ``(F) use or possession of any electric or electronic 
     musical equipment.
       ``(b) Exception for Certain Prisoners.--The Director of the 
     Bureau of Prisons may grant an exception to paragraph (2) or 
     (3)(E) of subsection (a) with respect to a prisoner or 
     detainee, if a licensed medical doctor employed by the Bureau 
     of Prisons certifies that such exception is medically 
     necessary in order to enable the prisoner or detainee to 
     pursue a program of physical therapy or rehabilitation.
       ``(c) Effect on Other Regulations.--Nothing in the section 
     shall be construed to preempt or repeal any regulation or 
     policy of the Bureau of Prisons that imposes greater 
     restrictions on prisoners and detainees than those required 
     by this section, or to prevent the adoption by the Bureau of 
     Prisons of any restriction or policy that imposes greater 
     restrictions on prisoners and detainees than those required 
     by this section.
       ``(d) No Cause of Action.--Nothing in this section shall be 
     construed to create a cause of action by on behalf of any 
     person against the United States or any officer, employee, or 
     contractor thereof.

     ``Sec. 4049. Prisoner work requirement

       ``(a) In General.--Subject to subsection (b), the Director 
     of the Bureau of Prisons shall ensure that each convicted 
     inmate in the custody of the Attorney General and confined in 
     any Federal prison, correctional facility, jail, or other 
     facility shall be engaged in work. The type of work that a 
     particular inmate shall be engaged in shall be determined on 
     the basis of appropriate security and disciplinary 
     considerations and by the health of the inmate.
       ``(b) Excuse.--An inmate described in subsection (a) may be 
     excused from the requirement of subsection (a) in whole or in 
     part, only as necessitated by--
       ``(1) security considerations;
       ``(2) disciplinary action;
       ``(3) medical certification of disability, such as would 
     make it impractical for prison officials to arrange useful 
     work for the inmate to perform; or
       ``(4) a need for the inmate to work less than a full work 
     schedule in order to participate in literacy training, drug 
     rehabilitation, or other similar program in addition to 
     performing work.
       ``(c) No Compensation.--Nothing in this section shall be 
     construed to entitle any inmate to any wage, compensation, or 
     benefit, or be construed to provide a cause of action by or 
     on behalf of any person against the United States or any 
     officer, employee, or contractor thereof.''.
       (b) Clerical Amendment.--The chapter analysis for chapter 
     303 of title 18, United States Code, is amended by adding at 
     the end the following:

``4048. Certain prisoner amenities prohibited.
``4049. Prisoner work requirement.''.

     SEC. 913. ELIMINATION OF SENTENCING INEQUITIES AND AFTERCARE 
                   FOR FEDERAL INMATES.

       Section 3621 of title 18, United States Code, is amended--
       (1) in subsection (b), by striking the last sentence and 
     inserting ``The Bureau shall endeavor to make available 
     appropriate substance abuse treatment for each prisoner the 
     Bureau determines has a treatable drug abuse problem, with a 
     priority to be given to younger offenders and those who would 
     benefit most from the treatment''; and
       (2) in subsection (e), by striking paragraphs (1), (2), and 
     (5), and redesignating

[[Page S210]]

     paragraphs (3), (4), and (6), as paragraphs (1), (2), and 
     (3), respectively.
                   TITLE X--MISCELLANEOUS PROVISIONS

     SEC. 1001. SENSE OF THE SENATE REGARDING ONDCP.

       It is the sense of the Senate that--
       (1) the Office of National Drug Control Policy should, in 
     principal, be reauthorized for an additional 5 years; and
       (2) prior to any such reauthorization, the Committee on the 
     Judiciary of the Senate should conduct an extensive review of 
     the National Drug Control Strategy for 1997 submitted by 
     President Clinton.

     SEC. 1002. RESTRICTIONS ON DOCTORS PRESCRIBING SCHEDULE I 
                   SUBSTANCES.

       (a) In General.--Not later than 45 days after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall promulgate regulations that require any and 
     all hospitals or health care service providers who receive 
     Federal medicare or medicaid payments based upon appropriate 
     compliance certification, as an additional certification 
     requirement, to certify that no physician or other health 
     care professional who has privileges with such hospital or 
     health care service provider, or is otherwise employed by 
     them, is currently, or will in the future, prescribe or 
     otherwise recommend a schedule I substance to any person.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall report to Congress the number and names of 
     institutions refusing or otherwise failing to fulfill 
     certification requirement of subsection (a).
       (c) Revocation of Certification.--The Attorney General 
     shall promulgate regulations to revoke the DEA registration 
     of any physician or other health care provider who recommends 
     or prescribes a schedule I controlled substance.

     SEC. 1003. ANTI-DRUG USE PUBLIC SERVICE REQUIREMENT.

       The Federal Communications Commission shall--
       (1) coordinate with the President's Commission on Alcohol 
     and Drug Abuse Prevention, to develop a comprehensive 
     education and public service program targeting youth drug 
     abuse pursuant to section 8003 of Public Law 99-570 (21 
     U.S.C. 1302);
       (2) encourage the priority use of public service resources 
     dedicated to promoting youth drug abuse prevention and 
     education;
       (3) contact and encourage the donation of greater public 
     resources dedicated to youth drug abuse programs from--
       (A) television, radio, movies, cable communications, and 
     print media;
       (B) the recording industry;
       (C) the advertising industry;
       (D) business; and
       (E) professional sports; and
       (4) encourage each of the organizations and industries 
     referred to in paragraph (3) to assist the implementation of 
     new programs and national strategies for dissemination of 
     information intended to prevent youth drug abuse.

     SEC. 1004. CHILD PORNOGRAPHY.

       (a) In General.--The Secretary of State is directed to 
     review all extradition treaties in force, and, if necessary, 
     to renegotiate all such treaties, in order to ensure that 
     offenses involving the sexual exploitation and abuse of 
     children under sections 2251 through 2258 of title 18, United 
     States Code, are extraditable offenses.
       (b) Statute of Limitations.--In any case in which a 
     defendant is charged with an offense under chapter 110 of 
     title 18, United States Code, and is alleged to have 
     committed an offense, in whole or in part, beyond the 
     jurisdiction of the United States, the statute of limitations 
     shall be tolled during any period in which the defendant is 
     beyond the jurisdiction of the United States.

     SEC. 1005. 2,000 BOYS & GIRLS CLUBS BEFORE 2000.

       (a) In General.--Section 401(a) of the Economic Espionage 
     Act of 1996 (Public Law 104-294; 110 Stat. 3496) is amended 
     by striking paragraph (2) and inserting the following:
       ``(2) Purpose.--The purpose of this section is to provide 
     adequate resources in the form of seed money for the Boys and 
     Girls Clubs of America to establish 1,000 additional local 
     clubs where needed, with particular emphasis placed on 
     establishing clubs in public housing projects and distressed 
     areas, and to insure that there are a total of no less than 
     2000 Boys and Girls Club of America facilities in operation 
     not later than December 31, 1999.''
       (b) Accelerated Grants.--Section 401 of the Economic 
     Espionage Act of 1996 (Public Law 104-294; 110 Stat. 3496) is 
     amended by striking subsection (c) and inserting the 
     following:
       ``(c) Establishment.--
       ``(1) In general.--For each of the fiscal years 1997, 1998, 
     1999, 2000, and 2001, the Director of the Bureau of Justice 
     Assistance of the Department of Justice shall make a grant to 
     the Boys and Girls Clubs of America for the purpose of 
     establishing Boys and Girls Clubs facilities where needed, 
     with particular emphasis placed on establishing clubs in 
     public housing projects and distressed areas.
       ``(2) Contracting Authority.--To the extent that the 
     Secretary of Housing and Urban Development determines to be 
     appropriate, the Secretary of Housing and Urban Development, 
     in consultation with the Attorney General, shall enter into 
     contracts with the Boys and Girls Clubs of America to 
     establish clubs pursuant to the grants under paragraph (1).
       ``(3) Applications.--The Attorney General shall accept an 
     application for a grant under this subsection if submitted by 
     the Boys and Girls Clubs of America, and approve or deny the 
     grant not later than 90 days after the date on which the 
     application is submitted, if the application--
       ``(A) includes a long-term strategy to establish 1000 
     additional Boys and Girls Clubs and detailed summary of those 
     areas in which new facilities will be established during the 
     next fiscal year;
       ``(B) includes a plan to insure that there are a total of 
     not less than 2000 Boys and Girls Clubs of America facilities 
     in operation before January 1, 2000;
       ``(C) certifies that there will be appropriate coordination 
     with those communities where clubs will be located; and
       ``(D) explains the manner in which new facilities will 
     operate without additional, direct Federal financial 
     assistance to the Boys and Girls Clubs once assistance under 
     this subsection is discontinued.''.
       (c) Role Model Grants.--Section 401 of the Economic 
     Espionage Act of 1996 (Public Law 104-294; 110 Stat. 3496) is 
     amended by adding at the end the following:
       ``(f) Role Model Grants.--Of amounts made available under 
     subsection (e) in any fiscal year--
       ``(1) not more than 5 percent may be used to provide a 
     grant to the Boys and Girls Clubs of America for 
     administrative, travel, and other costs associated with a 
     national role-model speaking tour program; and
       ``(2) no amount may be used to compensate speakers other 
     than to reimburse speakers for reasonable travel and 
     accommodation costs associated with the program described in 
     paragraph (1).''.

     SEC. 1006. CELLULAR TELEPHONE INTERCEPTIONS.

       Subsection 2511 of title 18, United States Code, is amended 
     by inserting ``, imprisoned not more than 1 year, or both'' 
     after ``under this title''.
            TITLE XI--VIOLENT AND REPEAT JUVENILE OFFENDERS

     SEC. 1101. SHORT TITLE.

       This title may be cited as the ``Violent and Repeat 
     Juvenile Offender Act of 1997''.

     SEC. 1102. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) at the outset of the twentieth century, the States 
     adopted 2 separate juvenile justice systems for violent and 
     nonviolent offenders;
       (2) violent crimes committed by juveniles, such as 
     homicide, rape, and robbery, were an unknown phenomenon at 
     that time, but the rate at which juveniles commit such crimes 
     has escalated astronomically since that time;
       (3) in 1994--
       (A) the number of persons arrested overall for murder in 
     the United States decreased by 5.8 percent, but the number of 
     persons who are less than 15 years of age arrested for murder 
     increased by 4 percent; and
       (B) the number of persons arrested for all violent crimes 
     increased by 1.3 percent, but the number of persons who are 
     less than 15 years of age arrested for violent crimes 
     increased by 9.2 percent, and the number of persons less than 
     18 years of age arrested for such crimes increased by 6.5 
     percent;
       (4) from 1985 to 1996, the number of persons arrested for 
     all violent crimes increased by 52.3 percent, but the number 
     of persons under age 18 arrested for violent crimes rose by 
     75 percent;
       (5) the number of juvenile offenders is expected to undergo 
     a massive increase during the first 2 decades of the twenty-
     first century, culminating in an unprecedented number of 
     violent offenders who are less than 18 years of age;
       (6) the rehabilitative model of sentencing for juveniles, 
     which Congress rejected for adult offenders when Congress 
     enacted the Sentencing Reform Act of 1984, is inadequate and 
     inappropriate for dealing with violent and repeat juvenile 
     offenders;
       (7) the Federal Government should encourage the States to 
     experiment with progressive solutions to the escalating 
     problem of juveniles who commit violent crimes and who are 
     repeat offenders, including prosecuting all such offenders as 
     adults, but should not impose specific strategies or programs 
     on the States;
       (8) an effective strategy for reducing violent juvenile 
     crime requires greater collection of investigative data and 
     other information, such as fingerprints and DNA evidence, as 
     well as greater sharing of such information among Federal, 
     State, and local agencies, including the courts, in the law 
     enforcement and educational systems;
       (9) data regarding violent juvenile offenders must be made 
     available to the adult criminal justice system if recidivism 
     by criminals is to be addressed adequately;
       (10) holding juvenile proceedings in secret denies victims 
     of crime the opportunity to attend and be heard at such 
     proceedings, helps juvenile offenders to avoid accountability 
     for their actions, and shields juvenile proceedings from 
     public scrutiny and accountability;
       (11) the injuries and losses suffered by the victims of 
     violent crime are no less painful or devastating because the 
     offender is a juvenile; and
       (12) the investigation, prosecution, adjudication, and 
     punishment of criminal offenses committed by juveniles is, 
     and should

[[Page S211]]

     remain, primarily the responsibility of the States, to be 
     carried out without interference from the Federal Government.
       (b) Purposes.--The purposes of this title are--
       (1) to reform juvenile law so that the paramount concerns 
     of the juvenile justice system are providing for the safety 
     of the public and holding juvenile wrongdoers accountable for 
     their actions, while providing the wrongdoer a genuine 
     opportunity for self reform;
       (2) to revise the procedures in Federal court that are 
     applicable to the prosecution of juvenile offenders;
       (3) to address specifically the problem of violent crime 
     and controlled substance offenses committed by youth gangs; 
     and
       (4) to encourage and promote, consistent with the ideals of 
     federalism, adoption of policies by the States to ensure that 
     the victims of crimes of violence committed by juveniles 
     receive the same level of justice as do victims of violent 
     crimes that are committed by adults.

     SEC. 1103. SEVERABILITY.

       If any provision of this title, an amendment made by this 
     title, or the application of such provision or amendment to 
     any person or circumstance is held to be unconstitutional, 
     the remainder of this title, the amendments made by this 
     title, and the application of the provisions of such to any 
     person or circumstance shall not be affected thereby.
                  Subtitle A--Juvenile Justice Reform

     SEC. 1111. REPEAL OF GENERAL PROVISION.

       (a) In General.--Chapter 401 of title 18, United States 
     Code, is amended--
       (1) by striking section 5001; and
       (2) by redesignating section 5003 as section 5001.
       (b) Technical Amendments.--The chapter analysis for chapter 
     401 of title 18, United States Code, is amended--
       (1) by striking the item relating to section 5001; and
       (2) by redesignating the item relating to section 5003 as 
     5001.

     SEC. 1112. TREATMENT OF FEDERAL JUVENILE OFFENDERS.

       (a) In General.--Section 5032 of title 18, United States 
     Code, is amended to read as follows:

     ``Sec. 5032. Delinquency proceedings in district courts; 
       juveniles tried as adults; transfer for other criminal 
       prosecution

       ``(a) In General.--A juvenile who is not less than 14 years 
     of age and who is alleged to have committed an act that, if 
     committed by an adult, would be a criminal offense, shall be 
     tried in the appropriate district court of the United 
     States--
       ``(1) as an adult at the discretion of the United States 
     Attorney in the appropriate jurisdiction, upon a finding by 
     that United States Attorney, which finding shall not be 
     subject to review in or by any court, trial or appellate, 
     that there is a substantial Federal interest in the case or 
     the offense to warrant the exercise of Federal jurisdiction, 
     if the juvenile is charged with a Federal offense that--
       ``(A) is a crime of violence (as that term is defined in 
     section 16); or
       ``(B) involves a controlled substance (as that term is 
     defined in section 102 of the Controlled Substances Act (21 
     U.S.C. 802)) for which the penalty is a term of imprisonment 
     of not less than 5 years; and
       ``(2) in all other cases, as a juvenile.
       ``(b) Referral by United States Attorney.--
       ``(1) In general.--If the United States Attorney in the 
     appropriate jurisdiction declines prosecution of a charged 
     offense under subsection (a)(2), the United States Attorney 
     may refer the matter to the appropriate legal authorities of 
     the State or Indian tribe.
       ``(2) Definitions.--In this section--
       ``(A) the term `State' includes a State of the United 
     States, the District of Columbia, and any commonwealth, 
     territory, or possession of the United States; and
       ``(B) the term `Indian tribe' has the same meaning as in 
     section 4(e) of the Indian Self-Determination and Education 
     Assistance Act.
       ``(c) Applicable Procedures.--Any action prosecuted in a 
     district court of the United States under this section--
       ``(1) shall proceed in the same manner as is required by 
     this title and by the Federal Rules of Criminal Procedure in 
     proceedings against an adult in the case of a juvenile who is 
     being tried as an adult in accordance with subsection (a); 
     and
       ``(2) in all other cases, shall proceed in accordance with 
     this chapter, unless the juvenile has requested in writing, 
     upon advice of counsel, to be proceeded against as an adult.
       ``(d) Capital Cases.--Subject to section 3591, if a 
     juvenile is tried and sentenced as an adult, the juvenile 
     shall be subject to being sentenced to death on the same 
     terms and in accordance with the same procedures as an adult.
       ``(e) Application of Laws.--In any case in which a juvenile 
     is prosecuted in a district court of the United States as an 
     adult, the juvenile shall be subject to the same laws, rules, 
     and proceedings regarding sentencing that would be applicable 
     in the case of an adult. No juvenile sentenced to a term of 
     imprisonment shall be released from custody simply because 
     the juvenile reaches the age of 18 years.
       ``(f) Open Proceedings.--
       ``(1) In general.--Any offense tried in a district court of 
     the United States pursuant to this section shall be open to 
     the general public, in accordance with rules 10, 26, 31(a), 
     and 53 of the Federal Rules of Criminal Procedure, unless 
     good cause is established by the moving party or is otherwise 
     found by the court, for closure.
       ``(2) Status alone insufficient.--The status of the 
     defendant as a juvenile, absent other factors, shall not 
     constitute good cause for purposes of this subsection.
       ``(g) Availability of Records.--
       ``(1) In general.--In making a determination concerning the 
     prosecution of a juvenile in a district court of the United 
     States under this section, subject to the requirements of 
     section 5038, the United States Attorney of the appropriate 
     jurisdiction shall have complete access to the prior Federal 
     juvenile records of the subject juvenile, and to the extent 
     permitted by State law, the prior State juvenile records of 
     the subject juvenile.
       ``(2) Consideration of entire record.--In any case in which 
     a juvenile is found guilty in an action pursuant to this 
     section, the district court responsible for imposing sentence 
     shall have complete access to the prior juvenile records of 
     the subject juvenile, and, to the extent permitted under 
     State law, the prior State juvenile records of the subject 
     juvenile. At sentencing, the district court shall consider 
     the entire available prior juvenile record of the subject 
     juvenile.
       ``(3) Release of records.--The United States Attorney may 
     release such Federal records, and, to the extent permitted by 
     State law, such State records, to law enforcement authorities 
     of any jurisdiction and to officials of any school, school 
     district, or postsecondary school at which the individual who 
     is the subject of the juvenile record is enrolled or seeks, 
     intends, or is instructed to enroll, if such school officials 
     are held liable to the same standards and penalties to which 
     law enforcement and juvenile justice system employees are 
     held liable under Federal and State law, for the handling and 
     disclosure of such information.''.
       (b) Technical Amendment.--The chapter analysis for chapter 
     403 of title 18, United States Code, is amended by striking 
     the item relating to section 5032 and inserting the 
     following:

``5032. Delinquency proceedings in district courts; juveniles tried as 
              adults; transfer for other criminal prosecution.''.

     SEC. 1113. CAPITAL CASES.

       Section 3591 of title 18, United States Code, is amended by 
     striking ``18 years'' each place that term appears and 
     inserting ``16 years''.

     SEC. 1114. DEFINITIONS.

       Section 5031 of title 18, United States Code, is amended to 
     read as follows:

     ``Sec. 5031. Definitions

       ``In this chapter--
       ``(1) the term `juvenile' means a person who is less than 
     18 years of age; and
       ``(2) the term `juvenile delinquency' means the violation 
     of a law of the United States committed by a juvenile that 
     would be a crime if committed by an adult.''.

     SEC. 1115. NOTIFICATION AFTER ARREST.

       Section 5033 of title 18, United States Code, is amended in 
     the first sentence by striking ``Attorney General'' and 
     inserting ``United States Attorney of the appropriate 
     jurisdiction''.

     SEC. 1116. DETENTION PRIOR TO DISPOSITION.

       Section 5035 of title 18, United States Code, is amended--
       (1) by striking ``A juvenile'' and inserting the following:
       ``(a) In General.--A juvenile''; and
       (2) by adding at the end the following:
       ``(b) Detention of Certain Juveniles.--Notwithstanding 
     subsection (a), a juvenile who is to be tried as an adult 
     pursuant to section 5032 shall be subject to detention in 
     accordance with chapter 203 in the same manner and to the 
     same extent as an adult would be subject to that chapter.''.

     SEC. 1117. SPEEDY TRIAL.

       Section 5036 of title 18, United States Code, is amended--
       (1) by striking ``thirty'' and inserting ``70''; and
       (2) by striking ``the court,'' and all that follows through 
     the end of the section and inserting ``the court. The periods 
     of exclusion under section 3161(h) shall apply to this 
     section.''.

     SEC. 1118. DISPOSITIONAL HEARINGS.

       Section 5037 of title 18, United States Code, is amended--
       (1) in subsection (a), by striking ``(a)'' and all that 
     follows through ``After the'' and inserting the following:
       ``(a) In General.--
       ``(1) Dispositional hearing.--In any case in which a 
     juvenile is found to be a juvenile delinquent in district 
     court pursuant to section 5032, but is not tried as an adult 
     under that section, not later than 20 days after the hearing 
     in which a finding of juvenile delinquency is made, the court 
     shall hold a disposition hearing concerning the appropriate 
     disposition unless the court has ordered further study 
     pursuant to subsection (d).
       ``(2) Actions of court after hearing.--After the'';
       (2) in subsection (b), by striking ``extend--'' and all 
     that follows through ``The provisions'' and inserting the 
     following: ``extend, in the case of a juvenile, beyond the 
     maximum term that would be authorized by section 3561(b), if 
     the juvenile had been tried and convicted as an adult. The 
     provisions'';
       (3) in subsection (c), by striking ``extend--'' and all 
     that follows through ``Section 3624''

[[Page S212]]

     and inserting the following: ``extend beyond the maximum term 
     of imprisonment that would be authorized if the juvenile had 
     been tried and convicted as an adult. No juvenile sentenced 
     to a term of imprisonment shall be released from custody 
     simply because the juvenile reaches the age of 18 years. 
     Section 3624'';
       (4) by redesignating subsection (d) as subsection (e); and
       (5) by inserting after subsection (c) the following:
       ``(d) Applicability of Restitution Provisions.--If a 
     juvenile has been tried and convicted as an adult, or 
     adjudicated delinquent for any offense in which the juvenile 
     is otherwise tried pursuant to section 5032, the restitution 
     provisions contained in this title (including sections 3663, 
     3663A, 2248, 2259, 2264, and 2327) and title 21 shall apply 
     to that juvenile in the same manner and to the same extent as 
     those provisions apply to adults.''.

     SEC. 1119. USE OF JUVENILE RECORDS.

       Section 5038 of title 18, United States Code, is amended--
       (1) in subsection (a)--
       (A) in paragraph (5), by striking ``and'' at the end;
       (B) in paragraph (6), by striking the period at the end and 
     inserting ``; and'';
       (C) by inserting after paragraph (6) the following:
       ``(7) inquiries from any school or other educational 
     institution for the purpose of ensuring the public safety and 
     security at such institution.''; and
       (D) by striking ``Unless'' and inserting the following:
       ``(c) Prohibition on Release of Certain Information.--
     Unless'';
       (2) by redesignating subsections (b) and (c) as subsections 
     (d) and (e), respectively;
       (3) by inserting immediately after subsection (a) the 
     following:
       ``(b) Access by United States Attorney.--Notwithstanding 
     subsection (a), in determining the appropriate disposition of 
     a juvenile matter under section 5032, the United States 
     Attorney of the appropriate jurisdiction shall have complete 
     access to the official records of the juvenile proceedings 
     conducted under this title.'';
       (4) by inserting after subsection (e), as redesignated, the 
     following:
       ``(f) Records of Juveniles Tried as Adults.--In any case in 
     which a juvenile is tried as an adult, access to the record 
     of the offenses of the juvenile shall be made available in 
     the same manner as is applicable to adult defendants.'';
       (5) by striking ``(d) Whenever'' and all that follows 
     through ``adult defendants.'' and inserting the following:
       ``(g) Fingerprints and Photographs.--Fingerprints and 
     photographs of a juvenile--
       ``(1) who is prosecuted as an adult, shall be made 
     available in the same manner as is applicable to an adult 
     defendant; and
       ``(2) who is not prosecuted as an adult, shall be made 
     available only as provided in subsection (a).'';
       (6) by striking ``(e) Unless,'' and inserting the 
     following:
       ``(h) No Publication of Name or Picture.--Unless'';
       (7) by striking ``(f) Whenever'' and inserting the 
     following:
       ``(i) Information to Federal Bureau of Investigation.--
     Whenever''; and
       (8) in subsection (i), as redesignated--
       (A) by striking ``of committing an act'' and all that 
     follows through ``5032 of this title'' and inserting ``by a 
     district court of the United States pursuant to section 5032 
     of committing an act''; and
       (B) by inserting ``involved a juvenile tried as an adult 
     or'' before ``were juvenile adjudications''.

     SEC. 1120. INCARCERATION OF VIOLENT OFFENDERS.

       Section 5039 of title 18, United States Code, is amended--
       (1) by designating the first 3 undesignated paragraphs as 
     subsections (a) through (c), respectively; and
       (2) by adding at the end the following:
       ``(d) Segregation of Juveniles Convicted of Violent 
     Offenses.--
       ``(1) Definition.--In this subsection, the term `crime of 
     violence' has the same meaning as in section 16 of title 18, 
     United States Code.
       ``(2) Segregation.--The Director of the Bureau of Prisons 
     shall ensure that juveniles who are alleged to be or 
     determined to be delinquent are not confined in any 
     institution in which the juvenile has regular sustained 
     physical contact with adult persons who are detained or 
     confined.''.

     SEC. 1121. FEDERAL SENTENCING GUIDELINES.

       Section 994(h) of title 28, United States Code, is amended 
     by inserting ``, or in which the defendant is a juvenile who 
     is tried as an adult,'' after ``old or older''.
                       Subtitle B--Juvenile Gangs

     SEC. 1141. SHORT TITLE.

       This subtitle may be cited as the ``Federal Gang Violence 
     Act''.

     SEC. 1142. INCREASE IN OFFENSE LEVEL FOR PARTICIPATION IN 
                   CRIME AS A GANG MEMBER.

       (a) Definition.--In this section, the term ``criminal 
     street gang'' has the same meaning as in section 521(a) of 
     title 18, United States Code, as amended by section 1243 of 
     this subtitle.
       (b) Amendment of Sentencing Guidelines.--Pursuant to its 
     authority under section 994(p) of title 28, United States 
     Code, the United States Sentencing Commission shall amend the 
     Federal sentencing guidelines to provide an appropriate 
     enhancement, increasing the offense level by not less than 6 
     levels, for any offense, if the offense was both committed in 
     connection with, or in furtherance of, the activities of a 
     criminal street gang and the defendant was a member of the 
     criminal street gang at the time of the offense.
       (c) Construction With Other Guidelines.--The amendment made 
     pursuant to subsection (b) shall provide that the increase in 
     the offense level shall be in addition to any other 
     adjustment under chapter 3 of the Federal sentencing 
     guidelines.

     SEC. 1143. AMENDMENT OF TITLE 18 WITH RESPECT TO CRIMINAL 
                   STREET GANGS.

       (a) In General.--Section 521 of title 18, United States 
     Code, is amended--
       (1) in subsection (a)--
       (A) by striking ``(a) Definitions.--'' and inserting the 
     following:
       ``(a) Definitions.--In this section:'', and
       (B) by striking `` `conviction'' and all that follows 
     through the end of the subsection and inserting the 
     following:
       ``(1) Criminal street gang.--The term `criminal street 
     gang' means an ongoing group, club, organization, or 
     association of 3 or more persons, whether formal or 
     informal--
       ``(A) a primary activity of which is the commission of 1 or 
     more predicate gang crimes;
       ``(B) any members of which engage, or have engaged during 
     the 5-year period preceding the date in question, in a 
     pattern of criminal gang activity; and
       ``(C) the activities of which affect interstate or foreign 
     commerce.
       ``(2) Pattern of criminal gang activity.--The term `pattern 
     of criminal gang activity' means the commission of 2 or more 
     predicate gang crimes committed in connection with, or in 
     furtherance of, the activities of a criminal street gang--
       ``(A) at least 1 of which was committed after the date of 
     enactment of the Federal Gang Violence Act;
       ``(B) the first of which was committed not more than 5 
     years before the commission of another predicate gang crime; 
     and
       ``(C) that were committed on separate occasions.
       ``(3) Predicate gang crime.--The term `predicate gang 
     crime' means an offense, including an act of juvenile 
     delinquency that, if committed by an adult, would be an 
     offense that is--
       ``(A) a Federal offense--
       ``(i) that is a crime of violence (as that term is defined 
     in section 16) including carjacking, drive-by-shooting, 
     shooting at an unoccupied dwelling or motor vehicle, assault 
     with a deadly weapon, and homicide;
       ``(ii) that involves a controlled substance (as that term 
     is defined in section 102 of the Controlled Substances Act 
     (21 U.S.C. 802)) for which the penalty is imprisonment for 
     not less than 5 years;
       ``(iii) that is a violation of section 844, section 875 or 
     876 (relating to extortion and threats), section 1084 
     (relating to gambling), section 1955 (relating to gambling), 
     chapter 44 (relating to firearms), or chapter 73 (relating to 
     obstruction of justice);
       ``(iv) that is a violation of section 1956 (relating to 
     money laundering), insofar as the violation of such section 
     is related to a Federal or State offense involving a 
     controlled substance (as that term is defined in section 102 
     of the Controlled Substances Act (21 U.S.C. 802)); or
       ``(v) that is a violation of section 274(a)(1)(A), 277, or 
     278 of the Immigration and Nationality Act (8 U.S.C. 
     1324(a)(1)(A), 1327, or 1328) (relating to alien smuggling);
       ``(B) a State offense involving conduct that would 
     constitute an offense under subparagraph (A) if Federal 
     jurisdiction existed or had been exercised; or
       ``(C) a conspiracy, attempt, or solicitation to commit an 
     offense described in subparagraph (A) or (B).
       ``(3) State.--The term `State' includes a State of the 
     United States, the District of Columbia, Puerto Rico, Guam, 
     the Virgin Islands, and any other territory of possession of 
     the United States.''; and
       (2) by striking subsections (b), (c), and (d) and inserting 
     the following:
       ``(b) Criminal Penalties.--Any person who engages in a 
     pattern of criminal gang activity--
       ``(1) shall be sentenced to--
       ``(A) a term of imprisonment of not less than 10 years and 
     not more than life, fined in accordance with this title, or 
     both; and
       ``(B) the forfeiture prescribed in section 413 of the 
     Controlled Substances Act (21 U.S.C. 853); and
       ``(2) if any person engages in such activity after 1 or 
     more prior convictions under this section have become final, 
     shall be sentenced to--
       ``(A) a term of imprisonment of not less than 20 years and 
     not more than life, fined in accordance with this title, or 
     both; and
       ``(B) the forfeiture prescribed in section 412 of the 
     Controlled Substances Act (21 U.S.C. 853).''.
       (b) Conforming Amendment.--Section 3663(c)(4) of title 18, 
     United States Code, is amended by inserting before ``chapter 
     46'' the following: ``section 521 of this title,''.

     SEC. 1144. INTERSTATE AND FOREIGN TRAVEL OR TRANSPORTATION IN 
                   AID OF CRIMINAL STREET GANGS.

       (a) Travel Act Amendments.--
       (1) Prohibited conduct and penalties.--Section 1952(a) of 
     title 18, United States Code, is amended to read as follows:
       ``(a) Prohibited Conduct and Penalties.--
       ``(1) In general.--Any person who--

[[Page S213]]

       ``(A) travels in interstate or foreign commerce or uses the 
     mail or any facility in interstate or foreign commerce, with 
     intent to--
       ``(i) distribute the proceeds of any unlawful activity; or
       ``(ii) otherwise promote, manage, establish, carry on, or 
     facilitate the promotion, management, establishment, or 
     carrying on, of any unlawful activity; and
       ``(B) after travel or use of the mail or any facility in 
     interstate or foreign commerce described in subparagraph (A), 
     performs, attempts to perform, or conspires to perform an act 
     described in clause (i) or (ii) of subparagraph (A),
     shall be fined under this title, imprisoned not more than 10 
     years, or both.
       ``(2) Crimes of violence.--Any person who--
       ``(A) travels in interstate or foreign commerce or uses the 
     mail or any facility in interstate or foreign commerce, with 
     intent to commit any crime of violence to further any 
     unlawful activity; and
       ``(B) after travel or use of the mail or any facility in 
     interstate or foreign commerce described in subparagraph (A), 
     commits, attempts to commit, or conspires to commit any crime 
     of violence to further any unlawful activity,
     shall be fined under this title, imprisoned for not more than 
     20 years, or both, and if death results shall be sentenced to 
     death or be imprisoned for any term of years or for life.''.
       (2) Definitions.--Section 1952(b) of title 18, United 
     States Code, is amended to read as follows:
       ``(b) Definitions.--In this section:
       ``(1) Controlled substance.--The term `controlled 
     substance' has the same meaning as in section 102(6) of the 
     Controlled Substances Act (21 U.S.C. 802(6)).
       ``(2) State.--The term `State' includes a State of the 
     United States, the District of Columbia, and any 
     commonwealth, territory, or possession of the United States.
       ``(3) Unlawful activity.--The term `unlawful activity' 
     means--
       ``(A) predicate gang crime (as that term is defined in 
     section 521);
       ``(B) any business enterprise involving gambling, liquor on 
     which the Federal excise tax has not been paid, narcotics or 
     controlled substances, or prostitution offenses in violation 
     of the laws of the State in which the offense is committed or 
     of the United States;
       ``(C) extortion, bribery, arson, robbery, burglary, assault 
     with a deadly weapon, retaliation against or intimidation of 
     witnesses, victims, jurors, or informants, assault resulting 
     in bodily injury, possession of or trafficking in stolen 
     property, illegally trafficking in firearms, kidnapping, 
     alien smuggling, or shooting at an occupied dwelling or motor 
     vehicle, in each case, in violation of the laws of the State 
     in which the offense is committed or of the United States; or
       ``(D) any act that is indictable under section 1956 or 1957 
     of this title or under subchapter II of chapter 53 of title 
     31.''.
       (b) Amendment of Sentencing Guidelines.--
       (1) In general.--Pursuant to its authority under section 
     994(p) of title 28, United States Code, the United States 
     Sentencing Commission shall amend chapter 2 of the Federal 
     sentencing guidelines so that--
       (A) the base offense level for traveling in interstate or 
     foreign commerce in aid of a criminal street gang or other 
     unlawful activity is increased to 12; and
       (B) the base offense level for the commission of a crime of 
     violence in aid of a criminal street gang or other unlawful 
     activity is increased to 24.
       (2) Definitions.--In this subsection--
       (A) the term ``crime of violence'' has the same meaning as 
     in section 16 of title 18, United States Code;
       (B) the term ``criminal street gang'' has the same meaning 
     as in 521(a) of title 18, United States Code, as amended by 
     section 1243 of this subtitle; and
       (C) the term ``unlawful activity'' has the same meaning as 
     in section 1952(b) of title 18, United States Code, as 
     amended by this section.

     SEC. 1145. SOLICITATION OR RECRUITMENT OF PERSONS IN CRIMINAL 
                   GANG ACTIVITY.

       (a) Prohibited Acts.--Chapter 26 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 522. Recruitment of persons to participate in criminal 
       street gang activity

       ``(a) Prohibited Act.--It shall be unlawful for any person 
     to--
       ``(1) use any facility in, or travel in, interstate or 
     foreign commerce, or cause another to do so, to recruit, 
     solicit, request, induce, counsel, command, or cause another 
     person to be a member of a criminal street gang, or conspire 
     to do so; or
       ``(2) recruit, solicit, request, induce, counsel, command, 
     or cause another person to engage in a predicate gang crime 
     for which such person may be prosecuted in a court of the 
     United States, or conspire to do so.
       ``(b) Penalties.--A person who violates subsection (a) 
     shall--
       ``(1) if the person recruited--
       ``(A) is a minor, be imprisoned for a term of not less than 
     4 years and not more than 10 years, fined in accordance with 
     this title, or both; or
       ``(B) is not a minor, be imprisoned for a term of not less 
     than 1 year and not more than 10 years, fined in accordance 
     with this title, or both; and
       ``(2) be liable for any costs incurred by the Federal 
     Government or by any State or local government for housing, 
     maintaining, and treating the minor until the minor reaches 
     the age of 18.
       ``(c) Definitions.--In this section--
       ``(1) the terms `criminal street gang' and `predicate gang 
     crime' have the same meanings as in section 521; and
       ``(2) the term `minor' means a person who is younger than 
     18 years of age.''.
       (b) Sentencing Guidelines.--Pursuant to its authority under 
     section 994(p) of title 28, United States Code, the United 
     States Sentencing Commission shall amend chapter 2 of the 
     Federal sentencing guidelines to provide an appropriate 
     enhancement for any offense involving the recruitment of a 
     minor to participate in a gang activity.
       (c) Technical Amendment.--The chapter analysis for chapter 
     26 of title 18, United States Code, is amended by adding at 
     the end the following:

``522. Recruitment of persons to participate in criminal street gang 
              activity.''.

     SEC. 1146. CRIMES INVOLVING THE RECRUITMENT OF PERSONS TO 
                   PARTICIPATE IN CRIMINAL STREET GANGS AND 
                   FIREARMS OFFENSES AS RICO PREDICATES.

       Section 1961(1) of title 18, United States Code, is 
     amended--
       (1) by striking ``or'' before ``(F)''; and
       (2) by inserting before the semicolon at the end the 
     following: ``, (G) an offense under section 522 of this 
     title, or (H) an act or conspiracy to commit any violation of 
     chapter 44 of this title (relating to firearms)''.

     SEC. 1147. PROHIBITIONS RELATING TO FIREARMS.

       (a) Penalties.--Section 924(a)(6) of title 18, United 
     States Code, is amended--
       (1) by striking subparagraph (A);
       (2) by redesignating subparagraph (B) as subparagraph (A);
       (3) in subparagraph (A), as redesignated--
       (A) by striking ``(B) A person other than a juvenile who 
     knowingly'' and inserting ``(A) A person who knowingly'';
       (B) in clause (i), by striking ``not more than 1 year'' and 
     inserting ``not less than 1 year and not more than 5 years''; 
     and
       (C) in clause (ii), by inserting ``not less than 1 year 
     and'' after ``imprisoned''; and
       (4) by adding at the end the following:
       ``(B) Notwithstanding subparagraph (A), no mandatory 
     minimum sentence shall apply to a juvenile who is less than 
     13 years of age.''.
       (b) Serious Juvenile Drug Offenses as Armed Career Criminal 
     Predicates.--Section 924(e)(2)(A) of title 18, United States 
     Code, is amended--
       (1) in clause (i), by striking ``or'' at the end;
       (2) in clause (ii), by adding ``or'' at the end; and
       (3) by adding at the end the following:
       ``(iii) any act of juvenile delinquency that if committed 
     by an adult would be an offense described in clause (i) or 
     (ii);''.
       (c) Transfer of Firearms to Minors for Use in Crime.--
     Section 924(h) of title 18, United States Code, is amended by 
     striking ``10 years, fined in accordance with this title, or 
     both'' and inserting ``10 years, and if the transferee is a 
     person who is under 18 years of age, imprisoned for a term of 
     not less than 3 years, fined in accordance with this title, 
     or both''.

     SEC. 1148. AMENDMENT OF SENTENCING GUIDELINES WITH RESPECT TO 
                   BODY ARMOR.

       (a) Definitions.--In this section--
       (1) the term ``body armor'' means any product sold or 
     offered for sale as personal protective body covering 
     intended to protect against gunfire, regardless of whether 
     the product is to be worn alone or is sold as a complement to 
     another product or garment; and
       (2) the term ``law enforcement officer'' means any officer, 
     agent, or employee of the United States, a State, or a 
     political subdivision of a State, authorized by law or by a 
     government agency to engage in or supervise the prevention, 
     detection, investigation, or prosecution of any violation of 
     criminal law.
       (b) Sentencing Enhancement.--The United States Sentencing 
     Commission shall amend the Federal sentencing guidelines to 
     provide an appropriate sentencing enhancement, increasing the 
     offense level not less than 2 levels, for any crime in which 
     the defendant used body armor.
       (c) Applicability.--No Federal sentencing guideline 
     amendment made pursuant to this section shall apply if the 
     Federal crime in which the body armor is used constitutes a 
     violation of, attempted violation of, or conspiracy to 
     violate the civil rights of a person by a law enforcement 
     officer acting under color of the authority of such law 
     enforcement officer.

     SEC. 1149. ADDITIONAL PROSECUTORS.

       There are authorized to be appropriated $20,000,000 for 
     each of the fiscal years 1998, 1999, 2000, 2001, and 2002 for 
     the hiring of Assistant United States Attorneys and attorneys 
     in the Criminal Division of the Department of Justice to 
     prosecute juvenile criminal street gangs (as that term is 
     defined in section 521(a) of title 18, United States Code, as 
     amended by section 1243 of this subtitle).
         Subtitle C--Juvenile Crime Control and Accountability

     SEC. 1161. FINDINGS; DECLARATION OF PURPOSE; DEFINITIONS.

       Title I of the Juvenile Justice and Delinquency Prevention 
     Act of 1974 (42 U.S.C. 5601 et seq.) is amended to read as 
     follows:

[[Page S214]]

             ``TITLE I--FINDINGS AND DECLARATION OF PURPOSE

     ``SEC. 101. FINDINGS.

       ``Congress finds that--
       ``(1) during the past several years, the United States has 
     experienced an alarming increase in arrests of adolescents 
     for murder, assault, and weapons offenses;
       ``(2) in 1994, juveniles accounted for 1 in 5 arrests for 
     violent crimes, including murder, robbery, aggravated 
     assault, and rape, including 514 such arrests per 100,000 
     juveniles 10 through 17 years of age;
       ``(3) understaffed, overcrowded juvenile courts, 
     prosecutorial and public defender offices, probation 
     services, and correctional facilities no longer adequately 
     address the changing nature of juvenile crime, protect the 
     public, and correct youth offenders;
       ``(4) the juvenile justice system has proven inadequate to 
     meet the needs of society, because insufficient sanctions are 
     imposed on serious youth offenders and the needs of children, 
     who may be at risk of becoming delinquents;
       ``(5) existing programs and policies have not adequately 
     responded to the particular threat of drugs, alcohol abuse, 
     violence, and gangs pose to the youth of the Nation;
       ``(6) demographic increases projected in the number of 
     youth offenders require reexamination of the prosecution and 
     incarceration policies for serious violent youth offenders;
       ``(7) State and local communities that experience directly 
     the devastating failures of the juvenile justice system 
     require assistance to deal comprehensively with the problems 
     of juvenile delinquency;
       ``(8) Existing Federal programs have not provided the 
     States with necessary flexibility, and have not provided 
     coordination, resources, and leadership required to meet the 
     crisis of youth violence.
       ``(9) Overlapping and uncoordinated Federal programs have 
     created a multitude of Federal funding streams to State and 
     local governments, that have become a barrier to effective 
     program coordination, responsive public safety initiatives, 
     and the provision of comprehensive services for children and 
     youth.
       ``(10) Violent crime by juveniles constitutes a growing 
     threat to the national welfare that requires an immediate and 
     comprehensive governmental response, combining flexibility 
     and coordinated evaluation.
       ``(11) Limited State and local resources are being wasted 
     complying with the unnecessary Federal mandate that status 
     offenders be desinstitutionalized. Some communities believe 
     that curfews are appropriate for juveniles, and those 
     communities should not be prohibited by the Federal 
     Government from using confinement for status offenses as a 
     means of dealing with delinquent behavior before it becomes 
     criminal conduct.
       ``(12) Limited State and local resources are being wasted 
     complying with the unnecessary Federal mandate that no 
     juvenile be detained or confined in any jail or lockup for 
     adults, because it can be feasible to separate adults and 
     juveniles in 1 facility. This mandate is particularly 
     burdensome for rural communities.
       ``(13) The role of the Federal Government should be to 
     encourage and empower communities to develop and implement 
     policies to protect adequately the public from serious 
     juvenile crime as well as comprehensive programs to reduce 
     risk factors and prevent juvenile delinquency.
       ``(14) A strong partnership among law enforcement, local 
     government, juvenile and family courts, schools, businesses, 
     philanthropic organizations, families, and the religious 
     community, can create a community environment that supports 
     the youth of the Nation in reaching their highest potential 
     and reduces the destructive trend of juvenile crime.

     ``SEC. 102. PURPOSE AND STATEMENT OF POLICY.

       ``(a) In General.--The purposes of this Act are--
       ``(1) to protect the public and to hold juveniles 
     accountable for their acts;
       ``(2) to empower States and communities to develop and 
     implement comprehensive programs that support families and 
     reduce risk factors and prevent serious youth crime and 
     juvenile delinquency;
       ``(3) to provide for the thorough and ongoing evaluation of 
     all federally funded programs addressing juvenile crime and 
     delinquency;
       ``(4) to provide technical assistance to public and private 
     nonprofit entities that protect public safety, administer 
     justice and corrections to delinquent youth, or provide 
     services to youth at risk of delinquency, and their families;
       ``(5) to establish a centralized research effort on the 
     problems of youth crime and juvenile delinquency, including 
     the dissemination of the findings of such research and all 
     related data;
       ``(6) to establish a Federal assistance program to deal 
     with the problems of runaway and homeless youth;
       ``(7) to assist State and local governments in improving 
     the administration of justice for juveniles;
       ``(8) to assist the State and local governments in reducing 
     the level of youth violence;
       (9) to assist State and local governments in promoting 
     public safety by supporting juvenile delinquency prevention 
     and control activities;
       (10) to encourage and promote programs designed to keep in 
     school juvenile delinquents expelled or suspended for 
     disciplinary reasons;
       (11) to assist State and local governments in promoting 
     public safety by encouraging accountability through the 
     imposition of meaningful sanctions for acts of juvenile 
     delinquency;
       (12) to assist State and local governments in promoting 
     public safety by improving the extent, accuracy, availability 
     and usefulness of juvenile court and law enforcement records 
     and the openness of the juvenile justice system;
       (13) to assist State and local governments in promoting 
     public safety by encouraging the identification of violent 
     and hardcore juveniles and transferring such juveniles out of 
     the jurisdiction of the juvenile justice system and into the 
     jurisdiction of adult criminal court;
       (14) to assist State and local governments in promoting 
     public safety by providing resources to States to build or 
     expand juvenile detention facilities;
       (15) to provide for the evaluation of federally assisted 
     juvenile crime control programs, and training necessary for 
     the establishment and operation of such programs;
       (16) to ensure the dissemination of information regarding 
     juvenile crime control programs by providing a national 
     clearinghouse; and
       (17) to provide technical assistance to public and private 
     nonprofit juvenile justice and delinquency prevention 
     programs.''.
       ``(b) Statement of Policy.--It is the policy of Congress to 
     provide resources, leadership, and coordination--
       ``(1) to combat youth violence and to prosecute and punish 
     effectively violent juvenile offenders; and
       ``(2) to improve the quality of juvenile justice in the 
     United States.

     ``SEC. 103. DEFINITIONS.

       ``In this Act:
       ``(1) Administrator.--The term `Administrator' means the 
     Administrator of the Office of Juvenile Crime Control and 
     Accountability.
       ``(2) Construction.--The term `construction' means 
     acquisition, expansion, remodeling, and alteration of 
     existing buildings, and initial equipment of any such 
     buildings, or any combination of such activities (including 
     architects' fees but not the cost of acquisition of land for 
     buildings).
       ``(3) Juvenile population.--The term `juvenile population' 
     means the population of a State under 18 years of age.
       ``(4) Office.--The term `Office' means the Office of 
     Juvenile Crime Control and Accountability established under 
     section 201.
       ``(5) Outcome objective.--The term `outcome objective' 
     means an objective that relates to the impact of a program or 
     initiative, that measures the reduction of high risk 
     behaviors, such as incidence of arrest, the commission of 
     criminal acts or acts of delinquency, failure in school, 
     violence, the use of alcohol or illegal drugs, involvement of 
     youth gangs, and teenage pregnancy, among youth in the 
     community.
       ``(6) Process objective.--The term `process objective' 
     means an objective that relates to the manner in which a 
     program or initiative is carried out, including--
       ``(A) an objective relating to the degree to which the 
     program or initiative is reaching the target population; and
       ``(B) an objective relating to the degree to which the 
     program or initiative addresses known risk factors for youth 
     problem behaviors and incorporates activities that inhibit 
     the behaviors and that build on protective factors for youth.
       ``(7) State.--The term `State' means any State of the 
     United States, the District of Columbia, the Commonwealth of 
     Puerto Rico, the Trust Territory of the Pacific Islands, the 
     Virgin Islands, Guam, American Samoa, and the Commonwealth of 
     the Northern Mariana Islands.
       ``(8) State office.--The term `State office' means an 
     office designated by the chief executive officer of a State 
     to carry out this title, as provided in section 507 of the 
     Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
     3757).
       ``(9) Treatment.--The term `treatment' includes medical and 
     other rehabilitative services designed to protect the public, 
     including any services designed to benefit addicts and other 
     users by--
       ``(A) eliminating their dependence on alcohol or other 
     addictive or nonaddictive drugs; or
       ``(B) controlling their dependence and susceptibility to 
     addiction or use.
       ``(10) Youth.--The term `youth' means an individual who is 
     not less than 6 years of age and not more than 17 years of 
     age.''.

     SEC. 1162. YOUTH CRIME CONTROL AND ACCOUNTABILITY BLOCK 
                   GRANTS.

       (a) Office of Juvenile Crime Control and Accountability.--
     Section 201 of the Juvenile Justice and Delinquency 
     Prevention Act of 1974 (42 U.S.C. 5611) is amended--
       (1) in subsection (a), by striking ``Office of Juvenile 
     Justice and Delinquency Prevention'' and inserting ``Office 
     of Juvenile Crime Control and Accountability''; and
       (2) by adding at the end the following:
       ``(d) Delegation and Assignment.--
       ``(1) In general.--Except as otherwise expressly prohibited 
     by law or otherwise provided by this title, the Administrator 
     may--
       ``(A) delegate any of the functions of the Administrator, 
     and any function transferred or granted to the Administrator 
     after the date of enactment of this Act, to such officers and 
     employees of the Office as the Administrator may designate; 
     and

[[Page S215]]

       ``(B) authorize successive redelegations of such functions 
     as may be necessary or appropriate.
       ``(2) Responsibility.--No delegation of functions by the 
     Administrator under this subsection or under any other 
     provision of this title shall relieve the Administrator of 
     responsibility for the administration of such functions.
       ``(e) Reorganization.--The Administrator may allocate or 
     reallocate any function transferred among the officers of the 
     Office, and establish, consolidate, alter, or discontinue 
     such organizational entities in that Office as may be 
     necessary or appropriate.''.
       (b) National Program.--Section 204 of the Juvenile Justice 
     and Delinquency Prevention Act of 1974 (42 U.S.C. 5614) is 
     amended to read as follows:

     ``SEC. 204. NATIONAL PROGRAM.

       ``(a) National Juvenile Crime Control and Juvenile Offender 
     Accountability Plan.--
       ``(1) In general.--The Administrator shall develop 
     objectives, priorities, and short- and long-term plans, and 
     shall implement overall policy and a strategy to carry out 
     such plan, for all Federal juvenile crime control and 
     juvenile offender accountability programs and activities 
     relating to improving juvenile crime control and the 
     enhancement of accountability by offenders within the 
     juvenile justice system in the United States.
       ``(2) Contents of plans.--
       ``(A) In general.--Each plan described in paragraph (1) 
     shall--
       ``(i) contain specific, measurable goals and criteria for 
     reducing the incidence of crime and delinquency among 
     juveniles, improving juvenile crime control, and ensuring 
     accountability by offenders within the juvenile justice 
     system in the United States, and shall include criteria for 
     any discretionary grants and contracts, for conducting 
     research, and for carrying out other activities under this 
     title;
       ``(ii) provide for coordinating the administration of 
     programs and activities under this title with the 
     administration of all other Federal juvenile crime control 
     and juvenile offender accountability programs and activities, 
     including proposals for joint funding to be coordinated by 
     the Administrator;
       ``(iii) provide a detailed summary and analysis of the most 
     recent data available regarding the number of juveniles taken 
     into custody, the rate at which juveniles are taken into 
     custody, and the trends demonstrated by such data.
       ``(iv) provide a description of the activities for which 
     amounts are expended under this title;
       ``(v) provide specific information relating to the 
     attainment of goals set forth in the plan, including 
     specific, measurable standards for assessing progress toward 
     national juvenile crime reduction and juvenile offender 
     accountability goals; and
       ``(vi) provide for the coordination of Federal, State, and 
     local initiatives for the reduction of youth crime and 
     ensuring accountability for juvenile offenders.
       ``(B) Summary and analysis.--Each summary and analysis 
     under subparagraph (A)(iii) shall set out the information 
     required by clauses (i), (ii), and (iii) of this subparagraph 
     separately for juvenile nonoffenders, juvenile status 
     offenders, and other juvenile offenders. Such summary and 
     analysis shall separately address with respect to each 
     category of juveniles specified in the preceding sentence--
       ``(i) the types of offenses with which the juveniles are 
     charged;
       ``(ii) the ages of the juveniles;
       ``(iii) the types of facilities used to hold the juveniles 
     (including juveniles treated as adults for purposes of 
     prosecution) in custody, including secure detention 
     facilities, secure correctional facilities, jails, and 
     lockups; and
       ``(iv) the number of juveniles who died while in custody 
     and the circumstances under which each juvenile died.
       ``(3) Annual review.--The Administrator shall annually--
       ``(A) review each plan submitted under this subsection;
       ``(B) revise the plans, as the Administrator considers 
     appropriate; and
       ``(C) not later than March 1 of each year, present the 
     plans to the Committees on the Judiciary of the Senate and 
     the House of Representatives.
       ``(b) Duties of Administrator.--In carrying out this title, 
     the Administrator shall--
       ``(1) advise the President through the Attorney General as 
     to all matters relating to federally assisted juvenile crime 
     control and juvenile offender accountability programs, and 
     Federal policies regarding juvenile crime and justice, 
     including policies relating to juveniles prosecuted or 
     adjudicated in the Federal courts;
       ``(2) implement and coordinate Federal juvenile crime 
     control and juvenile offender accountability programs and 
     activities among Federal departments and agencies and between 
     such programs and activities and other Federal programs and 
     activities that the Administrator determines may have an 
     important bearing on the success of the entire national 
     juvenile crime control and juvenile offender accountability 
     effort;
       ``(3) provide for the auditing of grants provided pursuant 
     to this title;
       ``(4) collect, prepare, and disseminate useful data 
     regarding the prevention, correction, and control of juvenile 
     crime and delinquency, and issue, not less frequently than 
     once each calendar year, a report on successful programs and 
     juvenile crime reduction methods utilized by States, 
     localities, and private entities;
       ``(5) ensure the performance of comprehensive rigorous 
     independent scientific evaluations, each of which shall--
       ``(A) be independent in nature, and shall employ rigorous 
     and scientifically valid standards and methodologies; and
       ``(B) include measures of outcome and process objectives, 
     such as reductions in juvenile crime, youth gang activity, 
     youth substance abuse, and other high risk factors, as well 
     as increases in protective factors that reduce the likelihood 
     of delinquency and criminal behavior;
       ``(6) involve consultation with appropriate authorities in 
     the States and with appropriate private entities in the 
     development, review, and revision of the plans required by 
     subsection (a) and in the development of policies relating to 
     juveniles prosecuted or adjudicated in the Federal courts; 
     and
       ``(7) provide technical assistance to the States, units of 
     local government, and private entities in implementing 
     programs funded by grants under this title.
       ``(c) National Juvenile Crime Control and Juvenile Offender 
     Accountability Budget.--
       ``(1) In general.--The Administrator shall--
       ``(A) develop for each fiscal year, with the advice of the 
     program managers of departments and agencies with 
     responsibilities for any Federal juvenile crime control or 
     juvenile offender accountability program, a consolidated 
     National Juvenile Crime Control and Juvenile Offender 
     Accountability Plan budget proposal to implement the National 
     Juvenile Crime Control and Juvenile Offender Accountability 
     Plan; and
       ``(B) transmit such budget proposal to the President and to 
     Congress.
       ``(2) Submission of juvenile offender accountability budget 
     request.--
       ``(A) In general.--Each Federal Government program manager, 
     agency head, and department head with responsibility for any 
     Federal juvenile crime control or juvenile offender 
     accountability program shall submit the juvenile crime 
     control and juvenile offender accountability budget request 
     of the program, agency, or department to the Administrator at 
     the same time as such request is submitted to their superiors 
     (and before submission to the Office of Management and 
     Budget) in the preparation of the budget of the President 
     submitted to Congress under section 1105(a) of title 31, 
     United States Code.
       ``(B) Timely development and submission.--The head of each 
     department or agency with responsibility for a Federal 
     juvenile crime control or juvenile offender accountability 
     program shall ensure timely development and submission to the 
     Administrator of juvenile crime control and juvenile offender 
     accountability budget requests transmitted pursuant to this 
     subsection, in such format as may be designated by the 
     Administrator with the concurrence of the Administrator of 
     the Office of Management and Budget.
       ``(3) Review and certification.--The Administrator shall--
       ``(A) review each juvenile crime control and juvenile 
     offender accountability budget request transmitted to the 
     Administrator under paragraph (2);
       ``(B) certify in writing as to the adequacy of such request 
     in whole or in part to implement the objectives of the 
     National Juvenile Crime Control and Juvenile Offender 
     Accountability Plan for the year for which the request is 
     submitted and, with respect to a request that is not 
     certified as adequate to implement the objectives of the 
     National Juvenile Crime Control and Juvenile Offender 
     Accountability Plan, include in the certification an 
     initiative or funding level that would make the request 
     adequate; and
       ``(C) notify the program manager, agency head, or 
     department head, as applicable, regarding the certification 
     of the Administrator under subparagraph (B).
       ``(4) Recordkeeping requirement.--The Administrator shall 
     maintain records regarding certifications under paragraph 
     (3)(B).
       ``(5) Funding requests.--The Administrator shall request 
     the head of a department or agency to include in the budget 
     submission of the department or agency to the Office of 
     Management and Budget, funding requests for specific 
     initiatives that are consistent with the priorities of the 
     President for the National Juvenile Crime Control and 
     Juvenile Offender Accountability Plan and certifications made 
     pursuant to paragraph (3), and the head of the department or 
     agency shall comply with such a request.
       ``(6) Reprogramming and transfer requests.--
       ``(A) In general.--No department or agency with 
     responsibility for a Federal juvenile crime control or 
     juvenile offender accountability program shall submit to 
     Congress a reprogramming or transfer request with respect to 
     any amount of appropriated amounts greater than $5,000,000 
     that is included in the National Juvenile Crime Control and 
     Juvenile Offender Accountability Plan budget unless such 
     request has been approved by the Administrator.
       ``(B) The head of any department or agency with 
     responsibility for a Federal juvenile crime control or 
     juvenile offender accountability program may appeal to the 
     President any disapproval by the Administrator of a 
     reprogramming or transfer request.

[[Page S216]]

       ``(7) Quarterly reports.--The Administrator shall report to 
     Congress on a quarterly basis regarding the need for any 
     reprogramming or transfer of appropriated amounts for 
     National Juvenile Crime Control and Juvenile Offender 
     Accountability Plan activities.
       ``(d) Information, Reports, Studies, and Surveys From Other 
     Agencies.--The Administrator may require, through appropriate 
     authority, Federal departments and agencies engaged in any 
     activity involving any Federal juvenile crime control and 
     juvenile offender accountability program to provide the 
     Administrator with such information and reports, and to 
     conduct such studies and surveys, as the Administrator 
     determines to be necessary to carry out the purposes of this 
     title.
       ``(e) Utilization of Services and Facilities of Other 
     Agencies; Reimbursement.--The Administrator may utilize the 
     services and facilities of any agency of the Federal 
     Government and of any other public agency or institution in 
     accordance with appropriate agreements, and to pay for such 
     services either in advance or by way of reimbursement as may 
     be agreed upon.
       ``(f) Coordination of Functions of Administrator and 
     Secretary of Health and Human Services.--All functions of the 
     Administrator under title shall be coordinated as appropriate 
     with the functions of the Secretary of Health and Human 
     Services under title III.
       ``(g) Annual Juvenile Delinquency Development Statements.--
       ``(1) In general.--The Administrator shall require through 
     appropriate authority each Federal agency that administers a 
     Federal juvenile crime control and juvenile offender 
     accountability program to submit annually to the Office a 
     juvenile crime control and juvenile offender accountability 
     development statement. Such statement shall be in addition to 
     any information, report, study, or survey that the 
     Administrator may require under subsection (d).
       ``(2) Contents.--Each development statement submitted to 
     the Administrator under paragraph (1) shall contain such 
     information, data, and analyses as the Administrator may 
     require. Such analyses shall include an analysis of the 
     extent to which the program of the Federal agency submitting 
     such development statement conforms with and furthers Federal 
     juvenile crime control and juvenile offender accountability 
     prevention and treatment goals and policies.
       ``(3) Review and comment.--
       ``(A) In general.--The Administrator shall review and 
     comment upon each juvenile crime control and juvenile 
     offender accountability development statement transmitted to 
     the Administrator under paragraph (1).
       ``(B) Inclusion in other documentation.--Such development 
     statement, together with the comments of the Administrator, 
     shall be included by the Federal agency involved in every 
     recommendation or request made by such agency for Federal 
     legislation that significantly affects juvenile crime control 
     and juvenile offender accountability.
       ``(h) Juvenile Crime Control and Juvenile Offender 
     Accountability Incentive Block Grants.--
       ``(1) In general.--The Administrator shall make, subject to 
     the availability of appropriations, grants to States to 
     assist them in planning, establishing, operating, 
     coordinating, and evaluating projects, directly or through 
     grants and contracts with public and private agencies, for 
     the development of more effective investigation, prosecution, 
     and punishment (including the imposition of graduated 
     sanctions) of crimes or acts of delinquency committed by 
     juveniles, programs to improve the administration of justice 
     for and ensure accountability by juvenile offenders, and 
     programs to reduce the risk factors (such as truancy, drug or 
     alcohol use, and gang involvement) associated with juvenile 
     crime or delinquency.
       ``(2) Use of grants.--Grants under this title may be used--
       ``(A) for programs to enhance the identification, 
     investigation, prosecution, and punishment of juvenile 
     offenders, such as--
       ``(i) the utilization of graduated sanctions;
       ``(ii) the utilization of short-term confinement of 
     juveniles who are charged with or who are convicted of--

       ``(I) a crime of violence (as that term is defined in 
     section 16 of title 18, United States Code);
       ``(II) an offense involving a controlled substance (as that 
     term is defined in section 102 of the Controlled Substances 
     Act (21 U.S.C. 802);
       ``(III) an offense involving possession of a firearm (as 
     that term is defined in section 921(a) of title 18, United 
     States Code); or
       ``(IV) an offense involving possession of a destructive 
     device (as that term is defined in section 921(a) of title 
     18, United States Code);

       ``(iii) the hiring of prosecutors, judges, and probation 
     officers to implement policies to control juvenile crime and 
     ensure accountability of juvenile offenders; and
       ``(iv) the incarceration of violent juvenile offenders for 
     extended periods of time (including up to the length of adult 
     sentences);
       ``(B) for programs that provide restitution to the victims 
     of crimes committed by juveniles;
       ``(C) for programs that require juvenile offenders to 
     attend and successfully complete school or vocational 
     training;
       ``(D) for programs that require juvenile offenders who are 
     parents to demonstrate parental responsibility by working and 
     paying child support;
       ``(E) for programs that seek to curb or punish truancy;
       ``(F) for programs designed to collect, record, and 
     disseminate information useful in the identification, 
     prosecution, and sentencing of offenders, such as criminal 
     history information, fingerprints, and DNA tests;
       ``(G) for programs that provide that, whenever a juvenile 
     who is not less than 14 years of age is adjudicated 
     delinquent, as defined by Federal or State law in a juvenile 
     delinquency proceeding for conduct that, if committed by an 
     adult, would constitute a felony under Federal or State law, 
     the State shall ensure that a record is kept relating to the 
     adjudication that is--
       ``(i) equivalent to the record that would be kept of an 
     adult conviction for such an offense;
       ``(ii) retained for a period of time that is equal to the 
     period of time that records are kept for adult convictions;
       ``(iii) made available to law enforcement agencies of any 
     jurisdiction; and
       ``(iv) made available to officials of a school, school 
     district, or postsecondary school where the individual who is 
     the subject of the juvenile record seeks, intends, or is 
     instructed to enroll, and that such officials are held liable 
     to the same standards and penalties that law enforcement and 
     juvenile justice system employees are held liable to, under 
     Federal and State law, for handling and disclosing such 
     information;
       ``(H) for juvenile crime control and prevention programs 
     (such as curfews, youth organizations, antidrug programs, 
     antigang programs, and after school activities) that include 
     a rigorous, comprehensive evaluation component that measures 
     the decrease in risk factors associated with the juvenile 
     crime and delinquency and employs scientifically valid 
     standards and methodologies;
       ``(I) for the development and implementation of coordinated 
     multijurisdictional or multiagency programs for the 
     identification, control, supervision, prevention, 
     investigation, and treatment of the most serious juvenile 
     offenses and offenders, sometimes known as a `SHOCAP Program' 
     (Serious Habitual Offenders Comprehensive Action Program); or
       ``(J) for the development and implementation of coordinated 
     multijurisdictional or multiagency programs for the 
     identification, control, supervision, prevention, 
     investigation, and disruption of youth gangs.
       ``(3) Requirements.--To be eligible to receive a grant 
     under this title, a State shall make reasonable efforts, as 
     certified by the Governor, to ensure that, not later than 
     July 1, 2000--
       ``(A) juveniles age 14 and older can be prosecuted under 
     State law as adults, as a matter of law or prosecutorial 
     discretion for a crime of violence (as that term is defined 
     in section 16 of title 18, United States Code) such as murder 
     or armed robbery, an offense involving a controlled substance 
     (as defined in section 102 of the Controlled Substances Act 
     (21 U.S.C. 802)), or the unlawful possession of a firearm (as 
     that term is defined in section 921(a) of title 18, United 
     States Code) or a destructive device (as that term is defined 
     in section 921(a) of title 18, United States Code);
       ``(B) the State has in place a system of graduated 
     sanctions for juvenile offenders;
       ``(C) the State has in place a juvenile court system that 
     treats juvenile offenders uniformly throughout the State;
       ``(D) the State collects, records, and disseminates 
     information useful in the identification, prosecution, and 
     sentencing of offenders, such as criminal history 
     information, fingerprints, and DNA tests (if taken), to other 
     Federal, State, and local law enforcement agencies;
       ``(E) the State ensures that religious organizations can 
     participate in rehabilitative programs designed to purposes 
     authorized by this title; and
       ``(F) the State shall not detain or confine juveniles who 
     are alleged to be or determined to be delinquent in any 
     institution in which the juvenile has regular sustained 
     physical contact with adult persons who are detained or 
     confined.
       ``(j) Distribution by State Offices to Eligible 
     Applicants.--
       ``(1) In general.--Of amounts made available to the State, 
     not more than 20 percent shall be used for programs pursuant 
     to paragraph (2)(ii).
       ``(2) Eligible Applicants.--Entities eligible to receive 
     amounts distributed by the State office under this title 
     are--
       ``(A) a unit of local government;
       ``(B) local police or sheriff's departments;
       ``(C) State or local prosecutor's offices;
       ``(D) State or local courts responsible for the 
     administration of justice in cases involving juvenile 
     offenders;
       ``(E) schools;
       ``(F) nonprofit, educational, religious, or community 
     groups active in crime prevention or drug use prevention and 
     treatment; or
       ``(G) any combination of the entities described in 
     subparagraphs (A) through (F).
       ``(k) Application to State Office.--
       ``(1) In general.--To be eligible to receive amounts from 
     the State office, the applicant shall prepare and submit to 
     the State office an application in written form that--
       ``(A) describes the types of activities and services for 
     which the amount will be provided;
       ``(B) includes information indicating the extent to which 
     the activities and services achieve the purposes of the 
     title;

[[Page S217]]

       ``(C) provide for the evaluation component required by 
     subsection (b)(2), which evaluation shall be conducted by an 
     independent entity; and
       ``(D) provides any other information that the State office 
     may require.
       ``(2) Priority.--In approving applications under this 
     subsection, the State office should give priority to those 
     applicants demonstrating coordination with, consolidation of, 
     or expansion of existing State or local juvenile crime 
     control and juvenile offender accountability programs.
       ``(l) Funding Period.--The State office may award such a 
     grant for a period of not more than 3 years.
       ``(m) Renewal of Grants.--The State office may renew grants 
     made under this title. After the initial grant period, in 
     determining whether to renew a grant to an entity to carry 
     out activities, the State office shall give substantial 
     weight to the effectiveness of the activities in achieving 
     reductions in crimes committed by juveniles and in improving 
     the administration of justice to juvenile offenders.
       ``(n) Special Grants.--Of amounts made available under this 
     title in any fiscal year, the Administrator may use--
       ``(1) not more than 7 percent for grants for research and 
     evaluation;
       ``(2) not more than 3 percent for grants to Indian tribes 
     for purposes authorized by this title; and
       ``(3) not more than 5 percent for salaries and expenses of 
     the Office related to administering this title.''.
       (c) Repeals; Administrative Provisions.--Title II of the 
     Juvenile Justice and Delinquency Prevention Act of 1974 (42 
     U.S.C. 5611 et seq.) is amended--
       (1) by striking sections 206 and 207 and inserting the 
     following:

     ``SEC. 206. ALLOCATION OF GRANTS AND AUTHORIZATION OF 
                   APPROPRIATIONS.--

       ``(a) Allocation of Grant Amounts.--
       ``(1) In general.--Amounts made available under section 
     204(h) or part B shall be allocated to the States as follows:
       ``(A) 0.25 percent shall be allocated to each State; and
       ``(B) of the total amount remaining after the allocation 
     under subparagraph (A), there shall be allocated to each 
     State an amount that bears the same ratio to the amount of 
     remaining funds described in this paragraph as the juvenile 
     population of such State bears to the juvenile population of 
     all the States.
       ``(2) Exceptions.--The amount allocated to the Virgin 
     Islands of the United States, Guam, American Samoa, the Trust 
     Territory of the Pacific Islands, and the Commonwealth of the 
     Northern Mariana Islands shall be not less than $75,000 and 
     not more than $100,000.
       ``(3) Reallocation prohibited.--Any amounts appropriated 
     but not allocated due to the ineligibility or 
     nonparticipation of any State shall not be reallocated, but 
     shall revert to the Treasury at the end of the fiscal year 
     for which they were appropriated.
       ``(4) Restrictions on the use of amounts.--
       ``(A) Experimentation on individuals.--
       ``(i) In general.--No amounts made available to carry out 
     this title may be used for any biomedical or behavior control 
     experimentation on individuals or any research involving such 
     experimentation.
       ``(ii) Definition of `behavior control'.--In this 
     subparagraph, the term `behavior control'--

       ``(I) means any experimentation or research employing 
     methods that--

       ``(aa) involve a substantial risk of physical or 
     psychological harm to the individual subject; and
       ``(bb) are intended to modify or alter criminal and other 
     antisocial behavior, including aversive conditioning therapy, 
     drug therapy, chemotherapy (except as part of routine 
     clinical care), physical therapy of mental disorders, 
     electroconvulsive therapy, or physical punishment; and

       ``(II) does not include a limited class of programs 
     generally recognized as involving no such risk, including 
     methadone maintenance and certain alcohol treatment programs, 
     psychological counseling, parent training, behavior 
     contracting, survival skills training, restitution, or 
     community service, if safeguards are established for the 
     informed consent of subjects (including parents or guardians 
     of minors).

       ``(B) Prohibition against use of amounts in construction.--
     No amount made available to any public or private agency, or 
     institution or to any individual under this title (either 
     directly or through a State office) may be used for 
     construction, except for minor renovations or additions to an 
     existing structure.
       ``(C) Job training.--No amount made available under this 
     title may be used to carry out a youth employment program to 
     provide subsidized employment opportunities, job training 
     activities, or school-to-work activities for participants.
       ``(D) Lobbying.--
       ``(i) In general.--Except as provided in clause (ii), no 
     amount made available under this title to any public or 
     private agency, organization, or institution or to any 
     individual shall be used to pay for any personal service, 
     advertisement, telegram, telephone communication, letter, 
     printed or written matter, or other device intended or 
     designed to influence a Member of Congress or any other 
     Federal, State, or local elected official to favor or oppose 
     any Act, bill, resolution, or other legislation, or any 
     referendum, initiative, constitutional amendment, or any 
     other procedure of Congress, any State legislature, any local 
     council, or any similar governing body.
       ``(ii) Exception.--This subparagraph does not preclude the 
     use of amounts made available under this title in connection 
     with communications to Federal, State, or local elected 
     officials, upon the request of such officials through proper 
     official channels, pertaining to authorization, 
     appropriation, or oversight measures directly affecting the 
     operation of the program involved.
       ``(E) Legal action.--No amounts made available under this 
     title to any public or private agency, organization, 
     institution, or to any individual, shall be used in any way 
     directly or indirectly to file an action or otherwise take 
     any legal action against any Federal, State, or local agency, 
     institution, or employee.
       ``(F) Religious organizations.--
       ``(i) In general.--The purpose of this subparagraph is to 
     allow State and local governments to contract with religious 
     organizations, or to allow religious organizations to accept 
     certificates, vouchers, or other forms of disbursement under 
     any program described in this title, on the same basis as any 
     other nongovernmental provider without impairing the 
     religious character of such organizations, and without 
     impairing the religious character of such organizations, and 
     without diminishing the religious freedom of beneficiaries of 
     assistance funded under such program.
       ``(ii) Nondiscrimination against religious organizations.--
     If a State or local government exercises its authority under 
     religious organizations are eligible, on the same basis as 
     any other private organization, as contractors to provide 
     assistance, or to accept certificates, vouchers, or other 
     forms of disbursement, under any program described in this 
     title, so long as the programs are implemented consistent 
     with the Establishment Clause of the United States 
     Constitution. Except as provided in clause (x), neither the 
     Federal Government nor a State receiving funds under such 
     programs shall discriminate against an organization which is 
     or applies to be a contractor to provide assistance, or which 
     is or applies to be a contractor to provide assistance, or 
     which accepts certificates, vouchers, or other forms of 
     disbursement, on the basis that the organization has a 
     religious character.
       ``(iii) Religious character and freedom.--

       ``(I) Religious organizations.--A religious organization 
     that participates in a program authorized by this title shall 
     retain its independence from Federal, State, and local 
     governments, including such organization's control over the 
     definition, development, practice, and expression of its 
     religious beliefs.
       ``(II) Additional safeguards.--Neither the Federal 
     Government nor a State shall require a religious organization 
     to--

       ``(aa) alter its form of internal governance; or
       ``(bb) remove religious art, icons, scripture, or other 
     symbols;

     in order to be eligible to contract to provide assistance, or 
     to accept certificates, vouchers, or other forms of 
     disbursements, funded under a program described in this 
     title.

       ``(iv) Rights of beneficiaries of assistance.--If juvenile 
     offender has an objection to the religious character of the 
     organization or institution from which the juvenile offender 
     receives, or would receive, assistance funded under any 
     program described in this title, the State in which the 
     individual resides shall provide such individual (if 
     otherwise eligible for such assistance) within a reasonable 
     period of time after the date of such objection with 
     assistance from an alternative provider.
       ``(v) Employment practices.--A religious organization's 
     exemption provided under section 702 of the Civil Rights Act 
     of 1964 (42 U.S.C. 2000e-1a) regarding employment practices 
     shall not be affected by its participation in, or receipt of 
     funds from, programs described in this title.
       ``(vi) Nondiscrimination against beneficiaries.--Except as 
     otherwise provided in law, a religious organization shall not 
     discriminate against an individual in regard to rendering 
     assistance funded under any program described in this title 
     on the basis of religion, a religious belief, or refusal to 
     actively participate in a religious practice.
       ``(vii) Fiscal accountability.--

       ``(I) In general.--Subject to subclause (II), any religious 
     organization contracting to provide assistance funded under 
     any program described in clause (i)(II) shall be subject to 
     the same regulations as other contractors to account in 
     accord with generally accepted auditing principles for the 
     use of such funds provided under such programs.
       ``(II) Limited audit.--If such organization segregates 
     Federal funds provided under such programs into separate 
     accounts, then only the financial assistance provided with 
     such funds shall be subject to audit.

       ``(viii) Compliance.--Any party which seeks to enforce its 
     rights under this subparagraph may assert a civil action for 
     injunctive relief exclusively in an appropriate State court 
     against the entity or agency that allegedly commits such 
     violation.
       ``(ix) Limitations on use of funds for certain purposes.--
     No funds provided directly to institutions or organizations 
     to provide services and administer programs under this title 
     shall be expended for sectarian worship, instruction, or 
     proselytization.
       ``(x) Preemption.--Nothing in this subparagraph shall be 
     construed to preempt any

[[Page S218]]

     provision of a State constitution or State statute that 
     prohibits or restricts the expenditure of State funds in or 
     by religious organizations.
       ``(5) Penalties.--
       ``(A) In general.--If any amounts are used for the purposes 
     prohibited in either subparagraph (D) or (E) of paragraph 
     (4)--
       ``(i) all funding for the agency, organization, 
     institution, or individual at issue shall be immediately 
     discontinued;
       ``(ii) the agency, organization, institution, or individual 
     using amounts for the purpose prohibited in subparagraph (D) 
     or (E) of paragraph (4) shall be liable for reimbursement of 
     all amounts granted to the individual or entity for the 
     fiscal year for which the amounts were granted.
       ``(B) Liability for expenses and damages.--In relation to a 
     violation of paragraph (4)(D), the individual filing the 
     lawsuit or responsible for taking the legal action against 
     the Federal, State, or local agency or institution, or 
     individual working for the Government, shall be individually 
     liable for all legal expenses and any other expenses of the 
     government agency, institution, or individual working for the 
     Government, including damages assessed by the jury against 
     the Government agency, institution, or individual working for 
     the government, and any punitive damages.
       ``(b) Authorization of Appropriations.--
       ``(1) In general.--There are authorized to be appropriated 
     to carry out this title--
       ``(A) $650,000,000 for fiscal year 1998;
       ``(B) $650,000,000 for fiscal year 1999;
       ``(C) $650,000,000 for fiscal year 2000;
       ``(D) $650,000,000 for fiscal year 2001; and
       ``(E) $650,000,000 for fiscal year 2002.
       ``(2) Allocation of appropriations.--Of amounts authorized 
     to be appropriated under paragraph (1) in each fiscal year--
       ``(A) $500,000,000 shall be for programs under section 
     204(h); and
       ``(B) $150,000,000 shall be for programs under part B.
       ``(3) Availability of funds.--Amounts made available 
     pursuant to this subsection, and allocated pursuant to 
     paragraph (1) in any fiscal year shall remain available until 
     expended.

     ``SEC. 207. ADMINISTRATIVE PROVISIONS.

       ``(a) Authority of Administrator.--The Office shall be 
     administered by the Administrator under the general authority 
     of the Attorney General.
       ``(b) Applicability of Certain Crime Control Provisions.--
     Sections 809(c), 811(a), 811(b), 811(c), 812(a), 812(b), and 
     812(d) of the Omnibus Crime Control and Safe Streets Act of 
     1968 (42 U.S.C. 3789d(c), 3789f(a), 3789f(b), 3789f(c), 
     3789g(a), 3789g(b), 3789g(d)) shall apply with respect to the 
     administration of and compliance with this Act, except that 
     for purposes of this Act--
       ``(1) any reference to the Office of Justice Programs in 
     such sections shall be considered to be a reference to the 
     Assistant Attorney General who heads the Office of Justice 
     Programs; and
       ``(2) the term `this title' as it appears in such sections 
     shall be considered to be a reference to this Act.
       ``(c) Applicability of Certain Other Crime Control 
     Provisions.--Sections 801(a), 801(c), and 806 of the Omnibus 
     Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
     3711(a), 3711(c), and 3787) shall apply with respect to the 
     administration of and compliance with this Act, except that, 
     for purposes of this Act--
       ``(1) any reference to the Attorney General, the Assistant 
     Attorney General who heads the Office of Justice Programs, 
     the Director of the National Institute of Justice, the 
     Director of the Bureau of Justice Statistics, or the Director 
     of the Bureau of Justice Assistance shall be considered to be 
     a reference to the Administrator;
       ``(2) any reference to the Office of Justice Programs, the 
     Bureau of Justice Assistance, the National Institute of 
     Justice, or the Bureau of Justice Statistics shall be 
     considered to be a reference to the Office of Juvenile 
     Justice and Delinquency Prevention; and
       ``(3) the term `this title' as it appears in such sections 
     shall be considered to be a reference to this Act.
       ``(d) Rules, Regulations, and Procedures.--The 
     Administrator may, after appropriate consultation with 
     representatives of States and units of local government, 
     establish such rules, regulations, and procedures as are 
     necessary for the exercise of the functions of the Office and 
     as are consistent with the purpose of this Act.
       ``(e) Withholding.--The Administrator shall initiate such 
     proceedings as the Administrator determines to be appropriate 
     if the Administrator, after giving reasonable notice and 
     opportunity for hearing to a recipient of financial 
     assistance under this title, finds that--
       ``(1) the program or activity for which the grant or 
     contract involved was made has been so changed that the 
     program or activity no longer complies with this title; or
       ``(2) in the operation of such program or activity there is 
     failure to comply substantially with any provision of this 
     title.'';
       (2) in part B--
       (A) in section 221(b)--
       (i) in paragraph (1)--

       (I) by striking ``section 223'' and inserting ``section 
     222''; and
       (II) by striking ``section 223(c)'' and inserting ``section 
     222(c)''; and

       (ii) in paragraph (2), by striking ``section 299(c)(1)'' 
     and inserting ``section 222(a)(1)''; and
       (B) by striking sections 222 and 223 and inserting the 
     following:

     ``SEC. 222. STATE PLANS.

       ``(a) In General.--In order to receive formula grants under 
     this part, a State shall submit a plan for carrying out its 
     purposes applicable to a 3-year period. The State shall 
     submit annual performance reports to the Administrator which 
     shall describe progress in implementing programs contained in 
     the original plan, and shall describe the status of 
     compliance with State plan requirements. In accordance with 
     regulations which the Administrator shall prescribe, such 
     plan shall--
       ``(1) designate a State agency as the sole agency for 
     supervising the preparation and administration of the plan;
       ``(2) contain satisfactory evidence that the State agency 
     designated in accordance with paragraph (1) has or will have 
     authority, by legislation if necessary, to implement such 
     plan in conformity with this part;
       ``(3) provide for the active consultation with and 
     participation of units of general local government or 
     combinations thereof in the development of a State plan which 
     adequately takes into account the needs and requests of local 
     governments, except that nothing in the plan requirements, or 
     any regulations promulgated to carry out such requirements, 
     shall be construed to prohibit or impede the State from 
     making grants to, or entering into contracts with, local 
     private agencies, including religious organizations;
       ``(4) provide that the chief executive officer of the unit 
     of general local government shall assign responsibility for 
     the preparation and administration of the local government's 
     part of a State plan, or for the supervision of the 
     preparation and administration of the local government's part 
     of the State plan, to that agency within the local 
     government's structure or to a regional planning agency (in 
     this part referred to as the `local agency') which can most 
     effectively carry out the purposes of this part and shall 
     provide for supervision of the programs funded under this 
     part by that local agency;
       ``(5)(A) provide for--
       ``(i) an analysis of juvenile crime problems (including the 
     joining of gangs that commit crimes) and juvenile justice and 
     delinquency prevention needs (including educational needs) 
     within the relevant jurisdiction (including any geographical 
     area in which an Indian tribe performs law enforcement 
     functions), a description of the services to be provided, and 
     a description of performance goals and priorities, including 
     a specific statement of the manner in which programs are 
     expected to meet the identified juvenile crime problems 
     (including the joining of gangs that commit crimes) and 
     juvenile justice and delinquency prevention needs (including 
     educational needs) of the jurisdiction;
       ``(ii) an indication of the manner in which the programs 
     relate to other similar State or local programs which are 
     intended to address the same or similar problems; and
       ``(iii) a plan for the concentration of State efforts which 
     shall coordinate all State juvenile delinquency programs with 
     respect to overall policy and development of objectives and 
     priorities for all State juvenile delinquency programs and 
     activities, including provision for regular meetings of State 
     officials with responsibility in the area of juvenile justice 
     and delinquency prevention;
       ``(B) contain--
       ``(i) an analysis of services for the prevention and 
     treatment of juvenile delinquency in rural areas, including 
     the need for such services, the types of such services 
     available in rural areas, and geographically unique barriers 
     to providing such services; and
       ``(ii) a plan for providing needed services for the 
     prevention and treatment of juvenile delinquency in rural 
     areas; and
       ``(C) contain--
       ``(i) an analysis of mental health services available to 
     juveniles in the juvenile justice system (including an 
     assessment of the appropriateness of the particular 
     placements of juveniles in order to receive such services) 
     and of barriers to access to such services; and
       ``(ii) a plan for providing needed mental health services 
     to juveniles in the juvenile justice system;
       ``(6) provide for the active consultation with and 
     participation of private agencies in the development and 
     execution of the State plan; and provide for coordination and 
     maximum utilization of existing juvenile delinquency programs 
     and other related programs, such as education, special 
     education, recreation, health, and welfare within the State;
       ``(7) provide for the development of an adequate research, 
     training, and evaluation capacity within the State;
       ``(8) provide that not less than 75 percent of the funds 
     made available to the State pursuant to grants under section 
     221, whether expended directly by the State, by the unit of 
     general local government, or by a combination thereof, or 
     through grants and contracts with public or private nonprofit 
     agencies, shall be used for--
       ``(A) community-based alternatives (including home-based 
     alternatives) to incarceration and institutionalization, 
     specifically--
       ``(i) for youth who can remain at home with assistance, 
     home probation and programs providing professional supervised 
     group activities or individualized mentoring relationships 
     with adults that involve the family and provide counseling 
     and other supportive services;

[[Page S219]]

       ``(ii) for youth who need temporary placement, crisis 
     intervention, shelter, and after-care; and
       ``(iii) for youth who need residential placement, a 
     continuum of foster care or group home alternatives that 
     provide access to a comprehensive array of services;
       ``(B) community-based programs and services to work with--
       ``(i) parents and other family members to strengthen 
     families, including parent self-help groups, so that 
     juveniles may be retained in their homes;
       ``(ii) juveniles during their incarceration, and with their 
     families, to ensure the safe return of such juveniles to 
     their homes and to strengthen the families; and
       ``(iii) parents with limited English-speaking ability, 
     particularly in areas where there is a large population of 
     families with limited-English speaking ability;
       ``(C) comprehensive juvenile justice and delinquency 
     prevention programs that meet the needs of youth through the 
     collaboration of the many local systems before which a youth 
     may appear, including schools, courts, law enforcement 
     agencies, child protection agencies, mental health agencies, 
     welfare services, health care agencies, and private nonprofit 
     agencies offering youth services;
       ``(D) projects designed to develop and implement programs 
     stressing advocacy activities aimed at improving services for 
     and protecting the rights of youth affected by the juvenile 
     justice system;
       ``(E) educational programs or supportive services for 
     delinquent or other juveniles, provided equitably regardless 
     of sex, race, or family income, designed to--
       ``(i) encourage juveniles to remain in elementary and 
     secondary schools or in alternative learning situations, 
     including--

       ``(I) education in settings that promote experiential, 
     individualized learning and exploration of academic and 
     career options;
       ``(II) assistance in making the transition to the world of 
     work and self-sufficiency;
       ``(III) alternatives to suspension and expulsion; and
       ``(IV) programs to counsel delinquent juveniles and other 
     juveniles regarding the opportunities that education 
     provides; and

       ``(ii) enhance coordination with the local schools that 
     such juveniles would otherwise attend, to ensure that--

       ``(I) the instruction that juveniles receive outside school 
     is closely aligned with the instruction provided in school; 
     and
       ``(II) information regarding any learning problems 
     identified in such alternative learning situations are 
     communicated to the schools;

       ``(F) expanded use of home probation and recruitment and 
     training of home probation officers, other professional and 
     paraprofessional personnel, and volunteers to work 
     effectively to allow youth to remain at home with their 
     families as an alternative to incarceration or 
     institutionalization;
       ``(G) youth-initiated outreach programs designed to assist 
     youth (including youth with limited proficiency in English) 
     who otherwise would not be reached by traditional youth 
     assistance programs;
       ``(H) programs designed to develop and implement projects 
     relating to juvenile delinquency and learning disabilities, 
     including on-the-job training programs to assist community 
     services, law enforcement, and juvenile justice personnel to 
     more effectively recognize and provide for learning disabled 
     and other handicapped youth;
       ``(I) projects designed both to deter involvement in 
     illegal activities and to promote involvement in lawful 
     activities on the part of gangs whose membership is 
     substantially composed of youth;
       ``(J) programs and projects designed to provide for the 
     treatment of youths' dependence on or abuse of alcohol or 
     other addictive or nonaddictive drugs;
       ``(K) law-related education programs (and projects) for 
     delinquent and at-risk youth designed to prevent juvenile 
     delinquency;
       ``(L) programs for positive youth development that assist 
     delinquent and other at-risk youth in obtaining--
       ``(i) a sense of safety and structure;
       ``(ii) a sense of belonging and membership;
       ``(iii) a sense of self-worth and social contribution;
       ``(iv) a sense of independence and control over one's life;
       ``(v) a sense of closeness in interpersonal relationships; 
     and
       ``(vi) a sense of competence and mastery including health 
     and physical competence, personal and social competence, 
     cognitive and creative competence, vocational competence, and 
     citizenship competence, including ethics and participation;
       ``(M) programs that, in recognition of varying degrees of 
     the seriousness of delinquent behavior and the corresponding 
     gradations in the responses of the juvenile justice system in 
     response to that behavior, are designed to--
       ``(i) encourage courts to develop and implement a continuum 
     of post-adjudication restraints that bridge the gap between 
     traditional probation and confinement in a correctional 
     setting (including expanded use of probation, mediation, 
     restitution, community service, treatment, home detention, 
     intensive supervision, electronic monitoring, boot camps and 
     similar programs, and secure community-based treatment 
     facilities linked to other support services such as health, 
     mental health, education (remedial and special), job 
     training, and recreation); and
       ``(ii) assist in the provision by the Administrator of 
     information and technical assistance, including technology 
     transfer, to States in the design and utilization of risk 
     assessment mechanisms to aid juvenile justice personnel in 
     determining appropriate sanctions for delinquent behavior;
       ``(N) programs designed to prevent and reduce hate crimes 
     committed by juveniles, including educational programs and 
     sentencing programs designed specifically for juveniles who 
     commit hate crimes and that provide alternatives to 
     incarceration; and
       ``(O) programs (including referral to literacy programs and 
     social service programs) to assist families with limited 
     English-speaking ability that include delinquent juveniles to 
     overcome language and cultural barriers that may prevent the 
     complete treatment of such juveniles and the preservation of 
     their families;
       ``(9) provide for the development of an adequate research, 
     training, and evaluation capacity within the State;
       ``(10) provide that the State shall not detain or confine 
     juveniles who are alleged to be or determined to be 
     delinquent in any institution in which the juvenile has 
     regular sustained physical contact with adult persons who are 
     detained or confined;
       ``(11) provide for an adequate system of monitoring jails, 
     detention facilities, correctional facilities, and non-secure 
     facilities to insure that the requirements of paragraph (10) 
     are met, and for annual reporting of the results of such 
     monitoring to the Administrator, except that such reporting 
     requirements shall not apply in the case of a State which is 
     in compliance with the other requirements of this paragraph, 
     which is in compliance with the requirements in paragraph 
     (10), and which has enacted legislation which conforms to 
     such requirements and which contains, in the opinion of the 
     Administrator, sufficient enforcement mechanisms to ensure 
     that such legislation will be administered effectively;
       ``(12) provide assurance that youth in the juvenile justice 
     system are treated equitably on the basis of gender, race, 
     family income, and mentally, emotionally, or physically 
     handicapping conditions;
       ``(13) provide assurance that consideration will be given 
     to and that assistance will be available for approaches 
     designed to strengthen the families of delinquent and other 
     youth to prevent juvenile delinquency (which approaches 
     should include the involvement of grandparents or other 
     extended family members when possible and appropriate and the 
     provision of family counseling during the incarceration of 
     juvenile family members and coordination of family services 
     when appropriate and feasible);
       ``(14) provide for procedures to be established for 
     protecting the rights of recipients of services and for 
     assuring appropriate privacy with regard to records relating 
     to such services provided to any individual under the State 
     plan;
       ``(15) provide for such fiscal control and fund accounting 
     procedures necessary to assure prudent use, proper 
     disbursement, and accurate accounting of funds received under 
     this title;
       ``(16) provide reasonable assurances that Federal funds 
     made available under this part for any period shall be so 
     used as to supplement and increase (but not supplant) the 
     level of the State, local, and other non-Federal funds that 
     would in the absence of such Federal funds be made available 
     for the programs described in this part, and shall in no 
     event replace such State, local, and other non-Federal funds; 
     and
       ``(17) provide that the State agency designated under 
     paragraph (1) will from time to time, but not less often than 
     annually, review its plan and submit to the Administrator an 
     analysis and evaluation of the effectiveness of the programs 
     and activities carried out under the plan, and any 
     modifications in the plan, including the survey of State and 
     local needs, which it considers necessary.
       ``(b) Approval by State Agency.--The State agency 
     designated under subsection (a)(1) shall approve the State 
     plan and any modification thereof prior to submission to the 
     Administrator.
       ``(c) Approval by Administrator; Compliance With Statutory 
     Requirements.--
       ``(1) In general.--The Administrator shall approve any 
     State plan and any modification thereof that meets the 
     requirements of this section.
       ``(2) Reduced allocations.--If a State fails to comply with 
     any requirement of subsection (a)(8) in any fiscal year 
     beginning after January 1, 1998, the State shall be 
     ineligible to receive any allocation under that section for 
     such fiscal year unless--
       ``(A) the State agrees to expend all the remaining funds 
     the State receives under this part (excluding funds required 
     to be expended to comply with subsection (a)(4)(C)) for that 
     fiscal year only to achieve compliance with such paragraph; 
     or
       ``(B) the Administrator determines, in the discretion of 
     the Administrator, that the State--
       ``(i) has achieved substantial compliance with such 
     paragraph; and
       ``(ii) has made, through appropriate executive or 
     legislative action, an unequivocal commitment to achieving 
     full compliance within a reasonable time.''; and
       (3) by striking parts C, D, E, F, G, and H, and each part 
     designated as part I.

     SEC. 1163. RUNAWAY AND HOMELESS YOUTH.

       Section 385 of the Juvenile Justice and Delinquency 
     Prevention Act of 1974 (42 U.S.C. 5751) is amended--

[[Page S220]]

       (1) in subsection (a)--
       (A) in paragraph (1), by striking ``1993 and such sums as 
     may be necessary for fiscal years 1994, 1995, and 1996'' and 
     inserting ``1998 and such sums as may be necessary for fiscal 
     years 1999, 2000, 2001, and 2002''; and
       (B) by striking paragraph (3) and redesignating paragraphs 
     (4) and (5) as paragraphs (3) and (4), respectively;
       (2) in subsection (b), by striking ``1993 and such sums as 
     may be necessary for fiscal years 1994, 1995, and 1996'' and 
     inserting ``1998 and such sums as may be necessary for fiscal 
     years 1999, 2000, 2001, and 2002''; and
       (3) in subsection (c), by striking ``1993, 1994, 1995, and 
     1996'' and inserting ``1998, 1999, 2000, 2001, and 2002''.

     SEC. 1164. AUTHORIZATION OF APPROPRIATIONS.

       Title IV of the Juvenile Justice and Delinquency Prevention 
     Act of 1974 (42 U.S.C. 5771 et seq.) is amended--
       (1) in section 403, by striking paragraph (2) and inserting 
     the following:
       ``(2) the term `Administrator' means the Administrator of 
     the Office of Juvenile Crime Control and Accountability.'';
       (2) by striking section 404; and
       (3) in section 408, by striking ``1993, 1994, 1995, and 
     1996'' and inserting ``1998, 1999, 2000, 2001, and 2002''.

     SEC. 1165. REPEAL.

       Title V of the Juvenile Justice and Delinquency Prevention 
     Act of 1974 (42 U.S.C. 5781 et seq.) is repealed.

     SEC. 1166. TRANSFER OF FUNCTIONS AND SAVINGS PROVISIONS.

       (a) Definitions.--In this section, unless otherwise 
     provided or indicated by the context--
       (1) the term ``Administrator of the Office'' means the 
     Administrator of the Office of Juvenile Justice and 
     Delinquency Prevention;
       (2) the term ``Bureau of Justice Assistance'' means the 
     bureau established under section 401 of title I of the 
     Omnibus Crime Control and Safe Streets Act of 1968;
       (3) the term ``Administrator'' means the Administrator of 
     the Office of Juvenile Crime Control and Accountability 
     established by operation of subsection (b);
       (4) the term ``Federal agency'' has the meaning given the 
     term ``agency'' by section 551(1) of title 5, United States 
     Code;
       (5) the term ``function'' means any duty, obligation, 
     power, authority, responsibility, right, privilege, activity, 
     or program;
       (6) the term ``Office of Juvenile Crime Control and 
     Accountability'' means the office established by operation of 
     subsection (b);
       (7) the term ``Office of Juvenile Justice and Delinquency 
     Prevention'' means the Office of Juvenile Justice and 
     Delinquency Prevention within the Department of Justice, 
     established by section 201 of the Juvenile Justice and 
     Delinquency Prevention Act of 1974, as in effect on the day 
     before the date of enactment of this Act; and
       (8) the term ``office'' includes any office, 
     administration, agency, institute, unit, organizational 
     entity, or component thereof.
       (b) Transfer of Functions.--There are transferred to the 
     Office of Juvenile Crime Control and Accountability all 
     functions that the Administrator of the Office exercised 
     before the date of enactment of this Act (including all 
     related functions of any officer or employee of the Office of 
     Juvenile Justice and Delinquency Prevention), and authorized 
     after the enactment of this Act, relating to carrying out the 
     Juvenile Justice and Delinquency Prevention Act of 1974.
       (c) Transfer and Allocations of Appropriations and 
     Personnel.--
       (1) In general.--Except as otherwise provided in this 
     section and in section 101(a) (relating to Juvenile Justice 
     Programs) of the Omnibus Consolidated Appropriations Act, 
     1997, the personnel employed in connection with, and the 
     assets, liabilities, contracts, property, records, and 
     unexpended balances of appropriations, authorizations, 
     allocations, and other amounts employed, used, held, arising 
     from, available to, or to be made available in connection 
     with the functions transferred by this section, subject to 
     section 1531 of title 31, United States Code, shall be 
     transferred to the Office of Juvenile Crime Control and 
     Accountability.
       (2) Unexpended amounts.--Any unexpended amounts transferred 
     pursuant to this subsection shall be used only for the 
     purposes for which the amounts were originally authorized and 
     appropriated.
       (d) Incidental Transfers.--
       (1) In general.--The Director of the Office of Management 
     and Budget, at such time or times as the Director of that 
     Office shall provide, may make such determinations as may be 
     necessary with regard to the functions transferred by this 
     section, and to make such additional incidental dispositions 
     of personnel, assets, liabilities, grants, contracts, 
     property, records, and unexpended balances of appropriations, 
     authorizations, allocations, and other amounts held, used, 
     arising from, available to, or to be made available in 
     connection with such functions, as may be necessary to carry 
     out this section.
       (2) Termination of affairs.--The Director of the Office of 
     Management and Budget shall provide for the termination of 
     the affairs of all entities terminated by this section and 
     for such further measures and dispositions as may be 
     necessary to effectuate the purposes of this section.
       (e) Effect on Personnel.--
       (1) In general.--Except as otherwise provided by this 
     section, the transfer pursuant to this section of full-time 
     personnel (except special Government employees) and part-time 
     personnel holding permanent positions shall not cause any 
     such employee to be separated or reduced in grade or 
     compensation for 1 year after the date of transfer of such 
     employee under this section.
       (2) Executive schedule positions.--Except as otherwise 
     provided in this section, any person who, on the day before 
     the date of enactment of this Act, held a position 
     compensated in accordance with the Executive Schedule 
     prescribed in chapter 53 of title 5, United States Code, and 
     who, without a break in service, is appointed in the Office 
     of Juvenile Crime Control and Accountability to a position 
     having duties comparable to the duties performed immediately 
     preceding such appointment shall continue to be compensated 
     in such new position at not less than the rate provided for 
     such previous position, for the duration of the service of 
     such person in such new position.
       (3) Transition rule.--
       (A) In general.--The incumbent Administrator of the Office 
     as of the date immediately preceding the date of enactment of 
     this Act shall continue to serve as Administrator after the 
     enactment of this Act until such time as the incumbent 
     resigns, is relieved of duty by the President, or an 
     Administrator is appointed by the President, by and with the 
     advice and consent of the Senate.
       (B) Nominee.--Not later than 6 months after the date of 
     enactment of this Act, the President shall submit to the 
     Senate for consideration the name of the individual nominated 
     to be appointed as the Administrator.
       (f) Savings Provisions.--
       (1) Continuing effect of legal documents.--All orders, 
     determinations, rules, regulations, permits, agreements, 
     grants, contracts, certificates, licenses, registrations, 
     privileges, and other administrative actions--
       (A) that have been issued, made, granted, or allowed to 
     become effective by the President, any Federal agency or 
     official thereof, or by a court of competent jurisdiction, in 
     the performance of functions that are transferred under this 
     section; and
       (B) that are in effect at the time this section takes 
     effect, or were final before the date of enactment of this 
     Act and are to become effective on or after the date of 
     enactment of this Act, shall continue in effect according to 
     their terms until modified, terminated, superseded, set 
     aside, or revoked in accordance with law by the President, 
     the Administrator, or other authorized official, a court of 
     competent jurisdiction, or by operation of law.
       (2) Proceedings not affected.--
       (A) In general.--This section shall not affect any 
     proceedings, including notices of proposed rulemaking, or any 
     application for any license, permit, certificate, or 
     financial assistance pending before the Office of Juvenile 
     Justice and Delinquency Prevention on the date on which this 
     section takes effect, with respect to functions transferred 
     by this section but such proceedings and applications shall 
     be continued.
       (B) Orders; appeals; payments.--Orders shall be issued in 
     such proceedings, appeals shall be taken therefrom, and 
     payments shall be made pursuant to such orders, as if this 
     section had not been enacted, and orders issued in any such 
     proceedings shall continue in effect until modified, 
     terminated, superseded, or revoked by a duly authorized 
     official, by a court of competent jurisdiction, or by 
     operation of law.
       (C) Discontinuance or modification.--Nothing in this 
     paragraph shall be construed to prohibit the discontinuance 
     or modification of any such proceeding under the same terms 
     and conditions and to the same extent that such proceeding 
     could have been discontinued or modified if this paragraph 
     had not been enacted.
       (3) Suits not affected.--This section shall not affect 
     suits commenced before the date of enactment of this Act, and 
     in all such suits, proceedings shall be had, appeals taken, 
     and judgments rendered in the same manner and with the same 
     effect as if this section had not been enacted.
       (4) Nonabatement of actions.--No suit, action, or other 
     proceeding commenced by or against the Office of Juvenile 
     Justice and Delinquency Prevention, or by or against any 
     individual in the official capacity of such individual as an 
     officer of the Office of Juvenile Justice and Delinquency 
     Prevention, shall abate by reason of the enactment of this 
     section.
       (5) Administrative actions relating to promulgation of 
     regulations.--Any administrative action relating to the 
     preparation or promulgation of a regulation by the Office of 
     Juvenile Justice and Delinquency Prevention relating to a 
     function transferred under this section may be continued, to 
     the extent authorized by this section, by the Office of 
     Juvenile Crime Control and Accountability with the same 
     effect as if this section had not been enacted.
       (g) Transition.--The Administrator may utilize--
       (1) the services of such officers, employees, and other 
     personnel of the Office of Juvenile Justice and Delinquency 
     Prevention with respect to functions transferred to the 
     Office of Juvenile Crime Control and Accountability by this 
     section; and
       (2) amounts appropriated to such functions for such period 
     of time as may reasonably be needed to facilitate the orderly 
     implementation of this section.

[[Page S221]]

       (h) References.--Reference in any other Federal law, 
     Executive order, rule, regulation, or delegation of 
     authority, or any document of or relating to--
       (1) the Administrator of the Office of Juvenile Justice and 
     Delinquency Prevention with regard to functions transferred 
     by operation of subsection (b), shall be considered to refer 
     to the Administrator of the Office of Juvenile Crime Control 
     and Accountability; and
       (2) the Office of Juvenile Justice and Delinquency 
     Prevention with regard to functions transferred by operation 
     of subsection (b), shall be considered to refer to the Office 
     of Juvenile Crime Control and Accountability.
       (i) Technical and Conforming Amendment.--Section 5315 of 
     title 5, United States Code, is amended by striking 
     ``Administrator, Office of Juvenile Crime Control and 
     Accountability''.

     SEC. 1167. REPEAL OF UNNECESSARY AND DUPLICATIVE PROGRAMS.

       (a) Violent Crime Control and Law Enforcement Act of 
     1994.--
       (1) Title iii.--Title III of the Violent Crime Control and 
     Law Enforcement Act of 1994 (42 U.S.C. 13741 et seq.) is 
     amended by striking subtitles A through S, subtitle U, and 
     subtitle X.
       (2) Title v.--Title V of the Violent Crime Control and Law 
     Enforcement Act of 1994 (42 U.S.C. 3797 et seq.) is repealed.
       (3) Title xxvii.--Title XXVII of the Violent Crime Control 
     and Law Enforcement Act of 1994 (42 U.S.C. 14191 et seq.) is 
     repealed.
       (b) Elementary and Secondary Education Act.--
       (1) Title IV.--Title IV of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 7101) is repealed.
       (2) Title V.--Part C of title V of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 7261 et seq.) is 
     repealed.
       (d) Public Health Service Act.--Section 517 of the Public 
     Health Service Act (42 U.S.C. 290bb-23) is repealed.
       (e) Human Services Reauthorization Act.--Section 408 of the 
     Human Services Reauthorization Act is repealed.
       (f) Community Services Block Grants Act.--Section 682 of 
     the Community Services Block Grants Act (42 U.S.C. 9901) is 
     repealed.
       (g) Anti-Drug Abuse Act.--Subtitle B of title III of the 
     Anti-Drug Abuse Act of 1988 (42 U.S.C. 11801 et seq.) is 
     amended by striking chapters 1 and 2.

     SEC. 1168. HOUSING JUVENILE OFFENDERS.

       Section 20105(a)(1) of subtitle A of title II of the 
     Violent Crime Control and Law Enforcement Act of 1994 (42 
     U.S.C. 13705(a)(1)) is amended by striking ``15'' and 
     inserting ``30''.

     SEC. 1169. CIVIL MONETARY PENALTY SURCHARGE.

       (a) Imposition.--Subject to subsection (b) and 
     notwithstanding any other provision of law, a surcharge of 40 
     percent of the principal amount of a civil monetary penalty 
     shall be added to each civil monetary penalty assessed by the 
     United States or any agency thereof at the time the penalty 
     is assessed.
       (b) Limitation.--This section does not apply to any 
     monetary penalty assessed under the Internal Revenue Code of 
     1986.
       (c) Use of Surcharges.--Amounts collected from the 
     surcharge imposed under this section shall be used for 
     Federal programs to combat youth violence.
       (d) Effective Dates.--
       (1) In general.--A surcharge under subsection (b) shall be 
     added to each civil monetary penalty assessed on or after the 
     later of October 1, 1997 and the date of enactment of this 
     Act.
       (2) Expiration of authority.--The authority to add a 
     surcharge under this subsection shall terminate at the close 
     of September 30, 2002.
                                 ______
                                 
      By Mr. ASHCROFT (for himself, Mrs. Hutchison, Mr. Lott, Mr. 
        Nickles, Mr. Craig, Ms. Collins, Mr. DeWine, Mr. Allard, Mr. 
        Brownback, Mr. Chafee, Mr. Coats, Mr. Domenici, Mr. Enzi, Mr. 
        Faircloth, Mr. Gramm, Mr. Grams, Mr. Grassley, Mr. Hagel, Mr. 
        Hatch, Mr. Helms, Mr. Hutchinson, Mr. Kyl, Mr. Murkowski, Mr. 
        Roberts, Mr. Sessions, Mr. Thurmond, Mr. Warner, Mr. Coverdell, 
        and Mr. Jeffords):
  S. 4. A bill to amend the Fair Labor Standards Act of 1938 to provide 
to private sector employees the same opportunities for time-and-a-half 
compensatory time off, biweekly work programs, and flexible credit hour 
programs as Federal employees currently enjoy to help balance the 
demands and needs of work and family, to clarify the provisions 
relating to exemptions of certain professionals from the minimum wage 
and overtime requirements of the Fair Labor Standards Act of 1938, and 
for other purposes; to the Committee on Labor and Human Resources.


                   the family friendly workplace act

  Mr. ASHCROFT. Mr. President, I am delighted to have the opportunity 
to file, in conjunction with Senators Hutchison, Lott, Nickles, Craig, 
Collins, Enzi, Grassley, Coats, Warner, Helms, B. Smith, and Gramm, the 
Family Friendly Workplace Act. This is an important piece of 
legislation, which should free our families from inflexible work 
schedules in order to meet the competing demands of the workplace and 
their families.
  This demand for our time, which stresses us and stretches us, has 
been recognized by people on both sides of the political aisle. As a 
matter of fact, the Clinton administration's Labor Department developed 
a report to the Nation and to the President called ``Working Women 
Count.'' In order to do so, they surveyed hundreds of thousands of 
working women. And the conclusion of the report is as follows:
  The number one issue women want to bring to the President's attention 
is the difficulty of balancing work and family obligations.
  The Family Friendly Workplace Act is a way of helping people do just 
that--meet their responsibilities to their employers and meet their 
responsibilities to their families. Frankly, it is a way of doing it 
without taking a pay cut.
  Now, some have suggested that the way to do this is to have a family 
leave policy that allows workers to simply take time off work without 
pay. Well, that really exacerbates some of the tension in most of our 
families, because we have financial tension as well as this social 
tension that stretches us between the workplace and the home place. And 
so, really, what we have in the Family Friendly Workplace Act is the 
ability to have flexible working schedules at the option of the 
employee and at the request of the employee, when the employer will 
agree, that allows a person, for instance, to take time off on Friday 
afternoon and to make it up on Monday.
  Most Americans don't realize it, but it is against the law for an 
employer to agree with his employee that the employee can take time off 
on Friday afternoon to see his daughter get an award at the local high 
school and to make up that same time on Monday. The strict laws about 
hours and overtime make it difficult for that to happen, make it 
impossible, make it illegal.
  Those laws were developed in the 1930's. They put a lot of stress on 
American families. In the 1930's, we didn't have so many working 
mothers. One out of every 6 mothers of school-aged children worked in 
the 1930's, and well over 70 percent of them work in the 1990's. As we 
move to the next century, it is time for us to revamp our approach and 
to welcome the next century by accommodating these competing demands.
  Flexible work arrangements have been available to Federal Government 
workers since 1978--in the 1970's, 1980's, and 1990's, Government 
workers have had a special privilege. The Federal program has been so 
successful that the President of the United States, by Executive order 
in 1993 extended it to parts of the Federal Government that had not yet 
had the benefits of that program. It is high time that the workers in 
the private sector of this country enjoy the same benefits of agreeing 
with their employers on flexible working arrangements at the option of 
the worker, never to be imposed by the employer, which would allow the 
worker to accommodate the competing needs and demands of family and the 
workplace.
  Allowing workplace flexibility is a tremendous step forward. It has 
been asked for by the women of America as reflected in the Clinton 
administration document. It has been written about, like this Time 
Magazine article featuring the difficulties of Lori Lucas, a single 
mother, working full-time in Shrewsbury, Missouri. The President of the 
United States has talked about flextime and the need to have it, and it 
is time for us to deliver it to the American people--albeit 15 or more 
years after we delivered it to the workers in the Federal Government.
  I believe that working women know what they need. Working Women 
Magazine and Working Mother magazines have endorsed it, and is time to 
have those flexible working arrangements. Working Women Magazine said 
in its support of this legislation, that it is time for Congress to 
give women what they want, and not what you Congress thinks they need.
  Similarly, when parents spend time at work, they can never replace 
that

[[Page S222]]

time with their families no matter how much overtime they may bring 
home. Sometimes people would like, instead of being paid time and a 
half for overtime, to take time and a half off sometime later in order 
to spend time with their families. That is another part of this bill--
to allow people to take as compensation for overtime--compensatory time 
instead of money. While it would allow a worker to ask for the money, 
the worker would have a complete, unchallenged and unfettered right to 
be paid money for the overtime.
  This bill is really designed to give workers choices and the 
opportunity to choose to be with their families instead of being forced 
to take their overtime in money. For some workers, there comes a point 
when no matter how much money they have, they simply want and need to 
be able to spend some time with their families.
  I am delighted that I have been joined in this particular endeavor in 
developing this legislation by one of the individuals who is most 
careful regarding the rights, options and choices of individuals not 
only in the workplace but as American citizens. I would like to yield 
to the Senator from Texas, Senator Hutchison, who is the primary 
cosponsor of this legislation, the Family Friendly Workplace Act, and 
to call upon her for remarks.
  The PRESIDING OFFICER (Mr. Frist). The Senator from Texas is 
recognized.
  Mrs. HUTCHISON. Thank you, Mr. President. I thank the Senator from 
Missouri for providing leadership on this very important issue. He was 
out there fighting for this issue from the first day he came to the 
Senate, and he has certainly demonstrated his commitment to family 
flexibility throughout his Government career.
  I am reminded of the speech that I heard my friend, Congresswoman 
Susan Molinari, give this summer. Congresswoman Molinari is a working 
mom. She says what we need most as working moms in this country is more 
hours in the day. Senator Ashcroft and I would like to provide more 
hours in the day. That is not an option for us. But we are going to do 
something that we think will be second best to producing more hours in 
a day for a working mom or a working dad who wants to work or is forced 
to work to make ends meet, either way, but yet also wants more time 
with his or her children.
  This bill will primarily benefit the hourly employees in our country. 
Because salaried employees are presently exempt from many federal wage 
and hour laws, this is not as much an issue for them. They and their 
employers are able to work out flexible work arrangements. But in the 
hourly category, employers and employees do not have that option. They 
are not able to do what anybody would think in this country is common 
sense; and that is sit down and say, ``Could I work 2 extra hours on 
Friday in order to take off at 3 o'clock to go to the PTA meeting on 
Monday?'' That is what Senator Ashcroft and I would like to do with the 
Family Friendly Workplace Act that we have introduced today.
  It is a fact that in two-thirds of the households in this country, 
both the mother and the father are working. In fact, 75 percent of the 
mothers of young children are now in the workplace. So we must address 
the ever-increasing demands on working moms and working dads--to allow 
them to have more time to do what they need to do to bring their 
families together and to keep them close-knit. This requires going to 
the PTA meetings, going to the afternoon basketball game, or to the 
soccer game, or whatever it is that will allow that family to bond 
together and maintain its strength, thereby strengthening our country. 
We all know that the family unit is the core strength of our nation, 
and if we allow that to deteriorate, then nothing else is going to 
matter. In the history of civilization, no country has ultimately 
survived where the family unit has deteriorated.
  That is why we are looking for creative ways to help the working 
family--and in this case it is the hourly wage working families who are 
struggling the hardest to make ends meet--to be able to do what they 
need to do for their families while maintaining a good working 
relationship with their employers and preserving their family income.
  The bill that Senator Ashcroft and I are introducing today will 
relieve stress in the family by allowing the employer and the hourly 
employee to sit down and negotiate to, for example, take off two hours 
today and work an additional two hours the following week, or perhaps 
to work an extra hour every day and bank that time for use when a 
family need arises, or to work required overtime and have a choice 
about whether they take time-and-a-half compensation or time and a half 
hours because then they can bank that time and do even more with their 
families.
  In fact, there was a poll conducted by Penn & Shoen and Associates 
that revealed that 75 percent of all employees would like to have the 
ability to choose between getting time-and-a-half in either wages or 
time. Fifty-seven percent would take time off instead of being paid, if 
the option were available.
  So why not make these options available? The Family Friendly 
Workplace Act makes these options available, on a totally voluntary 
basis. There are strict requirements in this law that will keep 
employers from in any way requiring or coercing an employee to work and 
not take overtime pay. We want to make sure that does not happen. That 
is why the law is written very carefully to make sure that it could not 
happen, and that it will only give employees and employers the ability 
to voluntarily sit down and do what they think make sense for their 
schedules and needs.
  Let me also mention that where there are union agreements in effect, 
this law will not affect those agreements. This legislation does not 
encroach on the collective bargaining of unions in any way. Rather, it 
would apply to employees who are not in unions who now are restricted 
by a wage-and-hour law that says you cannot have the option of working 
a couple of hours on Friday in order to take off at 3 o'clock on 
Monday. That is exactly what Senator Ashcroft and I seek to enact with 
this legislation.
  I commend Senator Ashcroft for his leadership in this area. We are 
going to work with our colleagues on both sides of the aisle and on 
both sides of the Rotunda to enact this very important legislation. We 
must grant hourly wage employees who have families in this country and 
the same options that people on salaries and, indeed, that federal 
employees already have.
  Thank you, Mr. President. I yield back to the Senator from Missouri.
  Mr. ASHCROFT addressed the Chair.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. ASHCROFT. Mr. President, I thank the Senator from Texas for her 
sensitivity on this issue and for her commitment to it. I know she is 
dedicated to helping resolve this. There is simply no reason why the 
Government of the United States should put a barrier between the 
employers and employees of America who want to resolve stresses and 
strengths. We should have laws that allow people to reach these 
judgments about flexibly and allocating time, with adequate protection 
which are enforcement mechanisms through the Department of Labor.
  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. 4

       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 ``Family Friendly Workplace 
     Act''.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to assist working people in the United States;
       (2) to balance the demands of workplaces with the needs of 
     families;
       (3) to provide such assistance and balance such demands by 
     allowing employers to offer compensatory time off, which 
     employees may voluntarily elect to receive, and to establish 
     biweekly work programs and flexible credit hour programs, in 
     which employees may voluntarily participate; and
       (4) to give private sector employees the same benefits of 
     compensatory time off, biweekly work schedules, and flexible 
     credit hours as have been enjoyed by Federal Government 
     employees since 1978.

     SEC. 3. WORKPLACE FLEXIBILITY OPTIONS.

       (a) Compensatory Time Off.--
       (1) In general.--Section 7 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 207) is amended by adding at the end the 
     following:

[[Page S223]]

       ``(r) Compensatory Time Off for Private Employees.--
       ``(1) General rule.--
       ``(A) Compensatory time off.--An employee may receive, in 
     accordance with this subsection and in lieu of monetary 
     overtime compensation, compensatory time off at a rate not 
     less than one and one-half hours for each hour of employment 
     for which monetary overtime compensation is required by this 
     section.
       ``(B) Definition.--For purposes of this subsection, the 
     term `employee' does not include an employee of a public 
     agency.
       ``(2) Conditions.--An employer may provide compensatory 
     time off to employees under paragraph (1)(A) only pursuant to 
     the following:
       ``(A) Such time may be provided only in accordance with--
       ``(i) applicable provisions of a collective bargaining 
     agreement between the employer and the representative of the 
     employees recognized as provided in section 9(a) of the 
     National Labor Relations Act (29 U.S.C. 159(a)); or
       ``(ii) in the case of employees who are not represented by 
     a labor organization recognized as provided in section 9(a) 
     of the National Labor Relations Act, an agreement or 
     understanding arrived at between the employer and employee 
     before the performance of the work involved if such agreement 
     or understanding was entered into knowingly and voluntarily 
     by such employee and was not a condition of employment.
       ``(B) If such employee has affirmed, in a written or 
     otherwise verifiable statement that is made, kept, and 
     preserved in accordance with section 11(c), that the employee 
     has chosen to receive compensatory time off in lieu of 
     monetary overtime compensation.
       ``(C) If the employee has not accrued compensatory time off 
     in excess of the limit applicable to the employee prescribed 
     by paragraph (3).
       ``(3) Hour limit.--
       ``(A) Maximum hours.--An employee may accrue not more than 
     240 hours of compensatory time off.
       ``(B) Compensation date.--Not later than January 31 of each 
     calendar year, the employee's employer shall provide monetary 
     compensation for any unused compensatory time off accrued 
     during the preceding calendar year that was not used prior to 
     December 31 of the preceding calendar year at the rate 
     prescribed by paragraph (6). An employer may designate and 
     communicate to the employees of the employer a 12-month 
     period other than the calendar year, in which case such 
     compensation shall be provided not later than 31 days after 
     the end of such 12-month period.
       ``(C) Excess of 80 hours.--The employer may provide 
     monetary compensation for an employee's unused compensatory 
     time off in excess of 80 hours at any time after giving the 
     employee at least 30 days' notice. Such compensation shall be 
     provided at the rate prescribed by paragraph (6).
       ``(D) Policy.--An employer that has adopted a policy 
     offering compensatory time off to employees may discontinue 
     such policy upon giving employees 30 days' notice.
       ``(E) Written request.--An employee may withdraw an 
     agreement or understanding described in paragraph (2)(A)(ii) 
     at any time. An employee may also request in writing that 
     monetary compensation be provided, at any time, for all 
     compensatory time off accrued that has not yet been used. 
     Within 30 days after receiving the written request, the 
     employer shall provide the employee the monetary compensation 
     due in accordance with paragraph (6).
       ``(4) Prohibition of coercion.--
       ``(A) In general.--An employer that provides compensatory 
     time off under paragraph (1) to employees shall not directly 
     or indirectly intimidate, threaten, or coerce, or attempt to 
     intimidate, threaten, or coerce, any employee for the purpose 
     of--
       ``(i) interfering with the rights of the employee under 
     this subsection to request or not request compensatory time 
     off in lieu of payment of monetary overtime compensation for 
     overtime hours; or
       ``(ii) requiring the employee to use such compensatory time 
     off.
       ``(B) Definition.--As used in subparagraph (A), the term 
     `intimidate, threaten, or coerce' has the meaning given the 
     term in section 13A(d)(3)(B).''.
       (2) Remedies and sanctions.--Section 16 of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 216) is amended--
       (A) in subsection (b), by striking ``(b) Any employer'' and 
     inserting ``(b) Except as provided in subsection (f), any 
     employer''; and
       (B) by adding at the end the following:
       ``(f)(1) An employer that violates section 7(r)(4) shall be 
     liable to the employee affected in an amount equal to--
       ``(A) the product of--
       ``(i) the rate of compensation (determined in accordance 
     with section 7(r)(6)(A)); and
       ``(ii)(I) the number of hours of compensatory time off 
     involved in the violation that was initially accrued by the 
     employee; minus
       ``(II) the number of such hours used by the employee; and
       ``(B) as liquidated damages, the product of--
       ``(i) such rate of compensation; and
       ``(ii) the number of hours of compensatory time off 
     involved in the violation that was initially accrued by the 
     employee.
       ``(2) The employer shall be subject to such liability in 
     addition to any other remedy available for such violation 
     under this section or section 17, including a criminal 
     penalty under subsection (a) and a civil penalty under 
     subsection (e).''.
       (3) Calculations and special rules.--Section 7(r) of the 
     Fair Labor Standards Act of 1938 (29 U.S.C. 207(r)), as added 
     by paragraph (1), is amended by adding at the end the 
     following:
       ``(5) Termination of employment.--An employee who has 
     accrued compensatory time off authorized to be provided under 
     paragraph (1) shall, upon the voluntary or involuntary 
     termination of employment, be paid for the unused 
     compensatory time off in accordance with paragraph (6).
       ``(6) Rate of compensation for compensatory time off.--
       ``(A) General rule.--If compensation is to be paid to an 
     employee for accrued compensatory time off, such compensation 
     shall be paid at a rate of compensation not less than--
       ``(i) the regular rate received by such employee when the 
     compensatory time off was earned; or
       ``(ii) the final regular rate received by such employee,
     whichever is higher.
       ``(B) Consideration of payment.--Any payment owed to an 
     employee under this subsection for unused compensatory time 
     off shall be considered unpaid monetary overtime 
     compensation.
       ``(7) Use of time.--An employee--
       ``(A) who has accrued compensatory time off authorized to 
     be provided under paragraph (1); and
       ``(B) who has requested the use of such compensatory time 
     off,

     shall be permitted by the employer of the employee to use 
     such time within a reasonable period after making the request 
     if the use of the compensatory time off does not unduly 
     disrupt the operations of the employer.
       ``(8) Definitions.--The terms `monetary overtime 
     compensation' and `compensatory time off' shall have the 
     meanings given the terms `overtime compensation' and 
     `compensatory time', respectively, by subsection (o)(7).''.
       (4) Notice to employees.--Not later than 30 days after the 
     date of the enactment of this Act, the Secretary of Labor 
     shall revise the materials the Secretary provides, under 
     regulations published at 29 C.F.R. 516.4, to employers for 
     purposes of a notice explaining the Fair Labor Standards Act 
     of 1938 to employees so that such notice reflects the 
     amendments made to such Act by this subsection.
       (b) Biweekly Work Programs and Flexible Credit Hour 
     Programs.--
       (1) In general.--The Fair Labor Standards Act of 1938 is 
     amended by inserting after section 13 (29 U.S.C. 213) the 
     following new section:

     ``SEC. 13A. BIWEEKLY WORK PROGRAMS AND FLEXIBLE CREDIT HOUR 
                   PROGRAMS.

       ``(a) Purposes.--The purposes of this section are--
       ``(1) to assist working people in the United States;
       ``(2) to balance the demands of workplaces with the needs 
     of families;
       ``(3) to provide such assistance and balance such demands 
     by allowing employers to establish biweekly work programs and 
     flexible credit hour programs, in which employees may 
     voluntarily participate; and
       ``(4) to give private sector employees the same benefits of 
     biweekly work schedules and flexible credit hours as have 
     been enjoyed by Federal Government employees since 1978.
       ``(b) Biweekly Work Programs.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, an employer may establish biweekly work programs that 
     allow the use of a biweekly work schedule--
       ``(A) that consists of a basic work requirement of not more 
     than 80 hours, over a 2-week period; and
       ``(B) in which more than 40 hours of the work requirement 
     may occur in a week of the period.
       ``(2) Computation of overtime.--In the case of an employee 
     participating in such a biweekly work program, all hours 
     worked in excess of such a biweekly work schedule or in 
     excess of 80 hours in the 2-week period, that are requested 
     in advance by an employer, shall be overtime hours.
       ``(3) Overtime compensation provision.--The employee shall 
     be compensated for each such overtime hour at a rate not less 
     than one and one-half times the regular rate at which the 
     employee is employed, in accordance with section 7(a)(1), or 
     receive compensatory time off in accordance with section 7(r) 
     for each such overtime hour.
       ``(4) Compensation for hours in schedule.--Notwithstanding 
     section 7 or any other provision of law that relates to 
     premium pay for overtime work, the employee shall be 
     compensated for each hour in such a biweekly work schedule at 
     a rate not less than the regular rate at which the employee 
     is employed.
       ``(c) Flexible Credit Hour Programs.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, an employer may establish flexible credit hour programs, 
     under which, at the election of an employee, the employer and 
     the employee jointly designate hours for the employee to work 
     that are in excess of the basic work requirement of the 
     employee so that the employee can accumulate flexible credit 
     hours to reduce the hours

[[Page S224]]

     worked in a week or a day subsequent to the day on which the 
     flexible credit hours are worked.
       ``(2) Computation of overtime.--In the case of an employee 
     participating in such a flexible credit hour program, all 
     hours worked in excess of 40 hours in a week that are 
     requested in advance by an employer, other than flexible 
     credit hours, shall be overtime hours.
       ``(3) Overtime compensation provision.--The employee shall 
     be compensated for each such overtime hour at a rate not less 
     than one and one-half times the regular rate at which the 
     employee is employed, in accordance with section 7(a)(1), or 
     receive compensatory time off in accordance with section 7(r) 
     for each such overtime hour.
       ``(4) Compensation for flexible credit hours.--
     Notwithstanding section 7 or any other provision of law that 
     relates to premium pay for overtime work, an employee shall 
     be compensated for each flexible credit hour at a rate not 
     less than the regular rate at which the employee is employed.
       ``(5) Accumulation and compensation.--
       ``(A) Accumulation of flexible credit hours.--An employee 
     who is participating in such a flexible credit hour program 
     can accumulate not more than 50 flexible credit hours.
       ``(B) Compensation for flexible credit hours of employees 
     no longer subject to program.--Any employee who was 
     participating in such a flexible credit hour program and who 
     is no longer subject to such a program shall be paid at a 
     rate not less than the regular rate at which the employee is 
     employed on the date the employee receives such payment, for 
     not more than 50 flexible credit hours accumulated by such 
     employee.
       ``(C) Compensation for annually accumulated flexible credit 
     hours.--
       ``(i) In general.--Not later than January 31 of each 
     calendar year, the employer of an employee who is 
     participating in such a flexible credit hour program shall 
     provide monetary compensation for any flexible credit hours 
     accumulated as described in subparagraph (A) during the 
     preceding calendar year that were not used prior to December 
     31 of the preceding calendar year at a rate not less than the 
     regular rate at which the employee is employed on the date 
     the employee receives such payment.
       ``(ii) Different 12-month period.--An employer may 
     designate and communicate to the employees of the employer a 
     12-month period other than the calendar year, in which case 
     such compensation shall be provided not later than 31 days 
     after the end of such 12-month period.
       ``(d) Participation.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     employee may be required to participate in a program 
     described in this section. Participation in a program 
     described in this section may not be a condition of 
     employment.
       ``(2) Collective bargaining agreement.--In a case in which 
     a valid collective bargaining agreement exists, an employee 
     may only be required to participate in such a program in 
     accordance with the agreement.
       ``(3) Prohibition of coercion.--
       ``(A) In general.--An employer may not directly or 
     indirectly intimidate, threaten, or coerce, or attempt to 
     intimidate, threaten, or coerce, any employee for the purpose 
     of interfering with the rights of such employee under this 
     section to elect or not to elect to work a biweekly work 
     schedule, to elect or not to elect to participate in a 
     flexible credit hour program, or to elect or not to elect to 
     work flexible credit hours (including working flexible credit 
     hours in lieu of overtime hours).
       ``(B) Definition.--As used in subparagraph (A), the term 
     `intimidate, threaten, or coerce' includes promising to 
     confer or conferring any benefit (such as appointment, 
     promotion, or compensation) or effecting or threatening to 
     effect any reprisal (such as deprivation of appointment, 
     promotion, or compensation).
       ``(e) Application of Programs in the Case of Collective 
     Bargaining Agreements.--
       ``(1) Applicable requirements.--In the case of employees in 
     a unit represented by an exclusive representative, any 
     biweekly work program or flexible credit hour program 
     described in subsection (b) or (c), respectively, and the 
     establishment and termination of any such program, shall be 
     subject to the provisions of this section and the terms of a 
     collective bargaining agreement between the employer and the 
     exclusive representative.
       ``(2) Inclusion of employees.--Employees within a unit 
     represented by an exclusive representative shall not be 
     included within any program under this section except to the 
     extent expressly provided under a collective bargaining 
     agreement between the employer and the exclusive 
     representative.
       ``(3) Collective bargaining agreements.--Nothing in this 
     section shall be construed to diminish the obligation of an 
     employer to comply with any collective bargaining agreement 
     or any employment benefits program or plan that provides 
     lesser or greater rights to employees than the benefits 
     established under this section.
       ``(f) Definitions.--As used in this section:
       ``(1) Basic work requirement.--The term `basic work 
     requirement' means the number of hours, excluding overtime 
     hours, that an employee is required to work or is required to 
     account for by leave or otherwise.
       ``(2) Collective bargaining.--The term `collective 
     bargaining' means the performance of the mutual obligation of 
     the representative of an employer and the exclusive 
     representative of employees in an appropriate unit to meet at 
     reasonable times and to consult and bargain in a good-faith 
     effort to reach agreement with respect to the conditions of 
     employment affecting such employees and to execute, if 
     requested by either party, a written document incorporating 
     any collective bargaining agreement reached, but the 
     obligation referred to in this paragraph does not compel 
     either party to agree to a proposal or to make a concession.
       ``(3) Collective bargaining agreement.--The term 
     `collective bargaining agreement' means an agreement entered 
     into as a result of collective bargaining.
       ``(4) Election.--The term `at the election of', used with 
     respect to an employee, means at the initiative of, and at 
     the request of, the employee.
       ``(5) Employee.--The term `employee' means an employee, as 
     defined in section 3, except that the term shall not include 
     an employee, as defined in section 6121(2) of title 5, United 
     States Code.
       ``(6) Employer.--The term `employer' means an employer, as 
     defined in section 3, except that the term shall not include 
     any person acting in relation to an employee, as defined in 
     section 6121(2) of title 5, United States Code.
       ``(7) Exclusive representative.--The term `exclusive 
     representative' means any labor organization that--
       ``(A) is certified as the exclusive representative of 
     employees in an appropriate unit pursuant to Federal law; or
       ``(B) was recognized by an employer immediately before the 
     date of enactment of this section as the exclusive 
     representative of employees in an appropriate unit--
       ``(i) on the basis of an election; or
       ``(ii) on any basis other than an election;

     and continues to be so recognized.
       ``(8) Flexible credit hours.--The term `flexible credit 
     hours' means any hours, within a flexible credit hour program 
     established under subsection (c), that are in excess of the 
     basic work requirement of an employee and that, at the 
     election of the employee, the employer and the employee 
     jointly designate for the employee to work so as to reduce 
     the hours worked in a week or a day subsequent to the day on 
     which the flexible credit hours are worked.
       ``(9) Overtime hours.--The term `overtime hours'--
       ``(A) when used with respect to biweekly work programs 
     under subsection (b), means all hours worked in excess of the 
     biweekly work schedule involved or in excess of 80 hours in 
     the 2-week period involved, that are requested in advance by 
     an employer.
       ``(B) when used with respect to flexible credit hour 
     programs under subsection (c), means all hours worked in 
     excess of 40 hours in a week that are requested in advance by 
     an employer, but does not include flexible credit hours.
       ``(10) Regular rate.--The term `regular rate' has the 
     meaning given the term in section 7(e).''.
       (2) Prohibitions.--
       (A) Purposes.--The purposes of this paragraph are to make 
     violations of the biweekly work program and flexible credit 
     hour program provisions by employers unlawful under the Fair 
     Labor Standards Act of 1938, and to provide for appropriate 
     remedies for such violations, including, as appropriate, 
     fines, imprisonment, injunctive relief, and appropriate legal 
     or equitable relief, including liquidated damages.
       (B) Remedies and sanctions.--Section 15(a)(3) of the Fair 
     Labor Standards Act of 1938 (29 U.S.C. 215(a)(3)) is amended 
     by inserting before the semicolon the following: ``, or to 
     violate any of the provisions of section 13A''.
       (c) Limitations On Salary Practices Relating To Exempt 
     Employees.--Section 13 of the Fair Labor Standards Act of 
     1938 (29 U.S.C. 213) is amended by adding at the end the 
     following:
       ``(m)(1)(A) In the case of a determination of whether an 
     employee is an exempt employee described in subsection 
     (a)(1), the fact that the employee is subject to deductions 
     in compensation for--
       ``(i) absences of the employee from employment of less than 
     a full workday; or
       ``(ii) absences of the employee from employment of less 
     than a full pay period,

     shall not be considered in making such determination.
       ``(B) In the case of a determination described in 
     subparagraph (A), an actual reduction in compensation of the 
     employee may be considered in making the determination.
       ``(C) For the purposes of this paragraph, the term `actual 
     reduction in compensation' does not include any reduction in 
     accrued paid leave, or any other practice, that does not 
     reduce the amount of compensation an employee receives for a 
     pay period.
       ``(2) The payment of overtime compensation or other 
     additions to the compensation of an employee employed on a 
     salary based on hours worked shall not be considered in 
     determining if the employee is an exempt employee described 
     in subsection (a)(1).''.
                                                                    ____

  Mr. JEFFORDS. Mr. President, I am pleased to rise in support of S. 4, 
the ``Family Friendly Workplace Act of 1997.'' This legislation is 
designed to address the very pressing and legitimate needs of working 
families for more flexibility in their workplaces.

[[Page S225]]

  We all know how difficult it is for working parents to balance the 
demands of work and family responsibilities. There are soccer games, 
parent-teacher conferences, and doctor's appointments that demand a few 
hours of time during the workweek. Our workplace laws should allow 
workers the flexibility to work a few extra hours one week, in order to 
take time off later when they need to for family or personal reasons.
  Ironically, current law inhibits more flexible schedules and 
compensation programs. While this may come as a surprise, it is really 
not all that hard to understand why. The world of the workplace has 
undergone a revolution in the last 60 years.
  In the 1930's, as the Roosevelt administration and the Congress 
sought to establish minimum wage and overtime standards, the last thing 
on their minds was finding free time for workers. With as much as one-
third of the work force unemployed, the problem was far too much free 
time, not too little. The purpose of premium pay for overtime work was 
not to enrich already-employed workers, but to spread work to the 
unemployed, in effect reducing free time.
  The story of a woman from Poultney, Vermont, near my home town, 
brought this home to me. She was employed as a school teacher in the 
midst of the Depression, and had the further good fortune to fall in 
love and get married to a man who was also employed. Upon her marriage, 
she quickly resigned from her job. When asked why decades later, she 
explained it was simply understood that you would not have two full-
time jobs in one family.
  Such taboos today are little more than an interesting historical 
footnote. With the rise of single parent families and two-parent 
families in which both spouses work, it is incredibly difficult to 
balance the demands of work and family. That difficulty is increased by 
the Fair Labor Standards Act [FLSA] which was not designed with today's 
circumstances in mind. The law's minimum wage and overtime protections 
are just as important today as they were when enacted, but the law 
needs to be adjusted to the workplace of the 21st century.
  For example, the FLSA bars private employers from offering employees 
the choice of receiving overtime in the form of compensatory time off 
instead of cash wages. While Federal and public sector workers have had 
this option since 1985, private sector workers do not. Many employees 
do not necessarily want money as much as time to address family needs. 
A recent public opinion poll conducted by Penn & Schoen Associates 
found that workers strongly favor more flexibility in their work 
schedules. Seventy-five percent of those surveyed said they would 
prefer the option to choose to be compensated for overtime with 
compensatory time off or cash overtime.
  Now some of my colleagues may be familiar with what seems to be a 
contradictory poll conducted by Lake Research which found that nearly 
two-thirds of poll respondents opposed the policy we propose. Frankly, 
I would, too, if it was anything like what was described in the poll's 
question.
  The Lake Research poll describes compensatory time off as the 
employer's decision. It is not. It describes biweekly scheduling as the 
employer's decision. It is not. Indeed, the poll's question concludes 
by saying: Employers could schedule you to work 60 hours one week and 
20 hours the next, but you would not earn overtime pay. Do you support 
or oppose such a policy?
  It comes as no surprise that most people would not support such a 
policy. As my colleagues know, you can structure a question on a poll 
to yield just about any result you want. This is a pretty good example 
of just that.
  What is interesting to me is that even when faced with such a slanted 
presentation, one-third of the people either supported such a policy or 
were unsure. It stands to reason that when presented with the facts--
that is, that each of these proposals is predicated on the employee's 
decision, not the employer's--three quarters of Americans support 
having the option of taking time off instead of cash.
  This bill incorporates provisions which passed the House of 
Representatives last year that would allow the payment of overtime with 
compensatory time off at a rate of 1.5 hours for each hour worked over 
40 in a workweek. Just like in the public sector, however, no employee 
could be forced to accept comp time off instead of being paid for 
overtime. A written agreement between the employer and the employee is 
required, and there are strong penalties against any employer who 
coerces, intimidates, or threatens workers into accepting such an 
agreement.
  Not all employees want to work a traditional 8-hour day, 5 days a 
week, with no variation. Some employees would prefer to trade hours 
between weeks--e.g. work 45 hours one week, 35 hours the next and take 
every other Friday off--or shift to a schedule that compresses many 
hours at the front end of the week so that they can put together 
several days off later. However, companies would have to pay workers 
overtime for any hours over 40 in the first week, even if the employee 
would prefer to flex his or her schedule. Currently, only Federal 
workers can flex their schedules without their employer being subject 
to the overtime penalty.
  S. 4 would remove this limitation and permit employers and employees 
to mutually agree on a flexible, biweekly schedule consisting of any 
combination of 80 hours over a 2-week period. As with the comp time 
provisions, nothing would be forced upon the employer or the employee. 
If they agreed on such schedules, the employee could trade hours over a 
2-week period without violating the FLSA. Any hours in excess of 80 
hours would still be paid at 1.5 times the employee's regular rate of 
pay. If it's good enough for Federal workers, it's good enough for all 
workers.
  Finally, this bill corrects a flexibility problem for salaried 
workers in both the private and the public sectors. In many instances, 
salaried employees who want to take a few hours off for personal or 
family reasons must choose between two equally undesirable options: 
either to use a portion of their paid leave, that is, vacation or sick 
leave, or take a full day off without pay. If the employer grants an 
employee a few hours of unpaid leave--or merely has a policy which 
permits it--all the salaried employees may lose their exempt status 
under the FLSA.
  Thus, a policy that allows for a partial day of unpaid leave can 
convert an exempt worker to a nonexempt one who is then owed overtime, 
even if the worker has a six-figure income and is employed at the 
highest levels of the company. Multiply this over an entire salaried 
work force, and the liability to public and private employers soars 
into the billions of dollars.
  This bizarre situation does not apply, however, if an employee is 
taking leave pursuant to the Family and Medical Leave Act of 1993 
[FMLA]. This bill would merely extend this practice to accommodate the 
desire of many salaried employees to take time off for reasons other 
than family and medical leave, or for employees who work for small 
companies. In order to provide maximum flexibility to all salaried 
workers who wish to take partial day leave under any circumstances, 
this bill would clarify that salaried workers do not lose their exempt 
status under the FLSA as long as there has not been an actual reduction 
in pay. In effect, this provision would encourage the very type of 
leave that President Clinton feels needs to be accommodated in our 
workplace laws.
  Mr. President, the Senate Committee on Labor and Human Resources and 
its Subcommittee on Employment and Training, chaired by Senator DeWine, 
will thoroughly and deliverately review and debate these proposals in 
the coming weeks. I am hopeful that we will reach agreement on the need 
to provide workers with more flexibility in their work arrangements, 
and will pass legislation that will achieve this goal.
                                 ______
                                 
      By Mr. ASHCROFT (for himself, Mr. McCain, Mr. Lott, Mr. Abraham, 
        Mr. Allard, Mr. Brownback, Mr. Chafee, Mr. Coverdell, Mr. 
        Craig, Mr. DeWine, Mr. Domenici, Mr. Enzi, Mr. Faircloth, Mr. 
        Grams, Mr. Hagel, Mr. Hatch, Mr. Helms, Mr. Hutchinson, Mr. 
        Kyl, Mr. Murkowski, Mr. Nickles, Mr. Roberts, Mr. Santorum, Mr. 
        Sessions, Mr. Smith, Mr. Thomas, Mr. Thurmond, Mr. Warner, Mr. 
        Coats, Mr. Lugar, Mr. Gramm, Mr.

[[Page S226]]

        Kempthorne, and Mrs. Hutchison):
  S. 5. A bill to establish legal standards and procedures for product 
liability litigation, and for other purposes; to the Committee on 
Commerce, Science, and Transportation.


                the product liability reform act of 1997

  Mr. ASHCROFT. Mr. President, let me quickly encapsulate this 
important piece of legislation for the American people.
  Last year, in a bipartisan effort, we succeeded, and this year this 
bill is sponsored by a group of individuals including the chairman of 
the Commerce Committee, Senator McCain, Senator Lott, Senator 
Coverdell, Senator McConnell, Senator Abraham, and Senator Gramm, and I 
believe that we will again this year have a bipartisan approach. I have 
already spoken with a number of the people who were active in this 
measure--Senator Gorton, Senator Rockefeller, Senator Lieberman, and 
Senator Dodd--about last year's approach. We again have introduced a 
similar bill. This is a step on the road of reforming the legal system 
to provide reason and rationality where the legal system, the tort 
system has been out of control.
  Three years ago, for general aviation, the private airplane business, 
the small plane business, we passed a law which provided a framework of 
responsibility which put that part of the tort system back under 
control. People pooh-poohed the idea. They said, ``It won't help; it 
won't work to pass such a law.'' But we are now again building such 
airplanes in the United States. There are 9,000 new jobs in that 
industry alone because we made that decision, and the quality of the 
airplanes is better than it has ever been before. We have not deprived 
anyone of the capacity to receive compensatory damages as a result of 
inferior products or defects in products, and we want to extend the 
tort reform effort which began with general aviation a step further.
  The second step we took last year, in 1996, when we enacted 
securities law tort reform. And that law went into effect this last 
year. So it is now time for us, having done the general aviation 
portion of legal reform and tort reform and having moved from that to 
the securities law, to move to manufacturing generally in the product 
liability area. It is not an attempt to curtail compensatory damages. 
People who are injured should be compensated for their injuries. But it 
is an attempt to bring sanity and reason to an out-of-control tort 
system which is hurting the quality of our products, stifling 
innovation and making it very difficult for some industries to survive 
here. I need not tell most folks that they have already made these 
kinds of adjustments in the European Economic Community and, of course, 
by our competition in the Pacific Rim.
  This is another step forward in tort reform, and I commend those who 
have agreed to help us in this respect. I look forward to working with 
Senators on the other side of the aisle. The President of the United 
States has repeatedly reiterated his desire to sign a good bill in this 
respect and we will be fashioning a bill this year. The bill which we 
have signed is the conference report from last year's effort which 
passed both Houses of the Congress, and it will provide a place holder 
as we assemble good legislation this year which we can send to the 
President and urge him to sign.
  Mr. President, I thank you for the opportunity to introduce these two 
measures, S. 4 and S. 5.
  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. 5

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Product 
     Liability Reform Act of 1997''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.

                   TITLE I--PRODUCT LIABILITY REFORM

Sec. 101. Definitions.
Sec. 102. Applicability; preemption.
Sec. 103. Liability rules applicable to product sellers, renters, and 
              lessors.
Sec. 104. Defense based on claimant's use of intoxicating alcohol or 
              drugs.
Sec. 105. Misuse or alteration.
Sec. 106. Uniform time limitations on liability.
Sec. 107. Alternative dispute resolution procedures.
Sec. 108. Uniform standards for award of punitive damages.
Sec. 109. Liability for certain claims relating to death.
Sec. 110. Several liability for noneconomic loss.
Sec. 111. Workers' compensation subrogation.

                TITLE II--BIOMATERIALS ACCESS ASSURANCE

Sec. 201. Short title.
Sec. 202. Findings.
Sec. 203. Definitions.
Sec. 204. General requirements; applicability; preemption.
Sec. 205. Liability of biomaterials suppliers.
Sec. 206. Procedures for dismissal of civil actions against 
              biomaterials suppliers.

        TITLE III--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

Sec. 301. Effect of court of appeals decisions.
Sec. 302. Federal cause of action precluded.
Sec. 303. Effective date.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that--
       (1) our Nation is overly litigious, the civil justice 
     system is overcrowded, sluggish, and excessively costly and 
     the costs of lawsuits, both direct and indirect, are 
     inflicting serious and unnecessary injury on the national 
     economy;
       (2) excessive, unpredictable, and often arbitrary damage 
     awards and unfair allocations of liability have a direct and 
     undesirable effect on interstate commerce by increasing the 
     cost and decreasing the availability of goods and services;
       (3) the rules of law governing product liability actions, 
     damage awards, and allocations of liability have evolved 
     inconsistently within and among the States, resulting in a 
     complex, contradictory, and uncertain regime that is 
     inequitable to both plaintiffs and defendants and unduly 
     burdens interstate commerce;
       (4) as a result of excessive, unpredictable, and often 
     arbitrary damage awards and unfair allocations of liability, 
     consumers have been adversely affected through the withdrawal 
     of products, producers, services, and service providers from 
     the marketplace, and from excessive liability costs passed on 
     to them through higher prices;
       (5) excessive, unpredictable, and often arbitrary damage 
     awards and unfair allocations of liability jeopardize the 
     financial well-being of many individuals as well as entire 
     industries, particularly the Nation's small businesses and 
     adversely affects government and taxpayers;
       (6) the excessive costs of the civil justice system 
     undermine the ability of American companies to compete 
     internationally, and serve to decrease the number of jobs and 
     the amount of productive capital in the national economy;
       (7) the unpredictability of damage awards is inequitable to 
     both plaintiffs and defendants and has added considerably to 
     the high cost of liability insurance, making it difficult for 
     producers, consumers, volunteers, and nonprofit organizations 
     to protect themselves from liability with any degree of 
     confidence and at a reasonable cost;
       (8) because of the national scope of the problems created 
     by the defects in the civil justice system, it is not 
     possible for the States to enact laws that fully and 
     effectively respond to those problems;
       (9) it is the constitutional role of the national 
     government to remove barriers to interstate commerce and to 
     protect due process rights; and
       (10) there is a need to restore rationality, certainty, and 
     fairness to the civil justice system in order to protect 
     against excessive, arbitrary, and uncertain damage awards and 
     to reduce the volume, costs, and delay of litigation.
       (b) Purposes.--Based upon the powers contained in Article 
     I, Section 8, Clause 3 and the Fourteenth Amendment of the 
     United States Constitution, the purposes of this Act are to 
     promote the free flow of goods and services and to lessen 
     burdens on interstate commerce and to uphold constitutionally 
     protected due process rights by--
       (1) establishing certain uniform legal principles of 
     product liability which provide a fair balance among the 
     interests of product users, manufacturers, and product 
     sellers;
       (2) placing reasonable limits on damages over and above the 
     actual damages suffered by a claimant;
       (3) ensuring the fair allocation of liability in civil 
     actions;
       (4) reducing the unacceptable costs and delays of our civil 
     justice system caused by excessive litigation which harm both 
     plaintiffs and defendants; and
       (5) establishing greater fairness, rationality, and 
     predictability in the civil justice system.
                   TITLE I--PRODUCT LIABILITY REFORM

     SEC. 101. DEFINITIONS.

       For purposes of this title--
       (1) Actual malice.--The term ``actual malice'' means 
     specific intent to cause serious physical injury, illness, 
     disease, death, or damage to property.
       (2) Claimant.--The term ``claimant'' means any person who 
     brings an action covered by this title and any person on 
     whose

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     behalf such an action is brought. If such an action is 
     brought through or on behalf of an estate, the term includes 
     the claimant's decedent. If such an action is brought through 
     or on behalf of a minor or incompetent, the term includes the 
     claimant's legal guardian.
       (3) Claimant's benefits.--The term ``claimant's benefits'' 
     means the amount paid to an employee as workers' compensation 
     benefits.
       (4) Clear and convincing evidence.--The term ``clear and 
     convincing evidence'' is that measure or degree of proof that 
     will produce in the mind of the trier of fact a firm belief 
     or conviction as to the truth of the allegations sought to be 
     established. The level of proof required to satisfy such 
     standard is more than that required under preponderance of 
     the evidence, but less than that required for proof beyond a 
     reasonable doubt.
       (5) Commercial loss.--The term ``commercial loss'' means 
     any loss or damage solely to a product itself, loss relating 
     to a dispute over its value, or consequential economic loss, 
     the recovery of which is governed by the Uniform Commercial 
     Code or analogous State commercial or contract law.
       (6) Compensatory damages.--The term ``compensatory 
     damages'' means damages awarded for economic and non-economic 
     loss.
       (7) Durable good.--The term ``durable good'' means any 
     product, or any component of any such product, which has a 
     normal life expectancy of 3 or more years, or is of a 
     character subject to allowance for depreciation under the 
     Internal Revenue Code of 1986 and which is--
       (A) used in a trade or business;
       (B) held for the production of income; or
       (C) sold or donated to a governmental or private entity for 
     the production of goods, training, demonstration, or any 
     other similar purpose.
       (8) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from harm (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities) to the extent recovery for such loss is 
     allowed under applicable State law.
       (9) Harm.--The term ``harm'' means any physical injury, 
     illness, disease, or death or damage to property caused by a 
     product. The term does not include commercial loss.
       (10) Insurer.--The term ``insurer'' means the employer of a 
     claimant if the employer is self-insured or if the employer 
     is not self-insured, the workers' compensation insurer of the 
     employer.
       (11) Manufacturer.--The term ``manufacturer'' means--
       (A) any person who is engaged in a business to produce, 
     create, make, or construct any product (or component part of 
     a product) and who (i) designs or formulates the product (or 
     component part of the product), or (ii) has engaged another 
     person to design or formulate the product (or component part 
     of the product);
       (B) a product seller, but only with respect to those 
     aspects of a product (or component part of a product) which 
     are created or affected when, before placing the product in 
     the stream of commerce, the product seller produces, creates, 
     makes or constructs and designs, or formulates, or has 
     engaged another person to design or formulate, an aspect of 
     the product (or component part of the product) made by 
     another person; or
       (C) any product seller not described in subparagraph (B) 
     which holds itself out as a manufacturer to the user of the 
     product.
       (12) Noneconomic loss.--The term ``noneconomic loss'' means 
     subjective, nonmonetary loss resulting from harm, including 
     pain, suffering, inconvenience, mental suffering, emotional 
     distress, loss of society and companionship, loss of 
     consortium, injury to reputation, and humiliation.
       (13) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity (including 
     any governmental entity).
       (14) Product.--
       (A) In general.--The term ``product'' means any object, 
     substance, mixture, or raw material in a gaseous, liquid, or 
     solid state which--
       (i) is capable of delivery itself or as an assembled whole, 
     in a mixed or combined state, or as a component part or 
     ingredient;
       (ii) is produced for introduction into trade or commerce;
       (iii) has intrinsic economic value; and
       (iv) is intended for sale or lease to persons for 
     commercial or personal use.
       (B) Exclusion.--The term does not include--
       (i) tissue, organs, blood, and blood products used for 
     therapeutic or medical purposes, except to the extent that 
     such tissue, organs, blood, and blood products (or the 
     provision thereof) are subject, under applicable State law, 
     to a standard of liability other than negligence; or
       (ii) electricity, water delivered by a utility, natural 
     gas, or steam except to the extent that electricity, water 
     delivered by a utility, natural gas, or steam, is subject, 
     under applicable State law, to a standard of liability other 
     than negligence.
       (15) Product liability action.--The term ``product 
     liability action'' means a civil action brought on any theory 
     for harm caused by a product.
       (16) Product seller.--
       (A) In general.--The term ``product seller'' means a person 
     who in the course of a business conducted for that purpose--
       (i) sells, distributes, rents, leases, prepares, blends, 
     packages, labels, or otherwise is involved in placing a 
     product in the stream of commerce; or
       (ii) installs, repairs, refurbishes, reconditions, or 
     maintains the harm-causing aspect of the product.
       (B) Exclusion.--The term ``product seller'' does not 
     include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services in any case in 
     which the sale or use of a product is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who--

       (I) acts in only a financial capacity with respect to the 
     sale of a product; or
       (II) leases a product under a lease arrangement in which 
     the lessor does not initially select the leased product and 
     does not during the lease term ordinarily control the daily 
     operations and maintenance of the product.

       (17) Punitive damages.--The term ``punitive damages'' means 
     damages awarded against any person or entity to punish or 
     deter such person or entity, or others, from engaging in 
     similar behavior in the future.
       (18) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, Commonwealth of 
     Puerto Rico, the Northern Mariana Islands, the Virgin 
     Islands, Guam, American Samoa, and any other territory or 
     possession of the United States or any political subdivision 
     of any of the foregoing.

     SEC. 102. APPLICABILITY; PREEMPTION.

       (a) Preemption.--
       (1) In general.--This Act governs any product liability 
     action brought in any State or Federal court on any theory 
     for harm caused by a product.
       (2) Actions excluded.--A civil action brought for 
     commercial loss shall be governed only by applicable 
     commercial or contract law.
       (b) Relationship to State Law.--This title supersedes State 
     law only to the extent that State law applies to an issue 
     covered by this title. Any issue that is not governed by this 
     title, including any standard of liability applicable to a 
     manufacturer, shall be governed by otherwise applicable State 
     or Federal law.
       (c) Effect on Other Law.--Nothing in this Act shall be 
     construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any law;
       (2) supersede or alter any Federal law;
       (3) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (4) affect the applicability of any provision of chapter 97 
     of title 28, United States Code;
       (5) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation;
       (6) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum; or
       (7) supersede or modify any statutory or common law, 
     including any law providing for an action to abate a 
     nuisance, that authorizes a person to institute an action for 
     civil damages or civil penalties, cleanup costs, injunctions, 
     restitution, cost recovery, punitive damages, or any other 
     form of relief for remediation of the environment (as defined 
     in section 101(8) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601(8)).

     SEC. 103. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS, 
                   RENTERS, AND LESSORS.

       (a) General Rule.--
       (1) In general.--In any product liability action, a product 
     seller other than a manufacturer shall be liable to a 
     claimant only if the claimant establishes--
       (A) that--
       (i) the product that allegedly caused the harm that is the 
     subject of the complaint was sold, rented, or leased by the 
     product seller;
       (ii) the product seller failed to exercise reasonable care 
     with respect to the product; and
       (iii) the failure to exercise reasonable care was a 
     proximate cause of harm to the claimant;
       (B) that--
       (i) the product seller made an express warranty applicable 
     to the product that allegedly caused the harm that is the 
     subject of the complaint, independent of any express warranty 
     made by a manufacturer as to the same product;
       (ii) the product failed to conform to the warranty; and
       (iii) the failure of the product to conform to the warranty 
     caused harm to the claimant; or
       (C) that--
       (i) the product seller engaged in intentional wrongdoing, 
     as determined under applicable State law; and
       (ii) such intentional wrongdoing was a proximate cause of 
     the harm that is the subject of the complaint.
       (2) Reasonable opportunity for inspection.--For purposes of 
     paragraph (1)(A)(ii), a product seller shall not be 
     considered to have failed to exercise reasonable care with 
     respect to a product based upon an alleged failure to inspect 
     the product--
       (A) if the failure occurred because there was no reasonable 
     opportunity to inspect the product; or

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       (B) if the inspection, in the exercise of reasonable care, 
     would not have revealed the aspect of the product which 
     allegedly caused the claimant's harm.
       (b) Special Rule.--
       (1) In general.--A product seller shall be deemed to be 
     liable as a manufacturer of a product for harm caused by the 
     product if--
       (A) the manufacturer is not subject to service of process 
     under the laws of any State in which the action may be 
     brought; or
       (B) the court determines that the claimant would be unable 
     to enforce a judgment against the manufacturer.
       (2) Statute of limitations.--For purposes of this 
     subsection only, the statute of limitations applicable to 
     claims asserting liability of a product seller as a 
     manufacturer shall be tolled from the date of the filing of a 
     complaint against the manufacturer to the date that judgment 
     is entered against the manufacturer.
       (c) Rented or Leased Products.--
       (1) Notwithstanding any other provision of law, any person 
     engaged in the business of renting or leasing a product 
     (other than a person excluded from the definition of product 
     seller under section 101(16)(B)) shall be subject to 
     liability in a product liability action under subsection (a), 
     but any person engaged in the business of renting or leasing 
     a product shall not be liable to a claimant for the tortious 
     act of another solely by reason of ownership of such product.
       (2) For purposes of paragraph (1), and for determining the 
     applicability of this title to any person subject to 
     paragraph (1), the term ``product liability action'' means a 
     civil action brought on any theory for harm caused by a 
     product or product use.
       (d) Actions for Negligent Entrustment.--A civil action for 
     negligent entrustment shall not be subject to the provisions 
     of this section, but shall be subject to any applicable State 
     law.

     SEC. 104. DEFENSE BASED ON CLAIMANT'S USE OF INTOXICATING 
                   ALCOHOL OR DRUGS.

       (a) General Rule.--In any product liability action, it 
     shall be a complete defense to such action if--
       (1) the claimant was intoxicated or was under the influence 
     of intoxicating alcohol or any drug when the accident or 
     other event which resulted in such claimant's harm occurred; 
     and
       (2) the claimant, as a result of the influence of the 
     alcohol or drug, was more than 50 percent responsible for 
     such accident or other event.
       (b) Construction.--For purposes of subsection (a)--
       (1) the determination of whether a person was intoxicated 
     or was under the influence of intoxicating alcohol or any 
     drug shall be made pursuant to applicable State law; and
       (2) the term ``drug'' means any controlled substance as 
     defined in the Controlled Substances Act (21 U.S.C. 802(6)) 
     that was not legally prescribed for use by the claimant or 
     that was taken by the claimant other than in accordance with 
     the terms of a lawfully issued prescription.

     SEC. 105. MISUSE OR ALTERATION.

       (a) General Rule.--
       (1) In general.--In a product liability action, the damages 
     for which a defendant is otherwise liable under Federal or 
     State law shall be reduced by the percentage of 
     responsibility for the claimant's harm attributable to misuse 
     or alteration of a product by any person if the defendant 
     establishes that such percentage of the claimant's harm was 
     proximately caused by a use or alteration of a product--
       (A) in violation of, or contrary to, a defendant's express 
     warnings or instructions if the warnings or instructions are 
     adequate as determined pursuant to applicable State law; or
       (B) involving a risk of harm which was known or should have 
     been known by the ordinary person who uses or consumes the 
     product with the knowledge common to the class of persons who 
     used or would be reasonably anticipated to use the product.
       (2) Use intended by a manufacturer is not misuse or 
     alteration.--For the purposes of this Act, a use of a product 
     that is intended by the manufacturer of the product does not 
     constitute a misuse or alteration of the product.
       (b) Workplace Injury.--Notwithstanding subsection (a), and 
     except as otherwise provided in section 111, the damages for 
     which a defendant is otherwise liable under State law shall 
     not be reduced by the percentage of responsibility for the 
     claimant's harm attributable to misuse or alteration of the 
     product by the claimant's employer or any coemployee who is 
     immune from suit by the claimant pursuant to the State law 
     applicable to workplace injuries.

     SEC. 106. UNIFORM TIME LIMITATIONS ON LIABILITY.

       (a) Statute of Limitations.--
       (1) In general.--Except as provided in paragraph (2) and 
     subsection (b), a product liability action may be filed not 
     later than 2 years after the date on which the claimant 
     discovered or, in the exercise of reasonable care, should 
     have discovered--
       (A) the harm that is the subject of the action; and
       (B) the cause of the harm.
       (2) Exception.--A person with a legal disability (as 
     determined under applicable law) may file a product liability 
     action not later than 2 years after the date on which the 
     person ceases to have the legal disability.
       (b) Statute of Repose.--
       (1) In general.--Subject to paragraphs (2) and (3), no 
     product liability action that is subject to this Act 
     concerning a product, that is a durable good, alleged to have 
     caused harm (other than toxic harm) may be filed after the 
     15-year period beginning at the time of delivery of the 
     product to the first purchaser or lessee.
       (2) State law.--Notwithstanding paragraph (1), if pursuant 
     to an applicable State law, an action described in such 
     paragraph is required to be filed during a period that is 
     shorter than the 15-year period specified in such paragraph, 
     the State law shall apply with respect to such period.
       (3) Exceptions.--
       (A) A motor vehicle, vessel, aircraft, or train, that is 
     used primarily to transport passengers for hire, shall not be 
     subject to this subsection.
       (B) Paragraph (1) does not bar a product liability action 
     against a defendant who made an express warranty in writing 
     as to the safety or life expectancy of the specific product 
     involved which was longer than 15 years, but it will apply at 
     the expiration of that warranty.
       (C) Paragraph (1) does not affect the limitations period 
     established by the General Aviation Revitalization Act of 
     1994 (49 U.S.C. 40101 note).
       (c) Transitional Provision Relating to Extension of Period 
     for Bringing Certain Actions.--If any provision of subsection 
     (a) or (b) shortens the period during which a product 
     liability action could be otherwise brought pursuant to 
     another provision of law, the claimant may, notwithstanding 
     subsections (a) and (b), bring the product liability action 
     not later than 1 year after the date of enactment of this 
     Act.

     SEC. 107. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.

       (a) Service of Offer.--A claimant or a defendant in a 
     product liability action may, not later than 60 days after 
     the service of--
       (1) the initial complaint; or
       (2) the applicable deadline for a responsive pleading;

     whichever is later, serve upon an adverse party an offer to 
     proceed pursuant to any voluntary, nonbinding alternative 
     dispute resolution procedure established or recognized under 
     the law of the State in which the product liability action is 
     brought or under the rules of the court in which such action 
     is maintained.
       (b) Written Notice of Acceptance or Rejection.--Except as 
     provided in subsection (c), not later than 10 days after the 
     service of an offer to proceed under subsection (a), an 
     offeree shall file a written notice of acceptance or 
     rejection of the offer.
       (c) Extension.--The court may, upon motion by an offeree 
     made prior to the expiration of the 10-day period specified 
     in subsection (b), extend the period for filling a written 
     notice under such subsection for a period of not more than 60 
     days after the date of expiration of the period specified in 
     subsection (b). Discovery may be permitted during such 
     period.

     SEC. 108. UNIFORM STANDARDS FOR AWARD OF PUNITIVE DAMAGES.

       (a) General Rule.--Punitive damages may, to the extent 
     permitted by applicable State law, be awarded against a 
     defendant if the claimant establishes by clear and convincing 
     evidence that conduct carried out by the defendant with a 
     conscious, flagrant indifference to the rights or safety of 
     others was the proximate cause of the harm that is the 
     subject of the action in any product liability action.
       (b) Limitation on Amount.--
       (1) In general.--The amount of punitive damages that may be 
     awarded in an action described in subsection (a) may not 
     exceed the greater of--
       (A) 2 times the sum of the amount awarded to the claimant 
     for economic loss and noneconomic loss; or
       (B) $250,000.
       (2) Special rule.--Notwithstanding paragraph (1), in any 
     action described in subsection (a) against an individual 
     whose net worth does not exceed $500,000 or against an owner 
     of an unincorporated business, or any partnership, 
     corporation, association, unit of local government, or 
     organization which has fewer that 25 full-time employees, the 
     punitive damages shall not exceed the lesser of--
       (A) 2 times the sum of the amount awarded to the claimant 
     for economic loss and noneconomic loss; or
       (B) $250,000.

     For the purpose of determining the applicability of this 
     paragraph to a corporation, the number of employees of a 
     subsidiary or wholly-owned corporation shall include all 
     employees of a parent or sister corporation.
       (3) Exception for insufficient award in cases of egregious 
     conduct.--
       (A) Determination by court.--If the court makes a 
     determination, after considering each of the factors in 
     subparagraph (B), that the application of paragraph (1) would 
     result in an award of punitive damages that is insufficient 
     to punish the egregious conduct of the defendant against whom 
     the punitive damages are to be awarded or to deter such 
     conduct in the future, the court shall determine the 
     additional amount of punitive damages (referred to in this 
     paragraph as the ``additional amount'') in excess of the 
     amount determined in accordance with paragraph (1) to be 
     awarded against the defendant in a separate proceeding in 
     accordance with this paragraph.

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       (B) Factors for consideration.--In any proceeding under 
     paragraph (A), the court shall consider--
       (i) the extent to which the defendant acted with actual 
     malice;
       (ii) the likelihood that serious harm would arise from the 
     conduct of the defendant;
       (iii) the degree of the awareness of the defendant of that 
     likelihood;
       (iv) the profitability of the misconduct to the defendant;
       (v) the duration of the misconduct and any concurrent or 
     subsequent concealment of the conduct by the defendant;
       (vi) the attitude and conduct of the defendant upon the 
     discovery of the misconduct and whether the misconduct has 
     terminated;
       (vii) the financial condition of the defendant; and
       (viii) the cumulative deterrent effect of other losses, 
     damages, and punishment suffered by the defendant as a result 
     of the misconduct, reducing the amount of punitive damages on 
     the basis of the economic impact and severity of all measures 
     to which the defendant has been or may be subjected, 
     including--

       (I) compensatory and punitive damage awards to similarly 
     situated claimants;
       (II) the adverse economic effect of stigma or loss of 
     reputation;
       (III) civil fines and criminal and administrative 
     penalties; and
       (IV) stop sale, cease and desist, and other remedial or 
     enforcement orders.

       (C) Requirements for awarding additional amount.--If the 
     court awards an additional amount pursuant to this 
     subsection, the court shall state its reasons for setting the 
     amount of the additional amount in findings of fact and 
     conclusions of law.
       (D) Preemption.--This section does not create a cause of 
     action for punitive damages and does not preempt or supersede 
     any State or Federal law to the extent that such law would 
     further limit the award of punitive damages. Nothing in this 
     subsection shall modify or reduce the ability of courts to 
     order remittiturs.
       (4) Application by court.--This subsection shall be applied 
     by the court and application of this subsection shall not be 
     disclosed to the jury. Nothing in this subsection shall 
     authorize the court to enter an award of punitive damages in 
     excess of the jury's initial award of punitive damages.
       (c) Bifurcation at Request of Any Party.--
       (1) In general.--At the request of any party the trier of 
     fact in any action that is subject to this section shall 
     consider in a separate proceeding, held subsequent to the 
     determination of the amount of compensatory damages, whether 
     punitive damages are to be awarded for the harm that is the 
     subject of the action and the amount of the award.
       (2) Inadmissibility of evidence relative only to a claim of 
     punitive damages in a proceeding concerning compensatory 
     damages.--If any party requests a separate proceeding under 
     paragraph (1), in a proceeding to determine whether the 
     claimant may be awarded compensatory damages, any evidence, 
     argument, or contention that is relevant only to the claim of 
     punitive damages, as determined by applicable State law, 
     shall be inadmissible.

     SEC. 109. LIABILITY FOR CERTAIN CLAIMS RELATING TO DEATH.

       In any civil action in which the alleged harm to the 
     claimant is death and, as of the effective date of this Act, 
     the applicable State law provides, or has been construed to 
     provide, for damages only punitive in nature, a defendant may 
     be liable for any such damages without regard to section 108, 
     but only during such time as the State law so provides. This 
     section shall cease to be effective September 1, 1997.

     SEC. 110. SEVERAL LIABILITY FOR NONECONOMIC LOSS.

       (a) General Rule.--In a product liability action, the 
     liability of each defendant for noneconomic loss shall be 
     several only and shall not be joint.
       (b) Amount of Liability.--
       (1) In general.--Each defendant shall be liable only for 
     the amount of noneconomic loss allocated to the defendant in 
     direct proportion to the percentage of responsibility of the 
     defendant (determined in accordance with paragraph (2)) for 
     the harm to the claimant with respect to which the defendant 
     is liable. The court shall render a separate judgment against 
     each defendant in an amount determined pursuant to the 
     preceding sentence.
       (2) Percentage of responsibility.--For purposes of 
     determining the amount of noneconomic loss allocated to a 
     defendant under this section, the trier of fact shall 
     determine the percentage of responsibility of each person 
     responsible for the claimant's harm, whether or not such 
     person is a party to the action.

     SEC. 111. WORKERS' COMPENSATION SUBROGATION.

       (a) General Rule.--
       (1) Right of subrogation.--
       (A) In general.--An insurer shall have a right of 
     subrogation against a manufacturer or product seller to 
     recover any claimant's benefits relating to harm that is the 
     subject of a product liability action that is subject to this 
     Act.
       (B) Written notification.--To assert a right of subrogation 
     under subparagraph (A), the insurer shall provide written 
     notice to the court in which the product liability action is 
     brought.
       (C) Insurer not required to be a party.--An insurer shall 
     not be required to be a necessary and proper party in a 
     product liability action covered under subparagraph (A).
       (2) Settlements and other legal proceedings.--
       (A) In general.--In any proceeding relating to harm or 
     settlement with the manufacturer or product seller by a 
     claimant who files a product liability action that is subject 
     to this Act, an insurer may participate to assert a right of 
     subrogation for claimant's benefits with respect to any 
     payment made by the manufacturer or product seller by reason 
     of such harm, without regard to whether the payment is made--
       (i) as part of a settlement;
       (ii) in satisfaction of judgment;
       (iii) as consideration for a covenant not to sue; or
       (iv) in another manner.
       (B) Written notification.--Except as provided in 
     subparagraph (C), an employee shall not make any settlement 
     with or accept any payment from the manufacturer or product 
     seller without written notification to the insurer.
       (C) Exemption.--Subparagraph (B) shall not apply in any 
     case in which the insurer has been compensated for the full 
     amount of the claimant's benefits.
       (3) Harm resulting from action of employer or coemployee.--
       (A) In general.--If, with respect to a product liability 
     action that is subject to this Act, the manufacturer or 
     product seller attempts to persuade the trier of fact that 
     the harm to the claimant was caused by the fault of the 
     employer of the claimant or any coemployee of the claimant, 
     the issue of that fault shall be submitted to the trier of 
     fact, but only after the manufacturer or product seller has 
     provided timely written notice to the insurer.
       (B) Rights of insurer.--
       (i) In general.--Notwithstanding any other provision of 
     law, with respect to an issue of fault submitted to a trier 
     of fact pursuant to subparagraph (A), an insurer shall, in 
     the same manner as any party in the action (even if the 
     insurer is not a named party in the action), have the right 
     to--

       (I) appear;
       (II) be represented;
       (III) introduce evidence;
       (IV) cross-examine adverse witnesses; and
       (V) present arguments to the trier of fact.

       (ii) Last issue.--The issue of harm resulting from an 
     action of an employer or coemployee shall be the last issue 
     that is submitted to the trier of fact.
       (C) Reduction of damages.--If the trier of fact finds by 
     clear and convincing evidence that the harm to the claimant 
     that is the subject of the product liability action was 
     caused by the fault of the employer or a coemployee of the 
     claimant--
       (i) the court shall reduce by the amount of the claimant's 
     benefits--

       (I) the damages awarded against the manufacturer or product 
     seller; and
       (II) any corresponding insurer's subrogation lien; and

       (ii) the manufacturer or product seller shall have no 
     further right by way of contribution or otherwise against the 
     employer.
       (D) Certain rights of subrogation not affected.--
     Notwithstanding a finding by the trier of fact described in 
     subparagraph (C), the insurer shall not lose any right of 
     subrogation related to any--
       (i) intentional tort committed against the claimant by a 
     coemployee; or
       (ii) act committed by a coemployee outside the scope of 
     normal work practices.
       (b) Attorney's Fees.--If, in a product liability action 
     that is subject to this section, the court finds that harm to 
     a claimant was not caused by the fault of the employer or a 
     coemployee of the claimant, the manufacturer or product 
     seller shall reimburse the insurer for reasonable attorney's 
     fees and court costs incurred by the insurer in the action, 
     as determined by the court.
                TITLE II--BIOMATERIALS ACCESS ASSURANCE

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Biomaterials Access 
     Assurance Act of 1997''.

     SEC. 202. FINDINGS.

       Congress finds that--
       (1) each year millions of citizens of the United States 
     depend on the availability of lifesaving or life enhancing 
     medical devices, many of which are permanently implantable 
     within the human body;
       (2) a continued supply of raw materials and component parts 
     is necessary for the invention, development, improvement, and 
     maintenance of the supply of the devices;
       (3) most of the medical devices are made with raw materials 
     and component parts that--
       (A) are not designed or manufactured specifically for use 
     in medical devices; and
       (B) come in contact with internal human tissue;
       (4) the raw materials and component parts also are used in 
     a variety of nonmedical products;
       (5) because small quantities of the raw materials and 
     component parts are used for medical devices, sales of raw 
     materials and component parts for medical devices constitute 
     an extremely small portion of the overall market for the raw 
     materials and medical devices;
       (6) under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.), manufacturers of medical devices are 
     required to demonstrate that the medical devices are safe

[[Page S230]]

     and effective, including demonstrating that the products are 
     properly designed and have adequate warnings or instructions;
       (7) notwithstanding the fact that raw materials and 
     component parts suppliers do not design, produce, or test a 
     final medical device, the suppliers have been the subject of 
     actions alleging inadequate--
       (A) design and testing of medical devices manufactured with 
     materials or parts supplied by the suppliers; or
       (B) warnings related to the use of such medical devices;
       (8) even though suppliers of raw materials and component 
     parts have very rarely been held liable in such actions, such 
     suppliers have ceased supplying certain raw materials and 
     component parts for use in medical devices because the costs 
     associated with litigation in order to ensure a favorable 
     judgment for the suppliers far exceeds the total potential 
     sales revenues from sales by such suppliers to the medical 
     device industry;
       (9) unless alternate sources of supply can be found, the 
     unavailability of raw materials and component parts for 
     medical devices will lead to unavailability of lifesaving and 
     life-enhancing medical devices;
       (10) because other suppliers of the raw materials and 
     component parts in foreign nations are refusing to sell raw 
     materials or component parts for use in manufacturing certain 
     medical devices in the United States, the prospects for 
     development of new sources of supply for the full range of 
     threatened raw materials and component parts for medical 
     devices are remote;
       (11) it is unlikely that the small market for such raw 
     materials and component parts in the United States could 
     support the large investment needed to develop new suppliers 
     of such raw materials and component parts;
       (12) attempts to develop such new suppliers would raise the 
     cost of medical devices;
       (13) courts that have considered the duties of the 
     suppliers of the raw materials and component parts have 
     generally found that the suppliers do not have a duty--
       (A) to evaluate the safety and efficacy of the use of a raw 
     material or component part in a medical device; and
       (B) to warn consumers concerning the safety and 
     effectiveness of a medical device;
       (14) attempts to impose the duties referred to in 
     subparagraphs (A) and (B) of paragraph (13) on suppliers of 
     the raw materials and component parts would cause more harm 
     than good by driving the suppliers to cease supplying 
     manufacturers of medical devices; and
       (15) in order to safeguard the availability of a wide 
     variety of lifesaving and life-enhancing medical devices, 
     immediate action is needed--
       (A) to clarify the permissible bases of liability for 
     suppliers of raw materials and component parts for medical 
     devices; and
       (B) to provide expeditious procedures to dispose of 
     unwarranted suits against the suppliers in such manner as to 
     minimize litigation costs.

     SEC. 203. DEFINITIONS.

       As used in this title:
       (1) Biomaterials supplier.--
       (A) In general.--The term ``biomaterials supplier'' means 
     an entity that directly or indirectly supplies a component 
     part or raw material for use in the manufacture of an 
     implant.
       (B) Persons included.--Such term includes any person who--
       (i) has submitted master files to the Secretary for 
     purposes of premarket approval of a medical device; or
       (ii) licenses a biomaterials supplier to produce component 
     parts or raw materials.
       (2) Claimant.--
       (A) In general.--The term ``claimant'' means any person who 
     brings a civil action, or on whose behalf a civil action is 
     brought, arising from harm allegedly caused directly or 
     indirectly by an implant, including a person other than the 
     individual into whose body, or in contact with whose blood or 
     tissue, the implant is placed, who claims to have suffered 
     harm as a result of the implant.
       (B) Action brought on behalf of an estate.--With respect to 
     an action brought on behalf of or through the estate of an 
     individual into whose body, or in contact with whose blood or 
     tissue the implant is placed, such term includes the decedent 
     that is the subject of the action.
       (C) Action brought on behalf of a minor or incompetent.--
     With respect to an action brought on behalf of or through a 
     minor or incompetent, such term includes the parent or 
     guardian of the minor or incompetent.
       (D) Exclusions.--Such term does not include--
       (i) a provider of professional health care services, in any 
     case in which--

       (I) the sale or use of an implant is incidental to the 
     transaction; and
       (II) the essence of the transaction is the furnishing of 
     judgment, skill, or services; or

       (ii) a person acting in the capacity of a manufacturer, 
     seller, or biomaterials supplier.
       (3) Component part.--
       (A) In general.--The term ``component part'' means a 
     manufactured piece of an implant.
       (B) Certain components.--Such term includes a manufactured 
     piece of an implant that--
       (i) has significant non-implant applications; and
       (ii) alone, has no implant value or purpose, but when 
     combined with other component parts and materials, 
     constitutes an implant.
       (4) Harm.--
       (A) In general.--The term ``harm'' means--
       (i) any injury to or damage suffered by an individual;
       (ii) any illness, disease, or death of that individual 
     resulting from that injury or damage; and
       (iii) any loss to that individual or any other individual 
     resulting from that injury or damage.
       (B) Exclusion.--The term does not include any commercial 
     loss or loss of or damage to an implant.
       (5) Implant.--The term ``implant'' means--
       (A) a medical device that is intended by the manufacturer 
     of the device--
       (i) to be placed into a surgically or naturally formed or 
     existing cavity of the body for a period of at least 30 days; 
     or
       (ii) to remain in contact with bodily fluids or internal 
     human tissue through a surgically produced opening for a 
     period of less than 30 days; and
       (B) suture materials used in implant procedures.
       (6) Manufacturer.--The term ``manufacturer'' means any 
     person who, with respect to an implant--
       (A) is engaged in the manufacture, preparation, 
     propagation, compounding, or processing (as defined in 
     section 510(a)(1)) of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 360(a)(1)) of the implant; and
       (B) is required--
       (i) to register with the Secretary pursuant to section 510 
     of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360) 
     and the regulations issued under such section; and
       (ii) to include the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section.
       (7) Medical device.--The term ``medical device'' means a 
     device, as defined in section 201(h) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 321(h)) and includes any 
     device component of any combination product as that term is 
     used in section 503(g) of such Act (21 U.S.C. 353(g)).
       (8) Raw material.--The term ``raw material'' means a 
     substance or product that--
       (A) has a generic use; and
       (B) may be used in an application other than an implant.
       (9) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (10) Seller.--
       (A) In general.--The term ``seller'' means a person who, in 
     the course of a business conducted for that purpose, sells, 
     distributes, leases, packages, labels, or otherwise places an 
     implant in the stream of commerce.
       (B) Exclusions.--The term does not include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services, in any case in 
     which the sale or use of an implant is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who acts in only a financial capacity with 
     respect to the sale of an implant.

     SEC. 204. GENERAL REQUIREMENTS; APPLICABILITY; PREEMPTION.

       (a) General Requirements.--
       (1) In general.--In any civil action covered by this title, 
     a biomaterials supplier may raise any defense set forth in 
     section 205.
       (2) Procedures.--Notwithstanding any other provision of 
     law, the Federal or State court in which a civil action 
     covered by this title is pending shall, in connection with a 
     motion for dismissal or judgment based on a defense described 
     in paragraph (1), use the procedures set forth in section 
     206.
       (b) Applicability.--
       (1) In general.--Except as provided in paragraph (2), 
     notwithstanding any other provision of law, this title 
     applies to any civil action brought by a claimant, whether in 
     a Federal or State court, against a manufacturer, seller, or 
     biomaterials supplier, on the basis of any legal theory, for 
     harm allegedly caused by an implant.
       (2) Exclusion.--A civil action brought by a purchaser of a 
     medical device for use in providing professional services 
     against a manufacturer, seller, or biomaterials supplier for 
     loss or damage to an implant or for commercial loss to the 
     purchaser--
       (A) shall not be considered an action that is subject to 
     this title; and
       (B) shall be governed by applicable commercial or contract 
     law.
       (c) Scope of Preemption.--
       (1) In general.--This title supersedes any State law 
     regarding recovery for harm caused by an implant and any rule 
     of procedure applicable to a civil action to recover damages 
     for such harm only to the extent that this title establishes 
     a rule of law applicable to the recovery of such damages.
       (2) Applicability of other laws.--Any issue that arises 
     under this title and that is not governed by a rule of law 
     applicable to the recovery of damages described in paragraph 
     (1) shall be governed by applicable Federal or State law.
       (d) Statutory Construction.--Nothing in this title may be 
     construed--
       (1) to affect any defense available to a defendant under 
     any other provisions of Federal or State law in an action 
     alleging harm caused by an implant; or

[[Page S231]]

       (2) to create a cause of action or Federal court 
     jurisdiction pursuant to section 1331 or 1337 of title 28, 
     United States Code, that otherwise would not exist under 
     applicable Federal or State law.

     SEC. 205. LIABILITY OF BIOMATERIALS SUPPLIERS.

       (a) In General.--
       (1) Exclusion from liability.--Except as provided in 
     paragraph (2), a biomaterials supplier shall not be liable 
     for harm to a claimant caused by an implant.
       (2) Liability.--A biomaterials supplier that--
       (A) is a manufacturer may be liable for harm to a claimant 
     described in subsection (b);
       (B) is a seller may be liable for harm to a claimant 
     described in subsection (c); and
       (C) furnishes raw materials or component parts that fail to 
     meet applicable contractual requirements or specifications 
     may be liable for a harm to a claimant described in 
     subsection (d).
       (b) Liability as Manufacturer.--
       (1) In general.--A biomaterials supplier may, to the extent 
     required and permitted by any other applicable law, be liable 
     for harm to a claimant caused by an implant if the 
     biomaterials supplier is the manufacturer of the implant.
       (2) Grounds for liability.--The biomaterials supplier may 
     be considered the manufacturer of the implant that allegedly 
     caused harm to a claimant only if the biomaterials supplier--
       (A)(i) has registered with the Secretary pursuant to 
     section 510 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 360) and the regulations issued under such section; 
     and
       (ii) included the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section;
       (B) is the subject of a declaration issued by the Secretary 
     pursuant to paragraph (3) that states that the supplier, with 
     respect to the implant that allegedly caused harm to the 
     claimant, was required to--
       (i) register with the Secretary under section 510 of such 
     Act (21 U.S.C. 360), and the regulations issued under such 
     section, but failed to do so; or
       (ii) include the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section, 
     but failed to do so; or
       (C) is related by common ownership or control to a person 
     meeting all the requirements described in subparagraph (A) or 
     (B), if the court deciding a motion to dismiss in accordance 
     with section 206(c)(3)(B)(i) finds, on the basis of 
     affidavits submitted in accordance with section 206, that it 
     is necessary to impose liability on the biomaterials supplier 
     as a manufacturer because the related manufacturer meeting 
     the requirements of subparagraph (A) or (B) lacks sufficient 
     financial resources to satisfy any judgment that the court 
     feels it is likely to enter should the claimant prevail.
       (3) Administrative procedures.--
       (A) In general.--The Secretary may issue a declaration 
     described in paragraph (2)(B) on the motion of the Secretary 
     or on petition by any person, after providing--
       (i) notice to the affected persons; and
       (ii) an opportunity for an informal hearing.
       (B) Docketing and final decision.--Immediately upon receipt 
     of a petition filed pursuant to this paragraph, the Secretary 
     shall docket the petition. Not later than 180 days after the 
     petition is filed, the Secretary shall issue a final decision 
     on the petition.
       (C) Applicability of statute of limitations.--Any 
     applicable statute of limitations shall toll during the 
     period during which a claimant has filed a petition with the 
     Secretary under this paragraph.
       (c) Liability as Seller.--A biomaterials supplier may, to 
     the extent required and permitted by any other applicable 
     law, be liable as a seller for harm to a claimant caused by 
     an implant if--
       (1) the biomaterials supplier--
       (A) held title to the implant that allegedly caused harm to 
     the claimant as a result of purchasing the implant after--
       (i) the manufacture of the implant; and
       (ii) the entrance of the implant in the stream of commerce; 
     and
     (B) subsequently resold the implant; or
       (2) the biomaterials supplier is related by common 
     ownership or control to a person meeting all the requirements 
     described in paragraph (1), if a court deciding a motion to 
     dismiss in accordance with section 206(c)(3)(B)(ii) finds, on 
     the basis of affidavits submitted in accordance with section 
     206, that it is necessary to impose liability on the 
     biomaterials supplier as a seller because the related seller 
     meeting the requirements of paragraph (1) lacks sufficient 
     financial resources to satisfy any judgment that the court 
     feels it is likely to enter should the claimant prevail.
       (d) Liability for Violating Contractual Requirements or 
     Specifications.--A biomaterials supplier may, to the extent 
     required and permitted by any other applicable law, be liable 
     for harm to a claimant caused by an implant, if the claimant 
     in an action shows, by a preponderance of the evidence, 
     that--
       (1) the raw materials or component parts delivered by the 
     biomaterials supplier either--
       (A) did not constitute the product described in the 
     contract between the biomaterials supplier and the person who 
     contracted for delivery of the product; or
       (B) failed to meet any specifications that were--
       (i) provided to the biomaterials supplier and not expressly 
     repudiated by the biomaterials supplier prior to acceptance 
     of delivery of the raw materials or component parts;
       (ii)(I) published by the biomaterials supplier;
       (II) provided to the manufacturer by the biomaterials 
     supplier; or
       (III) contained in a master file that was submitted by the 
     biomaterials supplier to the Secretary and that is currently 
     maintained by the biomaterials supplier for purposes of 
     premarket approval of medical devices; or
       (iii) included in the submissions for purposes of premarket 
     approval or review by the Secretary under section 510, 513, 
     515, or 520 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 360, 360c, 360e, or 360j), and received clearance from 
     the Secretary if such specifications were provided by the 
     manufacturer to the biomaterials supplier and were not 
     expressly repudiated by the biomaterials supplier prior to 
     the acceptance by the manufacturer of delivery of the raw 
     materials or component parts; and
       (2) such conduct was an actual and proximate cause of the 
     harm to the claimant.

     SEC. 206. PROCEDURES FOR DISMISSAL OF CIVIL ACTIONS AGAINST 
                   BIOMATERIALS SUPPLIERS.

       (a) Motion To Dismiss.--In any action that is subject to 
     this title, a biomaterials supplier who is a defendant in 
     such action may, at any time during which a motion to dismiss 
     may be filed under an applicable law, move to dismiss the 
     action against it on the grounds that--
       (1) the defendant is a biomaterials supplier; and
       (2)(A) the defendant should not, for the purposes of--
       (i) section 205(b), be considered to be a manufacturer of 
     the implant that is subject to such section; or
       (ii) section 205(c), be considered to be a seller of the 
     implant that allegedly caused harm to the claimant; or
       (B)(i) the claimant has failed to establish, pursuant to 
     section 205(d), that the supplier furnished raw materials or 
     component parts in violation of contractual requirements or 
     specifications; or
       (ii) the claimant has failed to comply with the procedural 
     requirements of subsection (b).
       (b) Manufacturer of Implant Shall Be Named a Party.--The 
     claimant shall be required to name the manufacturer of the 
     implant as a party to the action, unless--
       (1) the manufacturer is subject to service of process 
     solely in a jurisdiction in which the biomaterials supplier 
     is not domiciled or subject to a service of process; or
       (2) an action against the manufacturer is barred by 
     applicable law.
       (c) Proceeding on Motion To Dismiss.--The following rules 
     shall apply to any proceeding on a motion to dismiss filed 
     under this section:
       (1) Affidavits relating to listing and declarations.--
       (A) In general.--The defendant in the action may submit an 
     affidavit demonstrating that defendant has not included the 
     implant on a list, if any, filed with the Secretary pursuant 
     to section 510(j) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 360(j)).
       (B) Response to motion to dismiss.--In response to the 
     motion to dismiss, the claimant may submit an affidavit 
     demonstrating that--
       (i) the Secretary has, with respect to the defendant and 
     the implant that allegedly caused harm to the claimant, 
     issued a declaration pursuant to section 205(b)(2)(B); or
       (ii) the defendant who filed the motion to dismiss is a 
     seller of the implant who is liable under section 205(c).
       (2) Effect of motion to dismiss on discovery.--
       (A) In general.--If a defendant files a motion to dismiss 
     under paragraph (1) or (2) of subsection (a), no discovery 
     shall be permitted in connection to the action that is the 
     subject of the motion, other than discovery necessary to 
     determine a motion to dismiss for lack of jurisdiction, until 
     such time as the court rules on the motion to dismiss in 
     accordance with the affidavits submitted by the parties in 
     accordance with this section.
       (B) Discovery.--If a defendant files a motion to dismiss 
     under subsection (a)(2)(B)(i) on the grounds that the 
     biomaterials supplier did not furnish raw materials or 
     component parts in violation of contractual requirements or 
     specifications, the court may permit discovery, as ordered by 
     the court. The discovery conducted pursuant to this 
     subparagraph shall be limited to issues that are directly 
     relevant to--
       (i) the pending motion to dismiss; or
       (ii) the jurisdiction of the court.
       (3) Affidavits relating status of defendant.--
       (A) In general.--Except as provided in clauses (i) and (ii) 
     of subparagraph (B), the court shall consider a defendant to 
     be a biomaterials supplier who is not subject to an action 
     for harm to a claimant caused by an implant, other than an 
     action relating to liability for a violation of contractual 
     requirements or specifications described in subsection (d).

[[Page S232]]

       (B) Responses to motion to dismiss.--The court shall grant 
     a motion to dismiss any action that asserts liability of the 
     defendant under subsection (b) or (c) of section 205 on the 
     grounds that the defendant is not a manufacturer subject to 
     such section 205(b) or seller subject to section 205(c), 
     unless the claimant submits a valid affidavit that 
     demonstrates that--
       (i) with respect to a motion to dismiss contending the 
     defendant is not a manufacturer, the defendant meets the 
     applicable requirements for liability as a manufacturer under 
     section 205(b); or
       (ii) with respect to a motion to dismiss contending that 
     the defendant is not a seller, the defendant meets the 
     applicable requirements for liability as a seller under 
     section 205(c).
       (4) Basis of ruling on motion to dismiss.--
       (A) In general.--The court shall rule on a motion to 
     dismiss filed under subsection (a) solely on the basis of the 
     pleadings of the parties made pursuant to this section and 
     any affidavits submitted by the parties pursuant to this 
     section.
       (B) Motion for summary judgment.--Notwithstanding any other 
     provision of law, if the court determines that the pleadings 
     and affidavits made by parties pursuant to this section raise 
     genuine issues as concerning material facts with respect to a 
     motion concerning contractual requirements and 
     specifications, the court may deem the motion to dismiss to 
     be a motion for summary judgment made pursuant to subsection 
     (d).
       (d) Summary Judgment.--
       (1) In general.--
       (A) Basis for entry of judgment.--A biomaterials supplier 
     shall be entitled to entry of judgment without trial if the 
     court finds there is no genuine issue as concerning any 
     material fact for each applicable element set forth in 
     paragraphs (1) and (2) of section 205(d).
       (B) Issues of material fact.--With respect to a finding 
     made under subparagraph (A), the court shall consider a 
     genuine issue of material fact to exist only if the evidence 
     submitted by claimant would be sufficient to allow a 
     reasonable jury to reach a verdict for the claimant if the 
     jury found the evidence to be credible.
       (2) Discovery made prior to a ruling on a motion for 
     summary judgment.--If, under applicable rules, the court 
     permits discovery prior to a ruling on a motion for summary 
     judgment made pursuant to this subsection, such discovery 
     shall be limited solely to establishing whether a genuine 
     issue of material fact exists as to the applicable elements 
     set forth in paragraphs (1) and (2) of section 205(d).
       (3) Discovery with respect to a biomaterials supplier.--A 
     biomaterials supplier shall be subject to discovery in 
     connection with a motion seeking dismissal or summary 
     judgment on the basis of the inapplicability of section 
     205(d) or the failure to establish the applicable elements of 
     section 205(d) solely to the extent permitted by the 
     applicable Federal or State rules for discovery against 
     nonparties.
       (e) Stay Pending Petition for Declaration.--If a claimant 
     has filed a petition for a declaration pursuant to section 
     205(b)(3)(A) with respect to a defendant, and the Secretary 
     has not issued a final decision on the petition, the court 
     shall stay all proceedings with respect to that defendant 
     until such time as the Secretary has issued a final decision 
     on the petition.
       (f) Manufacturer Conduct of Proceeding.--The manufacturer 
     of an implant that is the subject of an action covered under 
     this title shall be permitted to file and conduct a 
     proceeding on any motion for summary judgment or dismissal 
     filed by a biomaterials supplier who is a defendant under 
     this section if the manufacturer and any other defendant in 
     such action enter into a valid and applicable contractual 
     agreement under which the manufacturer agrees to bear the 
     cost of such proceeding or to conduct such proceeding.
       (g) Attorney Fees.--The court shall require the claimant to 
     compensate the biomaterials supplier (or a manufacturer 
     appearing in lieu of a supplier pursuant to subsection (f)) 
     for attorney fees and costs, if--
       (1) the claimant named or joined the biomaterials supplier; 
     and
       (2) the court found the claim against the biomaterials 
     supplier to be without merit and frivolous.
        TITLE III--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

     SEC. 301. EFFECT OF COURT OF APPEALS DECISIONS.

       A decision by a Federal circuit court of appeals 
     interpreting a provision of this Act (except to the extent 
     that the decision is overruled or otherwise modified by the 
     Supreme Court) shall be considered a controlling precedent 
     with respect to any subsequent decision made concerning the 
     interpretation of such provision by any Federal or State 
     court within the geographical boundaries of the area under 
     the jurisdiction of the circuit court of appeals.

     SEC. 302. FEDERAL CAUSE OF ACTION PRECLUDED.

       The district courts of the United States shall not have 
     jurisdiction pursuant to this Act based on section 1331 or 
     1337 of title 28, United States Code.

     SEC. 303. EFFECTIVE DATE.

       This Act shall apply with respect to any action commenced 
     on or after the date of the enactment of this Act without 
     regard to whether the harm that is the subject of the action 
     or the conduct that caused the harm occurred before such date 
     of enactment.

  Mr. McCAIN. Mr. President, the Product Liability Reform Act of 1997 
overhauls an unfair and inefficient product liability system for the 
benefit of American consumers and entrepreneurs. The text of this bill 
will be familiar to all Senators who are veterans of the 104th 
Congress: it is the conference report that Congress approved last year. 
Unfortunately, President Clinton vetoed that conference report, but I 
want to remind my colleagues that the President said in his veto 
statement ``I support real common sense product liability reform.'' 
Well, Mr. President, we will soon again hold your words to task.
  The introduction of this bill today, as one of the first 10 bills 
introduced in the Congress, is an indication of the importance of the 
legislation and the priority that we place on its consideration. The 
text of the Conference Report has been introduced because it is the 
last action Congress took on this matter.
  Now members from both sides of the aisle will undertake bipartisan 
discussions and diverse viewpoints will be addressed. In the last 
Congress Senator Gorton and Senator Rockefeller did an excellent job in 
developing a bipartisan consensus to pass this legislation. I 
appreciate their hard work and dedication. Their efforts will be called 
on again. Senator Ashcroft has assumed the chairmanship of the 
subcommittee with jurisdiction over this bill and I know he will be a 
valuable asset as this legislation advances.
  As we address this important legislation I look forward to working 
with the President as well. The President's veto statement outlined 
some of his concerns with the conference report. In my opinion, many of 
those concerns can be addressed easily and directly. Other issues, such 
as reform of punitive damages and joint and several liability, will 
require meaningful discussions.
  I am nevertheless hopeful that those negotiations will succeed. I am 
encouraged that the President has strongly indicated his support for 
meaningful product liability reform. I recall that in the first 
Presidential debate with Senator Dole, in October 1996, the President 
said, when discussing product liability, ``we're going to eliminate 
frivolous lawsuits, I'll sign the bill.'' In that debate, the President 
reminded the public that he has supported tort reform in the past. In 
1994, the President signed the General Aviation Revitalization Act 
which, by instituting a statute of repose, truly revitalized a 
withering industry and in the process created hundreds of high quality 
jobs.
  As this legislation moves forward, I remind my colleagues that we 
must not let the perfect be the enemy of the good. Much is at stake. 
Federal liability legislation is urgently needed. The present system in 
the United States for resolving product liability actions is costly, 
slow, inequitable and unpredictable. I find it shocking that the 
system's transaction costs exceed the compensation paid to individuals 
who have sustained injury. These transaction costs are inevitably 
passed on to consumers through higher product prices. The inefficiency 
and unpredictability of the product liability system has also stifled 
innovation, kept beneficial products off the market, and has 
handicapped American firms as they compete in a global market.
  Consumers who are legitimately injured suffer most from this broken 
system. Many consumers who are injured by defective products and are in 
need of compensation are unable to recover damages or must wait years 
to recover them. They are thrown into a product liability litigation 
system where identical cases can produce shockingly different results. 
Sadly, severely injured victims tend to receive far less than their 
actual economic losses, while those with minor injuries often are 
dramatically overcompensated. This legislation will help fix this 
broken system. I feel it is important to emphasize that this 
legislation will greatly benefit consumers and it will not bar the door 
to the court house or limit the compensatory damages that an injured 
plaintiff can receive.
  The malfunctions of this system are particularly evident in the area 
of biomaterials where valuable life-saving products are kept from 
consumers. I was introduced to this issue when the Ransom family in 
Mesa, AZ wrote to

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me about their daughter's desperate need for a specialized brain shunt. 
They were concerned this life-saving device may not be available for 
their daughter because companies were no longer willing to supply the 
raw materials necessary due to the high risk of being unjustifiably 
sued.
  In the last Congress, Senator Lieberman and I introduced legislation 
to address this problem. That legislation, the Biomaterials Access 
Assurance Act, became part of the product liability bill and was 
included in the Conference Report of the bill. In the closing weeks of 
the last Congress, Senator Lieberman and I proposed a version of our 
bill that excluded breast implant litigation from its coverage. I 
expect the legislation advanced in this Congress will also contain that 
exclusion for breast implant litigation. I look forward to working 
closely with Senator Lieberman on this matter.
  I hope that bipartisan negotiations begin in earnest on The Product 
Liability Reform Act. It is my desire to have this legislation be the 
first bill reported in this Congress by the Committee on Commerce, 
Science, and Transportation.
  Mr. ABRAHAM. Mr. President, I rise today in support of S. 5, a bill 
to reform product liability law. This legislation will significantly 
curb the epidemic of frivolous lawsuits that are diverting our Nation's 
resources away from productive activity and into transaction costs.
  Our current legal system, under which we spend $300 billion or 4\1/2\ 
percent of our gross domestic product each year, is not just broken, it 
is falling apart. This is a system in which plaintiffs receive less 
than half of every dollar spent on litigation-related costs. It is a 
system that forces necessary goods, such as pharmaceuticals that can 
treat a number of debilitating diseases and conditions, off the market 
in this country.
  The bill I cosponsor today would do much to address these problems. 
It institutes caps on punitive damages, thereby limiting potential 
windfalls for plaintiffs without in any way interfering with their 
ability to obtain full recovery for their injuries. It provides product 
manufacturers with long-overdue relief from abusers of their products. 
And it protects these makers, and sellers, from being made to pay for 
all or most noneconomic damages when they are responsible for only a 
small percentage of them.
  Last year, President Clinton chose to veto the bipartisan products 
liability bill that passed the Congress. For the sake of all Americans, 
I hope this year will be different.
  Mr. ASHCROFT. Mr. President, today is an exciting day as I introduce, 
along with Senators McCain, Coverdell, McConnell,  and Abraham, S. 5, 
the Product Liability Fairness Act of 1977.
  Justice Holmes once wisely observed that a page of history is worth a 
volume of logic. With respect to the effort to enact product liability 
law, we have hundreds of pages of history and volumes of logic to 
support its enactment now.
  The effort of the Federal Government to address product liability 
goes back almost two decades when President Ford established the 
Federal Inter-Agency Task Force on Product Liability. Although 
administration changed, President Carter did not abandon the effort, 
but enhanced it with resulting research that supports what we do today. 
President Carter chartered the drafting of the Model Uniform Product 
Liability Act, which tentatively was offered as a vehicle for state 
action.
  Product liability legislation has been reported out of the Senate 
Commerce Committee seven times. Last Congress, legislation and a 
conference report containing many compromises and bipartisan agreements 
was voted upon favorably in each House. A bipartisan majority of the 
Senate approved the conference report on March 21, 1996.
  The bill that we introduce today is that conference report. I 
appreciate that today's bill reflects a bill one that was vetoed by 
President Clinton. But, we are not here today to simply repeat history. 
We are here to make history and provide Americans with fair product 
liability legislation.
  We are introducing the same bill as a ``place marker'' for 
discussions and a fair resolution of issues. The President's veto 
message suggested that he well may have been misinformed about the 
nature of the legislation passed by bipartisan majorities last year. 
Let us have discussions to clarify those matters so that the 
legislation is unequivocal in its meaning and purpose.
  We are resolved to work with the White House to obtain the 
President's support. I take the President at his word when he said in 
the Presidential debate on October 6, 1996, ``I signed a tort reform 
bill that dealt with civil aviation a couple of years ago. I proved 
that I will sign a reasonable tort reform.''
  It is interesting that the President referred to the General Aviation 
Revitalization Act of 1994, which he did sign on August 17, 1994. The 
aviation liability reform bill enacted a statute of repose for general 
aviation aircraft. In 1994, proponents of the bill said that it would 
produce jobs. It has. To date, over 9,000 new jobs, good jobs, have 
been created. Single engine aircraft are being manufactured in America 
again, and an endangered industry has been revitalized. President 
Clinton was right to support that bill.
  What did opponents say in 1994 aviation bill? They said that no new 
jobs would be produced. And, they said that if planes were produced, 
they would be unsafe and, in hyperbole, suggested that they might be 
made of balsa wood. What actually happened? I already mentioned that 
9,000 new jobs have been created. You should also know that the 
aircraft being made by American workers are the safest single engine 
aircraft produced in the history of this country.
  Let us bring the results of the General Aviation Revitalization Act 
of 1994 to the broad segments of our country and industries.
  We introduce this bill to stimulate job growth. We introduce this 
bill to remove the chilling effects that prevent the introduction of 
good and useful products. We introduce this bill to encourage new 
product development. On the other hand, it is our goal to assure that 
anyone that makes dangerous and defective products is appropriately 
sanctioned by our tort law.
  From the perspective of many, this bill is a very modest one. From 
their perspective, there is a need to have liability reform in other 
crucial areas, such as: general punitive reform, medical liability 
reform, and volunteers' liability reform.
  The principles contained in this bill are a good starting point to 
make the product liability laws in this nation fair for consumers who 
purchase defective products while placing the burden on those 
responsible for placing these products in the stream of commerce. It 
also ensures that those who misuse products, or use them while under 
the influence of drugs or alcohol, do not collect a windfall which 
becomes a burden for American consumers in the form of increased costs 
for products--useful products that are no longer available in the 
market, and the loss of jobs and greater opportunities.

  This bill in no way limits compensatory damages. This bill would not 
affect the ability of plaintiffs to sue manufacturers or sellers of 
medical implants. It would, however, allow raw material suppliers to be 
dismissed from lawsuits if the generic raw material used in the medical 
device met contract specifications, and if the biomaterial supplier is 
not classified as either a manufacturer or seller of the implant.
  Strong product liability reform is good for America. It ensures that 
consumers, injured by a product, will be fairly compensated. It will 
enhance American innovation, which is the best in the world, by 
treating responsible entrepreneurs fairly while treating the bad actors 
harshly and to the full extent of the law.
  As chairman of the Consumer Affairs Subcommittee I am committed and 
look forward to working with this administration toward ending the 20-
year study and painstaking endeavor to provide our Nation with sound 
and fair Federal product liability law. It took the European community 
about 6 years to accomplish this goal and create the European product 
liability directive. Japan enacted its first product liability reform 
law almost 2 years ago.
  Our Nation, this Congress, and this administration should pull 
together and meet the challenge of our foreign competitors and enact 
fair and balanced product liability law. In that

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spirit and for that purpose, we introduce S. 5.
       By Mr. SANTORUM (for himself and Mr. Smith):

  S. 6. A bill to amend title 18, United States Code, to ban partial-
birth abortions; to the Committee on the Judiciary.

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