[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
[[Page S167]]
(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
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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
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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
[[Page S227]]
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
[[Page S228]]
(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.
[[Page S229]]
(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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