[Congressional Record Volume 143, Number 4 (Tuesday, January 21, 1997)]
[Senate]
[Pages S234-S376]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   THE PARTIAL-BIRTH BAN ACT OF 1997

  Mr. SANTORUM. Mr. President, the agenda for the 105th Congress 
reflects a continuance of the very significant debate that occurred in 
the 104th Congress on the issue of partial birth abortion.
  Four months ago, we debated and considered a presidential veto 
override on a bill to ban the partial birth abortion procedure. On a 
final vote, we came very close to banning this very gruesome procedure, 
and the number of colleagues who supported the override set the stage 
for consideration again this year.
  A wide spectrum of individuals have coalesced around the effort to 
ban partial birth abortions. These varied individuals and groups have 
raised their voices in support of a ban both because of the brutality 
of partial birth abortions and because they recognize that this debate 
is not about Roe vs. Wade, the 1973 Supreme Court decision legalizing 
abortion. It is not about when a fetus becomes a baby. And it is 
certainly not about women's health. It is about infanticide, it is 
about killing a child as he or she is being born, an issue that neither 
Roe vs. Wade nor the subsequent Doe vs. Bolton decision addressed.
  During the Senate debate last year, various traditionally pro-choice 
legislators voted in support of legislation to ban this particular 
procedure. Among them was a colleague who stated on the floor of the 
Senate, ``In my legal judgement, the issue is not over a woman's right 
to choose within the constitutional context of Roe versus Wade. * * * 
The line of the law is drawn, in my legal judgement, when the child is 
partially out of the womb of the mother. It is no longer abortion; it 
is infanticide.'' He was joined in these sentiments by other like 
minded Senators.
  This perspective is significant in that it suggests the scope of the 
tragedy that this procedure represents. And for those who may still be 
unclear what a partial birth abortion procedure is, it is this: a fully 
formed baby--in most cases a viable fetus of 23-26 weeks--is pulled 
from its mother until all but the head is delivered. Then, scissors are 
plunged into the base of the skull, a tube is inserted and the child's 
brains are suctioned out so that the head of the now-dead infant 
collapses and is delivered.
  Partial birth abortion is tragic for the infant who loses his or her 
life in this brutal procedure. It is also a personal tragedy for the 
families who choose the procedure, as it is for those who perform it--
even if they aren't aware of it. But partial birth abortion is also a 
profound social tragedy. It rips through the moral cohesion of our 
public life. It cuts into our most deeply held beliefs about the 
importance of protecting and cherishing vulnerable human life. It 
fractures our sense that the laws of our country should reflect long-
held, commonly accepted moral norms.
  Yet this kind of tragedy--even as it calls forth and exposes our 
outrage--can be an unexpected catalyst for consensus, for new 
coalitions and configurations in our public life. The partial birth 
abortion debate moves us beyond the traditional lines of confrontation 
to hollow out a place in the public square where disparate individuals 
and groups can come together and draw a line that they know should not 
be crossed.
  The stark tragedy of partial birth abortion can be the beginning of a 
significant public discussion where we define--or re-define--our first 
principles. Why is such a discussion important? Precisely because it 
throws into relief the fundamental truths around which a moral 
consensus is formed in this country. And, as John Courtney Murray 
reminds us in ``We Hold These Truths, Catholic Reflections on the 
American Proposition'', a public consensus which finds its expression 
in the law should be ``an ensemble of substantive truths, a structure 
of basic knowledge, an order of elementary affirmations* * *''.
  If we do not have fundamental agreement about first principles, we 
simply cannot engage one another in civil debate. All we have is the 
confusion of different factions locked in their own moral universe. If 
we could agree publicly on just this one point--that partial birth 
abortion is not something our laws should sanction, and if we could 
then reveal the consensus--a consensus that I know exists--against 
killing an almost-born infant, we would have significantly advanced the 
discussion about what moral status and dignity we give to life in all 
its stages. Public agreement, codified by law, on this one prohibition 
gives us a common point of departure. It give us a common language 
even, because we agree, albeit in a narrow sense, on the meaning of 
fundamental terms such as life and death. And it is with this common 
point of departure and discourse--however narrow--that we gain a degree 
of coherence and unity in our public life and dialogue.
  I truly believe that out of the horror and tragedy of partial birth 
abortions, we can find points of agreement across ideological, 
political and religious lines which enable us to work toward a life-
sustaining culture. So, as hundreds of thousands of faithful and 
steadfast citizens come together to participate in this year's March 
for Life, let us remember that such a culture, the culture for which we 
hope and pray daily, might very well be achieved one argument at a 
time.
  Mr. President, I am proud to have the opportunity to sponsor this 
legislation and to continue the very significant achievements of my 
colleague, Senator Bob Smith. I look forward to continuing that effort 
in cooperation with Representative Charles Canady, and I thank my 
colleagues for making this initiative a priority in our legislative 
agenda.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                  S. 6

       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 ``Partial-Birth Abortion Ban 
     Act of 1997''.

     SEC. 2. PROHIBITION ON PARTIAL-BIRTH ABORTIONS.

       (a) In General.--Title 18, United States Code, is amended 
     by inserting after chapter 73 the following:

                 ``CHAPTER 74--PARTIAL BIRTH ABORTIONS

``Sec.
``1531. Partial-birth abortions prohibited.

     ``Sec. 1531. Partial-birth abortions prohibited

       ``(a) Whoever, in or affecting interstate or foreign 
     commerce, knowingly performs a partial-birth abortion and 
     thereby kills a human fetus or infant shall be fined under 
     this title or imprisoned not more than two years, or both.
       ``(b) Subsection (a) does not apply to a partial-birth 
     abortion that is necessary to save the life of a mother 
     because her life is endangered by a physical disorder, 
     physical injury, or physical illness, including a life-
     endangering physical condition caused by or arising from the 
     pregnancy itself, if no other medical procedure would suffice 
     for that purpose.
       ``(c) As used in this section--
       ``(1) the term `partial-birth abortion' means an abortion 
     in which the person performing the abortion partially 
     vaginally delivers a living fetus before killing the infant 
     and completing the delivery; and
       ``(2) the terms `fetus' and `infant' are interchangeable.
       ``(d)(1) Unless the pregnancy resulted from the plaintiff's 
     criminal conduct or the plaintiff consented to the abortion, 
     the father, and if the mother has not attained the age of 18 
     years at the time of the abortion, the maternal grandparents 
     of the fetus or infant, may in a civil action obtain 
     appropriate relief.
       ``(2) Such relief shall include--
       ``(A) money damages for all injuries, psychological and 
     physical, occasioned by the violation of this section; and
       ``(B) statutory damages equal to three times the cost of 
     the partial-birth abortion;

     even if the mother consented to the performance of an 
     abortion.
       ``(e) A woman upon whom a partial-birth abortion is 
     performed may not be prosecuted under this section for a 
     conspiracy to violate this section, or an offense under 
     section 2, 3, or 4 of this title based on a violation of this 
     section.''.
       (b) Clerical Amendment.--The table of chapters for part I 
     of title 18, United States Code, is amended by inserting 
     after the item relating to chapter 73 the following new item:

``75. Partial-birth abortions...............................1531''.....

  Mr. ABRAHAM. Mr. President, I rise today to cosponsor S. 6. In doing 
so I add my voice to the chorus calling for

[[Page S235]]

an end to partial birth abortion. The bill we are considering is 
designed to outlaw medical procedures ``in which the person performing 
the abortion partially delivers a living fetus before killing the fetus 
and completing the delivery.'' It is a narrowly drafted bill which 
specifically and effectively targets a rare but grisly and unnecessary 
practice.
  I understand, Mr. President, that the American people are divided on 
many issues within the abortion debate. I am firmly pro-life. But in my 
view one need not resort to broad, ideological arguments in this case. 
Partial birth abortions occur only in the third trimester of pregnancy. 
They are never required to save the life, health, or child-bearing 
ability of the mother. They are unnecessary and regrettable.
  We in this chamber failed to override the President's veto of this 
legislation during the last Congress. But I remain convinced that all 
of us can agree that this Nation can do without this particular, rare, 
and grisly procedure. I urge my colleagues to support this legislation.
                                 ______
                                 
      By Mr. LOTT (for himself, Mr. Thurmond, Mr. Smith, Mr. Warner, 
        Mr. Kyl, Mr. Cochran, Mr. Abraham, Mr. Allard, Mr. Ashcroft, 
        Mr. Coverdell, Mr. Craig, Mr. DeWine, Mr. Domenici, Mr. Enzi, 
        Mr. Faircloth, Mr. Grams, Mr. Hagel, Mr. Hatch, Mr. Helms, Mrs. 
        Hutchison, Mr. Hutchinson, Mr. Inhofe, Mr. Murkowski, Mr. 
        Nickles, Mr. Sessions, and Mr. Kempthorne):
  S. 7. A bill to establish a U.S. policy for the deployment of a 
national missile defense system, and for other purposes; to the 
Committee on Armed Services.


                the national missile defense act of 1997

  Mr. LOTT. 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. 7

       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 ``National Missile Defense Act 
     of 1997''.

     SEC. 2. NATIONAL MISSILE DEFENSE POLICY.

       (a) National Missile Defense.--It is the policy of the 
     United States to deploy by the end of 2003 a National Missile 
     Defense system that--
       (1) is capable of defending the territory of the United 
     States against limited ballistic missile attack (whether 
     accidental, unauthorized, or deliberate); and
       (2) could be augmented over time to provide a layered 
     defense against larger and more sophisticated ballistic 
     missile threats if they emerge.
       (b) Cooperative Transition.--It is the policy of the United 
     States to seek a cooperative transition to a regime that does 
     not feature an offense-only form of deterrence as the basis 
     for strategic stability.

     SEC. 3. NATIONAL MISSILE DEFENSE SYSTEM ARCHITECTURE.

       (a) Requirement for Development of System.--To implement 
     the policy established in section 3(a), the Secretary of 
     Defense shall develop for deployment a National Missile 
     Defense (NMD) system which shall achieve an initial 
     operational capability (IOC) by the end of 2003.
       (b) Elements of the NMD System.--The system to be developed 
     for deployment shall include the following elements:
       (1) Interceptors.--An interceptor system that optimizes 
     defensive coverage of the continental United States, Alaska, 
     and Hawaii against limited ballistic missile attack (whether 
     accidental, unauthorized, or deliberate).
       (2) Ground-based radars.--Fixed ground-based radars.
       (3) Space-based sensors.--Space-based sensors, including 
     the Space and Missile Tracking System.
       (4) BM/C3.--Battle management, command, control, and 
     communications (BM/C3).

     SEC. 4. IMPLEMENTATION OF NATIONAL MISSILE DEFENSE SYSTEM.

       The Secretary of Defense shall--
       (1) upon the enactment of this Act, promptly initiate 
     required preparatory and planning actions that are necessary 
     so as to be capable of meeting the initial operational 
     capability (IOC) date specified in section 3(a);
       (2) not later than the end of fiscal year 1999, conduct an 
     integrated systems test which uses elements (including BM/
     C3 elements) that are representative of, and traceable 
     to, the national missile defense system architecture 
     specified in section 3(b);
       (3) prescribe and use streamlined acquisition policies and 
     procedures to reduce the cost and increase the efficiency of 
     developing the system specified in section 3(a); and
       (4) develop a national missile defense follow-on program 
     that--
       (A) leverages off of the national missile defense system 
     specified in section 3(a); and
       (B) could augment that system, if necessary, to provide for 
     a layered defense.

     SEC. 5. REPORT ON PLAN FOR NATIONAL MISSILE DEFENSE SYSTEM 
                   DEVELOPMENT AND DEPLOYMENT.

       Not later than 120 days after the date of the enactment of 
     this Act, the Secretary of Defense shall submit to Congress a 
     report on the Secretary's plan for development and deployment 
     of a national missile defense system pursuant to this Act. 
     The report shall include the following matters:
       (1) The Secretary's plan for carrying out this Act, 
     including--
       (A) a detailed description of the system architecture 
     selected for development under section 3(b); and
       (B) a discussion of the justification for the selection of 
     that particular architecture.
       (2) The Secretary's estimate of the amount of 
     appropriations required for research, development, test, 
     evaluation, and for procurement, for each of fiscal years 
     1998 through 2003 in order to achieve the initial operational 
     capability date specified in section 3(a).
       (3) A determination of the point at which any activity that 
     is required to be carried out under this Act would conflict 
     with the terms of the ABM Treaty, together with a description 
     of any such activity, the legal basis for the Secretary's 
     determination, and an estimate of the time at which such 
     point would be reached in order to meet the initial 
     operational capability date specified in section 3(a).

     SEC. 6. POLICY REGARDING THE ABM TREATY.

       (a) ABM Treaty Negotiations.--In light of the findings in 
     section 232 of the National Defense Authorization Act for 
     Fiscal Year 1996 (Public Law 102-106; 110 Stat. 228, 10 
     U.S.C. 2431 note) and the policy established in section 2, 
     Congress urges the President to pursue, if necessary, high-
     level discussions with the Russian Federation to achieve an 
     agreement to amend the ABM Treaty to allow deployment of the 
     national missile defense system being developed for 
     deployment under section 3.
       (b) Requirement for Senate Advice and Consent.--If an 
     agreement described in subsection (a) is achieved in 
     discussions described in that subsection, the President shall 
     present that agreement to the Senate for its advice and 
     consent. No funds appropriated or otherwise available for any 
     fiscal year may be obligated or expended to implement such an 
     amendment to the ABM Treaty unless the amendment is made in 
     the same manner as the manner by which a treaty is made.
       (c) Action Upon Failure To Achieve Negotiated Changes 
     Within One Year.--If an agreement described in subsection (a) 
     is not achieved in discussions described in that subsection 
     within one year after the date of the enactment of this Act, 
     the President and Congress, in consultation with each other, 
     shall consider exercising the option of withdrawing the 
     United States from the ABM Treaty in accordance with the 
     provisions of Article XV of that treaty.

     SEC. 7. DEFINITIONS.

       In this Act:
       (1) ABM treaty.--The term ``ABM Treaty'' means the Treaty 
     Between the United States of America and the Union of Soviet 
     Socialist Republics on the Limitation of Anti-Ballistic 
     Missile Systems, and signed at Moscow on May 26, 1972, and 
     includes the Protocols to that Treaty, signed at Moscow on 
     July 3, 1974.
       (2) Limited ballistic missile attack.--The term ``limited 
     ballistic missile attack'' refers to a limited ballistic 
     missile attack as that term is used in the National Ballistic 
     Defense Capstone Requirements Document, dated August 24, 
     1996, that was issued by the United States Space Command and 
     validated by the Joint Requirements Oversight Council of the 
     Department of Defense.

  Mr. HELMS. Mr. President, the Defend America Act of 1997 is a vital 
piece of legislation--one which provides a clear and concise blueprint 
for protecting the American people from the growing threat of attack 
from ballistic missiles carrying nuclear, chemical, or biological 
warheads.
  It is critical that the United States begin immediately the 8-year 
task of building and deploying a national missile defense. I am 
grateful to the distinguished majority leader, Mr. Lott, for 
introducing this bill and I am honored to join him as a cosponsor.
  Just over a year ago the Clinton administration vetoed the 1996 
Defense Authorization Act. In his veto message, the President 
explicitly objected to the missile defense provisions of the act. At 
that time, along with others, I found it beyond belief that the 
administration could arrive at the decision to block the deployment of 
a national missile defense. I remember wondering, given the fact that 
North Korea is known to be developing a missile capable of striking 
United States cities, how such a decision could be made.
  The chairman of the National Intelligence Council, Richard Cooper, 
testified before the House National Security

[[Page S236]]

Committee on February 28, 1996, that ``. . . North Korea is developing 
a missile, which we call the Taepo Dong 2, that could have a range 
sufficient to reach Alaska. The missile way also be capable of reaching 
some U.S. territories in the Pacific and the far western portion of the 
2,000-km-long Hawaiian Island chain.''
  What Mr. Cooper did not add was the fact that nations can and have 
increased the ranges of their ballistic missiles by reducing payloads.
  Mr. President, a September 29, 1995, article in the Washington Times 
reported that the Defense Intelligence Agency has estimated that the 
Taepo Dong 2 could, in fact, have a range of 4,650 miles and, with a 
smaller warhead, could reach 6,200 miles--approximately 10,000 km. 
Similarly, a September 11, 1995, article in a South Korean newspaper 
stated that Russia believes that once the Taepo Dong 2's inertial 
navigation system, warhead weight, and fuel injection devices are 
improved, the missile could reach over 9,600 kilometers. At those 
ranges, the Taepo Dong 2 could drop a nuclear or biological warhead on 
U.S. cities as far east as Denver or Minneapolis.
  Mr. President, I ask unanimous consent that these two articles be 
printed in the Record.
  Second, I cannot fathom why the Clinton administration objected to 
the deployment of a national missile defense in light of Red China's 
bellicose words and deeds. China fields of dozens of submarine-launched 
ballistic missiles, hundreds of warheads on heavy bombers, roughly 24 
medium- and long-range ballistic missiles, and has several crash 
modernization initiatives in progress. Moreover, China intends to 
deploy, by the end of the century, four new types of ballistic 
missiles. Furthermore, the United States has very clear indications 
that Red China is at this moment pursuing MIRV-technology.
  Mr. President, this is the same country, mind you, that flexed its 
military might by conducting live missile-firing exercises in the 
Strait of Taiwan in an obviously intentional effort to bully and cower 
a valued and longstanding ally of the United States. This is the same 
country that issued thinly-veiled threats this spring suggesting that 
nuclear weapons would be used against the United States if the United 
States intervened on behalf of Taiwan. Assistant Secretary of State 
Winston Lord acknowledged that Chinese officials had declared that the 
United States ``wouldn't dare defend Taiwan because they--China--would 
rain nuclear bombs on Los Angeles.''
  Now, if this was not nuclear blackmail, it will do while the Clinton 
administration folds its hands until the first nuclear missile hits the 
West Coast of the United States. China's ability to hold the United 
States hostage to such threats is made possible by the fact that a band 
of latter-day Luddites here in Washington have consistently refused 
even to consider building the very strategic missile defenses necessary 
to protect the American people from such an attack.
  Mr. President, it is time for the defenders of the ABM Treaty to give 
up their pious devotion to an antiquated arms control theology, and to 
come to grips with the realities of the post-cold-war world. Dr. Henry 
Kissinger--the architect of the ABM Treaty--put it best when he 
recently wrote: ``The end of the cold war has made * * * a strategy [of 
mutually assured destruction (MAD)] largely irrelevant. Barely 
plausible when there was only one strategic opponent, the theory makes 
no sense in a multipolar world of proliferating nuclear powers.''
  Dr. Kissinger went on to note specifically that MAD would not work 
against blackmail with nuclear weapons. Yet that is exactly what we 
faced when China blatantly threatened Los Angeles.
  The truth of the matter is that no amount of policy reformulation by 
the Clinton administration can change the fact that the United States 
is vulnerable to nuclear-tipped missiles fielded by China, or any one 
else. Rectifying this dangerous deficiency requires leadership and 
action. It is an all the more pressing issue because the current course 
charted by the administration fails to recognize the inherent danger in 
China's pursuit of an advanced nuclear arsenal.
  Mr. President, any further delay in the development of the United 
States of a flexible, cost-effective national missile defense is 
unconscionable. I am honored to be a cospsonor of the Defend America 
Act and urge Senators to support this legislation to ensure that the 
American people are protected from attack by ballistic missiles.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Washington Times, Sept. 29, 1995]

   North Korean Missile Could Reach United States, Intelligence Warns

                            (By Bill Gertz)

       The Western United States could be within range of North 
     Korea's longest-range missile armed with nuclear, chemical or 
     biological warheads by the year 2000, according to U.S. and 
     foreign intelligence assessments.
       Sen. Jon Kyl, Arizona Republican, said new information 
     indicates North Korea's Taepo Dong-2 missile, still under 
     development, is an intercontinental ballistic missile (ICBM) 
     capable of hitting U.S. cities and demonstrates the need for 
     rapidly building a national missile defense.
       A South Korean intelligence official, quoting a Russian 
     assessment said the Taepo Dong-2 will be deployed by 2000 
     with a maximum range of 6,200 miles once warhead 
     modifications and technical improvements are made, the 
     newspaper Seoul Shinmun reported Sept. 11.
       Mr. Kyl, a member of the Senate Intelligence Committee, 
     said he investigated the report and found it ``not 
     inconsistent with some information that I have.''
       ``The bottom line is that if the information is even close 
     to the truth, it presents for the first time a very serious 
     and relatively quick challenge to U.S. sovereignty,'' he 
     said.
       The Defense Intelligence Agency (DIA) estimates the Taepo 
     Dong-2 will have a range of about 4,650 miles and confirmed 
     that with a smaller warhead it could reach 6,200 miles, a 
     Pentagon source said.
       Information on the North Korean ICBM comes as a House and 
     Senate conference committee is working on provisions of the 
     fiscal 1996 defense authorization about whether the Pentagon 
     should move ahead quickly with deployment of a national 
     missile defense that could defend against such North Korean 
     missiles.
       ``Given the time it takes to develop and deploy an 
     effective national missile-defense system, overlayed on that 
     intelligence information, it is clear we have to begin now if 
     we are to avoid a `missile-defense gap,' '' Mr. Kyl said.
       ``In this case it would be real,'' he said, referring to 
     the issue of the United States lagging behind the Soviet 
     Union in strategic missiles. The missile-gap debate surfaced 
     during the 1960 presidential election campaign and was later 
     proved to have been unfounded.
       Mr. Kyl said the intelligence report also counters claims 
     by administration officials that national missile defenses 
     are not needed because there is no immediate threat to the 
     United States.
       A DIA statement said the press information about the Taepo 
     Dong-2 was ``factual. . . . Clearly the successful deployment 
     of these longer-range missiles would present a new dimension 
     to the challenges to United States and regional interests.''
       One DIA computer simulation of the Taepo Dong-2 put the 
     range of the missile at between 2,666 miles and 3,720 miles.
       But according to South Korean intelligence, Russian missile 
     experts believe the range of the Taepo Dong-2 could be 
     extended to at least 6,000 miles after technical problems are 
     solved, the Seoul newspaper reported.
       The Russians told South Korea the greater range could be 
     achieved if the guidance mechanism is improved, the warhead 
     weight is decreased and fuel-injection technology is 
     advanced.
       The Pentagon's Ballistic Missile Defense Organization drew 
     up charts showing the targets a long-range Taepo Dong-2 could 
     hit. They include all major U.S. cities on the West Coast, in 
     Arizona, Colorado, Kansas and just short of Chicago. It also 
     could reach all the major European capitals.
       A U.S. intelligence official said current North Korean 
     missile technology is ``Scud technology'' with rudimentary 
     guidance and control mechanisms.
       ``It will take a lot longer than the year 2000 to get to 
     that point,'' he said of long-range missile capability. 
     ``Although there is no question they would like to achieve 
     that.''
       But other intelligence officials said China is secretly 
     helping the North Korean long-range missile project and a 
     group of up to 200 North Korean missile engineers has 
     undergone training in China.
       As for the range of the Taepo Dong, the CIA report says 
     only that its two versions will have ranges shorter and 
     greater than 1,860 miles, respectively.
       The accuracy of the missile is so poor that U.S. analysis 
     see it as only useful for firing weapons of mass 
     destruction--nuclear, chemical or biological warheads. The 
     Pentagon says North Korea has covertly developed enough 
     nuclear fuel for four or five nuclear devices. The CIA says 
     it has aggressive chemical and biological warfare programs.
                                                                    ____


                              South Korea


             u.s. reportedly within new north missile range

                        [Report by Pak Chae-pom]

       [FBIS Translated Text] The new Taepodong missile No. 2 that 
     North Korea is

[[Page S237]]

     developing is believed to have a maximum range of 10,000 km--
     which means that the U.S. mainland would be within its 
     range--and will be ready for actual deployment around 2000.
       According to an ROK intelligence official on 10 September, 
     the assessment is based on a Russian-source intelligence on 
     North Korea's ground-to-ground missiles.
       The data Russia handed over to the ROK reveal that North 
     Korea is continuing the research and development of Taepodong 
     No. 1 and No. 2 at a missile test site in Sanum-tong and that 
     it recently conducted a missile engine test.
       A computer simulated test by the U.S. Defense Intelligence 
     Agency estimated that the Taepodong No. 2 has a 4,300 to 
     6,000-km range, but the Russian authorities projected that 
     when some technical problems are solved, the range could be 
     expanded to over 9,600 km.
       The Russian source analyzed that the safety of the inertial 
     navigation system, adjustment of the warhead weight, and fuel 
     injection device are the technologies North Korea needs to 
     improve.
       North Korea's Taepodong No. 2 is reportedly a two-stage 
     missile with a 16-meter Taepodong No. 1 attached on a 16.2-
     meter thruster and a 1,000-kg warhead on the thruster.
       An intelligence official said: ``Irrespective of the recent 
     economic setback, North Korea is speeding up the development 
     of Taepodong No. 2 and other long-range weapons to block the 
     support from the neighboring countries in case of an 
     emergency on the Korean peninsula.''
                                 ______
                                 
      By Mr. BOB SMITH (for himself, Mr. Chafee, and Mr. Lott):
  S. 8. A bill to reauthorize and amend the Comprehensive Environmental 
Response, Liability, and Compensation Act of 1980, and for other 
purposes; to the Committee on Environment and Public Works.


               superfund cleanup acceleration act of 1997

  Mr. CHAFEE. Mr. President, Senator Smith from New Hampshire and I 
have been working on this not only this year, but in past years also. I 
think after 7 years, it is time to fix this program. Tens of billions 
of dollars have been spent with very modest results, as far as cleanups 
go. This bill, which Senator Smith and I have submitted, addresses the 
so-called brownfields problem, for example.
  What are brownfields? They are contaminated sites, usually within our 
cities, which can be cleaned up relatively quickly and inexpensively 
and can be returned to productive industrial commercial use, thereby 
generating jobs and revenue.
  In this legislation, we deal with who will have to pay. Obviously, 
this is where the intense legal arguments have occurred, where you need 
to hire a hall because there are so many lawyers involved.
  We eliminate the unfairness of joint and several liability at most 
sites, and we replace it with proportional allocations where each 
polluter pays its fair share.
  We eliminate from liability anyone who legally sent waste to a 
municipal landfill.
  We eliminate small businesses and persons whose share was less than 1 
percent and persons who sent less than 200 pounds or 110 gallons.
  In deciding how clean the cleanup ought to be, we take into 
consideration, what is the future use of the site going to be? Is it 
going to be for a children's playground, or is it going to be for a 
parking lot that is paved? Obviously, it makes a difference as to how 
clean the site should be cleaned up.
  Mr. President, this bill is not written in concrete. Senator Abraham, 
for example, is deeply concerned that we do not include here within our 
legislation tax incentives for brownfields cleanup in empowerment zones 
and in enterprise communities. Senator Abraham, who is deeply concerned 
about our inner cities and the jobs that will flow from it if these 
sites within the inner cities are cleaned up, believes there should be 
some tax incentives provided. We have not done that because of a cost 
problem, but we have assured Senator Abraham we will work with him to 
try to come up with the result that he seeks. I want to commend Senator 
Abraham for the work that he has done on this and the intense concern 
he has shown throughout the process of formulating this legislation.
  Mr. President, now I would like to turn it over to Senator Smith who 
has labored so hard in this vineyard, not only this year but last year. 
I do not think anybody in this Senate knows more about this legislation 
or has worked harder on it than Senator Smith from New Hampshire.
  Mr. BOB SMITH addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. BOB SMITH. Thank you, Mr. President. I thank my distinguished 
colleague and chairman of the Environment and Public Works Committee 
for his kind remarks. He, too, has been deeply involved in this issue. 
We have spent a lot of hours on this.
  I am just very excited about the fact that this is in the top 10 
legislative initiatives that the majority leader and the Republican 
Party have, and I welcome the opportunity to make a few remarks here.
  It is a tribute to Senator Lott and to Senator Chafee that they have 
made this a priority. It is the right thing to do, Mr. President, 
because I share with the American people the belief that our children 
ought to be able to drink clean water and breathe clean air and live in 
safe homes so they do not have to worry about environmental pollution, 
most specifically not having to live next to the stigma of a so-called 
Superfund site that never gets cleaned up.
  We have some very good environmental laws on the books in this 
country--the Clean Air Act, the Safe Drinking Water Act, and others--
but there are a few that do not fit that category, that have failed. 
Superfund is one of those laws. It is up to this committee and to the 
Senate, I think, to take the leadership here and to try to make those 
corrections.
  To achieve meaningful reform--and I mean reform--we have to cut 
transaction costs. That is goal No. 1. The second goal is to reduce the 
time necessary to complete cleanup at these sites. The third goal is to 
inject some common sense into our cleanup program to reach sensible 
levels that protect our children and our environment.
  The bill we introduce today will accomplish each and every one of 
those goals. It improves the serious problem of brownfields, which our 
colleague, Senator Chafee, has already mentioned. Senator Abraham of 
Michigan is very much involved in this issue. We commend his leadership 
and look forward to working with him on the brownfields portion of this 
bill.
  But we provide $60 million in new funding each year for States and 
localities for grants and loan programs to spur the cleanup and the 
redevelopment of these sites.
  I welcome the initiative on the part of our colleagues on the other 
side of our aisle on brownfields. It enhances the role of States by 
allowing them to take responsibility for conducting Superfund cleanups 
and increases citizen participation. It reinjects common sense back 
into the cleanup process by taking the future use of the site into 
consideration when cleanup remedies are elected.
  It promotes the use of innovative technology to ensure that the 
citizenry can have the benefit of the most up-to-date scientific 
approaches to cleanup and eliminates potential liability for tens of 
thousands of average citizens, small businesses, schools, churches, the 
Boy Scouts, Girl Scouts, and others who have been caught up in this 
Superfund liability net. It caps the liability of municipalities and 
other entities that owned or operated municipal sites and did so 
legally.
  Finally, it reduces litigation by creating a fair-share allocation 
process at multiparty sites where the trust fund will pick up the cost 
of the defunct or insolvent parties in wastes that cannot be attributed 
to a viable party.
  Thus, Mr. President, what this bill does, in a nutshell, is it stops 
paying lawyers and starts paying for cleanup. I think that is a 
tremendous improvement over current law. So the discussions over the 
past 2 years, which Senator Chafee has mentioned, which I have been 
involved in with the administration, Administrator Browner, and my 
colleagues on the other side of the aisle, have been productive. We 
have learned a lot. We are ready to roll up our sleeves again and get 
it done. We were very close to an agreement last time. We look forward 
to working with our colleagues and with the President of the United 
States to get it done in a bipartisan way.
  As the Chairman of the Senate Subcommittee on Superfund, Waste 
Control and Risk Assessment, I am here today, along with Senator 
Chafee, the Chairman of the Environment Committee, to introduce some 
commonsense

[[Page S238]]

legislation to put the Superfund law back on track toward achieving its 
original goal of protecting our Nation's children from environmental 
pollutants in the quickest practical manner possible.
  I would like to thank the Republican Leader, Senator Lott and all of 
the members of the Republican Conference who have co-sponsored our 
legislation--The Superfund Cleanup Acceleration Act--for recognizing 
the importance of improving the Superfund program. By making this one 
of the ``top 10'' Senate priorities for the 105th Congress, I believe 
we have demonstrated our strong commitment toward protecting our 
environment, improving environmental laws, and preserving the health of 
our Nation's children.
  Before I describe our legislation, I would like to take a few minutes 
to talk about Superfund and how we find ourselves here today.
  The history of Superfund is long and somewhat checkered. The program 
was created in 1980 to clean up abandoned hazardous waste sites, and at 
that time, it was anticipated that this program would clean up around 
400 sites nationwide. Begun with the best of intentions, the program 
has not performed the way it should. So far Superfund has cost our 
Nation more than $40 billion dollars, yet, only 125 out of a total of 
around 1,300 sites have been removed from the Superfund list over the 
last 16 years. Superfund has become the classic example of a Federal 
program awash in redtape, litigation and gold plated spending.
  The problems in Superfund are many. First, the Superfund liability 
scheme allows the Environmental Protection Agency to hold any 
potentially responsible party liable for the entire cleanup cost at a 
site--irrespective of the type of contamination, when the material was 
disposed of, or whether the activity was legal. This is simply unfair 
and, not surprisingly, results in enormous litigation costs with 30 to 
70 percent of every dollar spent on lawyers.
  Because of the fear of Superfund liability, many of our Nation's 
inner cities contain abandoned or underutilized properties--dubbed 
Brownfields--which lay fallow because private developers and 
municipalities don't want to be dragged into Superfund's litigation 
quagmire. In order to spur economic redevelopment, we must place a 
priority on fixing this problem.
  Superfund sets out unrealistic cleanup goals which frequently ignore 
common sense in considering the future use of the site. All too often, 
sites that are destined to become industrial parks or parking lots are 
required to be cleaned to standards compatible with school playgrounds. 
We need to reinject common sense back into this program so that we 
protect real people from real risks, not hypothetical people from 
hypothetical risks. We must also recognize that the States, which are 
much better able to understand the concerns and needs of residents who 
live near these sites, should have the lead in determining how these 
sites are going to be cleaned up, and when.
  Because I am also the Chairman of the Armed Services Subcommittee on 
Strategic Forces, which funds the Department of Energy cleanup program, 
I am keenly aware that the real costs of Superfund are not limited 
solely to the private sector. Not only are there more than 155 Federal 
facilities on the Superfund list, but these sites represent the most 
complex and costly cleanup challenges in the program. The inability to 
create commonsense cleanup plans results in billions of dollars of 
additional liability to Federal agencies--costs that ultimately come 
from the taxes we all pay. In a period of budget deficits and declining 
resources, we need to do a better job of making cleanup decisions.
  While Superfund was created with the hope of quickly dealing with the 
serious problem of toxic waste sites endangering our citizens, it is 
evident that Superfund has proceeded at a snail's pace and that most 
sites are still not cleaned up. I commend Carol Browner, the 
Administrator of the EPA, for recognizing this fact, and for 
instituting a series of administrative reforms in the last year--
reforms that reflect changes that I, and other Republicans have 
advocated for many years.
  Although I applaud the administration for making these changes, I 
believe it is too soon to declare victory in the effort to make 
Superfund work better. While improvements have been made in some areas, 
it is far too early to determine their true or lasting effect. I 
certainly do not agree with some in the Administration that feel that 
the administrative reforms have corrected all the problems of 
Superfund. The fact remains that even with the administrative reforms, 
too much money is spent on litigation, sites aren't being cleaned up 
fast enough, and children are being needlessly exposed to toxic 
contaminants.
  Rather than reform Superfund on a piecemeal basis, as some may 
suggest, it is clear that comprehensive legislation is necessary to 
correct Superfund's deeper problems. The bill we have introduced will 
address those problems in a top-to-bottom fashion so that we can clean 
up all of these waste sites as quickly as possible.

  To achieve meaningful Superfund reform, it is necessary to meet three 
goals. The first is to cut the transaction costs of the program. That 
means cutting out the lawyers and ensuring that every dollar meant for 
cleanup goes to cleanup. The second goal is to reduce the time 
necessary to complete cleanup at these sites. Currently, it takes more 
than 12 years to clean up a site. We can do better than that. The last 
goal is to inject common sense into our cleanup program to reach 
sensible levels that protect our children and protect the environment.
  The bill we are introducing today will accomplish each of these 
goals.
  Our legislation improves the serious problem of brownfields by 
providing $60 million in new funding each year to States and localities 
for grant and loan programs to spur the cleanup and redevelopment of 
these sites;
  It enhances the roll of States by allowing them to take primary 
responsibility for conducting Superfund cleanups.
  It increases citizen participation by setting up Citizen Response 
Organizations to improve coordination between citizens, government and 
responsible parties.
  It reinjects common sense back into the cleanup process by taking the 
future use of the site into consideration when cleanup remedies are 
selected.
  It promotes the use of innovative technologies to insure that the 
citizenry can have the benefit of the most-up-to-date scientific 
approaches to cleanup.
  It eliminates potential liability from tens of thousands of average 
citizens, small businesses, schools, churches, and others who are 
currently caught in the Superfund liability net.
  It caps the liability of municipalities and other entities that owned 
or operated municipal waste sites.
  And finally, it reduces litigation by creating a fair-share 
allocation process at multi-party sites where the Trust fund will pick 
up the cost of defunct or insolvent parties, or wastes that cannot be 
attributed to a viable party.
  Among the significant issues we have focused on is the issue of 
brownfields. As many of my colleagues may know, there are a variety of 
bills that have been introduced by Senator Abraham, Senator Lieberman, 
Senator Lautenberg and others which attempt to take a crack at this 
issue.
  Many of the brownfield bills that have been introduced rely on tax 
credits or tax deductions to promote the cleanup of these sites. While 
the issue of tax credits does not fall within the jurisdiction of the 
Environment Committee, as this bill progresses toward passage, it is my 
intention to work with my colleagues to find common ground and provide 
additional support for these areas.
  Liability has always been one of the most contentious issues in the 
Superfund reform debate. My position has been clear from the beginning. 
I believe that retroactive liability is fundamentally unfair and if I 
had my way, I would repeal it. Some of my colleagues see things 
differently. It is important to understand that the bill we are 
introducing represents many hours of intense discussions and all the 
parties involved will recognize some of their positions. The bill does 
not go as far as I would like. Equally, it asks that the other side to 
take a step forward as well. We each must take this step to improve a 
system which is not helping our citizens the way it should.
  Over the last 2 years, my staff and that of Senator Chafee have been 
engaged in bi-partisian discussions with

[[Page S239]]

Democrats and the Clinton administration. These discussions were long 
and sometimes pointed, but the participants in these negotiations 
understood that the Superfund program has flaws which need to be 
corrected.
  While there is general agreement that cleanups should occur faster, 
and that there are too many lawyers in the system, there are many ideas 
about how to correct these problems. The discussions over the past 2 
years have been productive and on many issues we are close to 
agreement. We look forward to working with our colleagues and the with 
the President to craft a bipartisan solution to the problems of 
Superfund.
  The bill we introduce today incorporates many good ideas from our 
bipartisan negotiations. It represents a significant step away from 
where we started last Congress, and I believe it deserves, and will 
receive, bipartisan support.
  Much has been said about the Republican and Democratic positions on 
the environment. I urge my colleagues to move beyond the rhetoric and 
the posturing of the last election and examine the real situation. The 
bill we are introducing today will speed cleanups, take lawyers out of 
the system, inject common sense back into the process, and protect 
children much faster from toxic exposure than under current law. This 
should not merely be a top-10 priority on the Republican agenda, but it 
should be a top ten item on our shared agenda. I urge all of my 
colleagues to join with us to reform this program this year.
  I thank you, Mr. President. I thank my colleague.
  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, I want to stress the comments that Senator 
Smith made about a bipartisan approach.
  As I mentioned before, this is legislation that we worked on. We 
believe it is very, very good legislation. We are not saying it is the 
end all and be all. Obviously, in our committee we will have hearings 
on it. All the members of the committee will have a chance to have 
their views expressed.
  We look forward to contributions from the members of the Democratic 
Party who are part of our Environment Committee. It is our hope that 
when we come forward with a bill to present on this floor finally for 
consideration by the body, that it will come out unanimously from our 
committee, will have the support of the administration, and will 
fulfill the desires of all of us that this legislation become law.
  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. 8

       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 ``Superfund 
     Cleanup Acceleration Act of 1997.''
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                  TITLE I--BROWNFIELDS REVITALIZATION

Sec. 101. Brownfields.
Sec. 102. Assistance for qualifying State voluntary response programs.
Sec. 103. Enforcement in cases of a release subject to a State plan.
Sec. 104. Contiguous properties.
Sec. 105. Prospective purchasers and windfall liens.
Sec. 106. Safe harbor innocent landholders.

                          TITLE II--STATE ROLE

Sec. 201. Delegation to the States of authorities with respect to 
              national priorities list facilities.

                   TITLE III--COMMUNITY PARTICIPATION

Sec. 301. Community response organizations; technical assistance 
              grants; improvement of public participation in the 
              superfund decisionmaking process.

                TITLE IV--SELECTION OF REMEDIAL ACTIONS

Sec. 401. Definitions.
Sec. 402. Selection and implementation of remedial actions.
Sec. 403. Remedy selection methodology.
Sec. 404. Remedy selection procedures.
Sec. 405. Completion of physical construction and delisting.
Sec. 406. Transition rules for facilities currently involved in remedy 
              selection.
Sec. 407. National Priorities List.

                           TITLE V--LIABILITY

Sec. 501. Liability exceptions and limitations.
Sec. 502. Contribution from the Fund.
Sec. 503. Allocation of liability for certain facilities.
Sec. 504. Liability of response action contractors.
Sec. 505. Release of evidence.
Sec. 506. Contribution protection.
Sec. 507. Treatment of religious, charitable, scientific, and 
              educational organizations as owners or operators.
Sec. 508. Common carriers.
Sec. 509. Limitation on liability of railroad owners.
Sec. 510. Liability of recyclers.

                      TITLE VI--FEDERAL FACILITIES

Sec. 601. Transfer of authorities.
Sec. 602. Limitation on criminal liability of Federal officers, 
              employees, and agents.
Sec. 603. Innovative technologies for remedial action at Federal 
              facilities.

                  TITLE VII--NATURAL RESOURCE DAMAGES

Sec. 701. Restoration of natural resources.
Sec. 702. Assessment of injury to and restoration of natural resources.
Sec. 703. Consistency between response actions and resource restoration 
              standards.
Sec. 704. Contribution.

                       TITLE VIII--MISCELLANEOUS

Sec. 801. Result-oriented cleanups.
Sec. 802. National Priorities List.
Sec. 803. Obligations from the fund for response actions.

                           TITLE IX--FUNDING

                     Subtitle A--General Provisions

Sec. 901. Authorization of appropriations from the Fund.
Sec. 902. Orphan share funding.
Sec. 903. Department of Health and Human Services.
Sec. 904. Limitations on research, development, and demonstration 
              programs.
Sec. 905. Authorization of appropriations from general revenues.
Sec. 906. Additional limitations.
Sec. 907. Reimbursement of potentially responsible parties.
                  TITLE I--BROWNFIELDS REVITALIZATION

     SEC. 101. BROWNFIELDS.

       (a) In General.--Title I of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601 et seq.) is amended by adding at the end the following:

     ``SEC. 127. BROWNFIELDS.

       ``(a) Definitions.--In this section:
       ``(1) Administrative cost.--The term `administrative cost' 
     does not include the cost of--
       ``(A) investigation and identification of the extent of 
     contamination;
       ``(B) design and performance of a response action; or
       ``(C) monitoring of natural resources.
       ``(2) Brownfield facility.--The term `brownfield facility' 
     means--
       ``(A) a parcel of land that contains an abandoned, idled, 
     or underused commercial or industrial facility, the expansion 
     or redevelopment of which is complicated by the presence or 
     potential presence of a hazardous substance; but
       ``(B) does not include--
       ``(i) a facility that is the subject of a removal or 
     planned removal under title I;
       ``(ii) a facility that is listed or has been proposed for 
     listing on the National Priorities List or that has been 
     delisted under section 134(d)(5);
       ``(iii) a facility that is subject to corrective action 
     under section 3004(u) or 3008(h) of the Solid Waste Disposal 
     Act (42 U.S.C. 6924(u) or 6928(h)) at the time at which an 
     application for a grant concerning the facility is submitted 
     under this section;
       ``(iv) a land disposal unit with respect to which--

       ``(I) a closure notification under subtitle C of the Solid 
     Waste Disposal Act (42 U.S.C. 6921 et seq.) has been 
     submitted; and
       ``(II) closure requirements have been specified in a 
     closure plan or permit;

       ``(v) a facility with respect to which an administrative 
     order on consent or judicial consent decree requiring cleanup 
     has been entered into by the United States under this Act, 
     the Solid Waste Disposal Act (42 U.S.C. 6901 et seq.), the 
     Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), 
     the Toxic Substances Control Act (15 U.S.C. 2601 et seq.), or 
     the Safe Drinking Water Act (42 U.S.C. 300f et seq.);
       ``(vi) a facility that is owned or operated by a 
     department, agency, or instrumentality of the United States; 
     or
       ``(vii) a portion of a facility, for which portion, 
     assistance for response activity has been obtained under 
     subtitle I of the Solid Waste Disposal Act (42 U.S.C. 6991 et 
     seq.) from the Leaking Underground Storage Tank Trust Fund 
     established under section 9508 of the Internal Revenue Code 
     of 1986.
       ``(3) Eligible entity.--The term `eligible entity' means--
       ``(A) a general purpose unit of local government;
       ``(B) a land clearance authority or other quasi-
     governmental entity that operates under the supervision and 
     control of or as an agent of a general purpose unit of local 
     government;
       ``(C) a regional council or group of general purpose units 
     of local government;

[[Page S240]]

       ``(D) a redevelopment agency that is chartered or otherwise 
     sanctioned by a State; and
       ``(E) an Indian tribe.
       ``(b) Brownfield Characterization Grant Program.--
       ``(1) Establishment of program.--The Administrator shall 
     establish a program to provide grants for the site 
     characterization and assessment of brownfield facilities.
       ``(2) Assistance for site characterization and 
     assessment.--
       ``(A) In general.--On approval of an application made by an 
     eligible entity, the Administrator may make grants out of the 
     Fund to the eligible entity to be used for the site 
     characterization and assessment of 1 or more brownfield 
     facilities or to capitalize a revolving loan fund.
       ``(B) Appropriate inquiry.--A site characterization and 
     assessment carried out with the use of a grant under 
     subparagraph (A) shall be performed in accordance with 
     section 101(35)(B).
       ``(3) Maximum grant amount.--A grant under subparagraph (A) 
     shall not exceed, with respect to any individual brownfield 
     facility covered by the grant, $100,000 for any fiscal year 
     or $200,000 in total.
       ``(c) Brownfield Remediation Grant Program.--
       ``(1) Establishment of program.--The Administrator shall 
     establish a program to provide grants to be used for 
     capitalization of revolving loan funds for response actions 
     (excluding site characterization and assessment) at 
     brownfield facilities.
       ``(2) Assistance for site characterization and 
     assessment.--
       ``(A) In general.--On approval of an application made by a 
     State or an eligible entity, the Administrator may make 
     grants out of the Fund to the State or eligible entity to 
     capitalize a revolving loan fund to be used for response 
     actions (excluding site characterization and assessment) at 1 
     or more brownfield facilities.
       ``(B) Appropriate inquiry.--A site characterization and 
     assessment carried out with the use of a grant under 
     subparagraph (A) shall be performed in accordance with 
     section 101(35)(B).
       ``(3) Maximum grant amount.--A grant under subparagraph (A) 
     shall not exceed, with respect to any individual brownfield 
     facility covered by the grant, $150,000 for any fiscal year 
     or $300,000 in total.
       ``(d) General Provisions.--
       ``(1) Sunset.--No amount shall be available from the Fund 
     for purposes of this section after the fifth fiscal year 
     after the date of enactment of this section.
       ``(2) Prohibition.--No part of a grant under this section 
     may be used for payment of penalties, fines, or 
     administrative costs.
       ``(3) Audits.--The Inspector General of the Environmental 
     Protection Agency shall audit an appropriate number of grants 
     made under subsections (b)(2) and (c)(2) to ensure that funds 
     are used for the purposes described in this section.
       ``(4) Agreements.--Each grant made under this section shall 
     be subject to an agreement that--
       ``(A) requires the eligible entity to comply with all 
     applicable State laws (including regulations);
       ``(B) requires that the eligible entity shall use the grant 
     exclusively for purposes specified in subsection (b)(2) or 
     (c)(2);
       ``(C) in the case of an application by a State under 
     subsection (c)(2), payment by the State of a matching share 
     of at least 50 percent of the costs of the response action 
     for which the grant is made, from other sources of State 
     funding; and
       ``(D) contains such other terms and conditions as the 
     Administrator determines to be necessary to carry out the 
     purposes of this section.
       ``(5) Leveraging.--An eligible entity that receives a grant 
     under paragraph (1) may use the funds for part of a project 
     at a brownfield facility for which funding is received from 
     other sources, but the grant shall be used only for the 
     purposes described in subsection (b)(2) or (c)(2).
       ``(e) Grant Applications.--
       ``(1) In general.--Any eligible entity may submit an 
     application to the Administrator, through a regional office 
     of the Environmental Protection Agency and in such form as 
     the Administrator may require, for a grant under this section 
     for 1 or more brownfield facilities.
       ``(2) Application requirements.--An application for a grant 
     under this section shall include--
       ``(A) an identification of each brownfield facility for 
     which the grant is sought and a description of the 
     redevelopment plan for the area or areas in which the 
     brownfield facilities are located, including a description of 
     the nature and extent of any known or suspected environmental 
     contamination within the area;
       ``(B) an analysis that demonstrates the potential of the 
     grant to stimulate economic development on completion of the 
     planned response action, including a projection of the number 
     of jobs expected to be created at each facility after 
     remediation and redevelopment and, to the extent feasible, a 
     description of the type and skill level of the jobs and a 
     projection of the increases in revenues accruing to Federal, 
     State, and local governments from the jobs; and
       ``(C) information relevant to the ranking criteria stated 
     in paragraph (4).
       ``(3) Approval.--
       ``(A) Initial grant.--On or about March 30 and September 30 
     of the first fiscal year following the date of enactment of 
     this section, the Administrator shall make grants under this 
     section to eligible entities that submit applications before 
     those dates that the Administrator determines have the 
     highest rankings under ranking criteria established under 
     paragraph (4).
       ``(B) Subsequent grants.--Beginning with the second fiscal 
     year following the date of enactment of this section, the 
     Administrator shall make an annual evaluation of each 
     application received during the prior fiscal year and make 
     grants under this section to eligible entities that submit 
     applications during the prior year that the Administrator 
     determines have the highest rankings under the ranking 
     criteria established under paragraph (4).
       ``(4) Ranking criteria.--The Administrator shall establish 
     a system for ranking grant applications that includes the 
     following criteria:
       ``(A) The extent to which a grant will stimulate the 
     availability of other funds for environmental remediation and 
     subsequent redevelopment of the area in which the brownfield 
     facilities are located.
       ``(B) The potential of the development plan for the area in 
     which the brownfield facilities are located to stimulate 
     economic development of the area on completion of the 
     cleanup, such as the following:
       ``(i) The relative increase in the estimated fair market 
     value of the area as a result of any necessary response 
     action.
       ``(ii) The potential of a grant to create new or expand 
     existing business and employment opportunities (particularly 
     full-time employment opportunities) on completion of any 
     necessary response action.
       ``(iii) The estimated additional tax revenues expected to 
     be generated by economic redevelopment in the area in which a 
     brownfield facility is located.
       ``(iv) The estimated extent to which a grant would 
     facilitate the identification of or facilitate a reduction of 
     health and environmental risks.
       ``(v) The financial involvement of the State and local 
     government in any response action planned for a brownfield 
     facility and the extent to which the response action and the 
     proposed redevelopment is consistent with any applicable 
     State or local community economic development plan.
       ``(vi) The extent to which the site characterization and 
     assessment or response action and subsequent development of a 
     brownfield facility involves the active participation and 
     support of the local community.
       ``(vii) Such other factors as the Administrator considers 
     appropriate to carry out the purposes of this section.''.
       (b) Funding.--Section 111 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9611) is amended by adding at the end the 
     following:
       ``(q) Brownfield Characterization Grant Program.--For each 
     of fiscal years 1998 through 2002, not more than $15,000,000 
     of the amounts available in the Fund may be used to carry out 
     section 127(b).
       ``(r) Brownfield Remediation Grant Program.--For each of 
     fiscal years 1998 through 2002, not more than $25,000,000 of 
     the amounts available in the Fund may be used to carry out 
     section 127(c).''.

     SEC. 102. ASSISTANCE FOR QUALIFYING STATE VOLUNTARY RESPONSE 
                   PROGRAMS.

       (a) Definition.--Section 101 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601) is amended by adding at the end the 
     following:
       ``(39) Qualifying state voluntary response program.--The 
     term `qualifying State voluntary response program' means a 
     State program that includes the elements described in section 
     128(b).''.
       (b) Qualifying State Voluntary Response Programs.--Title I 
     of the Comprehensive Environmental Response, Compensation, 
     and Liability Act of 1980 (42 U.S.C. 9601 et seq.) (as 
     amended by section 101(a)) is amended by adding at the end 
     the following:

     ``SEC. 128. QUALIFYING STATE VOLUNTARY RESPONSE PROGRAMS.

       ``(a) Assistance to States.--The Administrator shall 
     provide technical and other assistance to States to establish 
     and expand qualifying State voluntary response programs that 
     include the elements listed in subsection (b).
       ``(b) Elements.--The elements of a qualifying State 
     voluntary response program are the following:
       ``(1) Opportunities for technical assistance for voluntary 
     response actions.
       ``(2) Adequate opportunities for public participation, 
     including prior notice and opportunity for comment in 
     appropriate circumstances, in selecting response actions.
       ``(3) Streamlined procedures to ensure expeditious 
     voluntary response actions.
       ``(4) Oversight and enforcement authorities or other 
     mechanisms that are adequate to ensure that--
       ``(A) voluntary response actions will protect human health 
     and the environment and be conducted in accordance with 
     applicable Federal and State law; and
       ``(B) if the person conducting the voluntary response 
     action fails to complete the necessary response activities, 
     including operation and maintenance or long-term monitoring 
     activities, the necessary response activities are completed.
       ``(5) Mechanisms for approval of a voluntary response 
     action plan.

[[Page S241]]

       ``(6) A requirement for certification or similar 
     documentation from the State to the person conducting the 
     voluntary response action indicating that the response is 
     complete.
       ``(c) Compliance With Act.--A person that conducts a 
     voluntary response action under this section at a facility 
     that is listed or proposed for listing on the National 
     Priorities List shall implement applicable provisions of this 
     Act or of similar provisions of State law in a manner 
     comporting with State policy, so long as the remedial action 
     that is selected protects human health and the environment to 
     the same extent as would a remedial action selected by the 
     Administrator under section 121(a).''.
       (c) Funding.--Section 111 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9611) (as amended by section 101(b)) is 
     amended by adding at the end the following:
       ``(s) Qualifying State Voluntary Response Program.--For 
     each of fiscal years 1998 through 2002, not more than 
     $25,000,000 of the amounts available in the Fund may be used 
     for assistance to States to establish and administer 
     qualifying State voluntary response programs, during the 
     first 5 full fiscal years following the date of enactment of 
     this subparagraph, distributed among each of the States that 
     notifies the Administrator of the State's intent to establish 
     a qualifying State voluntary response program and each of the 
     States with a qualifying State voluntary response program. 
     For each fiscal year there shall be available to each 
     eligible entity a grant in the amount of at least 
     $250,000.''.

     SEC. 103. ENFORCEMENT IN CASES OF A RELEASE SUBJECT TO A 
                   STATE PLAN.

       Title I of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9601 et 
     seq.) is amended by adding at the end the following:

     ``SEC. 129. ENFORCEMENT IN CASES OF A RELEASE SUBJECT TO A 
                   STATE PLAN.

       ``(a) In General.--In the case of a facility at which there 
     is a release or threatened release of a hazardous substance 
     subject to a State remedial action plan or with respect to 
     which the State has provided certification or similar 
     documentation that response action has been completed under a 
     State remedial action plan, neither the President nor any 
     other person may use any authority under this Act to take an 
     administrative or judicial enforcement action or to bring a 
     private civil action against any person regarding any matter 
     that is within the scope of the plan.
       ``(b) Releases Not Subject to State Plans.--For any 
     facility at which there is a release or threatened release of 
     hazardous substances that is not subject to a State remedial 
     action plan, the President shall provide notice to the State 
     within 48 hours after issuing an order under section 106(a) 
     addressing a release or threatened release. Such an order 
     shall cease to have force or effect on the date that is 90 
     days after issuance unless the State concurs in the 
     continuation of the order.
       ``(c) Cost or Damage Recovery Actions.--Subsection (a) does 
     not apply to an action brought by a State or Indian tribe for 
     the recovery of costs or damages under section 107.''.

     SEC. 104. CONTIGUOUS PROPERTIES.

       (a) In General.--Section 107 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9607(a)) is amended by adding at the end the 
     following:
       ``(o) Contiguous Properties.--
       ``(1) Not considered to be an owner or operator.--A person 
     that owns or operates real property that is contiguous to or 
     otherwise similarly situated with respect to real property on 
     which there has been a release or threatened release of a 
     hazardous substance and that is or may be contaminated by the 
     release shall not be considered to be an owner or operator of 
     a vessel or facility under subsection (a) (1) or (2) solely 
     by reason of the contamination if--
       ``(A) the person did not cause, contribute, or consent to 
     the release or threatened release; and
       ``(B) the person is not liable, and is not affiliated with 
     any other person that is liable, for any response costs at 
     the facility, through any direct or indirect familial 
     relationship, or any contractual, corporate, or financial 
     relationship other than that created by the instruments by 
     which title to the facility is conveyed or financed.
       ``(2) Cooperation, assistance, and access.--Notwithstanding 
     paragraph (1), a person described in paragraph (1) shall 
     provide full cooperation, assistance, and facility access to 
     the persons that are responsible for response actions at the 
     facility, including the cooperation and access necessary for 
     the installation, integrity, operation, and maintenance of 
     any complete or partial response action at the facility.
       ``(3) Assurances.--The Administrator may--
       ``(A) issue an assurance that no enforcement action under 
     this Act will be initiated against a person described in 
     paragraph (1); and
       ``(B) grant a person described in paragraph (1) protection 
     against a cost recovery or contribution action under section 
     113(f).''.
       (b) Conforming Amendment.--Section 107(a) of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9607) is amended by striking 
     ``of this section'' and inserting ``and the exemptions and 
     limitations stated in this section''.

     SEC. 105. PROSPECTIVE PURCHASERS AND WINDFALL LIENS.

       (a) Definition.--Section 101 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601) (as amended by section 102(a)) is 
     amended by adding at the end the following:
       ``(40) Bona fide prospective purchaser.--The term `bona 
     fide prospective purchaser' means a person that acquires 
     ownership of a facility after the date of enactment of this 
     paragraph, or a tenant of such a person, that establishes 
     each of the following by a preponderance of the evidence:
       ``(A) Disposal prior to acquisition.--All active disposal 
     of hazardous substances at the facility occurred before the 
     person acquired the facility.
       ``(B) Inquiries.--
       ``(i) In general.--The person made all appropriate 
     inquiries into the previous ownership and uses of the 
     facility and the facility's real property in accordance with 
     generally accepted good commercial and customary standards 
     and practices.
       ``(ii) Standards and practices.--The standards and 
     practices referred to in paragraph (35)(B)(ii) or those 
     issued or adopted by the Administrator under that paragraph 
     shall be considered to satisfy the requirements of this 
     subparagraph.
       ``(iii) Residential use.--In the case of property for 
     residential or other similar use purchased by a 
     nongovernmental or noncommercial entity, a facility 
     inspection and title search that reveal no basis for further 
     investigation shall be considered to satisfy the requirements 
     of this subparagraph.
       ``(C) Notices.--The person provided all legally required 
     notices with respect to the discovery or release of any 
     hazardous substances at the facility.
       ``(D) Care.--The person exercised appropriate care with 
     respect to each hazardous substance found at the facility by 
     taking reasonable steps to stop any continuing release, 
     prevent any threatened future release and prevent or limit 
     human or natural resource exposure to any previously released 
     hazardous substance.
       ``(E) Cooperation, assistance, and access.--The person 
     provides full cooperation, assistance, and facility access to 
     the persons that are responsible for response actions at the 
     facility, including the cooperation and access necessary for 
     the installation, integrity, operation, and maintenance of 
     any complete or partial response action at the facility.
       ``(F) Relationship.--The person is not liable, and is not 
     affiliated with any other person that is liable, for any 
     response costs at the facility, through any direct or 
     indirect familial relationship, or any contractual, 
     corporate, or financial relationship other than that created 
     by the instruments by which title to the facility is conveyed 
     or financed.''.
       (b) Amendment.--Section 107 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9607) (as amended by section 104) is amended 
     by adding at the end the following:
       ``(p) Prospective Purchaser and Windfall Lien.--
       ``(1) Limitation on liability.--Notwithstanding subsection 
     (a), a bona fide prospective purchaser whose potential 
     liability for a release or threatened release is based solely 
     on the purchaser's being considered to be an owner or 
     operator of a facility shall not be liable as long as the 
     bona fide prospective purchaser does not impede the 
     performance of a response action or natural resource 
     restoration.
       ``(2) Lien.--If there are unrecovered response costs at a 
     facility for which an owner of the facility is not liable by 
     reason of section 101(20)(G)(iii) and each of the conditions 
     described in paragraph (3) is met, the United States shall 
     have a lien on the facility, or may obtain from appropriate 
     responsible party a lien on any other property or other 
     assurances of payment satisfactory to the Administrator, for 
     such unrecovered costs.
       ``(3) Conditions.--The conditions referred to in paragraph 
     (1) are the following:
       ``(A) Response action.--A response action for which there 
     are unrecovered costs is carried out at the facility.
       ``(B) Fair market value.--The response action increases the 
     fair market value of the facility above the fair market value 
     of the facility that existed 180 days before the response 
     action was initiated.
       ``(C) Sale.--A sale or other disposition of all or a 
     portion of the facility has occurred.
       ``(4) Amount.--A lien under paragraph (2)--
       ``(A) shall not exceed the increase in fair market value of 
     the property attributable to the response action at the time 
     of a subsequent sale or other disposition of the property;
       ``(B) shall arise at the time at which costs are first 
     incurred by the United States with respect to a response 
     action at the facility;
       ``(C) shall be subject to the requirements of subsection 
     (l)(3); and
       ``(D) shall continue until the earlier of satisfaction of 
     the lien or recovery of all response costs incurred at the 
     facility.''.

     SEC. 106. SAFE HARBOR INNOCENT LANDHOLDERS.

       (a) Amendment.--Section 101(35) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601(35)) is amended by striking subparagraph 
     (B) and inserting the following:
       ``(B) Knowledge of inquiry requirement.--

[[Page S242]]

       ``(i) All appropriate inquiries.--To establish that the 
     defendant had no reason to know of the matter described in 
     subparagraph (A)(i), the defendant must show that, at or 
     prior to the date on which the defendant acquired the 
     facility, the defendant undertook all appropriate inquiries 
     into the previous ownership and uses of the facility in 
     accordance with generally accepted good commercial and 
     customary standards and practices.
       ``(ii) Standards and practices.--The Administrator shall by 
     regulation establish as standards and practices for the 
     purpose of clause (i)--

       ``(I) the American Society for Testing and Materials (ASTM) 
     Standard E1527-94, entitled `Standard Practice for 
     Environmental Site Assessments: Phase I Environmental Site 
     Assessment Process'; or
       ``(II) alternative standards and practices under clause 
     (iii).

       ``(iii) Alternative standards and practices.--

       ``(I) In general.--The Administrator may by regulation 
     issue alternative standards and practices or designate 
     standards developed by other organizations than the American 
     Society for Testing and Materials after conducting a study of 
     commercial and industrial practices concerning the transfer 
     of real property in the United States.
       ``(II) Considerations.--In issuing or designating 
     alternative standards and practices under subclause (I), the 
     Administrator shall consider including each of the following:

       ``(aa) The results of an inquiry by an environmental 
     professional.
       ``(bb) Interviews with past and present owners, operators, 
     and occupants of the facility and the facility's real 
     property for the purpose of gathering information regarding 
     the potential for contamination at the facility and the 
     facility's real property.
       ``(cc) Reviews of historical sources, such as chain of 
     title documents, aerial photographs, building department 
     records, and land use records to determine previous uses and 
     occupancies of the real property since the property was first 
     developed.
       ``(dd) Searches for recorded environmental cleanup liens, 
     filed under Federal, State, or local law, against the 
     facility or the facility's real property.
       ``(ee) Reviews of Federal, State, and local government 
     records (such as waste disposal records), underground storage 
     tank records, and hazardous waste handling, generation, 
     treatment, disposal, and spill records, concerning 
     contamination at or near the facility or the facility's real 
     property.
       ``(ff) Visual inspections of the facility and facility's 
     real property and of adjoining properties.
       ``(gg) Specialized knowledge or experience on the part of 
     the defendant.
       ``(hh) The relationship of the purchase price to the value 
     of the property if the property was uncontaminated.
       ``(ii) Commonly known or reasonably ascertainable 
     information about the property.
       ``(jj) The degree of obviousness of the presence or likely 
     presence of contamination at the property, and the ability to 
     detect such contamination by appropriate investigation.
       ``(iv) Site inspection and title search.--In the case of 
     property for residential use or other similar use purchased 
     by a nongovernmental or noncommercial entity, a facility 
     inspection and title search that reveal no basis for further 
     investigation shall be considered to satisfy the requirements 
     of this subparagraph.''.
       (b) Standards and Practices.--
       (1) Establishment by regulation.--The Administrator of the 
     Environmental Protection Agency shall issue the regulation 
     required by section 101(35)(B)(ii) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (as added by subsection (a) not later than 1 year after 
     the date of enactment of this Act.
       (2) Interim standards and practices.--Until the 
     Administrator issues the regulation described in paragraph 
     (1), in making a determination under section 101(35)(B)(i) of 
     the Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (as added by subsection (a)), there 
     shall be taken into account--
       (A) any specialized knowledge or experience on the part of 
     the defendant;
       (B) the relationship of the purchase price to the value of 
     the property if the property was uncontaminated;
       (C) commonly known or reasonably ascertainable information 
     about the property;
       (D) the degree of obviousness of the presence or likely 
     presence of contamination at the property; and
       (E) the ability to detect the contamination by appropriate 
     investigation.
                          TITLE II--STATE ROLE

     SEC. 201. DELEGATION TO THE STATES OF AUTHORITIES WITH 
                   RESPECT TO NATIONAL PRIORITIES LIST FACILITIES.

       (a) In General.--Title I of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601 et seq.) (as amended by section 103) is amended by 
     adding at the end the following:

     ``SEC. 130. DELEGATION TO THE STATES OF AUTHORITIES WITH 
                   RESPECT TO NATIONAL PRIORITIES LIST FACILITIES.

       ``(a) Definitions.--In this section:
       ``(1) Comprehensive delegation state.--The term 
     `comprehensive delegation State', with respect to a facility, 
     means a State to which the Administrator has delegated 
     authority to perform all of the categories of delegable 
     authority.
       ``(2) Delegable authority.--The term `delegable authority' 
     means authority to perform (or ensure performance of) all of 
     the authorities included in any 1 or more of the categories 
     of authority:
       ``(A) Category a.--All authorities necessary to perform 
     technical investigations, evaluations, and risk analyses, 
     including--
       ``(i) a preliminary assessment or facility evaluation under 
     section 104;
       ``(ii) facility characterization under section 104;
       ``(iii) a remedial investigation under section 104;
       ``(iv) a facility-specific risk evaluation under section 
     131;
       ``(v) enforcement authority related to the authorities 
     described in clauses (i) through (iv); and
       ``(vi) any other authority identified by the Administrator 
     under subsection (b).
       ``(B) Category b.--All authorities necessary to perform 
     alternatives development and remedy selection, including--
       ``(i) a feasibility study under section 104; and
       ``(ii)(I) remedial action selection under section 121 
     (including issuance of a record of decision); or
       ``(II) remedial action planning under section 133(b)(5);
       ``(iii) enforcement authority related to the authorities 
     described in clauses (i) and (ii); and
       ``(iv) any other authority identified by the Administrator 
     under subsection (b).
       ``(C) Category c.--All authorities necessary to perform 
     remedial design, including--
       ``(i) remedial design under section 121;
       ``(ii) enforcement authority related to the authority 
     described in clause (i); and
       ``(iii) any other authority identified by the Administrator 
     under subsection (b).
       ``(D) Category d.--All authorities necessary to perform 
     remedial action and operation and maintenance, including--
       ``(i) a removal under section 104;
       ``(ii) a remedial action under section 104 or section 10 
     (a) or (b);
       ``(iii) operation and maintenance under section 104(c);
       ``(iv) enforcement authority related to the authorities 
     described in clauses (i) through (iii); and
       ``(v) any other authority identified by the Administrator 
     under subsection (b).
       ``(E) Category e.--All authorities necessary to perform 
     information collection and allocation of liability, 
     including--
       ``(i) information collection activity under section 104(e);
       ``(ii) allocation of liability under section 136;
       ``(iii) a search for potentially responsible parties under 
     section 104 or 107;
       ``(iv) settlement under section 122;
       ``(v) enforcement authority related to the authorities 
     described in clauses (i) through (iv); and
       ``(vi) any other authority identified by the Administrator 
     under subsection (b).
       ``(3) Delegated state.--The term `delegated State' means a 
     State to which delegable authority has been delegated under 
     subsection (c), except as may be provided in a delegation 
     agreement in the case of a limited delegation of authority 
     under subsection (c)(5).
       ``(4) Delegated authority.--The term `delegated authority' 
     means a delegable authority that has been delegated to a 
     delegated State under this section.
       ``(5) Delegated facility.--The term `delegated facility' 
     means a non-federal listed facility with respect to which a 
     delegable authority has been delegated to a State under this 
     section.
       ``(6) Enforcement authority.--The term ``enforcement 
     authority'' means all authorities necessary to recover 
     response costs, require potentially responsible parties to 
     perform response actions, and otherwise compel implementation 
     of a response action, including--
       ``(A) issuance of an order under section 106(a);
       ``(B) a response action cost recovery under section 107;
       ``(C) imposition of a civil penalty or award under section 
     109 (a)(1)(D) or (b)(4);
       ``(D) settlement under section 122; and
       ``(E) any other authority identified by the Administrator 
     under subsection (b).
       ``(7) Noncomprehensive delegation state.--The term 
     `noncomprehensive delegation State', with respect to a 
     facility, means a State to which the Administrator has 
     delegated authority to perform fewer than all of the 
     categories of delegable authority.
       ``(8) Nondelegable authority.--The term `nondelegable 
     authority' means authority to--
       ``(A) make grants to community response organizations under 
     section 117; and
       ``(B) conduct research and development activities under any 
     provision of this Act.
       ``(9) Non-federal listed facility.--The term `non-federal 
     listed facility' means a facility that--
       ``(A) is not owned or operated by a department, agency, or 
     instrumentality of the United States in any branch of the 
     Government; and
       ``(B) is listed on the National Priorities List.
       ``(b) Identification of Delegable Authorities.--
       ``(1) In general.--The President shall by regulation 
     identify all of the authorities of

[[Page S243]]

     the Administrator that shall be included in a delegation of 
     any category of delegable authority described in subsection 
     (a)(2).
       ``(2) Limitation.--The Administrator shall not identify a 
     nondelegable authority for inclusion in a delegation of any 
     category of delegable authority.
       ``(c) Delegation of Authority.--
       ``(1) In general.--Pursuant to an approved State 
     application, the Administrator shall delegate authority to 
     perform 1 or more delegable authorities with respect to 1 or 
     more non-Federal listed facilities in the State.
       ``(2) Application.--An application under paragraph (1) 
     shall--
       ``(A) identify each non-Federal listed facility for which 
     delegation is requested;
       ``(B) identify each delegable authority that is requested 
     to be delegated for each non-Federal listed facility for 
     which delegation is requested; and
       ``(C) certify that the State, supported by such 
     documentation as the State, in consultation with the 
     Administrator, considers to be appropriate--
       ``(i) has statutory and regulatory authority (including 
     appropriate enforcement authority) to perform the requested 
     delegable authorities in a manner that is protective of human 
     health and the environment;
       ``(ii) has resources in place to adequately administer and 
     enforce the authorities;
       ``(iii) has procedures to ensure public notice and, as 
     appropriate, opportunity for comment on remedial action 
     plans, consistent with sections 117 and 133; and
       ``(iv) agrees to exercise its enforcement authorities to 
     require that persons that are potentially liable under 
     section 107(a), to the extent practicable, perform and pay 
     for the response actions set forth in each category described 
     in subsection (a)(2).
       ``(3) Approval of application.--
       ``(A) In general.--Not later than 60 days after receiving 
     an application under paragraph (2) by a State that is 
     authorized to administer and enforce the corrective action 
     requirements of a hazardous waste program under section 3006 
     of the Solid Waste Disposal Act (42 U.S.C. 6926), and not 
     later than 120 days after receiving an application from a 
     State that is not authorized to administer and enforce the 
     corrective action requirements of a hazardous waste program 
     under section 3006 of the Solid Waste Disposal Act (42 U.S.C. 
     6926), unless the State agrees to a greater length of time 
     for the Administrator to make a determination, the 
     Administrator shall--
       ``(i) issue a notice of approval of the application 
     (including approval or disapproval regarding any or all of 
     the facilities with respect to which a delegation of 
     authority is requested or with respect to any or all of the 
     authorities that are requested to be delegated); or
       ``(ii) if the Administrator determines that the State does 
     not have adequate legal authority, financial and personnel 
     resources, organization, or expertise to administer and 
     enforce any of the requested delegable authority, issue a 
     notice of disapproval, including an explanation of the basis 
     for the determination.
       ``(B) Failure to act.--If the Administrator does not issue 
     a notice of approval or notice of disapproval of all or any 
     portion of an application within the applicable time period 
     under subparagraph (A), the application shall be deemed to 
     have been granted.
       ``(C) Resubmission of application.--
       ``(i) In general.--If the Administrator disapproves an 
     application under paragraph (1), the State may resubmit the 
     application at any time after receiving the notice of 
     disapproval.
       ``(ii) Failure to act.--If the Administrator does not issue 
     a notice of approval or notice of disapproval of a 
     resubmitted application within the applicable time period 
     under subparagraph (A), the resubmitted application shall be 
     deemed to have been granted.
       ``(D) No additional terms or conditions.--The Administrator 
     shall not impose any term or condition on the approval of an 
     application that meets the requirements stated in paragraph 
     (2) (except that any technical deficiencies in the 
     application be corrected).
       ``(E) Judicial review.--The State (but no other person) 
     shall be entitled to judicial review under section 113(b) of 
     a disapproval of a resubmitted application.
       ``(4) Delegation agreement.--On approval of a delegation of 
     authority under this section, the Administrator and the 
     delegated State shall enter into a delegation agreement that 
     identifies each category of delegable authority that is 
     delegated with respect to each delegated facility.
       ``(5) Limited delegation.--
       ``(A) In general.--In the case of a State that does not 
     meet the requirements of paragraph (2)(C) the Administrator 
     may delegate to the State limited authority to perform, 
     ensure the performance of, or supervise or otherwise 
     participate in the performance of 1 or more delegable 
     authorities, as appropriate in view of the extent to which 
     the State has the required legal authority, financial and 
     personnel resources, organization, and expertise.
       ``(B) Special provisions.--In the case of a limited 
     delegation of authority to a State under subparagraph (A), 
     the Administrator shall specify the extent to which the State 
     shall be considered to be a delegated State for the purposes 
     of this Act.
       ``(d) Performance of Delegated Authorities.--
       ``(1) In general.--A delegated State shall have sole 
     authority (except as provided in paragraph (6)(B), subsection 
     (e)(4), and subsection (g)) to perform a delegated authority 
     with respect to a delegated facility.
       ``(2) Agreements for performance of delegated 
     authorities.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     a delegated State may enter into an agreement with a 
     political subdivision of the State, an interstate body 
     comprised of that State and another delegated State or 
     States, or a combination of such subdivisions or interstate 
     bodies, providing for the performance of any category of 
     delegated authority with respect to a delegated facility in 
     the State if the parties to the agreement agree in the 
     agreement to undertake response actions that are consistent 
     with this Act.
       ``(B) No agreement with potentially responsible party.--A 
     delegated State shall not enter into an agreement under 
     subparagraph (A) with a political subdivision or interstate 
     body that is, or includes as a component an entity that is, a 
     potentially responsible party with respect to a delegated 
     facility covered by the agreement.
       ``(C) Continuing responsibility.--A delegated State that 
     enters into an agreement under subparagraph (A)--
       ``(i) shall exercise supervision over and approve the 
     activities of the parties to the agreement; and
       ``(ii) shall remain responsible for ensuring performance of 
     the delegated authority.
       ``(3) Compliance with act.--
       ``(A) Noncomprehensive delegation states.--A 
     noncomprehensive delegation State shall implement each 
     applicable provision of this Act (including regulations and 
     guidance issued by the Administrator) so as to perform each 
     delegated authority with respect to a delegated facility in 
     the same manner as would the Administrator with respect to a 
     facility that is not a delegated facility.
       ``(B) Comprehensive delegation states.--
       ``(i) In general.--A comprehensive delegation State shall 
     implement applicable provisions of this Act or of similar 
     provisions of State law in a manner comporting with State 
     policy, so long as the remedial action that is selected 
     protects human health and the environment to the same extent 
     as would a remedial action selected by the Administrator 
     under section 121.
       ``(ii) Costlier remedial action.--

       ``(I) In general.--A delegated State may select a remedial 
     action for a delegated facility that has a greater response 
     cost (including operation and maintenance costs) than the 
     response cost for a remedial action that would be selected by 
     the Administrator under section 121, if the State pays for 
     the difference in cost.
       ``(II) No cost recovery.--If a delegated State selects a 
     more costly remedial action under subclause (I), the State 
     shall not be entitled to seek cost recovery under this Act or 
     any other Federal or State law from any other person for the 
     difference in cost.

       ``(4) Judicial review.--An order that is issued under 
     section 106 by a delegated State with respect to a delegated 
     facility shall be reviewable only in United States district 
     court under section 113.
       ``(5) Delisting of national priorities list facilities.--
       ``(A) Delisting.--After notice and an opportunity for 
     public comment, a delegated State may remove from the 
     National Priorities List all or part of a delegated 
     facility--
       ``(i) if the State makes a finding that no further action 
     is needed to be taken at the facility (or part of the 
     facility) under any applicable law to protect human health 
     and the environment consistent with section 121(a) (1) and 
     (2);
       ``(ii) with the concurrence of the potentially responsible 
     parties, if the State has an enforceable agreement to perform 
     all required remedial action and operation and maintenance 
     for the facility or if the cleanup will proceed at the 
     facility under section 3004 (u) or (v) of the Solid Waste 
     Disposal Act (42 U.S.C. 6924 (u), (v)); or
       ``(iii) if the State is a comprehensive delegation State 
     with respect to the facility.
       ``(B) Effect of delisting.--A delisting under subparagraph 
     (A) (ii) or (iii) shall not affect--
       ``(i) the authority or responsibility of the State to 
     complete remedial action and operation and maintenance;
       ``(ii) the eligibility of the State for funding under this 
     Act;
       ``(iii) notwithstanding the limitation on section 
     104(c)(1), the authority of the Administrator to make 
     expenditures from the Fund relating to the facility; or
       ``(iv) the enforceability of any consent order or decree 
     relating to the facility.
       ``(C) No relisting.--
       ``(i) In general.--Except as provided in clause (ii), the 
     Administrator shall not relist on the National Priorities 
     List a facility or part of a facility that has been removed 
     from the National Priorities List under subparagraph (A).
       ``(ii) Cleanup not completed.--The Administrator may relist 
     a facility or part of a facility that has been removed from 
     the National Priorities List under subparagraph (A) if 
     cleanup is not completed in accordance with the enforceable 
     agreement under subparagraph (A)(ii).
       ``(6) Cost recovery.--
       ``(A) Recovery by a delegated state.--Of the amount of any 
     response costs recovered from a responsible party by a 
     delegated State for a delegated facility under section 107--
       ``(i) 25 percent of the amount of any Federal response cost 
     recovered with respect to

[[Page S244]]

     a facility, plus an amount equal to the amount of response 
     costs incurred by the State with respect to the facility, may 
     be retained by the State; and
       ``(ii) the remainder shall be deposited in the Hazardous 
     Substances Superfund established under subchapter A of 
     chapter 98 of the Internal Revenue Code of 1986.
       ``(B) Recovery by the administrator.--
       ``(i) In general.--The Administrator may take action under 
     section 107 to recover response costs from a responsible 
     party for a delegated facility if--

       ``(I) the delegated State notifies the Administrator in 
     writing that the delegated State does not intend to pursue 
     action for recovery of response costs under section 107 
     against the responsible party; or
       ``(II) the delegated State fails to take action to recover 
     response costs within a reasonable time in light of 
     applicable statutes of limitation.

       ``(ii) Notice.--If the Administrator proposes to commence 
     an action for recovery of response costs under section 107, 
     the Administrator shall give the State written notice and 
     allow the State at least 90 days after receipt of the notice 
     to commence the action.
       ``(iii) No further action.--If the Administrator takes 
     action against a potentially responsible party under section 
     107 relating to a release from a delegated facility, the 
     delegated State may not take any other action for recovery of 
     response costs relating to that release under this Act or any 
     other Federal or State law.
       ``(e) Federal Responsibilities and Authorities.--
       ``(1) Review use of funds.--
       ``(A) In general.--The Administrator shall review the 
     certification submitted by the Governor under subsection 
     (f)(8) not later than 120 days after the date of its 
     submission.
       ``(B) Finding of use of funds inconsistent with this act.--
     If the Administrator finds that funds were used in a manner 
     that is inconsistent with this Act, the Administrator shall 
     notify the Governor in writing not later than 120 days after 
     receiving the Governor's certification.
       ``(C) Explanation.--not later than 30 days after receiving 
     a notice under subparagraph (B), the Governor shall--
       ``(i) explain why the Administrator's finding is in error; 
     or
       ``(ii) explain to the Administrator's satisfaction how any 
     misapplication or misuse of funds will be corrected.
       ``(D) Failure to explain.--If the Governor fails to make an 
     explanation under subparagraph (C) to the Administrator's 
     satisfaction, the Administrator may request reimbursement of 
     such amount of funds as the Administrator finds was 
     misapplied or misused.
       ``(E) Repayment of funds.--If the Administrator fails to 
     obtain reimbursement from the State within a reasonable 
     period of time, the Administrator may, after 30 days' notice 
     to the State, bring a civil action in United States district 
     court to recover from the delegated State any funds that were 
     advanced for a purpose or were used for a purpose or in a 
     manner that is inconsistent with this Act.
       ``(2) Withdrawal of delegation of authority.--
       ``(A) Delegated states.--If at any time the Administrator 
     finds that contrary to a certification made under subsection 
     (c)(2), a delegated State--
       ``(i) lacks the required financial and personnel resources, 
     organization, or expertise to administer and enforce the 
     requested delegated authorities;
       ``(ii) does not have adequate legal authority to request 
     and accept delegation; or
       ``(iii) is failing to materially carry out the State's 
     delegated authorities,

     the Administrator may withdraw a delegation of authority with 
     respect to a delegated facility after providing notice and 
     opportunity to correct deficiencies under subparagraph (D).
       ``(B) States with limited delegations of authority.--If the 
     Administrator finds that a State to which a limited 
     delegation of authority was made under subsection (c)(5) has 
     materially breached the delegation agreement, the 
     Administrator may withdraw the delegation after providing 
     notice and opportunity to correct deficiencies under 
     subparagraph (D).
       ``(C) Notice and opportunity to correct.--If the 
     Administrator proposes to withdraw a delegation of authority 
     for any or all delegated facilities, the Administrator shall 
     give the State written notice and allow the State at least 90 
     days after the date of receipt of the notice to correct the 
     deficiencies cited in the notice.
       ``(D) Failure to correct.--If the Administrator finds that 
     the deficiencies have not been corrected within the time 
     specified in a notice under subparagraph (C), the 
     Administrator may withdraw delegation of authority after 
     providing public notice and opportunity for comment.
       ``(E) Judicial review.--A decision of the Administrator to 
     withdraw a delegation of authority shall be subject to 
     judicial review under section 113(b).
       ``(3) Rule of construction.--Nothing in this section shall 
     be construed to affect the authority of the Administrator 
     under this Act to--
       ``(A) take a response action at a facility listed on the 
     National Priorities List in a State to which a delegation of 
     authority has not been made under this section or at a 
     facility not included in a delegation of authority; or
       ``(B) perform a delegable authority with respect to a 
     facility that is not included among the authorities delegated 
     to a State with respect to the facility.
       ``(4) Retained authority.--
       ``(A) Notice.--Before performing an emergency removal 
     action under section 104 at a delegated facility, the 
     Administrator shall notify the delegated States of the 
     Administrator's intention to perform the removal.
       ``(B) State action.--If, after receiving a notice under 
     subparagraph (A), the delegated State notifies the 
     Administrator within 48 hours that the State intends to take 
     action to perform an emergency removal at the delegated 
     facility, the Administrator shall not perform the emergency 
     removal action unless the Administrator determines that the 
     delegated State has failed to act within a reasonable period 
     of time to perform the emergency removal.
       ``(C) Immediate and significant danger.--If the 
     Administrator finds that an emergency at a delegated facility 
     poses an immediate and significant danger to human health or 
     the environment, the Administrator shall not be required to 
     provide notice under subparagraph (A).
       ``(5) Prohibited actions.--Except as provided in 
     subsections (d)(6)(B), (e)(4), and (g) or except with the 
     concurrence of the delegated State, the President, the 
     Administrator, and the Attorney General shall not take any 
     action under section 104, 106, 107, 109, 121, or 122 in 
     performance of a delegable authority that has been delegated 
     to a State with respect to a delegated facility.
       ``(f) Funding.--
       ``(1) In general.--The Administrator shall provide grants 
     to or enter into contracts or cooperative agreements with 
     delegated States to carry out this section.
       ``(2) No claim against fund.--Notwithstanding any other 
     law, funds to be granted under this subsection shall not 
     constitute a claim against the Fund or the United States.
       ``(3) Insufficient funds available.--If funds are 
     unavailable in any fiscal year to satisfy all commitments 
     made under this section by the Administrator, the 
     Administrator shall have sole authority and discretion to 
     establish priorities and to delay payments until funds are 
     available.
       ``(4) Determination of costs on a facility-specific 
     basis.--The Administrator shall--
       ``(A) determine--
       ``(i) the delegable authorities the costs of performing 
     which it is practicable to determine on a facility-specific 
     basis; and
       ``(ii) the delegable authorities the costs of performing 
     which it is not practicable to determine on a facility-
     specific basis; and
       ``(B) publish a list describing the delegable authorities 
     in each category.
       ``(5) Facility-specific grants.--The costs described in 
     paragraph (4)(A)(ii) shall be funded as such costs arise with 
     respect to each delegated facility.
       ``(6) Nonfacility-specific grants.--
       ``(A) In general.--The costs described in paragraph 
     (4)(A)(ii) shall be funded through nonfacility-specific 
     grants under this paragraph.
       ``(B) Formula.--The Administrator shall establish a formula 
     under which funds available for nonfacility-specific grants 
     shall be allocated among the delegated States, taking into 
     consideration--
       ``(i) the cost of administering the delegated authority;
       ``(ii) the number of sites for which the State has been 
     delegated authority;
       ``(iii) the types of activities for which the State has 
     been delegated authority;
       ``(iv) the number of facilities within the State that are 
     listed on the National Priorities List or are delegated 
     facilities under section 130(d)(5);
       ``(v) the number of other high priority facilities within 
     the State;
       ``(vi) the need for the development of the State program;
       ``(vii) the need for additional personnel;
       ``(viii) the amount of resources available through State 
     programs for the cleanup of contaminated sites; and
       ``(ix) the benefit to human health and the environment of 
     providing the funding.
       ``(7) Permitted use of grant funds.--A delegated State may 
     use grant funds, in accordance with this Act and the National 
     Contingency Plan, to take any action or perform any duty 
     necessary to implement the authority delegated to the State 
     under this section.
       ``(8) Cost share.--
       ``(A) Assurance.--A delegated State to which a grant is 
     made under this subsection shall provide an assurance that 
     the State will pay any amount required under section 
     104(c)(3).
       ``(B) Prohibited use of grant funds.--A delegated State to 
     which a grant is made under this subsection may not use grant 
     funds to pay any amount required under section 104(c)(3).
       ``(9) Certification of use of funds.--
       ``(A) In general.--Not later than 1 year after the date on 
     which a delegated State receives funds under this subsection, 
     and annually thereafter, the Governor of the State shall 
     submit to the Administrator--
       ``(i) a certification that the State has used the funds in 
     accordance with the requirements of this Act and the National 
     Contingency Plan; and
       ``(ii) information describing the manner in which the State 
     used the funds.

[[Page S245]]

       ``(B) Regulations.--Not later than 1 year after the date of 
     enactment of this section, the Administrator shall issue a 
     regulation describing with particularity the information that 
     a State shall be required to provide under subparagraph 
     (A)(ii).
       ``(g) Cooperative Agreements.--Nothing in this section 
     shall affect the authority of the Administrator under section 
     104(d)(1) to enter into a cooperative agreement with a State, 
     a political subdivision of a State, or an Indian tribe to 
     carry out actions under section 104.''.
       (b) State Cost Share.--Section 104(c) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9604(c)) is amended--
       (1) by striking ``(c)(1) Unless'' and inserting the 
     following:
       ``(c) Miscellaneous Limitations and Requirements.--
       ``(1) Continuance of obligations from fund.--Unless'';
       (2) by striking ``(2) The President'' and inserting the 
     following:
       ``(2) Consultation.--The President''; and
       (3) by striking paragraph (3) and inserting the following:
       ``(3) State cost share.--
       ``(A) In general.--The Administrator shall not provide any 
     remedial action under this section unless the State in which 
     the release occurs first enters into a contract or 
     cooperative agreement with the Administrator providing 
     assurances deemed adequate by the Administrator that the 
     State will pay, in cash or through in-kind contributions, a 
     specified percentage of the costs of the remedial action and 
     operation and maintenance costs.
       ``(B) Activities with respect to which state cost share is 
     required.--No State cost share shall be required except for 
     remedial actions under section 104.
       ``(C) Specified percentage.--
       ``(i) In general.--The specified percentage of costs that a 
     State shall be required to share shall be the lower of 10 
     percent or the percentage determined under clause (ii).
       ``(ii) Maximum in accordance with law prior to 1996 
     amendments.--

       ``(I) On petition by a State, the Director of the Office of 
     Management and Budget (referred to in this clause as the 
     `Director'), after providing public notice and opportunity 
     for comment, shall establish a cost share percentage, which 
     shall be uniform for all facilities in the State, at the 
     percentage rate at which the total amount of anticipated 
     payments by the State under the cost share for all facilities 
     in the State for which a cost share is required most closely 
     approximates the total amount of estimated cost share 
     payments by the State for facilities that would have been 
     required under cost share requirements that were applicable 
     prior to the date of enactment of this subparagraph, adjusted 
     to reflect the extent to which the State's ability to recover 
     costs under this Act were reduced by reason of enactment of 
     amendments to this Act by the Superfund Cleanup Acceleration 
     Act of 1997.
       ``(II) The Director may adjust a State's cost share under 
     this clause not more frequently than every 3 years.

       ``(D) Indian tribes.--In the case of remedial action to be 
     taken on land or water held by an Indian Tribe, held by the 
     United States in trust for Indians, held by a member of an 
     Indian Tribe (if the land or water is subject to a trust 
     restriction on alienation), or otherwise within the borders 
     of an Indian reservation, the requirements of this paragraph 
     shall not apply.''.
       (c) Uses of Fund.--Section 111(a) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9611(a)) is amended by inserting after 
     paragraph (6) the following:
       ``(7) Grants to delegated states.--Making a grant to a 
     delegated State under section 130(f).''.
       (d) Relationship to Other Laws.--
       (1) In general.--Section 114(b) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9614(b)) is amended by striking ``removal'' 
     each place it appears and inserting ``response''.
       (2) Conforming amendment.--Section 101(37)(B) of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9601(37)(B)) is amended by 
     striking ``section 114(c)'' and inserting ``section 114(b)''.
                   TITLE III--COMMUNITY PARTICIPATION

     SEC. 301. COMMUNITY RESPONSE ORGANIZATIONS; TECHNICAL 
                   ASSISTANCE GRANTS; IMPROVEMENT OF PUBLIC 
                   PARTICIPATION IN THE SUPERFUND DECISIONMAKING 
                   PROCESS.

       (a) Amendment.--Section 117 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9617) is amended by striking subsection (e) 
     and inserting the following:
       ``(e) Community Response Organizations.--
       ``(1) Establishment.--The Administrator shall create a 
     community response organization for a facility that is listed 
     or proposed for listing on the National Priorities List--
       ``(A) if the Administrator determines that a representative 
     public forum will be helpful in promoting direct, regular, 
     and meaningful consultation among persons interested in 
     remedial action at the facility; or
       ``(B) at the request of--
       ``(i) 50 individuals residing in, or at least 20 percent of 
     the population of, the area in which the facility is located;
       ``(ii) a representative group of the potentially 
     responsible parties; or
       ``(iii) any local governmental entity with jurisdiction 
     over the facility.
       ``(2) Responsibilities.--A community response organization 
     shall--
       ``(A) solicit the views of the local community on various 
     issues affecting the development and implementation of 
     remedial actions at the facility;
       ``(B) serve as a conduit of information to and from the 
     community to appropriate Federal, State, and local agencies 
     and potentially responsible parties;
       ``(C) serve as a representative of the local community 
     during the remedial action planning and implementation 
     process; and
       ``(D) provide reasonable notice of and opportunities to 
     participate in the meetings and other activities of the 
     community response organization.
       ``(3) Access to documents.--The Administrator shall provide 
     a community response organization access to documents in 
     possession of the Federal Government regarding response 
     actions at the facility that do not relate to liability and 
     are not protected from disclosure as confidential business 
     information.
       ``(4) Community response organization input.--
       ``(A) Consultation.--The Administrator (or if the remedial 
     action plan is being prepared or implemented by a party other 
     than the Administrator, the other party) shall--
       ``(i) consult with the community response organization in 
     developing and implementing the remedial action plan; and
       ``(ii) keep the community response organization informed of 
     progress in the development and implementation of the 
     remedial action plan.
       ``(B) Timely submission of comments.--The community 
     response organization shall provide its comments, 
     information, and recommendations in a timely manner to the 
     Administrator (and other party).
       ``(C) Consensus.--The community response organization shall 
     attempt to achieve consensus among its members before 
     providing comments and recommendations to the Administrator 
     (and other party), but if consensus cannot be reached, the 
     community response organization shall report or allow 
     presentation of divergent views.
       ``(5) Technical assistance grants.--
       ``(A) Preferred recipient.--If a community response 
     organization exists for a facility, the community response 
     organization shall be the preferred recipient of a technical 
     assistance grant under subsection (f).
       ``(B) Prior award.--If a technical assistance grant 
     concerning a facility has been awarded prior to establishment 
     of a community response organization--
       ``(i) the recipient of the grant shall coordinate its 
     activities and share information and technical expertise with 
     the community response organization; and
       ``(ii) 1 person representing the grant recipient shall 
     serve on the community response organization.
       ``(6) Membership.--
       ``(A) Number.--The Administrator shall select not less than 
     15 nor more than 20 persons to serve on a community response 
     organization.
       ``(B) Notice.--Before selecting members of the community 
     response organization, the Administrator shall provide a 
     notice of intent to establish a community response 
     organization to persons who reside in the local community.
       ``(C) Represented groups.--The Administrator shall, to the 
     extent practicable, appoint members to the community response 
     organization from each of the following groups of persons:
       ``(i) Persons who reside or own residential property near 
     the facility;
       ``(ii) Persons who, although they may not reside or own 
     property near the facility, may be adversely affected by a 
     release from the facility.
       ``(iii) Persons who are members of the local public health 
     or medical community and are practicing in the community.
       ``(iv) Representatives of Indian tribes or Indian 
     communities that reside or own property near the facility or 
     that may be adversely affected by a release from the 
     facility.
       ``(v) Local representatives of citizen, environmental, or 
     public interest groups with members residing in the 
     community.
       ``(vi) Representatives of local governments, such as city 
     or county governments, or both, and any other governmental 
     unit that regulates land use or land use planning in the 
     vicinity of the facility.
       ``(vii) Members of the local business community.
       ``(D) Proportion.--Local residents shall comprise not less 
     than 60 percent of the membership of a community response 
     organization.
       ``(E) Pay.--Members of a community response organization 
     shall serve without pay.
       ``(7) Participation by government representatives.--
     Representatives of the Administrator, the Administrator of 
     the Agency for Toxic Substances and Disease Registry, other 
     Federal agencies, and the State, as appropriate, shall 
     participate in community response organization meetings to 
     provide information and technical expertise, but shall not be 
     members of the community response organization.
       ``(8) Administrative support.--The Administrator, to the 
     extent practicable, shall provide administrative services and 
     meeting

[[Page S246]]

     facilities for community response organizations.
       ``(9) FACA.--The Federal Advisory Committee Act (5 U.S.C. 
     App.) shall not apply to a community response organization.
       ``(f) Technical Assistance Grants.--
       ``(1) Definitions.--In this subsection:
       ``(A) Affected citizen group.--The term `affected citizen 
     group' means a group of 2 or more individuals who may be 
     affected by the release or threatened release of a hazardous 
     substance, pollutant, or contaminant at any facility on the 
     State Registry or the National Priorities List.
       ``(B) Technical assistance grant.--The term `technical 
     assistance grant' means a grant made under paragraph (2).
       ``(2) Authority.--
       ``(A) In general.--In accordance with a regulation issued 
     by the Administrator, the Administrator may make grants 
     available to affected citizen groups.
       ``(B) Availability of application process.--To ensure that 
     the application process for a technical assistance grant is 
     available to all affected citizen groups, the Administrator 
     shall periodically review the process and, based on the 
     review, implement appropriate changes to improve 
     availability.
       ``(3) Special rules.--
       ``(A) No matching contribution.--No matching contribution 
     shall be required for a technical assistance grant.
       ``(B) Availability in advance.--The Administrator shall 
     make all or a portion (but not less than $5,000 or 10 percent 
     of the grant amount, whichever is greater) of the grant 
     amount available to a grant recipient in advance of the total 
     expenditures to be covered by the grant.
       ``(4) Limit per facility.--
       ``(A) 1 grant per facility.--Not more than 1 technical 
     assistance grant may be made with respect to a single 
     facility, but the grant may be renewed to facilitate public 
     participation at all stages of response action.
       ``(B) Duration.--The Administrator shall set a limit by 
     regulation on the number of years for which a technical 
     assistance grant may be made available based on the duration, 
     type, and extent of response action at a facility.
       ``(5) Availability for facilities not yet listed.--Subject 
     to paragraph (6), 1 or more technical assistance grants shall 
     be made available to affected citizen groups in communities 
     containing facilities on the State Registry as of the date on 
     which the grant is awarded.
       ``(6) Funding limit.--
       ``(A) Percentage of total appropriations.--Not more than 2 
     percent of the funds made available to carry out this Act for 
     a fiscal year may be used to make technical assistance 
     grants.
       ``(B) Allocation between listed and unlisted facilities.--
     Not more than the portion of funds equal to \1/8\ of the 
     total amount of funds used to make technical assistance 
     grants for a fiscal year may be used for technical assistance 
     grants with respect to facilities not listed on the National 
     Priorities List.
       ``(7) Funding amount.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the amount of a technical assistance grant may not exceed 
     $50,000 for a single grant recipient.
       ``(B) Increase.--The Administrator may increase the amount 
     of a technical assistance grant, or renew a previous 
     technical assistance grant, up to a total grant amount not 
     exceeding $100,000, to reflect the complexity of the response 
     action, the nature and extent of contamination at the 
     facility, the level of facility activity, projected total 
     needs as requested by the grant recipient, the size and 
     diversity of the affected population, and the ability of the 
     grant recipient to identify and raise funds from other non-
     Federal sources.
       ``(8) Use of technical assistance grants.--
       ``(A) Permitted use.--A technical assistance grant may be 
     used to obtain technical assistance in interpreting 
     information with regard to--
       ``(i) the nature of the hazardous substances located at a 
     facility;
       ``(ii) the work plan;
       ``(iii) the facility evaluation;
       ``(iv) a proposed remedial action plan, a remedial action 
     plan, and a final remedial design for a facility;
       ``(v) response actions carried out at the facility; and
       ``(vi) operation and maintenance activities at the 
     facility.
       ``(B) Prohibited use.--A technical assistance grant may not 
     be used for the purpose of collecting field sampling data.
       ``(9) Grant guidelines.--
       ``(A) In general.--Not later than 90 days after the date of 
     enactment of this paragraph, the Administrator shall develop 
     and publish guidelines concerning the management of technical 
     assistance grants by grant recipients.
       ``(B) Hiring of experts.--A recipient of a technical 
     assistance grant that hires technical experts and other 
     experts shall act in accordance with the guidelines under 
     subparagraph (A).
       ``(g) Improvement of Public Participation in the Superfund 
     Decisionmaking Process.--
       ``(1) In general.--
       ``(A) Meetings and notice.--In order to provide an 
     opportunity for meaningful public participation in every 
     significant phase of response activities under this Act, the 
     Administrator shall provide the opportunity for, and publish 
     notice of, public meetings before or during performance of--
       ``(i) a facility evaluation, as appropriate;
       ``(ii) announcement of a proposed remedial action plan; and
       ``(iii) completion of a final remedial design.
       ``(B) Information.--A public meeting under subparagraph (A) 
     shall be designed to obtain information from the community, 
     and disseminate information to the community, with respect to 
     a facility concerning the Administrator's facility activities 
     and pending decisions.
       ``(2) Participants and subject.--The Administrator shall 
     provide reasonable notice of an opportunity for public 
     participation in meetings in which--
       ``(A) the participants include Federal officials (or State 
     officials, if the State is conducting response actions under 
     a delegated or authorized program or through facility 
     referral) with authority to make significant decisions 
     affecting a response action, and other persons (unless all of 
     such other persons are coregulators that are not potentially 
     responsible parties or are government contractors); and
       ``(B) the subject of the meeting involves discussions 
     directly affecting--
       ``(i) a legally enforceable work plan document, or any 
     significant amendment to the document, for a removal, 
     facility evaluation, proposed remedial action plan, final 
     remedial design, or remedial action for a facility on the 
     National Priorities List; or
       ``(ii) the final record of information on which the 
     Administrator will base a hazard ranking system score for a 
     facility.
       ``(3) Limitation.--Nothing in this subsection shall be 
     construed--
       ``(A) to provide for public participation in or otherwise 
     affect any negotiation, meeting, or other discussion that 
     concerns only the potential liability or settlement of 
     potential liability of any person, whether prior to or 
     following the commencement of litigation or administrative 
     enforcement action;
       ``(B) to provide for public participation in or otherwise 
     affect any negotiation, meeting, or other discussion that is 
     attended only by representatives of the United States (or of 
     a department, agency, or instrumentality of the United 
     States) with attorneys representing the United States (or of 
     a department, agency, or instrumentality of the United 
     States); or
       ``(C) to waive, compromise, or affect any privilege that 
     may be applicable to a communication related to an activity 
     described in subparagraph (A) or (B).
       ``(4) Evaluation.--
       ``(A) In general.--To the extent practicable, before and 
     during the facility evaluation, the Administrator shall 
     solicit and evaluate concerns, interests, and information 
     from the community.
       ``(B) Procedure.--An evaluation under subparagraph (A) 
     shall include, as appropriate--
       ``(i) face-to-face community surveys to identify the 
     location of private drinking water wells, historic and 
     current or potential use of water, and other environmental 
     resources in the community;
       ``(ii) a public meeting;
       ``(iii) written responses to significant concerns; and
       ``(iv) other appropriate participatory activities.
       ``(5) Views and preferences.--
       ``(A) Solicitation.--During the facility evaluation, the 
     Administrator (or other person performing the facility 
     evaluation) shall solicit the views and preferences of the 
     community on the remediation and disposition of hazardous 
     substances or pollutants or contaminants at the facility.
       ``(B) Consideration.--The views and preferences of the 
     community shall be described in the facility evaluation and 
     considered in the screening of remedial alternatives for the 
     facility.
       ``(6) Alternatives.--Members of the community may propose 
     remedial action alternatives, and the Administrator shall 
     consider such alternatives in the same manner as the 
     Administrator considers alternatives proposed by potentially 
     responsible parties.
       ``(7) Information.--
       ``(A) The community.--The Administrator, with all 
     significant phases of the response action at the facility.
       ``(B) Technical staff.--The Administrator shall ensure that 
     information gathered from the community during community 
     outreach efforts reaches appropriate technical staff i
       ``(B) Technical staff.--The Administrator shall ensure that 
     information gathered from the community during community 
     outreach efforts reaches appropriate technical staff in a 
     timely and effective manner.
       ``(C) Responses.--The Administrator shall ensure that 
     reasonable written or other appropriate responses will be 
     made to such information.
       ``(8) Nonprivileged information.--Throughout all phases of 
     response action at a facility, the Administrator shall make 
     all nonprivileged information relating to a facility 
     available to the public for inspection and copying without 
     the need to file a formal request, subject to reasonable 
     service charges as appropriate.
       ``(9) Presentation.--
       ``(A) Documents.--
       ``(i) In general.--The Administrator, in carrying out 
     responsibilities under this Act, shall ensure that the 
     presentation of information on risk is complete and 
     informative.
       ``(ii) Risk.--To the extent feasible, documents prepared by 
     the Administrator and made available to the public that 
     purport to

[[Page S247]]

     describe the degree of risk to human health shall be 
     consistent with the risk communication principles outlined in 
     section 131(c).
       ``(B) Comparisons.--The Administrator, in carrying out 
     responsibilities under this Act, shall provide comparisons of 
     the level of risk from hazardous substances found at the 
     facility to comparable levels of risk from those hazardous 
     substances ordinarily encountered by the general public 
     through other sources of exposure.
       ``(10) Requirements.--
       ``(A) Lengthy removal actions.--Notwithstanding any other 
     provision of this subsection, in the case of a removal action 
     taken in accordance with section 104 that is expected to 
     require more than 180 days to complete, and in any case in 
     which implementation of a removal action is expected to 
     obviate or that in fact obviates the need to conduct a long-
     term remedial action--
       ``(i) the Administrator shall, to the maximum extent 
     practicable, allow for public participation consistent with 
     paragraph (1); and
       ``(ii) the removal action shall achieve the goals of 
     protecting human health and the environment in accordance 
     with section 121(a)(1).
       ``(B) Other removal actions.--In the case of all other 
     removal actions, the Administrator may provide the community 
     with notice of the anticipated removal action and a public 
     comment period, as appropriate.''.
       (b) Issuance of Guidelines.--The Administrator of the 
     Environmental Protection Agency shall issue guidelines under 
     section 117(e)(9) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980, as added 
     by subsection (a), not later than 90 days after the date of 
     enactment of this Act.
                TITLE IV--SELECTION OF REMEDIAL ACTIONS

     SEC. 401. DEFINITIONS.

       Section 101 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9601) (as 
     amended by section 105(a)) is amended by adding at the end 
     the following:
       ``(41) Actual or planned or reasonably anticipated future 
     use of the land and water resources.--The term `actual or 
     planned or reasonably anticipated future use of the land and 
     water resources' means--
       ``(A) the actual use of the land, surface water, and ground 
     water at a facility on the date of submittal of the proposed 
     remedial action plan; and
       ``(B)(i) with respect to land--
       ``(I) the use of land that is authorized by the zoning or 
     land use decisions formally adopted, at or prior to the time 
     of the initiation of the facility evaluation, by the local 
     land use planning authority for a facility and the land 
     immediately adjacent to the facility; and
       ``(II) any other reasonably anticipated use that the local 
     land use authority, in consultation with the community 
     response organization (if any), determines to have a 
     substantial probability of occurring based on recent (as of 
     the time of the determination) development patterns in the 
     area in which the facility is located and on population 
     projections for the area; and
       ``(ii) with respect to water resources, the future use of 
     the surface water and ground water that is potentially 
     affected by releases from a facility that is reasonably 
     anticipated, by the governmental unit that regulates surface 
     or ground water use or surface or ground water use planning 
     in the vicinity of the facility, on the date of submission of 
     the proposed remedial action plan.
       ``(42) Sustainability.--The term `sustainability'', for the 
     purpose of section 121(a)(1)(B)(ii), means the ability of an 
     ecosystem to continue to function within the normal range of 
     its variability absent the effects of a release of a 
     hazardous substance.''.

     SEC. 402. SELECTION AND IMPLEMENTATION OF REMEDIAL ACTIONS.

       Section 121 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9621) is 
     amended--
       (1) by striking the section heading and subsections (a) and 
     (b) and inserting the following:

     ``SEC. 121. SELECTION AND IMPLEMENTATION OF REMEDIAL ACTIONS.

       ``(a) General Rules.--
       ``(1) Selection of cost-effective remedial action that 
     protects human health and the environment.--
       ``(A) In general.--The Administrator shall select a cost-
     effective remedial action that achieves the goals of 
     protecting human health and the environment as stated in 
     subparagraph (B), and complies with other applicable Federal 
     and State laws in accordance with subparagraph (C) on the 
     basis of a facility-specific risk evaluation in accordance 
     with section 131 and in accordance with the criteria stated 
     in subparagraph (D) and the requirements of paragraph (2).
       ``(B) Goals of protecting human health and the 
     environment.--
       ``(i) Protection of human health.--A remedial action shall 
     be considered to protect human health if, considering the 
     expected exposures associated with the actual or planned or 
     reasonably anticipated future use of the land and water 
     resources and on the basis of a facility-specific risk 
     evaluation in accordance with section 131, the remedial 
     action achieves a residual risk--

       ``(I) from exposure to nonthreshold carcinogenic hazardous 
     substances, pollutants, or contaminants such that cumulative 
     lifetime additional cancer from exposure to hazardous 
     substances from releases at the facility range from 10-4 
     to 10-6 for the affected population; and
       ``(II) from exposure to threshold carcinogenic and  
     noncarcinogenic hazardous substances, pollutants, or 
     contaminants at the facility, that does not exceed a hazard 
     index of 1.

       ``(ii) Protection of the environment.--A remedial action 
     shall be considered to be protective of the environment if 
     the remedial action--

       ``(I) protects ecosystems from significant threats to their 
     sustainability arising from exposure to releases of hazardous 
     substances at a site; and
       ``(II) does not cause a greater threat to the 
     sustainability of ecosystems than a release of a hazardous 
     substance.

       ``(iii) Protection of ground water.--A remedial action 
     shall prevent or eliminate any actual human ingestion of 
     drinking water containing any hazardous substance from the 
     release at levels--

       ``(I) in excess of the maximum contaminant level 
     established under the Safe Drinking Water Act (42 U.S.C. 300f 
     et seq.); or
       ``(II) if no such maximum contaminant level has been 
     established for the hazardous substance, at levels that meet 
     the goals for protection of human health under clause (i).

       ``(C) Compliance with federal and state laws.--
       ``(i) Substantive requirements.--

       ``(I) In general.--Subject to clause (iii) and 
     subparagraphs (A) and (D) and paragraph (2), a remedial 
     action shall--

       ``(aa) comply with the substantive requirements of all 
     promulgated standards, requirements, criteria, and 
     limitations under each Federal law and each State law 
     relating to the environment or to the siting of facilities 
     (including a State law that imposes a more stringent 
     standard, requirement, criterion, or limitation than Federal 
     law) that is applicable to the conduct or operation of the 
     remedial action or to determination of the level of cleanup 
     for remedial actions; and
       ``(bb) comply with or attain any other promulgated 
     standard, requirement, criterion, or limitation under any 
     State law relating to the environment or siting of 
     facilities, as determined by the State, after the date of 
     enactment of the Superfund Cleanup Acceleration Act of 1997, 
     through a rulemaking procedure that includes public notice, 
     comment, and written response comment, and opportunity for 
     judicial review, but only if the State demonstrates that the 
     standard, requirement, criterion, or limitation is of general 
     applicability and is consistently applied to remedial actions 
     under State law.

       ``(II) Identification of facilities.--Compliance with a 
     State standard, requirement, criterion, or limitation 
     described in subclause (I) shall be required at a facility 
     only if the standard, requirement, criterion, or limitation 
     has been identified by the State to the Administrator in a 
     timely manner as being applicable to the facility.
       ``(III) Published lists.--Each State shall publish a 
     comprehensive list of the standards, requirements, criteria, 
     and limitations that the State may apply to remedial actions 
     under this Act, and shall revise the list periodically, as 
     requested by the Administrator.
       ``(IV) Contaminated media.--Compliance with this clause 
     shall not be required with respect to return, replacement, or 
     disposal of contaminated media or residuals of contaminated 
     media into the same media in or very near then-existing areas 
     of contamination onsite at a facility.

       ``(ii) Procedural requirements.--Procedural requirements of 
     Federal and State standards, requirements, criteria, and 
     limitations (including permitting requirements) shall not 
     apply to response actions conducted onsite at a facility.
       ``(iii) Waiver provisions.--

       ``(I) Determination by the president.--The Administrator 
     shall evaluate and determine if it is not appropriate for a 
     remedial action to attain a Federal or State standard, 
     requirement, criterion, or limitation as required by clause 
     (i).
       ``(II) Selection of remedial action that does not comply.--
     The Administrator may select a remedial action at a facility 
     that meets the requirements of subparagraph (B) but does not 
     comply with or attain a Federal or State standard, 
     requirement, criterion, or limitation described in clause (i) 
     if the Administrator makes any of the following findings:

       ``(aa) Improper identification.--The standard, requirement, 
     criterion, or limitation, which was improperly identified as 
     an applicable requirement under clause (i)(I)(aa), fails to 
     comply with the rulemaking requirements of clause (i)(I)(bb).
       ``(bb) Part of remedial action.--The selected remedial 
     action is only part of a total remedial action that will 
     comply with or attain the applicable requirements of clause 
     (i) when the total remedial action is completed.
       ``(cc) Greater risk.--Compliance with or attainment of the 
     standard, requirement, criterion, or limitation at the 
     facility will result in greater risk to human health or the 
     environment than alternative options.
       ``(dd) Technically impracticability.--Compliance with or 
     attainment of the standard, requirement, criterion, or 
     limitation is technically impracticable.
       ``(ee) Equivalent to standard of performance.--The selected 
     remedial action will attain a standard of performance that is 
     equivalent to that required under a standard,

[[Page S248]]

     requirement, criterion, or limitation described in clause (i) 
     through use of another approach.
       ``(ff) Inconsistent application.--With respect to a State 
     standard, requirement, criterion, limitation, or level, the 
     State has not consistently applied (or demonstrated the 
     intention to apply consistently) the standard, requirement, 
     criterion, or limitation or level in similar circumstances to 
     other remedial actions in the State.
       ``(gg) Balance.--In the case of a remedial action to be 
     undertaken under section 104 or 136 using amounts from the 
     Fund, a selection of a remedial action that complies with or 
     attains a standard, requirement, criterion, or limitation 
     described in clause (i) will not provide a balance between 
     the need for protection of public health and welfare and the 
     environment at the facility, and the need to make amounts 
     from the Fund available to respond to other facilities that 
     may present a threat to public health or welfare or the 
     environment, taking into consideration the relative immediacy 
     of the threats presented by the various facilities.

       ``(III) Publication.--The Administrator shall publish any 
     findings made under subclause (II), including an explanation 
     and appropriate documentation.

       ``(D) Remedy selection criteria.--In selecting a remedial 
     action from among alternatives that achieve the goals stated 
     in subparagraph (B) pursuant to a facility-specific risk 
     evaluation in accordance with section 131, the Administrator 
     shall balance the following factors, ensuring that no single 
     factor predominates over the others:
       ``(i) The effectiveness of the remedy in protecting human 
     health and the environment.
       ``(ii) The reliability of the remedial action in achieving 
     the protectiveness standards over the long term.
       ``(iii) Any short-term risk to the affected community, 
     those engaged in the remedial action effort, and to the 
     environment posed by the implementation of the remedial 
     action.
       ``(iv) The acceptability of the remedial action to the 
     affected community.
       ``(v) The implementability and technical feasibility of the 
     remedial action from an engineering perspective.
       ``(vi) The reasonableness of the cost.
       ``(2) Technical impracticability.--
       ``(A) Minimization of risk.--If the Administrator, after 
     reviewing the remedy selection criteria stated in paragraph 
     (1)(D), finds that achieving the goals stated in paragraph 
     (1)(B) is technically impracticable, the Administrator shall 
     evaluate remedial measures that mitigate the risks to human 
     health and the environment and select a technically 
     practicable remedial action that will most closely achieve 
     the goals stated in paragraph (1) through cost-effective 
     means.
       ``(B) Basis for finding.--A finding of technical 
     impracticability may be made on the basis of a determination, 
     supported by appropriate documentation, that, at the time at 
     which the finding is made--
       ``(i) there is no known reliable means of achieving at a 
     reasonable cost the goals stated in paragraph (1)(B); and
       ``(ii) it has not been shown that such a means is likely to 
     be developed within a reasonable period of time.
       ``(3) Presumptive remedial actions.--A remedial action that 
     implements a presumptive remedial action issued under section 
     132 shall be considered to achieve the goals stated in 
     paragraph (1)(B) and balance adequately the factors stated in 
     paragraph (1)(D).
       ``(4) Ground water.--
       ``(A) In general.--The Administrator or the preparer of the 
     remedial action plan shall select a cost effective remedial 
     action for ground water that achieves the goals of protecting 
     human health and the environment as stated in paragraph 
     (1)(B) and with the requirements of this paragraph, and 
     complies with other applicable Federal and State laws in 
     accordance with subparagraph (C) on the basis of a facility-
     specific risk evaluation in accordance with section 131 and 
     in accordance with the criteria stated in subparagraph (D) 
     and the requirements of paragraph (2). If appropriate, a 
     remedial action for ground water shall be phased, allowing 
     collection of sufficient data to evaluate the effect of any 
     other remedial action taken at the site and to determine the 
     appropriate scope of the remedial action.
       ``(B) Considerations for ground water remedial action.--A 
     decision regarding a remedial action for ground water shall 
     take into consideration--
       ``(i) the actual or planned or reasonably anticipated 
     future use of ground water and the timing of that use; and
       ``(ii) any attenuation or biodegradation that would occur 
     if no remedial action were taken.
       ``(C) Uncontaminated ground water.--A remedial action shall 
     protect uncontaminated ground water that is suitable for use 
     as drinking water by humans or livestock if the water is 
     uncontaminated and suitable for such use at the time of 
     submission of the proposed remedial action plan. A remedial 
     action to protect uncontaminated ground water may utilize 
     natural attenuation (which may include dilution or 
     dispersion, but in conjunction with biodegradation or other 
     levels of attenuation necessary to facilitate the remediation 
     of contaminated ground water) so long as the remedial action 
     does not interfere with the actual or planned or reasonably 
     anticipated future use of the uncontaminated ground water.
       ``(D) Contaminated ground water.--
       ``(i) In general.--In the case of contaminated ground water 
     for which the actual or planned or reasonably anticipated 
     future use of the resource is as drinking water for humans or 
     livestock, if the Administrator determines that restoration 
     of some portion of the contaminated ground water to a 
     condition suitable for the use is technically practicable, 
     the Administrator shall seek to restore the ground water to a 
     condition suitable for the use.
       ``(ii) Determination of restoration practicability.--In 
     making a determination regarding the technical practicability 
     of ground water restoration--

       ``(I) there shall be no presumption of the technical 
     practicability; and
       ``(II) the determination of technical practicability shall, 
     to the extent practicable, be made on the basis of 
     projections, modeling, or other analysis on a site-specific 
     basis without a requirement for the construction or 
     installation and operation of a remedial action.

       ``(iii) Determination of need for and methods of 
     restoration.--In making a determination and selecting a 
     remedial action regarding restoration of contaminated ground 
     water the Administrator shall take into account--

       ``(I) the ability to substantially accelerate the 
     availability of ground water for use as drinking water beyond 
     the rate achievable by natural attenuation; and
       ``(II) the nature and timing of the actual or planned or 
     reasonably anticipated use of such ground water.

       ``(iv) Restoration technically impracticable.--

       ``(I) In general.--A remedial action for contaminated 
     ground water having an actual or planned or reasonably 
     anticipated future use as a drinking water source for humans 
     or livestock for which attainment of the levels described in 
     paragraph (1)(B)(iii) is technically impracticable shall be 
     selected in accordance with paragraph (1)(D)(2).
       ``(II) No ingestion.--Selected remedies may rely on point-
     of-use treatment or other measures to ensure that there will 
     be no ingestion of drinking water at levels exceeding the 
     requirement of paragraph (1)(B)(iii) (I) or (II).
       ``(III) Inclusion as part of operation and maintenance.--
     The operation and maintenance of any treatment device 
     installed at the point of use shall be included as part of 
     the operation and maintenance of the remedy.

       ``(E) Ground water not suitable for use as drinking 
     water.--Notwithstanding any other evaluation or determination 
     of the potential suitability of ground water for drinking 
     water use, ground water that is not suitable for use as 
     drinking water by humans or livestock because of naturally 
     occurring conditions, or is so contaminated by the effects of 
     broad-scale human activity unrelated to a specific facility 
     or release that restoration of drinking water quality is 
     technically impracticable or is physically incapable of 
     yielding a quantity of 150 gallons per day of water to a well 
     or spring, shall be considered to be not suitable for use as 
     drinking water.
       ``(F) Other ground water.--Remedial action for contaminated 
     ground water (other than ground water having an actual or 
     planned or reasonably anticipated future use as a drinking 
     water source for humans or livestock) shall attain levels 
     appropriate for the then-current or reasonably anticipated 
     future use of the ground water, or levels appropriate 
     considering the then-current use of any ground water or 
     surface water to which the contaminated ground water 
     discharges.
       ``(5) Other considerations applicable to remedial 
     actions.--A remedial action that uses institutional and 
     engineering controls shall be considered to be on an equal 
     basis with all other remedial action alternatives.'';
       (2) by redesignating subsection (c) as subsection (b);
       (3) by striking subsection (d); and
       (4) by redesignating subsections (e) and (f) as subsections 
     (c) and (d), respectively.

     SEC. 403. REMEDY SELECTION METHODOLOGY.

       Title I of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9601 et 
     seq.) (as amended by section 201(a)) is amended by adding at 
     the end the following:

     ``SEC. 131. FACILITY-SPECIFIC RISK EVALUATIONS.

       ``(a) Uses.--
       ``(1) In general.--A facility-specific risk evaluation 
     shall be used to--
       ``(A) identify the significant components of potential risk 
     posed by a facility;
       ``(B) screen out potential contaminants, areas, or exposure 
     pathways from further study at a facility;
       ``(C) compare the relative protectiveness of alternative 
     potential remedies proposed for a facility; and
       ``(D) demonstrate that the remedial action selected for a 
     facility is capable of protecting human health and the 
     environment considering the actual or planned or reasonably 
     anticipated future use of the land and water resources.
       ``(2) Compliance with principles.--A facility-specific risk 
     evaluation shall comply with the principles stated in this 
     section to ensure that--
       ``(A) actual or planned or reasonably anticipated future 
     use of the land and water resources is given appropriate 
     consideration; and
       ``(B) all of the components of the evaluation are, to the 
     maximum extent practicable,

[[Page S249]]

     scientifically objective and inclusive of all relevant data.
       ``(b) Risk Evaluation Principles.--A facility-specific risk 
     evaluation shall--
       ``(1) be based on actual information or scientific 
     estimates of exposure considering the actual or planned or 
     reasonably anticipated future use of the land and water 
     resources to the extent that substituting such estimates for 
     those made using standard assumptions alters the basis for 
     decisions to be made;
       ``(2) be comprised of components each of which is, to the 
     maximum extent practicable, scientifically objective, and 
     inclusive of all relevant data;
       ``(3) use chemical and facility-specific data and analysis 
     (such as bioavailability, exposure, and fate and transport 
     evaluations) in preference to default assumptions when--
       ``(A) such data and analysis are likely to vary by 
     facility; and
       ``(B) facility-specific risks are to be communicated to the 
     public or the use of such data and analysis alters the basis 
     for decisions to be made; and
       ``(4) use a range and distribution of realistic and 
     scientifically supportable assumptions when chemical and 
     facility-specific data are not available, if the use of such 
     assumptions would communicate more accurately the 
     consequences of the various decision options.
       ``(c) Risk Communication Principles.--The document 
     reporting the results of a facility-specific risk evaluation 
     shall--
       ``(1) contain an explanation that clearly communicates the 
     risks at the facility;
       ``(2) identify and explain all assumptions used in the 
     evaluation, any alternative assumptions that, if made, could 
     materially affect the outcome of the evaluation, the policy 
     or value judgments used in choosing the assumptions, and 
     whether empirical data conflict with or validate the 
     assumptions;
       ``(3) present--
       ``(A) a range and distribution of exposure and risk 
     estimates, including, if numerical estimates are provided, 
     central estimates of exposure and risk using--
       ``(i) the most scientifically supportable assumptions or a 
     weighted combination of multiple assumptions based on 
     different scenarios; or
       ``(ii) any other methodology designed to characterize the 
     most scientifically supportable estimate of risk given the 
     information that is available at the time of the facility-
     specific risk evaluation; and
       ``(B) a statement of the nature and magnitude of the 
     scientific and other uncertainties associated with those 
     estimates;
       ``(4) state the size of the population potentially at risk 
     from releases from the facility and the likelihood that 
     potential exposures will occur based on the actual or planned 
     or reasonably anticipated future use of the land and water 
     resources; and
       ``(5) compare the risks from the facility to other risks 
     commonly experienced by members of the local community in 
     their daily lives and similar risks regulated by the Federal 
     Government.
       ``(d) Regulations.--Not later than 18 months after the date 
     of enactment of this section, the Administrator shall issue a 
     final regulation implementing this section that promotes a 
     realistic characterization of risk that neither minimizes nor 
     exaggerates the risks and potential risks posed by a facility 
     or a proposed remedial action.

     ``SEC. 132. PRESUMPTIVE REMEDIAL ACTIONS.

       ``(a) In General.--Not later than 1 year after the date of 
     enactment of this section, the Administrator shall issue a 
     final regulation establishing presumptive remedial actions 
     for commonly encountered types of facilities with reasonably 
     well understood contamination problems and exposure 
     potential.
       ``(b) Practicability and Cost-Effectiveness.--Such 
     presumptive remedies must have been demonstrated to be 
     technically practicable and cost-effective methods of 
     achieving the goals of protecting human health and the 
     environment stated in section 121(a)(1)(B).
       ``(c) Variations.--The Administrator may issue various 
     presumptive remedial actions based on various uses of land 
     and water resources, various environmental media, and various 
     types of hazardous substances, pollutants, or contaminants.
       ``(d) Engineering Controls.--Presumptive remedial actions 
     are not limited to treatment remedies, but may be based on, 
     or include, institutional and standard engineering 
     controls.''.

     SEC. 404. REMEDY SELECTION PROCEDURES.

       Title I of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9601 et 
     seq.) (as amended by section 403) is amended by adding at the 
     end the following:

     ``SEC. 133. REMEDIAL ACTION PLANNING AND IMPLEMENTATION.

       ``(a) In General.--
       ``(1) Basic rules.--
       ``(A) Procedures.--A remedial action with respect to a 
     facility that is listed or proposed for listing on the 
     National Priorities List shall be developed and selected in 
     accordance with the procedures set forth in this section.
       ``(B) No other procedures or requirements.--The procedures 
     stated in this section are in lieu of any procedures or 
     requirements under any other law to conduct remedial 
     investigations, feasibility studies, record of decisions, 
     remedial designs, or remedial actions.
       ``(C) Limited review.--In a case in which the potentially 
     responsible parties prepare a remedial action plan, only the 
     work plan, facility evaluation, proposed remedial action 
     plan, and final remedial design shall be subject to review, 
     comment, and approval by the Administrator.
       ``(D) Designation of potentially responsible parties to 
     prepare work plan, facility evaluation, proposed remedial 
     action, and remedial design and to implement the remedial 
     action plan.--In the case of a facility for which the 
     Administrator is not required to prepare a work plan, 
     facility evaluation, proposed remedial action, and remedial 
     design and implement the remedial action plan--
       ``(i) if a potentially responsible party or group of 
     potentially responsible parties--

       ``(I) expresses an intention to prepare a work plan, 
     facility evaluation, proposed remedial action plan, and 
     remedial design and to implement the remedial action plan 
     (not including any such expression of intention that the 
     Administrator finds is not made in good faith); and
       ``(II) demonstrates that the potentially responsible party 
     or group of potentially responsible parties has the financial 
     resources and the expertise to perform those functions,

     the Administrator shall designate the potentially responsible 
     party or group of potentially responsible parties to perform 
     those functions; and
       ``(ii) if more than 1 potentially responsible party or 
     group of potentially responsible parties--

       ``(I) expresses an intention to prepare a work plan, 
     facility evaluation, proposed remedial action plan, and 
     remedial design and to implement the remedial action plan 
     (not including any such expression of intention that the 
     Administrator finds is not made in good faith); and
       ``(II) demonstrates that the potentially responsible 
     parties or group of potentially responsible parties has the 
     financial resources and the expertise to perform those 
     functions,

     the Administrator, based on an assessment of the various 
     parties' comparative financial resources, technical 
     expertise, and histories of cooperation with respect to 
     facilities that are listed on the National Priorities List, 
     shall designate 1 potentially responsible party or group of 
     potentially responsible parties to perform those functions.
       ``(E) Approval required at each step of procedure.--No 
     action shall be taken with respect to a facility evaluation, 
     proposed remedial action plan, remedial action plan, or 
     remedial design, respectively, until a work plan, facility 
     evaluation, proposed remedial action plan, and remedial 
     action plan, respectively, have been approved by the 
     Administrator.
       ``(F) National contingency plan.--The Administrator shall 
     conform the National Contingency Plan regulations to reflect 
     the procedures stated in this section.
       ``(2) Use of presumptive remedial actions.--
       ``(A) Proposal to use.--In a case in which a presumptive 
     remedial action applies, the Administrator (if the 
     Administrator is conducting the remedial action) or the 
     preparer of the remedial action plan may, after conducting a 
     facility evaluation, propose a presumptive remedial action 
     for the facility, if the Administrator or preparer shows with 
     appropriate documentation that the facility fits the generic 
     classification for which a presumptive remedial action has 
     been issued and performs an engineering evaluation to 
     demonstrate that the presumptive remedial action can be 
     applied at the facility.
       ``(B) Limitation.--The Administrator may not require a 
     potentially responsible party to implement a presumptive 
     remedial action.
       ``(b) Remedial Action Planning Process.--
       ``(1) In general.--The Administrator or a potentially 
     responsible party shall prepare and implement a remedial 
     action plan for a facility.
       ``(2) Contents.--A remedial action plan shall consist of--
       ``(A) the results of a facility evaluation, including any 
     screening analysis performed at the facility;
       ``(B) a discussion of the potentially viable remedies that 
     are considered to be reasonable under section 121(a), the 
     respective capital costs, operation and maintenance costs, 
     and estimated present worth costs of the remedies, and how 
     the remedies balance the factors stated in section 
     121(a)(1)(D);
       ``(C) a description of the remedial action to be taken;
       ``(D) a description of the facility-specific risk-based 
     evaluation under section 131 and a demonstration that the 
     selected remedial action will satisfy sections 121(a) and 
     132; and
       ``(E) a realistic schedule for conducting the remedial 
     action, taking into consideration facility-specific factors.
       ``(3) Work plan.--
       ``(A) In general.--Prior to preparation of a remedial 
     action plan, the preparer shall develop a work plan, 
     including a community information and participation plan, 
     which generally describes how the remedial action plan will 
     be developed.
       ``(B) Submission.--A work plan shall be submitted to the 
     Administrator, the State, the community response 
     organization, the local library, and any other public 
     facility designated by the Administrator.
       ``(C) Publication.--The Administrator or other person that 
     prepares a work plan shall publish in a newspaper of general 
     circulation in the area where the facility is located, and 
     post in conspicuous places in the local community, a notice 
     announcing that the work plan is available for review at the 
     local library and that comments concerning the work plan can 
     be submitted to the preparer

[[Page S250]]

     of the work plan, the Administrator, the State, or the local 
     community response organization.
       ``(D) Forwarding of comments.--If comments are submitted to 
     the Administrator, the State, or the community response 
     organization, the Administrator, State, or community response 
     organization shall forward the comments to the preparer of 
     the work plan.
       ``(E) Notice of disapproval.--If the Administrator does not 
     approve a work plan, the Administrator shall--
       ``(i) identify to the preparer of the work plan, with 
     specificity, any deficiencies in the submission; and
       ``(ii) require that the preparer submit a revised work plan 
     within a reasonable period of time, which shall not exceed 90 
     days except in unusual circumstances, as determined by the 
     Administrator.
       ``(4) Facility evaluation.--
       ``(A) In general.--The Administrator (or the preparer of 
     the facility evaluation) shall conduct a facility evaluation 
     at each facility to characterize the risk posed by the 
     facility by gathering enough information necessary to--
       ``(i) assess potential remedial alternatives, including 
     ascertaining, to the degree appropriate, the volume and 
     nature of the contaminants, their location, potential 
     exposure pathways and receptors;
       ``(ii) discern the actual or planned or reasonably 
     anticipated future use of the land and water resources; and
       ``(iii) screen out any uncontaminated areas, contaminants, 
     and potential pathways from further consideration.
       ``(B) Submission.--A draft facility evaluation shall be 
     submitted to the Administrator for approval.
       ``(C) Publication.--Not later than 30 days after 
     submission, or in a case in which the Administrator is 
     preparing the remedial action plan, after the completion of 
     the draft facility evaluation, the Administrator shall 
     publish in a newspaper of general circulation in the area 
     where the facility is located, and post in conspicuous places 
     in the local community, a notice announcing that the draft 
     facility evaluation is available for review and that comments 
     concerning the evaluation can be submitted to the 
     Administrator, the State, and the community response 
     organization.
       ``(D) Availability of comments.--If comments are submitted 
     to the Administrator, the State, or the community response 
     organization, the Administrator, State, or community response 
     organization shall make the comments available to the 
     preparer of the facility evaluation.
       ``(E) Notice of approval.--If the Administrator approves a 
     facility evaluation, the Administrator shall--
       ``(i) notify the community response organization; and
       ``(ii) publish in a newspaper of general circulation in the 
     area where the facility is located, and post in conspicuous 
     places in the local community, a notice of approval.
       ``(F) Notice of disapproval.--If the Administrator does not 
     approve a facility evaluation, the Administrator shall--
       ``(i) identify to the preparer of the facility evaluation, 
     with specificity, any deficiencies in the submission; and
       ``(ii) require that the preparer submit a revised facility 
     evaluation within a reasonable period of time, which shall 
     not exceed 90 days except in unusual circumstances, as 
     determined by the Administrator.
       ``(5) Proposed remedial action plan.--
       ``(A) Submission.--In a case in which a potentially 
     responsible party prepares a remedial action plan, the 
     preparer shall submit the remedial action plan to the 
     Administrator for approval and provide a copy to the local 
     library.
       ``(B) Publication.--After receipt of the proposed remedial 
     action plan, or in a case in which the Administrator is 
     preparing the remedial action plan, after the completion of 
     the remedial action plan, the Administrator shall cause to be 
     published in a newspaper of general circulation in the area 
     where the facility is located and posted in other conspicuous 
     places in the local community a notice announcing that the 
     proposed remedial action plan is available for review at the 
     local library and that comments concerning the remedial 
     action plan can be submitted to the Administrator, the State, 
     and the community response organization.
       ``(C) Availability of comments.--If comments are submitted 
     to a State or the community response organization, the State 
     or community response organization shall make the comments 
     available to the preparer of the proposed remedial action 
     plan.
       ``(D) Hearing.--The Administrator shall hold a public 
     hearing at which the proposed remedial action plan shall be 
     presented and public comment received.
       ``(E) Remedy review boards.--
       ``(i) Establishment.--Not later than 60 days after the date 
     of enactment of this section, the Administrator shall 
     establish and appoint the members of 1 or more remedy review 
     boards (referred to in this subparagraph as a ``remedy review 
     board''), each consisting of independent technical experts 
     within Federal and State agencies with responsibility for 
     remediating contaminated facilities.
       ``(ii) Submission of remedial action plans for review.--
     Subject to clause (iii), a proposed remedial action plan 
     prepared by a potentially responsible party or the 
     Administrator may be submitted to a remedy review board at 
     the request of the person responsible for preparing or 
     implementing the remedial action plan.
       ``(iii) No review.--The Administrator may preclude 
     submission of a proposed remedial action plan to a remedy 
     review board if the Administrator determines that review by a 
     remedy review board would result in an unreasonably long 
     delay that would threaten human health or the environment.
       ``(iv) Recommendations.--Not later than 180 days after 
     receipt of a request for review (unless the Administrator, 
     for good cause, grants additional time), a remedy review 
     board shall provide recommendations to the Administrator 
     regarding whether the proposed remedial action plan is--

       ``(I) consistent with the requirements and standards of 
     section 121(a);
       ``(II) technically feasible or infeasible from an 
     engineering perspective; and
       ``(III) reasonable or unreasonable in cost.

       ``(v) Review by the administrator.--

       ``(I) Consideration of comments.--In reviewing a proposed 
     remedial action plan, a remedy review board shall consider 
     any comments submitted under subparagraphs (B) and (D) and 
     shall provide an opportunity for a meeting, if requested, 
     with the person responsible for preparing or implementing the 
     remedial action plan.
       ``(II) Standard of review.--In determining whether to 
     approve or disapprove a proposed remedial action plan, the 
     Administrator shall give substantial weight to the 
     recommendations of the remedy review board.

       ``(F) Approval.--
       ``(i) In general.--The Administrator shall approve a 
     proposed remedial action plan if the plan--

       ``(I) contains the information described in section 131(b); 
     and
       ``(II) satisfies section 121(a).

       ``(ii) Default.--If the Administrator fails to issue a 
     notice of disapproval of a proposed remedial action plan in 
     accordance with subparagraph (G) within 180 days after the 
     proposed plan is submitted, the plan shall be considered to 
     be approved and its implementation fully authorized.
       ``(G) Notice of approval.--If the Administrator approves a 
     proposed remedial action plan, the Administrator shall--
       ``(i) notify the community response organization; and
       ``(ii) publish in a newspaper of general circulation in the 
     area where the facility is located, and post in conspicuous 
     places in the local community, a notice of approval.
       ``(H) Notice of disapproval.--If the Administrator does not 
     approve a proposed remedial action plan, the Administrator 
     shall--
       ``(i) inform the preparer of the proposed remedial action 
     plan, with specificity, of any deficiencies in the 
     submission; and
       ``(ii) request that the preparer submit a revised proposed 
     remedial action plan within a reasonable time, which shall 
     not exceed 90 days except in unusual circumstances, as 
     determined by the Administrator.
       ``(I) Judicial review.--A recommendation under subparagraph 
     (E)(iv) and the Administrator's review of such a 
     recommendation shall be subject to the limitations on 
     judicial review under section 113(h).
       ``(6) Implementation of remedial action plan.--A remedial 
     action plan that has been approved or is considered to be 
     approved under paragraph (5) shall be implemented in 
     accordance with the schedule set forth in the remedial action 
     plan.
       ``(7) Remedial design.--
       ``(A) Submission.--A remedial design shall be submitted to 
     the Administrator, or in a case in which the Administrator is 
     preparing the remedial action plan, shall be completed by the 
     Administrator.
       ``(B) Publication.--After receipt by the Administrator of 
     (or completion by the Administrator of) the remedial design, 
     the Administrator shall--
       ``(i) notify the community response organization; and
       ``(ii) cause a notice of submission or completion of the 
     remedial design to be published in a newspaper of general 
     circulation and posted in conspicuous places in the area 
     where the facility is located.
       ``(C) Comment.--The Administrator shall provide an 
     opportunity to the public to submit written comments on the 
     remedial design.
       ``(D) Approval.--Not later than 90 days after the 
     submission to the Administrator of (or completion by the 
     Administrator of) the remedial design, the Administrator 
     shall approve or disapprove the remedial design.
       ``(E) Notice of approval.--If the Administrator approves a 
     remedial design, the Administrator shall--
       ``(i) notify the community response organization; and
       ``(ii) publish in a newspaper of general circulation in the 
     area where the facility is located, and post in conspicuous 
     places in the local community, a notice of approval.
       ``(F) Notice of disapproval.--If the Administrator 
     disapproves the remedial design, the Administrator shall--
       ``(i) identify with specificity any deficiencies in the 
     submission; and
       ``(ii) allow the preparer submitting a remedial design a 
     reasonable time (which shall not exceed 90 days except in 
     unusual circumstances, as determined by the Administrator) in 
     which to submit a revised remedial design.
       ``(c) Enforcement of Remedial Action Plan.--
       ``(1) Notice of significant deviation.--If the 
     Administrator determines that the implementation of the 
     remedial action plan has

[[Page S251]]

     deviated significantly from the plan, the Administrator shall 
     provide the implementing party a notice that requires the 
     implementing party, within a reasonable period of time 
     specified by the Administrator, to--
       ``(A) comply with the terms of the remedial action plan; or
       ``(B) submit a notice for modifying the plan.
       ``(2) Failure to comply.--
       ``(A) Class one administrative penalty.--In issuing a 
     notice under paragraph (1), the Administrator may impose a 
     class one administrative penalty consistent with section 
     109(a).
       ``(B) Additional enforcement measures.--If the implementing 
     party fails to either comply with the plan or submit a 
     proposed modification, the Administrator may pursue all 
     additional appropriate enforcement measures pursuant to this 
     Act.
       ``(d) Modifications to Remedial Action.--
       ``(1) Definition.--In this subsection, the term `major 
     modification' means a modification that--
       ``(A) fundamentally alters the interpretation of site 
     conditions at the facility;
       ``(B) fundamentally alters the interpretation of sources of 
     risk at the facility;
       ``(C) fundamentally alters the scope of protection to be 
     achieved by the selected remedial action;
       ``(D) fundamentally alters the performance of the selected 
     remedial action; or
       ``(E) delays the completion of the remedy by more than 180 
     days.
       ``(2) Major modifications.--
       ``(A) In general.--If the Administrator or other 
     implementing party proposes a major modification to the plan, 
     the Administrator or other implementing party shall 
     demonstrate that--
       ``(i) the major modification constitutes the most cost-
     effective remedial alternative that is technologically 
     feasible and is not unreasonably costly; and
       ``(ii) that the revised remedy will continue to satisfy 
     section 121(a).
       ``(B) Notice and comment.--The Administrator shall provide 
     the implementing party, the community response organization, 
     and the local community notice of the proposed major 
     modification and at least 30 days' opportunity to comment on 
     any such proposed modification.
       ``(C) Prompt action.--At the end of the comment period, the 
     Administrator shall promptly approve or disapprove the 
     proposed modification and order implementation of the 
     modification in accordance with any reasonable and relevant 
     requirements that the Administrator may specify.
       ``(3) Minor modifications.--Nothing in this section 
     modifies the discretionary authority of the Administrator to 
     make a minor modification of a record of decision or remedial 
     action plan to conform to the best science and engineering, 
     the requirements of this Act, or changing conditions at a 
     facility.''.

     SEC. 405. COMPLETION OF PHYSICAL CONSTRUCTION AND DELISTING.

       Title I of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9601 et 
     seq.) (as amended by section 404) is amended by adding at the 
     end the following:

     ``SEC. 134. COMPLETION OF PHYSICAL CONSTRUCTION AND 
                   DELISTING.

       ``(a) In General.--
       ``(1) Proposed notice of completion and proposed 
     delisting.--Not later than 180 days after the completion by 
     the Administrator of physical construction necessary to 
     implement a response action at a facility, or not later than 
     180 days after receipt of a notice of such completion from 
     the implementing party, the Administrator shall publish a 
     notice of completion and proposed delisting of the facility 
     from the National Priorities List in the Federal Register and 
     in a newspaper of general circulation in the area where the 
     facility is located.
       ``(2) Physical construction.--For the purposes of paragraph 
     (1), physical construction necessary to implement a response 
     action at a facility shall be considered to be complete 
     when--
       ``(A) construction of all systems, structures, devices, and 
     other components necessary to implement a response action for 
     the entire facility has been completed in accordance with the 
     remedial design plan; or
       ``(B) no construction, or no further construction, is 
     expected to be undertaken.
       ``(3) Comments.--The public shall be provided 30 days in 
     which to submit comments on the notice of completion and 
     proposed delisting.
       ``(4) Final notice.--Not later than 60 days after the end 
     of the comment period, the Administrator shall--
       ``(A) issue a final notice of completion and delisting or a 
     notice of withdrawal of the proposed notice until the 
     implementation of the remedial action is determined to be 
     complete; and
       ``(B) publish the notice in the Federal Register and in a 
     newspaper of general circulation in the area where the 
     facility is located.
       ``(5) Failure to act.--If the Administrator fails to 
     publish a notice of withdrawal within the 60-day period 
     described in paragraph (4)--
       ``(A) the remedial action plan shall be deemed to have been 
     completed; and
       ``(B) the facility shall be delisted by operation of law.
       ``(6) Effect of delisting.--The delisting of a facility 
     shall have no effect on--
       ``(A) liability allocation requirements or cost-recovery 
     provisions otherwise provided in this Act;
       ``(B) any liability of a potentially responsible party or 
     the obligation of any person to provide continued operation 
     and maintenance;
       ``(C) the authority of the Administrator to make 
     expenditures from the Fund relating to the facility; or
       ``(D) the enforceability of any consent order or decree 
     relating to the facility.
       ``(7) Failure to make timely disapproval.--The issuance of 
     a final notice of completion and delisting or of a notice of 
     withdrawal within the time required by subsection (a)(3) 
     constitutes a nondiscretionary duty within the meaning of 
     section 310(a)(2).
       ``(b) Certification.--A final notice of completion and 
     delisting shall include a certification by the Administrator 
     that the facility has met all of the requirements of the 
     remedial action plan (except requirements for continued 
     operation and maintenance).
       ``(c) Future Use of a Facility.--
       ``(1) Facility available for unrestricted use.--If, after 
     completion of physical construction, a facility is available 
     for unrestricted use and there is no need for continued 
     operation and maintenance, the potentially responsible 
     parties shall have no further liability under any Federal, 
     State, or local law (including any regulation) for 
     remediation at the facility, unless the Administrator 
     determines, based on new and reliable factual information 
     about the facility, that the facility does not satisfy 
     section 121(a).
       ``(2) Facility not available for any use.--If, after 
     completion of physical construction, a facility is not 
     available for any use or there are continued operation and 
     maintenance requirements that preclude use of the facility, 
     the Administrator shall--
       ``(A) review the status of the facility every 5 years; and
       ``(B) require additional remedial action at the facility if 
     the Administrator determines, after notice and opportunity 
     for hearing, that the facility does not satisfy section 
     121(a).
       ``(3) Facilities available for restricted use.--The 
     Administrator may determine that a facility or portion of a 
     facility is available for restricted use while a response 
     action is under way or after physical construction has been 
     completed. The Administrator shall make a determination that 
     uncontaminated portions of the facility are available for 
     unrestricted use when such use would not interfere with 
     ongoing operations and maintenance activities or endanger 
     human health or the environment.
       ``(d) Operation and Maintenance.--The need to perform 
     continued operation and maintenance at a facility shall not 
     delay delisting of the facility or issuance of the 
     certification if performance of operation and maintenance is 
     subject to a legally enforceable agreement, order, or decree.
       ``(e) Change of Use of Facility.--
       ``(1) Petition.--Any person may petition the Administrator 
     to change the use of a facility described in subsection (c) 
     (2) or (3) from that which was the basis of the remedial 
     action plan.
       ``(2) Grant.--The Administrator may grant a petition under 
     paragraph (1) if the petitioner agrees to implement any 
     additional remedial actions that the Administrator determines 
     are necessary to continue to satisfy section 121(a), 
     considering the different use of the facility.
       ``(3) Responsibility for risk.--When a petition has been 
     granted under paragraph (2), the person requesting the change 
     in use of the facility shall be responsible for all risk 
     associated with altering the facility and all costs of 
     implementing any necessary additional remedial actions.''.

     SEC. 406. TRANSITION RULES FOR FACILITIES CURRENTLY INVOLVED 
                   IN REMEDY SELECTION.

       Title I of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9601 et 
     seq.) (as amended by section 405) is amended by adding at the 
     end the following:

     ``SEC. 135. TRANSITION RULES FOR FACILITIES INVOLVED IN 
                   REMEDY SELECTION ON DATE OF ENACTMENT.

       ``(a) No Record of Decision.--
       ``(1) Option.--In the case of a facility or operable unit 
     that, as of the date of enactment of this section, is the 
     subject of a remedial investigation and feasibility study 
     (whether completed or incomplete), the potentially 
     responsible parties or the Administrator may elect to follow 
     the remedial action plan process stated in section 133 rather 
     than the remedial investigation and feasibility study and 
     record of decision process under regulations in effect on the 
     date of enactment of this section that would otherwise apply 
     if the requesting party notifies the Administrator and other 
     potentially responsible parties of the election not later 
     than 90 days after the date of enactment of this section.
       ``(2) Submission of facility evaluation.--In a case in 
     which the potentially responsible parties have or the 
     Administrator has made an election under subsection (a), the 
     potentially responsible parties shall submit the proposed 
     facility evaluation within 180 days after the date on which 
     notice of the election is given.
       ``(b) Remedy Review Boards.--
       ``(1) Authority.--A remedy review board established under 
     section 133(b)(5)(E) (referred to in this subsection as a 
     `remedy review board') shall have authority to consider a 
     petition under paragraph (3) or (4) of this subsection.
       ``(2) General procedure.--

[[Page S252]]

       ``(A) Completion of review.--The review of a petition 
     submitted to a remedy review board under this subsection 
     shall be completed not later than 180 days after the receipt 
     of the petition unless the Administrator, for good cause, 
     grants additional time.
       ``(B) Costs of review.--All reasonable costs incurred by a 
     remedy review board, the Administrator, or a State in 
     conducting a review or evaluating a petition for possible 
     objection shall be borne by the petitioner.
       ``(C) Decisions.--At the completion of the 180-day review 
     period, a remedy review board shall issue a written decision 
     including responses to all comments submitted during the 
     review process with regard to a petition.
       ``(D) Opportunity for comment and meetings.--In reviewing a 
     petition under this subsection, a remedy review board shall 
     provide an opportunity for all interested parties, including 
     representatives of the State and local community in which the 
     facility is located, to comment on the petition and, if 
     requested, to meet with the remedy review board under this 
     subsection.
       ``(E) Review by the administrator.--
       ``(i) In general.--The Administrator shall have final 
     review of any decision of a remedy review board under this 
     subsection.
       ``(ii) Standard of review.--In conducting a review of a 
     decision of a remedy review board under this subsection, the 
     Administrator shall accord substantial weight to the remedy 
     review board's decision.
       ``(iii) Rejection of decision.--Any determination to reject 
     a remedy review board's decision under this subsection must 
     be approved by the Administrator or the Assistant 
     Administrator for Solid Waste and Emergency Response.
       ``(F) Judicial review.--A decision of a remedy review board 
     under subparagraph (C) and the Administrator's review of such 
     a decision shall be subject to the limitations on judicial 
     review under section 113(h).
       ``(G) Calculations of cost savings.--
       ``(i) In general.--A determination with respect to relative 
     cost savings and whether construction has begun shall be 
     based on operable units or distinct elements or phases of 
     remediation and not on the entire record of decision.
       ``(ii) Items not to be considered.--In determining the 
     amount of cost savings--

       ``(I) there shall not be taken into account any 
     administrative, demobilization, remobilization, or additional 
     investigation costs of the review or modification of the 
     remedy associated with the alternative remedy; and
       ``(II) only the estimated cost savings of expenditures 
     avoided by undertaking the alternative remedy shall be 
     considered as cost savings.

       ``(3) Construction not begun.--
       ``(A) Petition.--In the case of a facility or operable unit 
     with respect to which a record of decision has been signed 
     but construction has not yet begun prior to the date of 
     enactment of this section and which meet the criteria of 
     subparagraph (B), the implementor of the record of decision 
     may file a petition with a remedy review board not later than 
     90 days after the date of enactment of this section to 
     determine whether an alternate remedy under section 133 
     should apply to the facility or operable unit.
       ``(B) Criteria for approval.--Subject to subparagraph (C), 
     a remedy review board shall approve a petition described in 
     subparagraph (A) if--
       ``(i) the alternative remedial action proposed in the 
     petition satisfies section 121(a);
       ``(ii)(I) in the case of a record of decision with an 
     estimated implementation cost of between $5,000,000 and 
     $10,000,000, the alternative remedial action achieves cost 
     savings of at least 25 percent of the total costs of the 
     record of decision; or
       ``(II) in the case of an record of decision valued at a 
     total cost greater than $10,000,000, the alternative remedial 
     action achieves cost savings of $2,500,000 or more;
       ``(iii) in the case of a record of decision involving 
     ground water extraction and treatment remedies for substances 
     other than dense, nonaqueous phase liquids, the alternative 
     remedial action achieves cost savings of $2,000,000 or more; 
     or
       ``(iv) in the case of a record of decision intended 
     primarily for the remediation of dense, nonaqueous phase 
     liquids, the alternative remedial action achieves cost 
     savings of $1,000,000 or more.
       ``(C) Contents of petition.--For the purposes of facility-
     specific risk assessment under section 131, a petition 
     described in subparagraph (A) shall rely on risk assessment 
     data that were available prior to issuance of the record of 
     decision but shall consider the actual or planned or 
     reasonably anticipated future use of the land and water 
     resources.
       ``(D) Incorrect data.--Notwithstanding subparagraph (B) and 
     (C), a remedy review board may approve a petition if the 
     petitioner demonstrates that technical data generated 
     subsequent to the issuance of the record of decision 
     indicates that the decision was based on faulty or incorrect 
     information.
       ``(4) Additional construction.--
       ``(A) Petition.--In the case of a facility or operable unit 
     with respect to which a record of decision has been signed 
     and construction has begun prior to the date of enactment of 
     this section and which meets the criteria of subparagraph 
     (B), but for which additional construction or long-term 
     operation and maintenance activities are anticipated, the 
     implementor of the record of decision may file a petition 
     with a remedy review board within 90 days after the date of 
     enactment of this section to determine whether an alternative 
     remedial action should apply to the facility or operable 
     unit.
       ``(B) Criteria for approval.--Subject to subparagraph (C), 
     a remedy review board shall approve a petition described in 
     subparagraph (A) if--
       ``(i) the alternative remedial action proposed in the 
     petition satisfies section 121(a); and
       ``(ii)(I) in the case of a record of decision valued at a 
     total cost between $5,000,000 and $10,000,000, the 
     alternative remedial action achieves cost savings of at least 
     50 percent of the total costs of the record of decision;
       ``(II) in the case of a record of decision valued at a 
     total cost greater than $10,000,000, the alternative remedial 
     action achieves cost savings of $5,000,000 or more; or
       ``(III) in the case of a record of decision involving 
     monitoring, operations, and maintenance obligations where 
     construction is completed, the alternative remedial action 
     achieves cost savings of $1,000,000 or more.
       (C) Incorrect data.--Notwithstanding subparagraph (B), a 
     remedy review board may approve a petition if the petitioner 
     demonstrates that technical data generated subsequent to the 
     issuance of the record of decision indicates that the 
     decision was based on faulty or incorrect information, and 
     the alternative remedial action achieves cost savings of at 
     least $2,000,000.
       ``(D) Mandatory review.--A remedy review board shall not be 
     required to entertain more than 1 petition under subparagraph 
     (B)(ii)(III) or (C) with respect to a remedial action plan.
       ``(5) Delay.--In determining whether an alternative 
     remedial action will substantially delay the implementation 
     of a remedial action of a facility, no consideration shall be 
     given to the time necessary to review a petition under 
     paragraph (3) or (4) by a remedy review board or the 
     Administrator.
       ``(6) Objection by the governor.----
       ``(A) Notification.--Not later than 7 days after receipt of 
     a petition under this subsection, a remedy review board shall 
     notify the Governor of the State in which the facility is 
     located and provide the Governor a copy of the petition.
       ``(B) Objection.--The Governor may object to the petition 
     or the modification of the remedy, if not later than 90 days 
     after receiving a notification under subparagraph (A) the 
     Governor demonstrates to the remedy review board that the 
     selection of the proposed alternative remedy would cause an 
     unreasonably long delay that would be likely to result in 
     significant adverse human health impacts, environmental 
     risks, disruption of planned future use, or economic 
     hardship.
       ``(C) Denial.--On receipt of an objection and demonstration 
     under subparagraph (C), the remedy review board shall--
       ``(i) deny the petition; or
       ``(ii) consider any other action that the Governor may 
     recommend.
       ``(7) Savings clause.--Notwithstanding any other provision 
     of this subsection, in the case of a remedial action plan for 
     which a final record of decision under section 121 has been 
     published, if remedial action was not completed pursuant to 
     the remedial action plan before the date of enactment of this 
     section, the Administrator or a State exercising authority 
     under section 130(d) may modify the remedial action plan in 
     order to conform the plan to the requirements of this Act, as 
     in effect on the date of enactment of this section.''.

     SEC. 407. NATIONAL PRIORITIES LIST.

       (a) Amendments.--Section 105 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9605) is amended--
       (1) in subsection (a)(8) by adding at the end the 
     following:
       ``(C) provision that in listing a facility on the National 
     Priorities List, the Administrator shall not include any 
     parcel of real property at which no release has actually 
     occurred, but to which a released hazardous substance, 
     pollutant, or contaminant has migrated in ground water that 
     has moved through subsurface strata from another parcel of 
     real estate at which the release actually occurred, unless--
       ``(i) the ground water is in use as a public drinking water 
     supply or was in such use at the time of the release; and
       ``(ii) the owner or operator of the facility is liable, or 
     is affiliated with any other person that is liable, for any 
     response costs at the facility, through any direct or 
     indirect familial relationship, or any contractual, 
     corporate, or financial relationship other than that created 
     by the instruments by which title to the facility is conveyed 
     or financed.''; and
       (2) by adding at the end the following:
       ``(h) Listing of Particular Parcels.--
       ``(1) Definition.--In subsection (a)(8)(C) and paragraph 
     (2) of this subsection, the term `parcel of real property' 
     means a parcel, lot, or tract of land that has a separate 
     legal description from that of any other parcel, lot, or 
     tract of land the legal description and ownership of which 
     has been recorded in accordance with the law of the State in 
     which it is located.
       ``(2) Statutory construction.--Nothing in subsection 
     (a)(8)(C) shall be construed to limit the Administrator's 
     authority under section 104 to obtain access to and undertake 
     response actions at any parcel of real property to which a 
     released hazardous substance, pollutant, or contaminant has 
     migrated in the ground water.''.

[[Page S253]]

       (b) Revision of National Priorities List.--The President 
     shall revise the National Priorities List to conform with the 
     amendments made by subsection (a) not later that 180 days of 
     the date of enactment of this Act.
                           TITLE V--LIABILITY

     SEC. 501. LIABILITY EXCEPTIONS AND LIMITATIONS.

       (a) Definitions.--Section 101 of the Comprehensive 
     Environmental Response, Liability, and Compensation Act of 
     1980 (42 U.S.C. 9601) (as amended by section 401) is amended 
     by adding at the end of the following:
       ``(43) Codisposal landfills.--The `term codisposal 
     landfill' means a landfill that--
       ``(A) was listed on the National Priorities List as of 
     January 1, 1997;
       ``(B) received for disposal municipal solid waste or sewage 
     sludge; and
       ``(C) may also have received, before the effective date of 
     requirements under subtitle C of the Solid Waste Disposal Act 
     (42 U.S.C. 6921 et seq.), any hazardous waste, if a 
     substantial portion of the total volume of waste disposed of 
     at the landfill consisted of municipal solid waste or sewage 
     sludge that was transported to the landfill from outside the 
     facility.
       ``(44) Municipal solid waste.--The term `municipal solid 
     waste'--
       ``(A) means waste material generated by--
       ``(i) a household (such as a single- or multi-family 
     residence) or a public lodging (such as a hotel or motel); or
       ``(ii) a commercial, institutional, or industrial source, 
     to the extent that--

       ``(I) the waste material is essentially the same as waste 
     normally generated by a household or public lodging; or
       ``(II) the waste material is collected and disposed of with 
     other municipal solid waste or sewage sludge as part of 
     normal municipal solid waste collection services, and, 
     regardless of when generated, would be conditionally exempt 
     small quantity generator waste under the regulation issued 
     under section 3001(d) of the Solid Waste Disposal Act (42 
     U.S.C. 6921(d)); and

       ``(B) includes food and yard waste, paper, clothing, 
     appliances, consumer product packaging, disposable diapers, 
     office supplies, cosmetics, glass and metal food containers, 
     elementary or secondary school science laboratory waste, and 
     household hazardous waste; but
       ``(C) does not include combustion ash generated by resource 
     recovery facilities or municipal incinerators or waste from 
     manufacturing or processing (including pollution control) 
     operations that is not essentially the same as waste normally 
     generated by a household or public lodging.
       ``(45) Municipality.--The term `municipality' means--
       ``(A) means a political subdivision of a State (including a 
     city, county, village, town, township, borough, parish, 
     school district, sanitation district, water district, or 
     other public entity performing local governmental functions); 
     and
       ``(B) includes a natural person acting in the capacity of 
     an official, employee, or agent of any entity described in 
     subparagraph (A) in the performance of a governmental 
     function.
       ``(46) Sewage sludge.--The term `sewage sludge' means 
     solid, semisolid, or liquid residue removed during the 
     treatment of municipal waste water, domestic sewage, or other 
     waste water at or by publicly owned treatment works.''.
       (b) Exceptions and Limitations.--Section 107 of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9607) (as amended by section 
     306(b)) is amended by adding at the end the following:
       ``(q) Liability Exemption for Municipal Solid Waste and 
     Sewage Sludge.--No person (other than the United States or a 
     department, agency, or instrumentality of the United States) 
     shall be liable to the United States or to any other person 
     (including liability for contribution) under this section for 
     any response costs at a facility listed on the National 
     Priorities List to the extent that--
       ``(1) the person is liable solely under subparagraph (C) or 
     (D) of subsection (a)(1); and
       ``(2) the arrangement for disposal, treatment, or transport 
     for disposal or treatment, or the acceptance for transport 
     for disposal or treatment, involved only municipal solid 
     waste or sewage sludge.
       ``(r) De Minimis Contributor Exemption.--
       ``(1) In general.--In the case of a vessel or facility that 
     is not owned by the United States and is listed on the 
     National Priorities List, no person described in subparagraph 
     (C) or (D) of subsection (a)(1) (other than the United States 
     or any department, agency, or instrumentality of the United 
     States) shall be liable to the United States or to any other 
     person (including liability for contribution) for any 
     response costs under this section incurred after the date of 
     enactment of this subsection, if no activity specifically 
     attributable to the person resulted in--
       ``(A) the disposal or treatment of more than 1 percent of 
     the volume of material containing a hazardous substance at 
     the vessel or facility before January 1, 1997; or
       ``(B) the disposal or treatment of not more than 200 pounds 
     or 110 gallons of material containing hazardous substances at 
     the vessel or facility before January 1, 1997, or such 
     greater amount as the Administrator may determine by 
     regulation.
       ``(2) Exception.--Paragraph (1) shall not apply in a case 
     in which the Administrator determines that material described 
     in paragraph (1)(A) or (B) has contributed or may contribute 
     significantly to the amount of response costs at the 
     facility.
       ``(s) Small Business Exemption.--No person (other than the 
     United States or a department, agency, or instrumentality of 
     the United States) shall be liable to the United States or to 
     any person (including liability for contribution) under this 
     section for any response costs at a facility listed on the 
     National Priorities List incurred after the date of enactment 
     of this subsection if the person is a business that, during 
     the taxable year preceding the date of transmittal of 
     notification that the business is a potentially responsible 
     party, had on average fewer than 30 employees or for that 
     taxable year reported $3,000,000 or less in annual gross 
     revenues.
       ``(t) Codisposal Landfill Exemption and Limitations.--
       ``(1) Exemption.--No person shall be liable to the United 
     States or to any person (including liability for 
     contribution) under this section for any response costs at a 
     facility listed on the National Priorities List incurred 
     after the date of enactment of this subsection to the extent 
     that--
       ``(A) the person is liable under subparagraph (C) or (D) of 
     subsection (a)(1); and
       ``(B) the arrangement for disposal, treatment, or transport 
     for disposal or treatment or the acceptance for disposal or 
     treatment occurred with respect to a codisposal landfill.
       ``(2) Limitations.--
       ``(A) Definitions.--In this paragraph:
       ``(i) Large municipality.--The term `large municipality' 
     means a municipality with a population of 100,000 or more 
     according to the 1990 census.
       ``(ii) Small municipality.--The term `small municipality' 
     means a municipality with a population of less than 100,000 
     according to the 1990 census.
       ``(B) Aggregate liability of small municipalities.--With 
     respect to a codisposal landfill listed on the National 
     Priorities List that is owned or operated only by small 
     municipalities and that is not subject to the criteria for 
     solid waste landfills published under subtitle D of the Solid 
     Waste Disposal Act (42 U.S.C. 6941 et seq.) at part 258 of 
     title 40, Code of Federal Regulations (or a successor 
     regulation), the aggregate liability of all small 
     municipalities for response costs incurred on or after the 
     date of enactment of this subsection shall be the lesser of--
       ``(i) 10 percent of the total amount of response costs at 
     the facility; or
       ``(ii) the costs of compliance with the requirements of 
     subtitle D of the Solid Waste Disposal Act (42 U.S.C. 6941 et 
     seq.) for the facility (as if the facility had continued to 
     accept municipal solid waste through January 1, 1997);.
       ``(C) Aggregate liability of large municipalities.--With 
     respect to a codisposal landfill listed on the National 
     Priorities List that is owned or operated only by large 
     municipalities and that is not subject to the criteria for 
     solid waste landfills published under subtitle D of the Solid 
     Waste Disposal Act (42 U.S.C. 6941 et seq.) at part 258 of 
     title 40, Code of Federal Regulations (or a successor 
     regulation), the aggregate liability of all large 
     municipalities for response costs incurred on or after the 
     date of enactment of this subsection shall be the lesser of--
       ``(i) 20 percent of the proportion of the total amount of 
     response costs at the facility; or
       ``(ii) the costs of compliance with the requirements of 
     subtitle D of the Solid Waste Disposal Act (42 U.S.C. 6941 et 
     seq.) for the facility (as if the facility had continued to 
     accept municipal solid waste through January 1, 1997).
       ``(D) Aggregate persons other than municipalities.--With 
     respect to a codisposal landfill listed on the National 
     Priorities List that is owned or operated in whole or in part 
     by persons other than municipalities and that is not subject 
     to the criteria for solid waste landfills published under 
     subtitle D of the Solid Waste Disposal Act (42 U.S.C. 6941 et 
     seq.) at part 258 of title 40, Code of Federal Regulations 
     (or a successor regulation), the aggregate liability of all 
     persons other than municipalities shall be the lesser of--
       ``(i) 30 percent of the proportion of the total amount of 
     response costs at the facility; or
       ``(ii) the costs of compliance with the requirements of 
     subtitle D of the Solid Waste Disposal Act (42 U.S.C. 6941 et 
     seq.) for the facility (as if the facility had continued to 
     accept municipal solid waste through January 1, 1997).
       ``(E) Aggregate Liability for Municipalities and Non-
     Municipalities.--With respect to a codisposal landfill listed 
     on the National Priorities List that is owned and operated by 
     a combination of small and large municipalities or persons 
     other than municipalities and that is subject to the criteria 
     for solid waste landfills published under subtitle D of the 
     Solid Waste Disposal Act (42 U.S.C. 6941 et seq.) at part 258 
     of title 40, Code of Federal Regulations (or a successor 
     regulation)--
       ``(i) the allocator shall determine the proportion of the 
     use of the landfill that was made by small and large 
     municipalities and persons other than municipalities during 
     the time the facility was in operation; and
       ``(ii) shall allocate among the parties an appropriate 
     percentage of total liability not exceeding the aggregate 
     liability percentages stated in (B)(ii), (C)(ii), (D)(ii), 
     respectively.

[[Page S254]]

       ``(F) Liability at subtitle d facilities.--With respect to 
     a codisposal landfill listed on the National Priorities List 
     that is owned and operated by a small municipality, large 
     municipality, or person other than municipalities, or a 
     combination of thereof, and that is subject to the criteria 
     for solid waste landfills published under subtitle D of the 
     Solid Waste Disposal Act (42 U.S.C. 6941 et seq.) at part 258 
     of title 40, Code of Federal Regulations (or a successor 
     regulation), the aggregate liability of such municipalities 
     and persons shall be no greater than the costs of compliance 
     with the requirements of subtitle D of the Solid Waste 
     Disposal Act (42 U.S.C. 6941 et seq.) for the facility.
       ``(3) Applicability.--This subsection shall not apply to--
       ``(A) a person that acted in violation of subtitle C of the 
     Solid Waste Disposal Act (42 U.S.C. Sec. 6921 et seq.);
       ``(B) a person that owned or operated a codisposal landfill 
     in violation of the applicable requirements for municipal 
     solid waste landfill units under subtitle D of the Solid 
     Waste Disposal Act (42 U.S.C. Sec. 6941 et seq.) after 
     October 9, 1991;
       ``(C) a facility that was not operated pursuant to and in 
     substantial compliance with any other applicable permit, 
     license, or other approval or authorization relating to 
     municipal solid waste or sewage sludge disposal issued by an 
     appropriate State, Indian tribe, or local government 
     authority;
       ``(D) a person described in section 136(t); or
       ``(E) a person that impedes the performance of a response 
     action.''.
       (c) Effective Date and Transition Rules.--The amendments 
     made by this section--
       (1) shall take effect with respect to an action under 
     section 106, 107, or 113 of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9606, 9607, and 9613) that becomes final on or after the date 
     of enactment of this Act; but
       (2) shall not apply to an action brought by any person 
     under section 107 or 113 of that Act (42 U.S.C. 9607 and 
     9613) for costs or damages incurred by the person before the 
     date of enactment of this Act.

     SEC. 502. CONTRIBUTION FROM THE FUND.

       Section 112 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9612) is 
     amended by adding at the end the following:
       ``(g) Contribution From the Fund.--
       ``(1) Completion of obligations.--A person that is subject 
     to an administrative order issued under section 106 or has 
     entered into a settlement decree with the United States or a 
     State as of the date of enactment of this subsection shall 
     complete the person's obligations under the order or 
     settlement decree.
       ``(2) Contribution.--A person described in paragraph (1) 
     shall receive contribution from the Fund for any portion of 
     the costs (excluding attorneys' fees) incurred for the 
     performance of the response action after the date of 
     enactment of this subsection if the person is not liable for 
     such costs by reason of a liability exemption or limitation 
     under this section.
       ``(3) Application for contribution.--
       ``(A) In general.--Contribution under this section shall be 
     made upon receipt by the Administrator of an application 
     requesting contribution.
       ``(B) Periodic applications.--Beginning with the 7th month 
     after the date of enactment of this subsection, 1 application 
     for each facility shall be submitted every 6 months for all 
     persons with contribution rights (as determined under 
     subparagraph (2)).
       ``(4) Regulations.--Contribution shall be made in 
     accordance with such regulations as the Administrator shall 
     issue within 180 days after the date of enactment of this 
     section.
       ``(5) Documentation.--The regulations under paragraph (4) 
     shall, at a minimum, require that an application for 
     contribution contain such documentation of costs and 
     expenditures as the Administrator considers necessary to 
     ensure compliance with this subsection.
       ``(6) Expedition.--The Administrator shall develop and 
     implement such procedures as may be necessary to provide 
     contribution to such persons in an expeditious manner, but in 
     no case shall a contribution be made later than 1 year after 
     submission of an application under this subsection.
       ``(7) Consistency with national contingency plan.--No 
     contribution shall be made under this subsection unless the 
     Administrator determines that such costs are consistent with 
     the National Contingency Plan.''.

     SEC. 503. ALLOCATION OF LIABILITY FOR CERTAIN FACILITIES.

       Title I of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9601 et 
     seq.), as amended by section 406, is amended by adding at the 
     end the following:

     ``SEC. 136. ALLOCATION OF LIABILITY FOR CERTAIN FACILITIES.

       ``(a) Definitions.--In this section:
       ``(1) Allocated share.--The term `allocated share' means 
     the percentage of liability assigned to a potentially 
     responsible party by the allocator in an allocation report 
     under subsection (f)(4).
       ``(2) Allocation party.--The term `allocation party'--
       ``(A) means a party, named on a list of parties that will 
     be subject to the allocation process under this section, 
     issued by an allocator; and
       ``(B) with respect to a facility described in subparagraph 
     (4)(C), includes only parties that are, by virtue of section 
     107(t)(3), not entitled to the exemption under section 
     107(t)(1) or the limitation under section 107(t)(2).
       ``(3) Allocator.--The term `allocator' means an allocator 
     retained to conduct an allocation for a facility.
       ``(4) Mandatory allocation facility.--The term `mandatory 
     allocation facility' means--
       ``(A) a non-federally owned vessel or facility listed on 
     the National Priorities List with respect to which response 
     costs are incurred after the date of enactment of this 
     section and at which there are 2 or more potentially 
     responsive persons (including 1 or more persons that are 
     qualified for an exemption under section 107 (q), (r), or 
     (s)), if at least 1 potentially responsible person is viable 
     and not entitled to an exemption under section 107 (q), (r), 
     or (s);
       ``(B) a federally owned vessel or facility listed on the 
     National Priorities List with respect to which response costs 
     are incurred after the date of enactment of this section, and 
     with respect to which 1 or more potentially responsible 
     parties (other that a department, agency, or instrumentality 
     of the United States) are liable or potentially liable if at 
     least 1 potentially liable party is liable and not entitled 
     to an exemption under section 107 (q), (r), or (s); and
       ``(C) a codisposal landfill listed on the National 
     Priorities List with respect to which--
       ``(i) costs are incurred after the date of enactment of 
     this section; and
       (ii) by virtue of section 107(t)(3), 1 or more persons are 
     not entitled to the exemption under section 107(t)(1) or the 
     limitation under section 107(t)(2).
       ``(5) Orphan share.--The term `orphan share' means the 
     total of the allocated shares determined by the allocator 
     under subsection (h).
       ``(b) Allocations of Liability.--
       ``(1) Mandatory allocations.--For each mandatory allocation 
     facility involving 2 or more potentially responsible parties 
     (including 1 or more potentially responsible parties that are 
     qualified for an exemption under section 107 (q), (r), or 
     (s)), the Administrator shall conduct the allocation process 
     under this section.
       ``(2) Requested allocations.--For a facility (other than a 
     mandatory allocation facility) involving 2 or more 
     potentially responsible parties, the Administrator shall 
     conduct the allocation process under this section if the 
     allocation is requested in writing by a potentially 
     responsible party that has--
       ``(A) incurred response costs with respect to a response 
     action; or
       ``(B) resolved any liability to the United States with 
     respect to a response action in order to assist in allocating 
     shares among potentially responsible parties.
       ``(3) Permissive allocations.--For any facility (other than 
     a mandatory allocation facility or a facility with respect to 
     which a request is made under paragraph (2)) involving 2 or 
     more potentially responsible parties, the Administrator may 
     conduct the allocation process under this section if the 
     Administrator considers it to be appropriate to do so.
       ``(4) Orphan share.--An allocation performed at a vessel or 
     facility identified under subsection (b) (2) or (3) shall not 
     require payment of an orphan share under subsection (h) or 
     contribution under subsection (p).
       ``(5) Excluded facilities.--
       ``(A) In general.--A codisposal landfill listed on the 
     Natural Priorities List at which costs are incurred after 
     January 1, 1997, and at which all potentially responsible 
     persons are entitled to the liability exemption under section 
     107(t)(1). This section does not apply to a response action 
     at a mandatory allocation facility for which there was in 
     effect as of the date of enactment of this section, a 
     settlement, decree, or order that determines the liability 
     and allocated shares of all potentially responsible parties 
     with respect to the response action.
       ``(B) Availability of orphan share.--For any mandatory 
     allocation facility that is otherwise excluded by 
     subparagraph (A) and for which there was not in effect as of 
     the date of enactment of this section a final judicial order 
     that determined the liability of all parties to the action 
     for response costs incurred after the date of enactment of 
     this section, an allocation shall be conducted for the sole 
     purpose of determining the availability of orphan share 
     funding pursuant to subsection (h)(2) for any response costs 
     incurred after the date of enactment of this section.
       ``(6) Scope of allocations.--An allocation under this 
     section shall apply to--
       ``(A) response costs incurred after the date of enactment 
     of this section, with respect to a mandatory allocation 
     facility described in subsection (a)(4) (A), (B), or (C); and
       ``(B) response costs incurred at a facility that is the 
     subject of a requested or permissive allocation under 
     subsection (b) (2) or (3).
       ``(8) Other matters.--This section shall not limit or 
     affect--
       ``(A) the obligation of the Administrator to conduct the 
     allocation process for a response action at a facility that 
     has been the subject of a partial or expedited settlement 
     with respect to a response action that is not within the 
     scope of the allocation;
       ``(B) the ability of any person to resolve any liability at 
     a facility to any other person at any time before initiation 
     or completion

[[Page S255]]

     of the allocation process, subject to subsection (h)(3);
       ``(C) the validity, enforceability, finality, or merits of 
     any judicial or administrative order, judgment, or decree, 
     issued prior to the date of enactment of this section with 
     respect to liability under this Act; or
       ``(D) the validity, enforceability, finality, or merits of 
     any preexisting contract or agreement relating to any 
     allocation of responsibility or any indemnity for, or sharing 
     of, any response costs under this Act.
       ``(c) Moratorium on Litigation and Enforcement.--
       ``(1) In general.--No person may assert a claim for 
     recovery of a response cost or contribution toward a response 
     cost (including a claim for insurance proceeds) under this 
     Act or any other Federal or State law in connection with a 
     response action--
       ``(A) for which an allocation is required to be performed 
     under subsection (b)(1); or
       ``(B) for which the Administrator has initiated the 
     allocation process under this section,

     until the date that is 120 days after the date of issuance of 
     a report by the allocator under subsection (f)(4) or, if a 
     second or subsequent report is issued under subsection (m), 
     the date of issuance of the second or subsequent report.
       ``(2) Pending actions or claims.--If a claim described in 
     paragraph (1) is pending on the date of enactment of this 
     section or on initiation of an allocation under this section, 
     the portion of the claim pertaining to response costs that 
     are the subject of the allocation shall be stayed until the 
     date that is 120 days after the date of issuance of a report 
     by the allocator under subsection (f)(4) or, if a second or 
     subsequent report is issued under subsection (m), the date of 
     issuance of the second or subsequent report, unless the court 
     determines that a stay would result in manifest injustice.
       ``(3) Tolling of period of limitation.--
       ``(A) Beginning of tolling.--Any applicable period of 
     limitation with respect to a claim subject to paragraph (1) 
     shall be tolled beginning on the earlier of--
       ``(i) the date of listing of the facility on the National 
     Priorities List if the listing occurs after the date of 
     enactment of this section; or
       ``(ii) the date of initiation of the allocation process 
     under this section.
       ``(B) End of tolling.--A period of limitation shall be 
     tolled under subparagraph (A) until the date that is 180 days 
     after the date of issuance of a report by the allocator under 
     subsection (f)(4), or of a second or subsequent report under 
     subsection (m).
       ``(4) Retained authority.--Except as specifically provided 
     in this section, this section does not affect the authority 
     of the Administrator to--
       ``(A) exercise the powers conferred by section 103, 104, 
     105, 106, or 122;
       ``(B) commence an action against a party if there is a 
     contemporaneous filing of a judicial consent decree resolving 
     the liability of the party;
       ``(C) file a proof of claim or take other action in a 
     proceeding under title 11, United States Code; or
       ``(D) require implementation of a response action at an 
     allocation facility during the conduct of the allocation 
     process.
       ``(d) Allocation Process.--
       (1) Establishment.--Not later than 180 days after the date 
     of enactment of this section, the Administrator shall 
     establish by regulation a process for conduct of mandatory, 
     requested, and permissive allocations.
       ``(2) Requirements.--In developing the allocation process 
     under paragraph (1), the Administrator shall--
       ``(A) ensure that parties that are eligible for an 
     exemption from liability under section 107 (q), (r), (s), 
     (t), (v), and (w)--
       ``(i) are identified by the Administrator (before selection 
     of an allocator or by an allocator);
       ``(ii) at the earliest practicable opportunity, are 
     notified of their status; and
       ``(iii) are provided with appropriate written assurances 
     that they are not liable for response costs under this Act;
       ``(B) establish an expedited process for the selection, 
     appointment, and retention by contract of a impartial 
     allocator, acceptable to both potentially responsible parties 
     and a representative of the Fund, to conduct the allocation 
     process in a fair, efficient, and impartial manner;
       ``(C) permit any person to propose to name additional 
     potentially responsible parties as allocation parties, the 
     costs of any such nominated party's costs (including 
     reasonable attorney's fees) to be borne by the party that 
     proposes the addition of the party to the allocation process 
     if the allocator determines that there is no adequate basis 
     in law or fact to conclude that a party is liable based on 
     the information presented by the nominating party or 
     otherwise available to the allocator; and
       ``(D) require that the allocator adopt any settlement that 
     allocates 100 percent of the recoverable costs of a response 
     action at a facility to the signatories to the settlement, if 
     the settlement contains a waiver of--
       ``(i) a right of recovery from any other party of any 
     response cost that is the subject of the allocation; and
       ``(ii) a right to contribution under this Act,
     with respect to any response action that is within the scope 
     of allocation process.
       ``(2) Time limit.--The Administrator shall initiate the 
     allocation process for a facility not later than the earlier 
     of--
       ``(A) the date of completion of the facility evaluation or 
     remedial investigation for the facility; or
       ``(B) the date that is 60 days after the date of selection 
     of a removal action.
       ``(3) No judicial review.--There shall be no judicial 
     review of any action regarding selection of an allocator 
     under the regulation issued under this subsection.
       ``(4) Recovery of contract costs.--The costs of the 
     Administrator in retaining an allocator shall be considered 
     to be a response cost for all purposes of this Act.
       ``(e) Federal, State, and Local Agencies.--
       ``(1) In general.--Other than as set forth in this Act, any 
     Federal, State, or local governmental department, agency, or 
     instrumentality that is named as a potentially responsible 
     party or an allocation party shall be subject to, and be 
     entitled to the benefits of, the allocation process and 
     allocation determination under this section to the same 
     extent as any other party.
       ``(2) Orphan share.--The Administrator or the Attorney 
     General shall participate in the allocation proceeding as the 
     representative of the Fund from which any orphan share shall 
     be paid.
       ``(f) Allocation Authority.--
       ``(1) Information-gathering authorities.--
       ``(A) In general.--An allocator may request information 
     from any person in order to assist in the efficient 
     completion of the allocation process.
       ``(B) Requests.--Any person may request that an allocator 
     request information under this paragraph.
       ``(C) Authority.--An allocator may exercise the 
     information-gathering authority of the Administrator under 
     section 104(e), including issuing an administrative subpoena 
     to compel the production of a document or the appearance of a 
     witness.
       ``(D) Disclosure.--Notwithstanding any other law, any 
     information submitted to the allocator in response to a 
     subpoena issued under subparagraph (C) shall be exempt from 
     disclosure to any person under section 552 of title 5, United 
     States Code.
       ``(E) Orders.--In a case of contumacy or failure of a 
     person to obey a subpoena issued under subparagraph (C), an 
     allocator may request the Attorney General to--
       ``(i) bring a civil action to enforce the subpoena; or
       ``(ii) if the person moves to quash the subpoena, to defend 
     the motion.
       ``(F) Failure of attorney general to respond.--If the 
     Attorney General fails to provide any response to the 
     allocator within 30 days of a request for enforcement of a 
     subpoena or information request, the allocator may retain 
     counsel to commence a civil action to enforce the subpoena or 
     information request.
       ``(2) Additional authority.--An allocator may--
       ``(A) schedule a meeting or hearing and require the 
     attendance of allocation parties at the meeting or hearing;
       ``(B) sanction an allocation party for failing to cooperate 
     with the orderly conduct of the allocation process;
       ``(C) require that allocation parties wishing to present 
     similar legal or factual positions consolidate the 
     presentation of the positions;
       ``(D) obtain or employ support services, including 
     secretarial, clerical, computer support, legal, and 
     investigative services; and
       ``(E) take any other action necessary to conduct a fair, 
     efficient, and impartial allocation process.
       ``(3) Conduct of allocation process.--
       ``(A) In general.--The allocator shall conduct the 
     allocation process and render a decision based solely on the 
     provisions of this section, including the allocation factors 
     described in subsection (g).
       ``(B) Opportunity to be heard.--Each allocation party shall 
     be afforded an opportunity to be heard (orally or in writing, 
     at the option of an allocation party) and an opportunity to 
     comment on a draft allocation report.
       ``(C) Responses.--The allocator shall not be required to 
     respond to comments.
       ``(D) Streamlining.--The allocator shall make every effort 
     to streamline the allocation process and minimize the cost of 
     conducting the allocation.
       ``(4) Allocation report.--The allocator shall provide a 
     written allocation report to the Administrator and the 
     allocation parties that specifies the allocation share of 
     each allocation party and any orphan shares, as determined by 
     the allocator.
       ``(g) Equitable Factors for Allocation.--The allocator 
     shall prepare a nonbinding allocation of percentage shares of 
     responsibility to each allocation party and to the orphan 
     share, in accordance with this section and without regard to 
     any theory of joint and several liability, based on--
       ``(1) the amount of hazardous substances contributed by 
     each allocation party;
       ``(2) the degree of toxicity of hazardous substances 
     contributed by each allocation party;
       ``(3) the mobility of hazardous substances contributed by 
     each allocation party;
       ``(4) the degree of involvement of each allocation party in 
     the generation, transportation, treatment, storage, or 
     disposal of hazardous substances;
       ``(5) the degree of care exercised by each allocation party 
     with respect to hazardous substances, taking into account the 
     characteristics of the hazardous substances;

[[Page S256]]

       ``(6) the cooperation of each allocation party in 
     contributing to any response action and in providing complete 
     and timely information to the allocator; and
       ``(7) such other equitable factors as the allocator 
     determines are appropriate.
       ``(h) Orphan Shares.--
       ``(1) In general.--The allocator shall determine whether 
     any percentage of responsibility for the response action 
     shall be allocable to the orphan share.
       ``(2) Makeup of orphan share.--The orphan share shall 
     consist of--
       ``(A) any share that the allocator determines is 
     attributable to an allocation party that is insolvent or 
     defunct and that is not affiliated with any financially 
     viable allocation party;
       ``(B) the difference between the aggregate share that the 
     allocator determines is attributable to a person and the 
     aggregate share actually assumed by the person in a 
     settlement with the United States otherwise if--
       ``(i) the person is eligible for an expedited settlement 
     with the United States under section 122 based on limited 
     ability to pay response costs;
       ``(ii) the liability of the person is eliminated, limited, 
     or reduced by any provision of this Act; or
       ``(iii) the person settled with the United States before 
     the completion of the allocation.; and
       ``(C) all response costs at a codisposal landfill listed on 
     the National Priorities incurred after the date of enactment 
     of this section attributable to any person or group of 
     persons entitled to an exemption or limitation under section 
     107 (q), (r), (s), or (t).
       ``(4) Unattributable shares.--A share attributable to a 
     hazardous substance that the allocator determines was 
     disposed at the facility that cannot be attributed to any 
     identifiable party shall be distributed among the allocation 
     parties and the orphan share in accordance with the allocated 
     share assigned to each.
       ``(i) Information Requests.--
       ``(1) Duty to answer.--Each person that receives an 
     information request or subpoena from the allocator shall 
     provide a full and timely response to the request.
       ``(2) Certification.--An answer to an information request 
     by an allocator shall include a certification by a 
     representative that meets the criteria established in section 
     270.11(a) of title 40, Code of Federal Regulations (or any 
     successor regulation), that--
       ``(A) the answer is correct to the best of the 
     representative's knowledge;
       ``(B) the answer is based on a diligent good faith search 
     of records in the possession or control of the person to whom 
     the request was directed;
       ``(C) the answer is based on a reasonable inquiry of the 
     current (as of the date of the answer) officers, directors, 
     employees, and agents of the person to whom the request was 
     directed;
       ``(D) the answer accurately reflects information obtained 
     in the course of conducting the search and the inquiry;
       ``(E) the person executing the certification understands 
     that there is a duty to supplement any answer if, during the 
     allocation process, any significant additional, new, or 
     different information becomes known or available to the 
     person; and
       ``(F) the person executing the certification understands 
     that there are significant penalties for submitting false 
     information, including the possibility of a fine or 
     imprisonment for a knowing violation.
       ``(j) Penalties.--
       ``(1) Civil.--
       ``(A) In general.--A person that fails to submit a complete 
     and timely answer to an information request, a request for 
     the production of a document, or a summons from an allocator, 
     submits a response that lacks the certification required 
     under subsection (i)(2), or knowingly makes a false or 
     misleading material statement or representation in any 
     statement, submission, or testimony during the allocation 
     process (including a statement or representation in 
     connection with the nomination of another potentially 
     responsible party) shall be subject to a civil penalty of not 
     more than $10,000 per day of violation.
       ``(B) Assessment of penalty.--A penalty may be assessed by 
     the Administrator in accordance with section 109 or by any 
     allocation party in a citizen suit brought under section 310.
       ``(2) Criminal.--A person that knowingly and willfully 
     makes a false material statement or representation in the 
     response to an information request or subpoena issued by the 
     allocator under subsection (i) shall be considered to have 
     made a false statement on a matter within the jurisdiction of 
     the United States within the meaning of section 1001 of title 
     18, United States Code.
       ``(k) Document Repository; Confidentiality.--
       ``(1) Document repository.--
       ``(A) In general.--The allocator shall establish and 
     maintain a document repository containing copies of all 
     documents and information provided by the Administrator or 
     any allocation party under this section or generated by the 
     allocator during the allocation process.
       ``(B) Availability.--Subject to paragraph (2), the 
     documents and information in the document repository shall be 
     available only to an allocation party for review and copying 
     at the expense of the allocation party.
       ``(2) Confidentiality.--
       ``(A) In general.--Each document or material submitted to 
     the allocator or placed in the document repository and the 
     record of any information generated or obtained during the 
     allocation process shall be confidential.
       ``(B) Maintenance.--The allocator, each allocation party, 
     the Administrator, and the Attorney General--
       ``(i) shall maintain the documents, materials, and records 
     of any depositions or testimony adduced during the allocation 
     as confidential; and
       ``(ii) shall not use any such document or material or the 
     record in any other matter or proceeding or for any purpose 
     other than the allocation process.
       ``(C) Disclosure.--Notwithstanding any other law, the 
     documents and materials and the record shall not be subject 
     to disclosure to any person under section 552 of title 5, 
     United States Code.
       ``(D) Discovery and admissibility.--
       ``(i) In general.--Subject to clause (ii), the documents 
     and materials and the record shall not be subject to 
     discovery or admissible in any other Federal, State, or local 
     judicial or administrative proceeding, except--

       ``(I) a new allocation under subsection (m) or (r) for the 
     same response action; or
       ``(II) an initial allocation under this section for a 
     different response action at the same facility.

       ``(ii) Otherwise discoverable or admissible.--

       ``(I) Document or material.--If the original of any 
     document or material submitted to the allocator or placed in 
     the document repository was otherwise discoverable or 
     admissible from a party, the original document, if   
     subsequently   sought   from   the party, shall remain 
     discoverable or admissible.
       ``(II) Facts.--If a fact generated or obtained during the 
     allocation was otherwise discoverable or admissible from a 
     witness, testimony concerning the fact, if subsequently 
     sought from the witness, shall remain discoverable or 
     admissible.

       ``(3) No waiver of privilege.--The submission of testimony, 
     a document, or information under the allocation process shall 
     not constitute a waiver of any privilege applicable to the 
     testimony, document, or information under any Federal or 
     State law or rule of discovery or evidence.
       ``(4) Procedure if disclosure sought.--
       ``(A) Notice.--A person that receives a request for a 
     statement, document, or material submitted for the record of 
     an allocation proceeding, shall--
       ``(i) promptly notify the person that originally submitted 
     the item or testified in the allocation proceeding; and
       ``(ii) provide the person that originally submitted the 
     item or testified in the allocation proceeding an opportunity 
     to assert and defend the confidentiality of the item or 
     testimony.
       ``(B) Release.--No person may release or provide a copy of 
     a statement, document, or material submitted, or the record 
     of an allocation proceeding, to any person not a party to the 
     allocation except--
       ``(i) with the written consent of the person that 
     originally submitted the item or testified in the allocation 
     proceeding; or
       ``(ii) as may be required by court order.
       ``(5) Civil penalty.--
       ``(A) In general.--A person that fails to maintain the 
     confidentiality of any statement, document, or material or 
     the record generated or obtained during an allocation 
     proceeding, or that releases any information in violation of 
     this section, shall be subject to a civil penalty of not more 
     than $25,000 per violation.
       ``(B) Assessment of penalty.--A penalty may be assessed by 
     the Administrator in accordance with section 109 or by any 
     allocation party in a citizen suit brought under section 310.
       ``(C) Defenses.--In any administrative or judicial 
     proceeding, it shall be a complete defense that any 
     statement, document, or material or the record at issue under 
     subparagraph (A)--
       ``(i) was in, or subsequently became part of, the public 
     domain, and did not become part of the public domain as a 
     result of a violation of this subsection by the person 
     charged with the violation;
       ``(ii) was already known by lawful means to the person 
     receiving the information in connection with the allocation 
     process; or
       ``(iii) became known to the person receiving the 
     information after disclosure in connection with the 
     allocation process and did not become known as a result of 
     any violation of this subsection by the person charged with 
     the violation.
       ``(l) Rejection of Allocation Report.--
       ``(1) Rejection.--The Administrator and the Attorney 
     General may jointly reject a report issued by an allocator 
     only if the Administrator and the Attorney General jointly 
     publish, not later than 180 days after the Administrator 
     receives the report, a written determination that--
       ``(A) no rational interpretation of the facts before the 
     allocator, in light of the factors required to be considered, 
     would form a reasonable basis for the shares assigned to the 
     parties; or
       ``(B) the allocation process was directly and substantially 
     affected by bias, procedural error, fraud, or unlawful 
     conduct.
       ``(2) Finality.--A report issued by an allocator may not be 
     rejected after the date that is 180 days after the date on 
     which the United States accepts a settlement offer (excluding 
     an expedited settlement under section 122) based on the 
     allocation.

[[Page S257]]

       ``(3) Judicial review.--Any determination by the 
     Administrator or the Attorney General under this subsection 
     shall not be subject to judicial review unless 2 successive 
     allocation reports relating to the same response action are 
     rejected, in which case any allocation party may obtain 
     judicial review of the second rejection in a United States 
     district court under subchapter II of chapter 5 of part I of 
     title 5, United States Code.
       ``(4) Delegation.--The authority to make a determination 
     under this subsection may not be delegated to any officer or 
     employee below the level of an Assistant Administrator or 
     Acting Assistant Administrator or an Assistant Attorney 
     General or Acting Assistant Attorney General with authority 
     for implementing this Act.
       ``(m) Second and Subsequent Allocations.--
       ``(1) In general.--If a report is rejected under subsection 
     (l), the allocation parties shall select an allocator to 
     perform, on an expedited basis, a new allocation based on the 
     same record available to the previous allocator.
       ``(2) Moratorium and tolling.--The moratorium and tolling 
     provisions of subsection (c) shall be extended until the date 
     that is 180 days after the date of the issuance of any second 
     or subsequent allocation report under paragraph (1).
       ``(3) Same allocator.--The allocation parties may select 
     the same allocator who performed 1 or more previous 
     allocations at the facility, except that the Administrator 
     may determine that an allocator whose previous report at the 
     same facility has been rejected under subsection (l) is 
     unqualified to serve.
       ``(n) Settlements Based on Allocations.--
       ``(1) Definition.--In this subsection, the term `all 
     settlements' includes any orphan share allocated under 
     subsection (h).
       ``(2) In general.--Unless an allocation report is rejected 
     under subsection (l), any allocation party at a mandatory 
     allocation facility (including an allocation party whose 
     allocated share is funded partially or fully by orphan share 
     funding under subsection (h)) shall be entitled to resolve 
     the liability of the party to the United States for response 
     actions subject to allocation if, not later than 90 days 
     after the date of issuance of a report by the allocator, the 
     party--
       ``(A) offers to settle with the United States based on the 
     allocated share specified by the allocator; and
       ``(B) agrees to the other terms and conditions stated in 
     this subsection.
       ``(3) Provisions of settlements.--
       ``(A) In general.--A settlement based on an allocation 
     under this section--
       ``(i) may consist of a cash-out settlement or an agreement 
     for the performance of a response action; and
       ``(ii) shall include--

       ``(I) a waiver of contribution rights against all persons 
     that are potentially responsible parties for any response 
     action addressed in the settlement;
       ``(II) a covenant not to sue that is consistent with 
     section 122(f) and, except in the case of a cash-out 
     settlement, provisions regarding performance or adequate 
     assurance of performance of the response action;
       ``(III) a premium, calculated on a facility-specific basis 
     and subject to the limitations on premiums stated in 
     paragraph (5), that reflects the actual risk to the United 
     States of not collecting unrecovered response costs for the 
     response action, despite the diligent prosecution of 
     litigation against any viable allocation party that has not 
     resolved the liability of the party to the United States, 
     except that no premium shall apply if all allocation parties 
     participate in the settlement or if the settlement covers 100 
     percent of the response costs subject to the allocation;
       ``(IV) complete protection from all claims for contribution 
     regarding the response action addressed in the settlement; 
     and
       ``(V) provisions through which a settling party shall 
     receive prompt contribution from the Fund under subsection 
     (o) of any response costs incurred by the party for any 
     response action that is the subject of the allocation in 
     excess of the allocated share of the party, including the 
     allocated portion of any orphan share.

       ``(B) Right to contribution.--A right to contribution under 
     subparagraph (A)(ii)(V) shall not be contingent on recovery 
     by the United States of any response costs from any person 
     other than the settling party.
       ``(4) Report.--The Administrator shall report annually to 
     Congress on the administration of the allocation process 
     under this section, providing in the report--
       ``(A) information comparing allocation results with actual 
     settlements at multiparty facilities;
       ``(B) a cumulative analysis of response action costs 
     recovered through post-allocation litigation or settlements 
     of post-allocation litigation;
       ``(C) a description of any impediments to achieving 
     complete recovery; and
       ``(D) a complete accounting of the costs incurred in 
     administering and participating in the allocation process.
       ``(5) Premium.--In each settlement under this subsection, 
     the premium authorized--
       ``(A) shall be determined on a case-by-case basis to 
     reflect the actual litigation risk faced by the United States 
     with respect to any response action addressed in the 
     settlement; but
       ``(B) shall not exceed--
       ``(i) 5 percent of the total costs assumed by a settling 
     party if all settlements (including any orphan share) account 
     for more than 80 percent and less than 100 percent of 
     responsibility for the response action;
       ``(ii) 10 percent of the total costs assumed by a settling 
     party if all settlements (including any orphan share) account 
     for more than 60 percent and not more than 80 percent of 
     responsibility for the response action;
       ``(iii) 15 percent of the total costs assumed by a settling 
     party if all settlements (including any orphan share) account 
     for more than 40 percent and not more than 60 percent of 
     responsibility for the response action; or
       ``(iv) 20 percent of the total costs assumed by a settling 
     party if all settlements (including any orphan share) account 
     for 40 percent or less of responsibility for the response; 
     and
       ``(C) shall be reduced proportionally by the percentage of 
     the allocated share for that party paid through orphan 
     funding under subsection (h).
       ``(o) Funding of Orphan Shares.--
       ``(1) Contribution.--For each settlement agreement entered 
     into under subsection (n), the Administrator shall promptly 
     reimburse the allocation parties for any costs incurred that 
     are attributable to the orphan share, as determined by the 
     allocator.
       ``(2) Entitlement.--Paragraph (1) constitutes an 
     entitlement to any allocation party eligible to receive a 
     reimbursement.
       ``(3) Amounts owed.--
       ``(A) Delay if funds are unavailable.--If funds are 
     unavailable in any fiscal year to reimburse all allocation 
     parties pursuant to paragraph (1), the Administrator may 
     delay payment until funds are available.
       ``(B) Priority.--The priority for reimbursement shall be 
     based on the length of time that has passed since the 
     settlement between the United States and the allocation 
     parties pursuant to subsection (n).
       ``(C) Payment from funds made available in subsequent 
     fiscal years.--Any amount due and owing in excess of 
     available appropriations in any fiscal year shall be paid 
     from amounts made available in subsequent fiscal years, along 
     with interest on the unpaid balances at the rate equal to 
     that of the current average market yield on outstanding 
     marketable obligations of the United States with a maturity 
     of 1 year.
       ``(4) Documentation and auditing.--The Administrator--
       ``(A) shall require that any claim for contribution be 
     supported by documentation of actual costs incurred; and
       ``(B) may require an independent auditing of any claim for 
     contribution.
       ``(p) Post-Allocation Contribution.--
       ``(1) In general.--An allocation party (including a party 
     that is subject to an order under section 106 or a settlement 
     decree) that incurs costs after the date of enactment of this 
     section for implementation of a response action that is the 
     subject of an allocation under this section to an extent that 
     exceeds the percentage share of the allocation party, as 
     determined by the allocator, shall be entitled to prompt 
     payment of contribution for the excess amount, including any 
     orphan share, from the Fund, unless the allocation report is 
     rejected under subsection (l).
       ``(2) Not contingent.--The right to contribution under 
     paragraph (1) shall not be contingent on recovery by the 
     United States of a response cost from any other person.
       ``(3) Terms and conditions.--
       ``(A) Risk premium.--A contribution payment shall be 
     reduced by the amount of the litigation risk premium under 
     subsection (n)(5) that would apply to a settlement by the 
     allocation party concerning the response action, based on the 
     total allocated shares of the parties that have not reached a 
     settlement with the United States.
       ``(B) Timing.--
       ``(i) In general.--A contribution payment shall be paid out 
     during the course of the response action that was the subject 
     of the allocation, using reasonable progress payments at 
     significant milestones.
       ``(ii) Construction.--Contribution for the construction 
     portion of the work shall be paid out not later than 120 days 
     after the date of completion of the construction.
       ``(C) Equitable offset.--A contribution payment is subject 
     to equitable offset or recoupment by the Administrator at any 
     time if the allocation party fails to perform the work in a 
     proper and timely manner.
       ``(D) Independent auditing.--The Administrator may require 
     independent auditing of any claim for contribution.
       ``(E) Waiver.--An allocation party seeking contribution 
     waives the right to seek recovery of response costs in 
     connection with the response action, or contribution toward 
     the response costs, from any other person.
       ``(F) Bar.--An administrative order shall be in lieu of any 
     action by the United States or any other person against the 
     allocation party for recovery of response costs in connection 
     with the response action, or for contribution toward the 
     costs of the response action.
       ``(q) Post-Settlement Litigation.--
       ``(1) In general.--Subject to subsections (m) and (n), and 
     on the expiration of the moratorium period under subsection 
     (c)(4), the Administrator may commence an action under 
     section 107 against an allocation party that has not resolved 
     the liability of the party to the United States following 
     allocation and may seek to recover response costs not 
     recovered through settlements with other persons.
       ``(2) Orphan share.--The recoverable costs shall include 
     any orphan share determined under subsection (h), but shall 
     not include any share allocated to a Federal, State, or

[[Page S258]]

     local governmental agency, department, or instrumentality.
       ``(3) Impleader.--A defendant in an action under paragraph 
     (1) may implead an allocation party only if the allocation 
     party did not resolve liability to the United States.
       ``(4) Certification.--In commencing or maintaining an 
     action under section 107 against an allocation party after 
     the expiration of the moratorium period under subsection 
     (c)(4), the Attorney General shall certify in the complaint 
     that the defendant failed to settle the matter based on the 
     share that the allocation report assigned to the party.
       ``(5) Response costs.--
       ``(A) Allocation procedure.--The cost of implementing the 
     allocation procedure under this section, including reasonable 
     fees and expenses of the allocator, shall be considered as a 
     necessary response cost.
       ``(B) Funding of orphan shares.--The cost attributable to 
     funding an orphan share under this section--
       ``(i) shall be considered as a necessary cost of response 
     cost; and
       ``(ii) shall be recoverable in accordance with section 107 
     only from an allocation party that does not reach a 
     settlement and does not receive an administrative order under 
     subsection (n) or (p).
       ``(r) New Information.--
       ``(1) In general.--An allocation under this section shall 
     be final, except that any settling party, including the 
     United States, may seek a new allocation with respect to the 
     response action that was the subject of the settlement by 
     presenting the Administrator with clear and convincing 
     evidence that--
       ``(A) the allocator did not have information concerning--
       ``(i) 35 percent or more of the materials containing 
     hazardous substances at the facility; or
       ``(ii) 1 or more persons not previously named as an 
     allocation party that contributed 15 percent or more of 
     materials containing hazardous substances at the facility; 
     and
       ``(B) the information was discovered subsequent to the 
     issuance of the report by the allocator.
       ``(2) New allocation.--Any new allocation of 
     responsibility--
       ``(A) shall proceed in accordance with this section;
       ``(B) shall be effective only after the date of the new 
     allocation report; and
       ``(C) shall not alter or affect the original allocation 
     with respect to any response costs previously incurred.
       ``(s) Discretion of Allocator.--A contract by which the 
     Administrator retain an allocator shall give the allocator 
     broad discretion to conduct the allocation process in a fair, 
     efficient, and impartial manner, and the Administrator shall 
     not issue any rule or order that limits the discretion of the 
     allocator in the conduct of the allocation.
       ``(t) Illegal Activities.--Section 107 (o), (p), (q), (r), 
     (s), (t), (u), (v), and (w) and section 112(g) shall not 
     apply to any person whose liability for response costs under 
     section 107(a)(1) is otherwise based on any act, omission, or 
     status that is determined by a court or administrative body 
     of competent jurisdiction, within the applicable statute of 
     limitation, to have been a violation of any Federal or State 
     law pertaining to the treatment, storage, disposal, or 
     handling of hazardous substances if the violation pertains to 
     a hazardous substance, the release or threat of release of 
     which caused the incurrence of response costs at the vessel 
     or facility.''.

     SEC. 504. LIABILITY OF RESPONSE ACTION CONTRACTORS.

       (a) Liability of Contractors.--Section 101(20) of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9601(20)) is amended by 
     adding at the end the following:
       ``(H) Liability of contractors.--
       ``(i) In general.--The term `owner or operator' does not 
     include a response action contractor (as defined in section 
     119(e)).
       ``(ii) Liability limitations.--A person described in clause 
     (i) shall not, in the absence of negligence by the person, be 
     considered to--

       ``(I) cause or contribute to any release or threatened 
     release of a hazardous substance, pollutant, or contaminant;
       ``(II) arrange for disposal or treatment of a hazardous 
     substance, pollutant, or contaminant;
       ``(III) arrange with a transporter for transport or 
     disposal or treatment of a hazardous substance, pollutant, or 
     contaminant; or
       ``(IV) transport a hazardous substance, pollutant, or 
     contaminant.

       ``(iii) Exception.--This subparagraph does not apply to a 
     person potentially responsible under section 106 or 107 other 
     than a person associated solely with the provision of a 
     response action or a service or equipment ancillary to a 
     response action.''.
       (b) National Uniform Negligence Standard.--Section 119(a) 
     of the Comprehensive Environmental Response, Compensation, 
     and Liability Act of 1980 (42 U.S.C. 9619(a)) is amended--
       (1) in paragraph (1) by striking ``title or under any other 
     Federal law'' and inserting ``title or under any other 
     Federal or State law''; and
       (2) in paragraph (2)--
       (A) by striking ``(2) Negligence, etc.--Paragraph (1)'' and 
     inserting the following:
       ``(2) Negligence and intentional misconduct; application of 
     state law.--
       ``(A) Negligence and intentional misconduct.--
       ``(i) In general.--Paragraph (1)''; and
       (B) by adding at the end the following:
       ``(ii) Standard.--Conduct under clause (i) shall be 
     evaluated based on the generally accepted standards and 
     practices in effect at the time and place at which the 
     conduct occurred.
       ``(iii) Plan.--An activity performed in accordance with a 
     plan that was approved by the Administrator shall not be 
     considered to constitute negligence under clause (i).
       ``(B) Application of state law.--Paragraph (1) shall not 
     apply in determining the liability of a response action 
     contractor under the law of a State if the State has adopted 
     by statute a law determining the liability of a response 
     action contractor.''.
       (c) Extension of Indemnification Authority.--Section 
     119(c)(1) of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 
     9619(c)(1)) is amended by adding at the end the following: 
     ``The agreement may apply to a claim for negligence arising 
     under Federal or State law.''.
       (d) Indemnification Determinations.--Section 119(c) of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9619(c)) is amended by 
     striking paragraph (4) and inserting the following:
       ``(4) Decision to indemnify.--
       ``(A) In general.--For each response action contract for a 
     vessel or facility, the Administrator shall make a decision 
     whether to enter into an indemnification agreement with a 
     response action contractor.
       ``(B) Standard.--The Administrator shall enter into an 
     indemnification agreement to the extent that the potential 
     liability (including the risk of harm to public health, 
     safety, environment, and property) involved in a response 
     action exceed or are not covered by insurance available to 
     the contractor at the time at which the response action 
     contract is entered into that is likely to provide adequate 
     long-term protection to the public for the potential 
     liability on fair and reasonable terms (including 
     consideration of premium, policy terms, and deductibles).
       ``(C) Diligent efforts.--The Administrator shall enter into 
     an indemnification agreement only if the Administrator 
     determines that the response action contractor has made 
     diligent efforts to obtain insurance coverage from non-
     Federal sources to cover potential liabilities.
       ``(D) Continued diligent efforts.--An indemnification 
     agreement shall require the response action contractor to 
     continue, not more frequently than annually, to make diligent 
     efforts to obtain insurance coverage from non-Federal sources 
     to cover potential liabilities.
       ``(E) Limitations on indemnification.--An indemnification 
     agreement provided under this subsection shall include 
     deductibles and shall place limits on the amount of 
     indemnification made available in amounts determined by the 
     contracting agency to be appropriate in light of the unique 
     risk factors associated with the cleanup activity.''.
       (e) Indemnification for Threatened Releases.--Section 
     119(c)(5)(A) of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 
     9619(c)(5)(A)) is amended by inserting ``or threatened 
     release'' after ``release'' each place it appears.
       (f) Extension of Coverage to All Response Actions.--Section 
     119(e)(1) of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 
     9619(e)(1)) is amended--
       (1) in subparagraph (D) by striking ``carrying out an 
     agreement under section 106 or 122''; and
       (2) in the matter following subparagraph (D)--
       (A) by striking ``any remedial action under this Act at a 
     facility listed on the National Priorities List, or any 
     removal under this Act,'' and inserting ``any response 
     action,''; and
       (B) by inserting before the period at the end the 
     following: ``or to undertake appropriate action necessary to 
     protect and restore any natural resource damaged by the 
     release or threatened release''.
       (g) Definition of Response Action Contractor.--Section 
     119(e)(2)(A)(i) of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 
     9619(e)(2)(A)(i)) is amended by striking ``and is carrying 
     out such contract'' and inserting ``covered by this section 
     and any person (including any subcontractor) hired by a 
     response action contractor''.
       (h) Surety Bonds.--Section 119 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9619) is amended--
       (1) in subsection (e)(2)(C) by striking ``, and before 
     January 1, 1996,''; and
       (2) in subsection (g)(5) by striking ``, or after December 
     31, 1995''.
       (i) National Uniform Statute of Repose.--Section 119 of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9619) is amended by adding 
     at the end the following:
       ``(h) Limitation on Actions Against Response Action 
     Contractors.--
       ``(1) In general.--No action may be brought as a result of 
     the performance of services under a response contract against 
     a response action contractor after the date that is 7 years 
     after the date of completion of work at any facility under 
     the contract to recover--
       ``(A) injury to property, real or personal;
       ``(B) personal injury or wrongful death;

[[Page S259]]

       ``(C) other expenses or costs arising out of the 
     performance of services under the contract; or
       ``(D) contribution or indemnity for damages sustained as a 
     result of an injury described in subparagraphs (A) through 
     (C).
       ``(2) Exception.--Paragraph (1) does not bar recovery for a 
     claim caused by the conduct of the response action contractor 
     that is grossly negligent or that constitutes intentional 
     misconduct.
       ``(3) Indemnification.--This subsection does not affect any 
     right of indemnification that a response action contractor 
     may have under this section or may acquire by contract with 
     any person.
       ``(i) State Standards of Repose.--Subsections (a)(1) and 
     (h) shall not apply in determining the liability of a 
     response action contractor if the State has enacted a statute 
     of repose determining the liability of a response action 
     contractor.''.

     SEC. 505. RELEASE OF EVIDENCE.

       (a) Timely Access to Information Furnished Under Section 
     104(e).--Section 104(e)(7)(A) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9604(e)(7)(A)) is amended by inserting after 
     ``shall be available to the public'' the following: ``not 
     later than 14 days after the records, reports, or information 
     is obtained''.
       (b) Requirement To Provide Potentially Responsible Parties 
     Evidence of Liability.--
       (1) Abatement actions.--Section 106(a) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9606(a)) is amended--
       (A) by striking ``(a) In addition'' and inserting the 
     following: ``(a) Order.--''
       ``(1) In general.--In addition''; and
       (B) by adding at the end the following:
       ``(2) Contents of order.--An order under paragraph (1) 
     shall provide information concerning the evidence that 
     indicates that each element of liability described in section 
     107(a)(1) (A), (B), (C), and (D), as applicable, is 
     present.''.
       (2) Settlements.--Section 122(e)(1) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9622(e)(1)) is amended by inserting after 
     subparagraph (C) the following:
       ``(D) For each potentially responsible party, the evidence 
     that indicates that each element of liability contained in 
     section 107(a)(1) (A), (B), (C), and (D), as applicable, is 
     present.''.

     SEC. 506. CONTRIBUTION PROTECTION.

       Section 113(f)(2) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9613(f)(2)) is amended in the first sentence by inserting 
     ``or cost recovery'' after ``contribution''.

     SEC. 507. TREATMENT OF RELIGIOUS, CHARITABLE, SCIENTIFIC, AND 
                   EDUCATIONAL ORGANIZATIONS AS OWNERS OR 
                   OPERATORS.

       (a) Definition.--Section 101(20) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601(20)) (as amended by section 502(a)) is 
     amended by adding at the end the following:
       ``(I) Religious, charitable, scientific, and educational 
     organizations.--The term `owner or operator' includes an 
     organization described in section 501(c)(3) of the Internal 
     Revenue Code of 1986 that is organized and operated 
     exclusively for religious, charitable, scientific, or 
     educational purposes and that holds legal or equitable title 
     to a vessel or facility.''.
       (b) Limitation on Liability.--Section 107 of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9607) (as amended by section 
     501(b)) is amended by adding at the end the following:
       ``(u) Religious, Charitable, Scientific, and Educational 
     Organizations.--
       ``(1) Limitation on liability.--Subject to paragraph (2), 
     if an organization described in section 101(20)(I) holds 
     legal or equitable title to a vessel or facility as a result 
     of a charitable gift that is allowable as a deduction under 
     section 170, 2055, or 2522 of the Internal Revenue Code of 
     1986 (determined without regard to dollar limitations), the 
     liability of the organization shall be limited to the lesser 
     of the fair market value of the vessel or facility or the 
     actual proceeds of the sale of the vessel or facility 
     received by the organization.
       ``(2) Conditions.--In order for an organization described 
     in section 101(20)(I) to be eligible for the limited 
     liability described in paragraph (1), the organization 
     shall--
       ``(A) provide full cooperation, assistance, and vessel or 
     facility access to persons authorized to conduct response 
     actions at the vessel or facility, including the cooperation 
     and access necessary for the installation, preservation of 
     integrity, operation, and maintenance of any complete or 
     partial response action at the vessel or facility;
       ``(B) provide full cooperation and assistance to the United 
     States in identifying and locating persons who recently 
     owned, operated, or otherwise controlled activities at the 
     vessel or facility;
       ``(C) establish by a preponderance of the evidence that all 
     active disposal of hazardous substances at the vessel or 
     facility occurred before the organization acquired the vessel 
     or facility; and
       ``(D) establish by a preponderance of the evidence that the 
     organization did not cause or contribute to a release or 
     threatened release of hazardous substances at the vessel or 
     facility.
       ``(3) Limitation.--Nothing in this subsection affects the 
     liability of a person other than a person described in 
     section 101(20)(I) that meets the conditions specified in 
     paragraph (2).''.

     SEC. 508. COMMON CARRIERS.

       Section 107(b)(3) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9607(b)(3)) is amended by striking ``a published tariff and 
     acceptance'' and inserting ``a contract''.

     SEC. 509. LIMITATION ON LIABILITY OF RAILROAD OWNERS.

       Section 107 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9607) (as 
     amended by section 507(b)) is amended by adding at the end 
     the following:
       ``(v) Limitation on Liability of Railroad Owners.--
     Notwithstanding subsection (a)(1), a person that does not 
     impede the performance of a response action or natural 
     resource restoration shall not be liable under this Act to 
     the extent that liability is based solely on the status of 
     the person as a railroad owner or operator of a spur track, 
     including a spur track over land subject to an easement, to a 
     facility that is owned or operated by a person that is not 
     affiliated with the railroad owner or operator, if--
       ``(1) the spur track provides access to a main line or 
     branch line track that is owned or operated by the railroad;
       ``(2) the spur track is 10 miles long or less; and
       ``(3) the railroad owner or operator does not cause or 
     contribute to a release or threatened release at the spur 
     track.''.

     SEC. 510. LIABILITY OF RECYCLERS.

       (a) Definitions.--Section 101 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601) (as amended by section 501(a)) is 
     amended by adding at the end the following:
       ``(47) Recyclable material.--The term `recyclable 
     material'--
       ``(A) means--
       ``(i) scrap glass, paper, plastic, rubber, or textile;
       ``(ii) scrap metal; and
       ``(iii) a spent battery; and
       ``(B) includes small amounts of any type of material that 
     is incident to or adherent to material described in 
     subparagraph (A) as a result of the normal and customary use 
     of the material prior to the exhaustion of the useful life of 
     the material.
       ``(48) Scrap metal.--The term `scrap metal'--
       ``(A) means--
       ``(i) scrap metal (as that term is defined by the 
     Administrator for purposes of the Solid Waste Disposal Act 
     (42 U.S.C. 6901 et seq.) in section 261.1(c)(6) of title 40, 
     Code of Federal Regulations, or any successor regulation); 
     and
       ``(ii) a metal byproduct (such as slag, skimming, or dross) 
     that is not 1 of the primary products of, and is not solely 
     or separately produced by, a production process; but
       ``(B) does not include--
       ``(i) any steel shipping container that--

       ``(I) has (or, when intact, had) a capacity of not less 
     than 30 and not more than 3,000 liters; and
       ``(II) has any hazardous substance contained in or adherent 
     to it (not including any small pieces of metal that may 
     remain after a hazardous substance has been removed from the 
     container or any alloy or other material that may be 
     chemically or metallurgically bonded in the steel itself); or

       ``(ii) any material described in subparagraph (A) that the 
     Administrator may by regulation exclude from the meaning of 
     the term based on a finding that inclusion of the material 
     within the meaning of the term would result in a threat to 
     human health or the environment.''.
       (b) Liability of Recyclers.--Section 107 of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9607) (as amended by section 
     509) is amended by adding at the end the following:
       ``(w) Liability of Recyclers.--
       ``(1) Applicability of subsection.--Subject to paragraph 
     (10), this subsection shall be applied to determine the 
     liability of any person with respect to a transaction engaged 
     in before, on, or after the date of enactment of this 
     subsection.
       ``(2) Relief from liability.--Except as provided in 
     paragraph (6), a person that arranges for the recycling of 
     recyclable material shall not be liable under subsection 
     (a)(1) (C) or (D).
       ``(3) Scrap glass, paper, plastic, rubber, or textile.--For 
     the purposes of paragraph (2), a person shall be considered 
     to arrange for the recycling of scrap glass, paper, plastic, 
     rubber, or textile if the person sells or otherwise arranges 
     for the recycling of the recyclable material in a transaction 
     in which, at the time of the transaction--
       ``(A) the recyclable material meets a commercial 
     specification;
       ``(B) a market exists for the recyclable material;
       ``(C) a substantial portion of the recyclable material is 
     made available for use as a feedstock for the manufacture of 
     a new saleable product; and
       ``(D)(i) the recyclable material is a replacement or 
     substitute for a virgin raw material; or
       ``(ii) the product to be made from the recyclable material 
     is a replacement or substitute for a product made, in whole 
     or in part, from a virgin raw material.

[[Page S260]]

       ``(4) Scrap metal.--For the purposes of paragraph (2), a 
     person shall be considered to arrange for the recycling of 
     scrap metal if the person sells or otherwise arranges for the 
     recycling of the scrap metal in a transaction in which, at 
     the time of the transaction--
       ``(A) the conditions stated in subparagraphs (A) through 
     (D) of paragraph (3) are met; and
       ``(B) in the case of a transaction that occurs after the 
     effective date of a standard, established by the 
     Administrator by regulation under the Solid Waste Disposal 
     Act (42 U.S.C. 6901 et seq.), regarding the storage, 
     transport, management, or other activity associated with the 
     recycling of scrap metal, the person is in compliance with 
     the standard.
       ``(5) Spent batteries.--
       ``(A) In general.--For the purposes of paragraph (1), a 
     person shall be considered to arrange for the recycling of a 
     spent lead-acid battery, nickel-cadmium battery, or other 
     battery if the person sells or otherwise arranges for the 
     recycling of the battery in a transaction in which, at the 
     time of the transaction--
       ``(i) the conditions stated in subparagraphs (A) through 
     (D) of paragraph (3) are met;
       ``(ii) the person does not reclaim the valuable components 
     of the battery; and
       ``(iii) in the case of a transaction that occurs after the 
     effective date of a standard, established by the 
     Administrator by regulation under authority of the Solid 
     Waste Disposal Act (42 U.S.C. 6901 et seq.) or the Mercury-
     Containing and Rechargeable Battery Management Act), 
     regarding the storage, transport, management, or other 
     activity associated with the recycling of batteries, the 
     person is in compliance with the standard.
       ``(B) Tolling arrangements.--A person that, by contract, 
     arranges for reclamation and smelting of a battery by a third 
     party not a party to a transaction under subparagraph (A) and 
     receives from the third party material reclaimed from the 
     battery shall not, by reason of the receipt of the reclaimed 
     material, be considered to reclaim the valuable components of 
     the battery for purposes of subparagraph (A)(ii).
       ``(6) Grounds for establishing liability.--
       ``(A) In general.--A person that arranges for the recycling 
     of recyclable material that would be liable under subsection 
     (a)(1) (C) or (D) but for paragraph (2) shall be liable 
     notwithstanding that paragraph if--
       ``(i) the person has an objectively reasonable basis to 
     believe at the time of the recycling transaction that--

       ``(I) the recyclable material will not be recycled;
       ``(II) the recyclable material will be burned as fuel, for 
     energy recovery or incineration;
       ``(III) the consuming facility is not in compliance with a 
     substantive provision (including a requirement to obtain a 
     permit for handling, processing, reclamation, or other 
     management activity associated with recyclable material) of 
     any Federal, State, or local environmental law (including a 
     regulation), or a compliance order or decree issued under 
     such a law, applicable to the handling, processing, 
     reclamation, or other management activity associated with the 
     recyclable material; or
       ``(IV) a hazardous substance has been added to the 
     recyclable material for purposes other than processing for 
     recycling;

       ``(ii) the person fails to exercise reasonable care with 
     respect to the management or handling of the recyclable 
     material (for which purpose a failure to adhere to customary 
     industry practices current at the time of the recycling 
     transaction designed to minimize, through source control, 
     contamination of the recyclable material by hazardous 
     substances shall be considered to be a failure to exercise 
     reasonable care); or
       ``(iii) any item of the recyclable material contains--

       ``(I) polychlorinated biphenyls at a concentration in 
     excess of 50 parts per million (or any different 
     concentration specified in any applicable standard that may 
     be issued under other Federal law after the date of enactment 
     of this subsection); or
       ``(II) in the case of a transaction involving scrap paper, 
     any concentration of a hazardous substance that the 
     Administrator determines by regulation, issued after the date 
     of enactment of this subsection and before the date of the 
     transaction, to be likely to cause significant risk to human 
     health or the environment as a result of its inclusion in the 
     paper recycling process.

       ``(B) Objectively reasonable basis for belief.--Whether a 
     person has an objectively reasonable basis for belief 
     described in subparagraph (A)(i) shall be determined using 
     criteria that include--
       ``(i) the size of the person's business;
       ``(ii) customary industry practices (including practices 
     designed to minimize, through source control, contamination 
     of recyclable material by hazardous substances);
       ``(iii) the price paid or received in the recycling 
     transaction; and
       ``(iv) the ability of the person to detect the nature of 
     the consuming facility's operations concerning handling, 
     processing, or reclamation of the recyclable material or 
     other management activities associated with the recyclable 
     material.
       ``(7) Regulations.--The Administrator may issue a 
     regulation that clarifies the meaning of any term used in 
     this subsection or by any other means makes clear the 
     application of this subsection to any person.
       ``(8) Liability for attorney's fees for certain actions.--A 
     person that, after the date of enactment of this subsection, 
     commences a civil action in contribution against a person 
     that is not liable by operation of this subsection shall be 
     liable to that person for all reasonable costs of defending 
     the action, including all reasonable attorney's fees and 
     expert witness fees.
       ``(9) Relationship to liability under other laws.--Nothing 
     in this subsection shall affect--
       ``(A) liability under any other Federal, State, or local 
     law (including a regulation); or
       ``(B) the authority of the Administrator to issue 
     regulations under the Solid Waste Disposal Act (42 U.S.C. 
     6901 et seq.) or any other law.
       ``(10) Transition rules.--
       ``(A) Decree or order entered prior to january 1, 1997.--
     This subsection shall not affect any judicial decree or order 
     that was entered or any administrative order that became 
     effective prior to January 1, 1997, unless, as of the date of 
     enactment of this subsection, the judicial decree or order 
     remained subject to appeal or the administrative order 
     remained subject to judicial review.
       ``(B) Decree or order entered on or after january 1, 
     1997.--Any consent decree with the United States, 
     administrative order, or judgment in favor of the United 
     States that was entered, or in the case of an administrative 
     order, became effective, on or after January 1, 1997, and 
     before the date of enactment of this subsection shall be 
     reopened at the request of any party to the recycling 
     transaction for a determination of the party's liability to 
     the United States based on this subsection.
       ``(C) Effect on nonrecyclers.--
       ``(i) Costs borne by the united states.--All costs 
     attributable to a recycling transaction that, absent this 
     subsection, would be borne by a person that is relieved of 
     liability (in whole or in part) by this subsection shall be 
     borne by the United States, to the extent that the person is 
     relieved of liability.
       ``(ii) No recovery from the united states.--Notwithstanding 
     clause (i), no person shall be entitled to recover any sums 
     paid to the United States prior to the date of enactment of 
     this subsection in satisfaction of any liability attributable 
     to a recycling transaction.
       ``(D) Contribution among parties to recycling 
     transactions.--Notwithstanding the other provisions of this 
     subsection, a person that is relieved of liability by this 
     subsection, but incurred response costs for a response action 
     taken prior to the date of enactment of this subsection, may 
     bring a civil action for contribution for the costs against--
       ``(i) any person that is liable under section 107(a)(1) (A) 
     or (B); or
       ``(ii) any person that, before the date of enactment of 
     this subsection--

       ``(I) received and failed to comply with an administrative 
     order issued under section 104 or 106; or
       ``(II) received and did not accept a written offer from the 
     United States to enter into a consent decree or 
     administrative order.''.

                      TITLE VI--FEDERAL FACILITIES

     SEC. 601. TRANSFER OF AUTHORITIES.

       Section 120 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9620) is 
     amended by striking subsection (g) and inserting the 
     following:
       ``(g) Transfer of Authorities.--
       ``(1) Definitions.--In this section:
       ``(A) Interagency agreement.--The term `interagency 
     agreement' means an interagency agreement under this section.
       ``(B) Transfer agreement.--The term `transfer agreement' 
     means a transfer agreement under paragraph (3).
       ``(C) Transferee state.--The term `transferee State' means 
     a State to which authorities have been transferred under a 
     transfer agreement.
       ``(2) State application for transfer of authorities.--A 
     State may apply to the Administrator to exercise the 
     authorities vested in the Administrator under this Act at any 
     facility located in the State that is--
       ``(A) owned or operated by any department, agency, or 
     instrumentality of the United States (including the 
     executive, legislative, and judicial branches of government); 
     and
       ``(B) listed on the National Priorities List.
       ``(3) Transfer of authorities.--
       ``(A) Determinations.--The Administrator shall enter into a 
     transfer agreement to transfer to a State the authorities 
     described in paragraph (2) if the Administrator determines 
     that--
       ``(i) the State has the ability to exercise such 
     authorities in accordance with this Act, including adequate 
     legal authority, financial and personnel resources, 
     organization, and expertise;
       ``(ii) the State has demonstrated experience in exercising 
     similar authorities;
       ``(iii) the State has agreed to be bound by all Federal 
     requirements and standards under section 133 governing the 
     design and implementation of the facility evaluation, 
     remedial action plan, and remedial design; and
       ``(iv) the State has agreed to abide by the terms of any 
     interagency agreement or agreements covering the Federal 
     facility or facilities with respect to which authorities are 
     being transferred in effect at the time of the transfer of 
     authorities.
       ``(B) Contents of transfer agreement.--A transfer 
     agreement--

[[Page S261]]

       ``(i) shall incorporate the determinations of the 
     Administrator under subparagraph (A); and
       ``(ii) in the case of a transfer agreement covering a 
     facility with respect to which there is no interagency 
     agreement that specifies a dispute resolution process, shall 
     require that within 120 days after the effective date of the 
     transfer agreement, the State shall agree with the head of 
     the Federal department, agency, or instrumentality that owns 
     or operates the facility on a process for resolution of any 
     disputes between the State and the Federal department, 
     agency, or instrumentality regarding the selection of a 
     remedial action for the facility; and
       ``(iii) shall not impose on the transferee State any term 
     or condition other than that the State meet the requirements 
     of subparagraph (A).
       ``(4) Effect of transfer.--
       ``(A) State authorities.--A transferee State--
       ``(i) shall not be deemed to be an agent of the 
     Administrator but shall exercise the authorities transferred 
     under a transfer agreement in the name of the State; and
       ``(ii) shall have exclusive authority to exercise 
     authorities that have been transferred.
       ``(B) Effect on interagency agreements.--Nothing in this 
     subsection shall require, authorize, or permit the 
     modification or revision of an interagency agreement covering 
     a facility with respect to which authorities have been 
     transferred to a State under a transfer agreement (except for 
     the substitution of the transferee State for the 
     Administrator in the terms of the interagency agreement, 
     including terms stating obligations intended to preserve the 
     confidentiality of information) without the written consent 
     of the Governor of the State and the head of the department, 
     agency, or instrumentality.
       ``(5) Selected remedial action.--The remedial action 
     selected for a facility under section 133 by a transferee 
     State shall constitute the only remedial action required to 
     be conducted at the facility, and the transferee State shall 
     be precluded from enforcing any other remedial action 
     requirement under Federal or State law, except for--
       ``(A) any corrective action under the Solid Waste Disposal 
     Act (42 U.S.C. 6901 et seq.) that was initiated prior to the 
     date of enactment of this subsection; and
       ``(B) any remedial action in excess of remedial action 
     under section 133 that the State selects in accordance with 
     paragraph (10).
       ``(6) Deadline.--
       ``(A) In general.--The Administrator shall make a 
     determination on an application by a State under paragraph 
     (2) not later than 120 days after the date on which the 
     Administrator receives the application.
       ``(B) Failure to act.--If the Administrator does not issue 
     a notice of approval or notice of disapproval of an 
     application within the time period stated in subparagraph 
     (A), the application shall be deemed to have been granted.
       ``(7) Resubmission of application.--
       ``(A) In general.--If the Administrator disapproves an 
     application under paragraph (1), the State may resubmit the 
     application at any time after receiving the notice of 
     disapproval.
       ``(B) Failure to act.--If the Administrator does not issue 
     a notice of approval or notice of disapproval of a 
     resubmitted application within the time period stated in 
     paragraph (6)(A), the resubmitted application shall be deemed 
     to have been granted.
       ``(8) Judicial review.--The State (but no other person) 
     shall be entitled to judicial review under section 113(b) of 
     a disapproval of a resubmitted application.
       ``(9) Withdrawal of authorities.--The Administrator may 
     withdraw the authorities transferred under a transfer 
     agreement in whole or in part if the Administrator determines 
     that the State--
       ``(A) is exercising the authorities, in whole or in part, 
     in a manner that is inconsistent with the requirements of 
     this Act;
       ``(B) has violated the transfer agreement, in whole or in 
     part; or
       ``(C) no longer meets one of the requirements of paragraph 
     (3).
       ``(10) State cost responsibility.--The State may require a 
     remedial action that exceeds the remedial action selection 
     requirements of section 121 if the State pays the incremental 
     cost of implementing that remedial action over the most cost-
     effective remedial action that would result from the 
     application of section 133.
       ``(11) Dispute resolution and enforcement.--
       ``(A) Dispute resolution.--
       ``(i) Facilities covered by both a transfer agreement and 
     an interagency agreements.--In the case of a facility with 
     respect to which there is both a transfer agreement and an 
     interagency agreement, if the State does not concur in the 
     remedial action proposed for selection by the Federal 
     department, agency, or instrumentality, the Federal 
     department, agency, or instrumentality and the State shall 
     engage in the dispute resolution process provided for in the 
     interagency agreement, except that the final level for 
     resolution of the dispute shall be the head of the Federal 
     department, agency, or instrumentality and the Governor of 
     the State.
       ``(ii) Facilities covered by a transfer agreement but not 
     an interagency agreement.--In the case of a facility with 
     respect to which there is a transfer agreement but no 
     interagency agreement, if the State does not concur in the 
     remedial action proposed for selection by the Federal 
     department, agency, or instrumentality, the Federal 
     department, agency, or instrumentality and the State shall 
     engage in dispute resolution as provided in paragraph 
     (3)(B)(ii) under which the final level for resolution of the 
     dispute shall be the head of the Federal department, agency, 
     or instrumentality and the Governor of the State.
       ``(iii) Failure to resolve.--If no agreement is reached 
     between the head of the Federal department, agency, or 
     instrumentality and the Governor in a dispute resolution  
     process  under  clause  (i)  or (ii), the Governor of the 
     State shall make the final determination regarding selection 
     of a remedial action. To compel implementation of the State's 
     selected remedy, the State must bring a civil action in 
     United States district court.
       ``(B) Enforcement.--
       ``(i) Authority; jurisdiction.--An interagency agreement 
     with respect to which there is a transfer agreement or an 
     order issued by a transferee State shall be enforceable by a 
     transferee State or by the Federal department, agency, or 
     instrumentality that is a party to the interagency agreement 
     only in the United States district court for the district in 
     which the facility is located.
       ``(ii) Remedies.--The district court shall--

       ``(I) enforce compliance with any provision, standard, 
     regulation, condition, requirement, order, or final 
     determination that has become effective under the interagency 
     agreement;
       ``(II) impose any appropriate civil penalty provided for 
     any violation of an interagency agreement, not to exceed 
     $25,000 per day;
       ``(III) compel implementation of the selected remedial 
     action; and
       ``(IV) review a challenge by the Federal department, 
     agency, or instrumentality to the remedial action selected by 
     the State under this section, in accordance with section 
     113(j).

       ``(12) Community participation.--If, prior to the date of 
     enactment of this section, a Federal department, agency, or 
     instrumentality had established for a facility covered by a 
     transfer agreement a facility-specific advisory board or 
     other community-based advisory group (designated as a `site-
     specific advisory board', a `restoration advisory board', or 
     otherwise), and the Administrator determines that the board 
     or group is willing and able to perform the responsibilities 
     of a community response organization under section 117(e)(2), 
     the board or group--
       ``(A) shall be considered to be a community response 
     organization for the purposes of section 117 (e) (2), (3), 
     (4), and (9), and (g) and sections 131 and 133; but
       ``(B) shall not be required to comply with, and shall not 
     be considered to be a community response organization for the 
     purposes of, section 117 (e) (1), (5), (6), (7), or (8) or 
     (f).''.

     SEC. 602. LIMITATION ON CRIMINAL LIABILITY OF FEDERAL 
                   OFFICERS, EMPLOYEES, AND AGENTS.

       Section 120 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9620) is 
     amended by adding at the end the following:
       ``(k) Criminal Liability.--Notwithstanding any other 
     provision of this Act or any other law, an officer, employee, 
     or agent of the United States shall not be held criminally 
     liable for a failure to comply, in any fiscal year, with a 
     requirement to take a response action at a facility that is 
     owned or operated by a department, agency, or instrumentality 
     of the United States, under this Act, the Solid Waste 
     Disposal Act (42 U.S.C. 6901 et seq.), or any other Federal 
     or State law unless--
       ``(1) the officer, employee, or agent has not fully 
     performed any direct responsibility or delegated 
     responsibility that the officer, employee, or agent had under 
     Executive Order 12088 (42 U.S.C. 4321 note) or any other 
     delegation of authority to ensure that a request for funds 
     sufficient to take the response action was included in the 
     President's budget request under section 1105 of title 31, 
     United States Code, for that fiscal year; or
       ``(2) appropriated funds were available to pay for the 
     response action.''.

     SEC. 603. INNOVATIVE TECHNOLOGIES FOR REMEDIAL ACTION AT 
                   FEDERAL FACILITIES.

       (a) In General.--Section 311 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9660) is amended by adding at the end the 
     following:
       ``(h) Federal Facilities.--
       ``(1) Designation.--The President may designate a facility 
     that is owned or operated by any department, agency, or 
     instrumentality of the United States, and that is listed or 
     proposed for listing on the National Priorities List, to 
     facilitate the research, development, and application of 
     innovative technologies for remedial action at the facility.
       ``(2) Use of facilities.--
       ``(A) In general.--A facility designated under paragraph 
     (1) shall be made available to Federal departments and 
     agencies, State departments and agencies, and public and 
     private instrumentalities, to carry out activities described 
     in paragraph (1).
       ``(B) Coordination.--The Administrator--
       ``(i) shall coordinate the use of the facilities with the 
     departments, agencies, and instrumentalities of the United 
     States; and
       ``(ii) may approve or deny the use of a particular 
     innovative technology for remedial action at any such 
     facility.
       ``(3) Considerations.--

[[Page S262]]

       ``(A) Evaluation of schedules and penalties.--In 
     considering whether to permit the application of a particular 
     innovative technology for remedial action at a facility 
     designated under paragraph (1), the Administrator shall 
     evaluate the schedules and penalties applicable to the 
     facility under any agreement or order entered into under 
     section 120.
       ``(B) Amendment of agreement or order.--If, after an 
     evaluation under subparagraph (A), the Administrator 
     determines that there is a need to amend any agreement or 
     order entered into pursuant to section 120, the Administrator 
     shall comply with all provisions of the agreement or order, 
     respectively, relating to the amendment of the agreement or 
     order.''.
       (b) Report to Congress.--Section 311(e) of Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9660(e)) is amended--
       (1) by striking ``At the time'' and inserting the 
     following:
       ``(1) In general.--At the time''; and
       (2) by adding at the end the following:
       ``(2) Additional information.--A report under paragraph (1) 
     shall include information on the use of facilities described 
     in subsection (h)(1) for the research, development, and 
     application of innovative technologies for remedial activity, 
     as authorized under subsection (h).''.
                  TITLE VII--NATURAL RESOURCE DAMAGES

     SEC. 701. RESTORATION OF NATURAL RESOURCES.

       Section 107(f) of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9607(f)) 
     is amended--
       (1) by inserting ``Natural Resource Damages.--'' after 
     ``(f)'';
       (2) by striking ``(1) Natural Resources Liability.--In the 
     case'' and inserting the following:
       ``(1) Liability.--
       ``(A) In general.--In the case''; and
       (3) in paragraph (1)(A), as designated by paragraph (2)--
       (A) by inserting after the fourth sentence the following: 
     ``Sums recovered by an Indian tribe as trustee under this 
     subsection shall be available for use only for restoration, 
     replacement, or acquisition of the equivalent of such natural 
     resources by the Indian tribe. A restoration, replacement, or 
     acquisition conducted by the United States, a State, or an 
     Indian tribe shall proceed only if it is technologically 
     feasible from an engineering perspective at a reasonable cost 
     and consistent with all known or anticipated response actions 
     at or near the facility.''; and
       (B) by striking ``The measure of damages in any action'' 
     and all that follows through the end of the paragraph and 
     inserting the following:
       ``(B) Limitations on liability.--
       ``(i) Measure of damages.--The measure of damages in any 
     action for damages for injury to, destruction of, or loss of 
     natural resources shall be limited to--

       ``(I) the reasonable costs of restoration, replacement, or 
     acquisition of the equivalent of natural resources that 
     suffer injury, destruction, or loss caused by a release; and
       ``(II) the reasonable costs of assessing damages.

       ``(ii) Nonuse values.--There shall be no recovery under 
     this Act for any impairment of nonuse values.
       ``(iii) No double recovery.--A person that obtains a 
     recovery of damages, response costs, assessment costs, or any 
     other costs under this Act for the costs of restoring an 
     injury to or destruction or loss of a natural resource 
     (including injury assessment costs) shall not be entitled to 
     recovery under this Act or any other Federal or State law for 
     the same injury to or destruction or loss of the natural 
     resource.
       ``(iv) Restrictions on recovery.--

       ``(I) Limitation on lost use damages.--There shall be no 
     recovery from any person under this section for the costs of 
     a loss of use of a natural resource for a natural resource 
     injury, destruction, or loss that occurred before December 
     11, 1980.
       ``(II) Restoration, replacement, or acquisition.--There 
     shall be no recovery from any person under this section for 
     the costs of restoration, replacement, or acquisition of the 
     equivalent of a natural resource if the natural resource 
     injury, destruction, or loss for which the restoration, 
     replacement, or acquisition is sought and the release of the 
     hazardous substance from which the injury resulted occurred 
     wholly before December 11, 1980.''.

     SEC. 702. ASSESSMENT OF INJURY TO AND RESTORATION OF NATURAL 
                   RESOURCES.

       (a) Natural Resource Injury and Restoration Assessments.--
     Section 107(f)(2) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9607(f)(2)) is amended by striking subparagraph (C) and 
     inserting the following:
       ``(C) Natural resource injury and restoration assessment.--
       ``(i) Regulation.--A natural resource injury and 
     restoration assessment conducted for the purposes of this Act 
     made by a Federal, State, or tribal trustee shall be 
     performed, to the extent practicable, in accordance with--

       ``(I) the regulation issued under section 301(c); and
       ``(II) generally accepted scientific and technical 
     standards and methodologies to ensure the validity and 
     reliability of assessment results.

       ``(ii) Facility-specific conditions.--Injury assessment, 
     restoration planning, and quantification of restoration costs 
     shall, to the extent practicable, be based on facility-
     specific information.
       ``(iii) Recoverable costs.--A trustee's claim for 
     assessment costs--

       ``(I) may include only--

       ``(aa) costs that arise from work performed for the purpose 
     of assessing injury to a natural resource to support a claim 
     for restoration of the natural resource; and
       ``(bb) costs that arise from developing and evaluating a 
     reasonable range of alternative restoration measures; but

       ``(II) may not include the costs of conducting any type of 
     study relying on the use of contingent valuation methodology.

       ``(iv) Payment period.--In a case in which injury to or 
     destruction or loss of a natural resource was caused by a 
     release that occurred over a period of years, payment of 
     damages shall be permitted to be made over a period of years 
     that is appropriate in view of the period of time over which 
     the damages occurred, the amount of the damages, the 
     financial ability of the responsible party to pay the 
     damages, and the time period over which and the pace at which 
     expenditures are expected to be made for restoration, 
     replacement, and acquisition activities.
       ``(v) Trustee restoration plans.--

       ``(I) Administrative record.--Participating natural 
     resource trustees may designate a lead administrative trustee 
     or trustees. The lead administrative trustee may establish an 
     administrative record on which the trustees will base the 
     selection of a plan for restoration of a natural resource. 
     The restoration plan shall include a determination of the 
     nature and extent of the natural resource injury. The 
     administrative record shall be made available to the public 
     at or near the facility at which the release occurred.
       ``(II) Public participation.--The Administrator shall issue 
     a regulation for the participation of interested persons, 
     including potentially responsible parties, in the development 
     of the administrative record on which the trustees will base 
     selection of a restoration plan and on which judicial review 
     of restoration plans will be based. The procedures for 
     participation shall include, at a minimum, each of the 
     requirements stated in section 113(k)(2)(B).''.

       (b) Regulations.--Section 301 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9651) is amended by striking subsection (c) 
     and inserting the following:
       ``(c) Regulations for Injury and Restoration Assessments.--
       ``(1) In general.--The President, acting through Federal 
     officials designated by the National Contingency Plan under 
     section 107(f)(2), shall issue a regulation for the 
     assessment of injury to natural resources and the costs of 
     restoration of natural resources (including the costs of 
     assessment) for the purposes of this Act and for 
     determination of the time periods in which payment of damages 
     will be required.
       ``(2) Contents.--The regulation under paragraph (1) shall--
       ``(A) specify protocols for conducting assessments in 
     individual cases to determine the injury, destruction, or 
     loss of natural resources;
       ``(B) identify the best available procedures to determine 
     the reasonable costs of restoration and assessment;
       ``(C) take into consideration the ability of a natural 
     resource to recover naturally and the availability of 
     replacement or alternative resources;
       ``(D) provide for the designation of a single lead Federal 
     decisionmaking trustee for each facility at which an injury 
     to natural resources has occurred within 180 days after the 
     date of first notice to the responsible parties that an 
     assessment of injury and restoration alternatives will be 
     made; and
       ``(E) set forth procedures under which--
       ``(i) all pending and potential trustees identify the 
     injured natural resources within their respective trust 
     responsibilities, and the authority under which such 
     responsibilities are established, as soon as practicable 
     after the date on which a release occurs;
       ``(ii) assessment of injury and restoration alternatives 
     will be coordinated to the greatest extent practicable 
     between the lead Federal decisionmaking trustee and any 
     present or potential State or tribal trustees, as applicable; 
     and
       ``(iii) time periods for payment of damages in accordance 
     with section 107(f)(2)(C)(iv) shall be determined.
       ``(3) Deadline for issuance of regulation; periodic 
     review.--The regulation under paragraph (1) shall be issued 
     not later than 1 year after the date of enactment of the 
     Superfund Cleanup Acceleration Act of 1997 and shall be 
     reviewed and revised as appropriate every 5 years.''.

     SEC. 703. CONSISTENCY BETWEEN RESPONSE ACTIONS AND RESOURCE 
                   RESTORATION STANDARDS.

       (a) Restoration Standards and Alternatives.--Section 107(f) 
     of the Comprehensive Environmental Response, Compensation, 
     and Liability Act of 1980 (42 U.S.C. 9607(f)) is amended by 
     adding at the end the following:
       ``(3) Compatibility with remedial action.--Both response 
     actions and restoration measures may be implemented at the 
     same facility, or to address releases from the same facility. 
     Such response actions and restoration measures shall not be 
     inconsistent with

[[Page S263]]

     one another and shall be implemented, to the extent 
     practicable, in a coordinated and integrated manner.''.
       (b) Consideration of Natural Resources in Response 
     Actions.--Section 121(a) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9621(a)) (as amended by section 402(1)) is amended by adding 
     at the end the following:
       ``(6) Coordination.--In evaluating and selecting remedial 
     actions, the Administrator shall take into account the 
     potential for injury to a natural resource resulting from 
     such actions.''.

     SEC. 704. CONTRIBUTION.

       Subparagraph (A) of section 113(f)(1) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9613(f)(1)) is amended in the third sentence 
     by inserting ``and natural resource damages'' after 
     ``costs''.
                       TITLE VIII--MISCELLANEOUS

     SEC. 801. RESULT-ORIENTED CLEANUPS.

       (a) Amendment.--Section 105(a) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9605(a)) is amended--
       (1) by striking ``and'' at the end of paragraph (9);
       (2) by striking the period at the end of paragraph (10) and 
     inserting ``; and''; and
       (3) by inserting after paragraph (10) the following:
       ``(11) procedures for conducting response actions, 
     including facility evaluations, remedial investigations, 
     feasibility studies, remedial action plans, remedial designs, 
     and remedial actions, which procedures shall--
       ``(A) use a results-oriented approach to minimize the time 
     required to conduct response measures and reduce the 
     potential for exposure to the hazardous substances, 
     pollutants, and contaminants in an efficient, timely, and 
     cost-effective manner;
       ``(B) require, at a minimum, expedited facility evaluations 
     and risk assessments, timely negotiation of response action 
     goals, a single engineering study, streamlined oversight of 
     response actions, and consultation with interested parties 
     throughout the response action process;
       ``(C) be subject to the requirements of sections 117, 120, 
     121, and 133 in the same manner and to the same degree as 
     those sections apply to response actions; and
       ``(D) be required to be used for each remedial action 
     conducted under this Act unless the Administrator determines 
     that their use would not be cost-effective or result in the 
     selection of a response action that achieves the goals of 
     protecting human health and the environment stated in section 
     121(a)(1)(B).''.
       (b) Amendment of National Hazardous Substance Response 
     Plan.--Not later than 180 days after the date of enactment of 
     this Act, the Administrator, after notice and opportunity for 
     public comment, shall amend the National Hazardous Substance 
     Response Plan under section 105(a) of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9605(a)) to include the procedures required 
     by the amendment made by subsection (a).

     SEC. 802. NATIONAL PRIORITIES LIST.

       Section 105 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9605) (as 
     amended by section 407(a)(2)) is amended by adding at the end 
     the following:
       ``(i) National Priorities List.--
       ``(1) Limitation.--
       ``(A) In general.--After the date of the enactment of this 
     subsection, the President may add vessels and facilities to 
     the National Priorities List only in accordance with the 
     following schedule:
       ``(i) Not more than 30 vessels and facilities in 1997.
       ``(ii) Not more than 25 vessels and facilities in 1998.
       ``(iii) Not more than 20 vessels and facilities in 1999.
       ``(iv) Not more than 15 vessels and facilities in 2000.
       ``(v) Not more than 10 vessels and facilities in any year 
     after 2000.
       ``(B) Relisting.--The relisting of a vessel or facility 
     under section 130(d)(5)(C)(ii) shall not be considered to be 
     an addition to the National Priorities List for purposes of 
     this subsection.
       ``(2) Prioritization.--The Administrator shall prioritize 
     the vessels and facilities added under paragraph (1) on a 
     national basis in accordance with the threat to human health 
     and the environment presented by each of the vessels and 
     facilities, respectively.
       ``(3) State concurrence.--A vessel or facility may be added 
     to the National Priorities List under paragraph (1) only with 
     the concurrence of the Governor of the State in which the 
     vessel or facility is located.''.

     SEC. 803. OBLIGATIONS FROM THE FUND FOR RESPONSE ACTIONS.

       Section 104(c)(1) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9604(c)(1)) is amended--
       (1) in subparagraph (C) by striking ``consistent with the 
     remedial action to be taken'' and inserting ``not 
     inconsistent with any remedial action that has been selected 
     or is anticipated at the time of any removal action at a 
     facility.'';
       (2) by striking ``$2,000,000'' and inserting 
     ``$4,000,000''; and
       (3) by striking ``12 months'' and inserting ``2 years''.
                           TITLE IX--FUNDING
                     Subtitle A--General Provisions

     SEC. 901. AUTHORIZATION OF APPROPRIATIONS FROM THE FUND.

       Section 111(a) of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9611(a)) 
     is amended in the first sentence by striking ``not more than 
     $8,500,000,000 for the 5-year period beginning on the date of 
     enactment of the Superfund Amendments and Reauthorization Act 
     of 1986, and not more than $5,100,000,000 for the period 
     commencing October 1, 1991, and ending September 30, 1994'' 
     and inserting ``a total of $8,500,000,000 for fiscal years 
     1998, 1999, 2000, 2001, and 2002''.

     SEC. 902. ORPHAN SHARE FUNDING.

       Section 111(a) of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9611(a)), 
     as amended by section 301(c), is amended by inserting after 
     paragraph (8) the following:
       ``(9) Orphan share funding.--Payment of orphan shares under 
     section 136.''.

     SEC. 903. DEPARTMENT OF HEALTH AND HUMAN SERVICES.

       Section 111 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9611) is 
     amended by striking subsection (m) and inserting the 
     following:
       ``(m) Health Authorities.--There are authorized to be 
     appropriated from the Fund to the Secretary of Health and 
     Human Services to be used for the purposes of carrying out 
     the activities described in subsection (c)(4) and the 
     activities described in section 104(i), $50,000,000 for each 
     of fiscal years 1998, 1999, 2000, 2001, and 2002. Funds 
     appropriated under this subsection for a fiscal year, but not 
     obligated by the end of the fiscal year, shall be returned to 
     the Fund.''.

     SEC. 904. LIMITATIONS ON RESEARCH, DEVELOPMENT, AND 
                   DEMONSTRATION PROGRAMS.

       Section 111 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9611) is 
     amended by striking subsection (n) and inserting the 
     following:
       ``(n) Limitations on Research, Development, and 
     Demonstration Programs.--
       ``(1) Alternative or innovative technologies research, 
     development, and demonstration programs.--
       ``(A) Limitation.--For each of fiscal years 1998, 1999, 
     2000, 2001, and 2002, not more than $30,000,000 of the 
     amounts available in the Fund may be used for the purposes of 
     carrying out the applied research, development, and 
     demonstration program for alternative or innovative 
     technologies and training program authorized under section 
     311(b) other than basic research.
       ``(B) Continuing availability.--Such amounts shall remain 
     available until expended.
       ``(2) Hazardous substance research, demonstration, and 
     training.--
       ``(A) Limitation.--From the amounts available in the Fund, 
     not more than the following amounts may be used for the 
     purposes of section 311(a):
       ``(i) For fiscal year 1998, $37,000,000.
       ``(ii) For fiscal year 1999, $39,000,000.
       ``(iii) For fiscal year 2000, $41,000,000.
       ``(iv) For each of fiscal years 2001 and 2002, $43,000,000.
       ``(B) Further limitation.--No more than 15 percent of such 
     amounts shall be used for training under section 311(a) for 
     any fiscal year.
       ``(3) University hazardous substance research centers.--For 
     each of fiscal years 1998, 1999, 2000, 2001, and 2002, not 
     more than $5,000,000 of the amounts available in the Fund may 
     be used for the purposes of section 311(d).''.

     SEC. 905. AUTHORIZATION OF APPROPRIATIONS FROM GENERAL 
                   REVENUES.

       Section 111(p) of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9611(p)) 
     is amended by striking paragraph (1) and inserting the 
     following:
       ``(1) Authorization of appropriations.--
       ``(A) In general.--There are authorized to be appropriated, 
     out of any money in the Treasury not otherwise appropriated, 
     to the Hazardous Substance Superfund--
       ``(i) for fiscal year 1998, $250,000,000;
       ``(ii) for fiscal year 1999, $250,000,000;
       ``(iii) for fiscal year 2000, $250,000,000;
       ``(iv) for fiscal year 2001, $250,000,000; and
       ``(v) for fiscal year 2002, $250,000,000.
       ``(B) Additional amounts.--There is authorized to be 
     appropriated to the Hazardous Substance Superfund for each 
     such fiscal year an amount, in addition to the amount 
     authorized by subparagraph (A), equal to so much of the 
     aggregate amount authorized to be appropriated under this 
     subsection and section 9507(b) of the Internal Revenue Code 
     of 1986 as has not been appropriated before the beginning of 
     the fiscal year.''.

     SEC. 906. ADDITIONAL LIMITATIONS.

       Section 111 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9611) (as 
     amended by section 102(c)) is amended by adding at the end 
     the following:
       ``(t) Community Response Organization.--For the period 
     commencing January 1, 1997, and ending September 30, 2002, 
     not more than $15,000,000 of the amounts available in the 
     Fund may be used to make grants under section 117(f) 
     (relating to Community Response Organizations).
       ``(u) Recoveries.--Effective beginning January 1, 1997, any 
     response cost recoveries collected by the United States under 
     this Act

[[Page S264]]

     shall be credited as offsetting collections to the Superfund 
     appropriations account.''.

     SEC. 907. REIMBURSEMENT OF POTENTIALLY RESPONSIBLE PARTIES.

       Section 111(a) of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9611(a)) 
     (as amended by section 902) is amended by inserting after 
     paragraph (9) the following:
       ``(10) Reimbursement of potentially responsible parties.--
     If--
       ``(A) a potentially responsible party and the Administrator 
     enter into a settlement under this Act under which the 
     Administrator is reimbursed for the response costs of the 
     Administrator; and
       ``(B) the Administrator determines, through a Federal audit 
     of response costs, that the costs for which the Administrator 
     is reimbursed--
       ``(i) are unallowable due to contractor fraud;
       ``(ii) are unallowable under the Federal Acquisition 
     Regulation; or
       ``(iii) should be adjusted due to routine contract and 
     Environmental Protection Agency response cost audit 
     procedures,

     a potentially responsible party may be reimbursed for those 
     costs.''.

  Mr. ABRAHAM. Mr. President, I would like to join the others on the 
Senate floor here today to congratulate Senator Chafee and Senator 
Smith on the introduction of their Superfund reform legislation. As an 
original cosponsor of this legislation, I support their efforts to 
speed the cleanup of polluted sites across this country.
  And while this legislation has provisions targeting those sites 
currently on the national priority list, I should point out it also has 
provisions to speed the remediation of less seriously contaminated 
sites--so-called brownfields.
  I am someone who is deeply concerned about brownfields and the 
economic and environmental damage they impose on communities.
  First, Senator Chafee, thank you very much for agreeing to speak with 
me on this very important issue. As the Senator knows, last year I 
introduced legislation along with Senator Lieberman which would provide 
tax incentives for the remediation of brownfields. This legislation is 
very important to communities across the country, and I intend to 
reintroduce similar legislation this Congress. It is my understanding 
that the bill introduced today focuses, in part, on our brownfields 
problem.
  Mr. CHAFEE. The Senator from Michigan is correct. The focus of the 
Environment and Public Works Committee will extend beyond the National 
Priorities List to include solutions to our national brownfields 
problem. And while my committee does not have jurisdiction over tax 
measures, I recognize the leadership exerted by Senator Abraham to 
address the problem of brownfields and I hope to work with him on a 
variety of solutions to the environmental problems faced by this 
Nation's communities.
  Mr. ABRAHAM. I thank the Senator and I yield the floor.
                                 ______
                                 
      By Mr. NICKLES (for himself, Mr. Gregg, Mr. Warner, Mr. Lott, Mr. 
        Allard, Mr. Ashcroft, Mr. Coverdell, Mr. Craig, Mr. Domenici, 
        Mr. Enzi, Mr. Faircloth, Mr. Gorton, Mr. Grams, Mr. Hagel, Mr. 
        Hatch, Mr. Helms, Mrs. Hutchison, Mr. Hutchinson, Mr. Kyl, Mr. 
        Murkowski, Mr. Roberts, Mr. Sessions, Mr. Smith, Mr. Thomas, 
        Mr. Thurmond, Mr. Coats, and Mr. Kempthorne):
  S. 9. A bill to protect individuals from having their money 
involuntarily collected and used for politics by a corporation or labor 
organization; to the Committee on Rules and Administration.


                      THE PAYCHECK PROTECTION ACT

  Mr. NICKLES. Madam President, this bill, the Paycheck Protection Act, 
sponsored by myself, Senators Gregg, Lott, Inhofe, Hutchison from 
Texas, Cochran, Roberts, Hagel, Smith from New Hampshire, and 
Kempthorne, deals with making sure that no one is compelled to 
contribute to political campaigns with which they disagree. Senator 
Ford made an eloquent speech on campaign finance reform. I don't 
disagree with everything he said. I just disagree with parts of it.
  Campaign reform is an issue a lot of us are going to be dealing with 
this year. It is important, in my opinion, Madam President, that we 
encourage people to participate in campaigns. We want more people all 
across the country to participate in the electoral process. It is a sad 
day when only half of the people vote in a Presidential election. Madam 
President, it is very important that nobody be compelled to contribute 
to a campaign with which they disagree. You might think, well, wait a 
minute, how in the world in 1997, in this day and age, would anybody be 
compelled to contribute to a campaign with which they disagree? But it 
happens. Unfortunately, Madam President, every week millions of 
Americans are having money taken out of their paycheck to contribute to 
candidates that they may well disagree with, but they didn't have a 
voice, a choice, or an option.
  Madam President, that is wrong. I will tell you that the origin of 
the bill we are introducing came from a town meeting that I had, where 
an individual--a union member--stood up in a town meeting and said, ``I 
really resent the fact that my money is taken from me, without my vote, 
without my voice, without my option, and given to candidates and 
parties which I totally oppose.'' I said, ``I agree with you. We will 
try to remedy that.''
  That should not happen in America. That is something that sounds like 
it might happen in some totalitarian state where moneys or assets are 
confiscated and some corrupt politician would use it against their 
will. It is happening today. Millions of Americans are finding part of 
their paychecks taken from them without their voice or choice and used 
for political purposes with which they disagree.
  Madam President, this bill, the Paycheck Protection Act, which is 
sponsored by several of us, basically is very simple. It says that no 
individual, no employee working for a corporation, would be compelled 
to contribute to a political organization without their express 
consent. As a matter of fact, it says that no deduction from their 
wages would be used for political purposes unless they give prior 
written consent.
  Consent is the big issue. If we are going to have campaign reform, I 
am going to tell my colleague, this is going to have to be part of the 
package.
  This is America. No one should be compelled to contribute to 
political purposes for which they disagree. And that applies for an 
individual where maybe their company has a PAC (political action 
committee), and maybe the board of directors or the officers say, ``We 
want everybody to contribute.'' They can say what they want, but they 
cannot compel. No one should be compelled to contribute to a political 
organization, a political action committee, or to a labor organization 
against their will for political purposes. It is that simple.
  As Thomas Jefferson said, ``To compel a man to furnish funds for the 
propagation of ideas he disbelieves or abhors . . . is sinful and 
tyrannical.''
  We're not talking about nickels and dimes here, but untold millions 
of dollars in partisan political campaigns and propaganda. Since such 
funds are not required to be disclosed, it is impossible to determine 
the exact amount of this spending. However, estimates of this under-
the-radar spending is somewhere between $300 million and $1 billion for 
this most recent election.
  The way it is now, an employee paying dues to a labor organization 
has no choice over whether or not that labor organization can collect 
the money for politics. The only choice these employees have in the 
matter is to ask for a refund of the portion dues which is to be used 
for politics. This refund process is so lengthy and burdensome that it 
is next to impossible for someone to get their money back. Furthermore, 
for an employee to exercise their right to a refund of such dues, they 
are required to give up their right to vote in the labor organization 
that they are still required to pay for representing them. This is 
taxation without representation.
  The Supreme Court has consistently ruled that employees paying dues 
to a labor organization cannot be forced to also pay for the activities 
outside the core representational activities, such as costs associated 
with political activities. The Clinton administration, however, has 
kept employees in the dark regarding the minimal rights they do have. 
One of the first acts of this administration was to repeal the very 
regulations to carry out the Supreme Court's decision, which protected 
employees forced to pay for politics.

[[Page S265]]

  People are recognizing the wrong brought upon Americans who have been 
given no choice in supporting causes for which they oppose. Even the 
administration's own National Labor Relations Board [NLRB], which has 
strong labor organization sentiments, recently ruled dues-paying 
employees are in the least entitled to information setting forth the 
percentage of those dues not related to collective bargaining 
activities. While this is a step in the right direction, more needs to 
be done.
  The Paycheck Protection Act protects employees from having their 
money involuntarily taken from them and used for politics. The act 
protects stockholders and employees of a corporation from having, as a 
condition of employment, dues, initiation fees, or other payments for 
politics taken from them without the separate, prior, written, 
voluntary authorization. Similarly, the act protects employees paying 
dues to a labor organization from having such dues, initiation fees, or 
other payments taken from them which are used for politics.
  Mr. President, this act furthers the basic civil right spoken of by 
Thomas Jefferson. It does so by requiring that individuals not be 
compelled to fund or support activities outside the legitimate scope of 
the employer or labor organization. This bill pro-worker, pro-labor 
organization, and most importantly, pro-American.
  I look forward to a broad bipartisan support for this bill.
  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. 9

       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 ``Paycheck Protection Act''.

     SEC. 2. WORKERS' POLITICAL RIGHTS.

       Section 316 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441b) is amended by adding the following new 
     subsection:
       ``(c)(1) Except with the separate, prior, written, 
     voluntary authorization of each individual, it shall be 
     unlawful--
       (A) for any national bank or corporation described in this 
     section to collect from or assess its stockholders or 
     employees any dues, initiation fee, or other payment as a 
     condition of employment if any part of such dues, fee, or 
     payment will be used for political activities in which the 
     national bank or corporation, as the case may be, is engaged; 
     and
       (B) for any labor organization described in this section to 
     collect from or assess its members or nonmembers any dues, 
     initiation fee, or other payment if any part of such dues, 
     fee, or payment will be used for political activities.
       ``(2) an authorization described in paragraph (1) shall 
     remain in effect until revoked and may be revoked at any 
     time.
       ``(3) for purposes of this subsection, the term ``political 
     activities'' includes communications or other activities 
     which involve carrying on propaganda, attempting to influence 
     legislation, or participating or intervening in any political 
     campaign or political party.''
                                 ______
                                 
      By Mr. HATCH (for himself, Mr. Sessions, Mr. Ashcroft, Mr. 
        Domenici, Mr. Lott, Mr. Abraham, Mr. Allard, Mr. Bond, Mr. 
        Coverdell, Mr. Craig, Mr. D'Amato, Mr. Enzi, Mr. Faircloth, Mr. 
        Gorton, Mr. Grams, Mr. Grassley, Mr. Hagel, Mr. Helms, Mr. 
        Hutchinson, Mr. Kyl, Mr. Murkowski, Mr. Roberts, Mr. Smith, Mr. 
        Thomas, Mr. Thurmond, and Mr. Warner):
  S. 10. A bill to reduce violent juvenile crime, promote 
accountability by juvenile criminals, punish and deter violent gang 
crime, and for other purposes; to the Committee on the Judiciary.


            violent and repeat juvenile offender act of 1997

  Mr. ASHCROFT. Mr. President, earlier today Senator Hatch introduced 
S. 10, the Violent and Repeat Offender Act of 1997. Senators Lott 
Domenici, Sessions, and I worked with him in developing the bill. While 
not perfect, the bill does take the initial steps in dealing with the 
epidemic of violent juvenile crime sweeping the Nation.
  Mr. President, the face of crime in America is indeed changing. 
Throughout our history, one thing has been clear: Government's first 
responsibility is to keep the citizenry safe. John Jay wrote in The 
Federalist, No. 3 ``Among the many objects to which a wise and free 
people find it necessary to direct their attention, that of providing 
for their safety seems to be first.''
  The murderers, robbers, rapists, and drug dealers of yesteryear were 
typically adults. Now they are typically juveniles. As the age of these 
criminal predators becomes younger and younger with each passing year, 
so does the age of their victims.
  Last Wednesday afternoon, 12-year-old Darryl Dayan Hall was abducted 
at gunpoint from the Southeast Washington area by three teenagers of a 
gang known as the Simple City Crew. This is the same gang that opened 
gunfire at a crowded community swimming pool in June 1993, wounding six 
children. This past Saturday, police found Darryl's frozen body. He had 
been shot once in the back of the head and at least once in the body.
  The three teenagers who are now charged with Darryl's murder have had 
numerous prior brushes with the law. One of Darryl's assailants was 
charged as a juvenile with possession of PCP in 1995 and then was 
released--as is too often the case--promising not to run afoul of the 
law again. Another of Darryl's assailants was, and is, on probation 
following his juvenile conviction last spring for possession of PCP 
with intent to distribute. Darryl's third assailant was charged as a 
juvenile just last month with carrying a deadly weapon.
  Mr. President, from 1984 to 1994, the number of juveniles murdered in 
this country increased 82 percent. In 1994, one of every five juveniles 
murdered were killed by another juvenile. The rate at which juveniles 
14 to 17 years old were arrested for murder grew by 22 percent from 
1990 to 1994 and the problem is going to get worse, much worse.
  Congress, over the last three decades, has established 131 separate 
Federal programs--administered by 16 different departments and 
agencies--to serve delinquent and at-risk youth, according to a report 
issued by GAO last March. Conservative estimates of Federal 
appropriations used for these at-risk and delinquent youth programs was 
more than $4 billion in fiscal year 1995.
  Despite this ongoing massive expenditure, the Federal Government has 
failed to meet its responsibility of providing public safety in this 
arena because it has not focused on holding juveniles accountable for 
their actions, it must focus on the problem of rising juvenile 
violence. We have a new category of offenders that deserve a new 
category of responses. We have criminals in our midst--young criminals.
  The juvenile offenders of today will become the career offenders of 
tomorrow, if Government continues to fail to recognize that America has 
an acute social illness that cannot be cured with money spent solely on 
social programs. This legislation takes a commonsense approach in 
dealing with the epidemic of juvenile violence. It would help States 
restore safety in urban, suburban, and rural communities.
  This legislation would provide $2.5 billion in new incentive grants 
for States to enact certain accountability-based reforms to their 
juvenile justice systems. This legislation would authorize funding for 
various programs, including trying violent juveniles as adults; 
establishing the ability of States to collect juvenile criminal 
records, fingerprints, and photographs, and to share that criminal 
history information within the State, with other States, and with the 
Federal Government; and establishing the Serious Habitual Offender 
Comprehensive Action Program [SHOCAP]. In addition, religious 
organizations would be permitted to participate in rehabilitative 
programs.

  Serious, violent, and repeat juvenile offenders must be held 
responsible for their crimes. Today we are living with a juvenile 
justice system that was created around the time of the silent film. We 
are living with a juvenile justice system that reprimands the crime 
victim for being at the wrong place at the wrong time, and then turns 
around and hugs the juvenile terrorist, whispering ever so softly into 
his ear, ``Don't worry, the State will cure you.''
  The juvenile justice system's primary goal is to treat and 
rehabilitate the juvenile offender. Such a system can handle runaways, 
truants, and other status offenders; but it is ill-equipped to deal 
with those who commit serious, violent, and repeat juvenile crime.

[[Page S266]]

  The criminal justice system, not the juvenile justice system, can 
emphasize that adult criminal acts have real consequences. The purpose 
of the criminal justice system is to punish, that is, to hold 
defendants accountable.
  This legislation would provide financial assistance to States to help 
them reform their juvenile system. A State would be eligible to receive 
Federal funds if the State agrees to enact legislation that would 
provide for the adult prosecution--as a matter of law or prosecutorial 
discretion--of juveniles 14 or older who commit a violent crime, such 
as murder, forcible rape, armed robbery and assault with a deadly 
weapon; an offense involving a controlled substance; or an offense 
involving possession of a firearm or a destructive device.
  Punishment of dangerous juvenile offenders as adults is an effective 
tool in fighting violent juvenile crime. For example, Jacksonville, FL 
State Attorney Harry Shorstein instituted a program to prosecute and 
incarcerate such offenders in 1992. Two years later, arrests for 
juveniles dropped from 7,184 to 5,475. While juvenile arrests increased 
for the Nation, Jacksonville's arrest rate decreased by 30 percent.
  States need to create and maintain juvenile criminal records. 
Typically, State statutes seal juvenile criminal records and expunge 
these records when the juvenile reaches age 18. The time has come to 
discard anachronistic ideas that crimes, no matter how heinous, by 
juveniles must be kept confidential.
  Our laws view juveniles through the benevolent prism of kids gone 
astray. It should view them as young criminals who know that they can 
commit crimes, repeatedly as juveniles because their juvenile records 
are kept hidden under the veil of secrecy. These young criminals know 
that when they reach their 18th birthday, they can begin their second 
career as adult criminals with an unblemished record. In rhetoric we 
are protecting juveniles from the stigma of a record but in reality we 
are coddling criminals. We must separate rhetoric from reality by 
lifting the veil of secrecy.
  Law enforcement officers need to know the prior juvenile criminal 
records of individuals to assist them in criminal investigations and 
apprehension.
  Law enforcement is in desperate need of access to juvenile criminal 
records, according to Police Chief David G. Walchak, who is also 
president of the International Association of Chiefs of Police. The 
police chief says, ``Current juvenile records (both arrest and 
adjudication) are inconsistent across the states, and are usually 
unavailable to the various programs' staff who work with youthful 
offenders.'' The police chief further states that ``There are only 26 
states that even allow law enforcement access to juvenile records.''
  In the words of Chief Walchak, ``If we [law enforcement] don't know 
who the youthful offenders are, we can't appropriately intervene.'' It 
is that simple. As juvenile gangs spread from urban to suburban to 
rural areas, as they travel from State to State, the veil of secrecy 
draped over their criminal history records undermines law enforcement 
efforts.
  This legislation would also provide money to States to create, 
maintain, and share juvenile criminal records, and to share those 
records with other Federal, State, and local law enforcement agencies. 
Strengthening law enforcement should be a top priority.

  School officials need access to juvenile criminal records to assist 
them in providing for the best interests of all students. Students are 
vulnerable in unsafe school environments. The decline in school safety 
can be attributed to laws that protect dangerous students rather than 
innocent students. While visiting with school officials in Sikeston, 
MO, a teacher told me that a student came to school wearing an 
electronic monitoring ankle bracelet. The student told the teacher, 
``You don't know if I'm a murderer or a rapist and I ain't gonna tell 
you.'' That student was brutally honest. No one had any knowledge of 
what he had done and, more important, no way of finding out.
  If schools know the identity of a violent juvenile, they can respond 
to misbehavior by imposing stricter sanctions, assigning particular 
teachers, or having the student's locker near a teacher's doorway 
entrance so that the teacher can monitor his conduct during the 
changing of class periods. In short, this bill would allow school 
officials to take measures that could prevent violence at schools.
  For purposes of adult sentencing, adult courts need to know if a 
convicted felon has a history of criminal behavior. According to the 
1991 Survey of Inmates in State Correctional Facilities, nearly 40 
percent of prison inmates had a prior record as a juvenile. That is 
approximately 4 in 10 prison inmates. This legislation will not enable 
criminals to masquerade as neophytes before the criminal justice 
system.
  The bill allows State and local governments to use Federal funds to 
implement the Serious Habitual Offenders Comprehensive Action Program 
[SHOCAP].
  SHOCAP is a multiagency crime analysis and case management process 
for identifying and targeting the violent and hard-core juvenile 
offenders in a community.
  SHOCAP targets these serious habitual offenders for most intensive 
social supervisory interventions, the most intensive accountability in 
school attendance and discipline, and the most investigation and 
prosecution when they commit a crime.
  The OJJDP conducted five test pilots of SHOCAP. Oxnard, CA was one of 
the selected sites. SHOCAP was implemented in 1983. Oxnard found that 
less than 2 percent of all juveniles arrested in that community were 
responsible for 35 percent of felonies by juveniles. Four years later, 
Oxnard's violent crime dropped 38 percent. Illinois and Florida both 
have recently established statewide SHOCAP's. This bill would allow all 
jurisdictions to use Federal funds to implement SHOCAP.
  Reforms are necessary at the Federal level as well. This legislation 
would make it easier for Federal prosecutors to try juveniles as 
adults. Under the bill, U.S. attorneys would have discretion to decide 
whether to try as adults juveniles 14 years or older who are alleged to 
have committed an act which if committed by an adult would be a felony. 
This would eliminate juvenile transfer hearings that leave the transfer 
decision to juvenile court judges.
  Federal juvenile court proceedings would be open to the general 
public. When imposing a sentence, the district court would be allowed 
to consider the juvenile's entire prior juvenile records. 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. And in those cases in which the 
juvenile was adjudicated delinquent in Federal juvenile delinquency 
proceedings, the U.S. attorney would be allowed to release such records 
to law enforcement authorities of any jurisdiction and to school 
officials.
  When the act committed by the juvenile is heinous, the punishment 
will be weighed accordingly. If tried and sentenced as an adult, the 
juvenile would be subject to the death penalty as an adult. In 
addition, the death penalty would be lowered from age 18 to 16.
  The Government should mount a counterattack on gang violence. This 
legislation targets violent youth gangs, like the notorious Simple City 
Crew in the District. There would be new Federal penalties for offenses 
committed by criminal street gangs. Gangs are no longer concentrated in 
the big cities, they are now in rural towns. The bill would also 
provide $100 million to hire assistant U.S. attorneys to prosecute 
juvenile criminal street gangs.
  We must challenge this culture of violence and restore the culture of 
personal responsibility. It is high time to consider hardheaded and 
sensible juvenile justice policies. Where possible we must give second 
chances. Where necessary we must punish severely. This is a first step 
to restore justice to a nation that has grown weary of injustice.
  In sum, this legislation would send a clear, cogent, and convincing 
message: serious acts have serious consequences.
  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. 10

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

[[Page S267]]

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Violent 
     and Repeat Juvenile Offender 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. Findings and purposes.
Sec. 3. Severability.

                    TITLE I--JUVENILE JUSTICE REFORM

Sec. 101. Repeal of general provision.
Sec. 102. Treatment of Federal juvenile offenders.
Sec. 103. Capital cases.
Sec. 104. Definitions.
Sec. 105. Notification after arrest.
Sec. 106. Detention prior to disposition.
Sec. 107. Speedy trial.
Sec. 108. Dispositional hearings.
Sec. 109. Use of juvenile records.
Sec. 110. Incarceration of violent offenders.
Sec. 111. Federal sentencing guidelines.

                        TITLE II--JUVENILE GANGS

Sec. 201. Short title.
Sec. 202. Increase in offense level for participation in crime as a 
              gang member.
Sec. 203. Amendment of title 18 with respect to criminal street gangs.
Sec. 204. Interstate and foreign travel or transportation in aid of 
              criminal street gangs.
Sec. 205. Solicitation or recruitment of persons in criminal gang 
              activity.
Sec. 206. Crimes involving the recruitment of persons to participate in 
              criminal street gangs and firearms offenses as RICO 
              predicates.
Sec. 207. Prohibitions relating to firearms.
Sec. 208. Amendment of sentencing guidelines with respect to body 
              armor.
Sec. 209. Additional prosecutors.

          TITLE III--JUVENILE CRIME CONTROL AND ACCOUNTABILITY

Sec. 301. Findings; declaration of purpose; definitions.
Sec. 302. Youth Crime Control and Accountability Block Grants.
Sec. 303. Runaway and homeless youth.
Sec. 304. Authorization of appropriations.
Sec. 305. Repeal.
Sec. 306. Transfer of functions and savings provisions.
Sec. 307. Repeal of unnecessary and duplicative programs.
Sec. 308. Housing juvenile offenders.
Sec. 309. Civil monetary penalty surcharge.

     SEC. 2. 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 remain, primarily the responsibility of the 
     States, to be carried out without interference from the 
     Federal Government.
       (b) Purposes.--The purposes of this Act 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. 3. 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--JUVENILE JUSTICE REFORM

     SEC. 101. 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. 102. 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.

[[Page S268]]

       ``(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. 103. 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. 104. 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. 105. 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. 106. 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. 107. 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. 108. 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'' 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. 109. 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. 110. 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. 111. 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''.
                        TITLE II--JUVENILE GANGS

     SEC. 201. SHORT TITLE.

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

     SEC. 202. 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 203 of 
     this title.
       (b) Amendment of Sentencing Guidelines.--Pursuant to its 
     authority under section 994(p) of title 28, United States 
     Code, the

[[Page S269]]

     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. 203. 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. 204. 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--
       ``(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 203 of this title; 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. 205. 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

[[Page S270]]

       ``(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. 206. 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. 207. 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. 208. 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. 209. 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 203 of this title).
          TITLE III--JUVENILE CRIME CONTROL AND ACCOUNTABILITY

     SEC. 301. 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:
             ``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;

[[Page S271]]

       ``(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. 302. 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
       ``(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;

[[Page S272]]

       ``(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.
       ``(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;

[[Page S273]]

       ``(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;
       ``(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

[[Page S274]]

     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 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

[[Page S275]]

       (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;
       ``(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

[[Page S276]]

     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. 303. RUNAWAY AND HOMELESS YOUTH.

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

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

     SEC. 306. 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.--

[[Page S277]]

       (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.
       (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. 307. 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. 308. 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. 309. 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. DASCHLE (for himself, Mr. Ford, Mr. Glenn, Mr. Levin, Ms. 
        Mikulski, Mr. Reid, Ms. Moseley-Braun, Mr. Durbin, Mr. 
        Wellstone, Mr. Kerry, and Mr. Lautenberg):
  S. 11. A bill to reform the Federal election campaign laws applicable 
to Congress; to the Committee on Rules and Administration.


 CONGRESSIONAL ELECTION CAMPAIGN SPENDING LIMIT AND REFORM ACT OF 1997

  Mr. LEVIN. Mr. President, this Congress faces no more important task 
in these first few months than passing legislation to reform the 
campaign finance system. We just witnessed the most expensive campaign 
in the history of our country. According to the Washington Post, both 
major political party committees raised over $880 million in 1995 and 
1996. That is estimated to be a 73 percent increase since the last 
Presidential election cycle.
  The increase in ``soft'' money raised by the parties during that same 
period was threefold--a 300 percent increase in ``soft'' money raised 
by the parties. The Washington Post again estimates that ``soft'' money 
contributions for 1995 and 1996 for Democrats was about $122 million, 
``soft'' money contributions for Republicans was about $141 million. 
For a system that was supposed to eliminate contributions from

[[Page S278]]

corporations and unions, we have seen corporations and unions 
contribute or spend millions of dollars to aid in the election or 
defeat of congressional and Presidential candidates.
  For a system that was supposed to cap contributions from individuals 
at no more than $25,000 a year to national political parties and 
individual campaigns combined, we have seen hundreds of contributions 
from individuals to both parties that equal or exceed $100,000. For a 
system that was supposed to require that campaign advertisements be 
paid for with money subject to the contribution restrictions of our 
campaign finance laws, we have seen probably hundreds of commercials, 
many of which had a significant impact on the outcome of elections in 
which they were run, hundreds of commercials paid for with unregulated, 
unrestricted, undisclosed, so-called ``soft'' money.
  For the vast majority of these ads, the public does not know the 
basic facts of who contributed to the payments for these ads or how 
much was spent to air them. For years, we have pretended that we 
actually have had somewhat meaningful restrictions on campaign 
contributions. But with this past election cycle, the facade has fallen 
and we are faced with the naked truth that this system is wide open.
  That is why I am joining with Senator Daschle today in sponsoring his 
proposal for campaign finance reform which would eliminate or rein in 
many of the worst loopholes in the current system including the raising 
and spending of unregulated or ``soft'' money, independent expenditures 
by national parties, and campaign ads which masquerade as so-called 
issue ads.
  Senator Daschle's bill is a comprehensive response to the problem and 
on balance it is an achievable and meaningful reform proposal. Senator 
Daschle has incorporated in his bill several provisions that I authored 
dealing with issue ads and independent expenditures by parties. The 
approach that my provision in this bill takes with respect to so-called 
issue ads is to redefine ``express advocacy'' to include any 
advertising broadcast on radio or television 90 days before a primary 
or general election which specifically mentions a candidate.
  The Supreme Court has tried to draw a bright line in defining 
``express advocacy'' by applying it only to those ads which include 
certain magic phrases like ``Vote for Mrs. X'' or ``Defeat Mr. Y.'' 
Such a test though leaves out ads which target a specific candidate and 
do not use the magic words that deliver the same message--for example, 
an ad that says, ``Write to candidate Z and let him know how you feel'' 
about an issue, which the ad has just strongly advocated or attacked.
  Now, my approach would treat any broadcast ad, any broadcast ad that 
appears within 90 days of an election in which a candidate is 
explicitly mentioned as ``express advocacy'' and payable therefore out 
of regulated funds. The approach which my provision takes with respect 
to independent expenditures by a party is to require a party to choose 
between making coordinated expenditures on behalf of a candidate or 
making independent expenditures. A party would not be allowed to have 
it both ways. And that is because it is impossible, practically 
speaking, for a national party to be truly independent from a candidate 
if it is also engaged in coordinated expenditures on that candidate's 
behalf. To argue otherwise defies common sense. It is one way or the 
other. If there is a coordinated campaign on the candidate's behalf, it 
is kind of hard to argue that that same national party can engage in 
coordinated expenditures relative to that campaign.
  We should not delay the consideration of campaign finance reform 
legislation, but we can always find a reason not to do it. This year 
there is a new reason. I have heard the suggestion that we should put 
off consideration of campaign finance reform until the hearings before 
the Governmental Affairs Committee on campaign finance irregularities 
are finished, but the argument for delay has been used in one form or 
another for many, many Congresses and our job now is to show the 
American people that we can do it and we can do it now.
  The typical sophisticated analysis of the likelihood of campaign 
finance reform is that any reform is virtually impossible. ``It will 
not happen,'' you hear among those so-called well-informed folks. ``The 
gap simply cannot be bridged,'' some people say.
  We witnessed the end of the cold war 5 years ago. No one ever thought 
that was going to end. If we can achieve the end of the nuclear arms 
race, we surely can achieve the end of the money race in the American 
campaign system. I think most of us--and I, surely--want to be part of 
that effort. I want to do whatever it takes to facilitate action now. 
That is why I will be introducing in the next few days a more limited 
form of campaign finance reform to address certain limited, specific, 
but extensive abuses. Then, if we come to loggerheads over a 
comprehensive approach with more limited bills being offered as 
backups, there will be no excuse to not tackle at least some of the 
more pressing problems.
  Let me take a minute, Mr. President, to show you how out of kilter 
this system has become. There's an article in today's Roll Call about 
the treatment of the Business Roundtable by the Republican Party. Now 
the Business Roundtable, which is an organization of the biggest and 
most influential corporations in America, doesn't need me or anybody 
else, probably, to stand up for it. I am sure it can handle itself 
quite adequately when it is picked on. But when you have the Republican 
Party calling in 24 CEO's of companies who are members of the Business 
Roundtable to begin the ``process of behavior modification'' according 
to the persons who spoke to Roll Call, you've got a serious problem.
  According to Roll Call,

       Still angry that big business failed to adequately bankroll 
     their campaigns and counter the AFL-CIO's onslaught of attack 
     ads last fall, the Republicans want the BRT (Business 
     Roundtable) to purge Democrats from its staff of nine 
     directors.

  ``You have to fix the problem. You have to fix the Business 
Roundtable,'' one Republican source said, according to Roll Call, 
``explaining that the GOP leadership is urging the prestigious 
organization of corporate bigwigs to purge its staff.''
  The article goes on.

       The lawmakers are also urging the CEOs of some 200 
     corporations that comprise the BRT to dump their Democratic 
     lobbyists, hire Republicans, and significantly increase the 
     percentage of PAC contributions that go to GOP candidates.

  Later on, the article says,

       If the Republicans can get the BRT to change its ways the 
     payoff could be big. Just as Willie Sutton robbed banks 
     because ``that's where the money is,'' the GOP Congressional 
     leaders realize that BRT members could handily boost 
     Republican election efforts if the BRT would agree to fund 
     issue-advocacy campaigns in future elections.

  What a sad state of affairs, Mr. President. Congressional leaders, 
according to this article, are trying to pressure a private 
organization as to whom its members should employ to lobby their 
offices, the amount of support these corporations should give to their 
party activities and how they should spend their money to influence 
elections on issue ads. And it is all done with what seems to be a 
threat--a ``do this or else'' attitude.
  The Wall Street Journal, reporting on this CEO meeting, suggests that 
the threat is more explicit than implied. The Wall Street Journal of 
January 9, 1997, reported:

       Companies that want to have it both ways, vows one top GOP 
     strategist, no longer will be involved in Republican 
     decision-making ``or invited to our cocktail parties.''

  And this action is not because the Business Roundtable did not 
contribute to Republican candidates. No, according to the Wall Street 
Journal, the BRT gave twice as much to Republicans as they did to 
Democrats--$25 million to Republicans and only $11 million to 
Democrats. It is not enough that the BRT members already give to 
Republicans, they ``should give a bigger percentage to the 
Republicans'' than they are now giving, according to Haley Barbour, the 
Republican Party Chairman.
  This is punishment, Mr. President, to be imposed on an organization 
by party and Congressional leaders. That is the message behind this 
action--no money, no access--and it looks awful. That is how far we 
have come in this scramble for campaign money, and that is why we have 
to make the effort now to get going on campaign finance reform.
  Mr. President, I ask unanimous consent the two articles I referred to 
be printed in the Record.

[[Page S279]]

  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the materials were ordered to be printed in 
the Record, as follows:

                                 S. 11

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

     SECTION 1. SHORT TITLE.

       (a) Short Title.--This title may be cited as the 
     ``Congressional Election Campaign Spending Limit and Reform 
     Act of 1997''.
       (b) Table of Contents.--
Sec. 1. Short title.

          TITLE I--CONTROL OF CONGRESSIONAL CAMPAIGN SPENDING

   Subtitle A--Senate Election Campaign Spending Limits and Benefits

Sec. 101. Senate spending limits and benefits.
Sec. 102. Ban on activities of political action committees in senate 
              elections.
Sec. 103. Reporting requirements.
Sec. 104. Disclosure by candidates other than eligible senate 
              candidates.
Sec. 105. Excess campaign funds of senate candidates.
Sec. 106. Contribution limit for eligible senate candidates.

                     Subtitle B--General Provisions

Sec. 111. Broadcast rates and preemption.
Sec. 112. Reporting requirements for certain independent expenditures.
Sec. 113. Campaign advertising amendments.
Sec. 114. Definitions.
Sec. 115. Provisions relating to franked mass mailings.

                   TITLE II--INDEPENDENT EXPENDITURES

Sec. 201. Definition of independent expenditure.
Sec. 202. Independent versus coordinated expenditures by political 
              party committees.
Sec. 203. Treatment of qualified nonprofit corporations.
Sec. 204. Equal broadcast time.

                        TITLE III--EXPENDITURES

                   Subtitle A--Personal Funds; Credit

Sec. 301. Contributions and loans from personal funds.
Sec. 302. Extensions of credit.

              Subtitle B--Soft Money of Political Parties

Sec. 311. Preparation and distribution by volunteers of materials in 
              connection with State and local political party voter 
              registration and get-out-the-vote activities so as not to 
              be considered a contribution or expenditure.
Sec. 312. Contributions to political party committees.
Sec. 313. Provisions relating to national, State, and local party 
              committees.
Sec. 314. Restrictions on fundraising by candidates and officeholders.
Sec. 315. Reporting requirements.

     Subtitle C--Soft Money of Persons Other Than Political Parties

Sec. 321. Soft money of persons other than political parties.

                        TITLE IV--CONTRIBUTIONS

Sec. 401. Prohibition of certain contributions by lobbyists.
Sec. 402. Contributions by dependents not of voting age.
Sec. 403. Contributions to candidates from State and local committees 
              of political parties to be aggregated.
Sec. 404. Contributions and expenditures using money secured by 
              physical force or other intimidation.
Sec. 405. Prohibition of acceptance by a candidate of cash 
              contributions from any one person aggregating more than 
              $100.

   TITLE V--AUTHORITIES AND DUTIES OF THE FEDERAL ELECTION COMMISSION

Sec. 501. Filing of reports using computers and facsimile machines.
Sec. 502. Increase in threshold for reporting requirements.
Sec. 503. Audits.
Sec. 504. Authority to seek injunction.
Sec. 505. Penalties.
Sec. 506. Independent litigating authority.
Sec. 507. Reference of suspected violation to the attorney general.
Sec. 508. Powers of the commission.

                        TITLE VI--MISCELLANEOUS

Sec. 601. Prohibition of leadership committees.
Sec. 602. Telephone voting by persons with disabilities.
Sec. 603. Certain tax-exempt organizations not subject to corporate 
              limits.
Sec. 604. Aiding and abetting violations of the Federal election 
              campaign act of 1971.
Sec. 605. Campaign advertising that refers to an opponent.
Sec. 606. Limit on congressional use of the franking privilege.
Sec. 607. Participation by foreign nationals in political activities.
Sec. 608. Certification of compliance with foreign contribution and 
              solicitation limitations.

               TITLE VII--EFFECTIVE DATES; AUTHORIZATIONS

Sec. 701. Effective date.
Sec. 702. Budget neutrality.
Sec. 703. Severability.
Sec. 704. Expedited review of constitutional issues.
Sec. 705. Regulations.
          TITLE I--CONTROL OF CONGRESSIONAL CAMPAIGN SPENDING
   Subtitle A--Senate Election Campaign Spending Limits and Benefits

     SEC. 101. SENATE SPENDING LIMITS AND BENEFITS.

       (a) In General.--The Federal Election Campaign Act of 1971 
     (2 U.S.C. 431 et seq.) is amended by adding at the end the 
     following:
 ``TITLE V--SPENDING LIMITS AND BENEFITS FOR SENATE ELECTION CAMPAIGNS

     ``SEC. 501. DEFINITIONS.

       ``In this title:
       ``(1) Eligible senate candidate.--The term `eligible Senate 
     candidate' means a candidate who is certified under section 
     505 as being eligible to receive benefits under this title.
       ``(2) Excess expenditure amount.--The term `excess 
     expenditure amount', with respect to an eligible Senate 
     candidate, means the amount applicable to the eligible Senate 
     candidate under section 504(b).
       ``(3) Expenditure.--The term `expenditure' has the meaning 
     given in paragraph (9) of section 301, excluding subparagraph 
     (B)(ii) of that paragraph.
       ``(4) General election expenditure limit.--The term 
     `general election expenditure limit', with respect to an 
     eligible Senate candidate, means the limit applicable to the 
     eligible Senate candidate under section 503(b).
       ``(5) Personal funds expenditure limit.--The term `personal 
     funds expenditure limit' means the limit stated in section 
     503(a).
       ``(6) Primary election expenditure limit.--The term 
     `primary election expenditure limit', with respect to an 
     eligible Senate candidate, means the limit applicable to the 
     eligible Senate candidate under section 502(d)(1)(A).
       ``(7) Runoff election expenditure limit.--The term `runoff 
     election expenditure limit', with respect to an eligible 
     Senate candidate, means the limit applicable to the eligible 
     Senate candidate under section 502(d)(1)(B).

     ``SEC. 502. ELIGIBLE SENATE CANDIDATES.

       ``(a) In General.--For purposes of this title, a candidate 
     is an eligible Senate candidate if the candidate--
       ``(1) files a primary election eligibility declaration 
     under subsection (b) and is in compliance with the 
     representations made in the declaration;
       ``(2) files a general election eligibility certification 
     and declaration under subsection (c) and is in compliance 
     with the representations made in the certification and 
     declaration; and
       ``(3) meets the threshold contribution requirements of 
     subsection (e).
       ``(b) Primary Election Eligibility Declaration.--
       ``(1) In general.--The requirements of this subsection are 
     met if the candidate files with the Secretary of the Senate a 
     declaration that--
       ``(A) the candidate and the candidate's authorized 
     committees--
       ``(i) will meet the primary and runoff election expenditure 
     limits of subsection (d); and
       ``(ii) will accept only an amount of contributions for the 
     primary and runoff elections that does not exceed those 
     limits;
       ``(B) the candidate and the candidate's authorized 
     committees will meet the personal funds expenditure limit;
       ``(C) the candidate and the candidate's authorized 
     committees will meet the general election expenditure limit; 
     and
       ``(D) the candidate and the candidate's authorized 
     committees will meet the closed captioning requirements of 
     section 510.
       ``(2) Deadline for filing declaration.--The declaration 
     under paragraph (1) shall be filed not later than the date on 
     which the candidate files as a candidate for the primary 
     election.
       ``(c) General Election Eligibility Certification and 
     Declaration.--
       ``(1) In general.--The requirements of this subsection are 
     met if the candidate files with the Secretary of the Senate--
       ``(A) a certification, under penalty of perjury, that--
       ``(i) the candidate and the candidate's authorized 
     committees--

       ``(I) met the primary and runoff election expenditure 
     limits under subsection (d); and
       ``(II) did not accept contributions for the primary or 
     runoff election in excess of the primary or runoff 
     expenditure limit under subsection (d), whichever is 
     applicable, reduced by any amounts transferred to the current 
     election cycle from a preceding election cycle;

       ``(ii) the candidate met the threshold contribution 
     requirement under subsection (e), and that only allowable 
     contributions were taken into account in meeting such 
     requirement; and
       ``(iii) at least 1 other candidate has qualified for the 
     same general election ballot under the law of the candidate's 
     State; and
       ``(B) a declaration that the candidate and the authorized 
     committees of the candidate--
       ``(i) except as otherwise provided by this title, will not 
     make expenditures that exceed the general election 
     expenditure limit;
       ``(ii) will not accept any contributions in violation of 
     section 315;
       ``(iii) except as otherwise provided by this title, will 
     not accept any contribution for

[[Page S280]]

     the general election to the extent that the contribution 
     would cause the aggregate amount of contributions to exceed 
     the sum of the amount of the general election expenditure 
     limit and the amounts described in subsections (c), (d), and 
     (e) of section 503, reduced by any amounts transferred to the 
     current election cycle from a previous election cycle and not 
     taken into account under subparagraph (A)(ii)(II);
       ``(iv) will deposit all payments received under this title 
     in an account insured by the Federal Deposit Insurance 
     Corporation from which funds may be withdrawn by check or 
     similar means of payment to third parties;
       ``(v) will furnish campaign records, evidence of 
     contributions, and other appropriate information to the 
     Commission;
       ``(vi) will cooperate in the case of any audit and 
     examination by the Commission under section 506 and will pay 
     any amounts required to be paid under that section; and
       ``(vii) will meet the closed captioning requirements of 
     section 510.
       ``(2) Deadline for filing certification.--The certification 
     under paragraph (1) shall be filed not later than 7 days 
     after the earlier of--
       ``(A) the date on which the candidate qualifies for the 
     general election ballot under State law; or
       ``(B) if, under State law, a primary or runoff election to 
     qualify for the general election ballot occurs after 
     September 1, the date on which the candidate wins the primary 
     or runoff election.
       ``(d) Primary and Runoff Expenditure Limits.--
       ``(1) In general.--The requirements of this subsection are 
     met if--
       ``(A) the candidate or the candidate's authorized 
     committees did not make expenditures for the primary election 
     in excess of the lesser of--
       ``(i) 67 percent of the general election expenditure limit; 
     or
       ``(ii) $2,750,000; and
       ``(B) the candidate and the candidate's authorized 
     committees did not make expenditures for any runoff election 
     in excess of 20 percent of the general election expenditure 
     limit.
       ``(2) Indexing.--The $2,750,000 amount under paragraph 
     (1)(A)(ii) shall be increased as of the beginning of each 
     calendar year based on the increase in the price index 
     determined under section 315(c), except that the base period 
     shall be calendar year 1996.
       ``(3) Increase.--The limitations under subparagraphs (A) 
     and (B) of paragraph (1) with respect to any candidate shall 
     be increased by the aggregate amount of independent 
     expenditures in opposition to, or on behalf of any opponent 
     of, the candidate during the primary or runoff election 
     period, whichever is applicable, that are required to be 
     reported to the Secretary of the Senate or to the Commission 
     with respect to that period under section 304.
       ``(4) Excess amount of contributions.--
       ``(A) In general.--If the contributions received by a 
     candidate or the candidate's authorized committees for the 
     primary election or runoff election exceed the expenditures 
     for either election--
       ``(i) the excess amount of contributions shall be treated 
     as contributions for the general election; and
       ``(ii) expenditures for the general election may be made 
     from the excess amount of contributions.
       ``(B) Limitation.--Subparagraph (A) shall not apply to the 
     extent that treatment of excess contributions in accordance 
     with subparagraph (A)--
       ``(i) would result in the violation of any limitation under 
     section 315; or
       ``(ii) would cause the aggregate amount of contributions 
     received for the general election to exceed the limits under 
     subsection (c)(1)(D)(iii).
       ``(e) Threshold Contribution Requirements.--
       ``(1) In general.--The requirements of this subsection are 
     met if the candidate and the candidate's authorized 
     committees have received allowable contributions during the 
     applicable period in an amount at least equal to 5 percent of 
     the general election expenditure limit.
       ``(2) Definitions.--In this section and subsections (b) and 
     (c) of section 504:
       ``(A) Allowable contribution.--The term `allowable 
     contribution' means a contribution that is made as a gift of 
     money by an individual pursuant to a written instrument 
     identifying the individual as the contributor.
       ``(B) Applicable period.--The term `applicable period' 
     means--
       ``(i) the period beginning on January 1 of the calendar 
     year preceding the calendar year of a general election and 
     ending on--

       ``(I) the date on which the certification under subsection 
     (c) is filed by the candidate; or
       ``(II) for purposes of subsections (b) and (c) of section 
     504, the date of the general election; or

       ``(ii) in the case of a special election for the office of 
     United States Senator, the period beginning on the date on 
     which the vacancy in the office occurs and ending on the date 
     of the general election.

     ``SEC. 503. LIMIT ON EXPENDITURES.

       ``(a) Personal Funds Expenditure Limit.--
       ``(1) In general.--The aggregate amount of expenditures 
     that may be made during an election cycle by an eligible 
     Senate candidate or the candidate's authorized committees 
     from the sources described in paragraph (2) shall not exceed 
     $25,000.
       ``(2) Sources.--A source is described in this paragraph if 
     it is--
       ``(A) personal funds of the candidate or a member of the 
     candidate's immediate family; or
       ``(B) proceeds of indebtedness incurred by the candidate or 
     a member of the candidate's immediate family.
       ``(b) General Election Expenditure Limit.--
       ``(1) In general.--Except as otherwise provided in this 
     title, the aggregate amount of expenditures for a general 
     election by an eligible Senate candidate and the candidate's 
     authorized committees shall not exceed the lesser of--
       ``(A) $5,500,000; or
       ``(B) the greater of--
       ``(i) $1,200,000; or
       ``(ii) $400,000; plus

       ``(I) 30 cents multiplied by the voting age population not 
     in excess of 4,000,000; and
       ``(II) 25 cents multiplied by the voting age population in 
     excess of 4,000,000.

       ``(2) Exception.--In the case of an eligible Senate 
     candidate in a State that has not more than 1 transmitter for 
     a commercial Very High Frequency (VHF) television station 
     licensed to operate in that State, paragraph (1)(B)(ii) shall 
     be applied by substituting--
       ``(A) `92 cents' for `30 cents' in subclause (I); and
       ``(B) `90 cents' for `25 cents' in subclause (II).
       ``(3) Indexing.--The amount otherwise determined under 
     paragraph (1) for any calendar year shall be increased by the 
     same percentage as the percentage increase for the calendar 
     year under section 502(d)(2).
       ``(c) Legal and Accounting Compliance Fund.--
       ``(1) In general.--The general election expenditure limit, 
     shall not apply to qualified legal or accounting expenditures 
     made by a candidate or the candidate's authorized committees 
     or a Federal officeholder from a legal and accounting 
     compliance fund meeting the requirements of paragraph (2).
       ``(2) Requirements.--A legal and accounting compliance fund 
     meets the requirements of this paragraph if--
       ``(A) the fund is established with respect to qualified 
     legal or accounting expenditures incurred with respect to a 
     particular election;
       ``(B) the only amounts transferred to the fund are amounts 
     received in accordance with the limitations, prohibitions, 
     and reporting requirements of this Act;
       ``(C) the aggregate amounts transferred to, and 
     expenditures made from, the fund do not exceed the sum of--
       ``(i) the lesser of--

       ``(I) 15 percent of the general election expenditure limit 
     for the election for which the fund was established; or
       ``(II) $300,000; plus

       ``(ii) the amount determined under paragraph (4); and
       ``(D) no funds received by the candidate under section 
     504(a)(3) are transferred to the fund.
       ``(3) Definition of qualified legal or accounting 
     expenditure.--For purposes of this subsection, the term 
     `qualified legal or accounting expenditure' means--
       ``(A) an expenditure for costs of legal or accounting 
     services provided in connection with--
       ``(i) an administrative or court proceeding initiated under 
     this Act for the election for which the legal and accounting 
     fund was established; or
       ``(ii) the preparation of a document or report required by 
     this Act or by the Commission;
       ``(B) an expenditure for legal or accounting service 
     provided in connection with the election cycle for which the 
     legal and accounting compliance fund was established to 
     ensure compliance with this Act with respect to the election 
     cycle.
       ``(4) Increase.--
       ``(A) Petition.--If, after a general election, primary 
     election, or runoff election, a candidate determines that 
     qualified legal or accounting expenditures will exceed the 
     limit under paragraph (2)(C)(i), the candidate may petition 
     the Commission for an increase in the limit by filing the 
     petition with the Secretary of the Senate.
       ``(B) Determination.--The Commission shall authorize an 
     increase in the limit under paragraph (2)(C)(i) in the amount 
     (if any) by which the Commission determines the qualified 
     legal or accounting expenditures exceed the limit.
       ``(C) Judicial review.--A determination under subparagraph 
     (B) shall be subject to judicial review under section 507.
       ``(D) Contributions and expenditures not counted.--Except 
     as provided in section 315, a contribution received or 
     expenditure made under this paragraph shall not be counted 
     against any contribution or expenditure limit applicable to 
     the candidate under this title.
       ``(5) Treatment.--Funds in a legal and accounting 
     compliance fund shall be treated for purposes of this Act as 
     a separate segregated fund, except that any portion of the 
     fund not used to pay qualified legal or accounting 
     expenditures, and not transferred to a legal and accounting 
     compliance fund for the election cycle for the next general 
     election, shall be treated in the same manner as other 
     campaign funds for purposes of section 313(b).

[[Page S281]]

       ``(d) Payment of Taxes on Earnings.--The limitation under 
     subsection (b) shall not apply to any expenditure for 
     Federal, State, or local income taxes on the earnings of a 
     candidate's authorized committees.
       ``(e) Certain Expenses.--In the case of an eligible Senate 
     candidate who holds a Federal office, the limitation under 
     subsection (b) shall not apply to ordinary and necessary 
     expenses of travel of the candidate and the candidate's 
     spouse and children between Washington, District of Columbia, 
     and the candidate's State in connection with the candidate's 
     activities as a holder of Federal office.

     ``SEC. 504. BENEFITS FOR ELIGIBLE SENATE CANDIDATES.

       ``(a) In General.--An eligible Senate candidate shall be 
     entitled to--
       ``(1) the broadcast media rates provided under section 
     315(b) of the Communications Act of 1934; and
       ``(2) payments in an amount equal to--
       ``(A) the excess expenditure amount determined under 
     subsection (b); and
       ``(B) the independent expenditure amount determined under 
     subsection (c).
       ``(b) Excess Expenditure Amount.--
       ``(1) Determination.--The excess expenditure amount is--
       ``(A) in the case of a major party candidate, an amount 
     equal to the sum of--
       ``(i) if the opponent's excess is less than 33\1/3\ percent 
     of the general election expenditure limit, an amount equal to 
     one-third of the general election expenditure limit; plus
       ``(ii) if the opponent's excess equals or exceeds 33\1/3\ 
     percent but is less than 66\2/3\ percent of the general 
     election expenditure limit, an amount equal to one-third of 
     the general election expenditure limit; plus
       ``(iii) if the opponent's excess equals or exceeds 66\2/3\ 
     percent of the general election expenditure limit, an amount 
     equal to one-third of the general election expenditure limit; 
     and
       ``(B) in the case of an eligible Senate candidate who is 
     not a major party candidate, an amount equal to the least 
     of--
       ``(i) the amount of allowable contributions accepted by the 
     eligible Senate candidate during the applicable period in 
     excess of the threshold contribution requirement under 
     section 502(e);
       ``(ii) 50 percent of the general election expenditure 
     limit; or
       ``(iii) the opponent's excess.
       ``(2) Definition of opponent's excess.--In this subsection, 
     the term `opponent's excess' means the amount by which an 
     opponent of an eligible Senate candidate in the general 
     election accepts contributions or makes (or obligates to 
     make) expenditures for the election in excess of the general 
     election expenditure limit.
       ``(c) Independent Expenditure Amount.--The independent 
     expenditure amount is the total amount of independent 
     expenditures made, or obligated to be made, during the 
     general election period by 1 or more persons in opposition 
     to, or on behalf of an opponent of, an eligible Senate 
     candidate that are required to be reported by the persons 
     under section 304(d) with respect to the general election 
     period and are certified by the Commission under section 
     304(d).
       ``(d) Waiver of Expenditure and Contribution Limits.--
       ``(1) Recipients of excess expenditure amount payments and 
     independent expenditure amount payments.--
       ``(A) In general.--An eligible Senate candidate who 
     receives payments under subsection (a)(2) may make 
     expenditures from the payments for the general election 
     without regard to the general election expenditure limit.
       ``(B) Nonmajor party candidates.--In the case of an 
     eligible Senate candidate who is not a major party candidate, 
     the general election expenditure limit shall be increased by 
     the amount (if any) by which the opponent's excess 
     expenditure amount exceeds the amount determined under 
     subsection (b)(2)(B) with respect to the candidate.
       ``(2) All benefit recipients.--
       ``(A) In general.--An eligible Senate candidate who 
     receives benefits under this section may make expenditures 
     for the general election without regard to the personal funds 
     expenditure limit or general election expenditure limit if 
     any 1 of the eligible Senate candidate's opponents who is not 
     an eligible Senate candidate raises an amount of 
     contributions or makes or becomes obligated to make an amount 
     of expenditures for the general election that exceeds 200 
     percent of the general election expenditure limit.
       ``(B) Limitation.--The amount of the expenditures that may 
     be made by reason of subparagraph (A) shall not exceed 100 
     percent of the general election expenditure limit.
       ``(3) Acceptance of contribution without regard to section 
     502(c)(1)(D)(iii).--
       ``(A) A candidate who receives benefits under this section 
     may accept a contribution for the general election without 
     regard to section 502(c)(1)(D)(iii) if--
       ``(i) a major party candidate in the same general election 
     is not an eligible Senate candidate; or
       ``(ii) any other candidate in the same general election who 
     is not an eligible Senate candidate raises an amount of 
     contributions or makes or becomes obligated to make an amount 
     of expenditures for the general election that exceeds 75 
     percent of the general election expenditure limit applicable 
     to such other candidate.
       ``(B) Limitation.--The amount of contributions that may be 
     received by reason of subparagraph (A) shall not exceed 100 
     percent of the general election expenditure limit.
       ``(e) Use of Payments.--
       ``(1) Permitted use.--Payments received by an eligible 
     Senate candidate under subsection (a)(2) shall be used to 
     make expenditures with respect to the general election period 
     for the candidate.
       ``(2) Prohibited use.--Payments received by an eligible 
     Senate candidate under subsection (a)(2) shall not be used--
       ``(A) except as provided in paragraph (4), to make any 
     payments, directly or indirectly, to the candidate or to any 
     member of the immediate family of the candidate;
       ``(B) to make any expenditure other than an expenditure to 
     further the general election of the candidate;
       ``(C) to make an expenditure the making of which 
     constitutes a violation of any law of the United States or of 
     the State in which the expenditure is made; or
       ``(D) subject to section 315(i), to repay any loan to any 
     person except to the extent that proceeds of the loan were 
     used to further the general election of the candidate.

     ``SEC. 505. CERTIFICATION BY THE COMMISSION.

       ``(a) Certification of Status as Eligible Senate 
     Candidate.--
       ``(1) In general.--The Commission shall certify to any 
     candidate meeting the requirements of section 502 that the 
     candidate is an eligible Senate candidate entitled to 
     benefits under this title.
       ``(2) Revocation.--The Commission shall revoke a 
     certification under paragraph (1) if the Commission 
     determines that a candidate fails to continue to meet the 
     requirements of section 502.
       ``(b) Certification of Eligibility To Receive Benefits.--
       ``(1) In general.--Not later than 48 hours after an 
     eligible Senate candidate files a request with the Secretary 
     of the Senate to receive benefits under section 504, the 
     Commission shall issue a certification stating whether the 
     candidate is eligible for payments under this title and the 
     amount of such payments to which such candidate is entitled.
       ``(2) Contents of request.--A request under paragraph (1) 
     shall--
       ``(A) contain such information and be made in accordance 
     with such procedures as the Commission may provide by 
     regulation; and
       ``(B) contain a verification signed by the candidate and 
     the treasurer of the principal campaign committee of the 
     candidate stating that the information furnished in support 
     of the request, to the best of their knowledge, is correct 
     and fully satisfies the requirements of this title.
       ``(c) Determinations by the Commission.--All determinations 
     made by the Commission under this title (including 
     certifications under subsections (a) and (b)) shall be final 
     and conclusive, except to the extent that a determination is 
     subject to examination and audit by the Commission under 
     section 506 and judicial review under section 507.

     ``SEC. 506. EXAMINATIONS AND AUDITS; REPAYMENTS; CIVIL 
                   PENALTIES.

       ``(a) Examinations and Audits.--
       ``(1) After a general election.--After each general 
     election, the Commission shall conduct an examination and 
     audit of the campaign accounts of all candidates in 5 percent 
     of the elections to the Senate in which there was an eligible 
     Senate candidate on the ballot, as designated by the 
     Commission through the use of an appropriate statistical 
     method of random selection, to determine whether the 
     candidates have complied with the conditions of eligibility 
     and other requirements of this title.
       ``(2) After a special election.--After each special 
     election in which an eligible Senate candidate was on the 
     ballot, the Commission shall conduct an examination and audit 
     of the campaign accounts of all candidates in the election to 
     determine whether the candidates have complied with the 
     conditions of eligibility and other requirements of this 
     title.
       ``(3) With reason to believe there may have been a 
     violation.--The Commission may conduct an examination and 
     audit of the campaign accounts of any eligible Senate 
     candidate in a general election if the Commission determines 
     that there exists reason to believe that the eligible Senate 
     candidate failed to comply with this title.
       ``(b) Excess Payment.--If the Commission determines any 
     payment was made to an eligible Senate candidate under this 
     title in excess of the aggregate amounts to which the 
     eligible Senate candidate was entitled, the Commission shall 
     notify the eligible Senate candidate, and the eligible Senate 
     candidate shall pay an amount equal to the excess.
       ``(c) Revocation of Status.--If the Commission revokes the 
     certification of an eligible Senate candidate as an eligible 
     Senate candidate under section 505(a)(1), the Commission 
     shall notify the eligible Senate candidate, and the eligible 
     Senate candidate shall pay an amount equal to the payments 
     received under this title.
       ``(d) Misuse of Benefit.--If the Commission determines that 
     any amount of any benefit made available to an eligible 
     Senate candidate under this title was not used as provided 
     for in this title, the Commission shall notify the eligible 
     Senate candidate, and the eligible Senate candidate shall pay 
     the amount of that amount.
       ``(e) Excess Expenditures.--If the Commission determines 
     that an eligible Senate candidate who received benefits under 
     this title made expenditures that in the aggregate exceed the 
     primary election expenditure, the runoff election expenditure 
     limit,

[[Page S282]]

     or the general election expenditure limit, the Commission 
     shall notify the eligible Senate candidate, and the eligible 
     Senate candidate shall pay an amount equal to the amount of 
     the excess expenditures.
       ``(f) Civil Penalties.--
       ``(1) Misuse of benefit.--If the Commission determines that 
     an eligible Senate candidate has committed a violation 
     described in subsection (d), the Commission may assess a 
     civil penalty against the eligible Senate candidate in an 
     amount not greater than 200 percent of the amount of the 
     benefit that was misused.
       ``(2) Excess expenditures.--
       ``(A) Low amount of excess expenditures.--If the Commission 
     determines that an eligible Senate candidate made 
     expenditures that exceeded by 2.5 percent or less the primary 
     election expenditure limit, the runoff election expenditure 
     limit, or the general election expenditure limit, the 
     Commission shall assess a civil penalty against the eligible 
     Senate candidate in an amount equal to the amount of the 
     excess expenditures.
       ``(B) Medium amount of excess expenditures.--If the 
     Commission determines that an eligible Senate candidate made 
     expenditures that exceeded by more than 2.5 percent and less 
     than 5 percent the primary election expenditure limit, the 
     runoff election expenditure limit, or the general election 
     expenditure limit, the Commission shall assess a civil 
     penalty against the eligible Senate candidate in an amount 
     equal to 3 times the amount of the excess expenditures.
       ``(C) Large amount of excess expenditures.--If the 
     Commission determines that an eligible Senate candidate made 
     expenditures that exceeded by 5 percent or more the primary 
     election expenditure limit, the runoff election expenditure 
     limit, or the general election expenditure limit, the 
     Commission shall assess a civil penalty against the eligible 
     Senate candidate in an amount equal to the amount of the 
     excess expenditures an amount equal to the sum of--
       ``(i) 3 times the amount of the excess expenditures plus an 
     additional amount determined by the Commission; plus
       ``(ii) if the Commission determines that the exceeding of 
     the expenditure limit was willful, an amount equal to the 
     amount of benefits that the eligible Senate candidate 
     received under this title.
       ``(g) Unexpended Funds.--
       ``(1) Repayment.--Subject to paragraph (2), any amount 
     received by an eligible Senate candidate under this title and 
     not expended on or before the date of the general election 
     shall be repaid not later than 30 days after the date of the 
     general election.
       ``(2) Retention for purposes of liquidation of 
     obligations.--An eligible Senate candidate may retain for a 
     period not exceeding 120 days after the date of a general 
     election a reasonable portion of unexpended funds received 
     under this title for the liquidation of all obligations to 
     pay expenditures for the general election incurred during the 
     general election period. At the end of the 120-day period, 
     any unexpended funds received under this title shall be 
     promptly repaid.
       ``(h) Payments Returned to Source.--Any payment, repayment, 
     or civil penalty under this section shall be paid to the 
     entity that afforded benefits under this title to the 
     eligible Senate candidate.
       ``(i) Limit on Period for Notification.--No notification 
     shall be made by the Commission under this section with 
     respect to an election more than 3 years after the date of 
     the election.

     ``SEC. 507. JUDICIAL REVIEW.

       ``(a) Judicial Review.--Any agency action by the Commission 
     under this title shall be subject to review by the United 
     States Court of Appeals for the District of Columbia Circuit 
     upon petition filed in that court within 30 days after the 
     date of the agency action.
       ``(b) Application of Title 5, United States Code.--Chapter 
     7 of title 5, United States Code, shall apply to judicial 
     review of any agency action by the Commission under this 
     title.
       ``(c) Agency Action.--For purposes of this section, the 
     term `agency action' has the meaning given the term in 
     section 551(13) of title 5, United States Code.

     ``SEC. 508. PARTICIPATION BY COMMISSION IN JUDICIAL 
                   PROCEEDINGS.

       ``(a) Appearances.--The Commission may appear in and defend 
     against any action instituted under this section and under 
     section 507 by attorneys employed in the office of the 
     Commission or by counsel whom it may appoint without regard 
     to the provisions of title 5, United States Code, governing 
     appointments in the competitive service, and whose 
     compensation it may fix without regard to chapter 51 and 
     subchapter III of chapter 53 of that title.
       ``(b) Actions for Recovery of Amount of Benefits.--The 
     Commission, by attorneys and counsel described in subsection 
     (a), may bring an action in United States district court to 
     recover any amounts determined under this title to be payable 
     to any entity that afforded a benefit to an eligible Senate 
     candidate under this title.
       ``(c) Action for Injunctive Relief.--The Commission, by 
     attorneys and counsel described in subsection (a), may 
     petition the courts of the United States for such injunctive 
     relief as is appropriate in order to implement any provision 
     of this title.
       ``(d) Appeals.--The Commission, on behalf of the United 
     States, may appeal from, and may petition the Supreme Court 
     for certiorari to review, any judgment or decree entered with 
     respect to actions in which the Commission under this 
     section.

     ``SEC. 509. REPORTS TO CONGRESS; REGULATIONS.

       ``(a) Reports.--
       ``(1) In general.--As soon as practicable after each 
     general election, the Commission shall submit a full report 
     to the Senate setting forth--
       ``(A) the expenditures (shown in such detail as the 
     Commission determines to be appropriate) made by each 
     eligible Senate candidate and the authorized committees of 
     the candidate;
       ``(B) the amounts certified by the Commission under section 
     505 as benefits available to each eligible Senate candidate; 
     and
       ``(C) the amount of repayments, if any, required under 
     section 506 and the reason why each repayment was required.
       ``(2) Printing.--Each report under paragraph (1) shall be 
     printed as a Senate document.
       ``(b) Regulations.--
       ``(1) In general.--The Commission may issue such 
     regulations, conduct such examinations and investigations, 
     and require the keeping and submission of such books, 
     records, and information, as the Commission considers 
     necessary to carry out the functions and duties of the 
     Commission under this title.
       ``(2) Statement to senate.--Not less than 30 days before 
     issuing a regulation under paragraph (1), the Commission 
     shall submit to the Senate a statement setting forth the 
     proposed regulation and containing a detailed explanation and 
     justification for the regulation.

     ``SEC. 510. CLOSED CAPTIONING IN TELEVISION BROADCASTS.

       ``Any television broadcast prepared or distributed by an 
     eligible Senate candidate shall be prepared in a manner that 
     contains, is accompanied by, or otherwise readily permits 
     closed captioning of the oral content of the broadcast to be 
     broadcast by way of line 21 of the vertical blanking interval 
     or by way of a comparable successor technology.

     ``SEC. 511. LIMITATIONS ON PAYMENTS.

       ``(a) Payments on Certification.--On receipt of a 
     certification from the Commission under section 505, except 
     as provided in subsection (b), the Secretary shall, subject 
     to the availability of appropriations, promptly pay the 
     amount certified by the Commission to the candidate.
       ``(b) Insufficient Funds.--
       ``(1) Withholding.--If, at the time of a certification by 
     the Commission under section 505 for payment to an eligible 
     Senate candidate, the Secretary determines that there are 
     not, or may not be, sufficient funds to satisfy the full 
     entitlement of all eligible Senate candidates, the Secretary 
     shall withhold from the amount of the payment such amount as 
     the Secretary determines to be necessary to ensure that each 
     eligible Senate candidate will receive the same pro rata 
     share of the candidate's full entitlement.
       ``(2) Subsequent payment.--Amounts withheld under paragraph 
     (1) shall be paid when the Secretary determines that there 
     are sufficient funds to pay all or a portion of the funds 
     withheld from all eligible Senate candidates, but, if only a 
     portion is to be paid, the portion shall be paid in such a 
     manner that each eligible Senate candidate receives an equal 
     pro rata share.
       ``(3) Notification of estimated withholding.--
       ``(A) Advance estimate of available funds and projected 
     costs.--Not later than December 31 of any calendar year 
     preceding a calendar year in which there is a regularly 
     scheduled general election, the Secretary, after consultation 
     with the Commission, shall make an estimate of--
       ``(i) the amount of funds that will be available to make 
     payments under this title in the general election year; and
       ``(ii) the costs of implementing this title in the general 
     election year.
       ``(B) Notification.--If the Secretary determines under 
     subparagraph (A) that there will be insufficient funds for 
     any calendar year, the Secretary shall notify by registered 
     mail each candidate for the Senate on January 1 of that year 
     (or, if later, the date on which an individual becomes such a 
     candidate) of the amount that the Secretary estimates will be 
     the pro rata withholding from each eligible Senate 
     candidate's payments under this subsection.
       ``(C) Increase in contribution limit.--The amount of an 
     eligible candidate's contribution limit under section 
     502(c)(1)(D)(iii) shall be increased by the amount of the 
     estimated pro rata withholding under subparagraph (B).
       ``(4) Notification of actual withholding.--
       ``(A) In general.--The Secretary shall notify the 
     Commission and each eligible Senate candidate by registered 
     mail of any actual reduction in the amount of any payment by 
     reason of this subsection.
       ``(B) Greater amount of withholding.--If the amount of a 
     withholding exceeds the amount estimated under paragraph (3), 
     an eligible Senate candidate's contribution limit under 
     section 502(c)(1)(D)(iii) shall be increased by the amount of 
     the excess.''.
       (b) Effective Dates.--
       (1) In general.--Except as provided in this subsection, the 
     amendment made by subsection (a) shall apply to elections 
     occurring after December 31, 1996.

[[Page S283]]

       (2) Applicability to contributions and expenditures.--For 
     purposes of any expenditure or contribution limit imposed by 
     the amendment made by subsection (a)--
       (A) no expenditure made before January 1, 1997, shall be 
     taken into account, except that there shall be taken into 
     account any such expenditure for goods or services to be 
     provided after that date; and
       (B) all cash, cash items, and Government securities on hand 
     as of January 1, 1997, shall be taken into account in 
     determining whether the contribution limit is met, except 
     that there shall not be taken into account amounts used 
     during the 60-day period beginning on January 1, 1997, to pay 
     for expenditures that were incurred (but unpaid) before that 
     date.
       (c) Effect of Invalidity on Other Provisions of Title.--If 
     section 502, 503, or 504 of the Federal Election Campaign Act 
     of 1971 (as added by subsection (a)) or any part of those 
     sections is held to be invalid, this Act and all amendments 
     made by this Act shall be treated as invalid.

     SEC. 102. BAN ON ACTIVITIES OF POLITICAL ACTION COMMITTEES IN 
                   SENATE ELECTIONS.

       (a) In General.--Title III of the Federal Election Campaign 
     Act of 1971 (2 U.S.C. 431 et seq.) is amended by adding at 
     the end the following:

     ``SEC. 324. BAN ON SENATE ELECTION ACTIVITIES BY POLITICAL 
                   ACTION COMMITTEES.

       ``(a) In General.--Notwithstanding any other provision of 
     this Act, no person other than an individual or a political 
     committee may make contributions, solicit or receive 
     contributions, or make expenditures for the purpose of 
     influencing an election, or nomination for election, to the 
     office of United States Senator.
       ``(b) Executive Officers and Administrative Employees.--In 
     the case of an individual who is an executive officer or 
     administrative employee of an employer--
       ``(1) the individual shall not make a contribution--
       ``(A) to any political committee established and maintained 
     by any political party for use in an election, or nomination 
     for election, to the office of United States Senator; or
       ``(B) to any candidate for nomination for election, or 
     election, to the office of United States Senator or the 
     candidate's authorized committees;

     if the contribution is made at the direction of, or is 
     otherwise controlled or influenced by, the employer; and
       ``(2) the individual shall not make any such contribution 
     if the making of the contribution would cause the aggregate 
     amount of contributions made by all executive officers and 
     administrative employees of the employer in any calendar year 
     to exceed--
       ``(A) $20,000 in the case of such political committees; and
       ``(B) $5,000 in the case of any such candidate and the 
     candidate's authorized committees.''.
       (b) Candidate's Committees.--Section 315(a) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 441a(a)) is amended 
     by adding at the end the following:
       ``(9) For the purposes of the limitations under paragraphs 
     (1) and (2), any political committee that is established or 
     financed or maintained or controlled by any candidate or 
     Federal officeholder shall be considered to be an authorized 
     committee of the candidate or officeholder. Nothing in this 
     paragraph shall be construed to permit the establishment, 
     financing, maintenance, or control of any committee that is 
     prohibited by paragraph (3) or (6) of section 302(e).''.
       (c) Rules Applicable When Ban Not in Effect.--For purposes 
     of the Federal Election Campaign Act of 1971 (2 U.S.C. 431 et 
     seq.), during any period beginning after the effective date 
     in which the limitation under section 324 of that Act (as 
     added by subsection (a)) is not in effect, the amendments 
     made by subsections (a) and (b) shall not be in effect.
       (d) Rule Ensuring Prohibition of Direct Corporate and Labor 
     Organization Spending.--If section 316(a) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 441b(a)) is held to 
     be invalid by reason of the amendments made by this section, 
     the amendments made by subsections (a) and (b) shall not 
     apply to contributions by any political committee that is 
     directly or indirectly established, administered, or 
     supported by a connected organization that is a bank, 
     corporation, or other organization described in section 
     316(a) of that Act.
       (e) Restrictions on Contributions to Political 
     Committees.--Paragraphs (1)(D) and (2)(D) of section 315(a) 
     of the Federal Election Campaign Act of 1971 (2 U.S.C. 
     441a(a)), as redesignated by section 312, are amended by 
     striking ``$5,000'' and inserting ``$1,000''.
       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to elections (and 
     the election cycles relating thereto) occurring after 
     December 31, 1996.
       (2) Applicability.--In applying the amendments made by this 
     section, there shall not be taken into account--
       (A) a contribution made or received before January 1, 1997; 
     or
       (B) a contribution made to, or received by, a candidate on 
     or after January 1, 1997, to the extent that the aggregate 
     amount of such contributions made to or received by the 
     candidate is not greater than the excess (if any) of--
       (i) the aggregate amount of such contributions made to or 
     received by any opponent of the candidate before January 1, 
     1997; over
       (ii) the aggregate amount of such contributions made to or 
     received by the candidate before January 1, 1997.

     SEC. 103. REPORTING REQUIREMENTS.

       Title III of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 431 et seq.) is amended by inserting after section 304 
     the following:

     ``SEC. 304A. REPORTING REQUIREMENTS FOR SENATE CANDIDATES.

       ``(a) Meanings of Terms.--Any term used in this section 
     that is used in title V shall have the same meaning as when 
     used in title V.
       ``(b) Candidate Other Than Eligible Senate Candidate.--
       ``(1) Declaration of intent.--A candidate for the office of 
     Senator who does not file a certification with the Secretary 
     of the Senate under section 502(c) shall, at the time 
     provided in section 501(c)(2), file with the Secretary of the 
     Senate a declaration as to whether the candidate intends to 
     make expenditures for the general election in excess of the 
     general election expenditure limit.
       ``(2) Reports.--
       ``(A) Initial report.--A candidate for the Senate who 
     qualifies for the ballot for a general election--
       ``(i) who is not an eligible Senate candidate under section 
     502; and
       ``(ii) who receives contributions in an aggregate amount or 
     makes or obligates to make expenditures in an aggregate 
     amount for the general election that exceeds 75 percent of 
     the general election expenditure limit;

     shall file a report with the Secretary of the Senate within 2 
     business days after aggregate contributions have been 
     received or aggregate expenditures have been made or 
     obligated to be made in that amount (or, if later, within 2 
     business days after the date of qualification for the general 
     election ballot), setting forth the candidate's aggregate 
     amount of contributions received and aggregate amount of 
     expenditures made or obligated to be made for the election as 
     of the date of the report.
       ``(B) Additional reports.--After an initial report is filed 
     under subparagraph (A), the candidate shall file additional 
     reports (until the amount of such contributions or 
     expenditures exceeds 200 percent of the general election 
     expenditure limit) with the Secretary of the Senate within 2 
     business days after each time additional contributions are 
     received, or expenditures are made or are obligated to be 
     made, that in the aggregate exceed an amount equal to 10 
     percent of the general election expenditure limit and after 
     the aggregate amount of contributions or expenditures exceeds 
     100, 133\1/3\, 166\2/3\, and 200 percent of the general 
     election expenditure limit.
       ``(3) Notification of other candidates.--The Commission--
       ``(A) shall, within 2 business days after receipt of a 
     declaration or report under paragraph (1) or (2), notify each 
     eligible Senate candidate of the filing of the declaration or 
     report; and
       ``(B) if an opposing candidate has received aggregate 
     contributions, or made or obligated to make aggregate 
     expenditures, in excess of the general election expenditure 
     limit, shall certify, under subsection (e), the eligibility 
     for payment of any amount to which an eligible Senate 
     candidate in the general election is entitled under section 
     504(a).
       ``(4) Action by the commission absent report.--
       ``(A) In general.--Notwithstanding the reporting 
     requirements under this subsection, the Commission may make 
     its own determination that a candidate in a general election 
     who is not an eligible Senate candidate has raised aggregate 
     contributions, or made or has obligated to make aggregate 
     expenditures, in the amounts that would require a report 
     under paragraph (2).
       ``(B) Notification of eligible senate candidates.--The 
     Commission shall--
       ``(i) within 2 business days after making a determination 
     under subparagraph (A), notify each eligible Senate candidate 
     in the general election of the making of the determination; 
     and
       ``(ii) when the aggregate amount of contributions or 
     expenditures exceeds the general election expenditure limit, 
     certify under subsection (e) an eligible Senate candidate's 
     eligibility for payment of any amount under section 504(a).
       ``(c) Reports on Personal Funds.--
       ``(1) Filing.--A candidate for the Senate who, during an 
     election cycle, expends more than the personal funds 
     expenditure limit during the election cycle shall file a 
     report with the Secretary of the Senate within 2 business 
     days after expenditures have been made or loans incurred in 
     excess of the personal funds expenditure limit.
       ``(2) Notification of eligible senate candidates.--Within 2 
     business days after a report has been filed under paragraph 
     (1), the Commission shall notify each eligible Senate 
     candidate in the general election of the filing of the 
     report.
       ``(3) Action by the commission absent report.--
       ``(A) In General.--Notwithstanding the reporting 
     requirements under this subsection, the Commission may make 
     its own determination that a candidate for the Senate has 
     made expenditures in excess of the amount under paragraph 
     (1).
       ``(B) Notification of eligible senate candidates.--Within 2 
     business days after making a determination under subparagraph 
     (A),

[[Page S284]]

     the Commission shall notify each eligible Senate candidate in 
     the general election of the making of the determination.
       ``(d) Candidates for Other Offices.--
       ``(1) Filing.--Each individual--
       ``(A) who becomes a candidate for the office of United 
     States Senator;
       ``(B) who, during the election cycle for that office, held 
     any other Federal, State, or local office or was a candidate 
     for any such office; and
       ``(C) who expended any amount during the election cycle 
     before becoming a candidate for the office of United States 
     Senator that would have been treated as an expenditure if the 
     individual had been such a candidate (including amounts for 
     activities to promote the image or name recognition of the 
     individual);

     shall, within 7 days after becoming a candidate for the 
     office of United States Senator, report to the Secretary of 
     the Senate the amount and nature of such expenditures.
       ``(2) Applicability.--Paragraph (1) shall not apply to any 
     expenditures in connection with a Federal, State, or local 
     election that has been held before the individual becomes a 
     candidate for the office of United States Senator.
       ``(3) Determination.--The Commission shall, as soon as 
     practicable, make a determination as to whether any amounts 
     reported under paragraph (1) were made for purposes of 
     influencing the election of the individual to the office of 
     Senator.
       ``(4) Certification.--The Commission shall certify to the 
     individual and the individual's opponents the amounts the 
     Commission determines to be described in paragraph (3), and 
     such amounts shall be treated as expenditures for purposes of 
     this Act.
       ``(e) Basis of Certifications.--Notwithstanding section 
     505(a), the certification required by this section shall be 
     made by the Commission on the basis of reports filed in 
     accordance with this Act or on the basis of the Commission's 
     own investigation or determination.
       ``(f) Shorter Periods for Reports and Notices During 
     Election Week.--Any report, determination, or notice required 
     by reason of an event occurring during the 7-day period 
     ending on the date of the general election shall be made 
     within 24 hours (rather than 2 business days) of the event.
       ``(g) Copies of Reports and Public Inspection.--The 
     Secretary of the Senate shall--
       ``(1) transmit a copy of any report or filing received 
     under this section or under title V as soon as possible (but 
     not later than 4 working hours of the Commission) after 
     receipt of the report or filing;
       ``(2) make the report or filing available for public 
     inspection and copying in the same manner as the Commission 
     under section 311(a)(4); and
       ``(3) preserve the reports and filings in the same manner 
     as the Commission under section 311(a)(5).''.

     SEC. 104. DISCLOSURE BY CANDIDATES OTHER THAN ELIGIBLE SENATE 
                   CANDIDATES.

       Section 318 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441d) (as amended by section 113) is amended by adding 
     at the end the following:
       ``(e) Disclosure by Candidates Other Than Eligible Senate 
     Candidates.--A broadcast, cablecast, or other communication 
     that is paid for or authorized by a candidate in the general 
     election for the office of United States Senator who is not 
     an eligible Senate candidate, or the authorized committee of 
     such a candidate, shall contain the following sentence: `This 
     candidate has not agreed to voluntary campaign spending 
     limits.'.''.

     SEC. 105. EXCESS CAMPAIGN FUNDS OF SENATE CANDIDATES.

       Section 313 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 439a) is amended--
       (1) by inserting ``(a) In General.--'' before ``Amounts'' 
     and adjusting the margin appropriately; and
       (2) by adding at the end the following:
       ``(b) Disposition of Excess Campaign Funds.--
       ``(1) Except as provided in paragraph (2), and 
     notwithstanding subsection (a), a candidate for the Senate 
     who has amounts in excess of amounts necessary to defray 
     expenditures for an election cycle, including any fines or 
     penalties relating thereto, shall, not later than 1 year 
     after the date of the general election for the election 
     cycle--
       ``(A) expend the excess in the manner described in 
     subsection (a); or
       ``(B) pay the excess to the general fund of the Treasury of 
     the United States.
       ``(2)  Applicability.--Paragraph (1) shall not apply to any 
     amount--
       ``(A) that is transferred to a legal and accounting 
     compliance fund under section 503(c); or
       ``(B) that is transferred for use in the next election 
     cycle, to the extent that the amount transferred does not 
     exceed 20 percent of the sum of the primary election 
     expenditure limit under section 501(d)(1)(A) and the general 
     election expenditure limit for the election cycle from which 
     the amounts are transferred.''.

     SEC. 106. CONTRIBUTION LIMIT FOR ELIGIBLE SENATE CANDIDATES.

       Section 315(a)(1) of the Federal Election Campaign Act of 
     1971 (2 U.S.C. 441a(a)(1)) is amended--
       (1) in subparagraph (A), by inserting ``except as provided 
     in subparagraph (B),'' before ``to'';
       (2) by redesignating subparagraphs (B) and (C) as 
     subparagraphs (C) and (D), respectively; and
       (3) by inserting after subparagraph (A) the following:
       ``(B) to an eligible Senate candidate (as defined in 
     section 501) and the authorized political committees of the 
     candidate which, in the aggregate, exceed $2,000, if an 
     opponent of the eligible Senate candidate fails to comply 
     with the expenditure limits contained in this Act and has 
     received contributions in excess of 10 percent of the general 
     election limits contained in this Act or has expended 
     personal funds in excess of 10 percent of the general 
     election limits contained in this Act;''.
                     Subtitle B--General Provisions

     SEC. 111. BROADCAST RATES AND PREEMPTION.

       (a) Broadcast Rates.--Section 315(b) of the Communications 
     Act of 1934 (47 U.S.C. 315(b)) is amended--
       (1) by striking ``(b) The charges'' and inserting the 
     following:
       ``(b) Broadcast Media Rates.--
       ``(1) In general.--The charges'';
       (2) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively, and adjusting the 
     margins accordingly;
       (3) in paragraph (1)(A) (as redesignated by paragraph 
     (2))--
       (A) by striking ``forty-five'' and inserting ``30''; and
       (B) by striking ``lowest unit charge of the station for the 
     same class and amount of time for the same period'' and 
     inserting ``lowest charge of the station for the same amount 
     of time for the same period on the same date''; and
       (4) by adding at the end the following:
       ``(2) Eligible senate candidates.--
       ``(A) In general.--In the case of an eligible Senate 
     candidate (as described in section 501 of the Federal 
     Election Campaign Act), the charges for the use of a 
     television broadcasting station during the 30-day period and 
     60-day period referred to in paragraph (1)(A) shall not 
     exceed 50 percent of the lowest charge described in paragraph 
     (1)(A).
       ``(B) Applicability.--Subparagraph (A) shall not apply to 
     broadcasts that are to be paid from amounts received under 
     section 504(a)(2)(B) of the Federal Election Campaign Act of 
     1971.''.
       (b) Preemption; Access.--Section 315 of the Communications 
     Act of 1947 (47 U.S.C. 315) is amended--
       (1) by redesignating subsections (c) and (d) as subsections 
     (d) and (e), respectively; and
       (2) by inserting after subsection (b) the following:
       ``(c) Preemption.--
       ``(1) In general.--Except as provided in paragraph (2), a 
     licensee shall not preempt the use, during any period 
     specified in subsection (b)(1), of a broadcasting station by 
     a legally qualified candidate for public office who has 
     purchased and paid for such use pursuant to subsection 
     (b)(1).
       ``(2) Circumstances beyond control of licensee.--If a 
     program to be broadcast by a broadcasting station is 
     preempted because of circumstances beyond the control of the 
     broadcasting station, any candidate advertising spot 
     scheduled to be broadcast during that program may also be 
     preempted.''.
       (c) Revocation of License for Failure To Permit Access.--
     Section 312(a)(7) of the Communications Act of 1947 (47 
     U.S.C. 312(a)(7)) is amended--
       (1) by striking ``or repeated'';
       (2) by inserting ``or cable system'' after ``broadcasting 
     station''; and
       (3) by striking ``his candidacy'' and inserting ``his or 
     her candidacy, under the same terms, conditions, and business 
     practices as apply to the broadcasting station's most favored 
     advertiser''.

     SEC. 112. REPORTING REQUIREMENTS FOR CERTAIN INDEPENDENT 
                   EXPENDITURES.

       (a) In General.--Section 304 of the Federal Election 
     Campaign Act of 1971 (2 U.S.C. 434) (as amended by section 
     608) is amended by adding at the end the following:
       ``(e) Time for Reporting Certain Expenditures.--
       ``(1) Expenditures aggregating $1,000.--A person that makes 
     independent expenditures aggregating $1,000 or more after the 
     20th day, but more than 24 hours, before an election shall 
     file a report describing the expenditures within 24 hours 
     after that amount of independent expenditures has been made.
       ``(2) Expenditures aggregating $10,000.--
       ``(A) Initial report.--A person that makes independent 
     expenditures aggregating $10,000 or more at any time up to 
     and including the 20th day before an election shall file a 
     report describing the expenditures within 48 hours that 
     amount of independent expenditures has been made.
       ``(B) Additional reports.--After a person files a report 
     under subparagraph (A), the person filing the report shall 
     file an additional report each time that independent 
     expenditures aggregating an additional $10,000 are made with 
     respect to the same election as that to which the initial 
     report relates.
       ``(3) Place of filing; contents; transmittal.--
       ``(A) Place of filing; contents.--A report under this 
     subsection--
       ``(i) shall be filed with the Secretary of the Senate or 
     the Commission, and the Secretary of State of the candidate's 
     State; and
       ``(ii) shall contain the information required by subsection 
     (b)(6)(B)(iii), including whether each independent 
     expenditure was made in support of, or in opposition to, a 
     candidate.
       ``(B) Transmittal.--

[[Page S285]]

       ``(i) To the commission.--As soon as possible (but not 
     later than 4 working hours of the Commission) after receipt 
     of a report under this subsection, the Secretary of the 
     Senate shall transmit the report to the Commission.
       ``(ii) To candidates.--Not later than 48 hours after 
     receipt of a report under this subsection, the Commission 
     shall transmit a copy of the report to each candidate seeking 
     nomination for election to, or election to, the office in 
     question.
       ``(4) Obligation to make expenditure.--For purposes of this 
     subsection, an expenditure shall be treated as being made 
     when it is made or obligated to be made.
       ``(5) Advance notice of intention to make independent 
     expenditures.--
       ``(A) In general.--A person that intends to make 
     independent expenditures totaling $5,000 or more during the 
     20 days before an election shall file a notice of that 
     intention not later than the 20th day before the election.
       ``(B) Place of filing; contents; transmittal.--
       ``(i) Place of filing; contents.--A statement under 
     subparagraph (A)--

       ``(I) shall be filed with the Secretary of the Senate or 
     the Commission, and the Secretary of State of the candidate's 
     State; and
       ``(II) shall identify each candidate whom the expenditure 
     will support or oppose.

       ``(ii) Transmittal.--

       ``(I) To the commission.--As soon as possible (but not 
     later than 4 working hours of the Commission) after receipt 
     of a notice of intention under this paragraph, the Commission 
     shall transmit the notice to the Commission.
       ``(II) To candidates.--Not later than 48 hours after the 
     receipt of a notice of intention under this paragraph, the 
     Commission shall transmit a copy of the notice to each 
     candidate identified in the notice.

       ``(6) Determinations by the commission.--
       ``(A) In general.--The Commission may make its own 
     determination that a person has made, or has incurred 
     obligations to make, independent expenditures with respect to 
     any Federal election that in the aggregate exceed the 
     applicable amounts under paragraph (1) or (2).
       ``(B) Notification.--The Commission shall notify each 
     candidate in the election of the making of the determination 
     within 24 hours after making the determination.
       ``(7) Certification of eligibility to receive benefits.--At 
     the same time as a candidate is notified under paragraph (3), 
     (5), or (6) with respect to expenditures during a general 
     election period, the Commission shall certify eligibility to 
     receive benefits under section 504(a).
       ``(8) Public availability; preservation.--The Secretary of 
     the Senate shall make any report or notice of intention 
     received under this subsection available for public 
     inspection and copying in the same manner as under section 
     311(a)(4), and shall preserve the reports and notices in the 
     same manner as under section 311(a)(5).''.
       (b) Conforming Amendment.--Section 304(c)(2) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 434(c)(2)) is amended 
     by striking the undesignated matter after subparagraph (C).

     SEC. 113. CAMPAIGN ADVERTISING AMENDMENTS.

       Section 318 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441d) is amended--
       (1) in subsection (a)--
       (A) by striking ``Whenever'' and inserting the following:
       ``(a) Disclosure.--When a political committee makes a 
     disbursement for the purpose of financing any communication 
     through any broadcasting station, newspaper, magazine, 
     outdoor advertising facility, mailing, or any other type of 
     general public political advertising, or when'';
       (B) by striking ``an expenditure'' and inserting ``a 
     disbursement'';
       (C) by striking ``direct''; and
       (D) in paragraph (3), by inserting ``and permanent street 
     address'' after ``name'';
       (2) in subsection (b), by inserting ``Same Charge as Charge 
     for Comparable Use.--'' before ``No''; and
       (3) by adding at the end the following:
       ``(c) Requirements for Printed Communications.--A printed 
     communication described in subsection (a) shall be--
       ``(1) of sufficient type size to be clearly readable by the 
     recipient of the communication;
       ``(2) contained in a printed box set apart from the other 
     contents of the communication; and
       ``(3) consist of a reasonable degree of color contrast 
     between the background and the printed statement.
       ``(d) Requirements for Broadcast and Cablecast 
     Communications.--
       ``(1) Paid for or authorized by the candidate.--
       ``(A) In general.--A broadcast or cablecast communication 
     described in paragraph (1) or (2) of subsection (a) shall 
     include, in addition to the requirements of those paragraphs, 
     an audio statement by the candidate that identifies the 
     candidate and states that the candidate has approved the 
     communication.
       ``(B) Televised communications.--A broadcast or cablecast 
     communication described in paragraph (1) that is broadcast or 
     cablecast by means of television shall include, in addition 
     to the audio statement under subparagraph (A), a written 
     statement--
       ``(i) that states: `I [name of candidate] am a candidate 
     for [the office the candidate is seeking], and I have 
     approved this message';
       ``(ii) that appears at the end of the communication in a 
     clearly readable manner with a reasonable degree of color 
     contrast between the background and the printed statement, 
     for a period of at least 4 seconds; and
       ``(iii) that is accompanied by a clearly identifiable 
     photographic or similar image of the candidate.
       ``(2) Not paid for or authorized by the candidate.--A 
     broadcast or cablecast communication described in subsection 
     (a)(3) shall include, in addition to the requirements of that 
     paragraph, in a clearly spoken manner, the statement--
       `____________________ is responsible for the content of 
     this advertisement.';

     with the blank to be filled in with the name of the political 
     committee or other person paying for the communication and 
     the name of any connected organization of the payor; and, if 
     the communication is broadcast or cablecast by means of 
     television, the statement shall also appear in a clearly 
     readable manner with a reasonable degree of color contrast 
     between the background and the printed statement, for a 
     period of at least 4 seconds.''.

     SEC. 114. DEFINITIONS.

       (a) In General.--Section 301 of the Federal Election 
     Campaign Act of 1971 (2 U.S.C. 431) is amended by striking 
     paragraph (19) and inserting the following:
       ``(19) The term `general election'--
       ``(A) means an election that will directly result in the 
     election of a person to a Federal office; and
       ``(B) includes a primary election that may result in the 
     election of a person to a Federal office.
       ``(20) The term `general election period' means, with 
     respect to a candidate, the period beginning on the day after 
     the date of the primary or runoff election for the specific 
     office that the candidate is seeking, whichever is later, and 
     ending on the earlier of--
       ``(A) the date of the general election; or
       ``(B) the date on which the candidate withdraws from the 
     campaign or otherwise ceases actively to seek election.
       ``(21) The term `immediate family' means--
       ``(A) a candidate's spouse;
       ``(B) a child, stepchild, parent, grandparent, brother, 
     half-brother, sister, or half-sister of the candidate or the 
     candidate's spouse; and
       ``(C) the spouse of any person described in subparagraph 
     (B).
       ``(22) The term `major party' has the meaning given the 
     term in section 9002(6) of the Internal Revenue Code of 1986, 
     except that if a candidate qualified for the ballot in a 
     general election in an open primary in which all the 
     candidates for the office participated and which resulted in 
     the candidate and at least 1 other candidate's qualifying for 
     the ballot in the general election, the candidate shall be 
     treated as a candidate of a major party for purposes of title 
     V.
       ``(23) The term `primary election' means an election that 
     may result in the selection of a candidate for the ballot in 
     a general election for a Federal office.
       ``(24) The term `primary election period' means, with 
     respect to a candidate, the period beginning on the day 
     following the date of the last election for the specific 
     office that the candidate is seeking and ending on the 
     earlier of--
       ``(A) the date of the first primary election for that 
     office following the last general election for that office; 
     or
       ``(B) the date on which the candidate withdraws from the 
     election or otherwise ceases actively to seek election.
       ``(25) The term `runoff election' means an election held 
     after a primary election that is prescribed by applicable 
     State law as the means for deciding which candidate will be 
     on the ballot in the general election for a Federal office.
       ``(26) The term `runoff election period' means, with 
     respect to any candidate, the period beginning on the day 
     following the date of the last primary election for the 
     specific office that the candidate is seeking and ending on 
     the date of the runoff election for that office.
       ``(27) The term `voting age population' means the number of 
     residents of a State who are 18 years of age or older, as 
     certified under section 315(e).
       ``(28) The term `election cycle' means--
       ``(A) in the case of a candidate or the authorized 
     committees of a candidate, the period beginning on the day 
     after the date of the most recent general election for the 
     specific office or seat that the candidate is seeking and 
     ending on the date of the next general election for that 
     office or seat; and
       ``(B) in the case of all other persons, the period 
     beginning on the first day following the date of the last 
     general election and ending on the date of the next general 
     election.''.
       (b) Identification.--Section 301(13) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 431(13)) is amended 
     by striking ``mailing address'' and inserting ``permanent 
     residence address''.

     SEC. 115. PROVISIONS RELATING TO FRANKED MASS MAILINGS.

       Section 3210(a)(6)(C) of title 39, United States Code, is 
     amended--
       (1) by striking ``if the mass mailing is postmarked fewer 
     than 60 days immediately before the date'' and inserting ``if 
     the mass mailing is postmarked during the calendar year''; 
     and
       (2) by inserting ``or reelection'' before the period.

[[Page S286]]

                   TITLE II--INDEPENDENT EXPENDITURES

     SEC. 201. DEFINITION OF INDEPENDENT EXPENDITURE.

       Section 301 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 431) is amended by striking paragraph (17) and 
     inserting the following:
       ``(17) Independent Expenditure.--
       ``(A) In general.--The term ``independent expenditure'' 
     means an expenditure by a person other than a candidate or 
     candidate's authorized committee--
       ``(i) that is made for a communication that contains 
     express advocacy; and
       ``(ii) is made without the participation or cooperation of 
     and without coordination with a candidate.
       ``(B) Express advocacy.--The term `express advocacy' means 
     a communication advocating the election or defeat of a 
     clearly identified candidate and includes any communication 
     that--
       ``(i)(I) contains a phrase such as `vote for', `re-elect', 
     `support', `cast your ballot for', `(name of candidate) for 
     Congress', `(name of candidate) in 1997', `vote against', 
     `defeat', `reject';
       ``(II) recommends a position on an issue and clearly 
     identifies 1 or more candidates as supporting or opposing 
     that position; or
       ``(III) contains campaign slogans or individual words that 
     in context can have no reasonable meaning other than to 
     recommend the election or defeat of 1 or more clearly 
     identified candidates;
       ``(ii) clearly identifies 1 or more candidates and is 
     broadcast by a radio broadcast station or a television 
     broadcast station (including a cable system) within 60 
     calendar days preceding the date of an election (or with 
     respect to a candidate for the office of Vice President or 
     President in a general election, within 90 calendar days 
     preceding the date of the general election); or
       ``(iii) taken as a whole and with limited reference to 
     external events, such as proximity to an election, expresses 
     unmistakable support for or opposition to 1 or more clearly 
     identified candidates.
       ``(C) Without the participation or cooperation of and 
     without coordination with a candidate.--The term `without the 
     participation or cooperation of and without coordination with 
     a candidate', with respect to an expenditure, means an 
     expenditure that is made--
       ``(i) without any request or suggestion from or any 
     involvement of a candidate or candidate's representative;
       ``(ii) without the involvement of any person who, during 
     the election cycle in which the expenditure is made, has 
     raised funds on behalf of the candidate, counseled or advised 
     the candidate or the candidate's representative regarding the 
     election (other than to provide legal and accounting services 
     to ensure compliance with this Act), engaged in campaign-
     related research or polling analysis with respect to the 
     election, or communicated with or received information from 
     the candidate or the candidate's representative about the 
     candidate's plans, resources, expenditures, or needs 
     regarding the election; and
       ``(iii) without the involvement of any person who received 
     compensation, during the election cycle in which the 
     expenditure is made, from the candidate or candidate's 
     representative and from the person making the independent 
     expenditure.''.

     SEC. 202. INDEPENDENT VERSUS COORDINATED EXPENDITURES BY 
                   POLITICAL PARTY COMMITTEES.

       (a) Definition of Coordinated Expenditure.--Section 301 of 
     the Federal Election Campaign Act of 1971 (2 U.S.C. 431) is 
     amended by adding at the end the following:
       ``(19) Coordinated Expenditure.--The term `coordinated 
     expenditure' means an expenditure that is made by a person 
     other than the candidate and that is not an independent 
     expenditure.''.
       (b) Independent Versus Coordinated Expenditures by 
     Political Party Committees.--Section 315(d) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 441a(d)) is amended--
       (1) in paragraph (1) by striking ``and (3)'' and inserting 
     ``, (3) and (4)''; and
       (2) by adding at the end the following:
       ``(4) Prohibition against making both coordinated 
     expenditures and independent expenditures.--
       ``(A) In general.--A committee of a political party shall 
     not make both a coordinated expenditure and an independent 
     expenditure with respect to the same candidate during a 
     single election cycle.
       ``(B) Certification.--Before making a coordinated 
     expenditure or an independent expenditure with respect to a 
     candidate, a committee of a political party that is subject 
     to this subsection shall file with the Commission a 
     certification, signed by the treasurer, stating whether the 
     committee will make coordinated expenditures or independent 
     expenditures with respect to the candidate.
       ``(C) Transfers.--A party committee that certifies under 
     this paragraph that the committee will make coordinated 
     expenditures with respect to a candidate shall not, in the 
     same election cycle, make a transfer of funds to, or receive 
     a transfer of funds from, any other party committee that has 
     certified under this paragraph that it will make independent 
     expenditures with respect to the candidate.''.

     SEC. 203. TREATMENT OF QUALIFIED NONPROFIT CORPORATIONS.

       Section 316 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441b) is amended by adding at the end the following:
       ``(c) Exception for Certain Tax-Exempt Corporations.--
       ``(1) In general.--Notwithstanding the prohibitions of this 
     section, a qualified nonprofit corporation may make an 
     independent expenditure.
       ``(2) Definition of qualified nonprofit corporation.--For 
     purposes of this Act, the term `qualified nonprofit 
     corporation' means a corporation that meets the following 
     requirements:
       ``(A) Tax-exempt status.--The corporation is exempt from 
     taxation under section 501(a) of the Internal Revenue Code of 
     1986 and is described in section 501(c)(4) of the Code.
       ``(B) Purposes.--The corporation is organized exclusively 
     to promote specific political ideas.
       ``(C) No trade or business.--The corporation does not 
     engage in any activity that constitutes a trade or business.
       ``(D) Establishment.--The corporation was not established 
     by--
       ``(i) a corporation that is carrying on a trade or 
     business;
       ``(ii) a labor organization; or
       ``(iii) a business league or other organization described 
     in section 501(c)(6) of the Internal Revenue Code of 1986.
       ``(E) Contributions.--The corporation does not accept, 
     directly or indirectly, donations of anything of value from 
     any corporation, labor organization or organization described 
     in subparagraph (D)(iii), and does not serve, directly or 
     indirectly, as a conduit for expenditures by such entities.
       ``(F) Claims and incentives.--The corporation--
       ``(i) has no shareholder or other person, other than an 
     employee or creditor without an ownership interest, whose 
     affiliation could allow a claim on the assets or earnings of 
     such corporation; and
       ``(ii) offers no incentives or disincentives for persons to 
     associate or not to associate with the corporation other than 
     the positions of the corporation on political issues.
       ``(3) Status as political committee.--If a qualified 
     nonprofit corporation meets the qualifications of section 
     301(4), the corporation shall be treated as a political 
     committee.
       ``(4) Disclosure to donors.--All solicitations of donations 
     by the qualified nonprofit corporation shall inform potential 
     donors that donations may be used by the corporation for 
     political purposes, such as supporting or opposing candidates 
     for public office.''.

     SEC. 204. EQUAL BROADCAST TIME.

       Section 315 of the Communications Act of 1934 (47 U.S.C. 
     315) is amended by striking subsection (a) and inserting the 
     following:
       ``(a) Equal Opportunity To Use Broadcasting Station.--
       ``(1) In general.--A licensee that permits any person who 
     is a legally qualified candidate for public office to use a 
     broadcasting station (other than any use required to be 
     provided under paragraph (2)) shall afford equal 
     opportunities to all other such candidates for that office in 
     the use of the broadcasting station.
       ``(2) Independent expenditures.--
       ``(A) Information to be provided to licensee by person 
     reserving broadcast time.--A person that reserves broadcast 
     time the payment for which would constitute an independent 
     expenditure (as defined in section 301 of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 431)) shall--
       ``(i) inform the licensee that payment for the broadcast 
     time will constitute an independent expenditure;
       ``(ii) inform the licensee of the names of all candidates 
     for the office to which the proposed broadcast relates and 
     state whether the message to be broadcast is intended to be 
     made in support of or in opposition to each such candidate; 
     and
       ``(iii) provide the licensee a copy of the statement 
     described in section 304(d) of the Federal Election Campaign 
     Act of 1971 (2 U.S.C. 434(d)).
       ``(B) Response by licensee.--A licensee that is informed as 
     described in subparagraph (A) shall--
       ``(i) if any of the candidates described in subparagraph 
     (A)(ii) has provided the licensee the name and address of a 
     person to whom notification under this subparagraph is to be 
     given--

       ``(I) notify the person of the proposed making of the 
     independent expenditure; and
       ``(II) allow any such candidate (other than a candidate for 
     whose benefit the independent expenditure is made) to 
     purchase the same amount of broadcast time immediately after 
     the broadcast time paid for by the independent expenditure; 
     and

       ``(ii) in the case of an opponent of a candidate for whose 
     benefit the independent expenditure is made who certifies to 
     the licensee that the opponent is eligible to have the cost 
     of response broadcast time paid using funds derived from a 
     payment made under section 504(a)(2)(B) of the Federal 
     Election Campaign Act of 1971, afford the opponent such 
     broadcast time without requiring payment in advance and at 
     the cost specified in subsection (b).
       ``(3) No censorship.--A licensee shall have no power of 
     censorship over the material broadcast under this section.
       ``(4) No obligation.--Except as provided in paragraph (2), 
     no obligation is imposed under this subsection on any 
     licensee to allow the use of its station by any candidate.

[[Page S287]]

       ``(5) Certain appearances not considered use of 
     broadcasting station.--
       ``(A) In general.--An appearance by a legally qualified 
     candidate on a--
       ``(i) bona fide newscast;
       ``(ii) bona fide news interview;
       ``(iii) bona fide news documentary (if the appearance of 
     the candidate is incidental to the presentation of the 
     subject or subjects covered by the news documentary); or
       ``(iv) on-the-spot coverage of bona fide news events 
     (including political conventions and activities incidental 
     thereto);
     shall not be considered to be use of a broadcasting station 
     within the meaning of this subsection.
       ``(B) No relief from other obligations.--Nothing in 
     subparagraph (A) relieves a licensee, in connection with the 
     presentation of newscasts, news interviews, news 
     documentaries, and on-the-spot coverage of news events, from 
     the obligation under this Act to operate in the public 
     interest and to afford reasonable opportunity for the 
     discussion of conflicting views on issues of public 
     importance.
       ``(6) Endorsement of candidate by licensee.--
       ``(A) In general.--A licensee that endorses a candidate for 
     Federal office in an editorial shall, within the time stated 
     in subparagraph (B), provide to all other candidates for 
     election to the same office--
       ``(i) notice of the date and time of broadcast of the 
     editorial;
       ``(ii) a taped or printed copy of the editorial; and
       ``(iii) a reasonable opportunity to broadcast a response 
     using the licensee's facilities.
       ``(B) Time for response.--
       ``(i) 72 hours or more before election.--In the case of an 
     editorial described in subparagraph (A) that is first 
     broadcast 72 hours or more before the date of a primary, 
     runoff, or general election, the notice and copy described in 
     subparagraph (A) (i) and (ii) shall be provided not later 
     than 24 hours after the time of the first broadcast of the 
     editorial.
       ``(ii) Less than 72 hours before election.--In the case of 
     an editorial described in subparagraph (A) that is first 
     broadcast less than 72 hours before the date of an election, 
     the notice and copy shall be provided at a time prior to the 
     first broadcast that will be sufficient to enable candidates 
     a reasonable opportunity to prepare and broadcast a 
     response.''.
                        TITLE III--EXPENDITURES
                   Subtitle A--Personal Funds; Credit

     SEC. 301. CONTRIBUTIONS AND LOANS FROM PERSONAL FUNDS.

       Section 315 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441a) is amended by adding at the end the following:
       ``(i) Limitations on Repayment of Loans and Return of 
     Contributions From Personal Funds.--
       ``(1) Repayment of loans.--If a candidate or a member of 
     the candidate's immediate family made a loan to the candidate 
     or to the candidate's authorized committees during an 
     election cycle, no contribution received after the date of 
     the general election for the election cycle may be used to 
     repay the loan.
       ``(2) Return of contributions.--No contribution by a 
     candidate or member of the candidate's immediate family may 
     be returned to the candidate or member other than as part of 
     a pro rata distribution of excess contributions to all 
     contributors.''.

     SEC. 302. EXTENSIONS OF CREDIT.

       Section 301(8)(A) of the Federal Election Campaign Act of 
     1971 (2 U.S.C. 431(8)(A)) (as amended by section 201(b)), is 
     amended--
       (1) by striking ``or'' at the end of clause (ii);
       (2) by striking the period at the end of clause (iii) and 
     inserting ``; or''; and
       (3) by inserting at the end the following:
       ``(iv) with respect to a candidate and the candidate's 
     authorized committees, any extension of credit for goods or 
     services relating to advertising on a broadcasting station, 
     in a newspaper or magazine, or by a mailing, or relating to 
     other similar types of general public political advertising, 
     if the extension of credit is--

       ``(I) in an amount greater than $1,000; and
       ``(II) for a period greater than the period, not in excess 
     of 60 days, for which credit is generally extended in the 
     normal course of business after the date on which the goods 
     or services are furnished or the date of a mailing.''.

              Subtitle B--Soft Money of Political Parties

     SEC. 311. PREPARATION AND DISTRIBUTION BY VOLUNTEERS OF 
                   MATERIALS IN CONNECTION WITH STATE AND LOCAL 
                   POLITICAL PARTY VOTER REGISTRATION AND GET-OUT-
                   THE-VOTE ACTIVITIES SO AS NOT TO BE CONSIDERED 
                   A CONTRIBUTION OR EXPENDITURE.

       (a) Contribution.--Section 301(8)(B)(xii) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 431(8)(B)(xii)) is 
     amended--
       (1) by striking ``such committee'' and inserting ``the 
     committee in connection with volunteer activities'';
       (2) by striking ``: Provided, That'' and inserting ``if'';
       (3) by redesignating the items designated as items ``(1)'', 
     ``(2)'', and ``(3)'', respectively, as subclauses (I), (II), 
     and (III);
       (4) by striking ``and'' at the end of subclause (II) (as 
     redesignated);
       (5) by inserting ``and'' at the end of subclause (III) (as 
     redesignated); and
       (6) by adding at the end the following:

       ``(IV) the activities are conducted solely by, and any 
     materials are distributed solely by, volunteers;''.

       (b) Expenditure.--Section 301(9)(B)(ix) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 431(9)(B)(ix)) is 
     amended--
       (1) by striking ``such committee'' and inserting ``the 
     committee in connection with volunteer activities'';
       (2) by striking ``: Provided, That'' and inserting ``if'';
       (3) by redesignating the items designated as items ``(1)'', 
     ``(2)'', and ``(3)'', respectively, as subclauses (I), (II), 
     and (III);
       (4) by striking ``and'' at the end of subclause (II) (as 
     redesignated);
       (5) by inserting ``and'' at the end of subclause (III) (as 
     redesignated); and
       (6) by adding at the end the following:

       ``(IV) any materials in connection with the activities are 
     prepared for distribution (and are distributed) solely by 
     volunteers; and''.

     SEC. 312. CONTRIBUTIONS TO POLITICAL PARTY COMMITTEES.

       (a) Individual Contributions to State Party.--Section 
     315(a)(1) of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441a(a)(1)) (as amended by section 106) is amended--
       (1) by striking ``or'' at the end of subparagraph (B);
       (2) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (3) by inserting after subparagraph (C) the following:
       ``(D) to--
       ``(i) a State Party Grassroots Fund established and 
     maintained by a State committee of a political party in any 
     calendar year that, in the aggregate, exceed $20,000; or
       ``(ii) any other political committee established and 
     maintained by a State committee of a political party in any 
     calendar year that, in the aggregate, exceed $5,000;

     except that the aggregate contributions described in this 
     subparagraph that may be made by a person to the State Party 
     Grassroots Fund and all committees of a State Committee of a 
     political party in any State in any calendar year shall not 
     exceed $20,000; or''.
       (b) Multicandidate Committee Contributions to State 
     Party.--Section 315(a)(2) of the Federal Election Campaign 
     Act of 1971 (2 U.S.C. 441a(a)(2)) is amended--
       (1) by striking ``or'' at the end of subparagraph (B);
       (2) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (3) by inserting after subparagraph (B) the following:
       ``(C) to--
       ``(i) a State Party Grassroots Fund established and 
     maintained by a State committee of a political party in any 
     calendar year that, in the aggregate, exceed $15,000; or
       ``(ii) to any other political committee established and 
     maintained by a State committee of a political party that, in 
     the aggregate, exceed $5,000;

     except that the aggregate contributions described in this 
     subparagraph that may be made by a multicandidate political 
     committee to the State Party Grassroots Fund and all 
     committees of a State Committee of a political party in any 
     State in any calendar year shall not exceed $15,000; or''.
       (c) Overall Limit.--Section 315(a) of the Federal Election 
     Campaign Act of 1971 (2 U.S.C. 441a(a)) is amended by 
     striking paragraph (3) and inserting the following:
       ``(3) Overall limit.--
       ``(A) Election cycle.--No individual shall make 
     contributions during any election cycle (as defined in 
     section 301(28)(B)) that, in the aggregate, exceed $60,000.
       ``(B) Calendar year.--
       ``(i) In general.--No individual shall make contributions 
     during any calendar year--

       ``(I) to all candidates and their authorized political 
     committees that, in the aggregate, exceed $25,000; or
       ``(II) to all political committees established and 
     maintained by State committees of a political party that, in 
     the aggregate, exceed $20,000.

       ``(ii) Nonelection year.--For purposes of clause (i), a 
     contribution made to a candidate or the candidate's 
     authorized political committees in a year other than the 
     calendar year in which the election is held with respect to 
     which the contribution is made shall be treated as being made 
     during the calendar year in which the election is held.
       (d) Presidential Candidate Committee Transfers.--
       (1) Amendment of feca.--Section 315(b)(1) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 441a(b)(1)) is 
     amended by striking subparagraph (B) and inserting the 
     following:
       ``(B) in the case of a campaign for election to that 
     office, an amount equal to the sum of--
       ``(i) $20,000,000; plus
       ``(ii) the lesser of--

       ``(I) 2 cents multiplied by the voting age population of 
     the United States (as certified under subsection (e); or
       ``(II) the amounts transferred by the candidate and the 
     authorized committees of the candidate to the national 
     committee of the candidate's political party for distribution 
     to State Party Grassroots Funds.''.

       (2) Amendment of internal revenue code.--Subparagraph (A) 
     of section 9002(11) of the Internal Revenue Code of 1986 
     (defining qualified campaign expense) is amended--
       (A) by striking ``or'' at the end of clause (ii);

[[Page S288]]

       (B) by inserting ``or'' at the end of clause (iii); and
       (C) by adding at the end the following:
       ``(iv) any transfers to the national committee of the 
     candidate's political party for distribution to State Party 
     Grassroots Funds (as defined in section 301(30) of the 
     Federal Election Campaign Act of 1971) to the extent that 
     such transfers do not exceed the amount determined under 
     section 315(b)(1)(B)(ii) of that Act;''.

     SEC. 313. PROVISIONS RELATING TO NATIONAL, STATE, AND LOCAL 
                   PARTY COMMITTEES.

       (a) Soft Money of Committees of Political Parties.--Title 
     III of the Federal Election Campaign Act of 1971 (2 U.S.C. 
     431 et seq.) (as amended by section 102(a)) is amended by 
     adding at the end the following:

     ``SEC. 325. POLITICAL PARTY COMMITTEES.

       ``(a) Limitations on National Committees.--
       ``(1) In general.--A national committee of a political 
     party and the congressional campaign committees of a 
     political party shall not solicit or accept any amount, or 
     solicit or accept a transfer from another political 
     committee, that is not subject to the limitations, 
     prohibitions, and reporting requirements of this Act.
       ``(2) Exclusions.--Paragraph (1) shall not apply to any 
     amount received--
       ``(A) that--
       ``(i) is to be transferred to a State committee of a 
     political party and is used solely for an activity described 
     in clause (xi), (xii), (xiii), (xiv), (xv), (xvi), or (xvii) 
     of section 301(9)(B); or
       ``(ii) is described in section 301(8)(B)(viii); and
       ``(B) with respect to which a contributor has been notified 
     that the amount will be used solely for the purposes 
     described in subparagraph (A).
       ``(b) Transfers to Tax-exempt Organizations.--A national 
     committee or a State committee of a political party shall not 
     transfer any funds to an organization that is exempt from 
     taxation under section 501(a) of the Internal Revenue Code of 
     1986 and is described in section 501(c)(3) of the Code.
       ``(c) Activities Subject to This Act.--
       ``(1) In general.--Any amount solicited, received, 
     expended, or disbursed directly or indirectly by a national, 
     State, district, or local committee of a political party 
     (including any subordinate committee) with respect to any of 
     the following activities shall be treated as a contribution 
     subject to the limitations, prohibitions, and reporting 
     requirements of this Act:
       ``(A)(i) Any get-out-the-vote activity conducted during a 
     calendar year in which an election for the office of 
     President is held.
       ``(ii) Any other get-out-the-vote activity unless 
     subsection (c)(2) applies to the activity.
       ``(B) Any generic campaign activity.
       ``(C) Any activity that identifies or promotes a Federal 
     candidate, regardless of whether--
       ``(i) a State or local candidate is also identified or 
     promoted; or
       ``(ii) any portion of the funds disbursed constitutes a 
     contribution or expenditure under this Act.
       ``(D) Voter registration.
       ``(E) Development and maintenance of voter files during an 
     even-numbered calendar year.
       ``(F) Any other activity that--
       ``(i) significantly affects a Federal election; or
       ``(ii) is not described in section 301(8)(B)(xvii).
       ``(2) Fundraising costs.--Any amount spent to raise funds 
     that are used, in whole or in part, in connection with an 
     activity described in paragraph (1) shall be treated as an 
     expenditure subject to the limitations, prohibitions, and 
     reporting requirements of this Act.
       ``(d) Get-Out-The-Vote Activities by State, District, and 
     Local Committees of a Political Party.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     get-out-the-vote activity for a State or local candidate, or 
     for a ballot measure, that is conducted by a State, district, 
     or local committee of a political party (including any 
     subordinate committee) shall be treated as an expenditure 
     subject to the limitations, prohibitions, and reporting 
     requirements of this Act.
       ``(2) Exclusions.--Paragraph (1) shall not apply to any 
     activity that the State committee of a political party 
     certifies to the Commission is an activity that--
       ``(A) is conducted during a calendar year other than a 
     calendar year in which an election for the office of 
     President is held;
       ``(B) is exclusively on behalf of (and specifically 
     identifies only) 1 or more State or local candidates or 
     ballot measures; and
       ``(C) does not include any effort or means used to identify 
     or turn out those identified to be supporters of any Federal 
     candidate (including any activity that is undertaken in 
     coordination with, or on behalf of, a candidate for Federal 
     office).
       ``(e) State Party Grassroots Funds.--
       ``(1) In general.--A State committee of a political party 
     may make disbursements and expenditures from its State Party 
     Grassroots Fund only for--
       ``(A) a generic campaign activity;
       ``(B) the making of a payment described in clause (v), (x), 
     or (xii) of paragraph (8)(B) or clause (iv), (viii), or (ix) 
     of paragraph (9)(B) of section 301;
       ``(C) subject to the limitations of section 315(d), the 
     making of a payment described in paragraph (8)(B)(xii) or 
     (9)(B)(ix) of section 301 on behalf of a candidate other than 
     a candidate for President or Vice President;
       ``(D) voter registration; and
       ``(E) development and maintenance of voter files during an 
     even-numbered calendar year.
       ``(2) Transfers.--
       ``(A) In general.--Notwithstanding section 315(a)(4) and 
     except as provided in subparagraph (B), no funds may be 
     transferred by a State committee of a political party from 
     its State Party Grassroots Fund to any other State Party 
     Grassroots Fund or to any other political committee.
       ``(B) Transfer to separate segregated fund of district or 
     local committee.--A transfer may be made from a State Party 
     Grassroots Fund to a district or local committee of the same 
     political party in the same State if the district or local 
     committee--
       ``(i) has established a separate fund for the purposes 
     described in paragraph (1); and
       ``(ii) uses the transferred funds solely for those 
     purposes.
       ``(f) Amounts Received by State Party Grassroots Fund From 
     Non-Federal Candidate Committees.--
       ``(1) In general.--Any amount received by a State Party 
     Grassroots Fund from a non-Federal candidate committee for 
     expenditures described in subsection (b) that are for the 
     benefit of that candidate shall be treated as meeting the 
     requirements of subsection (b) and section 304(f) if--
       ``(A) the amount is derived from funds that meet the 
     requirements of this Act with respect to any limitation or 
     prohibition as to source or dollar amount specified in 
     paragraphs (1)(A) and (2)(A) of section 315(a); and
       ``(B) the non-Federal candidate committee--
       ``(i) maintains, in the account from which payment is made, 
     records of the sources and amounts of funds for purposes of 
     determining whether those requirements are met; and
       ``(ii) certifies that the requirements were met.
       ``(2) Determination of compliance.--For purposes of 
     paragraph (1)(A), in determining whether the funds 
     transferred meet the requirements of this Act referred to in 
     paragraph (1)(A)--
       ``(A) a non-Federal candidate committee's cash on hand 
     shall be treated as consisting of the funds most recently 
     received by the committee; and
       ``(B) the committee must be able to demonstrate that its 
     cash on hand contains sufficient funds meeting those 
     requirements as are necessary to cover the transferred funds.
       ``(3) Reporting.--Notwithstanding paragraph (1), a State 
     Party Grassroots Fund that receives a transfer described in 
     paragraph (1) from a non-Federal candidate committee--
       ``(A) shall meet the reporting requirements of this Act; 
     and
       ``(B) shall submit to the Commission all certifications 
     received with respect to receipt of the transfer from the 
     candidate committee.''.
       (b) Definitions.--
       (1) Contribution.--Section 301(8)(B) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 431(8)(B)) is 
     amended--
       (A) by striking ``and'' at the end of clause (xiii);
       (B) by striking the period at the end of clause (xiv) and 
     inserting a semicolon; and
       (C) by adding at the end the following:
       ``(xv) any amount contributed to a candidate for other than 
     Federal office;
       ``(xvi) any amount received or expended to pay the costs of 
     a State or local political convention;
       ``(xvii) any payment for campaign activities that are 
     exclusively on behalf of (and specifically identify only) 
     State or local candidates and do not identify any Federal 
     candidate, and that are not activities described in section 
     325(c) (without regard to paragraph (6)(B)) or section 
     325(d)(1);
       ``(xviii) any payment for administrative expenses of a 
     State or local committee of a political party, including 
     expenses for--

       ``(I) overhead, including party meetings;
       ``(II) staff (other than individuals devoting a significant 
     amount of their time to elections for Federal office and 
     individuals engaged in conducting get-out-the-vote activities 
     for a Federal election); and
       ``(III) party elections or caucuses;

       ``(xix) any payment for research pertaining solely to State 
     and local candidates and issues;
       ``(xx) any payment for development and maintenance of voter 
     files other than during the 1-year period ending on the date 
     during an even-numbered calendar year on which regularly 
     scheduled general elections for Federal office occur; and
       ``(xxi) any payment for any other activity that is solely 
     for the purpose of influencing, and that solely affects, an 
     election for non-Federal office and that is not an activity 
     described in section 325(c) (without regard to paragraph 
     (6)(B)) or section 325(d)(1).''.
       (2) Expenditure.--Section 301(9)(B) of the Federal Election 
     Campaign Act of 1971 (2 U.S.C. 431(9)(B)) is amended--
       (A) by striking ``and'' at the end of clause (ix);
       (B) by striking the period at the end of clause (x) and 
     inserting a semicolon; and
       (C) by adding at the end the following:
       ``(xi) any amount contributed to a candidate for other than 
     Federal office;

[[Page S289]]

       ``(xii) any amount received or expended to pay the costs of 
     a State or local political convention;
       ``(xiii) any payment for campaign activities that are 
     exclusively on behalf of (and specifically identify only) 
     State or local candidates and do not identify any Federal 
     candidate, and that are not activities described in section 
     325(c) (without regard to paragraph (6)(B)) or section 
     325(d)(1);
       ``(xiv) any payment for administrative expenses of a State 
     or local committee of a political party, including expenses 
     for--

       ``(I) overhead, including party meetings;
       ``(II) staff (other than individuals devoting a significant 
     amount of their time to elections for Federal office and 
     individuals engaged in conducting get-out-the-vote activities 
     for a Federal election); and
       ``(III) conducting party elections or caucuses;

       ``(xv) any payment for research pertaining solely to State 
     and local candidates and issues;
       ``(xvi) any payment for development and maintenance of 
     voter files other than during the 1-year period ending on the 
     date during an even-numbered calendar year on which regularly 
     scheduled general elections for Federal office occur; and
       ``(xvii) any payment for any other activity that is solely 
     for the purpose of influencing, and that solely affects, an 
     election for non-Federal office and that is not an activity 
     described in section 325(c) (without regard to paragraph 
     (6)(B)) or section 325(d)(1).''.
       (3) Other terms.--Section 301 of the Federal Election 
     Campaign Act of 1971 (2 U.S.C. 431) (as amended by section 
     114(a)) is amended by adding at the end the following:
       ``(29) Generic campaign activity.--The term `generic 
     campaign activity' means a campaign activity that promotes a 
     political party rather than a particular candidate or non-
     Federal candidate.
       ``(30) State party grassroots fund.--The term `State Party 
     Grassroots Fund' means a separate fund established and 
     maintained by a State committee of a political party solely 
     for purposes of making expenditures and other disbursements 
     described in section 325(d).
       ``(31) Non-federal candidate.--The term `non-Federal 
     candidate' means a candidate for State or local office.
       ``(32) Non-federal candidate committee.--For purposes of 
     this subsection, the term `non-Federal candidate committee' 
     means a committee established, financed, maintained, or 
     controlled by a non-Federal candidate.''.
       (c) Limitation Applied at National Level.--Section 
     315(d)(3) of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441a(d)(3)) is amended--
       (1) by striking ``(3) The national'' and inserting the 
     following:
       ``(3) Candidates for the senate and the house of 
     representatives.--
       ``(A) In general.--The national'';
       (2) by redesignating subparagraphs (A), (B), and (C) as 
     clauses (i), (ii), and (iii), respectively, and adjusting the 
     margins as appropriate; and
       (3) by adding at the end the following:
       ``(2) Expenditures by congressional campaign committees.--
     Notwithstanding paragraph (1), a congressional campaign 
     committee of a political party shall make the expenditures 
     described in paragraph (1) that are authorized to be made by 
     a national or State committee with respect to a candidate in 
     any State unless the congressional campaign committee 
     allocates all or a portion of the expenditures to either or 
     both of those committees.''.
       (d) Application of Limitations to Entire Election Cycle.--
     Section 315(d) of the Federal Election Campaign Act of 1971 
     (2 U.S.C. 441a(d)) is amended--
       (1) in paragraph (1) by striking ``general''; and
       (2) in the first sentence of paragraph (2) and in paragraph 
     (3)--
       (A) by striking ``general''; and
       (B) by striking ``which'' and inserting ``that, during an 
     election cycle,''.

     SEC. 314. RESTRICTIONS ON FUNDRAISING BY CANDIDATES AND 
                   OFFICEHOLDERS.

       (a) State Fundraising Activities.--Section 315 of the 
     Federal Election Campaign Act of 1971 (2 U.S.C. 441a) (as 
     amended by section 301) is amended by adding at the end the 
     following:
       ``(j) Limitations on Fundraising Activities of Federal 
     Candidates and Officeholders and Certain Political 
     Committees.--
       ``(1) In general.--For purposes of this Act, a candidate, 
     an individual holding Federal office, or any agent of the 
     candidate or individual may not solicit funds to, or receive 
     funds on behalf of, any person--
       ``(A) that are to be expended in connection with any 
     election for Federal office unless the funds are subject to 
     the limitations, prohibitions, and requirements of this Act; 
     or
       ``(B) that are to be expended in connection with any 
     election for other than Federal office unless the funds are 
     not in excess of amounts permitted with respect to Federal 
     candidates and political committees under paragraphs (1) and 
     (2) of subsection (a), and are not from sources prohibited by 
     those paragraphs with respect to elections to Federal office.
       ``(2) Limitation on solicitations.--
       ``(A) In general.--The aggregate amount that a person 
     described in subparagraph (B) may solicit from a 
     multicandidate political committee for State committees 
     described in subsection (a)(1)(C) (including subordinate 
     committees) for any calendar year shall not exceed the dollar 
     amount in effect under subsection (a)(2)(B) for the calendar 
     year.
       ``(B) Applicability.--A person is described in this 
     subparagraph if the person is a candidate, an individual 
     holding Federal office, an agent of such a candidate or 
     individual, or a national, State, district, or local 
     committee of a political party (including a subordinate 
     committee) or an agent of such a committee.
       ``(3) Appearance or participation in a fundraising event.--
     The appearance or participation by a candidate or individual 
     holding Federal office in a fundraising event conducted by a 
     committee of a political party or a non-Federal candidate 
     shall not be treated as a solicitation for purposes of 
     paragraph (1) if the candidate or individual does not solicit 
     or receive, or make disbursements from, any funds resulting 
     from the activity.
       ``(4) State law.--Paragraph (1) shall not apply to the 
     solicitation or receipt of funds, or disbursements, by an 
     individual who is a non-Federal candidate if the activity is 
     permitted under State law.
       ``(5) Definition.--For purposes of this subsection, an 
     individual shall be treated as holding Federal office if the 
     individual--
       ``(A) holds a Federal office; or
       ``(B) holds a position described in level I of the 
     Executive Schedule under section 5312 of title 5, United 
     States Code.''.
       (b) Tax-Exempt Organizations.--Section 315 of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 441a) (as amended by 
     subsection (a)) is amended by adding at the end the 
     following:
       ``(k) Tax-Exempt Organizations.--
       ``(1) In general.--If an individual is a candidate for, or 
     holds, Federal office during any period, the individual shall 
     not during that period solicit contributions to, or on behalf 
     of, any organization that is described in section 501(c) of 
     the Internal Revenue Code of 1986 if a significant portion of 
     the activities of the organization include voter registration 
     or get-out-the-vote campaigns.
       ``(2) Definition.--For purposes of this section, an 
     individual shall be treated as holding Federal office if the 
     individual--
       ``(A) holds a Federal office; or
       ``(B) holds a position described in level I of the 
     Executive Schedule under section 5312 of title 5, United 
     States Code.''.

     SEC. 315. REPORTING REQUIREMENTS.

       (a) Reporting Requirements.--Section 304 of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 434) (as amended by 
     section 112(a)) is amended by adding at the end the 
     following:
       ``(f) Political Committees.--
       ``(1) National and congressional political committees.--The 
     national committee of a political party, a congressional 
     campaign committee of a political party, and any subordinate 
     committee of a national committee or congressional campaign 
     committee of a political party, shall report all receipts and 
     disbursements during the reporting period, whether or not in 
     connection with an election for Federal office.
       ``(2) Other political committees to which section 325 
     applies.--A political committee (not described in paragraph 
     (1)) to which section 325 applies shall report all receipts 
     and disbursements, including separate schedules for receipts 
     and disbursements for a State Grassroots Fund.
       ``(3) Transfers.--A political committee to which section 
     325 applies shall--
       ``(A) include in a report under paragraph (1) or (2) the 
     amount of any transfer described in section 325(d)(2); and
       ``(B) itemize those amounts to the extent required by 
     section 304(b)(3)(A).
       ``(4) Other political committees.--Any political committee 
     to which paragraph (1) or (2) does not apply shall report any 
     receipts or disbursements that are used in connection with a 
     Federal election.
       ``(5) Itemization.--If a political committee has receipts 
     or disbursements to which this subsection applies from any 
     person aggregating in excess of $200 for any calendar year, 
     the political committee shall separately itemize its 
     reporting for the person in the same manner as under 
     paragraphs (3)(A), (5), and (6) of subsection (b).
       ``(6) Reporting periods.--Reports required to be filed by 
     this subsection shall be filed for the same time periods as 
     reports are required for political committees under 
     subsection (a).''.
       (b) Report of Exempt Contributions.--Section 301(8) of the 
     Federal Election Campaign Act of 1971 (2 U.S.C. 431(8)) is 
     amended by adding at the end the following:
       ``(C) reporting requirement.--The exclusion provided in 
     subparagraph (B)(viii) shall not apply for purposes of any 
     requirement to report contributions under this Act, and all 
     such contributions aggregating in excess of $200 shall be 
     reported.''.
       (c) Reports by State Committees.--Section 304 of the 
     Federal Election Campaign Act of 1971 (2 U.S.C. 434 (as 
     amended by subsection (a)) is amended by adding at the end 
     the following:
       ``(g) Filing of State Reports.--In lieu of any report 
     required to be filed under this Act, the Commission may allow 
     a State committee of a political party to file with the 
     Commission a report required to be filed under State law if 
     the Commission determines that such a report contains 
     substantially the same information as a report required under 
     this Act.''.
       (d) Other Reporting Requirements.--
       (1) Authorized committees.--Section 304(b)(4) of the 
     Federal Election Campaign Act of 1971 (2 U.S.C. 434(b)(4)) is 
     amended--

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       (A) by striking ``and'' at the end of subparagraph (H);
       (B) by inserting ``and'' at the end of subparagraph (I); 
     and
       (C) by adding at the end the following:
       ``(J) in the case of an authorized committee, disbursements 
     for the primary election, the general election, and any other 
     election in which the candidate participates;''.
       (2) Names and addresses.--Section 304(b)(5)(A) of the 
     Federal Election Campaign Act of 1971 (2 U.S.C. 434(b)(5)(A)) 
     is amended--
       (A) by striking ``within the calendar year''; and
       (B) by striking ``such operating expenditure'' and 
     inserting ``operating expense, and the election to which the 
     operating expense relates''.
     Subtitle C--Soft Money of Persons Other Than Political Parties

     SEC. 321. SOFT MONEY OF PERSONS OTHER THAN POLITICAL PARTIES.

       Section 304 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 434) (as amended by section 315(c)) is amended by 
     adding at the end the following:
       ``(h) Election Activity of Persons Other Than Political 
     Parties.--
       ``(1) Initial statement.--A person to which section 325 
     does not apply that makes (or obligates to make) aggregate 
     disbursements totaling in excess of $2,000 for activities 
     described in section 325(c) shall file a statement with the 
     Commission--
       ``(A) within 48 hours after the disbursements or 
     obligations in excess of $2,000 are made; or
       ``(B) in the case of disbursements or obligations that are 
     made within 14 days of an election, on or before the 14th day 
     before the election.
       ``(2) Additional statements.--An additional statement shall 
     be filed each time additional disbursements aggregating 
     $2,000 are made by a person described in paragraph (1).
       ``(4) Applicability.--This subsection does not apply to--
       ``(A) a candidate or a candidate's authorized committees; 
     or
       ``(B) an independent expenditure.
       ``(5) Contents.--A statement under this section shall 
     contain such information about the disbursements as the 
     Commission shall prescribe, including if applicable, whether 
     the disbursement was in support of, or in opposition to, a 
     candidate or a political party.
       ``(6) Place of filing.--A statement under this section 
     shall be filed with the Secretary of the Senate or the Clerk 
     of the House of Representatives, and the Secretary of State 
     (or equivalent official) of the candidate's State. The 
     Secretary of the Senate or Clerk of the House of 
     Representatives shall, as soon as possible (but not later 
     than 24 hours after receipt), transmit a copy of the 
     statement to the Commission.
       ``(7) Transmittal.--Not later than 48 hours after receipt, 
     the Commission shall transmit a statement filed under this 
     subsection--
       ``(A) to the candidates or political parties involved in 
     the election in question; or
       ``(B) if the disbursement is not in support of, or in 
     opposition to, a candidate or political party, to the State 
     committees of each political party in the State in question.
       ``(8) Determinations by the commission.--The Commission may 
     make its own determination that disbursements described in 
     paragraph (1) have been made or are obligated to be made. The 
     Commission shall notify the candidates or political parties 
     described in paragraph (2) not later than 24 hours after its 
     determination.''.
                        TITLE IV--CONTRIBUTIONS

     SEC. 401. PROHIBITION OF CERTAIN CONTRIBUTIONS BY LOBBYISTS.

       Section 315 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441a) (as amended by section 314(b)) is amended by 
     adding at the end the following:
       ``(m) Prohibition of Certain Contributions by Lobbyists.--
       ``(1) In general.--A lobbyist, or a political committee 
     controlled by a lobbyist, shall not make a contribution to--
       ``(A) a Federal officeholder or candidate for Federal 
     office if, during the preceding 12 months, the lobbyist has 
     made a lobbying contact with the officeholder or candidate; 
     or
       ``(B) any authorized committee of the President or Vice 
     President of the United States if, during the preceding 12 
     months, the lobbyist has made a lobbying contact with a 
     covered executive branch official.
       ``(2) Contributions to member of congress or candidate for 
     congress.--A lobbyist who, or a lobbyist whose political 
     committee, has made a contribution to a member of Congress or 
     candidate for Congress (or any authorized committee of the 
     President) shall not, during the 12 months following such 
     contribution, make a lobbying contact with the member or 
     candidate who becomes a member of Congress or with a covered 
     executive branch official.
       ``(3) Definitions.--In this subsection the terms `covered 
     executive branch official', `lobbying contact', and 
     `lobbyist' have the meanings given those terms in section 3 
     of the Federal Lobbying Disclosure Act of 1995 (2 U.S.C. 
     1602) except that--
       ``(A) the term `lobbyist' includes a person required to 
     register under the Foreign Agents Registration Act of 1938 
     (22 U.S.C. 611 et seq.); and
       ``(B) for purposes of this subsection, a lobbyist shall be 
     considered to make a lobbying contact or communication with a 
     member of Congress if the lobbyist makes a lobbying contact 
     or communication with--
       ``(i) the member of Congress;
       ``(ii) any person employed in the office of the member of 
     Congress; or
       ``(iii) any person employed by a committee, joint 
     committee, or leadership office who, to the knowledge of the 
     lobbyist, was employed at the request of or is employed at 
     the pleasure of, reports primarily to, represents, or acts as 
     the agent of the member of Congress.''.

     SEC. 402. CONTRIBUTIONS BY DEPENDENTS NOT OF VOTING AGE.

       Section 315 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441a) (as amended by section 401(a)) is amended by 
     adding at the end the following:
       ``(n) Dependents Not of Voting Age.--
       ``(1) In general.--For purposes of this section, any 
     contribution by an individual who--
       ``(A) is a dependent of another individual; and
       ``(B) has not, as of the time of the making of the 
     contribution, attained the legal age for voting in an 
     election to Federal office in the State in which the 
     individual resides;

     shall be treated as having been made by the other individual.
       ``(2) Allocation between spouses.--If an individual 
     described in paragraph (1) is the dependent of another 
     individual and the other individual's spouse, a contribution 
     described in paragraph (1) shall be allocated among those 
     individuals in a manner determined by the individuals.''.

     SEC. 403. CONTRIBUTIONS TO CANDIDATES FROM STATE AND LOCAL 
                   COMMITTEES OF POLITICAL PARTIES TO BE 
                   AGGREGATED.

       Section 315(a) of the Federal Election Campaign Act of 1971 
     (2 U.S.C. 441a(a)) (as amended by section 102(b)) is amended 
     by adding at the end the following:
       ``(10) Aggregation of contributions from State and local 
     committees of political parties.--Notwithstanding paragraph 
     (5)(B), a candidate may not accept, with respect to an 
     election, any contribution from a State or local committee of 
     a political party (including any subordinate committee of 
     such a committee), if the contribution, when added to the 
     total of contributions previously accepted from all such 
     committees of that political party, would cause the total 
     amount of contributions to exceed a limitation on 
     contributions to a candidate under this section.''.

     SEC. 404. CONTRIBUTIONS AND EXPENDITURES USING MONEY SECURED 
                   BY PHYSICAL FORCE OR OTHER INTIMIDATION.

       Title III of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 431) (as amended by section 313) is amended by adding 
     at the end the following:

     ``SEC. 326. USE OF PHYSICAL FORCE OR INTIMIDATION TO OBTAIN A 
                   CONTRIBUTION OR EXPENDITURE OR DETER THE FILING 
                   OF A COMPLAINT.

       ``It shall be unlawful for any person to--
       ``(1) cause another person to make a contribution or 
     expenditure by using physical force, job discrimination, a 
     financial reprisal, a threat of physical force, job 
     discrimination, or financial reprisal, or taking or 
     threatening to take other adverse action;
       ``(2) make a contribution or expenditure utilizing money or 
     anything of value secured in the manner described in 
     paragraph (1).''or
       ``(3) use physical force, job discrimination, or financial 
     reprisal, a threat of physical force, job discrimination, or 
     financial reprisal, or take or threaten to take other adverse 
     action, against an employee, union member, or other person--
       ``(A) to deter or prevent any person from filing a 
     complaint, providing testimony, or otherwise cooperating with 
     enforcement efforts under this Act; or
       ``(B) to retaliate against any person who has filed a 
     complaint, provided testimony, or otherwise cooperated with 
     enforcement efforts under this Act.''.

     SEC. 405. PROHIBITION OF ACCEPTANCE BY A CANDIDATE OF CASH 
                   CONTRIBUTIONS FROM ANY ONE PERSON AGGREGATING 
                   MORE THAN $100.

       Section 321 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441g) is amended by inserting ``, and no candidate or 
     authorized committee of a candidate shall accept from any 1 
     person,'' after ``make''.
   TITLE V--AUTHORITIES AND DUTIES OF THE FEDERAL ELECTION COMMISSION

     SEC. 501. FILING OF REPORTS USING COMPUTERS AND FACSIMILE 
                   MACHINES.

       Section 302(g) of the Federal Election Campaign Act of 1971 
     (2 U.S.C. 432(g)) is amended by adding at the end the 
     following:
       ``(6) Filing of reports using computers and facsimile 
     machines.--
       ``(A) Computers.--The Commission, in consultation with the 
     Secretary of the Senate and the Clerk of the House of 
     Representatives, may issue a regulation under a person 
     required to file a designation, statement, or report under 
     this Act--
       ``(i) are required to maintain and file the designation, 
     statement, or report for any calendar year in electronic form 
     accessible by computers if the person has, or has reason to 
     expect to have, aggregate contributions or expenditures in 
     excess of a threshold amount determined by the Commission; 
     and

[[Page S291]]

       ``(ii) may maintain and file the designation, statement, or 
     report in that manner if not required to do so under a 
     regulation under clause (i).
       ``(B) Facsimile machines.--The Commission, in consultation 
     with the Secretary of the Senate and the Clerk of the House 
     of Representatives, shall prescribe a regulation that allows 
     a person to file a designation, statement, or report required 
     by this Act through the use of a facsimile machine.
       ``(C) Verification.--In a regulation under this paragraph, 
     the Commission shall provide methods (other than requiring a 
     signature on the document being filed) for verifying a 
     designation, statement, or report. Any document verified 
     under any of the methods shall be treated for all purposes 
     (including penalties for perjury) in the same manner as a 
     document verified by signature.
       ``(D) Compatibility of systems.--The Secretary of the 
     Senate and the Clerk of the House of Representatives shall 
     ensure that any computer or other system that the Secretary 
     or the Clerk may develop and maintain to receive 
     designations, statements, and reports in the forms required 
     or permitted under this paragraph is compatible with any 
     system that the Commission may develop and maintain.''.

     SEC. 502. INCREASE IN THRESHOLD FOR REPORTING REQUIREMENTS.

       (a) Identification of Contributors.--Section 302(c)(3) of 
     the Federal Election Campaign Act of 1971 (2 U.S.C. 
     432(c)(3)) is amended by striking ``$200'' and inserting 
     ``$50''.
       (b) Identification of Disbursements.--Section 302(c)(5) of 
     the Federal Election Campaign Act of 1971 (2 U.S.C. 
     432(c)(5)) is amended by striking ``$200'' and inserting 
     ``$50''.

     SEC. 503. AUDITS.

       (a) Random Audits.--Section 311(b) of the Federal Election 
     Campaign Act of 1971 (2 U.S.C. 438(b)) is amended--
       (1) by inserting ``(1)'' before ``The Commission''; and
       (2) by adding at the end the following:
       ``(2) Random audits.--Notwithstanding paragraph (1), the 
     Commission may from time to time conduct random audits and 
     investigations to ensure voluntary compliance with this Act. 
     The subjects of such audits and investigations shall be 
     selected on the basis of criteria established by vote of at 
     least 4 members of the Commission to ensure impartiality in 
     the selection process. This paragraph does not apply to an 
     authorized committee of a candidate for President or Vice 
     President subject to audit under title VI or to an authorized 
     committee of an eligible Senate candidate or an eligible 
     House candidate subject to audit under section 522(a).''.
       (b) Extension of Period During Which Campaign Audits May Be 
     Begun.--Section 311(b) of the Federal Election Campaign Act 
     of 1971 (2 U.S.C. 438(b)), as redesignated by subsection (a), 
     is amended by striking ``6 months'' and inserting ``12 
     months''.

     SEC. 504. AUTHORITY TO SEEK INJUNCTION.

       Section 309(a) of the Federal Election Campaign Act of 1971 
     (2 U.S.C. 437g(a)) is amended--
       (1) by adding at the end the following:
       ``(13)(A) If, at any time in a proceeding described in 
     paragraph (1), (2), (3), or (4), the Commission believes 
     that--
       ``(i) there is a substantial likelihood that a violation of 
     this Act is occurring or is about to occur;
       ``(ii) the failure to act expeditiously will result in 
     irreparable harm to a party affected by the potential 
     violation;
       ``(iii) expeditious action will not cause undue harm or 
     prejudice to the interests of others; and
       ``(iv) the public interest would be best served by the 
     issuance of an injunction;

     the Commission may initiate a civil action for a temporary 
     restraining order or a temporary injunction pending the 
     outcome of the proceedings described in paragraphs (1), (2), 
     (3), and (4).
       ``(B) An action under subparagraph (A) shall be brought in 
     the United States district court for the district in which 
     the defendant resides, transacts business, or may be found or 
     in which the violation is occurring, has occurred, or is 
     about to occur.'';
       (2) in paragraph (7), by striking ``(5) or (6)'' and 
     inserting ``(5), (6), or (13)''; and
       (3) in paragraph (11), by striking ``(6)'' and inserting 
     ``(6) or (13)''.

     SEC. 505. PENALTIES.

       (a) Increased Penalties.--Section 309(a) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 437g(a)) is amended--
       (1) in paragraphs (5)(A), (6)(A), and (6)(B) by striking 
     ``$5,000'' and inserting ``$10,000'';
       (2) in paragraph (5)(B) by striking ``the greater of 
     $10,000 or an amount equal to 200 percent'' and inserting 
     ``the greater of $20,000 or 300 percent''; and
       (3) in paragraph (6)(C) by striking ``the greater of 
     $10,000 or an amount equal to 200 percent'' and inserting 
     ``the greater of $20,000 or 300 percent''.
       (b) Equitable Remedies.--Section 309(a)(5)(A) of the 
     Federal Election Campaign Act of 1971 (2 U.S.C. 437g(a)(5)) 
     is amended by striking the period and inserting ``, and, if 
     authorized by the agreement, may include equitable remedies 
     or penalties including disgorgement of funds to the United 
     States Treasury, community service requirements, suspension 
     or disbarment of treasurers, or public education 
     requirements.''.
       (c) Automatic Penalty For Late Filing.--Section 309(a) of 
     the Federal Election Campaign Act of 1971 (2 U.S.C. 437g(a)) 
     is amended--
       (1) by adding at the end the following:
       ``(13) Penalty for late filing.--
       ``(A) In general.--The Commission shall establish a 
     schedule of mandatory monetary penalties that shall be 
     imposed by the staff director of the Commission for any 
     failure to meet the time requirements for filing under 
     section 304.
       ``(B) Required filing of late report.--The Commission may 
     require a report that has not been filed within the time 
     requirements of section 304 to be filed by a specific date.
       ``(C) Procedure for assessing penalties and filing 
     deadlines.--Penalties and filing requirements imposed under 
     this paragraph shall not be subject to paragraph (1), (2), 
     (3), (4), (5) or (12).
       ``(D) Appeals.--
       ``(i) In general.--A political committee shall have 30 days 
     after the imposition of penalty or filing requirement under 
     this paragraph to file an exception with the Commission.
       ``(ii) Commission determination.--Within 30 days after 
     receiving the exception, the Commission shall make a 
     determination that is a final agency action subject to 
     exclusive review by the United States Court of Appeals for 
     the District of Columbia Circuit under section 706 of title 
     5, United States Code, upon petition filed in the court by 
     the political committee that is the subject of the agency 
     action, if the petition is filed within 30 days of the 
     Commission action for which review is sought.'';
       (2) in paragraph (5)(D)--
       (A) by inserting after the first sentence the following: 
     ``In any case in which a penalty or filing requirement 
     imposed on a political committee or treasurer under paragraph 
     (13) has not been satisfied, the Commission may institute a 
     civil action for enforcement under paragraph 6(A).''; and
       (B) by inserting before the period in the last sentence 
     ``or has failed to pay a penalty or meet a filing requirement 
     imposed under paragraph (13)''; and
       (3) in paragraph (6)(A), by striking ``paragraph (4)(A)'' 
     and inserting ``paragraph (4)(A) or (13)''.

     SEC. 506. INDEPENDENT LITIGATING AUTHORITY.

       (a) Litigating Authority.--Section 306(f) of Federal 
     Election Campaign Act of 1971 (2 U.S.C. 437c(f)) is amended 
     by striking paragraph (4) and inserting the following:
       ``(4) Independent litigating authority.--
       ``(A) In general.--Notwithstanding paragraph (2) or any 
     other provision of law, the Commission is authorized to 
     appear on its own behalf in any action related to the 
     exercise of its statutory duties or powers in any court as a 
     party or amicus curiae, either--
       ``(i) by attorneys employed in the office of the 
     Commission, or
       ``(ii) by counsel whom the Commission may appoint, on a 
     temporary basis, as may be necessary for such purpose, 
     without regard to the provisions of title 5, United States 
     Code, and whose compensation the Commission may fix without 
     regard to the provisions of chapter 51 and subchapter III of 
     chapter 53 of that title.
       ``(B) Appeals.--The authority granted under subparagraph 
     (A) includes the power of the Commission to appeal from, and 
     petition the Supreme Court for certiorari to review, 
     judgments, or decrees entered with respect to actions in 
     which the Commission appears pursuant to the authority 
     provided by this Act.''.
       (b) Power of Commission To Petition the Supreme Court.--
     Section 307(a)(6) of Federal Election Campaign Act of 1971 (2 
     U.S.C. 437d(a)(6)) is amended by striking ``or appeal any 
     civil action'' and inserting ``, appeal any civil action or 
     petition the Supreme Court for certiorari to review judgments 
     or decrees entered with respect to actions in which the 
     Commission appears''.

     SEC. 507. REFERENCE OF SUSPECTED VIOLATION TO THE ATTORNEY 
                   GENERAL.

       Section 309(a)(5) of Federal Election Campaign Act of 1971 
     (2 U.S.C. 437g(a)) is amended by striking subparagraph (C) 
     and inserting the following:
       ``(C) Referral to the Attorney General.--The Commission may 
     at any time, by an affirmative vote of 4 of its members, 
     refer a possible violation of this Act or chapter 95 or 
     chapter 96 of the Internal Revenue Code of 1986 to the 
     Attorney General of the United States, without regard to any 
     limitations set forth in this section.''.

     SEC. 508. POWERS OF THE COMMISSION.

       (a) Initiation of Enforcement Proceeding.--Section 
     309(a)(2) of Federal Election Campaign Act of 1971 (2 U.S.C. 
     437g(a)(2)) is amended by striking ``reason to believe that'' 
     and inserting ``reason to investigate whether''.
       (b) Service of Process.--Section 306(f) of the Federal 
     Election Campaign Act of 1971 (2 U.S.C. 437c(f)) is amended 
     by inserting at the end the following:
       ``(5) Service of process.--In any matter under this Act or 
     under chapter 95 or chapter 96 of the Internal Revenue Code 
     of 1986, the Commission may at its discretion, without court 
     order and with or without reimbursement, require the United 
     States Marshal Service to serve process on behalf of the 
     Commission, including serving a summons, subpoena, or 
     complaint, upon any person.''.
       (c) Venue for Violations Adjudicated in Court.--Section 
     309(a)(6)(A) of Federal Election Campaign Act of 1971 (2 
     U.S.C. 437g(a)(6)(A)) is amended by striking ``for the 
     district in which the person against whom

[[Page S292]]

     such action is brought is found, resides, or transacts 
     business'' and inserting ``in which the defendant resides, 
     transacts business, or is found or in which the violation 
     occurred''.
       (d) Filing of Reports With Commission Instead of the 
     Secretary of the Senate.--
       (1) Section 302.--Section 302(g) of the Federal Election 
     Campaign Act of 1971 (2 U.S.C. 432(g)) is amended--
       (A) by striking ``(g)(1)'' and all that follows through 
     ``(3) All'' and inserting ``(g) Filing.--'';
       (B) by striking paragraph (4); and
       (C) by striking ``, except designations, statements, and 
     reports filed in accordance with paragraph (1),''.
       (2) Section 304.--Section 304 of Federal Election Campaign 
     Act of 1971 (2 U.S.C. 434) is amended--
       (A) in the first sentence of subsection (a)(6), by striking 
     ``the Secretary, or the Commission,'' and inserting ``the 
     Commission''; and
       (B) in the third sentence of subsection (c)(2), by striking 
     ``the Secretary, or''.
       (3) Section 311.--Section 311(a)(4) of Federal Election 
     Campaign Act of 1971 (2 U.S.C. 438(a)(4)) is amended by 
     striking ``Secretary, or the''.
       (e) Authorization To Accept Gifts.--Section 306(f) of the 
     Federal Election Campaign Act of 1971 (2 U.S.C. 437c(f)) is 
     amended by adding at the end the following:
       ``(6) Authorization to accept gifts.--
       ``(A) In general.--To carry out the purposes of this Act, 
     the Commission may accept, hold, administer, and utilize 
     gifts, devises, and bequests of property, both real and 
     personal, if the acceptance and use of the gifts, devises, or 
     bequests does not create a conflict of interest.
       ``(B) Deposit of gifts.--Gifts and bequests of money and 
     proceeds from sales of other property received as gifts, 
     devises, or bequests shall be deposited in the Treasury and 
     shall be disbursed upon the order of the Commission.
       ``(C) Use of gifts.--Property accepted pursuant to this 
     section, and the proceeds from the property, shall be used as 
     closely as practicable in accordance with the terms of the 
     gifts, devises, or bequests.''.
                        TITLE VI--MISCELLANEOUS

     SEC. 601. PROHIBITION OF LEADERSHIP COMMITTEES.

       Section 302(e) of the Federal Election Campaign Act of 1971 
     (2 U.S.C. 432(e)) is amended--
       (1) by striking paragraph (3) and inserting the following:
       ``(3) Limitations.--A political committee that supports or 
     has supported more than 1 candidate shall not be designated 
     as an authorized committee, except that--
       ``(A) a candidate for the office of President nominated by 
     a political party may designate the national committee of the 
     political party as the candidate's principal campaign 
     committee if the national committee maintains separate books 
     of account with respect to its functions as a principal 
     campaign committee; and
       ``(B) a candidate may designate a political committee 
     established solely for the purpose of joint fundraising by 
     such candidates as an authorized committee.''; and
       (2) by adding at the end the following:
       ``(6) Prohibition of leadership committees.--
       ``(A) In general.--
       ``(i) Prohibition.--A candidate or an individual holding 
     Federal office shall not establish, finance, maintain, or 
     control any political committee or non-Federal political 
     committee other than a principal campaign committee of the 
     candidate, authorized committee, party committee, or other 
     political committee designated in accordance with paragraph 
     (3).
       ``(ii) Candidate for more than 1 office.--A candidate for 
     more than 1 Federal office may designate a separate principal 
     campaign committee for the campaign for election to each 
     Federal office.
       ``(iii) Candidates for state or local office.--This 
     paragraph does not preclude a Federal officeholder who is a 
     candidate for State or local office from establishing, 
     financing, maintaining, or controlling a political committee 
     for election of the individual to the State or local office.
       ``(B) Transition.--
       ``(i) Continuation for 12 months.--For a period of 12 
     months after the effective date of this paragraph, any 
     political committee established before that date but that is 
     prohibited under subparagraph (A) may continue to make 
     contributions.
       ``(ii) Disbursement at the end of 12 months.--At the end of 
     the 12-month period, the political committee shall disburse 
     all funds by 1 or more of the following means:

       ``(I) Making contributions to a person described in section 
     501(c)(3) of the Internal Revenue Code of 1986 and exempt 
     from taxation under section 501(a) of the Code.
       ``(II) Making a contribution to the Treasury of the United 
     States.
       ``(III) Contributing to the national, State, or local 
     committee of a political party.
       ``(IV) Making a contribution of not to exceed $1,000 each 
     to 1 or more candidates or non-Federal candidates.''.

     SEC. 602. TELEPHONE VOTING BY PERSONS WITH DISABILITIES.

       (a) Study of Systems To Permit Persons With Disabilities To 
     Vote by Telephone.--
       (1) In general.--The Federal Election Commission shall 
     conduct a study to determine the feasibility of developing a 
     system or systems by which persons with disabilities may be 
     permitted to vote by telephone.
       (2) Consultation.--The Federal Election Commission shall 
     conduct the study described in paragraph (1) in consultation 
     with State and local election officials, representatives of 
     the telecommunications industry, representatives of persons 
     with disabilities, and other concerned members of the public.
       (3) Criteria.--The system or systems developed pursuant to 
     paragraph (1) shall--
       (A) propose a description of the kinds of disabilities that 
     impose such difficulty in travel to polling places that a 
     person with a disability who may desire to vote is 
     discouraged from undertaking such travel;
       (B) propose procedures to identify persons who are so 
     disabled; and
       (C) describe procedures and equipment that may be used to 
     ensure that--
       (i) only persons who are entitled to use the system are 
     permitted to use it;
       (ii) the votes of persons who use the system are recorded 
     accurately and remain secret;
       (iii) the system minimizes the possibility of vote fraud; 
     and
       (iv) the system minimizes the financial costs that State 
     and local governments would incur in establishing and 
     operating the system.
       (4) Requests for proposals.--In developing a system 
     described in paragraph (1), the Federal Election Commission 
     may request proposals from private contractors for the design 
     of procedures and equipment to be used in the system.
       (5) Physical access.--Nothing in this section is intended 
     to supersede or supplant efforts by State and local 
     governments to make polling places physically accessible to 
     persons with disabilities.
       (6) Deadline.--The Federal Election Commission shall submit 
     to Congress the study required by this section not later than 
     1 year after the effective date of this Act.

     SEC. 603. CERTAIN TAX-EXEMPT ORGANIZATIONS NOT SUBJECT TO 
                   CORPORATE LIMITS.

       Section 316 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441b) is amended by adding at the end the following:
       ``(c) Prohibitions Not To Apply to Independent Expenditures 
     of Certain Tax-Exempt Organizations.--
       ``(1) In general.--Nothing in this section shall preclude a 
     qualified nonprofit corporation from making an independent 
     expenditure.
       ``(2) Definition of qualified nonprofit corporation.--In 
     this subsection, the term `qualified nonprofit corporation' 
     means a corporation described in section 501(c)(4) of the 
     Internal Revenue Code of 1986 that is exempt from taxation 
     under section 501(a) of the Code and that meets the following 
     requirements:
       ``(A) Purpose.--The only express purpose of the corporation 
     is the promotion of political ideas.
       ``(B) No trade or business.--The corporation cannot and 
     does not engage in any activities that constitute a trade or 
     business.
       ``(C) Gross receipts.--The gross receipts of the 
     corporation for the calendar year have not (and will not) 
     exceed $100,000, and the net value of the total assets at any 
     time during the calendar year do not exceed $250,000.
       ``(D) Establishment.--The corporation--
       ``(i) was not established by--

       ``(I) a person described in section 501(c)(6) of the 
     Internal Revenue Code of 1986 that is exempt from taxation 
     under section 501(a) of the Code;
       ``(II) a corporation engaged in carrying out a trade or 
     business; or
       ``(III) a labor organization; and

       ``(ii) cannot and does not directly or indirectly accept 
     donations of anything of value from any such person, 
     corporation, or labor organization.
       ``(E) Assets and earnings.--The corporation--
       ``(i) has no shareholder or other person affiliated with it 
     that could make a claim on its assets or earnings; and
       ``(ii) offers no incentives or disincentives for 
     associating or not associating with it other than on the 
     basis of its position on any political issue.
       ``(3) Qualified nonprofit corporation treated as political 
     committee.--If a major purpose of a qualified nonprofit 
     corporation is the making of independent expenditures, and 
     the requirements of section 301(4) are met with respect to 
     the corporation, the corporation shall be treated as a 
     political committee.
       ``(4) Notice requirement.--All solicitations by a qualified 
     nonprofit corporation shall include a notice informing 
     contributors that donations may be used by the corporation to 
     make independent expenditures.
       ``(5) Reports.--A qualified nonprofit corporation shall 
     file reports as required by subsections (d) and (e) of 
     section 304.

     SEC. 604. AIDING AND ABETTING VIOLATIONS OF THE FEDERAL 
                   ELECTION CAMPAIGN ACT OF 1971.

       Title III of the Federal Election Campaign Act of 1971 (as 
     amended by section 404) is amended by adding at the end the 
     following:

     ``SEC. 327. AIDING AND ABETTING VIOLATIONS.

       ``With reference to any provision of this Act that places a 
     requirement or prohibition on any person acting in a 
     particular capacity, any person who knowingly aids or abets 
     the person in that capacity in violating that provision may 
     be proceeded against as a principal in the violation.''.

[[Page S293]]

     SEC. 605. CAMPAIGN ADVERTISING THAT REFERS TO AN OPPONENT.

       Title III of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 431 et seq.) (as amended by section 505) is amended by 
     adding at the end the following:

     ``SEC. 328. CAMPAIGN ADVERTISING THAT REFERS TO AN OPPONENT.

       ``(a) Candidates.--A candidate or candidate's authorized 
     committee that places in the mail a campaign advertisement or 
     any other communication to the general public that directly 
     or indirectly refers to an opponent or the opponents of the 
     candidate in an election, with or without identifying any 
     opponent in particular, shall file an exact copy of the 
     communication with the Commission and with the Secretary of 
     State of the candidate's State by not later than 12:00 p.m. 
     on the day on which the communication is first placed in the 
     mail to the general public.
       ``(b) Persons Other Than Candidates.--
       ``(1) In general.--A person other than a candidate or 
     candidate's authorized committee that places in the mail a 
     campaign advertisement or any other communication described 
     in paragraph (2) shall file an exact copy of the 
     communication with the Commission and with the Secretary of 
     State of the candidate's State by not later than 12:00 p.m. 
     on the day on which the communication is first placed in the 
     mail to the general public.
       ``(2) Advocacy or reference to opponent.--A communication 
     is described in this paragraph if it is a communication to 
     the general public that--
       ``(A) advocates the election of a particular candidate in 
     an election; and
       ``(B) directly or indirectly refers to an opponent or the 
     opponents of the candidate in the election, with or without 
     identifying any opponent in particular.''.

     SEC. 606. LIMIT ON CONGRESSIONAL USE OF THE FRANKING 
                   PRIVILEGE.

       Section 3210(a)(6) of title 39, United States Code, is 
     amended by striking subparagraph (A) and inserting the 
     following:
       ``(A) A Member of Congress may not mail any mass mailing as 
     franked mail during a year in which there will be an election 
     for the seat held by the Member during the period between 
     January 1 of that year and the date of the general election 
     for that office, unless the Member has made a public 
     announcement that the Member will not be a candidate for 
     reelection to that seat or for election to any other Federal 
     office.''.

     SEC. 607. PARTICIPATION BY FOREIGN NATIONALS IN POLITICAL 
                   ACTIVITIES.

       (a) Prohibition.--Section 319 of the Federal Election 
     Campaign Act of 1971 (2 U.S.C. 441e) is amended--
       (1) by striking the heading and inserting ``participation 
     by foreign nationals in political activities'';
       (2) by striking subsection (a) and inserting the following:
       ``(a) Prohibited Contributions and Expenditures.--
       ``(1) It shall be unlawful for a foreign national directly 
     or through any other person to make any contribution or 
     expenditure of money or other thing of value, or to promise 
     expressly or impliedly to make any contribution or 
     expenditure, in connection with an election to any political 
     office or in connection with any primary election, 
     convention, or caucus held to select candidates for any 
     political office; or
       ``(2) for any person to solicit, receive, or accept a 
     contribution from a foreign national.'';
       (3) by redesignating subsection (b) as subsection (c); and
       (4) by inserting after subsection (a) the following:
       ``(b) Prohibited Activities.--It shall be unlawful for a 
     foreign national or an individual lawfully admitted for 
     permanent residence, as defined by section 101(a)(20) of the 
     Immigration and Nationality Act (8 U.S.C. 1101(a)(20), to 
     direct, dictate, control, or directly or indirectly 
     participate in the decisionmaking process of any other 
     person, (as defined in 301(11)), with regard to the person's 
     Federal or non-Federal election-related activities, such as a 
     decision concerning the making of a contribution or 
     expenditure in connection with an election for any Federal 
     office or a decision concerning the administration of a 
     political committee.''.
       (b) Affirmation of Eligibility To Make Contribution.--
     Section 319 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 441e) (as amended by subsection (a)) is amended by 
     adding at the end the following:
       ``(d) Affirmation of Eligibility To Make Contribution.--A 
     candidate or authorized committee of a candidate shall not 
     accept a contribution in excess of $500 unless the 
     contribution is accompanied by a statement, signed by the 
     person making the contribution, affirming that the person is 
     not a person prohibited by this section from making the 
     contribution.''.

     SEC. 608. CERTIFICATION OF COMPLIANCE WITH FOREIGN 
                   CONTRIBUTION AND SOLICITATION LIMITATIONS.

       Section 304 of the Federal Election Campaign Act of 1971 (2 
     U.S.C. 434) is amended--
       (1) by redesignating subsection (c) as subsection (d); and
       (2) by inserting after subsection (b) the following:
       ``(c) Certification of Compliance With Foreign Contribution 
     and Solicitation Limitations.--Each report required under 
     this section shall include a certification under penalty of 
     perjury that the political committee has not knowingly 
     solicited or accepted contributions prohibited by section 
     319.''.
               TITLE VII--EFFECTIVE DATES; AUTHORIZATIONS

     SEC. 701. EFFECTIVE DATE.

       Except as otherwise provided in this Act, this Act and the 
     amendments made by this Act shall take effect on the date of 
     enactment of this Act.

     SEC. 702. BUDGET NEUTRALITY.

       (a) Delayed Effectiveness.--This Act (other than this 
     section) and the amendments made by this Act shall not be 
     effective until the Director of the Office of Management and 
     Budget certifies that the estimated costs under section 252 
     of the Balanced Budget and Emergency Deficit Control Act of 
     1985 (2 U.S.C. 902) have been offset by the enactment of 
     legislation effectuating this Act.
       (b) Funding.--Legislation effectuating this Act shall not 
     provide for general revenue increases, reduce expenditures 
     for any existing Federal program, or increase the Federal 
     budget deficit.

     SEC. 703. SEVERABILITY.

       Except as provided in section 101(c), if any provision of 
     this Act (including any amendment made by this Act), or the 
     application of any such provision to any person or 
     circumstance is held invalid, the validity of any other 
     provision of this Act, or the application of the provision to 
     other persons and circumstances shall not be affected 
     thereby.

     SEC. 704. EXPEDITED REVIEW OF CONSTITUTIONAL ISSUES.

       (a) Direct Appeal to Supreme Court.--An appeal may be taken 
     directly to the Supreme Court of the United States from any 
     interlocutory order or final judgment, decree, or order 
     issued by any court ruling on the constitutionality of any 
     provision of this Act or amendment made by this Act.
       (b) Acceptance and Expedition.--The Supreme Court shall, if 
     the Court has not previously ruled on the question addressed 
     in the ruling below, accept jurisdiction over, advance on the 
     docket, and expedite the appeal to the greatest extent 
     possible.

     SEC. 705. REGULATIONS.

       The Federal Election Commission shall prescribe any 
     regulations required to carry out this Act and the amendments 
     made by this Act not later than 270 days after the effective 
     date of this Act.
  There being no objection, the articles were ordered to be printed in 
the Record, as follows:

              [From the Wall Street Journal Jan. 9, 1997]

            GOP To Rebuke Companies for Bipartisan Donations

                            By Helene Cooper

       WASHINGTON--Republican leaders are adopting a tough post-
     election strategy: ``Don't get mad, get even.'' And the foe 
     this time isn't the Democrats or organized labor.
       It's Corporate America.
       Annoyed that big business has been hedging its bets by 
     giving lots of money to the Democrats as well as to the 
     Republicans, the GOP says the Business Roundtable, a group of 
     200 chief executives from the nation's biggest companies, is 
     about to receive an ultimatum: Stop donating so much to the 
     Democrats and become more involved in partisan politics, or 
     be denied access to Republicans in Congress.
       GOP House leaders are expected to deliver the message 
     tonight at a dinner meeting with some 20 chief executives of 
     Business Roundtable companies. Scheduled to attend are 
     Speaker Newt Gingrich, Majority Leader Dick Armey, Rep. Tom 
     DeLay of Texas and Rep. John Boehner of Ohio, among others. 
     Corporate bigwigs expected at the meeting include Don Fites, 
     chief executive officer of Caterpillar Inc. who is chairman 
     of the Business Roundtable, and John Snow, chief executive of 
     CSX Corp.
       Republican Party Chairman Haley Barbour, who is 
     spearheading the drive, accuses the business group of 
     ``sitting on its hands'' during the past election campaign; 
     he calls America's big CEOs ineffectual in the battle against 
     Democrats and organized labor. ``If their view is going to be 
     neutral when the left tries to undo their agenda,'' Mr. 
     Barbour says in an interview, ``they need to paint up a big 
     billboard that says, `We don't fight.' ''
       Companies that want to have it both ways, vows one top GOP 
     strategist, no longer will be involved in Republican 
     decision-making ``or invited to our cocktail parties.''
       The GOP strategy is a high-risk one. While Business 
     Roundtable companies gave more than $11.04 million to the 
     Democrats during the 1996 election cycle, as of figures from 
     Dec. 2 they gave more than double that amount--$25.76 
     million--to Republicans, according to the Center for 
     Responsive Politics, a Washington-based public-interest group 
     that monitors campaign spending.
       Republican leaders insist they aren't selling access. But 
     their strategy comes at a time when the GOP is gearing up to 
     investigate Democratic fund raising and has criticized the 
     Clinton administration for cozying up to wealthy Asians and 
     Asian-Americans who have donated heavily to the Democratic 
     Party.
       But Mr. Barbour isn't worried about alienating the GOP's 
     longtime corporate backers. ``The best way to be friends is 
     to be upfront with them.'' he says. Roundtable companies, he 
     adds, ``should give a bigger percentage to the Republicans'' 
     than they now are giving.
       Mr. Barbour has been sounding the anti-Business Roundtable 
     drumbeat with increasing ferocity, calling the group 
     inefficient and

[[Page S294]]

     incompetent in numerous interviews. And Business Roundtable 
     members say he has suddenly become unavailable when they call 
     to talk about the problem.
       ``I've been unable to connect with Haley,'' Caterpillar's 
     Mr. Fites said in a letter to Roundtable members two weeks 
     ago. ``When I do reach him, I want to explain'' that the 
     Business Roundtable, as a group, doesn't give money to 
     political candidates, Mr. Fites said.
       But Business Roundtable companies do, and therein lies the 
     problem for Republicans, who have long thought of Corporate 
     America as their own private money machine. Lately though, 
     big companies have been hedging their bets more than before, 
     and giving substantial money to the Democrats as well. With a 
     Democratic administration, that is expected to continue.
       Telecommunication giants AT&T Corp., MCI Communications 
     Corp. and Sprint Corp., along with their political-action 
     groups, for example, rewarded the Democrats in Congress and 
     the Clinton administration for being sympathetic to their 
     cause during the telecommunication-legislation fight. They 
     spread out their huge contributions almost equally, giving 
     $1.74 million to the Democrats and $1.98 million to 
     Republicans. Eastman Kodak Co., which is counting on the 
     Clinton administration to push its trade complaint against 
     Fuji Photo film Co. of Japan, gave the Democrats $40,711 in 
     the 1996 cycle, and $39,000 to the Republicans.
       Adding to the GOP's corporate-money complaints was the 
     huge, albeit losing, $35 million campaign by organized labor 
     to elect a Democratic Congress. When GOP strategists tried to 
     counter the attack, forming a group called the Coalition, the 
     business-led group raised just $5 million. In addition, the 
     Business Roundtable declined to join. ``We do not solicit or 
     spend money on behalf of candidates for political office,'' 
     the group's spokeswoman, Johanna Schneider, said.
       ``We've got the labor unions giving 99% to Democrats, and 
     then the Business Roundtable turns around and says they're 
     neutral?'' says one top GOP strategist. ``If they're neutral, 
     then they should pack up their belongings and move out of 
     town. Washington is a partisan town.''
       Republicans say they are drawing up a list of corporations 
     that will be warned to shape up or ship out of the GOP 
     decisionmaking circle. Those in the GOP doghouse include 
     Anheuser-Busch Cos., which isn't a member of the Business 
     Roundtable, but which, along with its PAC, gave $442,057 to 
     the Democrats while giving $395,700 to the Republicans; and 
     UAL Corp.'s United Airlines, which, along with its PAC, gave 
     $265,007 to Democrats and $148,145 to Republicans.
       While clearly concerned, corporate CEOs are also annoyed. 
     ``Quite frankly, I'm puzzled by this entire situation,'' the 
     Business Roundtable's Mr. Fites says in his letter to fellow 
     top dogs. ``It is counterproductive to the large number of 
     mutual goals that the roundtable shares with the Republican 
     congressional leadership. I'm also concerned that these 
     unfounded attacks could drive a wedge between roundtable 
     members and congressional Republicans that will not serve 
     either side well.''

                           *   *   *   *   *

                                                                    ____


                    [From Roll Call, Jan. 20, 1997]

        GOP Pressures Business Group To Dump Their Dem Lobbyists

                            (By Amy Keller)

       Republican leaders are calling it ``behavior 
     modification.'' One source described the plan as ``shooting 
     elephants.''
       Either way, the Congressional GOP is turning up the heat on 
     one of its key allies: the Business Roundtable.
       Still angry that big business failed to adequately bankroll 
     their campaigns and counter the AFL-CIO's onslaught of attack 
     ads last fall, the Republicans want the BRT to purge 
     Democrats from its staff of nine directors.
       ``You have to fix the problem. You have to fix the Business 
     Roundtable,'' one Republican source said, explaining that the 
     GOP leadership is urging the prestigious organization of 
     corporate bigwigs to purge its staff.
       The lawmakers are also urging the CEOs of some 200 
     corporations that comprise the BRT to dump their Democratic 
     lobbyists, hire Republicans, and significantly increase the 
     percentage of PAC contributions that go to GOP candidates.
       Outgoing Republican National Committee Chairman Haley 
     Barbour has been scolding corporate America for weeks for 
     ``not [lifting] a finger in that battle'' against labor and 
     other liberal groups, and on Jan. 9, Republican lawmakers 
     hosted a dinner meeting with two dozen BRT Members to begin 
     the ``process of behavior modification,'' sources told Roll 
     Call.
       The CEO summit was run by top GOP leaders, including Senate 
     Majority Leader Trent Lott (Miss), Republic Conference 
     Chairman John Boehner (Ohio), and others. The BRT selected 24 
     CEOs--``friends of the Republican side,'' like Caterpillar 
     Inc. CEO Donald Fites and BRT chairman and Allied Signal Inc. 
     CEO Lawrence Bossidy--to attend the closed-door meeting.
       One top GOP leadership aid described the CEO summit as a 
     ``good conversation,'' and said both sides walked out ``with 
     a better understanding'' and a ``commitment'' to work 
     together.
       But other Republican sources say the business group remains 
     under intense scrutiny. One sore spot, sources said, is BRT 
     president Sam Maury, whom Republicans are attacking as a 
     Democratic operative.
       As one senior GOP staffer put it: ``We don't feel Sam Maury 
     fits our definition of'' someone who would ``work well on the 
     Republican team.''
       Maury is a lawyer and former US Steel executive who joined 
     the BRT in 1982, becoming its number-two man the following 
     year and moving up to executive director of the entire 
     organization in 1993.
       Maury did not return calls seeking comment, and a 
     spokeswoman for the BRT also declined to comment on the 
     matter.
       But Maury's not the only one who should be sent packing, 
     Republicans say.
       It's the view of GOP House and Senate leaders that the CEOs 
     of America's big companies have delegated too much 
     decisionmaking authority to Washington operatives with 
     Democratic loyalties. According to the GOP leadership, 
     corporations that want to maintain their ties with GOP 
     leaders, and be players in policy debates, need to hire 
     Republican lobbyists. One aide said the leaders are 
     encouraging businesses to call them if they need help in this 
     move--and that they'll be happy to make hiring 
     ``suggestions.''
       It's their choice if they want to be part of our team,'' he 
     added.
       Other incidents have also soured the GOP's relationship 
     with the BRT, Republicans say. For example, lawmakers are 
     still sore over the way the BRT handled an ad campaign 
     promoting the GOP budget in 1995.
       The BRT's $10 million ad campaign, which funded the 
     commercials on MTV and other networks to build public support 
     for the budget reconciliation bill, was viewed by Republicans 
     as ``tepid'' at best, and GOP sources said they have reason 
     to believe that Maury was coordinating the campaign with the 
     White House.
       Johanna Schneider, spokeswoman for the BRT, defended her 
     organization's reputation.
       The BRT was founded in 1972 by CEOs who were ``committed to 
     improving public policy,'' and that's the role of the BRT, 
     not funding campaigns, she told Roll Call.
       The BRT ``does not have a PAC,'' she said, and therefore 
     does not contribute to campaigns. And, she said, individual 
     companies that have PACs make those decisions on an 
     individual basis.
       ``I think we've been successful in adding to the public 
     dialogue,'' said Schneider. But Schneider insists that the 
     BRT doesn't, and won't have anything to do with funding 
     campaigns.
       So why are they being targeted?
       The behemoth corporations are, in some ways, easier to go 
     after. As one GOP supporter pointed out: ``It's much easier 
     to go out and shoot elephants than to shoot ants.''
       If the Republicans can get the BRT to change its ways the 
     payoff could be big. Just as Willie Sutton robbed banks 
     because ``that's where the money is,'' the GOP Congressional 
     leaders realize that BRT members could handily boost 
     Republican election efforts if the BRT would agree to fund 
     issue-advocacy campaigns in future elections.
       And while no one expects to see 100 percent, or even 90 
     percent, of corporate PAC money go exclusively to 
     Republicans--60 or 70 percent would be nice, they say.
       While some in the business community say they are angered 
     by the GOP's tactics, others are downplaying the tongue-
     lashing.
       Said one corporate source: ``They wanted businesses to stop 
     and review what they did in light of what labor did * * *. 
     Just a reminder that things have changed. A reminder to take 
     a look. . . take a good look at what you did. Look at it 
     collectively, and look at what other people on the other side 
     of the issues did.''
       Steve Stockmeyer, spokesman for the National Association of 
     Business PAC, wasn't at the recent meeting of CEOs and 
     Congressional leaders, but he told Roll Call that he has 
     sympathies on both sides.
       ``The Republican leadership is wise to seek out allies and 
     ask them to be more consistent allies,'' said Stockmeyer, 
     though he did say that the GOP approach has been rather 
     ``hamhanded.''
       ``Republicans haven't had 40 years to learn how to be 
     subtle,'' Stockmeyer said. He also noted that it would be 
     native for Republicans to expect the business community to 
     consistently support Republicans, though he admitted 
     businesses should do more.
       ``It will never be monolithic to the degree that labor was 
     * * *. Business is too pragmatic,'' he observed.
       As for the push to hire Republican lobbyists, Wright 
     Andrews, the former president of the American League of 
     Lobbyists, told Roll Call that he believes it is ``wrong, 
     wrong, wrong for either Democrats or Republicans to say, ``We 
     only want to work with our former staffers.' ''
       ``It's not their job to decide,'' he said.
       As Republicans strive to become a permanent majority on 
     Capitol Hill, many say they expect an influx of GOP lobbyists 
     to be a natural progression. They simply hope that the 
     increased pressure will ``speed up the process'' of that 
     turnover, one source said.
       Still, another source with solid GOP connections expressed 
     reservations about just how far Republican lawmakers can push 
     their argument.
       ``You don't start a game of this nature if you don't have a 
     game plan that takes you to the end of the game,'' he said, 
     remarking that GOP leaders must remember that in the end, 
     they need corporate America as much as it needs them.
                                                                    ____


  Mr. LEVIN. Mr. President, I could not agree more with something 
Senator Daschle said earlier today, when

[[Page S295]]

he urged us to enact campaign finance reform within the first 100 days 
of this Congress. The public is looking at us with greater scrutiny in 
this area than they have ever looked before. We have been down this 
road before, and I have walked down this road with colleagues, often on 
a bipartisan basis.
  The likelihood is we cannot get anything done in this area unless we 
act on a bipartisan basis. But act we must. That is what the public is 
telling us, and I believe the mood they are in will hold us accountable 
if we fail that charge.
  I thank the Chair and yield the floor.
                                 ______
                                 
      By Mr. DASCHLE (for himself, Mr. Kennedy, Ms. Moseley-Braun, Ms. 
        Mikulski, Mr. Dodd, Mr. Reid, Mr. Dorgan, Mrs. Murray, Mr. 
        Ford, Mr. Rockefeller, Mr. Inouye, Mr. Kerry, Mr. Levin, Mr. 
        Cleland, Mr. Johnson, Mr. Breaux, Mr. Torricelli, Mr. Durbin, 
        Mr. Glenn, Mrs. Boxer, Mr. Wellstone, and Mr. Bryan):
  S. 12. A bill to improve education for the 21st century; to the 
Committee on Finance.


                   education for the 21st century act

  Mr. KENNEDY. Mr. President, I give my strong support to the 
``Education for the 21st Century Act'' introduced today by Senator 
Daschle on one of our principle democratic leadership initiatives.
  Education must continue to be a top priority in this Congress. We 
need to do more to make college accessible and affordable for all 
students, to modernize school classrooms, to help communities build new 
school facilities and repair old ones, and to help all children learn 
to read so that they can read to learn.
  It is not enough to maintain current spending levels for education. 
Modest increases are essential to meet rising enrollments and 
inflation.
  Too often, college is priced out of reach for many families. From 
1980 to 1990, the cost of college rose by 126 percent, while family 
income increased by only 73 percent. To meet that rising cost, students 
are going deeper and deeper into debt. In the 1990s, students have 
borrowed more in student loans than in the three preceding decades 
combined.
  In 1996 alone, students borrowed $30 billion--a 65-percent increase 
since 1993. Since 1988, borrowing in the Federal student loan program 
has increased by more than 100 percent, while starting salaries for 
college graduates failed to increase at all. Eighty percent of young 
adults with student loans make under $20,000 in their first year of 
repayment, barely enough to support the average repayment.
  Communities are struggling to repair decrepit facilities, let alone 
build modern classrooms. Fourteen million children in a third of the 
Nation's schools are learning in sub-standard classrooms. Half the 
schools have unsatisfactory conditions. Forty-six percent of schools 
report insufficient electrical wiring for computers and communications 
equipment. The repair bill alone is estimated at $112 billion.
  And while all this is happening, enrollments are at an all-time high 
of 52 million students, and thus are continuing to rise.
  Forty percent of all children are now reading below their basic grade 
level. Many parents do not read to their children and with their 
children, even though we know that when parent involvement is high, 
student reading scores are also high.
  Technology is a powerful tool for improving schools and encouraging 
economic growth. Computers enable teachers to spend more time with 
students and teach more effective lessons. By the year 2000, 60 percent 
of all jobs in the Nation will require skills in computer and network 
use. According to a recent GAO study, one in every four schools does 
not have sufficient computers to meet its needs. Only 9 percent of 
classrooms are connected to the Internet.

  Clearly, we are not prepared to meet the challenges of the next 
century. We have to do better, and the Education for the 21st Century 
Act will help us to meet the pressing needs of communities, schools, 
and families.
  The Act includes four separate titles: The Higher Education 
Affordability Act, which includes President Clinton's $1,500 Hope 
Tuition Tax Credit, the $10,000 tuition tax deduction, and the 
restoration of the tax deduction for student loan interest; The 
Educational Facilities Improvement Act; The America Reads Challenge 
Act, which includes The Parents as First Teachers Act and The 
Challenging America's Young Readers Act; and The Investing in 
Technology in the Classroom Act.
  The Hope Tax Credit will make at least 2 years of community college 
affordable for every student. The bill provides a $1,500 a year 
refundable tax credit for net tuition payments during the first 2 years 
of college after high school for full-time students. Part-time students 
may receive $750 per year. The tax benefit is phased out for single 
persons between $50,000 and $70,000 in adjusted gross income, and 
phased out for couples between $80,000 and $100,000. Only students who 
have a cumulative ``B'' average from high school, or its equivalent, 
qualify for the credit. Pell grants and the tax credit are additive, up 
to the value of the net tuition paid.
  The $10,000 tax deduction will be available to all families with 
incomes below $100,000. The bill provides an above-the-line deduction 
of up to $10,000 per taxpayer per year for net tuition expenses. The 
deduction is available for all college and graduate schools, and the 
income limits are the same as those provided under the Hope Tax Credit.
  The bill also restores the deduction for interest on student loans 
that was available before the Tax Reform Act of 1986. Unlike the 
previous deduction, this bill provides an above-the-line deduction. The 
income limits are the same as those provided under the Hope Tax Credit.
  The Educational Facilities Improvement Act instructs the Federal 
Government to pay up to 50 percent of the interest costs on State and 
local bonds to finance school repair, renovation, modernization and 
construction. Twenty percent of the funds will go directly from the 
Secretary of Education to the 100 poorest school districts under a 
formula based on the number of poor children. The remainder of the 
funds will be awarded to States to provide assistance to State or local 
bond authorities.
  The America Reads Challenge Act includes two components: The Parents 
as First Teachers Act and the Challenge America's Young Readers Act. 
The Parents as First Teachers Act--recognizing that parents are the 
best first teachers--will support national and regional parent networks 
that disseminate information on helping parents help their children to 
read. It will also fund programs to expand successful programs and 
activities that help parents increase the reading skills of their 
children.
  The Challenging America's Young Readers Act will help State and local 
organizations help children learn to read by the third grade. Programs 
funded by this act will provide 30,000 reading specialists and 
volunteer coordinators to run tutoring assistance programs outside 
regular school hours to more than 3 million children.
  My hope is that these proposals will receive the bipartisan support 
they deserve, so they can be in place for the beginning of the next 
academic year this fall. Improving education or opportunities for 
education is clearly one of our highest national priorities. Few things 
which this Congress does will matter more to the country's future. 
Investing in education is investing in a stronger America here at home 
and around the world, and I look forward to working with my colleagues 
on both sides of the aisle to enact these important measures.
  Mr. BREAUX. Mr. President, I would like to make a few remarks about 
S. 12, the Education for the 21st Century Act, and our efforts to 
improve elementary and secondary educational opportunities for our 
Nation's children, as well as make higher education more accessible for 
adults.
  Quality education is necessary not only for the future of our 
children and our families, but for the future of our Nation. A better 
educated workforce is essential to compete in the global economy and to 
maintain a strong democracy. Every Member of this body knows that a 
high school diploma is worth far less in today's marketplace than a 
generation ago. According to the U.S. Bureau of Labor Statistics, 60 
percent of all jobs created between 1992 and 2005 will require 
education beyond

[[Page S296]]

high school. Modern society has little room for those who cannot read, 
write, and compute effectively; solve problems; and continually learn 
new technologies and skills.
  The Education for the 21st Century Act includes a number of important 
initiatives that, if enacted, will make educational opportunities more 
accessible for Americans: The HOPE Scholarship, the tax deduction for 
higher education expenses, the student loan interest deduction, and the 
technology literacy and America Reads initiatives. Another area of 
concern that S. 12 addresses is the declining physical condition of our 
Nation's schools.
  According to a June 1996 report by the U.S. General Accounting 
Office, nationwide, about a third of public elementary and secondary 
schools have at least one building needing extensive repair, and about 
60 percent need extensive repair, overhaul, or replacement of at least 
one major building feature. Nationwide, about 58 percent of schools 
have at least one unsatisfactory environmental condition (i.e., 
lighting, heating, ventilation, indoor air quality, acoustics for noise 
control, and physical security). Nationwide, 21 percent of schools need 
to spend over the national average ($1.7 million) to bring their 
facilities into ``good condition.''
  Although a national problem, it is mirrored in every State. In my own 
State of Louisiana, about 38 percent of public elementary and secondary 
schools have at least one building needing extensive repair. Fifty-six 
percent of Louisiana schools have at least one unsatisfactory 
environmental condition. Twenty-three percent of Louisiana schools need 
to spend over the national average to bring their facilities into 
``good condition.'' Sixty-five percent of Louisiana schools lack 
telephone lines for computer modems.
  It is important that we help schools, libraries, and local 
governments bring advanced telecommunications to millions who otherwise 
cannot participate in the new information age. Computer services like 
the Internet give young people in the most poor and remote communities 
access to the same information available in the best libraries and 
institutions in the country and the world. Unfortunately, many States 
and local governments have had to cut back on investment in education 
because of budget problems and limits on debt capacity.
  Some have argued that the proper role of Government is to try to 
solve everyone's problems from cradle to grave--to create programs to 
protect citizens from everything, even themselves, because, as they 
say, ``Government knows best.'' Others argue that Government has no 
role at all in helping people, other than getting out of the way and 
offer only a survival of the fittest solution. My colleagues let me 
suggest that the better role for Government to play is one that equips 
the American people with the means to solve their own problems.
  Some want to abandon the public schools, not make them better--as if 
removing the most motivated students and parents will somehow increase 
the drive to improve schools for everyone else. Others say education 
reform is a question of more resources and better management. Still 
others say an education system for the 21st century should be defined 
by its results and schools exist only if they attract students and 
satisfy parents; they serve everyone; and they operate on the premise 
that all students can succeed.
  Whatever your point of view, the task of making education work falls 
to all of us. If we have learned anything over the past decades, it is 
there is no quick fix. This proposal will not transform our schools 
overnight. However, over time, it will be a meaningful step toward 
improving the lives and futures of families in Louisiana and throughout 
this Nation. I believe we should explore, and I am exploring, other 
ideas and options to help State and local governments address their 
infrastructure needs.
  Mr. President, I hope my colleagues will favorably consider this 
legislation. As we move through the 105th Congress and consider all of 
the various proposals to produce a balanced federal budget, we must be 
mindful that our intent is to provide, not deny, American families the 
means and the opportunity to take part in our global economy.
  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. 12

       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 ``Education for the 21st 
     Century Act''.

     SEC. 2. FINDINGS.

       Congress finds as follows:
       (1) Quality public education is necessary not only for the 
     future of our children and our families, but for the future 
     of America. A better educated citizenry and workforce are 
     essential to compete in the global economy and to maintain a 
     strong democracy.
       (2) The investment America makes today in the education of 
     its people will determine the future of the Nation. In order 
     to promote growth and prosperity in our economy, and ensure 
     individual opportunity, America must maintain education as a 
     national priority.
       (3) Strong leadership in education is needed more than 
     ever. Schools are facing the challenge of educating more 
     highly skilled workers to meet the demands of a modern 
     economy. The Bureau of Labor Statistics estimates that 60 
     percent of all jobs created between 1992 and 2005 will 
     require more than a high school education.
       (4) Mounting evidence suggests that far more rigorous 
     levels of academic achievement will be required to equip 
     American students for the 21st century workplace. Employers 
     will demand increasingly sophisticated levels of literacy, 
     communication, mathematical, and technological skills. Sixty 
     percent of all jobs will require computer skills.
       (5) Literacy is a crucial element of academic success. 
     However, in 1994, 40 percent of 4th grade students failed to 
     attain the basic level of reading on the National Assessment 
     of Educational Progress. Seventy percent did not attain the 
     proficient level. Students who are not reading at grade-level 
     are very unlikely to graduate from high school. One-on-one 
     tutoring is a key component of bringing students up to 
     reading grade-level.
       (6) Students are learning in decrepit school buildings. 
     According to 2 recent Government Accounting Office reports, 
     14,000,000 children in a third of the Nation's schools are 
     learning in substandard classrooms. Half of the schools have 
     at least 1 unsatisfactory environmental condition, such as 
     poor air quality.
       (7) College costs are rising. College tuition has risen in 
     private colleges and universities and in State institutions 
     as State appropriations have eroded. From 1985 to 1994, the 
     average cost of attending college rose by 30 percent after 
     adjusting for inflation. During the same period, the median 
     income increased by only 1 percent.
       (8) Meeting the challenge of the next century will require 
     the involvement of all Americans, including public officials, 
     educators, parents, business and community leaders, and 
     students. Encouraging active participation by all segments of 
     communities is essential for the success of students in the 
     21st century.
              TITLE I--TAX INCENTIVES FOR HIGHER EDUCATION

     SEC. 101. REFUNDABLE CREDIT FOR HIGHER EDUCATION EXPENSES.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     refundable credits) is amended by redesignating section 35 as 
     section 36 and by inserting after section 34 the following 
     new section:

     ``SEC. 35. HIGHER EDUCATION TUITION AND FEES.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this subtitle for the taxable year the amount of qualified 
     higher education expenses paid by the taxpayer during such 
     taxable year.
       ``(b) Credit Limited To $1,500 Per Academic Year.--
       ``(1) In general.--The amount allowed as a credit under 
     subsection (a) for any taxable year with respect to an 
     eligible student shall not exceed the sum of the credit 
     amounts for qualified academic periods beginning during such 
     taxable year or the 1st 3 months of the next taxable year. A 
     qualified academic period may not be taken into account under 
     the preceding sentence more than once.
       ``(2) Credit allowed only for first 2 academic years of 
     post-secondary education.--For purposes of paragraph (1), the 
     term `qualified academic period' means, with respect to any 
     student, any academic period for which such student is an 
     eligible student if such period, when added to prior periods 
     that such student was an eligible student, does not exceed 2 
     full-time academic years (or the equivalent thereof).
       ``(3) Credit amount.--For purposes of paragraph (1), except 
     as otherwise provided in regulations prescribed by the 
     Secretary, the credit amount for any academic period is the 
     amount equal to--
       ``(A) $1,500, divided by
       ``(B) the number of such academic periods during the 
     academic year.

     In the case of an eligible student who is not a full-time 
     student for an academic period, the credit amount for such 
     period shall be \1/2\ the amount determined under the 
     preceding sentence.
       ``(4) Inflation adjustment of credit limitation for 
     academic year.--

[[Page S297]]

       ``(A) In general.--In the case of a taxable year beginning 
     after 1998, the $1,500 amount in paragraph (3)(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, determined by substituting `calendar year 1997' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(B) Rounding.--If any amount as adjusted under 
     subparagraph (A) is not a multiple of $50, such amount shall 
     be rounded to the next lowest multiple of $50.
       ``(c) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--The amount which would (but for this 
     subsection) be taken into account under subsection (a) for 
     the taxable year shall be reduced (but not below zero) by the 
     amount determined under paragraph (2).
       ``(2) Amount of reduction.--The amount determined under 
     this paragraph is the amount which bears the same ratio to 
     the amount which would be so taken into account as--
       ``(A) the excess of--
       ``(i) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(ii) $50,000 ($80,000 in the case of a joint return), 
     bears to
       ``(B) $20,000.
       ``(3) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means the adjusted gross income of the 
     taxpayer for the taxable year--
       ``(A) determined without regard to section 221, and
       ``(B) increased by any amount excluded from gross income 
     under section 911, 931, or 933.
       ``(4) Inflation adjustment.--
       ``(A) In general.--In the case of a taxable year beginning 
     after 2000, the $50,000 and $80,000 amounts in paragraph (2), 
     section 221(b)(2)(B)(i)(II), and section 222(b)(2)(A)(ii) 
     shall each be increased by an amount equal to--
       ``(i) such dollar amounts, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1999' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(B) Rounding.--If any amount as adjusted under 
     subparagraph (A) is not a multiple of $5,000, such amount 
     shall be rounded to the next lowest multiple of $5,000.
       ``(d) Qualified Higher Education Expenses.--For purposes of 
     this section--
       ``(1) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition and fees required for the enrollment 
     or attendance of--
       ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse, or
       ``(iii) any dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151,

     as an eligible student at an institution of higher education.
       ``(B) Exception for education involving sports, etc.--Such 
     term does not include expenses with respect to any course or 
     other education involving sports, games, or hobbies, unless 
     such course or other education is part of the student's 
     degree program.
       ``(C) Exception for nonacademic fees.--Such term does not 
     include student activity fees, athletic fees, insurance 
     expenses, or other expenses unrelated to a student's academic 
     course of instruction.
       ``(D) Eligible student.--
       ``(i) In general.--The term `eligible student' means, with 
     respect to any academic period, a student who--

       ``(I) meets the requirements of section 484(a)(1) of the 
     Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in 
     effect on the date of the enactment of this section, and
       ``(II) is carrying at least \1/2\ the normal full-time work 
     load for the course of study the student is pursuing, as 
     reasonably determined by the institution of higher education.

       ``(ii) Grade-point requirement.--A student shall not be 
     treated as an eligible student if the student did not have a 
     grade-point average of at least 2.75 on a 4-point scale (or 
     met a substantially similar measure of achievement) for the 
     students' high school education (or equivalent).
       ``(2) Institution of higher education.--The term 
     `institution of higher education' means an institution--
       ``(A) which is described in section 481 of the Higher 
     Education Act of 1965 (20 U.S.C. 1088), as in effect on the 
     date of the enactment of this section, and
       ``(B) which is eligible to participate in programs under 
     title IV of such Act.
       ``(3) Full-time student.--The term `full-time student' 
     means any student who is carrying at least the normal full-
     time work load for the course of study the student is 
     pursuing, as reasonably determined by the institution of 
     higher education.
       ``(e) Special Rules.--
       ``(1) Denial of credit if student convicted of drug 
     offense.--No credit shall be allowed under subsection (a) for 
     qualified higher education expenses for the enrollment or 
     attendance of a student for any academic period if such 
     student has been convicted of a Federal or State offense 
     consisting of the possession or distribution of a controlled 
     substance before the end of the taxable year with or within 
     which such period ends.
       ``(2) No double benefit.--
       ``(A) In general.--No credit shall be allowed under 
     subsection (a) for qualified higher education expenses for 
     the enrollment or attendance of a student for any academic 
     period if any such expense for the enrollment or attendance 
     of such student for such period is allowed as a deduction to 
     the taxpayer under any other provision of this chapter.
       ``(B) Dependents.--No credit shall be allowed under 
     subsection (a) to any individual with respect to whom a 
     deduction under section 151 is allowable to another taxpayer 
     for a taxable year beginning in the calendar year in which 
     such individual's taxable year begins.
       ``(3) Identification requirement.--No credit shall be 
     allowed under subsection (a) to a taxpayer with respect to an 
     eligible student other than the taxpayer unless the taxpayer 
     includes the name and taxpayer identification number of such 
     eligible student on the return of tax for the taxable year.
       ``(4) Adjustment for certain scholarships.--The amount of 
     qualified higher education expenses otherwise taken into 
     account under subsection (a) with respect to the education of 
     an individual for an academic period shall be reduced (before 
     the application of subsections (b) and (c)) by the sum of--
       ``(A) the amounts received with respect to such individual 
     which are allocable to such period as--
       ``(i) a qualified scholarship which under section 117 is 
     not includable in gross income,
       ``(ii) an educational assistance allowance under chapter 
     30, 31, 32, 34, or 35 of title 38, United States Code, or
       ``(iii) a payment (other than a gift, bequest, devise, or 
     inheritance within the meaning of section 102(a)) for 
     educational expenses, or attributable to enrollment at an 
     eligible educational institution, which is exempt from income 
     taxation by any law of the United States, and
       ``(B) the amount excludable from gross income under section 
     135 which is allocable to such expenses with respect to such 
     individual for such period.
       ``(5) No credit for married individuals filing separate 
     returns.--If the taxpayer is a married individual (within the 
     meaning of section 7703), this section shall apply only if 
     the taxpayer and the taxpayer's spouse file a joint return 
     for the taxable year.
       ``(6) Nonresident aliens.--If the taxpayer is a nonresident 
     alien individual for any portion of the taxable year, this 
     section shall apply only if such individual is treated as a 
     resident alien of the United States for purposes of this 
     chapter by reason of an election under subsection (g) or (h) 
     of section 6013.
       ``(7) Regulations.--The Secretary may, in consultation with 
     the Secretary of Education, prescribe such regulations as may 
     be necessary or appropriate to carry out this section, 
     including--
       ``(A) regulations requiring recordkeeping and information 
     reporting by the taxpayer and any other person the Secretary 
     determines appropriate, and
       ``(B) regulations providing for a recapture of credit 
     allowed under this section in cases where there is a refund 
     in a subsequent taxable year of any amount which was taken 
     into account in determining the amount of such credit.''
       (b) Extension of Procedures Applicable to Mathematical or 
     Clerical Errors.--Paragraph (2) of section 6213(g) of such 
     Code (relating to the definition of mathematical or clerical 
     errors) is amended by striking ``and'' at the end of 
     subparagraph (G), by striking the period at the end of 
     subparagraph (H) and inserting a comma, and by inserting 
     after subparagraph (H) the following new subparagraph:
       ``(I) an omission of a correct TIN required under section 
     35(e)(3) or under section 220(d)(3)(B) (relating to higher 
     education tuition and fees) to be included on a return.''
       (c) Conforming Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``or 
     from section 35 of such Code''.
       (2) The table of sections for subpart C of part IV of 
     subchapter B of chapter 1 of such Code is amended by striking 
     the last item and inserting the following new items:

``Sec. 35. Higher education tuition and fees.
``Sec. 36. Overpayments of tax.''

       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 1997.
       (2) Periods before 1998 taken into account.--For purposes 
     of applying section 35(b)(2)(A) of the Internal Revenue Code 
     of 1986 (as added by this section), periods before January 1, 
     1998, that the student was an eligible student shall be taken 
     into account.

     SEC. 102. DEDUCTION FOR HIGHER EDUCATION EXPENSES.

       (a) Deduction Allowed.-- Part VII of subchapter B of 
     chapter 1 of the Internal Revenue Code of 1986 (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. HIGHER EDUCATION TUITION AND FEES.

       ``(a) Allowance of Deduction.--In the case of an 
     individual, there shall be allowed as a deduction the amount 
     of qualified higher education expenses paid by the taxpayer 
     during the taxable year.
       ``(b) Limitations.--

[[Page S298]]

       ``(1) Dollar limitation.--
       ``(A) In general.--The amount allowed as a deduction under 
     subsection (a) for any taxable year shall not exceed $10,000.
       ``(B) Phase-in.--In the case of taxable years beginning in 
     1998 or 1999, subparagraph (A) shall be applied by 
     substituting `$5,000' for `$10,000'.
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--The amount allowed as a deduction under 
     subsection (a) (after application of paragraph (1)) shall be 
     reduced (but not below zero) by the amount determined under 
     subparagraph (B).
       ``(B) Amount of reduction.--The amount determined under 
     this subparagraph equals the amount which bears the same 
     ratio to the deduction (determined without regard to this 
     paragraph) as--
       ``(i) the excess of--

       ``(I) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(II) $50,000 ($80,000 in the case of a joint return), 
     bears to

       ``(ii) $20,000.
       ``(C) Modified adjusted gross income.--For purposes of 
     subparagraph (B), the term `modified adjusted gross income' 
     means the adjusted gross income of the taxpayer for the 
     taxable year determined--
       ``(i) without regard to this section and sections 911, 931, 
     and 933, and
       ``(ii) after the application of sections 86, 135, 137, 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.
       ``(D) Cross Reference.--

  ``For inflation adjustment of $50,000 and $80,000 amounts, see 
section 35(c)(4).

       ``(c) Definitions.--For purposes of this section--
       ``(1) In general.--Except as provided in paragraph (2), 
     terms used in this section which are also used in section 35 
     have the respective meanings given such terms in section 35.
       ``(2) Deduction available for education to acquire or 
     improve job skills.--For purposes of applying this section, 
     the requirement of section 35(d)(1)(D)(ii) shall be treated 
     as met if the student is enrolled in a course which enables 
     the student to improve the student's job skills or to acquire 
     new job skills.
       ``(d) Special Rules.--
       ``(1) Denial of double benefit.--No deduction shall be 
     allowed under subsection (a) for qualified higher education 
     expenses with respect to which a deduction is allowable to 
     the taxpayer under any other provision of this chapter unless 
     the taxpayer irrevocably waives his right to the deduction of 
     such expenses under such other provision.
       ``(2) Limitation on taxable year of deduction.--
       ``(A) In general.--A deduction shall be allowed under 
     subsection (a) for any taxable year only to the extent the 
     qualified higher education expenses are in connection with 
     enrollment at an institution of higher education during the 
     taxable year.
       ``(B) Certain prepayments allowed.--Subparagraph (A) shall 
     not apply to qualified higher education expenses paid during 
     a taxable year if such expenses are in connection with an 
     academic term beginning during such taxable year or during 
     the 1st 3 months of the next taxable year.
       ``(3) Certain rules to apply.--Rules similar to the 
     following rules of section 35(e) shall apply for purposes of 
     this section:
       ``(A) Paragraph (2)(B) (relating to denial of double 
     benefit for dependents).
       ``(B) Paragraph (3) (relating to identification 
     requirement).
       ``(C) Paragraph (4) (relating to adjustment for certain 
     scholarships).
       ``(D) Paragraph (5) (relating to no benefit for married 
     individuals filing separate returns).
       ``(E) Paragraph (6) (relating to nonresident aliens).
       ``(4) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including regulations requiring recordkeeping 
     and information reporting.''
       (b) Deduction Allowed in Computing Adjusted Gross Income.--
     Section 62(a) of such Code is amended by inserting after 
     paragraph (16) the following new paragraph:
       ``(17) Higher education tuition and fees.--The deduction 
     allowed by section 221.''
       (c) Conforming Amendment.--The table of sections for part 
     VII of subchapter B of chapter 1 of such Code is amended by 
     striking the item relating to section 221 and inserting:

``Sec. 221. Higher education tuition and fees.
``Sec. 222. Cross reference.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.

     SEC. 103. DEDUCTION FOR INTEREST ON EDUCATION LOANS.

       (a) In General.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions for individuals), as amended by section 
     102, is amended by redesignating section 222 as section 223 
     and by inserting after section 221 the following new section:

     ``SEC. 222. 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) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--The amount allowed as a deduction under 
     subsection (a) shall be reduced (but not below zero) by the 
     amount determined under paragraph (2).
       ``(2) Amount of reduction.--The amount determined under 
     this paragraph equals the amount which bears the same ratio 
     to the deduction (determined without regard to this 
     subsection) as--
       ``(A) the excess of--
       ``(i) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(ii) $50,000 ($80,000 in the case of a joint return), 
     bears to
       ``(B) $20,000.
       ``(3) Modified adjusted gross income.--For purposes of 
     paragraph (2), the term `modified adjusted gross income' 
     means the adjusted gross income of the taxpayer for the 
     taxable year determined--
       ``(A) without regard to this section and sections 911, 931, 
     and 933, and
       ``(B) after the application of sections 86, 135, 137, 219, 
     221, and 469.

     For purposes of sections 86, 135, 219, 221, and 469, adjusted 
     gross income shall be determined without regard to the 
     deduction allowed under this section.
       ``(4) Cross reference.--

  ``For inflation adjustment of $50,000 and $80,000 amounts, see 
section 35(c)(4).

       ``(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) 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 or the 
     taxpayer's spouse,
       ``(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' has the meaning given 
     such term by section 35(d) (without regard to paragraph 
     (1)(D)(ii)), 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 applying section 35(d) under the preceding 
     sentence, the term `eligible educational institution' 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.
       ``(e) 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 of such Code, 
     as amended by section 102, is amended by inserting after 
     paragraph (17) the following new paragraph:
       ``(18) Interest on education loans.--The deduction allowed 
     by section 222.''
       (c) Reporting Requirement.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 of such Code (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

[[Page S299]]

       ``(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--
       ``(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 222(d)(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) by redesignating clauses (x) through (xv) as clauses 
     (xi) through (xvi), respectively, in paragraph (1)(B) and by 
     inserting after clause (ix) of such paragraph the following 
     new clause:
       ``(x) section 6050S (relating to returns relating to 
     education loan interest received in trade or business from 
     individuals),'', and
       (B) 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 6050R (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. 222. Interest on education loans.
``Sec. 223. Cross reference.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to any qualified education loan (as defined in 
     section 222(d)(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, 1997.
              TITLE II--EDUCATIONAL FACILITIES IMPROVEMENT

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Educational Facilities 
     Improvement Act''.

     SEC. 202. PROVISION OF ASSISTANCE FOR CONSTRUCTION AND 
                   RENOVATION OF EDUCATIONAL FACILITIES.

       Title XII of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 8501 et seq.) is amended--
       (1) by repealing sections 12002 and 12003;
       (2) by redesignating sections 12001 and 12004 through 
     12013, as sections 12101 and 12102 through 12111, 
     respectively;
       (3) by inserting after the title heading the following:

     ``SEC. 12001. FINDINGS.

       ``The Congress finds the following:
       ``(1) The General Accounting Office performed a 
     comprehensive survey of the Nation's public elementary and 
     secondary school facilities, and found severe levels of 
     disrepair in all areas of the United States.
       ``(2) The General Accounting Office concluded more than 
     14,000,000 children attend schools in need of extensive 
     repair or replacement. Seven million children attend schools 
     with life safety code violations. Twelve million children 
     attend schools with leaky roofs.
       ``(3) The General Accounting Office found the problem of 
     crumbling schools transcends demographic and geographic 
     boundaries. At 38 percent of urban schools, 30 percent of 
     rural schools, and 29 percent of suburban schools, at least 1 
     building is in need of extensive repair or should be 
     completely replaced.
       ``(4) The condition of school facilities has a direct 
     affect on the safety of students and teachers, and on the 
     ability of students to learn.
       ``(5) Academic research has proven a direct correlation 
     between the condition of school facilities and student 
     achievement. At Georgetown University, researchers found 
     students assigned to schools in poor condition can be 
     expected to fall 10.9 percentage points below those in 
     buildings in excellent condition. Similar studies have 
     demonstrated up to a 20 percent improvement in test scores 
     when students were moved from a poor facility to a new 
     facility.
       ``(6) The General Accounting Office found most schools are 
     not prepared to incorporate modern technology into the 
     classroom. Forty-six percent of schools lack adequate 
     electrical wiring to support the full-scale use of 
     technology. More than a third of schools lack the requisite 
     electrical power. Fifty-six percent of schools have 
     insufficient phone lines for modems.
       ``(7) The Department of Education reported that elementary 
     and secondary school enrollment, already at a record high 
     level, will continue to grow during the period between 1996 
     and 2000, and that in order to accommodate this growth, the 
     United States will need to build an additional 6,000 schools 
     over this time period.
       ``(8) The General Accounting Office found it will cost 
     $112,000,000,000 just to bring schools up to good, overall 
     condition, not including the cost of modernizing schools so 
     the schools can utilize 21st century technology, nor 
     including the cost of expansion to meet record enrollment 
     levels.
       ``(9) State and local financing mechanisms have proven 
     inadequate to meet the challenges facing today's aging school 
     facilities. Large numbers of local educational agencies have 
     difficulties securing financing for school facility 
     improvement.
       ``(10) The Federal Government can support elementary and 
     secondary school facilities, and can leverage additional 
     funds for the improvement of elementary and secondary school 
     facilities.

     ``SEC. 12002. PURPOSE.

       ``The purpose of this title is to help State and local 
     authorities improve the quality of education at their public 
     schools through the provision of Federal funds to enable the 
     State and local authorities to meet the cost associated with 
     the improvement of school facilities within their 
     jurisdictions.

     ``PART A--GENERAL INFRASTRUCTURE IMPROVEMENT GRANT PROGRAM'';

     and
       (4) by adding at the end the following:

       ``PART B--CONSTRUCTION AND RENOVATION BOND SUBSIDY PROGRAM

     ``SEC. 12201. DEFINITIONS.

       ``As used in this part:
       ``(1) Educational facility.--The term educational 
     facility'' has the meaning given the term `school' in section 
     12110.
       ``(2) Local area.--The term `local area' means the 
     geographic area served by a local educational agency.
       ``(3) Local bond authority.--The term `local bond 
     authority' means--
       ``(A) a local educational agency with authority to issue a 
     bond for construction or renovation of educational facilities 
     in a local area; and
       ``(B) a political subdivision of a State with authority to 
     issue such a bond for an area including a local area.
       ``(4) Poverty line.--The term `poverty line' means the 
     official poverty line (as defined by the Office of Management 
     and Budget, and revised annually in accordance with section 
     673(2) of the Omnibus Budget Reconciliation Act of 1981 (42 
     U.S.C. 9902(2))) applicable to a family of the size involved.
       ``(5) State.--The term `State' means each of the several 
     States of the United States, the District of Columbia, and 
     the Commonwealth of Puerto Rico.

     ``SEC. 12202. AUTHORIZATION OF PROGRAM.

       ``(a) Program Authority.--Of the amount appropriated under 
     section 12210 for a fiscal year and not reserved under 
     subsection (b), the Secretary shall use--
       ``(1) 20 percent of such amount to award grants to local 
     bond authorities for not more than 125 eligible local areas 
     as provided for under section 12203; and
       ``(2) 80 percent of such amount to award grants to States 
     as provided for under section 12204.
       ``(b) Special Rule.--The Secretary may reserve--
       ``(1) not more than 1 percent of the amount appropriated 
     under section 12210 to provide assistance to Indian schools 
     in accordance with the purpose of this title;
       ``(2) not more than 0.5 percent of the amount appropriated 
     under section 12210 to provide assistance to Guam, the United 
     States Virgin Islands, 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 to carry out the purpose of this title; and

[[Page S300]]

       ``(3) not more than 0.1 percent of the amount appropriated 
     under section 12210 to carry out section 12209.

     ``SEC. 12203. DIRECT GRANTS TO LOCAL BOND AUTHORITIES.

       ``(a) In General.--The Secretary shall award a grant under 
     section 12202(a)(1) to eligible local bond authorities to 
     provide assistance for construction or renovation of 
     educational facilities in a local area.
       ``(b) Use of Funds.--The local bond authority shall use 
     amounts received through a grant made under section 
     12202(a)(1) to pay a portion of the interest costs applicable 
     to any local bond issued to finance an activity described in 
     section 12205 with respect to the local area.
       ``(c) Eligibility and Determination.--
       ``(1) Eligibility.--To be eligible to receive a grant under 
     section 12202(a)(1) for a local area, a local bond authority 
     shall demonstrate the capacity to issue a bond for an area 
     that includes 1 of the 125 local areas for which the 
     Secretary has made a determination under paragraph (2).
       ``(2) Determination.--
       ``(A) Mandatory.--The Secretary shall make a determination 
     of the 100 local areas that have the highest numbers of 
     children who are--
       ``(i) aged 5 to 17, inclusive; and
       ``(ii) members of families with incomes that do not exceed 
     100 percent of the poverty line.
       ``(B) Discretionary.--The Secretary may make a 
     determination of 25 local areas, for which the Secretary has 
     not made a determination under subparagraph (A), that have 
     extraordinary needs for construction or renovation of 
     educational facilities that the local bond authority serving 
     the local area is unable to meet.
       ``(d) Application.--To be eligible to receive a grant under 
     section 12202(a)(1), a local bond authority shall prepare and 
     submit to the Secretary an application at such time, in such 
     manner, and containing such information as the Secretary may 
     require, including--
       ``(1) an assurance that the application was developed in 
     consultation with parents and classroom teachers;
       ``(2) information sufficient to enable the Secretary to 
     make a determination under subsection (c)(2) with respect to 
     such local authority;
       ``(3) a description of the architectural, civil, 
     structural, mechanical, or electrical construction or 
     renovation to be supported with the assistance provided under 
     this part;
       ``(4) a cost estimate of the proposed construction or 
     renovation;
       ``(5) an identification of other resources, such as unused 
     bonding capacity, that are available to carry out the 
     activities for which assistance is requested under this part;
       ``(6) a description of how activities supported with funds 
     provided under this part will promote energy conservation; 
     and
       ``(7) such other information and assurances as the 
     Secretary may require.
       ``(e) Award of Grants.--
       ``(1) In general.--In awarding grants under section 
     12202(a)(1), the Secretary shall give preference to a local 
     bond authority based on--
       ``(A) the extent to which the local educational agency 
     serving the local area involved or the educational facility 
     for which the authority seeks a grant (as appropriate) meets 
     the criteria described in section 12103(a);
       ``(B) the extent to which the educational facility is 
     overcrowded; and
       ``(C) the extent to which assistance provided through the 
     grant will be used to fund construction or renovation that, 
     but for receipt of the grant, would not otherwise be possible 
     to undertake.
       ``(2) Amount of assistance.--
       ``(A) In general.--In determining the amount of assistance 
     for which local bond authorities are eligible under section 
     12202(a)(1), the Secretary shall--
       ``(i) give preference to a local bond authority based on 
     the criteria specified in paragraph (1); and
       ``(ii) consider--

       ``(I) the amount of the cost estimate contained in the 
     application of the local bond authority under subsection 
     (d)(4);
       ``(II) the relative size of the local area several by the 
     local bond authority; and
       ``(III) any other factors determined to be appropriate by 
     the Secretary.

       ``(B) Maximum amount of assistance.--A local bond authority 
     shall be eligible for assistance under section 12202(a)(1) in 
     an amount that does not exceed the appropriate percentage 
     under section 12204(f)(3) of the interest costs applicable to 
     any local bond issued to finance an activity described in 
     section 12205 with respect to the local area involved.

     ``SEC. 12204. GRANTS TO STATES.

       ``(a) In General.--The Secretary shall award a grant under 
     section 12202(a)(2) to each eligible State to provide 
     assistance to the State, or local bond authorities in the 
     State, for construction and renovation of educational 
     facilities in local areas.
       ``(b) Use of Funds.--The State shall use amounts received 
     through a grant made under section 12202(a)(2)--
       ``(1) to pay a portion of the interest costs applicable to 
     any State bond issued to finance an activity described in 
     section 12205 with respect to the local areas; or
       ``(2) to provide assistance to local bond authorities in 
     the State to pay a portion of the interest costs applicable 
     to any local bond issued to finance an activity described in 
     section 12205 with respect to the local areas.
       ``(c) Amount of Grant to State.--
       ``(1) In general.--From the amount available for grants 
     under section 12202(a)(2), the Secretary shall award a grant 
     to each eligible State that is equal to the total of--
       ``(A) a sum that bears the same relationship to 50 percent 
     of such amount as the total amount of funds made available 
     for all eligible local educational agencies in the State 
     under part A of title I for such year bears to the total 
     amount of funds made available for all eligible local 
     educational agencies in all States under such part for such 
     year; and
       ``(B) a sum that bears the same relationship to 50 percent 
     of such amount as the total amount of funds made available 
     for all eligible local educational agencies in the State 
     under title VI for such year bears to the total amount of 
     funds made available for all eligible local educational 
     agencies in all States under such title for such year.
       ``(2) Eligible local educational agencies.--For the purpose 
     of paragraph (1) the term `eligible local educational agency' 
     means a local educational agency that does not serve a local 
     area for which an eligible local bond authority received a 
     grant under section 12203
       ``(d) State Applications Required.--To be eligible to 
     receive a grant under section 12202(a)(2), a State shall 
     prepare and submit to the Secretary an application at such 
     time, in such manner, and containing such information as the 
     Secretary may require. Such application shall contain--
       ``(1) a description of the process the State will use to 
     determine which local bond authorities will receive 
     assistance under subsection (b)(2).
       ``(2) an assurance that grant funds under this section will 
     be used to increase the amount of school construction or 
     renovation in the State for a fiscal year compared to such 
     amount in the State for the preceding fiscal years.
       ``(e) Administering Agency.--
       ``(1) In general.--The State agency with authority to issue 
     bonds for the construction or renovation of educational 
     facilities, or with the authority to otherwise finance such 
     construction or renovation, shall administer the amount 
     received through the grant.
       ``(2) Special rule.--If no agency described in paragraph 
     (1) exits, or if there is more than one such agency, then the 
     chief executive officer of the State and the chief State 
     school officer shall designate a State entity or individual 
     to administer the amounts received through the grant.
       ``(f) Assistance to Local Bond Authorities.--
       ``(1) In general.--To be eligible to receive assistance 
     from a State under this section, a local bond authority shall 
     prepare and submit to the State agency designated under 
     subsection (e) an application at such time, in such manner, 
     and containing such information as the State agency may 
     require, including the information described in section 
     12203(d).
       ``(2) Criteria.--In awarding grants under this section, the 
     State agency shall give preference to a local bond authority 
     based on--
       ``(A) the extent to which the local educational agency 
     serving the local area involved or the educational facility 
     for which the authority seeks the grant (as appropriate) 
     meets the criteria described in section 12103(a);
       ``(B) the extent to which the educational facility is 
     overcrowded; and
       ``(C) the extent to which assistance provided through the 
     grant will be used to fund construction or renovation that, 
     but for receipt of the grant, would not otherwise be possible 
     to undertake.
       ``(3) Amount of assistance.--A local bond authority seeking 
     assistance for a local area served by a local educational 
     agency described in--
       ``(A) clause (i)(I) or clause (ii)(I) of section 
     1125(c)(2)(A), shall be eligible for assistance in an amount 
     that does not exceed 10 percent;
       ``(B) clause (i)(II) or clause (ii)(II) of section 
     1125(c)(2)(A), shall be eligible for assistance in an amount 
     that does not exceed 20 percent;
       ``(C) clause (i)(III) or clause (ii)(III) of section 
     1125(c)(2)(A), shall be eligible for assistance in an amount 
     that does not exceed 30 percent;
       ``(D) clause (i)(IV) or clause (ii)(IV) of section 
     1125(c)(2)(A), shall be eligible for assistance in an amount 
     that does not exceed 40 percent; and
       ``(E) clause (i)(V) or clause (ii)(V) of section 
     1125(c)(2)(A), shall be eligible for assistance in an amount 
     that does not exceed 50 percent;
     of the interest costs applicable to any local bond issued to 
     finance an activity described in section 12205 with respect 
     to the local area.
       ``(g) Assistance to State.--
       ``(1) In general.--If a State issues a bond to finance an 
     activity described in section 12205 with respect to local 
     areas, the State shall be eligible for assistance in an 
     amount that does not exceed the percentage calculated under 
     the formula described in paragraph (2) of the interest costs 
     applicable to the State bond with respect to the local areas.
       ``(2) Formula.--The Secretary shall develop a formula for 
     determining the percentage referred to in paragraph (1). The 
     formula

[[Page S301]]

     shall specify that the percentage shall consist of a weighted 
     average of the percentages referred to in subparagraphs (A) 
     through (E) of subsection (f)(3) for the local areas 
     involved.

     ``SEC. 12205. AUTHORIZED ACTIVITIES.

       ``An activity described in this section is a project of 
     significant size and scope that consists of--
       ``(1) the repair or upgrading of classrooms or structures 
     related to academic learning, including the repair of leaking 
     roofs, crumbling walls, inadequate plumbing, poor ventilation 
     equipment, and inadequate heating or light equipment;
       ``(2) an activity to increase physical safety at the 
     educational facility involved;
       ``(3) an activity to enhance the educational facility 
     involved to provide access for students, teachers, and other 
     individuals with disabilities;
       ``(4) an activity to improve the energy efficiency of the 
     educational facility involved;
       ``(5) an activity to address environmental hazards at the 
     educational facility involved, such as poor ventilation, 
     indoor air quality, or lighting;
       ``(6) the provision of basic infrastructure that 
     facilitates educational technology, such as communications 
     outlets, electrical systems, power outlets, or a 
     communication closet;
       ``(7) the construction of new schools to meet the needs 
     imposed by enrollment growth; and
       ``(8) any other activity the Secretary determines achieves 
     the purpose of this title.

     ``SEC. 12206. STATE GRANT WAIVERS.

       ``(a) Waiver for State Issuance of Bond.--
       ``(1) In general.--A State that issues a bond described in 
     section 12204(b)(1) with respect to a local area may request 
     that the Secretary waive the limits described in section 
     12204(f)(3) for the local area, in calculating the amount of 
     assistance the State may receive under section 12204(g). The 
     State may request the waiver only if no local entity is able, 
     for one of the reasons described in subparagraphs (A) through 
     (F) of paragraph (2), to issue bonds on behalf of the local 
     area. Under such a waiver, the Secretary may permit the State 
     to use amounts received through a grant made under section 
     12202(a)(2) to pay for not more than 80 percent of the 
     interest costs applicable to the State bond with respect to 
     the local area.
       ``(2) Demonstration by state.--To be eligible to receive a 
     waiver under this subsection, a State shall demonstrate to 
     the satisfaction of the Secretary that--
       ``(A) the local bond authority serving the local area has 
     reached a limit on its borrowing authority as a result of a 
     debt ceiling or property tax cap;
       ``(B) the local area has a high percentage of low-income 
     residents, or an unusually high property tax rate;
       ``(C) the demographic composition of the local area will 
     not support additional school spending;
       ``(D) the local bond authority has a history of failed 
     attempts to pass bond referenda;
       ``(E) the local area contains a significant percentage of 
     Federally-owned land that is not subject to local taxation; 
     or
       ``(F) for another reason, no local entity is able to issue 
     bonds on behalf of the local area.
       ``(b) Waiver for Other Financing Sources.--
       ``(1) In general.--A State may request that the Secretary 
     waive the use requirements of section 12204(b) for a local 
     bond authority to permit the State to provide assistance to 
     the local bond authority to finance construction or 
     renovation by means other than through the issuance of bonds.
       ``(2) Use of funds.--A State that receives a waiver granted 
     under this subsection may provide assistance to a local bond 
     authority in accordance with the criteria described in 
     section 12204(f)(2) to enable the local bond authority to 
     repay the costs incurred by the local bond authority in 
     financing an activity described in section 12205. The local 
     bond authority shall be eligible to receive the amount of 
     such assistance that the Secretary estimates the local bond 
     authority would be eligible to receive under section 
     12204(f)(3) if the construction or renovation were financed 
     through the issuance of a bond.
       ``(3) Matching requirement.--The State shall make available 
     to the local bond authority (directly or through donations 
     from public or private entities) non-Federal contributions in 
     an amount equal to not less than $1 for every $1 of Federal 
     funds provided to the local bond authority through the grant.
       ``(c) Waiver for Other Uses.--
       ``(1) In general.--A State may request that the Secretary 
     waive the use requirements of section 12204(b) for a State to 
     permit the State to carry out activities that achieve the 
     purpose of this title.
       ``(2) Demonstration by state.--To be eligible to receive a 
     waiver under this subsection, a State shall demonstrate to 
     the satisfaction of the Secretary that the use of assistance 
     provided under the waiver--
       ``(A) will result in an equal or greater amount of 
     construction or renovation of educational facilities than the 
     provision of assistance to defray the interest costs 
     applicable to a bond for such construction or renovation; and
       ``(B) will be used to fund activities that are effective in 
     carrying out the activities described in section 12205, such 
     as--
       ``(i) the capitalization of a revolving loan fund for such 
     construction or renovation;
       ``(ii) the use of funds for reinsurance or guarantees with 
     respect to the financing of such construction or renovation;
       ``(iii) the creation of a mechanism to leverage private 
     sector resources for such construction or renovation;
       ``(iv) the capitalization of authorities similar to State 
     Infrastructure Banks to leverage additional funds for such 
     construction or renovation; or
       ``(v) any other activity the Secretary determines achieves 
     the purpose of this title.
       ``(d) Local Bond Authority Waiver.--
       ``(1) In general.--A local bond authority may request the 
     Secretary waive the use requirements of section 12203(b) for 
     a local head authority to permit the authority to finance 
     construction or renovation of educational facilities by means 
     other than through use of bonds.
       ``(2) Demonstration.--To be eligible to receive a waiver 
     under this subsection, a local bond authority shall 
     demonstrate that the amounts made available through a grant 
     under the waiver will result in an equal or greater amount of 
     construction or renovation of educational facilities than the 
     provision of assistance to defray the interest costs 
     applicable to a bond for such construction or renovation.
       ``(e) Request for Waiver.--A State or local bond authority 
     that desires a waiver under this section shall submit a 
     waiver request to the Secretary that--
       ``(1) identifies the type of waiver requested;
       ``(2) with respect to a waiver described in subsections 
     (a), (c), or (d), makes the demonstration described in 
     subsections (a)(2), (c)(2), or (d)(2), respectively;
       ``(3) describes the manner in which the waiver will further 
     the purpose of this title; and
       ``(4) describes the use of assistance provided under such 
     waiver.
       ``(f) Action by Secretary.--The Secretary shall make a 
     determination with respect to a request submitted under 
     subsection (d) not later than 90 days after the date on which 
     such request was submitted.
       ``(g) General Requirements.--
       ``(1) States.--In the case of a waiver request submitted by 
     a State under this section, the State shall--
       ``(A) provide all interested local educational agencies in 
     the State with notice and a reasonable opportunity to comment 
     on the request;
       ``(B) submit the comments to the Secretary; and
       ``(C) provide notice and information to the public 
     regarding the waiver request in the manner that the applying 
     State customarily provides similar notices and information to 
     the public.
       ``(2) Local bond authorities.--In the case of a waiver 
     request submitted by a local bond authority under this 
     section, the local bond authority shall--
       ``(A) provide the affected local educational agency with 
     notice and a reasonable opportunity to comment on the 
     request;
       ``(B) submit the comments to the Secretary; and
       ``(C) provide notice and information to the public 
     regarding the waiver request in the manner that the applying 
     local bond authority customarily provides similar notices and 
     information to the public.

     ``SEC. 12207. GENERAL PROVISIONS.

       ``(a) Failure to Issue Bonds.--
       ``(1) States.--If a State that receives assistance under 
     this part fails to issue a bond for which the assistance is 
     provided, the amount of such assistance shall be made 
     available to the State as provided for under section 12204, 
     during the first fiscal year following the date of repayment.
       ``(2) Local bond authorities and local areas.--If a local 
     bond authority that receives assistance under this part fails 
     to issue a bond, or a local area that receives such 
     assistance fails to become the beneficiary of a bond, for 
     which the assistance is provided, the amount of such 
     assistance--
       ``(A) in the case of assistance received under section 
     12202(a)(1), shall be repaid to the Secretary and made 
     available as provided for under section 12203; and
       ``(B) in the case of assistance received under section 
     12202(a)(2), shall be repaid to the State and made available 
     as provided for under section 12204.
       ``(b) Liability of the Federal Government.--The Secretary 
     shall not be liable for any debt incurred by a State or local 
     bond authority for which assistance is provided under this 
     part. If such assistance is used by a local educational 
     agency to subsidize a debt other than the issuance of a bond, 
     the Secretary shall have no obligation to repay the lending 
     institution to whom the debt is owed if the local educational 
     agency defaults.

     ``SEC. 12208. FAIR WAGES.

       ``The provisions of section 12107 shall apply with respect 
     to all laborers and mechanics employed by contractors or 
     subcontractors in the performance of any contract and 
     subcontract for the repair, renovation, alteration, or 
     construction, including painting and decorating, of any 
     building or work that is financed in whole or in part using 
     assistance provided under this part.

     ``SEC. 12209. REPORT.

       ``From amounts reserved under section 12202(b)(3) for each 
     fiscal year the Secretary shall--
       ``(1) collect such data as the Secretary determines 
     necessary at the school, local, and State levels;

[[Page S302]]

       ``(2) conduct studies and evaluations, including national 
     studies and evaluations, in order to--
       ``(A) monitor the progress of activities supported with 
     funds provided under this part; and
       ``(B) evaluate the state of United States educational 
     facilities; and
       ``(3) report to the appropriate committees of Congress 
     regarding the findings of the studies and evaluations 
     described in paragraph (2).

     ``SEC. 12210. FUNDING.

       ``(a) In General.--There are appropriated $5,000,000,000 
     for fiscal year 1998 to carry out this part.
       ``(b) Entitlement.--Subject to subsection (a), each State 
     or local bond authority awarded a grant under this part shall 
     be entitled to payments under the grant.
       ``(c) Availability.--Any amounts appropriated pursuant to 
     the authority of subsection (a) shall remain available until 
     expended.''.

     SEC. 203. FUNDING.

       Section 12111 of the Educated Infrastructure Act of 1994 
     (as redesignated by section 202(2)) (20 U.S.C. 8513) is 
     amended to read as follows:

     ``SEC. 12111. FUNDING.

       ``(a) Authorization.--There are authorized to be 
     appropriated to carry out this part $200,000,000 for fiscal 
     year 1995 and such sums as may be necessary for each of the 
     four succeeding fiscal years.
       ``(b) Appropriation.--There are appropriated to carry out 
     this part $150,000,000 for each of the fiscal years 1998 
     through 2002.
       ``(c) Entitlement.--Subject to subsection (b), each State 
     or local bond authority awarded a grant under this part shall 
     be entitled to payments under the grant.''.

     SEC. 204. CONFORMING AMENDMENTS.

       (a) Cross References.--Part A of title XII of the 
     Elementary and Secondary Education Act of 1965 (as 
     redesignated by section 202(3)) is amended--
       (1) in section 12102(a) (as redesignated by section 
     202(2))--
       (A) in paragraph (1)--
       (i) by striking ``12013'' and inserting ``12111'';
       (ii) by striking ``12005'' and inserting ``12103''; and
       (iii) by striking ``12007'' and inserting ``12105''; and
       (B) in paragraph (2), by striking ``12013'' and inserting 
     ``12111''; and
       (2) in section 12110(3)(C) (as redesignated by section 
     202(2)), by striking ``12006'' and inserting ``12104''.
       (b) Conforming Amendments.--Part A of title XII of the 
     Elementary and Secondary Education Act of 1965 (as 
     redesignated by section 202(3)) (20 U.S.C. 8501 et seq.) is 
     further amended--
       (1) in section 12101 (as redesignated by section 202(2)), 
     by striking ``This title'' and inserting ``This part''; and
       (2) in sections 12102(a)(2), 12102(b)(1), 12103(a), 
     12103(b), 12103(b)(2), 12103(c), 12103(d), 12104(a), 
     12104(b)(2), 12104(b)(3), 12104(b)(4), 12104(b)(6), 
     12104(b)(7), 12105(a), 12105(b), 12106(a), 12106(b), 
     12106(c), 12106(c)(1), 12106(c)(7), 12106(e), 12107, 
     12108(a)(1), 12108(a)(2), 12108(b)(1), 12108(b)(2), 
     12108(b)(3), 12108(b)(4), 12109(2)(A), and 12110 (as 
     redesignated by section 202(2)), by striking ``this title'' 
     each place it appears and inserting ``this part''.
                   TITLE III--AMERICA READS CHALLENGE

     SEC. 301. FINDINGS.

       Congress finds as follows:
       (1) With the proper support and teaching, all children can 
     learn to read at grade-level by the end of the 3d grade.
       (2) Students who are not reading at grade-level are very 
     unlikely to graduate from high school.
       (3) Reading is a fundamental skill for learning, but in 
     1994, 40 percent of 4th grade students failed to attain the 
     basic level of reading on the National Assessment of 
     Education Progress. Seventy percent of 4th graders did not 
     attain the proficient level of reading.
       (4) Parents are the best first teachers. Parents can help 
     to increase their children's reading levels, for example, by 
     reading with their child 30 minutes a day. Evidence shows 
     that greater parental support of children's literacy success 
     makes a significant difference.
       (5) One-on-one tutoring is a key component of bringing 
     students up to reading at grade-level.
       (6) Pre-school preparation and family involvement is widely 
     recognized to improve student performance. Preparing children 
     to learn, both through parent involvement and through pre-
     school preparation, plays a crucial role in preventing 
     students from falling behind.
         Subtitle A--Parents As First Teachers Challenge Grants

     SEC. 311. SHORT TITLE.

       This subtitle may be cited as the ``Parents as First 
     Teachers Challenge Grant Act of 1997''.

     SEC. 312. FINDING AND PURPOSE.

       (a) Finding.--Congress finds that parents are the best 
     first teachers.
       (b) Purpose.--The purpose of this subtitle is to support 
     effective, proven efforts that provide assistance to parents 
     who want to help their children become successful readers by 
     the end of the 3d grade.

     SEC. 313. DEFINITIONS.

       In this subtitle:
       (1) Eligible child.--The term ``eligible child'' means an 
     individual eligible to attend preschool, kindergarten, or 
     1st, 2d, or 3d grade.
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of Education.

     SEC. 314. GRANTS AUTHORIZED.

       (a) Grants for National or Regional Networks.--The 
     Secretary is authorized to award at least 2 grants to public 
     or private agencies or institutions to enable the agencies or 
     institutions to support national or regional networks that 
     share information on helping eligible children read.
       (b) Grants for Successful Programs or Activities.--The 
     Secretary is authorized to award at least 2 grants to State 
     or local government agencies, nonprofit community groups or 
     organizations, or consortia thereof, to enable such agencies, 
     groups, organizations, or consortia to expand or replicate 
     successful programs or activities that helps a parent--
       (1) be a good teacher to the parent's eligible child; and
       (2) assist the parent's eligible child in attaining reading 
     skills while assisting the eligible child to learn to read.

     SEC. 315. RECIPIENT CRITERIA.

       (a) Grants for National or Regional Networks.--In order to 
     receive a grant under section 312(a), a public or private 
     agency or institution shall have a proven record of working 
     with parents of eligible children.
       (b) Grants for Successful Programs or Activities.--In order 
     to receive a grant under section 314(b), an agency, group, 
     organization, or consortium shall have a proven record of 
     working with parents to improve their eligible children's 
     reading.

     SEC. 316. APPLICATIONS.

       (a) In General.--Each entity desiring a grant under this 
     subtitle shall submit an application to the Secretary at such 
     time, in such manner, and accompanied by such information as 
     the Secretary may require.
       (b) Applications for Grants for National or Regional 
     Networks.--Each application submitted under subsection (a) 
     for a grant under section 314(a) shall--
       (1) demonstrate the likelihood that the proposed program or 
     activity will have a substantial regional or national impact;
       (2) demonstrate the cost-effectiveness of the proposed 
     program or activity; and
       (3) describe how the proposed program or activity will be 
     coordinated with private sector programs and activities, and 
     State and local programs and activities that provide support 
     for parents of eligible children.
       (c) Applications for Grants for Successful Programs or 
     Activities.--Each application submitted under subsection (a) 
     for a grant under section ____04(b) shall--
       (1) describe a program or activity that is capable of 
     successful expansion or replication;
       (2) contain evidence of community support for the proposed 
     program or activity from the private sector, a school, and 
     another entity;
       (3) contain information demonstrating the cost-
     effectiveness of the proposed program or activity; and
       (4) provide an assurance that the applicant will coordinate 
     the proposed program or activity with State and local 
     programs and activities that provide support for parents of 
     eligible children.

     SEC. 317. AUTHORIZATION OF APPROPRIATIONS.

       (a) Appropriations.--There are appropriated to carry out 
     this subtitle $45,000,000 for fiscal year 1998, $50,000,000 
     for fiscal year 1999, $60,000,000 for fiscal year 2000, 
     $70,000,000 for fiscal year 2001, and $75,000,000 for fiscal 
     year 2002.
       (b) Entitlement.--Subject to subsection (a), each entity 
     receiving a grant under this title for a fiscal year shall be 
     entitled to payments for such year under the grant.
            Subtitle B--Challenging America's Young Readers

     SEC. 321. SHORT TITLE.

       This subtitle may be cited as the ``Challenging America's 
     Young Readers Act of 1997''.

     SEC. 322. PURPOSE.

       The purpose of this subtitle is to raise reading levels by 
     providing tutoring assistance outside regular school hours to 
     children eligible to attend preschool, kindergarten, or 1st, 
     2d, or 3d grade.

     SEC. 323. DEFINITIONS.

       In this subtitle:
       (1) Administrators.--The term ``Administrators'' means the 
     Secretary of Education and the Chief Executive Officer of the 
     Corporation for National and Community Service acting 
     pursuant to the agreement entered into under section 324(c).
       (2) Eligible child.--The term ``eligible child'' means an 
     individual eligible to attend preschool, kindergarten, or 
     1st, 2d, or 3d grade.
       (3) State.--The term ``State'' means each of the several 
     States of the United States, the District of Columbia, and 
     the Commonwealth of Puerto Rico.
       (4) State educational agency.--The term ``State educational 
     agency'' has the meaning given the term by section 14101 of 
     the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     8801).

     SEC. 324. PROGRAM AUTHORIZED.

       (a) Allotment and Reservations.--
       (1) Allotment.--From the sum made available under section 
     330(b) and not reserved under paragraph (5) for a fiscal 
     year, the Administrators shall make an allotment to

[[Page S303]]

     each State educational agency for the fiscal year in an 
     amount that bears the same relation to the sum as the amount 
     such State received under part A of title I of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 6311 et seq.) 
     for the previous fiscal year bears to the amount all States 
     received under such part for the previous fiscal year.
       (2) Reservations.--
       (A) In general.--From the sum made available under section 
     330(b) for a fiscal year, the Administrators--
       (i) shall reserve 10 percent of such sum to carry out local 
     reading programs under section 326;
       (ii) shall reserve not more than 1.5 percent of such sum to 
     carry out national leadership and evaluation activities under 
     section 327;
       (iii) shall reserve the percentage described in 
     subparagraph (B) of such sum to make a payment to the 
     Secretary of the Interior to enable the Secretary of the 
     Interior to carry out the purpose of this subtitle for Indian 
     children; and
       (iv) shall reserve 0.25 percent of such sum to make 
     payments to 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 on the basis of their 
     respective need for assistance according to such criteria as 
     the Secretary determines will best carry out the purpose of 
     this subtitle.
       (B) Percentage.--The percentage referred to in subparagraph 
     (A)(iii) for a fiscal year is the percentage of funds 
     reserved under section 1121(a)(2) of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6331(a)(2)) for 
     the Secretary of the Interior for such previous year.
       (b) Grants.--
       (1) In general.--Each State educational agency receiving an 
     allotment under subsection (a)(1) shall use such allotment to 
     award grants, on a competitive basis, to organizations in the 
     State to enable the organizations--
       (A) to employ reading specialists to supervise tutoring 
     programs that teach eligible children to read;
       (B) to recruit and train tutors for tutoring programs that 
     teach eligible children to read; and
       (C) to carry out tutoring programs that teach eligible 
     children to read.
       (2) Special rule.--Each tutoring program assisted through a 
     grant awarded under paragraph (1) shall be conducted before 
     or after regular school hours, or during the weekend or the 
     summer.
       (c) Community and National Service Funds.--The 
     Administrators shall use amounts reserved under section 
     330(a) for a fiscal year to carry out the activities 
     described in subparagraphs (A) through (C) of subsection 
     (b)(1) during the periods described in subsection (b)(2) in 
     accordance with the National and Community Service Act of 
     1990 (42 U.S.C. 12501).
       (d) Joint Administration.--
       (1) In general.--The Secretary of Education and the Chief 
     Executive Officer of the Corporation for National and 
     Community Service shall administer this subtitle jointly 
     pursuant to an agreement between the Secretary and the Chief 
     Executive Officer.
       (2) Agreement.--The agreement described in paragraph (1) 
     shall establish the responsibilities of the Secretary of 
     Education and the Chief Executive Officer of the Corporation 
     for National and Community Service for administering this 
     subtitle. Such agreement shall--
       (A) not require more than one application from any one 
     State educational agency or local applicant;
       (B) encourage, but not require, the use of volunteers 
     assisted through funding made available under section 330(a) 
     to serve as volunteer recruiters and coordinators; and
       (C) include only one application review process.

     SEC. 325. APPLICATIONS.

       (a) State.--Each State educational agency desiring an 
     allotment under this subtitle shall submit an application to 
     the Administrators at such time, in such manner, and 
     containing such information as the Administrators may 
     require. Each such application shall--
       (1) describe how the State educational agency will award 
     grants under this subtitle; and
       (2) describe how the State educational agency will 
     encourage use of activities assisted under the National and 
     Community Service Act of 1990 (42 U.S.C. 12501 et seq.) and 
     the Domestic Volunteer Service Act of 1973 (42 U.S.C. 4950 et 
     seq.).
       (b) Local.--Each organization desiring a grant under 
     section 324(b) shall submit an application to the State 
     educational agency at such time, in such manner, and 
     accompanied by such information as the State educational 
     agency may reasonably require. Each such application shall--
       (1) describe how the proposed program or activity will be 
     linked with the curriculum of the appropriate local 
     educational agency, school, or classroom, and other reading 
     enhancement activities of the school and the eligible 
     children;
       (2) contain a description of how the applicant will use the 
     grant funds to provide assistance to economically 
     disadvantaged communities, and schools, in which eligible 
     children have the greatest need for reading assistance;
       (3) contain an assurance that the proposed program or 
     activity will focus on providing individualized tutoring in 
     reading that involves trained and supervised volunteers who 
     have been approved by the applicant; and
       (4) describe the strategies that will be undertaken through 
     the program or activity to ensure that eligible children will 
     make progress in reading;
       (5) describe how the applicant will evaluate the program or 
     activity, including measuring progress toward improving the 
     reading performance of eligible children, and improve the 
     program or activity if eligible children do not make progress 
     in improving reading performance; and
       (6) demonstrate how the program or activity--
       (A) will be coordinated with activities of local school 
     personnel, and activities assisted under the Head Start Act 
     (42 U.S.C. 9831 et seq.), Even Start, other provisions of 
     title I of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 6301 et seq.), and the Individuals with 
     Disabilities Education Act (20 U.S.C. 1400 et seq.), 
     particularly with respect to referral of eligible children; 
     and
       (B) will be developed and carried out with strong parent, 
     community, and private sector involvement.

     SEC. 326. LOCAL READING PROGRAMS.

       (a) Grants Authorized.--
       (1) In general.--From amounts reserved under section 
     324(a)(2)(A)(i) for a fiscal year, the Administrators shall 
     award grants to local entities for the planning, 
     implementation, or expansion of local reading programs that 
     serve economically disadvantaged communities.
       (2) Special rule.--In awarding grants under paragraph (1) 
     for a fiscal year, the Administrators shall ensure that at 
     least 1 such grant is awarded to serve an urban economically 
     disadvantaged community and at least 1 such grant is awarded 
     to serve a rural economically disadvantaged community.
       (b) Application.--Each local entity desiring a grant under 
     subsection (a) shall submit an application to the 
     Administrators at such time, in such manner, and accompanied 
     by such information as the Administrators may require. Each 
     such application shall include the information and assurances 
     described in section 325(b) with respect to such local 
     entity.

     SEC. 327. NATIONAL LEADERSHIP AND EVALUATION.

       (a) National Leadership.--From a portion of amounts 
     reserved under section 324(a)(2)(A)(ii) for a fiscal year, 
     the Administrators may carry out national leadership 
     activities, including dissemination of information on 
     effective practices, providing technical assistance 
     materials, and other activities, to increase the performance 
     of eligible children in the States.
       (b) Evaluation.--
       (1) In general.--From a portion of the amounts reserved 
     under section 324(a)(2)(A)(ii) for a fiscal year, the 
     Administrators, through a grant, contract, or cooperative 
     agreement, shall evaluate, and submit reports to Congress 
     regarding, the effectiveness of programs and activities 
     assisted under this subtitle.
       (2) Report dates.--The reports described in paragraph (1) 
     shall be submitted to Congress on September 1, 2000, and 
     every 2 years thereafter.

     SEC. 328. ADJUSTMENT OR TERMINATION OF FUNDING.

       Notwithstanding any other provision of this subtitle, the 
     Administrators may decrease or terminate any funding provided 
     under this subtitle if the Administrators determine that a 
     recipient of such funding does not--
       (1) improve reading performance with respect to eligible 
     children; or
       (2) implement the recipient's strategies to improve reading 
     performance with respect to eligible children.

     SEC. 329. NONDUPLICATION AND NONDISPLACEMENT.

       (a) Nonduplication.--Assistance provided under this 
     subtitle shall be used only for a program or activity that 
     does not duplicate, and is in addition to, an activity 
     otherwise available in the locality of such program or 
     activity.
       (b) Nondisplacement.--An employer shall not displace an 
     employee or position, including partial displacement such as 
     reduction in hours, wages, or employment benefits, as a 
     result of the use by such employer of a participant in a 
     program or activity receiving assistance under this subtitle.

     SEC. 330. FUNDING.

       (a) Reservation.--From amounts made available to carry out 
     the National and Community Service Act of 1990 (42 U.S.C. 
     12501 et seq.) for each of the fiscal years 1998 through 
     2002, the Chief Executive Officer of the Corporation for 
     National and Community Service shall make available 
     $200,000,000 to carry out this subtitle.
       (b) Appropriation.--There are appropriated to the Secretary 
     of Education to carry out this subtitle $200,000,000 for 
     fiscal year 1998, $250,000,000 for fiscal year 1999, 
     $300,000,000 for fiscal year 2000, $350,000,000 for fiscal 
     year 2001, and $350,000,000 for fiscal year 2002.
       (c) Entitlement.--Subject to subsections (a) and (b), each 
     entity receiving an allotment, awarded a grant, or entering 
     into a contract or cooperative agreement, under this subtitle 
     for a fiscal year shall be entitled to payments for such year 
     under the allotment, grant, contract, or cooperative 
     agreement.

[[Page S304]]

          TITLE IV--INVESTING IN TECHNOLOGY FOR THE CLASSROOMS
                    Subtitle A--Sense of the Senate

     SEC. 401. FINDINGS.

       Congress finds as follows:
       (1) Technology in the schools is a central component of 
     preparing students for the 21st century.
       (2) Equipping schools with technology is no longer a 
     luxury. It is a necessity. By the year 2000, 60 percent of 
     all jobs in the Nation will require skills in computer and 
     network use.
       (3) Technology in the classroom improves students' mastery 
     of basic skills, test scores, writing, and engagement in 
     school. With these gains come decreases in dropout rates and 
     decreases in attendance and discipline problems.
       (4) Not enough students have access to computers, distance 
     learning, and telecommunications technologies. A 1995 
     Government Accounting Report report estimates that 10,000,000 
     students, and 1 school in every 4 schools, do not have 
     sufficient computers to meet their needs.
       (5) Of the 5,800,000 computers in United States schools, 
     many are older models that do not have the power to perform 
     advanced functions such as those involving video and the 
     Internet.
       (6) Only 9 percent of all instructional rooms including 
     classrooms, laboratories, and library media, have connections 
     to the Internet.
       (7) The Federal Government began a new commitment to 
     funding education technology by investing an additional 
     $200,000,000 in subpart 2 of part A of title III of the 
     Elementary and Secondary Education Act of 1965 ( 20 U.S.C. 
     6841 et seq.) in fiscal year 1997. Although such investment 
     is an important investment, it is not sufficient to meet the 
     technology needs of schools and school children in the 21st 
     century.

     SEC. 402. SENSE OF THE SENATE.

       It is the Sense of the Senate that it is in the Nation's 
     best interest for the Federal Government to invest at least 
     $1,800,000,000 in additional funding for education technology 
     programs between fiscal years 1998 and 2002.
           Subtitle B--Educational Technology Clearinghouses

     SEC. 421. PURPOSE.

       It is the purpose of this subtitle to authorize a program 
     to support regional educational technology clearinghouses 
     that facilitate the donation of surplus equipment and 
     technology to schools and libraries from Federal or State 
     governmental agencies, businesses, and other private 
     entities.

     SEC. 422. AUTHORITY.

       (a) In General.--The Secretary of Education shall make 
     grants to or enter into contracts with regional public or 
     private nonprofit entities for the purpose of supporting a 
     system of regional educational technology clearinghouses. In 
     awarding the grants or contracts, the Secretary shall ensure 
     that each geographic region of the United States is served by 
     such an entity.
       (b) Duration.--The Secretary shall award grants and 
     contracts under this subtitle for a period of 5 years.

     SEC. 423. REQUIREMENTS.

       Each entity receiving a grant or contract under this 
     subtitle shall--
       (1) in cooperation with State educational agencies and 
     local educational agencies, develop a regional program to 
     support a clearinghouse that facilitates the transfer of 
     surplus equipment and technology to schools and libraries 
     from Federal or State governmental agencies, businesses, and 
     other private entities;
       (2) disseminate information to State educational agencies 
     and local educational agencies about the availability and 
     procurement of the equipment and technology through the 
     clearinghouse;
       (3) disseminate information to the public about activities 
     assisted under this subtitle, including information about the 
     donations being accepted by the clearinghouse;
       (4) have in place a process for ensuring that surplus 
     equipment and technology is distributed in a fair and 
     equitable manner, with school districts with the greatest 
     need for such equipment and technology receiving priority for 
     donations under this subtitle;
       (5) provide technical assistance to a school or library to 
     ensure that the equipment and technology being donated is 
     consistent with the short- and long-term educational 
     technology plans of the school or library, respectively;
       (6) use funds under this subtitle to upgrade equipment or 
     technology only if the entity determines such upgrading meets 
     the short- and long-term educational plan of the school or 
     library receiving the equipment or technology; and
       (7) ensure that the transfer of equipment and technology 
     does not violate copyright, patent, or trademark laws.

     SEC. 424. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to carry out this 
     subtitle $5,000,000 for fiscal year 1998 and such sums as may 
     be necessary for each of the 4 succeeding fiscal years.
                                 ______
                                 
      By Mr. DASCHLE (for himself, Ms. Mikulski, Mr. Kennedy, Mr. 
        Breaux, Mr. Dodd, Mrs. Murray, Mr. Inouye, Mr. Johnson, Ms. 
        Moseley-Braun, Mr. Rockefeller, Mr. Durbin, Mr. Kerry, and Mr. 
        Glenn):
  S. 13. A bill to provide access to health insurance coverage for 
uninsured children and pregnant women; to the Committee on Finance.


                 children's health coverage act of 1997

  Mr. BREAUX. Mr. President, I rise today in support of the Children's 
Health Coverage Act of 1997, a bill designed to expand health insurance 
for an estimated 10 million American children who have no health 
insurance. Last year, when Congress passed the Kassebaum/Kennedy bill, 
it took a big step towards increasing the availability of private 
health insurance coverage for certain children. While the Kassebaum/
Kennedy legislation will increase access to the health insurance market 
for many people, there are still too many low-income working families 
in this country who are unable to afford coverage even though it may be 
more readily available to them.
  According to a 1994 GAO report, 14.2 percent of all children are 
uninsured, the highest rate in any industrialized country. In Louisiana 
alone there are 254,952 children without health insurance. Nine out of 
ten of these children live in families with working parents. These 
parents go to work every day to earn a living and provide for their 
families. Some might say that providing for one's family should include 
health insurance but when you've got food to buy and rent to pay, 
health insurance to many parents is an unaffordable luxury. Perhaps 
even more troubling is that the number of uninsured children is 
expected to grow as employers continue to cut back on dependant 
coverage, leaving many working parents unable to afford insurance for 
their families. While Medicaid has picked up some of these children and 
will continue to do so, these expansions won't be enough to completely 
offset the loss in private coverage in this country.
  Mr. President, an important lesson we have learned in recent years is 
that big government mandates won't work. But I believe expanding 
coverage of children is a necessary next step to follow up on the 
significant progress we made last year. We should build on the momentum 
from Kassebaum/Kennedy bill to help low-income working families buy 
health insurance they need for their children. Basic primary and 
preventive care services that insurance provides are critical to a 
child's healthy development, and like all kinds of preventive care, 
it's cheaper than treating a child once he or she gets sick. As we all 
know, uninsured children are more likely to get care in an emergency 
room at later stages in their illness and are more likely to require an 
expensive hospital stay.
  This bill is a market-based plan that will provide tax credits to 
help working families buy the health insurance they need. Our goal is 
to stimulate a competitive market for children's health plans which are 
relatively inexpensive but have a big economic payoff. I am hopeful 
that Democrats and Republicans will be able to work together on this 
issue because it's in everyone's interest that our nation's children 
have the health care and health insurance they need since they are the 
future of this country. For the future of a healthy America, we need 
healthy kids now.
  Ms. MIKULSKI. Mr. President, I am honored to join the Senate Minority 
Leader in cosponsoring the Children's Health Coverage Act of 1997. This 
bill will help uninsured working families purchase health insurance for 
their children and will build on the success of last year's Kassebaum-
Kennedy health care reform legislation. It makes the health of all 
America's children a national priority. It takes the Democratic health 
care agenda one more step.
  Our country has failed to meet the health care needs of America's 
children. The United States has the highest rate of uninsured children 
of any industrialized country. In my home State of Maryland, nearly 1 
in 5 children is uninsured. That's almost 200,000 kids in Maryland 
alone. This is a disgrace for a country as bountiful as ours is. We say 
children are our priority. We need to put in the lawbooks the values we 
hold in our hearts. That makes good policy and good sense.
  These are the children of working families. Their parents may both be 
working 40-hour a week jobs. Jobs that put them over the poverty level 
but offer no benefits. This problem is pervasive. Nine out of ten 
children without insurance live in families with

[[Page S305]]

working parents. Two thirds of uninsured children live in families with 
incomes above the poverty line. The problem cuts across class and race.
  As I travel through my own State, working parents tell me how they 
worry about their children not having health insurance. They are afraid 
that they won't be able to take them to the doctor when they get really 
sick. With this bill, American parents won't have to fear for their 
children. This legislation meets the peace of mind test.
  I want to make sure children's health care needs are met 
comprehensively and equitably. This bill stands up and challenges what 
is wrong with our health care system. It affirms our need to develop 
human capital as well as economic capital. It's about getting our 
priorities straight and putting families first. I salute the Minority 
Leader for moving this important issue forward.
  Ms. MOSELEY-BRAUN. Mr. President, I rise today to offer my support as 
an original cosponsor of the Children's Health Coverage Act of 1997--S. 
13. Vice President Hubert Humphrey may have summed it up best when he 
concluded that ``the moral test of government is how that government 
treats those who are in the dawn of life, the children; those who are 
in the twilight of life, the elderly; and those who are in the shadows 
of life--the sick, the needy, and the handicapped.''
  Well, Mr. President, the Children's Health Coverage Act is our test 
for the 105th Congress and how this Congress will respond to the need 
to care for our children, who are in the dawn of their life; 10.5 
million children have no health insurance coverage. The GAO conclusion 
that children without insurance are less likely to grow up to be 
healthy, and productive adults may be the most telling fact. If we know 
the effect being uninsured has on our children's ability to contribute 
to society, how can we not respond?
  The ultimate guarantee of our children's health would be to make 
comprehensive health insurance coverage more readily available either 
through a private or public source. In the interim however, the 
Children's Health Coverage Act will make a number of important steps to 
improve the health of our children. First, enhancing health coverage 
for pregnant women will make our children healthy on the front-end 
through enhanced prenatal care. In 1993, almost 200,000 children were 
born to women who received either no prenatal care or prenatal care 
after the first trimester of their pregnancy. Good prenatal care can 
reduce rates of low-weight births and infant mortality, thus preventing 
avoidable disabilities.
  Next, the Children's Health Coverage Act will not erode existing 
health coverage for children. Children are losing private health 
insurance coverage faster than any other group. In many cases, Medicaid 
has been the safety-net preventing children from becoming uninsured. S. 
13 will stimulate the market for private children's health coverage and 
deter employers from dropping their contributions toward the coverage 
of their employees.
  Finally, the Children's Health Coverage Act makes the next logical 
step from the improvements made in the Kennedy-Kassebaum health care 
bill, by tackling the issue of insurance affordability. The right to 
buy insurance that you cannot afford really is not access at all. 
Millions of Americans were given more flexibility by making insurance 
more portable and ending ``job lock.'' However, if the ability to pay 
your premiums severely restricts the options, have we truly ended ``job 
lock.''
  Mr. President, caring for our children is critical to the success and 
the survival of this nation. However, we must not be content with only 
meeting the physiological needs of our children. We must also adopt a 
holistic approach to meeting the needs of our children. A significant 
number of our children have special health care needs. There are also 
many children who have special educational, financial, and social 
needs.
  During the ``Stand for Children'' rally in June of last year, five 
core principles were espoused that are essential to safeguarding our 
children. These principles are to give our children a Head start, a 
fair start, a safe start, a moral start, and a healthy start. These are 
fundamental principles that should govern our nation's agenda towards 
children. The Children's Health Coverage Act is a very good step toward 
ensuring a healthy start for our children. I hope that my colleagues 
can join me in supporting this important legislation.
  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. 13

       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 ``Children's 
     Health Coverage Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

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

        TITLE I--HEALTH INSURANCE COVERAGE FOR ELIGIBLE CHILDREN

Sec. 101. Establishment of program to provide eligible children with 
              access to health insurance coverage.
Sec. 102. Procedure for obtaining coverage under certified health 
              plans.
Sec. 103. Subsidy adjustment.
Sec. 104. Limitation on preexisting condition exclusion period and -
              prohibition on discrimination.
Sec. 105. Maintenance of effort.
Sec. 106. Oversight by Secretary.
Sec. 107. Rules of construction.

         TITLE II--HEALTH INSURANCE COVERAGE FOR PREGNANT WOMEN

Sec. 201. Expanding health insurance coverage for pregnant women.
Sec. 202. Grants for innovative outreach.

         TITLE III--CHILDREN'S HEALTH COVERAGE SUBSIDY CREDITS

Sec. 301. Health coverage provided to premium subsidy eligible children 
              through a tax credit for insurers.
Sec. 302. Health coverage provided to premium subsidy eligible children 
              through a refundable income tax credit.

     SEC. 2. DEFINITIONS.

       As used in this Act:
       (1) Certified health plan.--The term ``certified health 
     plan'' means a health plan that--
       (A) is not an employer sponsored health plan;
       (B) provides family coverage or child only coverage 
     options; and
       (C) is certified by a State under section 101(b)(1).
       (2) Eligible child.--The term ``eligible child'' means an 
     individual who has not attained the age of 19.
       (3) Health insurance issuer.--The term ``health insurance 
     issuer'' means an insurance company, insurance service, or 
     insurance organization (including a health maintenance 
     organization, as defined in paragraph (3)) which is licensed 
     to engage in the business of insurance in a State and which 
     is subject to State law which regulates insurance (within the 
     meaning of section 514(b)(2) of the Employee Retirement 
     Income Security Act of 1974).
       (4) Health maintenance organization.--The term ``health 
     maintenance organization'' means--
       (A) a Federally qualified health maintenance organization 
     (as defined in section 1301(a) of the Public Health Service 
     Act (42 U.S.C. 300e(a))),
       (B) an organization recognized under State law as a health 
     maintenance organization, or
       (C) a similar organization regulated under State law for 
     solvency in the same manner and to the same extent as such a 
     health maintenance organization.
       (5) Poverty line.--The term ``poverty line'' means the 
     income official poverty line (as defined by the Office of 
     Management and Budget, and revised annually in accordance 
     with section 673(2) of the Omnibus Budget Reconciliation Act 
     of 1981) applicable to a family of the size involved.
       (6) Premium subsidy eligible child.--The term ``premium 
     subsidy eligible child'' means any individual who--
       (A) is an eligible child who was born after December 31, 
     1984;
       (B) is a citizen or qualified alien (as defined in section 
     431(b) of the Personal Responsibility and Work Opportunity 
     Reconciliation Act of 1996 (8 U.S.C. 1641(b));
       (C) has a family income determined under section 102(b) 
     which does not exceed 300 percent of the poverty line or has 
     a family income within the limits described in section 
     103(b)(2);
       (D) is not eligible for assistance under a program under 
     title XIX of the Social Security Act or, except as provided 
     in section 102(e), under a similar State program providing 
     health insurance or other health care coverage; and
       (E)(i) except as provided in section 101(e) or clause (ii), 
     has not been covered, during the 12-month period ending on 
     the date on which the individual applies for subsidy-eligible 
     health coverage under this title, under a health plan offered 
     by a health insurance issuer (unless such plan was funded 
     under title

[[Page S306]]

     IX of the Social Security Act (42 U.S.C. 1101 et seq.)) and--
       (I) such individual does not have access to employer 
     sponsored health coverage; or
       (II) the employer of the individual or family involved 
     offers employer sponsored health coverage and the employer 
     contribution for such 12-month period does not exceed--

       (aa) in the case of an individual (or family) described in 
     section 103(a)(2)(A), 80 percent or more of the costs of 
     enrollment in the plan; or
       (bb) in the case of an individual (or family) described in 
     section 103(a)(2)(B), 50 percent or more of the costs of 
     enrollment in the plan; or

       (ii) is, as of the date of enactment of this Act, covered 
     under a health plan that is not a group health plan (as 
     defined in section 2791 of the Public Health Service Act), 
     and the family of such individual is not eligible to claim a 
     deduction under section 162(l) of the Internal Revenue Code 
     of 1986.
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (8) Subsidy eligible health coverage.--The term ``subsidy 
     eligible health coverage'' means health insurance coverage 
     under--
       (A) a certified health plan; or
       (B) an employer sponsored health plan providing family 
     coverage or child-only coverage options;
     for which a subsidy is available under this title.
        TITLE I--HEALTH INSURANCE COVERAGE FOR ELIGIBLE CHILDREN

     SEC. 101. ESTABLISHMENT OF PROGRAM TO PROVIDE ELIGIBLE 
                   CHILDREN WITH ACCESS TO HEALTH INSURANCE 
                   COVERAGE.

       (a) Establishment.--The Secretary shall establish a program 
     under which a premium subsidy eligible child, and the family 
     of such child, may receive a subsidy to be used to pay a 
     portion of the premium associated with the enrollment of the 
     child for subsidy eligible health coverage under a certified 
     health plan or employer sponsored health plan.
       (b) State Responsibilities.--Under the program established 
     under subsection (a)--
       (1) the insurance commissioner of a State may certify a 
     health plan if the commissioner determines that--
       (A) the health plan--
       (i) provides family or child-only coverage;
       (ii) meets general coverage guidelines that are established 
     by the Secretary and designed to ensure that the plan 
     provides comprehensive coverage, including preventive, basic, 
     and catastrophic benefits that meet the health care needs of 
     children (either as part of a family plan or a child-only 
     plan);
       (B) the average premium for the enrollment of a child under 
     such plan is reasonable when taking into consideration the 
     demographic and health status related factors of the 
     population for which the plan will be marketed;
       (C) each premium subsidy eligible child that is enrolled 
     under the plan will be assessed the same premium;
       (D) the plan provides for guaranteed issue with respect to 
     premium subsidy eligible children;
       (E) complies with the provisions of section 104 regarding 
     preexisting condition exclusions;
       (F) the health insurance issuer involved is participating 
     in any applicable reinsurance program that has been 
     established by the State to defray the costs of unevenly 
     distributed risk among issuers; and
       (G) the plan meets any other criteria established by the 
     State;
       (2) the insurance commissioner of the State shall provide 
     information on the availability of certified health plans and 
     the availability of subsidies in accordance with this title;
       (3) the appropriate State entity (as determined by the 
     Chief Executive Officer of the State) shall conduct income 
     verification and reconciliation activities with respect to 
     eligible children and families desiring to participate in the 
     program in the State and issue certificates in accordance 
     with section 102;
       (4) the appropriate State entity (as determined under 
     paragraph (4)) shall be responsible for the collection of 
     premiums from premium subsidy eligible children and the 
     forwarding of such premiums to the appropriate certified 
     health plans;
       (5) the State (through its own authority or acting in 
     conjunction with the Secretary under subsection (f)(3)) shall 
     ensure that each eligible child in the State has a reasonable 
     choice of health insurance issuers that offer child-only 
     coverage consistent with the standards developed by the 
     Secretary under this title;
       (6) the State will establish any other requirements and 
     procedures necessary to carry out this title within the 
     State; and
       (7) the State shall comply with any other requirements 
     established by the Secretary.
       (c) Participation of Issuers.--
       (1) In general.--Any health plan may submit an application 
     with the appropriate State insurance commissioner for 
     certification under this section and such plan shall be 
     certified if it meets the requirements of subsection (b)(1). 
     Employer-sponsored health plans shall not be required to be 
     certified under this title.
       (2) Requirement for federal contractors.--
       (A) In general.--Each health insurance issuer that provides 
     health coverage under contract with any Federal program and 
     that offers 1 or more health plans that provide family 
     coverage options shall submit an application, with the 
     appropriate State insurance commissioner, for the 
     certification of 1 or more health plans that provide the 
     children's only coverage described in subsection (b)(1)(A). 
     Such an issuer shall apply for the certification of at least 
     1 health plan that provides child-only coverage, and may 
     apply for the certification of 1 or more health plans that 
     provide family coverage if such plans provides coverage for 
     children as described in subsection (b)(1)(A).
       (B) Penalty.--A health insurance issuer shall be ineligible 
     to provide benefits under a Federal contract described in 
     subparagraph (A) if--
       (i) the issuer fails, in good faith, to submit an 
     application as required under subparagraph (A);
       (ii) the State insurance commissioner fails to certify a 
     health plan of the issuer as meeting the requirements of this 
     title; or
       (iii) the issuer fails to make any modifications to the 
     application or to a health plan as requested by the State 
     insurance commissioner for the certification of a health 
     plan.
       (C) Participation in individual market.--Notwithstanding 
     subparagraph (A), a health insurance issuer described in such 
     subparagraph shall not be required to offer coverage in the 
     individual market (as defined in section 2791(e)(1)) unless 
     the issuer is otherwise participating in such market. Such an 
     issuer shall be required to offer coverage to eligible 
     children under this title through the participation of the 
     issuer in all group purchasing arrangements operating in the 
     area served by the issuer, except that with respect to 
     employer-sponsored health plans, the obligation of an issuer 
     to offer child-only coverage shall be limited to employers to 
     which such issuers are otherwise offering coverage.
       (3) Expedited procedures.--The State insurance commissioner 
     of a State shall establish expedited procedures for the 
     certification of health plans that have been offered in the 
     insurance market in the State during the 1-year period 
     preceding the date on which a certification is sought.
       (4) Offering of coverage.--A health insurance issuer shall 
     offer certified health plans to each eligible child residing 
     in the area served by the issuer regardless of the family 
     income of such child. Coverage provided under such plans may 
     vary in accordance with this Act depending on whether the 
     enrollee is an eligible child or a premium subsidy eligible 
     child. Such coverage may be offered through insurance agents 
     or brokers.
       (d) Average Coverage Amount.--
       (1) Determination.--The Secretary, in consultation with 
     State insurance commissioners and other experts in the field 
     of health insurance, shall determine the average coverage 
     amount with respect to certified health plans. The amount 
     shall be based on the average costs of comprehensive health 
     insurance coverage for children as determined using data 
     derived from existing State initiatives that have been 
     established to provide health care coverage for uninsured 
     children and data on the average market rates for health 
     plans offering coverage reasonably similar to that of the 
     coverage offered under certified health plans.
       (2) Adjustments.--The Secretary shall annually adjust the 
     average coverage amount determined under paragraph (1) to 
     ensure that such amount accurately reflects the reasonable 
     costs associated with the purchase of coverage under a 
     certified health plan and regional variations in health care 
     costs.
       (3) Application of amount to child portion of plan.--In 
     establishing and applying the average coverage amount under 
     paragraph (1), the Secretary shall ensure that the amount 
     relates solely to the comprehensive coverage applicable to 
     the premium subsidy eligible child. If coverage of a premium 
     subsidy eligible child is under a certified family plan, the 
     average coverage amount shall relate solely to that portion 
     of the plan that provides the coverage for the eligible 
     child.
       (e) Waiver of Previous Coverage Limitation.--
       (1) Establishment of process.--The Secretary shall 
     establish a process to waive the limitation described in 
     section 2(6)(D) with respect to an individual if the 
     Secretary determines that the individual was covered under a 
     health plan during the period referred to in such section as 
     a dependent of another individual and that the coverage was 
     terminated involuntarily or the loss of coverage results from 
     a change in employment.
       (2) Limitation.--The process established under paragraph 
     (1) shall not permit a waiver with respect to previous 
     coverage that was terminated by an employer (or with respect 
     to which the contribution of the employer toward such 
     coverage was reduced) unless the Secretary determines that 
     such coverage was terminated because the employer ceased its 
     operations or because of other circumstances clearly 
     unrelated to the availability of subsidies under this title.
       (f) Provision of Technical Assistance by Secretary.--
       (1) Alternative procedures.--The Secretary, at the request 
     of and in conjunction with the insurance commissioner of a 
     State, shall assist the State in establishing alternative 
     rate review and approval procedures that apply to the health 
     plans seeking certification under this section. Any 
     procedures established under this paragraph shall be

[[Page S307]]

     consistent with the goals and requirements of this title.
       (2) Strategies to improve insurance market.--
       (A) In general.--The Secretary, at the request of and in 
     conjunction with a State, shall develop and pursue strategies 
     to encourage competition, prevent fraudulent practices, 
     ensure the adequacy of rates to prevent access barriers, and 
     achieve goals consistent with this title with respect to the 
     health insurance market in the State. Such strategies may 
     include the establishment of commercial insurance pooling 
     arrangements that may be used by small businesses and 
     integrated with other purchasing pools, the implementation of 
     competitive bidding mechanisms, and the coordination of 
     insurance delivery systems with delivery systems under title 
     XIX of the Social Security Act.
       (B) Termination.--The Secretary may require that a State 
     terminate or revise a strategy implemented by the State under 
     paragraph (1) if the Secretary determines that the strategy 
     conflicts with a provision of this title.
       (3) Choice of issuers.--The Secretary, at the request of 
     and in conjunction with a State, shall assist the State in 
     identifying and implementing strategies to ensure that choice 
     is provided to eligible children in accordance with 
     subsection (b)(5). Such strategies may include the strategies 
     described in paragraph (2)(A).
       (g) Procedures to Identify Those Eligible for Medicaid.--In 
     carrying out the program under this title, the Secretary 
     shall establish procedures to identify premium subsidy 
     eligible children whose enrollment in a certified health plan 
     is subsidized under this title and who subsequently become 
     eligible for assistance under a State plan under title XIX of 
     the Social Security Act as a result of disability, the amount 
     of health care costs, or similar factors. Such procedures, 
     while ensuring the continuity and coordination of care, shall 
     ensure that assistance under such title XIX is the primary 
     payer for children eligible for such assistance.

     SEC. 102. PROCEDURE FOR OBTAINING COVERAGE UNDER CERTIFIED 
                   HEALTH PLANS.

       (a) Application.--
       (1) In general.--To be eligible to receive a subsidy for 
     the purchase of coverage under a certified health plan under 
     this title, a family on behalf of a premium subsidy eligible 
     child shall submit to the State entity designated under 
     section 101(b)(4) an application that shall contain such 
     income and employment information as the State determines 
     necessary to make a determination with respect to the 
     eligibility of such applicant for a subsidy under this title.
       (2) Time for filing.--A family on behalf of a premium 
     subsidy eligible child may file an application for a subsidy 
     under this title at any time in accordance with this 
     subsection.
       (3) Use of simple form.--For purposes of this subsection, 
     the State entity shall use an application that shall be as 
     simple in form as possible and understandable to the average 
     individual. The application may require attachment of such 
     documentation as deemed necessary by the State in order to 
     ensure eligibility for a subsidy.
       (4) Availability of forms.--The State entity shall make an 
     application form available through health care providers and 
     participating issuers, public assistance offices, public 
     libraries, and at other locations (including post offices) 
     accessible to a broad cross-section of families.
       (b) Issuance of Certificate.--
       (1) In general.--
       (A) Notification of applicant.--If the State entity 
     described in subsection (a) determines that an applicant is 
     eligible for a subsidy under this title, the entity shall 
     notify the applicant of such eligibility and request that the 
     applicant designate a certified health plan that the 
     applicant desires to enroll in.
       (B) Notification of plan.--Upon a designation under 
     subparagraph (A), the entity shall forward a certificate of 
     eligibility on behalf of the applicant to the designated 
     plan. Such certificate shall contain identifying information 
     concerning the applicant and the eligible child involved and 
     the amount of the subsidy for which the applicant is 
     eligible.
       (2) Determination by state.--As elected by a family at the 
     time of the submission of an application under subsection 
     (a), the State entity shall make a determination concerning 
     family income either--
       (A) by multiplying by a factor of 4 the income of the 
     family for the 3-month period immediately preceding the month 
     in which the application is made, or
       (B) based upon estimated income for the entire year in 
     which the application is submitted.
       (3) Term.--A certificate under paragraph (1) shall remain 
     in effect for the 6-month period beginning on the date of the 
     issuance of the certificate. To continue to be eligible for a 
     subsidy, a family must apply to renew the certificate at the 
     end of each 6-month period.
       (c) Enrollment.--Upon receipt of a certificate of 
     eligibility under subsection (b), a certified health plan 
     shall ensure that the eligible child involved is 
     appropriately enrolled and that a copy of the enrollment and 
     coverage materials are provided to the enrollee. With respect 
     to the certified health plan involved, the plan shall use the 
     certificate in accordance with section 103 to compute the 
     amount of the premiums that are owed by the family involved.
       (d) Payment of Premiums.--
       (1) In general.--Upon receipt of the appropriate enrollment 
     materials from a certified health plan under subsection (c), 
     a premium subsidy eligible child, the family income of which 
     does not exceed the limit described in section 
     103(a)(2)(B)(i), shall be responsible for remitting to the 
     State entity described in subsection (a) the amount of the 
     subsidy adjusted premium owed under such plan.
       (2) Subsidy adjusted premium.--As used in paragraph (1), 
     the term ``subsidy adjusted premium'' means the total amount 
     of the premium assessed for the coverage of a premium subsidy 
     eligible child under a certified health plan less the amount 
     of the subsidy adjustment for which the child is eligible 
     under section 103.
       (3) Payment of issuer.--A State shall, under section 
     101(b)(4), establish procedures for the collection of 
     premiums under this subsection and the payment of such 
     premiums to the appropriate certified health plans.
       (e) Coverage under Certain State Programs.--
       (1) Coordination of programs.--The Secretary, in 
     conjunction with States, shall provide for the coordination 
     of the program established under this title with State 
     programs that provide health insurance or other health care 
     coverage for children. Such coordination may include the use 
     of subsidies made available under this title to obtain 
     coverage that supplements any partial coverage provided 
     through such a State program or other coordinated 
     arrangement.
       (2) Eligibility.--With respect to an eligible child who is 
     participating in a State program described in paragraph (1), 
     a State may, notwithstanding section 2(6)(D), determine that 
     such child is a premium subsidy eligible child.
       (3) Adjustment of average coverage amount.--The Secretary 
     shall adjust the average coverage amount under section 101(d) 
     with respect to an eligible child who is determined to be a 
     premium subsidy eligible child under paragraph (2) to reflect 
     the cost of enrolling the child in any plan providing 
     supplemental coverage as described in paragraph (1).

     SEC. 103. SUBSIDY ADJUSTMENT.

       (a) Premium Subsidy Eligible Children.--
       (1) Eligibility.--An eligible child who has been determined 
     by a State entity under section 102(b) to be a premium 
     subsidy eligible child shall be eligible for a premium 
     subsidy adjustment in the amount determined under paragraph 
     (2) to be applied by the certified plan involved when 
     computing the amount of the premium owed by such child.
       (2) Amount.--
       (A) Full subsidy.--
       (i) In general.--With respect to a family, the family 
     income of which does not exceed 200 percent of the poverty 
     line for a family of the size involved, the amount of a 
     premium subsidy adjustment specified in this paragraph for a 
     premium subsidy eligible child shall, subject to clause (ii), 
     be equal to 90 percent of the annual premium for the child 
     for such year for coverage of the child under a certified 
     health plan.
       (ii) Limitation.--The amount of a subsidy adjustment for 
     which a premium subsidy eligible child is eligible under 
     clause (i) may not exceed the average coverage amount for the 
     child as determined under section 101(d) with respect to the 
     region in which the plan is offered.
       (B) Graduated subsidy.--
       (i) In general.--With respect to a family, the family 
     income of which exceeds 200, but does not exceed 300, percent 
     of the poverty line for a family of the size involved, the 
     amount of a premium subsidy adjustment specified in this 
     paragraph for a premium subsidy eligible child shall be 
     determined by substituting ``the applicable percentage'' for 
     ``90 percent'' in subparagraph (A).
       (ii) Applicable percentage.--For purposes of clause (i), 
     the term ``applicable percentage'' shall be determined using 
     the following table:

                                                         The applicable
                                                             percentage
    ``If the family income:                                   shall be:
      Exceeds 200, but does not exceed 225, percent of poverty....80   
      Exceeds 225, but does not exceed 250, percent of poverty....60   
      Exceeds 250, but does not exceed 275, percent of poverty....40   
      Exceeds 275, but does not exceed 300, percent of poverty....20   
      Exceeds 300 percent of poverty (subject to subsection (b)(2))10  

       (b) Other Eligible Children.--
       (1) In general.--A premium subsidy eligible child who is 
     determined by the State to be a child described in paragraph 
     (2), shall be eligible for a premium subsidy adjustment in 
     the amount determined under paragraph (3) to be obtained 
     through a refundable tax credit determined under section 34A 
     of the Internal Revenue Code of 1986.
       (2) Income limitation.--A premium subsidy eligible child 
     described in this paragraph is a premium subsidy eligible 
     child the family income of which exceeds 300 percent of the 
     poverty line for a family of the size involved, but the 
     adjusted gross income (as defined in section 62 of the 
     Internal Revenue Code of 1986) of which is less than $75,000.
       (3) Amount.--
       (A) In general.--A premium subsidy eligible child described 
     in paragraph (2) shall be

[[Page S308]]

     eligible for a premium subsidy adjustment which shall, 
     subject to subparagraph (B), be equal to 10 percent of the 
     annual premium for the child for such year for coverage of 
     the child under a certified health plan.
       (B) Limitation.--The amount of a subsidy adjustment for 
     which a premium subsidy eligible child is eligible under 
     subparagraph clause (A) may not exceed the average coverage 
     amount for the child as determined under section 101(d) with 
     respect to the region in which the plan is offered.
       (4) Purchase of coverage by those not eligible for 
     subsidy.--An eligible child who is not a premium subsidy 
     eligible child and who enrolls in a certified health plan 
     shall be responsible for the payment of the entire premium 
     amount for coverage under the plan. Such certified plan shall 
     comply with the applicable State insurance requirements and 
     if such requirements permit, may elect not to comply with the 
     provisions of subparagraphs (D) (relating to guaranteed 
     issue) and (E) (relating to preexisting condition exclusion) 
     of section 101(b)(1).
       (c) Determinations of Income.--For purposes of this section 
     and section 102(b):
       (1) In general.--The term ``income'' means adjusted gross 
     income (as defined in section 62(a) of the Internal Revenue 
     Code of 1986)--
       (A) determined without regard to sections 135, 162(l), 911, 
     931, and 933 of such Code; and
       (B) increased by--
       (i) the amount of interest received or accrued which is 
     exempt from tax, plus
       (ii) the amount of social security benefits (described in 
     section 86(d) of such Code) which is not includible in gross 
     income under section 86 of such Code.
       (2) Family income.--The term ``family income'' means, with 
     respect to a family, the sum of the income for all members of 
     the family, not including the income of a dependent child 
     with respect to which no return is required under the 
     Internal Revenue Code of 1986.
       (d) Prohibition on Remitting Funds.--A health insurance 
     issuer may not in any manner remit any portion of the premium 
     that a family is responsible for under this title.

     SEC. 104. LIMITATION ON PREEXISTING CONDITION EXCLUSION 
                   PERIOD AND -PROHIBITION ON DISCRIMINATION.

       (a) Preexisting Conditions.--
       (1) In general.--No preexisting condition exclusion shall 
     be imposed by a certified health plan or an employer-
     sponsored health plan, with respect to the enrollment and 
     coverage of any premium subsidy eligible child.
       (2) Definition.--As used in this subsection, the term 
     ``preexisting condition exclusion'' shall have the meaning 
     given such term by section 2701(b)(1) of the Public Health 
     Service Act (as added by section 102 of the Health Insurance 
     Portability and Accountability Act of 1996).
       (b) Prohibition of Discrimination on Basis of Health 
     Status.--
       (1) In eligibility to enroll.--
       (A) In general.--Subject to subparagraph (B), a health 
     insurance issuer may not establish rules for eligibility 
     (including continued eligibility) of any premium subsidy 
     eligible child to enroll in a certified health plan or 
     employer-sponsored health plan based on any of the following 
     factors in relation to the premium subsidy eligible child:
       (i) Health status.
       (ii) Medical condition (including both physical and mental 
     illnesses).
       (iii) Claims experience.
       (iv) Receipt of health care.
       (v) Medical history.
       (vi) Genetic information.
       (vii) Evidence of insurability (including conditions 
     arising out of acts of domestic violence).
       (viii) Disability.
       (B) No application to benefits or exclusions.--Subparagraph 
     (A) shall not be construed--
       (i) to require a certified health plan or employer-
     sponsored health plan to provide particular benefits other 
     than those provided under the terms of the coverage, or
       (ii) to prevent such plan from establishing limitations or 
     restrictions on the amount, level, extent, or nature of the 
     benefits or coverage for similarly situated children enrolled 
     in the plan.
       (2) In premium contributions.--
       (A) In general.--With respect to a certified health plan or 
     employer-sponsored health plan, a health insurance issuer may 
     not require that any premium subsidy eligible child (as a 
     condition of enrollment or continued enrollment under the 
     certified or employer-sponsored health plan involved) to pay 
     a premium or contribution that is greater than such premium 
     or contribution for a similarly situated child enrolled in 
     the plan on the basis of any factor described in paragraph 
     (1)(A) in relation to the child.
       (B) Construction.--Nothing in subparagraph (A) shall be 
     construed--
       (i) to restrict the amount that an employer may be charged 
     for coverage under a plan; or
       (ii) to prevent a health insurance issuer from establishing 
     premium discounts or rebates or modifying otherwise 
     applicable copayments or deductibles in return for adherence 
     to programs of health promotion and disease prevention.
       (c) Employer May Not Discriminate Against Individuals 
     Eligible for a Subsidy.--
       (1) General rule.--An employer that elects to make employer 
     contributions on behalf of an individual who is an employee 
     of such employer, or who is a dependent of such employee, for 
     health insurance coverage of the type described in section 
     101(b)(1)(A) shall not condition, or vary such contributions 
     with respect to any such individual by reason of such 
     individual's or dependent's status as an child eligible for a 
     premium subsidy under this title.
       (2) Elimination of contributions.--An employer shall not be 
     treated as failing to meet the requirements of paragraph (1) 
     if the employer ceases to make employer contributions for 
     health insurance coverage for all its employees.

     SEC. 105. MAINTENANCE OF EFFORT.

       A State may not modify the eligibility requirements for 
     children under the State program under title XIX of the 
     Social Security Act, as in effect on July 1, 1996, in any 
     manner that would have the effect of reducing the eligibility 
     of children for coverage under such program.

     SEC. 106. OVERSIGHT BY SECRETARY.

       In the case of a determination by the Secretary that a 
     State has failed to carry out or substantially enforce a 
     provision (or provisions) of this title, the Secretary shall 
     carry out or enforce such provision (or provisions) with 
     respect to the coverage of eligible children in such State.

     SEC. 107. RULES OF CONSTRUCTION.

       Nothing in this title shall be construed--
       (1) as establishing premiums for health plans or otherwise 
     limiting the competitive health insurance market within a 
     State;
       (2) as limiting the ability of a State to establish health 
     insurance purchasing pools, initiate a competitive bidding 
     process with respect to certified health plans, or pursue 
     other innovative strategies aimed at maximizing the potential 
     of market forces to achieve quality and cost effectiveness; 
     or
       (3) as superseding any provision of State law which--
       (A) provides for the application of criteria, in addition 
     to those described in section 101(b)(1), for the 
     certification of health plans so long as such criteria do not 
     directly conflict with the goals of the criteria described in 
     such section; or
       (B) establishes, implements, or continues in effect any 
     standard or requirement relating solely to health insurance 
     issuers in connection with certified health plans or the 
     coverage of eligible children, except to the extent that such 
     standard or requirement prevents the application of a 
     requirement of this title.

     SEC. 108. MISCELLANEOUS PROVISIONS.

       (a) Transition Rule.--With respect to the 12-month period 
     described in section 2(6)(E), such period shall be reduced as 
     follows:
       (1) For premium subsidy eligible children desiring to 
     enroll in a certified plan during the first full month after 
     the date on which this Act becomes effective, the period 
     shall be 6 months.
       (2) For premium subsidy eligible children desiring to 
     enroll in a certified plan during the second full month after 
     the date on which this Act becomes effective, the period 
     shall be 7 months.
       (3) For premium subsidy eligible children desiring to 
     enroll in a certified plan during the third full month after 
     the date on which this Act becomes effective, the period 
     shall be 8 months.
       (4) For premium subsidy eligible children desiring to 
     enroll in a certified plan during the fourth full month after 
     the date on which this Act becomes effective, the period 
     shall be 9 months.
       (5) For premium subsidy eligible children desiring to 
     enroll in a certified plan during the fifth full month after 
     the day on which this Act becomes effective, the period shall 
     be 10 months.
       (6) For premium subsidy eligible children desiring to 
     enroll in a certified plan during the sixth full month after 
     the day on which this Act becomes effective, the period shall 
     be 11 months.
         TITLE II--HEALTH INSURANCE COVERAGE FOR PREGNANT WOMEN

     SEC. 201. EXPANDING HEALTH INSURANCE COVERAGE FOR PREGNANT 
                   WOMEN.

       (a) Establishment of Grant Program.--The Secretary shall 
     establish a program to provide grants to States to enable 
     such States to assist pregnant women in obtaining appropriate 
     prenatal, perinatal and postnatal care.
       (b) Application.--To be eligible to receive a grant under 
     this section, a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require.
       (c) Amount of Grant.--
       (1) In general.--From the amount available for grants under 
     subsection (e) for a fiscal year, the Secretary shall award a 
     grant to each State in an amount that is equal to an amount 
     which bears the same relationship to such amount as the 
     pregnancy coverage amount of the State as determined under 
     paragraph (2) bears to the pregnancy coverage amount for all 
     States.
       (2) Pregnancy coverage amount.--For purposes of paragraph 
     (1), the pregnancy coverage amount of a State shall be equal 
     to--
       (A) the number of estimated uninsured pregnant women in the 
     State the family income of which does not exceed 300 percent 
     of the poverty line for a family of the size involved; and
       (B) the average per capita cost of providing pregnancy 
     benefits to such women.
       (3) Guidelines.--The Secretary, in consultation with the 
     National Association of Insurance Commissioners and the 
     American Academy of Actuaries, shall establish guidelines for 
     the determination of the amounts

[[Page S309]]

     described in subparagraphs (A) and (B) of paragraph (2).
       (d) Use of Amounts.--A State shall use amounts received 
     under a grant provided under this section to assist pregnant 
     women in obtaining appropriate prenatal, perinatal and 
     postnatal care as approved by the Secretary.
       (e) Authorization of Appropriations.--There is authorized 
     to be appropriated such sums as may be necessary to carry out 
     this section.

     SEC. 202. GRANTS FOR INNOVATIVE OUTREACH.

       (a) Establishment of Grant Program.--The Secretary shall 
     establish a program to provide categorical grants to States 
     to assist children and pregnant women in obtaining health 
     care services and coverage for which they are eligible.
       (b) Application.--To be eligible to receive a grant under 
     this section, a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require.
       (c) Amount of Grant.--The Secretary shall determine the 
     amount of a grant provided under this section.
       (d) Use of Amounts.--A State shall use amounts received 
     under a grant provided under this section to carry out 
     innovative outreach activities to promote the timely 
     enrollment of pregnant women and children in health plans or 
     other programs that provide prenatal care and other 
     pregnancy-related services or comprehensive care for 
     children.
       (e) Authorization of Appropriations.--There is authorized 
     to be appropriated such sums as may be necessary to carry out 
     this section.
         TITLE III--CHILDREN'S HEALTH COVERAGE SUBSIDY CREDITS

     SEC. 301. HEALTH COVERAGE PROVIDED TO PREMIUM SUBSIDY 
                   ELIGIBLE CHILDREN THROUGH A TAX CREDIT FOR 
                   INSURERS.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     other credits) is amended by adding at the end the following:

     ``SEC. 30B. CHILDREN'S HEALTH COVERAGE SUBSIDY CREDIT FOR 
                   INSURERS.

       ``(a) Determination of Amount.--There shall be allowed as a 
     credit against the applicable tax for the taxable year an 
     amount equal to the eligible premium subsidies provided by a 
     health insurance issuer for coverage under 1 or more 
     certified health plans during the taxable year under the 
     Children's Health Coverage Act.
       ``(b) Applicable Tax.--For purposes of this section, the 
     term `applicable tax' means the excess (if any) of--
       ``(1) the sum of--
       ``(A) the tax imposed under this chapter (other than the 
     taxes imposed under the provisions described in subparagraphs 
     (C) through (O) of section 26(b)(1)), plus
       ``(B) the tax imposed under chapter 21, over
       ``(2) the credits allowable under subparts B and D of this 
     part.
       ``(c) Eligible Premium Subsidies.--The term ``eligible 
     premium subsidies' means premium subsidies for premium 
     subsidy eligible children (as defined in section 2(6) of the 
     Children's Health Coverage Act.
       ``(d) Other Definitions.--For purposes of this section, the 
     terms `health insurance issuer' and `certified health plan' 
     have the meaning given those terms by section 2 of the 
     Children's Health Coverage Act.''.
       (b) Transfer to Trust Funds.--The Secretary of the Treasury 
     shall transfer from the general fund to the Old-Age, 
     Survivors, and Disability Insurance Trust Fund and to the 
     Hospital Insurance Trust Fund amounts equivalent to the 
     amount of the reduction in taxes imposed by section 3111 of 
     the Internal Revenue Code of 1986 by reason of the credit 
     determined under section 30B (relating to the children's 
     health coverage subsidy credit for insurers). Any such 
     transfer shall be made at the same time the reduced taxes 
     would have been deposited in either such Trust Fund.
       (c) Conforming Amendment.--The table of sections for 
     subpart B of part IV of subchapter A of chapter 1 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following:

``Sec. 30B. Children's health coverage subsidy credit for insurers.''.

       (e) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 1997.

     SEC. 302. HEALTH COVERAGE PROVIDED TO PREMIUM SUBSIDY 
                   ELIGIBLE CHILDREN THROUGH A REFUNDABLE INCOME 
                   TAX CREDIT.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     refundable personal credits) is amended by inserting after 
     section 34 the following:

     ``SEC. 34A. CHILDREN'S HEALTH COVERAGE.

       ``(a) Allowance of Credit.--In the case of a premium 
     subsidy eligible individual, there shall be allowed as a 
     credit against the tax imposed by this subtitle for the 
     taxable year an amount equal to the premium subsidy 
     determined under section 103(b)(3) of the Children's Health 
     Coverage Act for such individual for the taxable year.
       ``(b) Premium Subsidy Eligible Individual.--For purposes of 
     this section, the term `premium subsidy eligible individual' 
     means, with respect to any period, an individual who has as a 
     dependent for the taxable year 1 or more premium subsidy 
     eligible children described in section 103(b)(2) of the 
     Children's Health Coverage Act.
       ``(c) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (b) Coordination With Deductions for Health Insurance 
     Expenses.--
       (1) Self-employed individuals.--Section 162(l) of the 
     Internal Revenue Code of 1986 (relating to special rules for 
     health insurance costs of self-employed individuals) is 
     amended by adding after paragraph (5) the following:
       ``(6) Coordination with children's health coverage 
     credit.--Paragraph (1) shall not apply to any amount taken 
     into account in computing the amount of the credit allowed 
     under section 34A.''.
       (2) Medical, dental, etc., expenses.--Section 213(e) of 
     such Code (relating to exclusion of amounts allowed for care 
     of certain dependents) is amended by inserting ``or section 
     34A'' after ``section 21''.
       (c) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 of the 
     Internal Revenue Code of 1986 is amended by inserting after 
     the item relating to section 34 the following:

``Sec. 34A. Children's health coverage.''.

       (d) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 1997.
                                 ______
                                 
      By Mr. DASCHLE (for himself, Mrs. Boxer, Mr. Kennedy, Mr. 
        Bingaman, Ms. Moseley-Braun, Mr. Rockefeller, Mr. Graham, Ms. 
        Mikulski, Mr. Kerry, Mr. Reid, Mr. Durbin, Mr. Inouye, Mr. 
        Torricelli, and Mr. Breaux):
  S. 14. A bill to provide for retirement savings and security, and for 
other purposes; to the Committee on Finance.


                    retirement security act of 1997

  Mr. KENNEDY. Mr. President, today I join with the distinguished 
Minority Leader, Senator Daschle, in co-sponsoring legislation 
important for the future of working families in this country. One of 
this Congress's highest priorities should be pension reform.

  The Treasury now spends $66 billion a year in tax subsidies to 
encourage pension coverage, but working families are not getting full 
value for this money. 56 percent of the workforce is not currently 
covered by any private pension plan. The situation is worse for 
employees of small businesses. Eighty-five percent of those employed by 
firms with fewer than 25 workers have no pension coverage. For low-wage 
workers, the situation is worst of all. More than 26 million 
employees--80 percent--who earn under $15,000 a year are not covered by 
a pension plan. Forty-one million employees who earn less than $30,000 
a year do not participate in a retirement plan--60 percent.
  Women make up an excessive portion of the working population that is 
not covered by a pension plan. Employees covered by union agreements 
are nearly twice as likely to have a pension, but women are half as 
likely to hold these jobs. More than eight million women who work for 
small firms have no access to pension coverage.
  Low-wage women are especially hard-hit. Sixty percent of those 
earning under $15,000 a year are women. Nearly sixteen million women 
who earn less than $15,000 a year are not participating in a pension 
plan--80 percent. Twenty-three million women earning less than $30,000 
a year don't participate in a retirement plan--nearly 60 percent.
  Women are more than twice as likely as men to hold part-time jobs, 
with no pension coverage. Women make up more than half the workforce in 
industries with the lowest rates of pension coverage--such as the 
service and retail industries. In those industries with higher rates of 
access to pensions--mining, durable manufacturing, and communications--
women make up just one-fourth of the workforce.
  We must change these figures. I am proud to join in sponsoring the 
Retirement Security Act that Senator Daschle is introducing today to 
deal with these serious problems.
  This bill will make real progress in expanding access to pensions for 
all working families. It will facilitate retirement savings by millions 
of Americans, by enabling workers to ask their employers to set aside 
savings from paychecks and deposit the savings directly into retirement 
accounts. This ``pension checkoff'' is a simple, practical step to make 
the private pension system more accessible to all workers.
  The bill will also provide tax incentives for low-wage employees to 
set aside money for retirement. Families

[[Page S310]]

on the lower rungs of the economic ladder deserve a secure income when 
they retire. This bill will reform the tax laws to make them more 
beneficial to low-income workers. No one who works for a living should 
have to retire in poverty.
  The bill advances other important goals as well. It strengthens the 
security of the pension system, so that the benefits families rely on 
will be there when they retire. It will stop employers from forcing 
employees to invest their retirement contributions in the employer's 
stock, against the workers' wishes. It will provide closer monitoring 
of pension plan terminations, to prevent companies from raiding 
employee pensions.
  The bill also promotes pension portability. The checkoff system will 
allow employees to continue saving for retirement even if they change 
jobs or leave the labor market for a time. Wherever they go, they can 
take their pension plan with them. In addition, the bill makes it 
easier for employees to roll over their retirement accounts to a new 
employer's plan.
  The bill will remove the most significant obstacles to pension 
coverage for women. It builds on the efforts of Senator Moseley-Braun 
and Senator Boxer in the last Congress to improve pension benefits for 
surviving spouses. It will also enable spouses to contribute to IRAs. 
The pension checkoff system will benefit millions of working women 
whose employers do not provide pension plans.
  I commend Senator Daschle for the leadership he has shown in 
introducing this important bill. At a time when Social Security is 
facing tremendous budget pressure, it is essential that the private 
pension system be accessible and affordable to every working family. I 
look forward to working with colleagues on both sides of the aisle to 
pass this necessary legislation.
  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. 14

       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 ``Retirement Security Act of 
     1997''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

                  TITLE I--PENSION ACCESS AND COVERAGE

Sec. 100. Amendment of 1986 Code.

      Subtitle A--Improved Access to Individual Retirement Savings

Chapter 1--Contributions To Individual Retirement Plans Through Payroll 
                               Deductions

Sec. 101. Definitions.
Sec. 102. Establishment of payroll deduction and investment system.
Sec. 103. Contributions to individual retirement plans.
Sec. 104. Investment options.
Sec. 105. Accounting and information.
Sec. 106. Administrative costs.
Sec. 107. Fiduciary responsibilities; liability and penalties; bonding; 
              investigative authority.
Sec. 108. Selection of contractor.

  Chapter 2--Nonrefundable Tax Credit for Contributions to Individual 
                          Retirement Accounts

Sec. 111. Nonrefundable tax credit for contributions to individual 
              retirement plans.

Chapter 3--Expanded Individual Retirement Accounts to Increase Coverage 
                            and Portability


                      SUBCHAPTER A--IRA DEDUCTION

Sec. 121. Increase in income limitations.
Sec. 122. Inflation adjustment for deductible amount and income 
              limitations.


              SUBCHAPTER B--DISTRIBUTIONS AND INVESTMENTS

Sec. 131. Distributions from IRAs may be used without additional tax to 
              purchase first homes, to pay higher education, or to pay 
              financially devastating medical expenses.
Sec. 132. Contributions must be held at least 5 years in certain cases.

            Chapter 4--Periodic Pension Benefits Statements

Sec. 141. Periodic pension benefits statements.

       Subtitle B--Improved Fairness in Retirement Plan Benefits

Sec. 151. Amendments to simple retirement accounts.
Sec. 152. Nondiscrimination rules for qualified cash or deferred 
              arrangements and matching contributions.
Sec. 153. Definition of highly compensated employees.

             Subtitle C--Improving Retirement Plan Coverage

Sec. 161. Credit for pension plan start-up costs of small employers.
Sec. 162. Treatment of multiemployer plans under section 415.
Sec. 163. Exemption of mirror plans from section 457 limits.
Sec. 164. Special rules for self-employed individuals.
Sec. 165. Immediate participation in the thrift savings plan for 
              Federal employees.
Sec. 166. Modification of 10 percent tax for nondeductible 
              contributions.

               Subtitle D--Simplifying Plan Requirements

Sec. 171. Full funding limitation for multiemployer plans.
Sec. 172. Elimination of partial termination rules for multiemployer 
              plans.
Sec. 173. Modifications to nondiscrimination and minimum participation 
              rules with respect to governmental plans.
Sec. 174. Elimination of requirement for plan descriptions and the 
              filing requirement for summary plan descriptions and 
              descriptions of material modifications to a plan; 
              technical corrections.
Sec. 175. New technologies in retirement plans.

                           TITLE II--SECURITY

Sec. 200. Amendment of ERISA.

                     Subtitle A--General Provisions

Sec. 201. Section 401(k) investment protection.
Sec. 202. Requirement of annual, detailed investment reports applied to 
              certain 401(k) plans.
Sec. 203. Study on investments in collectibles.
Sec. 204. Qualified employer plans prohibited from making loans through 
              credit cards and other intermediaries.
Sec. 205. Multiemployer plan benefits guaranteed.
Sec. 206. Prohibited transactions.
Sec. 207. Substantial owner benefits.
Sec. 208. Reversion report.
Sec. 209. Development of additional remedies.

                     Subtitle B--ERISA Enforcement

Sec. 211. Repeal of limited scope audit.
Sec. 212. Additional requirements for qualified public accountants.
Sec. 213. Clarification of fiduciary penalties.
Sec. 214. Conforming amendments relating to ERISA enforcement.

                         TITLE III--PORTABILITY

Sec. 301. Faster vesting of employer matching contributions.
Sec. 302. Rationalize the restrictions on distributions from 401(k) 
              plans.
Sec. 303. Treatment of transfers between defined contribution plans.
Sec. 304. Missing participants.

                   TITLE IV--TOWARD EQUITY FOR WOMEN

Sec. 401. Individual's participation in plan not treated as 
              participation by spouse.
Sec. 402. Modifications of joint and survivor annuity requirements.
Sec. 403. Division of pension benefits upon divorce.
Sec. 404. Deferred annuities for surviving spouses of Federal 
              employees.
Sec. 405. Payment of lump-sum credit for former spouses of Federal 
              employees.
Sec. 406. Women's pension toll-free phone number.

             TITLE V--DATE FOR ADOPTION OF PLAN AMENDMENTS

Sec. 501. Date for adoption of plan amendments.
                  TITLE I--PENSION ACCESS AND COVERAGE

     SEC. 100. 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.
      Subtitle A--Improved Access to Individual Retirement Savings

CHAPTER 1--CONTRIBUTIONS TO INDIVIDUAL RETIREMENT PLANS THROUGH PAYROLL 
                               DEDUCTIONS

     SEC. 101. DEFINITIONS.

       For purposes of this chapter:
       (1) Contractor.--The term ``contractor'' means the private 
     entity awarded a contract by the Secretary of Labor under 
     section 108.
       (2) Contribution certificate.--The term ``contribution 
     certificate'' means a certificate submitted by an eligible 
     employee to the employee's employer and the contractor 
     which--
       (A) identifies the employee by name, address, and social 
     security number,
       (B) includes a certification by the employee that the 
     employee is an eligible employee, and
       (C) identifies the amount of the contribution to an 
     individual retirement plan the employee wishes to make for 
     the taxable year through a payroll deduction, not to exceed

[[Page S311]]

     the amount allowed under section 408 of the Internal Revenue 
     Code of 1986 to an individual retirement plan for such year.
       (2) Eligible employee.--
       (A) In general.--The term ``eligible employee'' means, with 
     respect to any taxable year, an employee whose employer does 
     not sponsor a qualified retirement plan (as defined in 
     section 4974(c) of the Internal Revenue Code of 1986.
       (B) Employee.--The term ``employee'' does not include an 
     employee as defined in section 401(c)(1) of such Code.
       (3) Individual retirement plans.--
       (A) In general.--The term ``individual retirement plan'' 
     has the meaning given the term by section 7701(a)(37) of the 
     Internal Revenue Code of 1986).
       (B) Application of rules.--Rules applicable to an 
     individual retirement plan under the Internal Revenue Code of 
     1986 are applicable to an individual retirement plan referred 
     to in this chapter.

     SEC. 102. ESTABLISHMENT OF PAYROLL DEDUCTION AND INVESTMENT 
                   SYSTEM.

       The contractor shall establish a system under which--
       (1) eligible employees, through employer payroll 
     deductions, may make contributions to individual retirement 
     plans, and
       (2) amounts in the individual retirement plans are invested 
     as provided in section 104.

     SEC. 103. CONTRIBUTIONS TO INDIVIDUAL RETIREMENT PLANS.

       (a) In General.--The system established under section 102 
     shall provide that contributions made to an individual 
     retirement plan for any taxable year are--
       (1) contributions under an employer payroll deduction 
     system, and
       (2) additional contributions which, when added to 
     contributions under paragraph (1), do not exceed the amount 
     allowed under section 408 of the Internal Revenue Code of 
     1986 for the taxable year.
       (b) Employer Payroll Deduction Systems.--
       (1) In general.--The system established under section 102 
     shall provide to the maximum extent feasible that 
     contributions under employer payroll deduction systems are 
     made in such a manner as provides all employers with a 
     simple, cost-effective way of making such contributions.
       (2) Simplified employee enrollment and participation.--
       (A) Establishment.--An eligible employee may establish and 
     maintain an individual retirement plan simply by--
       (i) completing a contribution certificate, and
       (ii) submitting such certificate to the eligible employee's 
     employer and the contractor in the manner provided under 
     paragraph (3).
       (B) Ease of administration.--An eligible employee 
     establishing and maintaining an individual retirement plan 
     under subparagraph (A) may change the amount of an employer 
     payroll deduction, request employer payroll deductions by new 
     employers to an existing plan, and make changes in elections 
     made under section 104(d) in the same manner as under 
     subparagraph (A).
       (C) Simplified forms.--
       (i) Contribution certificate.--The contractor shall develop 
     a contribution certificate for purposes of subparagraph (A)--

       (I) which is written in a clear and easily understandable 
     manner, and
       (II) the completion of which by an eligible employee will 
     constitute the establishment of an individual retirement plan 
     and the request for employer payroll deductions.

       (ii) Other forms.--The contractor shall develop such model 
     forms for purposes of subparagraph (B) as are necessary to 
     enable the contractor and an employer to easily administer an 
     individual retirement plan on behalf of an eligible employee.
       (iii) Availability.--The contractor shall make available to 
     all eligible employees and employers the forms developed 
     under this subparagraph, and shall include with such forms 
     easy to understand explanatory materials.
       (3) Use of certificate.--Each employer upon receipt of a 
     contribution certificate from an eligible employee shall 
     deduct the appropriate contribution as determined by such 
     certificate from the employee's wages in equal amounts during 
     the remaining payroll periods for the taxable year and shall 
     remit such amounts to the contractor for investment in the 
     employee's individual retirement plan.
       (4) Failure to remit payroll deductions.--For purposes of 
     the Internal Revenue Code of 1986, any amount which an 
     employer fails to remit to the contractor on behalf of an 
     eligible employee pursuant to a contribution certificate of 
     such employee shall not be allowed as a deduction to the 
     employer under such Code.

     SEC. 104. INVESTMENT OPTIONS.

       (a) In General.--The contractor shall, pursuant to the 
     system established under section 102, enter into 
     arrangements, on a competitive basis, with qualified 
     professional asset managers to provide individuals with the 
     opportunity to invest sums in an individual retirement plan 
     in each of the funds described in subsection (b).
       (b) Type of Funds.--The funds described in the subsection 
     are the following:
       (1) A government securities investment fund.
       (2) A fixed income investment fund.
       (3) A common stock index investment fund.
       (c) Asset Managers.--
       (1) In general.--The contractor may select more than 1 
     qualified professional asset manager for each type of fund 
     described in subsection (b).
       (2) Asset allocation.--The contractor may place limits on 
     the amount which may be allocated by the contractor to any 
     qualified professional asset manager to the extent the 
     contractor determines necessary to prevent undue impact on 
     any financial market or undue risk to participants.
       (3) Definition.--For purposes of this section, the term 
     ``qualified professional asset manager'' has the meaning 
     given the term by section 8438(a)(7) of title 5, United 
     States Code.
       (d) Participant Elections.--
       (1) In general.--The system established under section 102 
     shall provide that an individual on whose behalf an 
     individual retirement plan is established may--
       (A) elect the investment funds into which contributions to 
     the plan are to be invested, and
       (B) elect to transfer contributions (and earnings) from one 
     fund to another.
       (2) Method.--Any election shall be made in the manner 
     provided by the system, except that the contractor shall seek 
     to ensure elections may be made in a simple, timely manner.
       (3) Limitation.--Any election under this subsection shall 
     be subject to the asset allocation limitation under 
     subsection (c)(2).
       (e) Investment Policies.--The system established under 
     section 102 shall provide that any investment policies 
     adopted by the contractor shall provide for--
       (1) prudent investments suitable for accumulating funds for 
     payment of retirement income, and
       (2) low administrative costs.

     SEC. 105. ACCOUNTING AND INFORMATION.

       (a) Establishment of Plans.--
       (1) In general.--The system established under section 102 
     shall provide for the establishment and maintenance of an 
     individual retirement plan for each individual--
       (A) for whom contributions are made to the contractor under 
     an employer payroll deduction system pursuant to a 
     contribution certificate, and
       (B) who makes any additional contributions allowed under 
     section 408 of the Internal Revenue Code of 1986 for the 
     taxable year.
       (2) Allocations and reductions to plan.--Such system shall 
     provide for--
       (A) the allocation to each plan of an amount equal to a pro 
     rata share of the net earnings and net losses from each 
     investment of sums in such plan, and
       (B) a reduction in each such plan for the plan's 
     appropriate share of the administrative expenses to be paid 
     out.
       (3) Examination of plans.--
       (A) In general.--The contractor shall annually engage, on 
     behalf of all individuals for whom an individual retirement 
     plan is maintained, an independent qualified public 
     accountant (within the meaning of section 103(a)(3)(D) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1023(a)(3)(D)) who shall conduct an examination of all plans 
     and other books and records maintained in the administration 
     of this chapter as the accountant considers necessary to make 
     the determination under subparagraph (B). The examination 
     shall be conducted in accordance with generally accepted 
     auditing standards and shall involve such tests of the plans, 
     books, and records as the public accountant considers 
     necessary.
       (B) Determination of compliance.--The public accountant 
     conducting an examination under subparagraph (A) shall 
     determine whether the plans, books, and records referred to 
     in such subparagraph have been maintained in conformity with 
     generally accepted accounting principles. The public 
     accountant shall transmit to the contractor and the Secretary 
     of Labor a report on such examination and determination.
       (C) Reliance.--In making a determination under subparagraph 
     (B), a public accountant may rely on the correctness of any 
     actuarial matter certified by an enrolled actuary if the 
     public accountant states a reliance in the report to the 
     contractor.
       (b) Additional Information.--
       (1) In general.--The system established under section 102 
     shall provide for the furnishing of information to employees 
     and employers of the opportunity of establishing individual 
     retirement plans and of transferring amounts to such plans.
       (2) Plan participants.--
       (A) In general.--Such system shall provide that each 
     individual for whom an individual retirement plan is 
     maintained shall be periodically furnished with--
       (i) a statement relating to the individual's plan, and
       (ii) a summary description of the investment options under 
     the plan and a history of the investment performance of such 
     options during the 5-year period preceding the evaluation.
       (B) Plan valuation.--Such system shall also provide that 
     each individual for whom an individual retirement plan is 
     established shall be entitled, upon request, to a periodic 
     valuation of amounts in each fund described in section 104(b) 
     in order to enable the individual to make an election to 
     transfer such amounts between funds.
       (3) Investment information.--The contractor shall also make 
     available to employees information on how to make informed 
     investment decisions and how to achieve retirement 
     objectives.
       (4) Information not investment advice.--Information 
     provided under this subsection

[[Page S312]]

     shall not be treated as investment advice for purposes of any 
     Federal or State law.

     SEC. 106. ADMINISTRATIVE COSTS.

       (a) In General.--Except as provided from amounts described 
     in section 108(c), any expense incurred by the contractor in 
     carrying out its functions under this chapter shall be paid 
     first from the earnings of the funds in individual retirement 
     plans and then from balances in such plans.
       (b) Allocation.--Expenses under subsection (a) shall be 
     allocated to each individual retirement plan in the manner 
     provided under section 105.

     SEC. 107. FIDUCIARY RESPONSIBILITIES; LIABILITY AND 
                   PENALTIES; BONDING; INVESTIGATIVE AUTHORITY.

       Except as modified by the Secretary of Labor in regulations 
     to correspond to the structure and responsibilities of the 
     contractor, the provisions of sections 8477, 8478, 8478a, and 
     8479(a) of title 5, United States Code, shall apply to the 
     contractor in the same manner as such provisions apply to the 
     Thrift Savings Fund.

     SEC. 108. SELECTION OF CONTRACTOR.

       (a) Selection.--
       (1) In general.--The Secretary of Labor shall contract out, 
     on a competitive basis, the duties under this chapter to a 
     private entity.
       (2) Measurement of contract performance.--No contract shall 
     be entered into with any entity under paragraph (1) unless 
     the Secretary of Labor finds that such entity will perform 
     its obligations under the contract efficiently and 
     effectively and will meet such requirements as to financial 
     responsibility, legal authority, and other matters as the 
     Secretary finds pertinent. The Secretary of Labor shall 
     publish in the Federal Register standards and criteria for 
     the efficient and effective performance of contract 
     obligations under this chapter (including standards and 
     criteria for the termination of such contract), and 
     opportunity shall be provided for public comment prior to 
     implementation.
       (b) Treatment as Trustee.--For purposes of the Internal 
     Revenue Code of 1986 the contractor shall be treated in the 
     same manner as a trustee described in section 408(a)(2) of 
     such Code.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as are necessary for the 
     Secretary of Labor to design and award the contract described 
     in subsection (a)(1) and for the contractor to begin 
     operations under this chapter.
       (d) Effective Date of System.--The system established under 
     section 102 shall take effect on the first day of the sixth 
     month following the month in which the contract under 
     subsection (a) is awarded.

  CHAPTER 2--NONREFUNDABLE TAX CREDIT FOR CONTRIBUTIONS TO INDIVIDUAL 
                          RETIREMENT ACCOUNTS

     SEC. 111. NONREFUNDABLE TAX CREDIT FOR CONTRIBUTIONS TO 
                   INDIVIDUAL RETIREMENT PLANS.

       (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 25 the following new 
     section:

     ``SEC. 25A. RETIREMENT SAVINGS.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter so much of the 
     qualified retirement contributions of the taxpayer for the 
     taxable year as does not exceed the applicable amount of the 
     adjusted gross income of the taxpayer for such year.
       ``(b) Applicable Amount.--For purposes of subsection (a), 
     the applicable amount is determined in accordance with the 
     following table:

The applicable amount is:e is:
$450.ver $15,000.......................................................
$400.$15,000 but not over $20,000......................................
$350.$20,000 but not over $25,000......................................
$300.$25,000 but not over $30,000......................................
$0.r $30,000...........................................................

       ``(c) Section not to apply to certain contributions.--This 
     section shall not apply with respect to--
       ``(1) an employer contribution to a simplified employee 
     pension, and
       ``(2) any amount contributed to a simple retirement account 
     established under section 408(p).
       ``(d) Other Limitations and Restrictions.--
       ``(1) Beneficiary must be under age 70\1/2\.--No credit 
     shall be allowed under this section with respect to any 
     qualified retirement contribution for the benefit of an 
     individual if such individual has attained age 70\1/2\ before 
     the close of such individual's taxable year for which the 
     contribution was made.
       ``(2) Recontributed amounts.--No credit shall be allowed 
     under this section with respect to a rollover contribution 
     described in section 402(c), 403(a)(4), 403(b)(8), or 
     408(d)(3).
       ``(3) Amounts contributed under endowment contract.--In the 
     case of an endowment contract described in section 408(b), no 
     credit shall be allowed under this section for that portion 
     of the amounts paid under the contract for the taxable year 
     which is properly allocable, under regulations prescribed by 
     the Secretary, to the cost of life insurance.
       ``(4) Denial of credit for amount contributed to inherited 
     annuities or accounts.--No credit shall be allowed under this 
     section with respect to any amount paid to an inherited 
     individual retirement account or individual retirement 
     annuity (within the meaning of section 408(d)(3)(C)(ii)).
       ``(5) No double benefit.--No credit shall be allowed under 
     this section for any taxable year with respect to the amount 
     of any qualified retirement contribution for the benefit of 
     an individual if such individual takes a deduction with 
     respect to such amount under section 219 for such taxable 
     year.
       ``(e) Qualified Retirement Contribution.--For purposes of 
     this section, the term `qualified retirement contribution' 
     means--
       ``(1) any amount paid in cash for the taxable year by or on 
     behalf of an individual to an individual retirement plan for 
     such individual's benefit, and
       ``(2) any amount contributed on behalf of any individual to 
     a plan described in section 501(a)(18).
       ``(f) Other Definitions and Special Rules.--
       ``(1) Compensation.--For purposes of this section, the term 
     `compensation' has the meaning given in section 219(f)(1).
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     credit shall be allowed under subsection (a) only if the 
     taxpayer and the taxpayer's spouse file a joint return for 
     the taxable year.
       ``(3) Time when contributions deemed made.--For purposes of 
     this section, a taxpayer shall be deemed to have made a 
     contribution to an individual retirement plan 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 (not including extensions thereof).
       ``(4) Reports.--The Secretary shall prescribe regulations 
     which prescribe the time and the manner in which reports to 
     the Secretary and plan participants shall be made by the plan 
     administrator of a qualified employer or government plan 
     receiving qualified voluntary employee contributions.
       ``(5) Employer payments.--For purposes of this title, any 
     amount paid by an employer to an individual retirement plan 
     shall be treated as payment of compensation to the employer 
     (other than a self-employed individual who is an employee 
     within the meaning of section 401(c)(1)) includible in his 
     gross income in the taxable year for which the amount was 
     contributed, whether or not a credit for such payment is 
     allowable under this section to the employee.
       ``(g) Cross Reference.--

  ``For failure to provide required reports, see section 6652(g).''.

       (b) Conforming Amendments.--
       (1) Section 86(f) is amended by redesignating paragraphs 
     (2), (3), and (4) as paragraphs (3), (4), and (5), 
     respectively, and by inserting after paragraph (1) the 
     following new paragraph:
       ``(2) section 25A(f)(1) (defining compensation),''.
       (2) Clause (i) of section 501(c)(18)(D) is amended by 
     inserting ``which may be taken into account in computing the 
     credit allowable under section 25A or'' before ``with 
     respect''.
       (3) Section 6047(c) is amended by inserting ``section 25A 
     or'' before ``section 219''.
       (4) Section 6652(g) is amended--
       (A) by inserting ``section 25A(f)(4) or'' before ``section 
     219(f)(4)'', and
       (B) by inserting ``Creditable'' before ``Deductible'' in 
     the heading thereof.
       (5) 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 25 the following new item:

``Sec. 25A. Retirement savings.''.

       (c) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 1997.

CHAPTER 3--EXPANDED INDIVIDUAL RETIREMENT ACCOUNTS TO INCREASE COVERAGE 
                            AND PORTABILITY

                      Subchapter A--IRA Deduction

     SEC. 121. INCREASE IN INCOME LIMITATIONS.

       (a) In General.--Subparagraph (B) of section 219(g)(3) 
     (defining applicable dollar amount) is amended--
       (1) by striking ``$40,000'' in clause (i) and inserting 
     ``$80,000 ($70,000 in the case of taxable years beginning in 
     1997, 1998, or 1999)'', and
       (2) by striking ``$25,000'' in clause (ii) and inserting 
     ``$50,000 ($45,000 in the case of taxable years beginning in 
     1997, 1998, or 1999)''.
       (b) Phaseout of Limitations.--Clause (ii) of section 
     219(g)(2)(A) (relating to amount of reduction) is amended by 
     striking ``$10,000'' and inserting ``an amount equal to 10 
     times the dollar amount applicable for the taxable year under 
     subsection (b)(1)(A)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 122. INFLATION ADJUSTMENT FOR DEDUCTIBLE AMOUNT AND 
                   INCOME LIMITATIONS.

       (a) In General.--Section 219 (relating to retirement 
     savings) is amended by redesignating subsection (h) as 
     subsection (i) and by inserting after subsection (g) the 
     following new subsection:
       ``(h) Cost-of-Living Adjustments.--
       ``(1) Deductible amounts.--In the case of any taxable year 
     beginning in a calendar year after 1997, the $2,000 amount 
     under subsection (b)(1)(A) shall be increased by an amount 
     equal to--
       ``(A) such dollar amount, multiplied by

[[Page S313]]

       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1996' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(2) Applicable dollar amount.--In the case of any taxable 
     year beginning in a calendar year after 2000, the applicable 
     dollar amounts under subsection (g)(3)(B) shall be increased 
     by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1999' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(3) Rounding rules.--
       ``(A) Deduction amounts.--If any amount after adjustment 
     under paragraph (1) is not a multiple of $500, such amount 
     shall be rounded to the next lowest multiple of $500.
       ``(B) Applicable dollar amounts.--If any amount after 
     adjustment under paragraph (2) is not a multiple of $5,000, 
     such amount shall be rounded to the next lowest multiple of 
     $5,000.''.
       (b) Conforming Amendments.--
       (1) Section 408(a)(1) is amended by striking ``in excess of 
     $2,000 on behalf of any individual'' and inserting ``on 
     behalf of any individual in excess of the amount in effect 
     for such taxable year under section 219(b)(1)(A)''.
       (2) Section 408(b)(2)(B) is amended by striking ``$2,000'' 
     and inserting ``the dollar amount in effect under section 
     219(b)(1)(A)''.
       (3) Section 408(j) is amended by striking ``$2,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

              Subchapter B--Distributions and Investments

     SEC. 131. DISTRIBUTIONS FROM IRAS MAY BE USED WITHOUT 
                   ADDITIONAL TAX TO PURCHASE FIRST HOMES, TO PAY 
                   HIGHER EDUCATION, OR TO PAY FINANCIALLY 
                   DEVASTATING MEDICAL EXPENSES.

       (a) In General.--Paragraph (2) of section 72(t) (relating 
     to exceptions to 10-percent additional tax on early 
     distributions from qualified retirement plans) is amended by 
     adding at the end the following new subparagraph:
       ``(E) Distributions from certain plans for first home 
     purchases or educational expenses.--Distributions to an 
     individual from an individual retirement plan--
       ``(i) which are qualified first-time homebuyer 
     distributions (as defined in paragraph (7)); or
       ``(ii) to the extent such distributions do not exceed the 
     qualified higher education expenses (as defined in paragraph 
     (8)) of the taxpayer for the taxable year.''.
       (b) Financially Devastating Medical Expenses.--
       (1) Certain lineal descendants and ancestors treated as 
     dependents.--Subparagraph (B) of section 72(t)(2) (relating 
     to subsection not to apply to certain distributions) is 
     amended by striking ``medical care'' and all that follows and 
     inserting ``medical care determined--
       ``(i) without regard to whether the employee itemizes 
     deductions for such taxable year, and
       ``(ii) in the case of an individual retirement plan, by 
     treating such employee's dependents as including all 
     children, grandchildren, and ancestors of the employee or 
     such employee's spouse.''.
       (2) Conforming amendment.--Subparagraph (B) of section 
     72(t)(2) is amended by striking ``or (D)'' and inserting ``, 
     (D), or (E)''.
       (c) Definitions.--Section 72(t) is amended by adding at the 
     end the following new paragraphs:
       ``(7) Qualified first-time homebuyer distributions.--For 
     purposes of paragraph (2)(E)(i)--
       ``(A) In general.--The term `qualified first-time homebuyer 
     distribution' means any payment or distribution received by 
     an individual to the extent such payment or distribution is 
     used by the individual before the close of the 60th day after 
     the day on which such payment or distribution is received to 
     pay qualified acquisition costs with respect to a principal 
     residence of a first-time homebuyer who is such individual or 
     the spouse, child (as defined in section 151(c)(3)), or 
     grandchild of such individual.
       ``(B) Qualified acquisition costs.--For purposes of this 
     paragraph, the term `qualified acquisition costs' means the 
     costs of acquiring, constructing, or reconstructing a 
     residence. Such term includes any usual or reasonable 
     settlement, financing, or other closing costs.
       ``(C) First-time homebuyer; other definitions.--For 
     purposes of this paragraph--
       ``(i) First-time homebuyer.--The term `first-time 
     homebuyer' means any individual if--

       ``(I) such individual (and if married, such individual's 
     spouse) had no present ownership interest in a principal 
     residence during the 3-year period ending on the date of 
     acquisition of the principal residence to which this 
     paragraph applies, and
       ``(II) subsection (h) or (k) of section 1034 did not 
     suspend the running of any period of time specified in 
     section 1034 with respect to such individual on the day 
     before the date the distribution is applied pursuant to 
     subparagraph (A).

     In the case of an individual described in section 
     143(i)(1)(C) for any year, an ownership interest shall not 
     include any interest under a contract of deed described in 
     such section. An individual who loses an ownership interest 
     in a principal residence incident to a divorce or legal 
     separation is deemed for purposes of this subparagraph to 
     have had no ownership interest in such principal residence 
     within the period referred to in subclause (II).
       ``(ii) Principal residence.--The term `principal residence' 
     has the same meaning as when used in section 1034.
       ``(iii) Date of acquisition.--The term `date of 
     acquisition' means the date--

       ``(I) on which a binding contract to acquire the principal 
     residence to which subparagraph (A) applies is entered into, 
     or
       ``(II) on which construction or reconstruction of such a 
     principal residence is commenced.

       ``(D) Special rule where delay in acquisition.--Any portion 
     of any distribution from any individual retirement plan which 
     fails to meet the requirements of subparagraph (A) solely by 
     reason of a delay or cancellation of the purchase or 
     construction of the residence may be contributed to an 
     individual retirement plan as provided in section 
     408(d)(3)(A)(i) (determined by substituting `120 days' for 
     `60 days' in such section), except that--
       ``(i) section 408(d)(3)(B) shall not be applied to such 
     portion, and
       ``(ii) such portion shall not be taken into account in 
     determining whether section 408(d)(3)(B) applies to any other 
     amount.
       ``(8) Qualified higher education expenses.--For purposes of 
     paragraph (2)(E)(ii)--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition and fees required for the enrollment 
     or attendance of--
       ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse,
       ``(iii) a dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151, or
       ``(iv) the taxpayer's child (as defined in section 
     151(c)(3)) or grandchild,

     as an eligible student at an institution of higher education.
       ``(B) Exceptions.--The term `qualified higher education 
     expenses' does not include--
       ``(i) expenses with respect to any course or other 
     education involving sports, games, or hobbies, unless such 
     expenses--

       ``(I) are part of a degree program, or
       ``(II) are deductible under this chapter without regard to 
     this section; or

       ``(ii) any student activity fees, athletic fees, insurance 
     expenses, or other expenses unrelated to a student's academic 
     course of instruction.
       ``(C) Coordination with savings bond provisions.--The 
     amount of qualified higher education expenses for any taxable 
     year shall be reduced by any amount excludable from gross 
     income under section 135.
       ``(D) Eligible student.--For purposes of subparagraph (A), 
     the term `eligible student' means a student who--
       ``(i) meets the requirements of section 484(a)(1) of the 
     Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in 
     effect on the date of the enactment of this section, and
       ``(ii)(I) is carrying at least one-half the normal full-
     time work load for the course of study the student is 
     pursuing, as determined by the institution of higher 
     education, or
       ``(II) is enrolled in a course which enables the student to 
     improve the student's job skills or to acquire new job 
     skills.
       ``(E) Institution of higher education.--The term 
     `institution of higher education' means an institution 
     which--
       ``(i) is described in section 481 of the Higher Education 
     Act of 1965 (20 U.S.C. 1088), as in effect on the date of the 
     enactment of this section, and
       ``(ii) is eligible to participate in programs under title 
     IV of such Act.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to payments and distributions after December 31, 
     1996.

     SEC. 132. CONTRIBUTIONS MUST BE HELD AT LEAST 5 YEARS IN 
                   CERTAIN CASES.

       (a) In General.--Section 72(t), as amended by section 
     131(c), is amended by adding at the end the following new 
     paragraph:
       ``(9) Certain contributions must be held 5 years.--
       ``(A) In general.--Paragraph (2)(A)(i) shall not apply to 
     any amount distributed out of an individual retirement plan 
     (other than a special individual retirement account) which is 
     allocable to contributions made to the plan during the 5-year 
     period ending on the date of such distribution (and earnings 
     on such contributions).
       ``(B) Ordering rule.--For purposes of this paragraph--
       ``(i) First-in, first-out rule.--Distributions shall be 
     treated as having been made--

       ``(I) first from the earliest contribution (and earnings 
     allocable thereto) remaining in the account at the time of 
     the distribution, and
       ``(II) then from other contributions (and earnings 
     allocable thereto) in the order in which made.

       ``(ii) Allocation of earnings.--Earnings shall be allocated 
     to contributions in such manner as the Secretary may 
     prescribe.
       ``(iii) Aggregations of contributions.--Except as provided 
     by the Secretary, for purposes of this subparagraph--

       ``(I) all contributions made during the same taxable year 
     may be treated as 1 contribution, and

[[Page S314]]

       ``(II) all contributions made before the first day of the 
     5-year period ending on the day before any distribution may 
     be treated as 1 contribution.

       ``(C) Special rule for rollovers.--
       ``(i) Pension plans.--Subparagraph (A) shall not apply to 
     distributions out of an individual retirement plan which are 
     allocable to rollover contributions to which section 402(c), 
     403(a)(4), or 403(b)(8) applied.
       ``(ii) Contribution period.--For purposes of subparagraph 
     (A), amounts shall be treated as having been held by a plan 
     during any period such contributions were held (or are 
     treated as held under this clause) by any individual 
     retirement plan from which transferred.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions (and earnings allocable thereto) 
     which are made after December 31, 1996.

            CHAPTER 4--PERIODIC PENSION BENEFITS STATEMENTS

     SEC. 141. PERIODIC PENSION BENEFITS STATEMENTS.

       (a) In General.--Subsection (a) of section 105 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1025) is amended by striking ``shall furnish to any plan 
     participant or beneficiary who so requests in writing,'' and 
     inserting ``shall furnish at least once every 3 years, in the 
     case of a defined benefit plan, and annually, in the case of 
     a defined contribution plan, to each plan participant, and 
     shall furnish to any plan participant or beneficiary who so 
     requests,''.
       (b) Rule for Multiemployer Plans.--Subsection (d) of 
     section 105 of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1025) is amended to read as follows:
       ``(d) Each administrator of a plan to which more than 1 
     unaffiliated employer is required to contribute shall furnish 
     to any plan participant or beneficiary who so requests in 
     writing, a statement described in subsection (a).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after the earlier of--
       (1) the date of issuance by the Secretary of Labor of 
     regulations providing guidance for simplifying defined 
     benefit plan calculations with respect to the information 
     required under section 105 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1025), or
       (2) December 31, 1997.
       Subtitle B--Improved Fairness in Retirement Plan Benefits

     SEC. 151. AMENDMENTS TO SIMPLE RETIREMENT ACCOUNTS.

       (a) Minimum Contribution Requirement.--
       (1) In general.--Paragraph (2) of section 408(p) (defining 
     qualified salary reduction arrangement) is amended--
       (A) by striking clauses (iii) and (iv) of subparagraph (A) 
     and inserting the following new clauses:
       ``(iii) the employer is required to make a matching 
     contribution to the simple retirement account for any year in 
     an amount equal to--

       ``(I) so much of the amount the employee elects under 
     clause (i)(I) as does not exceed 3 percent of compensation 
     for the year, and
       ``(II) a uniform percentage (which is at least 50 percent 
     but not more than 100 percent) of the amount the employee 
     elects under clause (i)(I) to the extent that such amount 
     exceeds 3 percent but does not exceed 5 percent of the 
     employee's compensation,

       ``(iv) the employer is required to make nonelective 
     contributions of 1 percent of compensation for each employee 
     eligible to participate in the arrangement who has at least 
     $5,000 of compensation from the employer for the year, and
       ``(v) no contributions may be made other than contributions 
     described in clause (i), (iii), or (iv).'', and
       (B) by striking subparagraph (B) and inserting the 
     following new subparagraph:
       ``(B) Contribution rules.--
       ``(i) Employer may elect 3-percent nonelective 
     contribution.--An employer shall be treated as meeting the 
     requirements of clauses (iii) and (iv) of subparagraph (A) 
     for any year if, in lieu of the contributions described in 
     such clauses, the employer elects to make nonelective 
     contributions of 3 percent of compensation for each employee 
     who is eligible to participate in the arrangement and who has 
     at least $5,000 of compensation from the employer for the 
     year. If an employer makes an election under this clause for 
     any year, the employer shall notify employees of such 
     election within a reasonable period of time before the 60-day 
     period for such year under paragraph (5)(C).
       ``(ii) Discretionary contributions.--A plan shall not be 
     treated as failing to meet the requirements of subparagraph 
     (A)(v) merely because, pursuant to the terms of the plan, an 
     employer makes nonelective contributions under subparagraph 
     (A)(iv) or clause (i) of this subparagraph in excess of 1 
     percent or 3 percent of compensation, respectively, but only 
     if all such contributions bear a uniform relationship to the 
     compensation of each eligible employee and do not exceed 5 
     percent of compensation for any eligible employee.
       ``(iii) Compensation limitation.--The compensation taken 
     into account under this paragraph for any year shall not 
     exceed the limitation in effect for such year under section 
     401(a)(17).''.
       (2) Matching contributions.--Subparagraph (B) of section 
     401(k)(11) (relating to adoption of simple plan to meet 
     nondiscrimination tests) is amended--
       (A) by striking subclauses (II) and (III) of clause (i) and 
     inserting the following new subclauses:

       ``(II) the employer is required to make a matching 
     contribution to the trust for any year in an amount equal 
     to--

       ``(aa) so much of the amount the employee elects under 
     subclause (I) as does not exceed 3 percent of compensation 
     for the year, and
       ``(bb) a uniform percentage (which is at least 50 percent 
     but not more than 100 percent) of the amount the employee 
     elects under subclause (I) to the extent that such amount 
     exceeds 3 percent but does not exceed 5 percent of the 
     employee's compensation,

       ``(III) the employer is required to make nonelective 
     contributions of 1 percent of compensation for each employee 
     eligible to participate in the arrangement who has at least 
     $5,000 of compensation from the employer for the year, and
       ``(IV) no other contributions may be made other than 
     contributions described in subclause (I), (II), or (III).'', 
     and

       (B) by striking clause (ii) and inserting the following new 
     clause:
       ``(ii) Contribution rules.--

       ``(I) Employer may elect 3-percent nonelective 
     contribution.--An employer shall be treated as meeting the 
     requirements of subclauses (II) and (III) of clause (i) for 
     any year if, in lieu of the contributions described in such 
     subclauses, the employer elects to make nonelective 
     contributions of 3 percent of compensation for each employee 
     who is eligible to participate in the arrangement and who has 
     at least $5,000 of compensation from the employer for the 
     year. If an employer makes an election under this subclause 
     for any year, the employer shall notify employees of such 
     election within a reasonable period of time before the 60th 
     day before the beginning of such year.
       ``(II) Discretionary contributions.--A plan shall not be 
     treated as failing to meet the requirements of clause (i)(IV) 
     merely because, pursuant to the terms of the plan, an 
     employer makes nonelective contributions under clause 
     (i)(III) or subclause (I) of this clause in excess of 1 
     percent or 3 percent of compensation, respectively, but only 
     if all such contributions bear a uniform relationship to the 
     compensation of each eligible employee and do not exceed 5 
     percent of compensation for any eligible employee.''.

       (b) Fiduciary Duties.--Section 404 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1104) is 
     amended--
       (1) by striking ``(1)'' after ``(c)'' in subsection (c),
       (2) by striking paragraph (2) in subsection (c), and
       (3) by redesignating subsection (d) as subsection (e) and 
     by inserting after subsection (c) the following new 
     subsection:
       ``(d)(1) In the case of a simple retirement account which 
     meets the requirements of section 408(p) of the Internal 
     Revenue Code of 1986, no plan sponsor who is otherwise a 
     fiduciary shall be liable under this part for any loss, or by 
     reason of any breach, which results from--
       ``(A) the designation of the trustee or issuer of such 
     account, or
       ``(B) the manner in which the assets in the account are 
     invested,

     after the earliest of the dates described in paragraph (2).
       ``(2) The dates described in this paragraph are as follows:
       ``(A) The date on which an affirmative election with 
     respect to the initial investment of any contribution is made 
     by the individual for whose benefit the account is 
     maintained.
       ``(B) The date on which there is a rollover of the assets 
     of the account to any other simple retirement account or 
     individual retirement plan.
       ``(C) The date which is 1 year after the account is 
     established.
       ``(3) This subsection shall not apply to the plan sponsor 
     of a simple retirement account unless the plan participants 
     are notified in writing (either separately or as part of the 
     notice under section 408(l)(2)(C)) that such contributions 
     may be transferred without cost or penalty to another 
     individual account or annuity.''.
       (c) Option To Suspend Contributions.--Section 408(p) 
     (relating to simple retirement accounts) is amended by adding 
     at the end the following new paragraph:
       ``(8) Suspension of plan.--Except as provided by the 
     Secretary, a plan shall not be treated as failing to meet the 
     requirements of this subsection if, under the plan, the 
     employer may suspend all elective, matching, and nonelective 
     contributions under the plan after notifying employees 
     eligible to participate in the arrangement of such suspension 
     in writing at least 30 days in advance. Such suspension shall 
     apply to contributions with respect to compensation earned 
     after the effective date of the suspension. Only 1 suspension 
     under this paragraph may take effect during any year.''.
       (d) Conforming Amendments.--Section 408(p)(2)(C), as so 
     added, is amended--
       (1) by striking clause (ii),
       (2) by striking ``Definitions'' in the heading and 
     inserting ``Eligible employer'',
       (3) by striking ``(i) Eligible employer.--'', and
       (4) by redesignating subclauses (I) and (II) as clauses (i) 
     and (ii), respectively.
       (e) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this

[[Page S315]]

     section shall apply to taxable years beginning after December 
     31, 1997.
       (2) Delayed effective date for plans established in 1997.--
     In the case of plans established in 1997 under section 408(p) 
     of the Internal Revenue Code of 1986, as in effect on January 
     1, 1997, the amendments made by this section shall apply to 
     taxable years beginning after December 31, 2002.

     SEC. 152. NONDISCRIMINATION RULES FOR QUALIFIED CASH OR 
                   DEFERRED ARRANGEMENTS AND MATCHING 
                   CONTRIBUTIONS.

       (a) Alternative Methods of Satisfying Section 401(k) 
     Nondiscrimination Tests.--Subparagraph (B) of section 
     401(k)(12) (relating to alternative methods of meeting 
     nondiscrimination requirements) is amended to read as 
     follows:
       ``(B) Nonelective and matching contributions.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if the requirements of clauses (ii) and (iii) are 
     met.
       ``(ii) Nonelective contributions.--The requirements of this 
     clause are met if, under the arrangement, the employer is 
     required, without regard to whether the employee makes an 
     elective contribution or employee contribution, to make a 
     contribution to a defined contribution plan on behalf of each 
     employee who is not a highly compensated employee and who is 
     eligible to participate in the arrangement in an amount equal 
     to at least 1 percent of the employee's compensation.
       ``(iii) Matching contributions.--The requirements of this 
     clause are met if, under the arrangement, the employer makes 
     matching contributions on behalf of each employee who is not 
     a highly compensated employee in an amount equal to--

       ``(I) 100 percent of the elective contributions of the 
     employee to the extent such elective contributions do not 
     exceed 3 percent of the employee's compensation, and
       ``(II) 50 percent of the elective contributions of the 
     employee to the extent that such elective contributions 
     exceed 3 percent but do not exceed 5 percent of the 
     employee's compensation.

       ``(iv) Rate for highly compensated employees.--The 
     requirements of clause (iii) are not met if, under the 
     arrangement, the rate of matching contribution with respect 
     to any rate of elective contribution of a highly compensated 
     employee is greater than that with respect to an employee who 
     is not a highly compensated employee. For purposes of this 
     clause, to the extent provided in regulations, the last 
     sentences of paragraph (3)(A) and subsection (m)(2)(B) shall 
     not apply.
       ``(v) Alternative plan designs.--If the rate of matching 
     contribution with respect to any rate of elective 
     contribution is not equal to the percentage required under 
     clause (iii), an arrangement shall not be treated as failing 
     to meet the requirements of clause (iii) if--

       ``(I) the rate of an employer's matching contribution does 
     not increase as an employee's rate of elective contribution 
     increase, and
       ``(II) the aggregate amount of matching contributions at 
     such rate of elective contribution is at least equal to the 
     aggregate amount of matching contributions which would be 
     made if matching contributions were made on the basis of the 
     percentages described in clause (iii).''.

       (b) Contributions Part of Qualified Cash or Deferred 
     Arrangement.--Subparagraph (E)(ii) of section 401(k)(12), as 
     so added, is amended to read as follows:
       ``(ii) Social security and similar contributions not taken 
     into account.--Except as provided in regulations, an 
     arrangement shall not be treated as meeting the requirements 
     of subparagraph (B) or (C) unless such requirements are met 
     without regard to subsection (l), and, for purposes of 
     subsection (l), and determining whether contributions 
     provided under a plan satisfy subsection (a)(4) on the basis 
     of equivalent benefits, employer contributions under 
     subparagraph (B) or (C) shall not be taken into account.''.
       (c) Alternative Methods of Satisfying Section 401(m) 
     Nondiscrimination Tests.--Section 401(m)(11) (relating to 
     alternative method of satisfying tests) is amended--
       (1) by striking ``subparagraph (B)'' in subparagraph 
     (A)(iii) and inserting ``subparagraphs (B) and (C)'',
       (2) by adding at the end of subparagraph (B) the following 
     new flush sentence:

     ``To the extent provided in regulations, the last sentences 
     of paragraph (2)(B) and subsection (k)(3)(A) shall not apply 
     for purposes of clause (iii).'', and
       (3) by adding at the end the following new subparagraph:
       ``(C) Test must be met separately.--If this paragraph 
     applies to any matching contributions, such contributions 
     shall not be taken into account in determining whether 
     employee contributions satisfy the requirements of this 
     subsection.''.
       (d) Special Rule for Determining Average Deferral 
     Percentage for First Plan Year, Etc.--Subparagraph (E) of 
     section 401(k)(3) is amended to read as follows:
       ``(E) For purposes of this paragraph, in the case of the 
     first plan year of any plan, the amount taken into account as 
     the actual deferral percentage of nonhighly compensated 
     employees for the preceding plan year shall be--
       ``(i) 3 percent, or
       ``(ii) the actual deferral percentage of nonhighly 
     compensated employees determined for such first plan year in 
     the case of--

       ``(I) an employer who elects to have this clause apply, or
       ``(II) except to the extent provided by the Secretary, a 
     successor plan.''.

       (e) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     section 1433 of the Small Business Job Protection Act of 
     1996.

     SEC. 153. DEFINITION OF HIGHLY COMPENSATED EMPLOYEES.

       (a) In General.--Subparagraph (B) of section 414(q)(1) 
     (defining highly compensated employee) is amended to read as 
     follows:
       ``(B) for the preceding year had compensation from the 
     employer in excess of $80,000.''.
       (b) Conforming Amendments.--
       (1)(A) Subsection (q) of section 414 is amended by striking 
     paragraphs (3), (5), and (7) and by redesignating paragraphs 
     (4), (6), and (8) as paragraphs (3) through (5), 
     respectively.
       (B) Sections 129(d)(8)(B), 401(a)(5)(D)(ii), 408(k)(2)(C), 
     and 416(i)(1)(D) are each amended by striking ``section 
     414(q)(4)'' and inserting ``section 414(q)(3)''.
       (C) Section 416(i)(1)(A) is amended by striking ``section 
     414(q)(5)'' and inserting ``section 414(r)(9)''.
       (2)(A) Section 414(r) is amended by adding at the end the 
     following new paragraph:
       ``(9) Excluded employees.--For purposes of paragraph 
     (2)(A), the following employees shall be excluded:
       ``(A) Employees who have not completed 6 months of service.
       ``(B) Employees who normally work less than 17\1/2\ hours 
     per week.
       ``(C) Employees who normally work not more than 6 months 
     during any year.
       ``(D) Employees who have not attained the age of 21.
       ``(E) Except to the extent provided in regulations, 
     employees who are included in a unit of employees covered by 
     an agreement which the Secretary of Labor finds to be a 
     collective bargaining agreement between employee 
     representatives and the employer.''.
       (B) Subparagraph (A) of section 414(r)(2) is amended by 
     striking ``subsection (q)(5)'' and inserting ``paragraph 
     (9)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     section 1431 of the Small Business Job Protection Act of 
     1996.
             Subtitle C--Improving Retirement Plan Coverage

     SEC. 161. CREDIT FOR PENSION PLAN START-UP COSTS OF SMALL 
                   EMPLOYERS.

       (a) Allowance of Credit.--Section 38(b) (defining current 
     year business credit) is amended by striking ``plus'' at the 
     end of paragraph (11), by striking the period at the end of 
     paragraph (12) and inserting ``, plus'', and by adding at the 
     end the following new paragraph:
       ``(13) the small employer pension plan start-up cost 
     credit.''.
       (b) Small Employer Pension Plan Start-Up Cost Credit.--
     Subpart D of part IV of subchapter A of chapter 1 (relating 
     to business related credits) is amended by adding at the end 
     the following new section:

     ``SEC. 45D. SMALL EMPLOYER PENSION PLAN START-UP COST CREDIT.

       ``(a) Amount of Credit.--For purposes of section 38--
       ``(1) In general.--The small employer pension plan start-up 
     cost credit for any taxable year is an amount equal to the 
     qualified start-up costs of an eligible employer in 
     establishing a qualified pension plan or qualified employer 
     payroll deduction system.
       ``(2) Aggregate limitation.--The amount of the credit under 
     paragraph (1) for any taxable year shall not exceed $500, 
     reduced by the aggregate amount determined under this section 
     for all preceding taxable years of the taxpayer.
       ``(b) Eligible Employer.--For purposes of this section, the 
     term `eligible employer' means an employer which--
       ``(1) had an average daily number of employees during the 
     preceding taxable year not in excess of 50, and
       ``(2) did not make any contributions on behalf of any 
     employee to a qualified pension plan during the 2 taxable 
     years immediately preceding the taxable year.
       ``(c) Other Definitions.--For purposes of this section--
       ``(1) Qualified start-up costs.--The term `qualified start-
     up costs' means any ordinary and necessary expenses of an 
     eligible employer which--
       ``(A) are paid or incurred in connection with the 
     establishment of a qualified pension plan or a qualified 
     employer payroll deduction system, and
       ``(B) are of a nonrecurring nature.
       ``(2) Qualified pension plan.--The term `qualified pension 
     plan' means--
       ``(A) a plan described in section 401(a) which includes a 
     trust exempt from tax under section 501(a),
       ``(B) a simplified employee pension (as defined in section 
     408(k)), or
       ``(C) a simple retirement account (as defined in section 
     408(p)).
       ``(3) Qualified employer payroll deduction system.--The 
     term `qualified employer payroll deduction system' means a 
     system described in section 103 of the Retirement Security 
     Act of 1997.
       ``(d) Special Rules.--For purposes of this section--
       ``(1) Aggregation rules.--All persons treated as a single 
     employer under subsection (a) or (b) of section 52 or 
     subsection (n) or (o) of section 414 shall be treated as one 
     person.

[[Page S316]]

       ``(2) Disallowance of deduction.--No deduction shall be 
     allowable under this chapter for any qualified start-up costs 
     for which a credit is allowable under subsection (a).''.
       (c) Conforming Amendments.--
       (1) Section 39(d) is amended by adding at the end the 
     following new paragraph:
       ``(8) No carryback of pension credit.--No portion of the 
     unused business credit for any taxable year which is 
     attributable to the small employer pension plan start-up cost 
     credit determined under section 45D may be carried back to a 
     taxable year ending before the date of the enactment of 
     section 45D.''.
       (2) The table of sections for subpart D of part IV of 
     subchapter A of chapter 1 is amended by adding at the end the 
     following new item:

``Sec. 45D. Small employer pension plan start-up cost credit.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to costs incurred after the date of the enactment 
     of this Act in taxable years ending after such date.

     SEC. 162. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

       (a) Compensation Limit.--Paragraph (11) of section 415(b) 
     (relating to limitation for defined benefit plans) is amended 
     to read as follows:
       ``(11) Special limitation rule for governmental and 
     multiemployer plans.--In the case of a governmental plan (as 
     defined in section 414(d)) or a multiemployer plan (as 
     defined in section 414(f)), subparagraph (B) of paragraph (1) 
     shall not apply.''.
       (b) Treatment of Certain Excess Benefit Plans.--
       (1) Application of section 457.--Paragraph (14) of section 
     457(e) (relating to other definitions and special rules) is 
     amended to read as follows:
       ``(14) Treatment of excess benefit arrangements.--
       ``(A) In general.--Subsections (b)(2) and (c)(1) shall not 
     apply to any excess benefit arrangement and benefits provided 
     under such an arrangement shall not be taken into account in 
     determining whether any other plan is an eligible deferred 
     compensation plan.
       ``(B) Excess benefit arrangement defined.--For purposes of 
     this section, the term `excess benefit arrangement' means a 
     plan which is maintained by an eligible employer solely for 
     purposes of providing benefits for certain employees in 
     excess of the limits on contributions and benefits imposed by 
     section 415. Such term includes a qualified governmental 
     excess benefit arrangement (as defined in section 
     415(m)(3)).''.
       (2) Conforming amendment.--Subparagraph (E) of section 
     457(f)(2) (relating to tax treatment of participants where 
     plan or arrangement of employer is not eligible) is amended 
     to read as follows:
       ``(E) an excess benefit arrangement (as defined in 
     subsection (e)(14)(B)).''.
       (c) Exemption for Survivor and Disability Benefits.--
     Subparagraph (I) of section 415(b)(2) (relating to limitation 
     for defined benefit plans) is amended--
       (1) by inserting ``or a multiemployer plan (as defined in 
     section 414(f))'' after ``section 414(d))'' in clause (i),
       (2) by inserting ``or multiemployer plan'' after 
     ``governmental plan'' in clause (ii), and
       (3) by inserting ``and multiemployer'' after 
     ``governmental'' in the heading.
       (d) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     section 1444 of the Small Business Job Protection Act of 
     1996.

     SEC. 163. EXEMPTION OF MIRROR PLANS FROM SECTION 457 LIMITS.

       (a) In General.--Subsection (e) of section 457 (relating to 
     deferred compensation plans of State and local governments 
     and tax-exempt organizations), as amended by section 
     162(b)(1), is amended by adding at the end the following new 
     paragraph:
       ``(15) Exemption for mirror plans.--
       ``(A) In general.--Amounts of compensation deferred under a 
     mirror plan shall not be taken into account in applying this 
     section to amounts of compensation deferred under any other 
     deferred compensation plan.
       ``(B) Mirror plan.--The term `mirror plan' means a plan, 
     program, or arrangement maintained solely for the purpose of 
     providing retirement benefits for employees in excess of the 
     limitations imposed by section 401(a)(17) or section 415, or 
     both.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 164. SPECIAL RULES FOR SELF-EMPLOYED INDIVIDUALS.

       (a) Contributions by Self-Employed Individuals Treated as 
     Matching Contributions.--Section 414 (relating to definitions 
     and special rules) is amended by adding at the end the 
     following new subsection:
       ``(v) Contributions by Self-Employed Individuals Treated as 
     Matching Contributions.--For purposes of this title, matching 
     contributions (as defined in section 401(m)(4)(A)) made on 
     behalf of a self-employed individual shall not be treated as 
     elective deferrals (within the meaning of section 402(g)(3)) 
     or as made pursuant to an election by the self-employed 
     individual.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1996.

     SEC. 165. IMMEDIATE PARTICIPATION IN THE THRIFT SAVINGS PLAN 
                   FOR FEDERAL EMPLOYEES.

       (a) Elimination of Certain Waiting Periods for Purposes of 
     Employee Contributions.--Paragraph (4) of section 8432(b) of 
     title 5, United States Code, is amended to read as follows:
       ``(4) The Executive Director shall prescribe such 
     regulations as may be necessary to carry out the following:
       ``(A) Notwithstanding subparagraph (A) of paragraph (2), an 
     employee or Member described in such subparagraph shall be 
     afforded a reasonable opportunity to first make an election 
     under this subsection beginning on the date of commencing 
     service or, if that is not administratively feasible, 
     beginning on the earliest date thereafter that such an 
     election becomes administratively feasible, as determined by 
     the Executive Director.
       ``(B) An employee or Member described in subparagraph (B) 
     of paragraph (2) shall be afforded a reasonable opportunity 
     to first make an election under this subsection (based on the 
     appointment or election described in such subparagraph) 
     beginning on the date of commencing service pursuant to such 
     appointment or election or, if that is not administratively 
     feasible, beginning on the earliest date thereafter that such 
     an election becomes administratively feasible, as determined 
     by the Executive Director.
       ``(C) Notwithstanding the preceding provisions of this 
     paragraph, contributions under paragraphs (1) and (2) of 
     subsection (c) shall not be payable with respect to any pay 
     period before the earliest pay period for which such 
     contributions would otherwise be allowable under this 
     subsection if this paragraph had not been enacted.
       ``(D) Sections 8351(a)(2), 8440a(a)(2), 8440b(a)(2), 
     8440c(a)(2), and 8440d(a)(2) shall be applied in a manner 
     consistent with the purposes of subparagraphs (A) and (B), to 
     the extent those subparagraphs can be applied with respect 
     thereto.
       ``(E) Nothing in this paragraph shall affect paragraph 
     (3).''.
       (b) Technical and Conforming Amendments.--
       (1) Section 8432(a) of title 5, United States Code, is 
     amended--
       (A) in the first sentence by striking ``(b)(1)'' and 
     inserting ``(b)''; and
       (B) by amending the second sentence to read as follows: 
     ``Contributions under this subsection pursuant to such an 
     election shall, with respect to each pay period for which 
     such election remains in effect, be made in accordance with a 
     program of regular contributions provided in regulations 
     prescribed by the Executive Director.''.
       (2) Section 8432(b)(1)(B) of such title is amended by 
     inserting ``(or any election allowable by virtue of paragraph 
     (4))'' after ``subparagraph (A)''.
       (3) Section 8432(b)(3) of such title is amended by striking 
     ``Notwithstanding paragraph (2)(A), an'' and inserting 
     ``An''.
       (4) Section 8432(i)(1)(B)(ii) of such title is amended by 
     striking ``either elected to terminate individual 
     contributions to the Thrift Savings Fund within 2 months 
     before commencing military service or''.
       (5) Section 8439(a)(1) of such title is amended by 
     inserting ``who makes contributions or'' after ``for each 
     individual'' and by striking ``section 8432(c)(1)'' and 
     inserting ``section 8432''.
       (6) Section 8439(c)(2) of such title is amended by adding 
     at the end the following: ``Nothing in this paragraph shall 
     be considered to limit the dissemination of information only 
     to the times required under the preceding sentence.''.
       (7) Sections 8440a(a)(2) and 8440d(a)(2) of such title are 
     amended by striking all after ``subject to'' and inserting 
     ``subject to this chapter.''.
       (c) Effective Date.--This section shall take effect 6 
     months after the date of the enactment of this Act or such 
     earlier date as the Executive Director may by regulation 
     prescribe.

     SEC. 166. MODIFICATION OF 10 PERCENT TAX FOR NONDEDUCTIBLE 
                   CONTRIBUTIONS.

       (a) In General.--Subparagraph (B) of section 4972(c)(6) 
     (relating to exceptions) is amended to read as follows:
       ``(B) contributions to 1 or more defined contribution plans 
     which are not deductible when contributed solely because of 
     section 404(a)(7), in an amount not in excess of the greater 
     of--
       ``(i) the amount of contributions not in excess of 6 
     percent of compensation (within the meaning of section 
     404(a)) paid or accrued (during the taxable year for which 
     the contributions were made) to beneficiaries under the 
     plans, or
       ``(ii) the amount of contributions described in section 
     401(m)(4)(A) or 402(g)(3)(A).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.
               Subtitle D--Simplifying Plan Requirements

     SEC. 171. FULL FUNDING LIMITATION FOR MULTIEMPLOYER PLANS.

       (a) Amendments to Code.--
       (1) Full-funding limitation.--Section 412(c)(7)(C) 
     (relating to full-funding limitation) is amended--
       (A) by inserting ``or in the case of a multiemployer 
     plan,'' after ``paragraph (6)(B),'', and
       (B) by inserting ``and multiemployer plans'' after 
     ``paragraph (6)(b)'' in the heading thereof.
       (2) Valuation.--Section 412(c)(9) (relating to annual 
     valuation) is amended--

[[Page S317]]

       (A) by inserting ``(3 years in the case of a multiemployer 
     plan)'' after ``year'', and
       (B) by striking ``Annual valuation'' in the heading and 
     inserting ``Valuation''.
       (b) Amendments to ERISA.--
       (1) Full-funding limitation.--Section 302(c)(7)(C) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1082(c)(7)(C)) is amended--
       (A) by inserting ``or in the case of a multiemployer 
     plan,'' after ``paragraph (6)(B),'', and
       (B) by inserting ``and multiemployer plans'' after 
     ``paragraph (6)(b)'' in the heading thereof.
       (2) Valuation.--Section 302(c)(9) of such Act (29 U.S.C. 
     1082(c)(9)) is amended--
       (A) by inserting ``(3 years in the case of a multiemployer 
     plan)'' after ``year'', and
       (B) by striking ``Annual valuation'' in the heading and 
     inserting ``Valuation''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 1996.

     SEC. 172. ELIMINATION OF PARTIAL TERMINATION RULES FOR 
                   MULTIEMPLOYER PLANS.

       (a) Partial Termination Rules for Multiemployer Plans.--
     Section 411(d)(3) (relating to termination or partial 
     termination; discontinuance of contributions) is amended by 
     adding at the end the following new sentence: ``This 
     paragraph shall not apply in the case of a partial 
     termination of a multiemployer plan.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to partial terminations beginning after December 
     31, 1996.

     SEC. 173. MODIFICATIONS TO NONDISCRIMINATION AND MINIMUM 
                   PARTICIPATION RULES WITH RESPECT TO 
                   GOVERNMENTAL PLANS.

       (a) General Nondiscrimination and Participation Rules.--
       (1) Nondiscrimination requirements.--Paragraph (5) of 
     section 401(a) (relating to qualified pension, profit-
     sharing, and stock bonus plans) is amended by adding at the 
     end the following new subparagraph:
       ``(F) Governmental plans.--Paragraphs (3) and (4) shall not 
     apply to a governmental plan (within the meaning of section 
     414(d)).''.
       (2) Additional participation requirements.--Subparagraph 
     (H) of section 401(a)(26) is amended to read as follows:
       ``(H) Exception for governmental plans.--This paragraph 
     shall not apply to a governmental plan (within the meaning of 
     section 414(d)).''.
       (3) Minimum participation standards.--Paragraph (2) of 
     section 410(c) is amended to read as follows:
       ``(2) A plan described in paragraph (1) shall be treated as 
     meeting the requirements of this section for purposes of 
     section 401(a), except that in the case of a plan described 
     in subparagraph (B), (C), or (D) of paragraph (1), this 
     paragraph shall only apply if such plan meets the 
     requirements of section 401(a)(3) (as in effect on September 
     1, 1974).''.
       (b) Participation Standards for Qualified Cash or Deferred 
     Arrangements.--Paragraph (3) of section 401(k) is amended by 
     adding at the end the following new subparagraph:
       ``(E)(i) The requirements of subparagraph (A)(i) and (C) 
     shall not apply to a governmental plan (within the meaning of 
     section 414(d)).
       ``(ii) The requirements of subsection (m)(2) (without 
     regard to subsection (a)(4)) shall apply to any matching 
     contribution of a governmental plan (as so defined).''.
       (c) Nondiscrimination Rules for Section 403(b) Plans.--
     Paragraph (12) of section 403(b) is amended by adding at the 
     end the following new subparagraph:
       ``(C) Governmental plans.--For purposes of paragraph 
     (1)(D), the requirements of subparagraph (A)(i) shall not 
     apply to a governmental plan (within the meaning of section 
     414(d)).''.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning on or after the date of the 
     enactment of this Act.
       (2) Treatment for years beginning before date of 
     enactment.--A governmental plan (within the meaning of 
     section 414(d) of the Internal Revenue Code of 1986) shall be 
     treated as satisfying the requirements of sections 401(a)(3), 
     401(a)(4), 401(a)(26), 401(k), 401(m), 403 (b)(1)(D) and 
     (b)(12), and 410 of such Code for all taxable years beginning 
     before the date of the enactment of this Act.

     SEC. 174. ELIMINATION OF REQUIREMENT FOR PLAN DESCRIPTIONS 
                   AND THE FILING REQUIREMENT FOR SUMMARY PLAN 
                   DESCRIPTIONS AND DESCRIPTIONS OF MATERIAL 
                   MODIFICATIONS TO A PLAN; TECHNICAL CORRECTIONS.

       (a) Filing Requirements.--Section 101(b) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1021(b)) is 
     amended by striking paragraphs (1), (2), and (3) and by 
     redesignating paragraphs (4) and (5) as paragraphs (1) and 
     (2), respectively.
       (b) Plan Description.--
       (1) In general.--Section 102(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1022(a)) is amended--
       (A) by striking paragraph (2), and
       (B) by striking ``(a)(1)'' and inserting ``(a)''.
       (2) Conforming amendments.--
       (A) Section 102(b) of such Act (29 U.S.C. 1022(b)) is 
     amended by striking ``The plan description and summary plan 
     description shall contain'' and inserting ``The summary plan 
     description shall contain''.
       (B) The heading for section 102 of such Act is amended by 
     striking ``plan description and''.
       (c) Furnishing of Reports.--
       (1) In general.--Section 104(a)(1) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1024(a)(1)) 
     is amended to read as follows:
       ``Sec. 104. (a)(1) The administrator of any employee 
     benefit plan subject to this part shall file with the 
     Secretary the annual report for a plan year within 210 days 
     after the close of such year (or within such time as may be 
     required by regulations promulgated by the Secretary in order 
     to reduce duplicative filing). The Secretary shall make 
     copies of such annual reports available for inspection in the 
     public document room of the Department of Labor.''.
       (2) Secretary may request documents.--
       (A) In general.--Section 104(a) of such Act (29 U.S.C. 
     1024(a)) is amended by adding at the end the following new 
     paragraph:
       ``(6) The administrator of any employee benefit plan 
     subject to this part shall furnish to the Secretary, upon 
     request, any documents relating to the employee benefit plan, 
     including but not limited to, the latest summary plan 
     description (including any summaries of plan changes not 
     contained in the summary plan description), and the 
     bargaining agreement, trust agreement, contract, or other 
     instrument under which the plan is established or 
     operated.''.
       (B) Penalty.--Section 502(c) of such Act (29 U.S.C. 
     1132(c)) is amended by redesignating paragraph (6) as 
     paragraph (7) and by inserting after paragraph (5) the 
     following new paragraph:
       ``(6) If, within 30 days of a request by the Secretary to a 
     plan administrator for documents under section 104(a)(6), the 
     plan administrator fails to furnish the material requested to 
     the Secretary, the Secretary may assess a civil penalty 
     against the plan administrator of up to $100 a day from the 
     date of such failure (but in no event in excess of $1,000 per 
     request). No penalty shall be imposed under this paragraph 
     for any failure resulting from matters reasonably beyond the 
     control of the plan administrator.''.
       (d) Conforming Amendments.--
       (1) Section 104(b)(1) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1024(b)(1)) is amended by 
     striking ``section 102(a)(1)'' each place it appears and 
     inserting ``section 102(a)''.
       (2) Section 104(b)(2) of such Act (29 U.S.C. 1024(b)(2)) is 
     amended by striking ``the plan description and'' and 
     inserting ``the latest updated summary plan description 
     and''.
       (3) Section 104(b)(4) of such Act (29 U.S.C. 1024(b)(4)) is 
     amended by striking ``plan description''.
       (4) Section 106(a) of such Act (29 U.S.C. 1026(a)) is 
     amended by striking ``descriptions,''.
       (5) Section 107 of such Act (29 U.S.C. 1027) is amended by 
     striking ``description or''.
       (6) Paragraph (2)(B) of section 108 of such Act (29 U.S.C. 
     1028) is amended to read as follows: ``(B) after publishing 
     or filing the annual reports,''.
       (7) Section 502(a)(6) of such Act (29 U.S.C. 1132(a)(6)) is 
     amended by striking ``or (5)'' and inserting ``(5), or (6)''.
       (e) Technical Correction.--Section 1144(c) of the Social 
     Security Act (42 U.S.C. 1320b-14(c)) is amended by 
     redesignating paragraph (9) as paragraph (8).

     SEC. 175. NEW TECHNOLOGIES IN RETIREMENT PLANS.

       The Secretary of the Treasury and the Secretary of Labor 
     shall expand their efforts to examine existing guidance 
     regarding notice, recordkeeping, and operational requirements 
     for retirement plans, in order to permit the use of new 
     technologies by plan sponsors and administrators in ways 
     which maintain the protection of the rights of participants 
     and beneficiaries.
                           TITLE II--SECURITY

     SEC. 200. AMENDMENT OF ERISA.

       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 Employee Retirement Income Security 
     Act of 1974.
                     Subtitle A--General Provisions

     SEC. 201. SECTION 401(k) INVESTMENT PROTECTION.

       (a) Limitations on Investment in Employer Securities and 
     Employer Real Property by Cash or Deferred Arrangements.--
     Paragraph (3) of section 407(d) (29 U.S.C. 1107(d)) is 
     amended by adding at the end the following new subparagraph:
       ``(D) The term `eligible individual account plan' does not 
     include that portion of an individual account plan that 
     consists of elective deferrals (as defined in section 
     402(g)(3) of the Internal Revenue Code of 1986) pursuant to a 
     qualified cash or deferred arrangement as defined in section 
     401(k) of the Internal Revenue Code of 1986 (and earnings 
     thereon), if such elective deferrals (or earnings thereon) 
     are required to be invested in qualifying employer securities 
     or qualifying employer real property or both pursuant to the 
     documents and instruments governing the plan or at the 
     direction of a person other than the participant (or the 
     participant's beneficiary) on whose behalf such elective 
     deferrals are made to the plan. For the purposes of 
     subsection (a), such portion shall be

[[Page S318]]

     treated as a separate plan. This subparagraph shall not apply 
     to an individual account plan if the fair market value of the 
     assets of all individual account plans maintained by the 
     employer equals not more than 10 percent of the fair market 
     value of the assets of all pension plans maintained by the 
     employer.''.
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     take effect on the date of the enactment of this Act.
       (2) Transition rule for plans holding excess securities or 
     property.--
       (A) In general.--In the case of a plan which on the date of 
     the enactment of this Act, has holdings of employer 
     securities and employer real property (as defined in section 
     407(d) of the Employee Retirement Income Security Act of 1974 
     (29 U.S.C. 1107(d)) in excess of the amount specified in such 
     section 407, the amendment made by this section applies to 
     any acquisition of such securities and property on or after 
     such date, but does not apply to the specific holdings which 
     constitute such excess during the period of such excess.
       (B) Special rule for certain acquisitions.--Employer 
     securities and employer real property acquired pursuant to a 
     binding written contract to acquire such securities and real 
     property entered into and in effect on the date of the 
     enactment of this Act, shall be treated as acquired 
     immediately before such date.

     SEC. 202. REQUIREMENT OF ANNUAL, DETAILED INVESTMENT REPORTS 
                   APPLIED TO CERTAIN 401(k) PLANS.

       (a) In General.--Section 104(b)(3) (29 U.S.C. 1024(b)(3)) 
     is amended--
       (1) by inserting ``(A)'' after ``(3)''; and
       (2) by adding at the end the following new subparagraph:
       ``(B)(i) If a plan includes a qualified cash or deferred 
     arrangement (as defined in section 401(k)(2) of the Internal 
     Revenue Code of 1986) and is maintained by an employer with 
     less than 100 participants, the administrators shall furnish 
     to each participant and to each beneficiary receiving 
     benefits under the plan an annual investment report detailing 
     such information as the Secretary by regulation shall 
     require.
       ``(ii) Clause (i) shall not apply with respect to any 
     participant described in section 404(c).''.
       (b) Regulations.--
       (1) In general.--The Secretary of Labor, in prescribing 
     regulations required under section 104(b)(3)(B)(i) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1023(b)(3)(B)(i)), as added by subsection (a), shall consider 
     including in the information required in an annual investment 
     report the following:
       (A) Total plan assets and liabilities as of the beginning 
     and ending of the plan year.
       (B) Plan income and expenses and contributions made and 
     benefits paid for the plan year.
       (C) Any transaction between the plan and the employer, any 
     fiduciary, or any 10-percent owner during the plan year, 
     including the acquisition of any employer security or 
     employer real property.
       (D) Any noncash contributions made to or purchases of 
     nonpublicly traded securities made by the plan during the 
     plan year without an appraisal by an independent third party.

     In determining the types of information to be included in the 
     annual investment report presented to participants and 
     beneficiaries, the Secretary of Labor shall take into account 
     the purposes of the diversification protection provided to 
     such participants and beneficiaries by section 407(d)(3)(D) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1107(d)(3)(D)), as added by section 201(a).
       (2) Electronic transfer.--The Secretary of Labor in 
     prescribing such regulations shall also make provision for 
     the electronic transfer of the required annual investment 
     report by a plan administrator to plan participants and 
     beneficiaries.
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to plan years beginning after the date of the 
     enactment of this Act.

     SEC. 203. STUDY ON INVESTMENTS IN COLLECTIBLES.

       (a) Study.--The Secretary of Labor, in consultation with 
     the Secretary of the Treasury, shall study the extent to 
     which pension plans invest in collectibles and whether such 
     investments present a risk to the pension security of the 
     participants and beneficiaries of such plans.
       (b) Report.--Not later than 12 months after the date of the 
     enactment of this Act, the Secretary of Labor shall submit a 
     report to the Congress containing the findings of the study 
     described in subsection (a) and any recommendations for 
     legislative action.

     SEC. 204. QUALIFIED EMPLOYER PLANS PROHIBITED FROM MAKING 
                   LOANS THROUGH CREDIT CARDS AND OTHER 
                   INTERMEDIARIES.

       (a) In General.--Subsection (a) of section 401 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new paragraph:
       ``(35) Prohibition of loans through credit cards and other 
     intermediaries.--A trust shall not constitute a qualified 
     trust under this section if the plan makes any loan to any 
     beneficiary under the plan through the use of any credit card 
     or any other intermediary.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to plan years beginning after the date of the 
     enactment of this Act.

     SEC. 205. MULTIEMPLOYER PLAN BENEFITS GUARANTEED.

       (a) In General.--Section 4022A(c) (29 U.S.C. 1322a(c)) is 
     amended--
       (1) by striking ``$5'' each place it appears in paragraph 
     (1) and inserting ``$11'',
       (2) by striking ``$15'' in paragraph (1) and inserting 
     ``$33'', and
       (3) by striking paragraphs (2), (5), and (6) and by 
     redesignating paragraphs (3) and (4) as paragraphs (2) and 
     (3), respectively.
       (b) Effective Date.--The amendments made by this section 
     shall apply to any multiemployer plan that has not received 
     financial assistance (within the meaning of section 4261 of 
     the Employee Retirement Income Security Act of 1974) within 
     the 1-year period ending on the date of the enactment of this 
     Act.

     SEC. 206. PROHIBITED TRANSACTIONS.

       (a) In General.--Section 502(i) (29 U.S.C. 1132(i)) is 
     amended by striking ``5 percent'' and inserting ``10 
     percent''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to prohibited transactions occurring after the 
     date of the enactment of this Act.

     SEC. 207. SUBSTANTIAL OWNER BENEFITS.

       (a) Modification of Phase-in of Guarantee.--Subparagraphs 
     (B) and (C) of section 4022(b)(5) (29 U.S.C. 1322(b)(5)) are 
     amended to read as follows:
       ``(B) For purposes of this title, the term `majority owner' 
     has the same meaning as substantial owner under subparagraph 
     (A), except that subparagraph (A) shall be applied by 
     substituting `50 percent or more' for `more than 10 percent' 
     each place it appears.
       ``(C) In the case of a participant who is a majority owner, 
     the amount of benefits guaranteed under this section shall 
     not exceed the product of--
       ``(i) a fraction (not to exceed 1) the numerator of which 
     is the number of years from the later of the effective date 
     or the adoption date of the plan to the termination date, and 
     the denominator of which is 30, and
       ``(ii) the amount of the majority owner's monthly benefits 
     guaranteed under subsection (a) (as limited by paragraph (3) 
     of this subsection).''.
       (b) Modification of Allocation of Assets.--
       (1) Section 4044(a)(4)(B) (29 U.S.C. 1344(a)(4)(B)) is 
     amended by striking ``section 4022(b)(5)'' and inserting 
     ``section 4022(b)(5)(C)''.
       (2) Section 4044(b) (29 U.S.C. 1344(b)) is amended--
       (A) by striking ``(5)'' in paragraph (2) and inserting 
     ``(4), (5),'', and
       (B) by redesignating paragraphs (3) through (6) as 
     paragraphs (4) through (7), respectively, and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) If assets available for allocation under paragraph 
     (4) of subsection (a) are insufficient to satisfy in full the 
     benefits of all individuals who are described in that 
     paragraph, the assets shall be allocated first to benefits 
     described in subparagraph (A) of that paragraph. Any 
     remaining assets shall then be allocated to subparagraph (B). 
     If assets allocated to subparagraph (B) are insufficient to 
     satisfy in full the benefits in that subparagraph, the assets 
     shall be allocated pro rata among individuals on the basis of 
     the present value (as of the termination date) of their 
     respective benefits described in that subparagraph.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan terminations--
       (1) under section 4041(c) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1341(c)) with respect to 
     which notices of intent to terminate are provided under 
     section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) on or 
     after the date of the enactment of this Act, or
       (2) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which proceedings are instituted by the 
     corporation on or after such date.

     SEC. 208. REVERSION REPORT.

       (a) In General.--Section 4008 (29 U.S.C. 1308) is amended 
     by adding at the end the following new subsection:
       ``(b) Reversion Report.--As soon as practicable after the 
     close of each fiscal year, the Secretary of Labor (acting in 
     the Secretary's capacity as chairman of the corporation's 
     board) shall transmit to the President and the Congress a 
     report providing information on plans from which residual 
     assets were distributed to employers pursuant to section 
     4044(d).''.
       (b) Conforming Amendment.--Section 4008 (29 U.S.C. 1308) is 
     amended by striking ``Sec. 4008.'' and inserting ``Sec. 4008. 
     (a) Annual Report.--''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to fiscal years beginning after September 30, 
     1996.

     SEC. 209. DEVELOPMENT OF ADDITIONAL REMEDIES.

       (a) Findings.--The Congress finds that--
       (1) the provisions of this Act, like many of those proposed 
     by the President and recently signed into law, are designed 
     to expand retirement savings;
       (2) this goal can be achieved in part by simplifying the 
     pension system and reducing administrative costs of 
     maintaining pension plans for all employers;
       (3) such simplification can benefit not only the 
     implementation and ongoing administration of pension plans 
     but also the correction

[[Page S319]]

     of problems that arise in the operation of such plans;
       (4) the Secretary of the Treasury has commendably already 
     acted to develop programs intended to facilitate such 
     corrections; and
       (5) efficient correction serves participants and 
     beneficiaries not only by fulfilling the law's requirements 
     regarding pension plans but also by directing funds into 
     plans rather than toward correction efforts and by 
     encouraging employers to continue to sponsor support for such 
     plans.
       (b) Sense of Congress.--It is the sense of the Congress 
     that the Secretary of the Treasury should--
       (1) review existing correction mechanisms to determine 
     whether modifications might facilitate additional utilization 
     by sponsors, improve voluntary compliance, and hasten the 
     correction of pension plans,
       (2) consider whether additional means of addressing 
     nonegregious violations should be explored,
       (3) make whatever legislative recommendations, if any, 
     appear necessary to fulfill these goals, and
       (4) remain cognizant that the Congress, as well as the 
     Secretary, considers the continuing security of retirement 
     savings for workers, retirees, and beneficiaries of 
     fundamental importance.
                     Subtitle B--ERISA Enforcement

     SEC. 211. REPEAL OF LIMITED SCOPE AUDIT.

       (a) In General.--Section 103(a)(3)(C) (29 U.S.C. 
     1023(a)(3)(C)) is amended by adding at the end the following:
       ``(ii) If an accountant is offering an opinion under this 
     section in the case of an employee pension benefit plan, the 
     accountant shall, to the extent consistent with generally 
     accepted auditing standards, rely on the work of any 
     independent public accountant of any bank or similar 
     institution or insurance carrier that holds assets or 
     processes transactions of the employee pension benefit plan 
     provided that such bank, institution, or insurance carrier is 
     regulated, supervised, and subject to periodic examination by 
     a State or Federal agency.''.
       (b) Conforming Amendments.--
       (1) Section 103(a)(3)(A) of such Act (29 U.S.C. 
     1023(a)(3)(A)) is amended by striking ``subparagraph (C)'' 
     and inserting ``subparagraph (C)(i)''.
       (2) Section 103(a)(3)(C) of such Act (29 U.S.C. 
     1023(a)(3)(C)) is amended by striking ``(C) The'' and 
     inserting ``(C)(i) In the case of an employee benefit plan 
     other than an employee pension benefit plan, the''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to opinions required under section 
     103(a)(3)(A) of the Employee Retirement Income Security Act 
     of 1974 for plan years beginning on or after January 1 of the 
     calendar year following the date of the enactment of this 
     Act.

     SEC. 212. ADDITIONAL REQUIREMENTS FOR QUALIFIED PUBLIC 
                   ACCOUNTANTS.

       (a) In General.--Section 103(a)(3)(D) (29 U.S.C. 
     1023(a)(3)(D)) is amended--
       (1) by inserting ``(i)'' after ``(D)'';
       (2) by inserting ``, with respect to any engagement of an 
     accountant under subparagraph (A)'' after ``means'';
       (3) by redesignating clauses (i), (ii), and (iii) as 
     subclauses (I), (II), and (III), respectively;
       (4) by striking the period at the end of subclause (III) 
     (as so redesignated) and inserting a comma;
       (5) by adding after subclause (III) (as so redesignated), 
     and flush with clause (i), the following:
     ``but only if such person meets the requirements of clauses 
     (ii) and (iii) with respect to such engagement.''; and
       (6) by adding at the end the following new clauses:
       ``(ii) A person meets the requirements of this clause with 
     respect to an engagement of such person as an accountant 
     under subparagraph (A) if such person--

       ``(I) has in operation an appropriate internal quality 
     control system;
       ``(II) has undergone a qualified external quality control 
     review of the person's accounting and auditing practices, 
     including such practices relevant to employee benefit plans 
     (if any), during the 3-year period immediately preceding such 
     engagement; and
       ``(III) has completed, within the 2-year period immediately 
     preceding such engagement, at least 80 hours of continuing 
     education or training which contributes to the accountant's 
     professional proficiency and which meets such requirements as 
     may be prescribed by the Secretary in regulations.

     The Secretary shall issue the regulations under subclause 
     (III) not later than December 31, 1998.
       ``(iii) A person meets the requirements of this clause with 
     respect to an engagement of such person as an accountant 
     under subparagraph (A) if such person meets such additional 
     requirements and qualifications of regulations which the 
     Secretary deems necessary to ensure the quality of plan 
     audits.
       ``(iv) For purposes of clause (ii)(II), an external quality 
     control review shall be treated as qualified with respect to 
     a person referred to in clause (ii) if--

       ``(I) such review is performed in accordance with the 
     requirements of external quality control review programs of 
     recognized auditing standard-setting bodies, as determined in 
     regulations of the Secretary, and
       ``(II) in the case of any such person who has, during the 
     peer review period, conducted one or more previous audits of 
     employee benefit plans, such review includes the review of an 
     appropriate number (determined as provided in such 
     regulations, but in no case less than one) of plan audits in 
     relation to the scale of such person's auditing practice.

     The Secretary shall issue the regulations under subclause (I) 
     not later than December 31, 1998.''.
       (b) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply with respect to 
     plan years beginning on or after the date which is 3 years 
     after the date of the enactment of this Act.
       (2) Restrictions on conducting examinations.--Clause (iii) 
     of section 103(a)(3)(D) of the Employee Retirement Income 
     Security Act of 1974 (as added by subsection (a)(6)) shall 
     take effect on the date of the enactment of this Act.

     SEC. 213. CLARIFICATION OF FIDUCIARY PENALTIES.

       (a) Modification of Prohibition of Assignment or 
     Alienation.--
       (1) In general.--Section 206(d) (29 U.S.C. 1056(d)) is 
     amended by adding at the end the following new paragraphs:
       ``(4) Paragraph (1) shall not apply to any offset of a 
     participant's accrued benefit in an employee pension benefit 
     plan against an amount that the participant is ordered or 
     required to pay to the plan if--
       ``(A) the order or requirement to pay arises--
       ``(i) under a judgment of conviction for a crime involving 
     such plan,
       ``(ii) under a civil judgment (including a consent order or 
     decree) entered by a court in an action brought in connection 
     with a violation (or alleged violation) of part 4 of this 
     subtitle, or
       ``(iii) pursuant to a settlement agreement between the 
     Secretary and the participant, or a settlement agreement 
     between the Pension Benefit Guaranty Corporation and the 
     participant, in connection with a violation (or alleged 
     violation) of part 4 of this subtitle by a fiduciary or any 
     other person,
       ``(B) the judgment, order, decree, or settlement agreement 
     expressly provides for the offset of all or part of the 
     amount ordered or required to be paid to the plan against the 
     participant's accrued benefit in the plan, and
       ``(C) if the participant has a spouse at the time at which 
     the offset is to be made--
       ``(i) such spouse has consented in writing to such offset 
     and such consent is witnessed by a notary public or 
     representative of the plan,
       ``(ii) such spouse is ordered or required in such judgment, 
     order, decree, or settlement to pay an amount to the plan in 
     connection with a violation of part 4 of this title, or
       ``(iii) in such judgment, order, decree, or settlement, 
     such spouse retains the right to receive the value of the 
     survivor annuity under a qualified joint and survivor annuity 
     provided pursuant to section 205(a)(1) and under a qualified 
     preretirement survivor annuity provided pursuant to section 
     205(a)(2), determined in accordance with paragraph (5).
       ``(5)(A) The value of the survivor annuity described in 
     paragraph (4)(C)(iii) shall be determined as if--
       ``(i) the participant terminated employment on the date of 
     the offset,
       ``(ii) there was no offset,
       ``(iii) the plan permitted retirement only on or after 
     normal retirement age,
       ``(iv) the plan provided only the minimum-required 
     qualified joint and survivor annuity, and
       ``(v) the amount of the qualified preretirement survivor 
     annuity under the plan is equal to the amount of the survivor 
     annuity payable under the minimum-required qualified joint 
     and survivor annuity.
       ``(B) For purposes of this paragraph, the term `minimum-
     required qualified joint and survivor annuity' means the 
     qualified joint and survivor annuity which is the actuarial 
     equivalent of a single annuity for the life of the 
     participant and under which the survivor annuity is 50 
     percent of the amount of the annuity which is payable during 
     the joint lives of the participant and the spouse.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to judgments, orders, and decrees issued, and 
     settlement agreements entered into, on or after the date of 
     the enactment of this Act.
       (b) Civil Penalties for Breach of Fiduciary 
     Responsibility.--
       (1) Imposition and amount of penalty made discretionary.--
     Section 502(l)(1) (29 U.S.C. 1132(l)(1)) is amended--
       (A) by striking ``shall'' and inserting ``may'', and
       (B) by striking ``equal to'' and inserting ``not greater 
     than''.
       (2) Applicable recovery amount.--Section 502(l)(2) (29 
     U.S.C. 1132(l)(2)) is amended to read as follows:
       ``(2) For purposes of paragraph (1), the term `applicable 
     recovery amount' means any amount which is recovered from (or 
     on behalf of) any fiduciary or other person with respect to a 
     breach or violation described in paragraph (1) on or after 
     the 30th day following receipt by such fiduciary or other 
     person of written notice from the Secretary of the violation, 
     whether paid voluntarily or by order of a court in a judicial 
     proceeding instituted by the Secretary under subsection 
     (a)(2) or (a)(5). The Secretary may, in the Secretary's sole 
     discretion, extend the 30-day period described in the 
     preceding sentence.''.
       (3) Other rules.--Section 502(l) (29 U.S.C. 1132(l)) is 
     amended by adding at the end the following new paragraphs:
       ``(5) A person shall be jointly and severally liable for 
     the penalty described in paragraph

[[Page S320]]

     (1) to the same extent that such person is jointly and 
     severally liable for the applicable recovery amount on which 
     the penalty is based.
       ``(6) No penalty shall be assessed under this subsection 
     unless the person against whom the penalty is assessed is 
     given notice and opportunity for a hearing with respect to 
     the violation and applicable recovery amount.''.
       (4) Effective dates.--
       (A) In general.--The amendments made by this subsection 
     shall apply to any breach of fiduciary responsibility or 
     other violation of part 4 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 occurring on 
     or after the date of the enactment of this Act.
       (B) Transition rule.--In applying the amendment made by 
     paragraph (2) (relating to applicable recovery amount), a 
     breach or other violation occurring before the date of the 
     enactment of this Act which continues after the 180th day 
     after such date (and which may have been discontinued at any 
     time during its existence) shall be treated as having 
     occurred after such date of enactment.

     SEC. 214. CONFORMING AMENDMENTS RELATING TO ERISA 
                   ENFORCEMENT.

       (a) Special Rule for Certain Judgments and Settlements.--
     Section 401(a)(13)of the Internal Revenue Code of 1986 
     (relating to assignment and alienation) is amended by adding 
     at the end the following new subparagraphs:
       ``(C) Special rule for certain judgments and settlements.--
     Subparagraph (A) shall not apply to any offset of a 
     participant's accrued benefit in a plan against an amount 
     that the participant is ordered or required to pay to the 
     plan if--
       ``(i) the order or requirement to pay arises--

       ``(I) under a judgment of conviction for a crime involving 
     such plan,
       ``(II) under a civil judgment (including a consent order or 
     decree) entered by a court in an action brought in connection 
     with a violation (or alleged violation) of part 4 of subtitle 
     B of title I of the Employee Retirement Income Security Act 
     of 1974, or
       ``(III) pursuant to a settlement agreement between the 
     Secretary of Labor and the participant, or a settlement 
     agreement between the Pension Benefit Guaranty Corporation 
     and the participant, in connection with a violation (or 
     alleged violation) of part 4 of subtitle B of title I of such 
     Act,

       ``(ii) the judgment, order, decree, or settlement agreement 
     expressly provides for the offset of all or part of the 
     amount ordered or required to be paid to the plan against the 
     participant's accrued benefit in the plan, and
       ``(iii) if the participant has a spouse at the time at 
     which the offset is to be made--

       ``(I) such spouse has consented in writing to such offset 
     and such consent is witnessed by a notary public or 
     representative of the plan,
       ``(II) such spouse is ordered or required to pay in such 
     judgment, order, decree, or settlement an amount to the plan 
     in connection with a violation of part 4 of this title, or
       ``(III) in such judgment, order, decree, or settlement, 
     such spouse retains the right to receive the value of the 
     survivor annuity under a qualified joint and survivor annuity 
     provided pursuant to paragraph (11)(A)(i) and under a 
     qualified preretirement survivor annuity provided pursuant to 
     paragraph (11)(A)(ii), determined in accordance with 
     subparagraph (D).

       ``(D) Determination of value of survivor annuity in 
     connection with offset.--The value of the survivor annuity 
     described in subparagraph (C)(iii)(III) shall be determined 
     as if--
       ``(i) the participant terminated employment on the date of 
     the offset,
       ``(ii) there was no offset,
       ``(iii) the plan permitted retirement only on or after 
     normal retirement age,
       ``(iv) the plan provided only the minimum-required 
     qualified joint and survivor annuity, and
       ``(v) the amount of the qualified preretirement survivor 
     annuity under the plan is equal to the amount of the survivor 
     annuity payable under the minimum-required qualified joint 
     and survivor annuity.

     For purposes of this subparagraph, the term `minimum-required 
     qualified joint and survivor annuity' means the qualified 
     joint and survivor annuity which is the actuarial equivalent 
     of a single annuity for the life of the participant and under 
     which the survivor annuity is 50 percent of the amount of the 
     annuity which is payable during the joint lives of the 
     participant and the spouse.
       ``(E) Waiver of certain distribution requirements.--With 
     respect to the requirements of subsections (a) and (k) of 
     section 401, section 403(b), and section 409(d), a plan shall 
     not be treated as failing to meet such requirements solely by 
     reason of an offset under subparagraph (C).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to judgments, orders, and decrees issued, and 
     settlement agreements entered into, on or after the date of 
     the enactment of this Act.
                         TITLE III--PORTABILITY

     SEC. 301. FASTER VESTING OF EMPLOYER MATCHING CONTRIBUTIONS.

       (a) In General.--Paragraph (2) of section 203(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1053(a)) is amended--
       (1) by striking ``or (B)'' and inserting ``(B), and, if 
     applicable, (C)'',
       (2) by striking ``3'', ``4'', ``5'', ``6'', and ``7'' in 
     the table in subparagraph (B) and inserting ``1'', ``2'', 
     ``3'', ``4'', and ``5'', respectively, and
       (3) by adding at the end the following new subparagraph:
       ``(C) 401(k) plans.--A plan satisfies the requirements of 
     this subparagraph if--
       ``(i) the plan includes a qualified cash or deferred 
     arrangement (as defined in section 401(k)(2)) of the Internal 
     Revenue Code of 1986, and
       ``(ii) an employee who has completed at least 3 years of 
     service has a nonforfeitable right to 100 percent of the 
     employee's accrued benefit derived from employer matching 
     contributions (as defined in section 401(m)(4)(A) of such 
     Code).

     For purposes of this subparagraph, matching contributions 
     shall be taken into account regardless of whether the 
     matching contributions are made to the same plan as the 
     contributions made under section 401(k) of such Code, and 
     matching contributions to any plan shall be taken into 
     account if such matching contributions are made with respect 
     to after-tax employee contributions includible in gross 
     income and if the employer's limit on matching contributions 
     with respect to such includible employee contributions is 
     coordinated with the employer's limit on matching 
     contributions with respect to contributions under such 
     section.''.
       (b) Conforming Amendments.--Paragraph (2) of section 411(a) 
     of the Internal Revenue Code of 1986 (relating to employer 
     contributions) is amended--
       (1) by striking ``or (B)'' and inserting ``(B), and, if 
     applicable, (C)'',
       (2) by striking ``3'', ``4'', ``5'', ``6'', and ``7'' in 
     the table in subparagraph (B) and inserting ``1'', ``2'', 
     ``3'', ``4'', and ``5'', respectively,
       (3) by striking ``3 to 7'' and inserting ``1 to 5'', and
       (4) by adding at the end the following new subparagraph:
       ``(C) 401(k) plans.--A plan satisfies the requirements of 
     this subparagraph if--
       ``(i) the plan includes a qualified cash or deferred 
     arrangement (as defined in section 401(k)(2)), and
       ``(ii) an employee who has completed at least 3 years of 
     service has a nonforfeitable right to 100 percent of the 
     employee's accrued benefit derived from employer matching 
     contributions (as defined in section 401(m)(4)(A)).

     For purposes of this subparagraph, matching contributions 
     shall be taken into account regardless of whether the 
     matching contributions are made to the same plan as the 
     contributions made under section 401(k), and matching 
     contributions to any plan shall be taken into account if such 
     matching contributions are made with respect to after-tax 
     employee contributions and if the employer's limit on 
     matching contributions with respect to such after-tax 
     employee contributions is coordinated with the employer's 
     limit on matching contributions with respect to contributions 
     under such section.''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraphs (2) and 
     (3), the amendments made by this section shall apply to plan 
     years beginning after December 31, 1997.
       (2) Application to current employees.--The amendments made 
     by this section shall not apply to any employee who does not 
     have at least 1 hour of service in any plan year beginning 
     after December 31, 1997.
       (3) Collective bargaining agreements.--In the case of a 
     plan maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers ratified by the date of the enactment of this Act, 
     the amendments made by this section shall not apply to 
     employees covered by any such agreement in plan years 
     beginning before the earlier of--
       (A) the later of--
       (i) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof on or after such date of enactment), 
     or
       (ii) January 1, 1998, or
       (B) January 1, 2002.

     SEC. 302. RATIONALIZE THE RESTRICTIONS ON DISTRIBUTIONS FROM 
                   401(k) PLANS.

       (a) In General.--Section 401(k)(2)(B)(i)(I) of the Internal 
     Revenue Code of 1986 (relating to qualified cash or deferred 
     arrangements) is amended by striking ``separation from 
     service'' and inserting ``severance from employment''.
       (b) Business Sale Requirements Deleted.--
       (1) In general.--Section 401(k)(2)(B)(i)(II) of the 
     Internal Revenue Code of 1986 (relating to qualified cash or 
     deferred arrangements) is amended by striking ``an event'' 
     and inserting ``a plan termination''.
       (2) Conforming amendments.--Section 401(k)(10) of such Code 
     is amended--
       (A) by striking subparagraph (A) and inserting the 
     following:
       ``(A) In general.--A plan termination is described in this 
     paragraph if the termination of the plan is without 
     establishment or maintenance of another defined contribution 
     plan (other than an employee stock ownership plan as defined 
     in section 4975(e)(7)).'',
       (B) by striking subparagraph (C), and
       (C) by striking ``or disposition of assets or subsidiary'' 
     in the heading.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 1997.

[[Page S321]]

     SEC. 303. TREATMENT OF TRANSFERS BETWEEN DEFINED CONTRIBUTION 
                   PLANS.

       (a) In General.--Section 411(d)(6) of the Internal Revenue 
     Code of 1986 (relating to accrued benefit not to be decreased 
     by amendment) is amended by adding at the end the following 
     new subparagraph:
       ``(D) Plan transfers.--A defined contribution plan (in this 
     subparagraph referred to as the `transferee plan') shall not 
     be treated as failing to meet the requirements of this 
     paragraph merely because the transferee plan does not provide 
     some or all of the forms of distribution previously available 
     under another defined contribution plan (in this subparagraph 
     referred to as the `transferor plan') to the extent that--
       ``(i) the forms of distribution previously available under 
     the transferor plan applied to the account of a participant 
     or beneficiary under the transferor plan that was transferred 
     from the transferor plan to the transferee plan pursuant to a 
     direct transfer rather than pursuant to a distribution from 
     the transferor plan,
       ``(ii) the terms of both the transferor plan and the 
     transferee plan authorize the transfer described in clause 
     (i),
       ``(iii) the transfer described in clause (i) was made 
     pursuant to a voluntary election by the participant or 
     beneficiary whose account was transferred to the transferee 
     plan,
       ``(iv) the election described in clause (iii) was made 
     after the participant or beneficiary received a notice 
     describing the consequences of making the election,
       ``(v) if the transferor plan provides for an annuity as the 
     normal form of distribution under the plan in accordance with 
     section 417, the transfer is made with the consent of the 
     participant's spouse (if any), and such consent meets 
     requirements similar to the requirements imposed by section 
     417(a)2), and
       ``(vi) the transferee plan allows the participant or 
     beneficiary described in clause (iii) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under transferee plan in the form of a single sum 
     distribution.''.
       (b) Conforming Amendment.--Section 204(g)of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
     amended by adding at the end the following new paragraph:
       ``(4) A defined contribution plan (in this paragraph 
     referred to as the `transferee plan') shall not be treated as 
     failing to meet the requirements of this subsection merely 
     because the transferee plan does not provide some or all of 
     the forms of distribution previously available under another 
     defined contribution plan (in this paragraph referred to as 
     the `transferor plan') to the extent that--
       ``(A) the forms of distribution previously available under 
     the transferor plan applied to the account of a participant 
     or beneficiary under the transferor plan that was transferred 
     from the transferor plan to the transferee plan pursuant to a 
     direct transfer rather than pursuant to a distribution from 
     the transferor plan,
       ``(B) the terms of both the transferor plan and the 
     transferee plan authorize the transfer described in 
     subparagraph (A),
       ``(C) the transfer described in subparagraph (A) was made 
     pursuant to a voluntary election by the participant or 
     beneficiary whose account was transferred to the transferee 
     plan,
       ``(D) the election described in subparagraph (C) was made 
     after the participant or beneficiary received a notice 
     describing the consequences of making the election,
       ``(E) if the transferor plan provides for an annuity as the 
     normal form of distribution under the plan in accordance with 
     section 205, the transfer is made with the consent of the 
     participant's spouse (if any), and such consent meets 
     requirements similar to the requirements imposed by section 
     205(c)2), and
       ``(F) the transferee plan allows the participant or 
     beneficiary described in subparagraph (C) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under transferee plan in the form of a single sum 
     distribution.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transfers after December 31, 1997.

     SEC. 304. MISSING PARTICIPANTS.

       (a) In General.--Section 4050 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1350) is amended by 
     redesignating subsection (c) as subsection (e) and by 
     inserting after subsection (b) the following new subsections:
       ``(c) Multiemployer Plans.--The corporation shall prescribe 
     rules similar to the rules in subsection (a) for 
     multiemployer plans covered by this title that terminate 
     under section 4041A.
       ``(d) Plans Not Otherwise Subject to Title.--
       ``(1) Transfer to corporation.--The plan administrator of a 
     plan described in paragraph (4) may elect to transfer a 
     missing participant's benefits to the corporation upon 
     termination of the plan.
       ``(2) Information to the corporation.--To the extent 
     provided in regulations, the plan administrator of a plan 
     described in paragraph (4) shall, upon termination of the 
     plan, provide the corporation information with respect to 
     benefits of a missing participant if the plan transfers such 
     benefits--
       ``(A) to the corporation, or
       ``(B) to an entity other than the corporation or a plan 
     described in paragraph (4)(B)(ii).
       ``(3) Payment by the corporation.--If benefits of a missing 
     participant were transferred to the corporation under 
     paragraph (1), the corporation shall, upon location of the 
     participant or beneficiary, pay to the participant or 
     beneficiary the amount transferred (or the appropriate 
     survivor benefit) either--
       ``(A) in a single sum (plus interest), or
       ``(B) in such other form as is specified in regulations of 
     the corporation.
       ``(4) Plans described.--A plan is described in this 
     paragraph if--
       ``(A) the plan is a pension plan (within the meaning of 
     section 3(2))--
       ``(i) to which the provisions of this section do not apply 
     (without regard to this subsection), and
       ``(ii) which is not a plan described in paragraphs (2) 
     through (11) of section 4021(b), and
       ``(B) at the time the assets are to be distributed upon 
     termination, the plan--
       ``(i) has missing participants, and
       ``(ii) has not provided for the transfer of assets to pay 
     the benefits of all missing participants to another pension 
     plan (within the meaning of section 3(2)).
       ``(5) Certain provisions not to apply.--Subsections (a)(1) 
     and (a)(3) shall not apply to a plan described in paragraph 
     (4).''.
       (b) Conforming Amendments.--
       (1) Section 206(f) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1056(f)) is amended--
       (A) by striking ``title IV'' and inserting ``section 
     4050'', and
       (B) by striking ``the plan shall provide that''.
       (2) Section 401(a)(34) (relating to benefits of missing 
     participants on plan termination) is amended by striking 
     ``title IV'' and inserting ``section 4050''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions made after final regulations 
     implementing subsections (c) and (d) of section 4050 of the 
     Employee Retirement Income Security Act of 1974 (as added by 
     subsection (a)), respectively, are prescribed.
                   TITLE IV--TOWARD EQUITY FOR WOMEN

     SEC. 401. INDIVIDUAL'S PARTICIPATION IN PLAN NOT TREATED AS 
                   PARTICIPATION BY SPOUSE.

       (a) In General.--Paragraph (1) of section 219(g) of the 
     Internal Revenue Code of 1986 (relating to limitation on 
     deduction for active participants in certain pension plans) 
     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. 402. MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY 
                   REQUIREMENTS.

       (a) Amendments to ERISA.--
       (1) Amount of annuity.--
       (A) In general.--Paragraph (1) of section 205(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1055(a)) is amended by inserting ``or, at the election of the 
     participant, shall be provided in the form of a qualified 
     joint and \2/3\ survivor annuity'' after ``survivor 
     annuity,''.
       (B) Definition.--Subsection (d) of section 205 of such Act 
     (29 U.S.C. 1055) is amended--
       (i) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively,
       (ii) by inserting ``(1)'' after ``(d)'', and
       (iii) by adding at the end the following new paragraph:
       ``(2) For purposes of this section, the term ``qualified 
     joint and \2/3\ survivor annuity'' means an annuity--
       ``(A) for the participant while both the participant and 
     the spouse are alive with a survivor annuity for the life of 
     surviving individual (either the participant or the spouse) 
     equal to 67 percent of the amount of the annuity which is 
     payable to the participant while both the participant and the 
     spouse are alive,
       ``(B) which is the actuarial equivalent of a single annuity 
     for the life of the participant, and
       ``(C) which, for all other purposes of this Act, is treated 
     as a qualified joint and survivor annuity.''.
       (2) Illustration requirement.--Clause (i) of section 
     205(c)(3)(A) of such Act (29 U.S.C. 1055(c)(3)(A)) is amended 
     to read as follows:
       ``(i) the terms and conditions of each qualified joint and 
     survivor annuity and qualified joint and \2/3\ survivor 
     annuity offered, accompanied by an illustration of the 
     benefits under each such annuity for the particular 
     participant and spouse and an acknowledgement form to be 
     signed by the participant and the spouse that they have read 
     and considered the illustration before any form of retirement 
     benefit is chosen,''.
       (b) Amendments to Internal Revenue Code.--
       (1) Amount of annuity.--
       (A) In general.--Clause (i) of section 401(a)(11)(A) of the 
     Internal Revenue Code of 1986 (relating to requirement of 
     joint and survivor annuity and preretirement survivor 
     annuity) is amended by inserting ``or, at the election of the 
     participant, shall be provided in the form of a qualified 
     joint and \2/3\ survivor annuity'' after ``survivor 
     annuity,''.
       (B) Definition.--Section 417 of such Code (relating to 
     definitions and special rules for purposes of minimum 
     survivor annuity requirements) is amended by redesignating 
     subsection (f) as subsection (g) and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Definition of Qualified Joint and \2/3\ Survivor 
     Annuity.--For purposes of this section and section 
     401(a)(11), the term

[[Page S322]]

     ``qualified joint and \2/3\ survivor annuity'' means an 
     annuity--
       ``(1) for the participant while both the participant and 
     the spouse are alive with a survivor annuity for the life of 
     surviving individual (either the participant or the spouse) 
     equal to 67 percent of the amount of the annuity which is 
     payable to the participant while both the participant and the 
     spouse are alive,
       ``(2) which is the actuarial equivalent of a single annuity 
     for the life of the participant, and
       ``(3) which, for all other purposes of this title, is 
     treated as a qualified joint and survivor annuity.''.
       (2) Illustration requirement.--Clause (i) of section 
     417(a)(3)(A) of such Code (relating to explanation of joint 
     and survivor annuity) is amended to read as follows:
       ``(i) the terms and conditions of each qualified joint and 
     survivor annuity and qualified joint and \2/3\ survivor 
     annuity offered, accompanied by an illustration of the 
     benefits under each such annuity for the particular 
     participant and spouse and an acknowledgement form to be 
     signed by the participant and the spouse that they have read 
     and considered the illustration before any form of retirement 
     benefit is chosen,''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 1996.

     SEC. 403. DIVISION OF PENSION BENEFITS UPON DIVORCE.

       (a) Amendments to the Internal Revenue Code of 1986.--
     Subsection (p)(1) of section 414 of the Internal Revenue Code 
     of 1986 is amended by adding the following new subparagraph:
       ``(C) Deemed domestic relations order upon divorce.--
       ``(i) In general.--A divorce decree issued with respect to 
     the participant and the former spouse pursuant to a State 
     domestic relations law (including an annulment or other order 
     of marital dissolution) shall, upon delivery to a plan along 
     with the information required by paragraph (2)(A), be deemed 
     by the plan to be a domestic relations order that specifies 
     that 50 percent of the marital share of the participant's 
     accrued benefit is to be provided to such former spouse, 
     unless the divorce decree states that pension benefits were 
     considered by the parties and no division is intended.
       ``(ii) Marital share.--The marital share shall be the 
     accrued benefit of the participant under the plan as of the 
     date of the divorce (to the extent such accrued benefit is 
     vested at the date of the divorce or any later date) 
     multiplied by a fraction, the numerator of which is the 
     period of participation by the participant under the plan 
     starting with the date of marriage and ending with the date 
     of divorce, and the denominator of which is the total period 
     of participation by the participant under the plan.
       ``(iii) Interpretation as qualified domestic relations 
     order.--Each plan shall establish reasonable rules for 
     determining how any such deemed domestic relations order is 
     to be interpreted under the plan so as to constitute a 
     qualified domestic relations order that satisfies paragraphs 
     (2) through (4) (and a copy of such rules shall be provided 
     to such former spouse promptly after delivery of the divorce 
     decree). Such rules--

       ``(I) may delay the effect of such an order until the 
     earlier of the date the participant is fully vested or has 
     terminated employment,
       ``(II) may allow the former spouse to be paid out 
     immediately,
       ``(III) shall permit the former spouse to be paid not later 
     than the earliest retirement age under the plan,
       ``(IV) may require the submitter of the divorce decree to 
     present a marriage certificate or other evidence of the 
     marriage date to assist in benefit calculations,
       ``(V) may require that a divorce decree be presented on the 
     date which is not later than 2 years after the date of the 
     issuance of the decree, and
       ``(VI) may conform to the rules applicable to qualified 
     domestic relations orders regarding form or type of benefit.

       ``(iv) Application.--This subparagraph shall not apply to 
     the extent that a qualified domestic relations order issued 
     in connection with such divorce provides otherwise.''.
       (b) Amendments to the Employee Retirement Income Security 
     Act of 1974.--Subsection (d)(2)(B) of section 206 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1056) is amended by adding the following new subclause (iii):
       ``(iii) Deemed domestic relations order upon divorce.--

       ``(I) In general.--A divorce decree issued with respect to 
     the participant and the former spouse pursuant to a State 
     domestic relations law (including an annulment or other order 
     of marital dissolution) shall, upon delivery to a plan along 
     with the information required by subparagraph (C)(i), be 
     deemed by the plan to be a domestic relations order that 
     specifies that 50 percent of the marital share of the 
     participant's accrued benefit is to be provided to such 
     former spouse.
       ``(II) Marital share.--The marital share shall be the 
     accrued benefit of the participant under the plan as of the 
     date of the divorce (to the extent such accrued benefit is 
     vested at the date of the divorce or any later date) 
     multiplied by a fraction, the numerator of which is the 
     period of participation by the participant under the plan 
     starting with the date of marriage and ending with the date 
     of divorce, and the denominator of which is the total period 
     of participation by the participant under the plan.
       ``(III) Interpretation as qualified domestic relations 
     order.--Each plan shall establish reasonable rules for 
     determining how any such deemed domestic relations order is 
     to be interpreted under the plan so as to constitute a 
     qualified domestic relations order that satisfies 
     subparagraphs (C) through (E) (and a copy of such rules shall 
     be provided to such former spouse promptly after delivery of 
     the divorce decree). Such rules (aa) may delay the effect of 
     such an order until the earlier of the date the participant 
     is fully vested or has terminated employment, (bb) may allow 
     the former spouse to be paid out immediately, and (cc) shall 
     permit the spouse to be paid not later than the earliest 
     retirement age under the plan.
       ``(IV) Application.--This subclause shall not apply to the 
     extent that a qualified domestic relations order issued in 
     connection with such divorce provides otherwise.''.

       (c) Effective Date.--The amendments made by this section 
     shall be effective for divorce decrees issued after December 
     31, 1999.

     SEC. 404. DEFERRED ANNUITIES FOR SURVIVING SPOUSES OF FEDERAL 
                   EMPLOYEES.

       (a) In General.--Section 8341 of title 5, United States 
     Code, is amended--
       (1) in subsection (h)(1), by striking ``section 8338(b) of 
     this title'' and inserting ``section 8338(b), and a former 
     spouse of a deceased former employee who separated from the 
     service with title to a deferred annuity under section 8338 
     (if they were married to one another prior to the date of 
     separation),''; and
       (2) by adding at the end the following:
       ``(j)(1) If a former employee dies after having separated 
     from the service with title to a deferred annuity under 
     section 8338 but before having established a valid claim for 
     annuity, and is survived by a spouse to whom married on the 
     date of separation, the surviving spouse may elect to 
     receive--
       ``(A) an annuity, commencing on what would have been the 
     former employee's 62d birthday, equal to 55 percent of the 
     former employee's deferred annuity;
       ``(B) an annuity, commencing on the day after the date of 
     death of the former employee, such that, to the extent 
     practicable, the present value of the future payments of the 
     annuity would be actuarially equivalent to the present value 
     of the future payments under subparagraph (A) as of the day 
     after the former employee's death; or
       ``(C) the lump-sum credit, if the surviving spouse is the 
     individual who would be entitled to the lump-sum credit and 
     if such surviving spouse files application therefor.
       ``(2) An annuity under this subsection and the right 
     thereto terminate on the last day of the month before the 
     surviving spouse remarries before becoming 55 years of age, 
     or dies.''.
       (b) Corresponding Amendment for FERS.--Section 8445(a) of 
     title 5, United States Code, is amended--
       (1) by striking ``(or of a former employee or'' and 
     inserting ``(or of a former''; and
       (2) by striking ``annuity)'' and inserting ``annuity, or of 
     a former employee who dies after having separated from the 
     service with title to a deferred annuity under section 8413 
     but before having established a valid claim for annuity (if 
     such former spouse was married to such former employee prior 
     to the date of separation))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to surviving spouses and former 
     spouses (whose marriage, in the case of the amendments made 
     by subsection (a), terminated after May 6, 1985) of former 
     employees who die after the date of the enactment of this 
     Act.

     SEC. 405. PAYMENT OF LUMP-SUM CREDIT FOR FORMER SPOUSES OF 
                   FEDERAL EMPLOYEES.

       (a) In General.--Title 5, United States Code, is amended--
       (1) in section 8342(c), by striking ``Lump-sum'' and 
     inserting ``Except as provided in section 8345(j), lump-
     sum'';
       (2) in section 8345(j)--
       (A) in paragraph (1), by inserting after ``that 
     individual'' the following: ``, or be made under section 
     8342(d) through (f) to an individual entitled under section 
     8342(c),''; and
       (B) by adding at the end the following:
       ``(4) Any payment under this subsection to a person bars 
     recovery by any other person.'';
       (3) in section 8424(d), by striking ``Lump-sum'' and 
     inserting ``Except as provided in section 8467(a), lump-
     sum''; and
       (4) in section 8467--
       (A) in subsection (a), by inserting after ``that 
     individual'' the following: ``, or be made under section 
     8424(e) through (g) to an individual entitled under section 
     8424(d),''; and
       (B) by adding at the end the following:
       ``(d) Any payment under this section to a person bars 
     recovery by any other person.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to any death occurring after the 
     90th day after the date of the enactment of this Act.

     SEC. 406. WOMEN'S PENSION TOLL-FREE PHONE NUMBER.

       (a) In General.--The Secretary of Labor shall contract with 
     an independent organization to create a women's pension toll-
     free telephone number and contact to serve as--
       (1) a resource for women on pension questions and issues;
       (2) a source for referrals to appropriate agencies; and

[[Page S323]]

       (3) a source for printed information.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated $500,000 for each of the fiscal years 
     1997, 1998, 1999, and 2000.
             TITLE V--DATE FOR ADOPTION OF PLAN AMENDMENTS

     SEC. 501. DATE FOR ADOPTION OF PLAN AMENDMENTS.

       (a) In General.--Except as otherwise provided in this Act, 
     if any amendment made by this Act requires an amendment to 
     any plan, such plan amendment shall not be required to be 
     made before the last day of the first plan year beginning on 
     or after January 1, 1998, if--
       (1) during the period after such amendment takes effect and 
     before the last day of such first plan year, the plan is 
     operated in accordance with the requirements of such 
     amendment, and
       (2) such plan amendment applies retroactively to such 
     period.

     A plan shall not be treated as failing to provide definitely 
     determinable benefits or contributions, or to be operated in 
     accordance with the provisions of the plan, merely because it 
     operates in accordance with this subsection.
       (b) Governmental Plans.--In the case of a governmental plan 
     (as defined in section 414(d) of the Internal Revenue Code of 
     1986), subsection (a) shall be applied by substituting for 
     ``January 1, 1998'' the later of--
       (1) January 1, 1999, or
       (2) the date which is 90 days after the opening of the 
     first legislative session beginning after January 1, 1999, of 
     the governing body with authority to amend the plan, but only 
     if such governing body does not meet continuously.
       (c) Special Rule for Collectively Bargained Plans.--
     Nothwithstanding any other provision of this Act, in the case 
     of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, any amendment made by this Act which 
     requires an amendment to such plan shall not be required to 
     be made before the last day of the first plan year beginning 
     on or after the earlier of--
       (1) the later of--
       (A) January 1, 1998, or
       (B) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after the date of the enactment of 
     this Act), or
       (2) January 1, 1999.
                                 ______
                                 
      By Mr. DASCHLE (for himself, Mr. Biden, Mr. Leahy, Mr. Kohl, Mr. 
        Breaux, Mr. Ford, Ms. Mikulski, Mr. Dodd, Mr. Durbin, Mr. 
        Kerry, Mr. Levin, Ms. Landrieu, Mr. Torricelli, Ms. Moseley-
        Braun, Mr. Glenn, and Mr. Rockefeller):
  S. 15. A bill to control youth violence, crime, and drug abuse, and 
for other purposes; to the Committee on the Judiciary.


      the YOUTH VIOLENCE, CRIME AND DRUG ABUSE CONTROL ACT of 1997

  Mr. BIDEN. Mr. President, today I rise to introduce--along with 
Senator Daschle, Senator Leahy, and many other Senators--legislation 
which will be a key cornerstone of the Senate Democrats anti-crime, 
anti-drug focus for the new Congress.
  Our thrust is clear and straight-forward:
  We must continue the successes of the 1994 Biden crime law.
  And, at the same time, we must take up the new challenge of 
confronting crime and drug abuse among our youth with a commonsense 
strategy balancing tough sanctions, certain punishment and protecting 
literally millions of kids from the criminals and drug pushers who can 
target any kid from any family whose parents are at work when the 
school day ends.
  We must continue the success of the 1994 crime law.
  While I give the credit first and foremost to the police officers on 
our Nation's streets, the verdict from the FBI's national crime 
statistics is that since the 1994 crime law, violent crime is down and 
down significantly:
  1996 is projected to have the lowest murder toll since 1988--and a 
murder rate that is lowest since 1971;
  1996 is projected to have the lowest violent crime total since 1990; 
and
  the murder rate for wives, ex-wives and girlfriends at the hands of 
their ``intimates'' fell to an 18-year low in 1994--and is lower still 
in 1995.
  This is a record of success which should convince the Senate to 
extend the 1994 crime law.
  Adding 25,000 more police by extending the 100,000 cops program for 
two more years.
  Extending the Violence Against Women Act funding to shelter 400,000 
more battered women and their children and continuing to help States 
arrest and prosecute batterers. Providing an additional $5 billion to 
build up to 80,000 more prison cells for violent criminals--we also 
propose to give States greater flexibility with these dollars to speed 
the prosecution of violent criminals and increase the use of drug 
testing. Provide $1 billion to extend such proven law enforcement 
programs as the Byrne anti-drug grants to State and local law 
enforcement. And, extend the crime law trust fund to fund all these 
initiatives from the cost-savings from downsizing the Federal 
Government--without increasing the Federal budget deficit.
  The bottom line--this bill calls on the full Senate to continue the 
successes of the 1994 Biden crime law.
  But, this legislation does not stop there. In the face of rising teen 
drug abuse and rising youth violence--despite some recent hopeful 
news--we must undertake a comprehensive effort to target these 
problems. This legislation offers just such a comprehensive effort:
  First, we propose to reform the juvenile justice system to crack down 
on violent youth by:
  Making some key changes to Federal law that respond to legitimate 
concerns which create the pressure to take the unwise step of 
prosecuting kids in our overburdened adult courts. Specifically, 
providing greater access to juveniles records and raising the mandatory 
release age for juveniles from 21 to 26--so juveniles will face up to 
11 years in prison even if they are prosecuted as juveniles.
  Providing $1 billion to help States build prisons for violent 
juveniles as well as additional prosecutors and other improvements to 
State juvenile justice systems (including certain, graduated punishment 
for first-time and minor juvenile offenders).
  Creating special juvenile ``gun'' courts where juvenile gun offenders 
are tried and sentenced on an expedited basis.
  These are essential to controlling juvenile crime because, as every 
mother knows, immediate and certain punishment is the key to 
disciplining kids.
  Second, we must target one of the primary sources of youth violence--
street gangs.
  We propose aggressive steps to:
  Target gang paraphernalia by boosting the penalties for criminals who 
arm themselves with bullet-proof body armor and deadly accurate laser-
sighting devices. And, as Senator Leahy has identified, we must make 
some commonsense reforms to speed law enforcement access to the numeric 
pagers so often used by youth gang criminals.
  Create a new crime of interstate franchise spread of street gangs--a 
step which better targets Federal law enforcement resources than simply 
federalizing ever more State crimes and encroaching upon the State's 
traditional handling of juvenile crime.
  Cracking down on street gangs also means that we should increase the 
penalties for witness intimidation, a favored tactic of criminal street 
gangs. This is a proposal outlined by the President just this weekend.
  Third, we must redouble our efforts to treat and prevent youth drug 
abuse.
  For the past several months, you have heard me modify one of the key 
arguments of the President's 1992 campaign by stating--``it's drugs, 
stupid, it's drugs.''
  This statement is--unfortunately--necessary in the face of rising 
drug abuse among our children. While drug abuse among adults is holding 
steady, all the surveys tell us that more and more children are falling 
prey to drugs.
  We propose a multi-prong response, because drugs need to be fought 
not only in our communities, but also in our scientific laboratories 
where important breakthroughs are being made into medicines to treat 
drug addiction--we propose additional funding for the Federal 
Medications Development Program and to provide incentives to the 
private sector to develop new medicines to treat heroin and cocaine 
addiction.
  We must also expand drug courts to cover 50,000 children--a vast 
improvement on the no drug testing, no treatment, and no threat of 
punishment system which typifies too many juvenile courts today.
  As I proposed last year, we must tighten controls on the club drug--
ketamine--that is popular with too many children today.

[[Page S324]]

  Funding drug treatment for 600,000 drug-addicted children is also 
key--particularly as our Nation stands on the edge of a baby-boomerang 
wave that will mean more teenagers--and more teen addicts.
  Reauthorizing the drug director's office as well as the Safe & Drug-
Free Schools Program which is the core of Federal drug prevention 
efforts are two other necessary steps.
  In addition, and in response to the recent passage of so-called 
medical marijuana initiatives, we seek a measure which should be 
supported even by their proponents--a simple study to determine if drug 
abuse among children rises in these two States.
  Fourth, we call for a renewed effort to prevent youth violence.
  No where has the crime policy debate been subject to more distortions 
and misunderstandings than on a goal all of us should share--let's 
prevent kids from getting involved in crime, violence and drugs in the 
first place.
  To get past all the misunderstanding, we propose to call upon the 
prestigious, non-partisan National Academy of Sciences to answer the 
questions--can we prevent youth crime? And, if so, how do we do so in 
the most efficient way possible?
  Let me repeat a challenge I offered last week--I will live by the 
results of this study, if those who oppose prevention efforts will as 
well. If the national academy says we can't figure out this task, so be 
it, I will not seek appropriations for any funds we authorize through 
this legislation. But, if the national academy of sciences says that we 
can, I challenge all to support full funding for these crime prevention 
efforts.
  But, in the meantime, it seems to me that we do know at least one 
thing about preventing youth crime and drug abuse--my mom summarized 
what we know in the simple phrase used by mothers everywhere: ``Idle 
hands are the devil's workshop.''
  This refers to the commonsense notion that if we can just get kids 
off the streets and into supervised programs during the after school 
hours when kids are likely to be the victims of gangs and criminals or 
the customers of drug pushers--if we can just do that simply thing, 
with boys and girls clubs or many other proven efforts, we can make 
important in-roads against drug abuse and crime among children.
  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. 15

       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 ``Youth 
     Violence, Crime, and Drug Abuse 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. Definitions.

                         TITLE I--CRIME CONTROL

              Subtitle A--More Police Officers on the Beat

Sec. 101. More police officers on the beat.
Sec. 102. Grants for equipment, technology, and support systems.
Sec. 103. National community police telecommunications.
Sec. 104. Technical amendment.

  Subtitle B--Violent Offender Incarceration and Truth-in-Sentencing 
                                 Grants

Sec. 121. Formula allocations.
Sec. 122. Extension of violent offender incarceration and truth-in-
              sentencing grants.

                     Subtitle C--Domestic Violence

Sec. 131. Extension of Violence Against Women Act.
Sec. 132. Rural domestic violence and child abuse enforcement 
              assistance.

            Subtitle D--Assistance to Local Law Enforcement

Sec. 141. Extension of law enforcement family support funding.
Sec. 142. Extension of rural drug enforcement and training funding.
Sec. 143. Extension of DNA identification grants funding.
Sec. 144. Extension of Byrne grant funding.
Sec. 145. Extension of technical automation grant funding.
Sec. 146. Extension of grants for State court prosecutors.

                    TITLE II--YOUTH VIOLENCE CONTROL

               Subtitle A--Federal Juvenile Prosecutions

Sec. 201. Increased detention, mandatory restitution, and additional 
              sentencing options for youth offenders.
Sec. 202. Access to records.
Sec. 203. Reinstituting dismissed cases.

 Subtitle B--Assistance to States for Prosecuting and Punishing Youth 
                               Offenders

Sec. 214. Juvenile and violent offender incarceration grants.
Sec. 215. Certain punishment and graduated sanctions for youth 
              offenders.

                    Subtitle C--Juvenile Gun Courts

Sec. 221. Definitions.
Sec. 222. Grant program.
Sec. 223. Applications.
Sec. 224. Grant awards.
Sec. 225. Use of grant amounts.
Sec. 226. Grant limitations.
Sec. 227. Federal share.
Sec. 228. Report and evaluation.
Sec. 229. Authorization of appropriations.

                  Subtitle D--Gang Violence Reduction

         Part 1--Enhanced Penalties for Gang-Related Activities

Sec. 241. Gang franchising.
Sec. 242. Gang franchising as RICO predicate.
Sec. 243. Increase in offense level for participation in crime as gang 
              member.
Sec. 244. Increasing the penalty for using physical force to tamper 
              with witnesses, victims, or informants.
Sec. 245. Possession of firearms in relation to counts of violence or 
              drug trafficking crimes.
Sec. 246. Increased penalty for transferring a firearm to a minor for 
              use in a crime.
Sec. 247. Elimination of statute of limitations for murder.
Sec. 248. Extension of statute of limitations for violent and drug 
              trafficking crimes.

                       Part 2--Gang Paraphernalia

Sec. 251. Enhancing law enforcement access to clone numeric pagers.
Sec. 252. Prohibitions relating to body armor.
Sec. 253. Prohibitions relating to laser sighting devices.

         Subtitle E--Rights of Victims in State Juvenile Courts

Sec. 261. State guidelines.

 TITLE III--PREVENTION AND TREATMENT OF YOUTH DRUG ABUSE AND ADDICTION

           Subtitle A--Protecting Youth From Dangerous Drugs

Sec. 301. Rescheduling of ``club'' drugs.

    Subtitle B--Development of Medicines for the Treatment of Drug 
                               Addiction

                    Part 1--Pharmacotherapy Research

Sec. 321. Reauthorization for medication development program.

            Part 2--Patent Protections for Pharmacotherapies

Sec. 331. Recommendation for investigation of drugs.
Sec. 332. Designation of drugs.
Sec. 333. Protection for drugs.
Sec. 334. Open protocols for investigations of drugs.

  Part 3--Encouraging Private Sector Development of Pharmacotherapies

Sec. 341. Development, manufacture, and procurement of drugs for the 
              treatment of addiction to illegal drugs.

             Subtitle C--Prevention and Treatment Programs

                  Part 1--Comprehensive Drug Education

Sec. 351. Extension of safe and drug-free schools and communities 
              program.

                          Part 2--Drug Courts

Sec. 361. Reauthorization of drug courts program.
Sec. 362. Juvenile drug courts.

                         Part 3--Drug Treatment

Sec. 371. Drug treatment for juveniles.

                Subtitle D--National Drug Control Policy

Sec. 381. Reauthorization of Office of National Drug Control Policy.
Sec. 382. Study on effects of California and Arizona drug initiatives.

                    Subtitle E--Penalty Enhancements

Sec. 391. Increased penalties for using Federal property to grow or 
              manufacture controlled substances.
Sec. 392. Technical correction to ensure compliance of Federal 
              sentencing guidelines with Federal law.

             TITLE IV--PROTECTING YOUTH FROM VIOLENT CRIME

               Subtitle A--Grants for Youth Organizations

Sec. 401. Grant program.
Sec. 402. Grants to national organizations.
Sec. 403. Grants to States.
Sec. 404. Allocation; grant limitation.
Sec. 405. Report and evaluation.
Sec. 406. Authorization of appropriations.

     Subtitle B--``Say No to Drugs'' Community Centers Act of 1997

Sec. 421. Short title; definitions.
Sec. 422. Grant requirements.
Sec. 423. Authorization of appropriations.

                      Subtitle C--Missing Children

Sec. 431. Amendments to the Missing Children's Assistance Act.

           TITLE V--IMPROVING YOUTH CRIME AND DRUG PREVENTION

     Subtitle A--Comprehensive Study of Federal Prevention Efforts

Sec. 501. Study by national academy of science.

[[Page S325]]

         Subtitle B--Evaluation Mandate for Authorized Programs

Sec. 522. Evaluation of crime prevention programs.
Sec. 523. Evaluation and research criteria.
Sec. 524. Compliance with evaluation mandate.
Sec. 525. Reservation of amounts for evaluation and research.

            Subtitle C--Elimination of Ineffective Programs

Sec. 531. Sense of Senate regarding funding for programs determined to 
              be ineffective.

       TITLE VI--EXTENSION OF VIOLENT CRIME REDUCTION TRUST FUND

Sec. 601. Extension of violent crime reduction trust fund.

     SEC. 2. DEFINITIONS.

       In this Act--
       (1) the term ``Attorney General'' means the Attorney 
     General of the United States;
       (2) the term ``Indian tribe'' means a tribe, band, pueblo, 
     nation, or other organized group or community of Indians, 
     including an Alaska Native village (as defined in or 
     established under the Alaska Native Claims Settlement Act (43 
     U.S.C. 1601 et seq.)), that is recognized as eligible for the 
     special programs and services provided by the United States 
     to Indians because of their status as Indians;
       (3) the term ``juvenile'' has the meaning given that term 
     under applicable State law;
       (4) the term ``State'' means any State of the United 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Virgin Islands, American Samoa, Guam, and the 
     Northern Mariana Islands;
       (5) the term ``unit of local government'' means any city, 
     county, township, borough, parish, or other entity exercising 
     governmental power under State law;
       (6) the term ``Violent Crime Reduction Trust Fund'' means 
     the fund established under title XXXI of the Violent Crime 
     Control and Law Enforcement Act of 1994 (42 U.S.C. 14211 et 
     seq.); and
       (7) the term ``youth'' means a person who is not younger 
     than 5 and not older than 18 years of age.
                         TITLE I--CRIME CONTROL
              Subtitle A--More Police Officers on the Beat

     SEC. 101. MORE POLICE OFFICERS ON THE BEAT.

       Section 1001(a)(11)(A) of title I of the Omnibus Crime 
     Control and Safe Streets Act of 1968 (42 U.S.C. 
     3793(a)(11)(A)) is amended--
       (1) in clause (v), by striking ``and'' at the end;
       (2) in clause (vi), by striking the period at the end and 
     inserting a semicolon; and
       (3) by adding at the end the following:
       ``(vii) $1,240,000,000 for fiscal year 2001; and
       ``(viii) $1,240,000,000 for fiscal year 2002.''.

     SEC. 102. GRANTS FOR EQUIPMENT, TECHNOLOGY, AND SUPPORT 
                   SYSTEMS.

       Section 1701(b)(2)(A) of title I of the Omnibus Crime 
     Control and Safe Streets Act of 1968 (42 U.S.C. 3796dd) is 
     amended to read as follows:
       ``(A) may not exceed 20 percent of the funds available for 
     grants pursuant to this subsection in any fiscal year.''.

     SEC. 103. NATIONAL COMMUNITY POLICE TELECOMMUNICATIONS.

       Part Q of title I of the Omnibus Crime Control and Safe 
     Streets Act of 1968 (42 U.S.C. 3796dd et seq.) is amended by 
     adding at the end the following:

     ``SEC. 1710. NATIONAL POLICE TELECOMMUNICATIONS.

       ``(a) Findings.--Congress finds that--
       ``(1) police departments and sheriffs confirm that the 911 
     system is overloaded and that a large percentage of those 
     calls are nonemergency calls;
       ``(2) many communities have seen increases in their 911 
     call volumes of between 40 percent and 50 percent annually;
       ``(3) police officers are forced to spend too much time 
     responding to nonemergency situations, which eliminates time 
     for proactive community policing; and
       ``(4) efforts to limit the use of 911 by using general 
     telephone numbers and educating the public to reference a 
     general number in the telephone book have been ineffective.
       ``(b) Purpose.--The purposes of this section are--
       ``(1) to encourage the Federal Communications Commission to 
     reserve the 311 nonemergency number on a national basis for 
     use by public safety agencies in responding to nonemergency 
     police telephone calls; and
       ``(2) to establish a Federal assistance program to assist 
     States and localities in establishing 311 nonemergency 
     systems and to educate citizens in the use of 911 and 311.
       ``(c) Authority To Make 311 Nonemergency Grants.--The 
     Attorney General, acting through the Director of the Office 
     of Community Oriented Policing Services, may make grants to 
     States, units of local governments, Indian tribal 
     governments, other public and private entities, and 
     multijurisdictional or regional consortia, to encourage the 
     use of and to implement 311 nonemergency telecommunication 
     systems for public safety.
       ``(d) General Regulatory Authority.--The Attorney General 
     may promulgate regulations and guidelines to carry out this 
     section.
       ``(e) Authorization of Appropriations.--There are 
     authorized to be appropriated from the Violent Crime 
     Reduction Trust Fund to carry out this section--
       ``(1) such sums as may be necessary for each of the fiscal 
     years 1998 through 2000; and
       ``(2) $10,000,000 in each of the fiscal years 2001 and 
     2002.''.

     SEC. 104. TECHNICAL AMENDMENT.

       Section 1001(a)(11)(B) of title I of the Omnibus Crime 
     Control and Safe Streets Act of 1968 (42 U.S.C. 3793) is 
     amended by striking ``150,000'' each place it appears and 
     inserting ``100,000''.
  Subtitle B--Violent Offender Incarceration and Truth-in-Sentencing 
                                 Grants

     SEC. 121. FORMULA ALLOCATIONS.

       Section 20106 of the Violent Crime Control and Law 
     Enforcement Act of 1994 (42 U.S.C. 13706) is amended--
       (1) in subsection (a)(1), by striking subparagraph (B) and 
     inserting the following:
       ``(B) Formula allocation.--The amount remaining after 
     application of subparagraph (A) shall be allocated as 
     follows:
       ``(i) 0.75 percent shall be allocated to each State that 
     meets the requirements of section 20103(b), except that the 
     United States Virgin Islands, American Samoa, Guam, and the 
     Commonwealth of the Northern Mariana Islands, if eligible 
     under section 20103(b), shall each be allocated 0.05 percent.
       ``(ii) The amount remaining after application of clause (i) 
     shall be allocated to each State that meets the requirements 
     of section 20103(b), in the ratio that the number of part 1 
     violent crimes reported by such State to the Federal Bureau 
     of Investigation for the 3 years preceding the year in which 
     the determination is made, bears to the average annual number 
     of part 1 violent crimes reported by all States that meet the 
     requirements of section 20103(b) to the Federal Bureau of 
     Investigation for the 3 years preceding the year in which the 
     determination is made.''; and
       (2) by striking subsection (b) and inserting the following:
       ``(b) Allocation of Truth-in-Sentencing Grants Under 
     Section 20104.--The amounts available for grants under 
     section 20104 shall be allocated as follows:
       ``(1) Formula allocation.--0.75 percent shall be allocated 
     to each State that meets the requirements of section 20104, 
     except that the United States Virgin Islands, American Samoa, 
     Guam, and the Commonwealth of the Northern Mariana Islands, 
     if eligible under section 20104, shall each be allocated 0.05 
     percent.
       ``(2) Additional allocation.--The amount remaining after 
     application of paragraph (1) shall be allocated to each State 
     that meets the requirements of section 20104, in the ratio 
     that the number of part 1 violent crimes reported by such 
     State to the Federal Bureau of Investigation for the 3 years 
     preceding the year in which the determination is made, bears 
     to the average annual number of part 1 violent crimes 
     reported by all States that meet the requirements of section 
     20103(b) to the Federal Bureau of Investigation for the 3 
     years preceding the year in which the determination is 
     made.''.

     SEC. 122. EXTENSION OF VIOLENT OFFENDER INCARCERATION AND 
                   TRUTH-IN-SENTENCING GRANTS.

       (a) Violent Offender Incarceration Grants.--Section 
     20108(a) of the Violent Crime Control and Law Enforcement Act 
     of 1994 (42 U.S.C. 13708(a)) is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (D), by striking ``and'' at the end;
       (B) in subparagraph (E), by striking the period at the end 
     and inserting a semicolon; and
       (C) by adding at the end the following:
       ``(F) $2,750,000,000 for fiscal year 2001; and
       ``(G) $2,750,000,000 for fiscal year 2002.''; and
       (2) in paragraph (2)(A), by striking ``fiscal year,'' and 
     all that follows before the period and inserting the 
     following: ``fiscal year distribute 45 percent for 
     incarceration grants under section 20103, 45 percent for 
     incentive grants under section 20104, and 10 percent for 
     violent juvenile offender incarceration grants under section 
     214 of the Youth Violence, Crime, and Drug Abuse Control Act 
     of 1997.''.
       (b) Truth in Sentencing Grants.--Section 20102(a) of the 
     Violent Crime Control and Law Enforcement Act of 1994 (42 
     U.S.C. 13702(a)) is amended--
       (1) in paragraph (2), by striking ``and'' at the end;
       (2) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(4) for hiring professional staff to supervise violent 
     offenders following release from custody and officers of the 
     court to speed the prosecution of violent offenders.''.
                     Subtitle C--Domestic Violence

     SEC. 131. EXTENSION OF VIOLENCE AGAINST WOMEN ACT.

       (a) Grants To Combat Violent Crimes Against Women.--Section 
     1001(a)(18) of title I of the Omnibus Crime Control and Safe 
     Streets Act of 1968 (42 U.S.C. 3793(a)(18)) is amended--
       (1) in subparagraph (E), by striking ``and'' at the end;
       (2) in subparagraph (F), by inserting ``and'' at the end; 
     and
       (3) by adding at the end the following:
       ``(G) $174,000,000 for fiscal year 2001; and
       ``(H) $174,000,000 for fiscal year 2002.''.
       (b) Education and Prevention Grants To Reduce Sexual 
     Assaults Against Women.--
       (1) In general.--Section 40151 of Public Law 103-322 (108 
     Stat. 1920) is amended by striking ``Health and Human 
     Services'' and inserting ``Health Service''.
       (2) Amendment.--Section 1910A(c) of the Public Health 
     Service Act is amended--
       (A) in paragraph (4), by striking ``and'' at the end; and

[[Page S326]]

       (B) by adding at the end the following:
       ``(6) $45,000,000 for fiscal year 2001; and
       ``(7) $45,000,000 for fiscal year 2002.''.
       (c) Grant for National Domestic Violence Hotline.--Section 
     316(f) of the Family Violence Prevention and Services Act (42 
     U.S.C. 10401) is amended--
       (1) in subparagraph (E), by striking ``and'' at the end;
       (2) in subparagraph (F), by adding ``and'' at the end; and
       (3) by adding at the end the following:
       ``(G) $500,000 for fiscal year 2001; and
       ``(H) $500,000 for fiscal year 2002.''.
       (d) Grants for Battered Women's Shelters.--Section 310(a) 
     of the Family Violence Prevention and Services Act (42 U.S.C. 
     10409(a)) is amended--
       (1) in paragraph (4), by striking ``and'' at the end;
       (2) in paragraph (5), by adding ``and'' at the end; and
       (3) by adding at the end the following:
       ``(6) $72,500,000 for fiscal year 2001; and
       ``(7) $72,500,000 for fiscal year 2002.''.
       (e) Victims of Child Abuse Programs.--Section 218(a) of the 
     Victims of Child Abuse Act of 1990 (42 U.S.C. 13014(a)) is 
     amended--
       (1) in paragraph (4), by striking ``and'' at the end;
       (2) in paragraph (5), by adding ``and'' at the end; and
       (3) by adding at the end the following:
       ``(6) $10,000,000 for fiscal year 2001; and
       ``(7) $10,000,000 for fiscal year 2002.''.

     SEC. 132. RURAL DOMESTIC VIOLENCE AND CHILD ABUSE ENFORCEMENT 
                   ASSISTANCE.

       Section 1501(b) of title I of the Omnibus Crime Control and 
     Safe Streets Act of 1968 (42 U.S.C. 3796bb(b)) is amended by 
     striking ``through fiscal year 1997'' and inserting ``or a 
     State that has a population density of more than 60 percent 
     (as defined by the Bureau of the Census of the Department of 
     Commerce)''.
            Subtitle D--Assistance to Local Law Enforcement

     SEC. 141. EXTENSION OF LAW ENFORCEMENT FAMILY SUPPORT 
                   FUNDING.

       Section 1001(a)(21) of title I of the Omnibus Crime Control 
     and Safe Streets Act of 1968 (42 U.S.C. 3793(a)(21)) is 
     amended--
       (1) by redesignating paragraphs (1) through (5) as 
     subparagraphs (A) through (E), respectively;
       (2) in subparagraph (D), as redesignated, by striking 
     ``and'' at the end;
       (3) in subparagraph (E), as redesignated, by striking the 
     period at the end and inserting a semicolon; and
       (4) by adding at the end the following:
       ``(F) $7,500,000 for fiscal year 2001; and
       ``(G) $7,500,000 for fiscal year 2002.''.

     SEC. 142. EXTENSION OF RURAL DRUG ENFORCEMENT AND TRAINING 
                   FUNDING.

       (a) Omnibus Crime Control and Safe Streets Act of 1968.--
     Section 1001(a)(9) of title I of the Omnibus Crime Control 
     and Safe Streets Act of 1968 (42 U.S.C. 3793(a)(9)) is 
     amended--
       (1) in subparagraph (D), by striking ``and'' at the end;
       (2) in subparagraph (E), by striking the period at the end 
     and inserting a semicolon; and
       (3) by adding at the end the following:
       ``(F) $66,000,000 for fiscal year 2001; and
       ``(G) $66,000,000 for fiscal year 2002.''.
       (b) Violent Crime Control and Law Enforcement Act of 
     1994.--Section 18103(b) of the Violent Crime Control and Law 
     Enforcement Act of 1994 (42 U.S.C. 14082(b)) is amended--
       (1) in paragraph (4), by striking ``and'' at the end;
       (2) in paragraph (5), by striking the period at the end and 
     inserting a semicolon; and
       (3) by adding at the end the following:
       ``(6) $1,000,000 for fiscal year 2001; and
       ``(7) $1,000,000 for fiscal year 2002.''.

     SEC. 143. EXTENSION OF DNA IDENTIFICATION GRANTS FUNDING.

       Section 1001(a) of title I of the Omnibus Crime Control and 
     Safe Streets Act of 1968 (42 U.S.C. 3793(a)) is amended--
       (1) by redesignating paragraphs (16) through (22) as 
     paragraphs (12) through (17), respectively; and
       (2) in paragraph (17), as redesignated--
       (A) by redesignating paragraphs (1) through (5) as 
     subparagraphs (A) through (E), respectively;
       (B) in subparagraph (D), as redesignated, by striking 
     ``and'' at the end;
       (C) in subparagraph (E), as redesignated, by striking the 
     period at the end and inserting a semicolon; and
       (D) by adding at the end the following:
       ``(F) $17,500,000 for fiscal year 2001; and
       ``(G) $17,500,000 for fiscal year 2002.''.

     SEC. 144. EXTENSION OF BYRNE GRANT FUNDING.

       Section 210101 of the Violent Crime Control and Law 
     Enforcement Act of 1994 (Public Law 103-322; 108 Stat. 2061) 
     is amended--
       (1) by striking ``through 2000'' and inserting ``through 
     2002'';
       (2) in paragraph (5), by striking ``and'' at the end;
       (3) in paragraph (6), by striking the period at the end and 
     inserting a semicolon; and
       (4) by adding at the end the following:
       ``(7) $200,000,000 for fiscal year 2001; and
       ``(8) $200,000,000 for fiscal year 2002.''.

     SEC. 145. EXTENSION OF TECHNICAL AUTOMATION GRANT FUNDING.

       Section 210501(c) of the Violent Crime Control and Law 
     Enforcement Act of 1994 (42 U.S.C. 14151(c)) is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (D), by striking ``and'' at the end;
       (B) in subparagraph (E), by striking the period at the end 
     and inserting a semicolon; and
       (C) by adding at the end the following:
       ``(F) for fiscal year 2001, $24,000,000; and
       ``(G) for fiscal year 2002, $24,000,000;''; and
       (2) in paragraph (2)--
       (A) in subparagraph (D), by striking ``and'' at the end;
       (B) in subparagraph (E), by striking the period at the end 
     and inserting a semicolon; and
       (C) by adding at the end the following:
       ``(F) for fiscal year 2001, $6,000,000; and
       ``(G) for fiscal year 2002, $6,000,000; and''.

     SEC. 146. EXTENSION OF GRANTS FOR STATE COURT PROSECUTORS.

       Section 21602 of the Violent Crime Control and Law 
     Enforcement Act of 1994 (42 U.S.C. 14161) is amended--
       (1) in subsection (a)--
       (A) by striking ``other criminal justice participants'' and 
     inserting ``other criminal justice participants, in both the 
     adult and juvenile systems,'';
       (B) by striking ``this Act'' and all that follows before 
     the period at the end of the section and inserting ``this 
     Act, the Youth Violence, Crime, and Drug Abuse Control Act of 
     1997, and amendments thereto'';
       (2) by redesignating subsection (d) as subsection (e);
       (3) by inserting after subsection (c) the following:
       ``(d) Not less than 20 percent of the total amount 
     appropriated to carry out this subtitle in each of the fiscal 
     years 2001 and 2002 shall be made available for providing 
     increased resources to State juvenile courts systems, 
     juvenile prosecutors, juvenile public defenders, and other 
     juvenile court system participants.'';
       (4) in subsection (e)--
       (A) in paragraph (4), by striking ``and'' at the end;
       (B) in paragraph (5), by striking the comma at the end and 
     inserting a semicolon; and
       (C) by inserting immediately after paragraph (5) the 
     following:
       ``(6) $250,000,000 for fiscal year 2001; and
       ``(7) $250,000,000 for fiscal year 2002,''.
                    TITLE II--YOUTH VIOLENCE CONTROL
               Subtitle A--Federal Juvenile Prosecutions

     SEC. 201. INCREASED DETENTION, MANDATORY RESTITUTION, AND 
                   ADDITIONAL SENTENCING OPTIONS FOR YOUTH 
                   OFFENDERS.

       Section 5037 of title 18, United States Code, is amended to 
     read as follows:

     ``Sec. 5037. Dispositional hearing

       ``(a) In General.--
       ``(1) Hearing.--In a proceeding under section 5032(a), if 
     the court finds a juvenile to be a juvenile delinquent, the 
     court shall hold a hearing concerning the appropriate 
     disposition of the juvenile not later than 20 court days 
     after the finding of juvenile delinquency unless the court 
     has ordered further study pursuant to subsection (e).
       ``(2) Report.--A predisposition report shall be prepared by 
     the probation officer who shall promptly provide a copy to 
     the juvenile, the attorney for the juvenile, and the attorney 
     for the government.
       ``(3) Victim impact information.--Victim impact information 
     shall be included in the report, and victims, or in 
     appropriate cases their official representatives, shall be 
     provided the opportunity to make a statement to the court in 
     person or present any information in relation to the 
     disposition.
       ``(4) Order of restitution.--After the dispositional 
     hearing, and after considering any pertinent policy 
     statements promulgated by the Sentencing Commission pursuant 
     to 994, of title 28, the court shall enter an order of 
     restitution pursuant to section 3556, and may suspend the 
     findings of juvenile delinquency, place the juvenile on 
     probation, commit the juvenile to official detention 
     (including the possibility of a term of supervised release), 
     and impose any fine that would be authorized if the juvenile 
     had been tried and convicted as an adult.
       ``(5) Release or detention.--With respect to release or 
     detention pending an appeal or a petition for a writ of 
     certiorari after disposition, the court shall proceed 
     pursuant to the provisions of chapter 207.
       ``(b) Term of Probation.--The term for which probation may 
     be ordered for a juvenile found to be a juvenile delinquent 
     may not extend beyond the maximum term that would be 
     authorized by section 3561(c) if the juvenile had been tried 
     and convicted as an adult. Sections 3563, 3564, and 3565 are 
     applicable to an order placing a juvenile on probation.
       ``(c) Term of Official Detention.--
       ``(1) Maximum term.--The term for which official detention 
     may be ordered for a juvenile found to be a juvenile 
     delinquent may not extend beyond the lesser of--
       ``(A) the maximum term of imprisonment that would be 
     authorized if the juvenile had been tried and convicted as an 
     adult;
       ``(B) 10 years; or
       ``(C) the date on which the juvenile achieves the age of 
     26.
       ``(2) Applicability of other provisions.--Section 3624 
     shall apply to an order placing a juvenile in detention.
       ``(d) Term of Supervised Release.--The term for which 
     supervised release may be ordered for a juvenile found to be 
     a juvenile delinquent may not extend beyond 5 years. 
     Subsections (c) through (i) of section 3583 shall apply to an 
     order placing a juvenile on supervised release.

[[Page S327]]

       ``(e) Custody of Attorney General.--
       ``(1) In general.--If the court desires more detailed 
     information concerning a juvenile alleged to have committed 
     an act of juvenile delinquency or a juvenile adjudicated 
     delinquent, it may commit the juvenile, after notice and 
     hearing at which the juvenile is represented by an attorney, 
     to the custody of the Attorney General for observation and 
     study by an appropriate agency or entity.
       ``(2) Outpatient basis.--Any observation and study pursuant 
     to a commission under paragraph (1) shall be conducted on an 
     outpatient basis, unless the court determines that inpatient 
     observation and study are necessary to obtain the desired 
     information, except that in the case of an alleged juvenile 
     delinquent, inpatient study may be ordered with the consent 
     of the juvenile and the attorney for the juvenile.
       ``(3) Contents of study.--The agency or entity conducting 
     an observation or study under this subsection shall make a 
     complete study of the alleged or adjudicated delinquent to 
     ascertain the personal traits, capabilities, background, any 
     prior delinquency or criminal experience, any mental or 
     physical defect, and any other relevant factors pertaining to 
     the juvenile.
       ``(4) Submission of results.--The Attorney General shall 
     submit to the court and the attorneys for the juvenile and 
     the government the results of the study not later than 30 
     days after the commitment of the juvenile, unless the court 
     grants additional time.
       ``(5) Exclusion of time.--Any time spent in custody under 
     this subsection shall be excluded for purposes of section 
     5036.
       ``(f) Conviction as Adult.--With respect to any juvenile 
     prosecuted and convicted as an adult under section 5032(c), 
     the court may, pursuant to guidelines promulgated by the 
     United States Sentencing Commission under section 994 of 
     title 28, determine to treat the conviction as an 
     adjudication of delinquency and impose any disposition 
     authorized under this section. The United States Sentencing 
     Commission shall promulgate such guidelines as soon as 
     practicable and not later than 1 year after the date of 
     enactment of this Act.''.

     SEC. 202. ACCESS TO RECORDS.

       Section 5038 of title 18, United States Code, is amended--
       (1) in subsection (a)--
       (A) by striking the language preceding the colon and 
     inserting the following:
       ``Throughout and upon completion of the juvenile 
     delinquency proceeding, the court records of the original 
     proceeding shall be safeguarded from disclosure to 
     unauthorized persons. The records shall be released to the 
     extent necessary to meet the following circumstances''; and
       (B) in subsection (a), by striking paragraph (6) and 
     inserting the following:
       ``(6) inquiries from any victim of such juvenile 
     delinquency, or in appropriate cases with the attorney for 
     the victim, or, if the victim is deceased, from the immediate 
     family of such victim in order to apprise such person of the 
     status or disposition of the proceeding;'';
       (2) by striking subsections (d) and (f) and redesignating 
     subsection (e) as subsection (d); and
       (3) by adding at the end the following:
       ``(e) Records and Information.--If a juvenile has been 
     adjudicated delinquent for an act that, if committed by an 
     adult, would be a felony or for a violation of section 
     922(x)--
       ``(1) the juvenile shall be fingerprinted and photographed, 
     and the fingerprints and photograph shall be sent to the 
     Federal Bureau of Investigation;
       ``(2) the court shall transmit to the Federal Bureau of 
     Investigation the information concerning the adjudication, 
     including name, date of adjudication, court, offenses, and 
     sentence, along with the notation that the matter was a 
     juvenile adjudication; and
       ``(3) access to the fingerprints, photograph, and other 
     records and information relating to a juvenile described in 
     this subsection, shall be restricted as prescribed by 
     subsection (a).''.

     SEC. 203. REINSTITUTING DISMISSED CASES.

       Section 5036 of title 18, United States Code, is amended by 
     striking the last sentence and inserting the following: ``In 
     determining whether an information should be dismissed with 
     or without prejudice, the court shall consider the 
     seriousness of the offense, the facts and circumstances of 
     the case that led to the dismissal, and the impact of a 
     reprosecution on the administration of justice.''.
 Subtitle B--Assistance to States for Prosecuting and Punishing Youth 
                               Offenders

     SEC. 214. JUVENILE AND VIOLENT OFFENDER INCARCERATION GRANTS.

       (a) Grants for Violent and Chronic Juvenile Facilities.--
       (1) Definitions.--In this subsection--
       (A) the term ``colocated facility'' means the location of 
     adult and juvenile facilities on the same property consistent 
     with regulations issued by the Attorney General to ensure 
     that adults and juveniles are substantially segregated;
       (B) the term ``substantially segregated'' means--
       (i) complete sight and sound separation in residential 
     confinement;
       (ii) use of shared direct care and management staff, 
     properly trained and certified by the State to interact with 
     juvenile offenders, if the staff does not interact with adult 
     and juvenile offenders during the same shift; and
       (iii) incidental contact during transportation to court 
     proceedings and other activities in accordance with 
     regulations issued by the Attorney General to ensure 
     reasonable efforts are made to segregate adults and 
     juveniles;
       (C) the term ``violent juvenile offender'' means a person 
     under the age of majority pursuant to State law that has been 
     adjudicated delinquent or convicted in adult court of a 
     violent felony as defined in section 924(e)(2)(B) of title 
     18, United States Code; and
       (D) the term ``qualifying State'' means a State that has 
     submitted, or a State in which an eligible unit of local 
     government has submitted, a grant application that meets the 
     requirements of paragraphs (3) and (5).
       (2) Authority.--
       (A) In general.--The Attorney General may make grants in 
     accordance with this subsection to States, units of local 
     government, or any combination thereof, to assist them in 
     planning, establishing, and operating secure facilities, 
     staff-secure facilities, detention centers, and other 
     correctional programs for violent juvenile offenders.
       (B) Use of amounts.--Grants under this subsection may be 
     used--
       (i) for colocated facilities for adult prisoners and 
     violent juvenile offenders; and
       (ii) only for the construction or operation of facilities 
     in which violent juvenile offenders are substantially 
     segregated from nonviolent juvenile offenders.
       (3) Applications.--
       (A) In general.--The chief executive officer of a State or 
     unit of local government that seeks to receive a grant under 
     this subsection shall submit to the Attorney General an 
     application, in such form and in such manner as the Attorney 
     General may prescribe.
       (B) Contents.--Each application submitted under 
     subparagraph (A) shall provide written assurances that each 
     facility or program funded with a grant under this 
     subsection--
       (i) will provide appropriate educational and vocational 
     training, a program of substance abuse testing, and substance 
     abuse treatment for appropriate juvenile offenders; and
       (ii) will afford juvenile offenders intensive post-release 
     supervision and services.
       (4) Minimum Amount.--
       (A) In general.--Except as provided in subparagraph (B), 
     each qualifying State, together with units of local 
     government within the State, shall be allocated for each 
     fiscal year not less than 1.0 percent of the total amount 
     made available in each fiscal year for grants under this 
     subsection.
       (B) Exception.--The United States Virgin Islands, American 
     Samoa, Guam, and the Northern Mariana Islands shall each be 
     allocated 0.2 percent of the total amount made available in 
     each fiscal year for grants under this subsection.
       (5) Performance evaluation.--
       (A) Evaluation components.--
       (i) In general.--Each facility or program funded under this 
     subsection shall contain an evaluation component developed 
     pursuant to guidelines established by the Attorney General.
       (ii) Outcome measures.--The evaluations required by this 
     subsection shall include outcome measures that can be used to 
     determine the effectiveness of the funded programs, including 
     the effectiveness of such programs in comparison with other 
     correctional programs or dispositions in reducing the 
     incidence of recidivism, and other outcome measures.
       (B) Periodic review and reports.--
       (i) Review.--The Attorney General shall review the 
     performance of each grant recipient under this subsection.
       (ii) Reports.--The Attorney General may require a grant 
     recipient to submit to the Office of Justice Programs, 
     Corrections Programs Office the results of the evaluations 
     required under subparagraph (A) and such other data and 
     information as are reasonably necessary to carry out the 
     responsibilities of the Attorney General under this 
     subsection.
       (6) Technical assistance and training.--The Attorney 
     General shall provide technical assistance and training to 
     grant recipients under this subsection to achieve the 
     purposes of this subsection.
       (b) Juvenile Facilities on Tribal Lands.--
       (1) Reservation of funds.--Of amounts made available to 
     carry out section 214 of this Act under section 
     20108(a)(2)(A) of the Violent Crime Control and Law 
     Enforcement Act of 1994, the Attorney General shall reserve, 
     to carry out this subsection, 0.75 percent for each of the 
     fiscal years 1998 through 2002.
       (2) Grants to indian tribes.--Of amounts reserved under 
     paragraph (1), the Attorney General may make grants to Indian 
     tribes or to regional groups of Indian tribes for the purpose 
     of constructing secure facilities, staff-secure facilities, 
     detention centers, and other correctional programs for 
     incarceration of juvenile offenders subject to tribal 
     jurisdiction.
       (3) Applications.--To be eligible to receive a grant under 
     this section, an Indian tribe shall submit to the Attorney 
     General an application in such form and containing such 
     information as the Attorney General may by regulation 
     require.
       (4) Regional groups.--Individual Indian tribes from a 
     geographic region may apply for grants under paragraph (2) 
     jointly for the purpose of building regional facilities.

[[Page S328]]

       (c) Report on Accountability and Performance Measures in 
     Juvenile Corrections Programs.--
       (1) In general.--Not later than 6 months after the date of 
     enactment of this Act, the Attorney General shall, after 
     consultation with the National Institute of Justice and other 
     appropriate governmental and nongovernmental organizations, 
     submit to Congress a report regarding the possible use of 
     performance-based criteria in evaluating and improving the 
     effectiveness of juvenile corrections facilities and 
     programs.
       (2) Contents.--The report required under this subsection 
     shall include an analysis of--
       (A) the range of performance-based measures that might be 
     utilized as evaluation criteria, including measures of 
     recidivism among juveniles who have been incarcerated in 
     facilities or have participated in correctional programs;
       (B) the feasibility of linking Federal juvenile corrections 
     funding to the satisfaction of performance-based criteria by 
     grantees (including the use of a Federal matching mechanism 
     under which the share of Federal funding would vary in 
     relation to the performance of a program or facility);
       (C) whether, and to what extent, the data necessary for the 
     Attorney General to utilize performance-based criteria in the 
     Attorney General's administration of juvenile corrections 
     programs are collected and reported nationally; and
       (D) the estimated cost and feasibility of establishing 
     minimal, uniform data collection and reporting standards 
     nationwide that would allow for the use of performance-based 
     criteria in evaluating juvenile corrections programs and 
     facilities and administering Federal juvenile corrections 
     funds.

     SEC. 215. CERTAIN PUNISHMENT AND GRADUATED SANCTIONS FOR 
                   YOUTH OFFENDERS.

       (a) Findings and Purposes.--
       (1) Findings.--Congress finds that--
       (A) youth violence constitutes a growing threat to the 
     national welfare requiring immediate and comprehensive action 
     by the Federal Government to reduce and prevent youth 
     violence;
       (B) the behavior of youth who become violent offenders 
     often follow a progression, beginning with aggressive 
     behavior in school, truancy, and vandalism, leading to 
     property crimes and then serious violent offenses;
       (C) the juvenile justice systems in most States are ill-
     equipped to provide meaningful sanctions to minor, nonviolent 
     offenders because most of their resources are dedicated to 
     dealing with more serious offenders;
       (D) in most States, some youth commit multiple, nonviolent 
     offenses without facing any significant criminal sanction;
       (E) the failure to provide meaningful criminal sanctions 
     for first time, nonviolent offenders sends the false message 
     to youth that they can engage in antisocial behavior without 
     suffering any negative consequences and that society is 
     unwilling or unable to restrain that behavior;
       (F) studies demonstrate that interventions during the early 
     stages of a criminal career can halt the progression to more 
     serious, violent behavior; and
       (G) juvenile courts need access to a range of sentencing 
     options so that at least some level of sanction is imposed on 
     all youth offenders, including status offenders, and the 
     severity of the sanctions increase along with the seriousness 
     of the offense.
       (2) Purposes.--The purposes of this section are to provide 
     assistance to State and local juvenile courts to expand the 
     range of sentencing options for first time, nonviolent 
     offenders and to provide a selection of graduated sanctions 
     for more serious offenses.
       (b) Definitions.--In this section--
       (1) the term ``first time offender'' means a juvenile 
     against whom formal charges have not previously been filed in 
     any Federal or State judicial proceeding;
       (2) the term ``nonviolent offender'' means a juvenile who 
     is charged with an offense that does not involve the use of 
     force against the person of another; and
       (3) the term ``status offender'' means a juvenile who is 
     charged with an offense that would not be criminal if 
     committed by an adult (other than an offense that constitutes 
     a violation of a valid court order or a violation of section 
     922(x) of title 18, United States Code (or similar State 
     law)).
       (c) Grant Authorization.--
       (1) In general.--The Attorney General may make grants in 
     accordance with this section to States, State courts, local 
     courts, units of local government, and Indian tribes, for the 
     purposes of--
       (A) providing juvenile courts with a range of sentencing 
     options such that first time juvenile offenders, including 
     status offenders such as truants, vandals, and juveniles in 
     violation of State or local curfew laws, face at least some 
     level of punishment as a result of their initial contact with 
     the juvenile justice system; and
       (B) increasing the sentencing options available to juvenile 
     court judges so that juvenile offenders receive increasingly 
     severe sanctions--
       (i) as the seriousness of their unlawful conduct increases; 
     and
       (ii) for each additional offense.
       (c) Applications.--
       (1) Eligibility.--In order to be eligible to receive a 
     grant under this section, the chief executive of a State, 
     unit of local government, or Indian tribe, or the chief judge 
     of a local court, shall submit an application to the Attorney 
     General in such form and containing such information as the 
     Attorney General may reasonably require.
       (2) Requirements.--Each application submitted in accordance 
     with paragraph (1) shall include--
       (A) a request for a grant to be used for the purposes 
     described in this section;
       (B) a description of the communities to be served by the 
     grant, including the extent of youth crime and violence in 
     those communities;
       (C) written assurances that Federal funds received under 
     this subtitle will be used to supplement, not supplant, non-
     Federal funds that would otherwise be available for 
     activities funded under this subsection;
       (D) a comprehensive plan described in paragraph (3) (in 
     this section referred to as the ``comprehensive plan''); and
       (E) any additional information in such form and containing 
     such information as the Attorney General may reasonably 
     require.
       (3) Implementation plan.--For purposes of paragraph (2), a 
     comprehensive plan shall include--
       (A) an action plan outlining the manner in which the 
     applicant will achieve the purposes described in subsection 
     (c)(1);
       (B) a description of any resources available in the 
     jurisdiction of the applicant to implement the action plan 
     described in subparagraph (A);
       (C) an estimate of the costs of full implementation of the 
     plan; and
       (D) a plan for evaluating the impact of the grant on the 
     jurisdiction's juvenile justice system.
       (e) Grant Awards.--
       (1) Considerations.--In awarding grants under this section, 
     the Attorney General shall consider--
       (A) the ability of the applicant to provide the stated 
     services;
       (B) the level of youth crime, violence, and drug use in the 
     community; and
       (C) to the extent practicable, achievement of an equitable 
     geographic distribution of the grant awards.
       (2) Allocations.--
       (A) In general.--The Attorney General shall allot not less 
     than 0.75 percent of the total amount made available to carry 
     out this section in each fiscal year to applicants in each 
     State from which applicants have applied for grants under 
     this section.
       (B) Indian tribes.--The Attorney General shall allocate not 
     less than 0.75 percent of the total amount made available to 
     carry out this section in each fiscal year to Indian tribes.
       (f) Use of Grant Amounts.--
       (1) In general.--Each grant made under this section shall 
     be used to establish programs that--
       (A) expand the number of judges, prosecutors, and public 
     defenders for the purpose of imposing sanctions on first time 
     juvenile offenders and status offenders;
       (B) provide expanded sentencing options, such as 
     restitution, community service, drug testing and treatment, 
     mandatory job training, curfews, house arrest, mandatory work 
     projects, and boot camps, for status offenders and nonviolent 
     offenders;
       (C) increase staffing for probation officers to supervise 
     status offenders and nonviolent offenders to ensure that 
     sanctions are enforced;
       (D) provide aftercare and supervision for status and 
     nonviolent offenders, such as drug education and drug 
     treatment, vocational training, job placement, and family 
     counseling;
       (E) encourage private sector employees to provide training 
     and work opportunities for status offenders and nonviolent 
     offenders; and
       (F) provide services and interventions for status and 
     nonviolent offenders designed, in tandem with criminal 
     sanctions, to reduce the likelihood of further criminal 
     behavior.
       (2) Prohibition on use of amounts.--
       (A) Definitions.--In this paragraph--
       (i) the term ``alien'' has the same meaning as in section 
     101(a) of the Immigration and Nationality Act (8 U.S.C. 
     1101(a)); and
       (ii) the terms ``secure detention facility'' and ``secure 
     correctional facility'' have the same meanings as in section 
     103 of the Juvenile Justice and Delinquency Prevention Act of 
     1974 (42 U.S.C. 5603).
       (B) Prohibition.--No amounts made available under this 
     subtitle may be used for any program that permits the 
     placement of status offenders, alien juveniles in custody, or 
     nonoffender juveniles (such as dependent or neglected 
     children) in secure detention facilities or secure 
     correctional facilities.
       (g) Grant Limitations.--Not more than 3 percent of the 
     amounts made available to the Attorney General or a grant 
     recipient under this section may be used for administrative 
     purposes.
       (h) Federal Share.--
       (1) In general.--Subject to paragraphs (2) and (3), the 
     Federal share of a grant made under this subtitle may not 
     exceed 90 percent of the total estimated costs of the program 
     described in the comprehensive plan submitted under 
     subsection (d)(3) for the fiscal year for which the program 
     receives assistance under this section.
       (2) Waiver.--The Attorney General may waive, in whole or in 
     part, the requirements of paragraph (1).
       (3) In-kind contributions.--For purposes of paragraph (1), 
     in-kind contributions may constitute any portion of the non-
     Federal share of a grant under this section.
       (i) Report and Evaluation.--
       (1) Report to the attorney general.--Not later than October 
     1, 1998, and October 1 of each year thereafter, each grant 
     recipient

[[Page S329]]

     under this section shall submit to the Attorney General a 
     report that describes, for the year to which the report 
     relates, any progress achieved in carrying out the 
     comprehensive plan of the grant recipient.
       (2) Evaluation and report to congress.--Not later than 
     March 1, 1999, and March 1 of each year thereafter, the 
     Attorney General shall submit to the Congress an evaluation 
     and report that contains a detailed statement regarding grant 
     awards, activities of grant recipients, a compilation of 
     statistical information submitted by grant recipients under 
     this section, and an evaluation of programs established by 
     grant recipients under this section.
       (3) Criteria.--In assessing the effectiveness of the 
     programs established and operated by grant recipients 
     pursuant to this section, the Attorney General shall 
     consider--
       (A) a comparison between the number of first time offenders 
     who received a sanction for criminal behavior in the 
     jurisdiction of the grant recipient before and after 
     initiation of the program;
       (B) changes in the recidivism rate for first time offenders 
     in the jurisdiction of the grant recipient;
       (C) a comparison of the recidivism rates and the 
     seriousness of future offenses of first time offenders in the 
     jurisdiction of the grant recipient that receive a sanction 
     and those who do not;
       (D) changes in truancy rates of the public schools in the 
     jurisdiction of the grant recipient; and
       (E) changes in the arrest rates for vandalism and other 
     property crimes in the jurisdiction of the grant recipient.
       (4) Documents and information.--Each grant recipient under 
     this section shall provide the Attorney General with all 
     documents and information that the Attorney General 
     determines to be necessary to conduct an evaluation of the 
     effectiveness of programs funded under this section.
       (j) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section from the Violent 
     Crime Reduction Trust Fund--
       (1) such sums as may be necessary for each of the fiscal 
     years 1998 and 1999; and
       (2) $175,000,000 for each of the fiscal years 2000 and 
     2001.
                    Subtitle C--Juvenile Gun Courts

     SEC. 221. DEFINITIONS.

       In this subtitle--
       (1) the term ``firearm'' has the same meaning as in section 
     921 of title 18, United States Code;
       (2) the term ``firearm offender'' means any individual 
     charged with an offense involving the illegal possession, 
     use, transfer, or threatened use of a firearm; and
       (3) the term ``local court'' means any section or division 
     of a State or municipal juvenile court system; and
       (4) the term ``juvenile gun court'' means a specialized 
     division within a State or local juvenile court system, or a 
     specialized docket within a State or local court that 
     considers exclusively cases involving juvenile firearm 
     offenders.

     SEC. 222. GRANT PROGRAM.

       The Attorney General may provide grants in accordance with 
     this subtitle to States, State courts, local courts, units of 
     local government, and Indian tribes for court-based juvenile 
     justice programs that target juvenile firearm offenders 
     through the establishment of juvenile gun courts.

     SEC. 223. APPLICATIONS.

       (a) Eligibility.--In order to be eligible to receive a 
     grant under this subtitle, the chief executive of a State, 
     unit of local government, or Indian tribe, or the chief judge 
     of a local court, shall submit an application to the Attorney 
     General in such form and containing such information as the 
     Attorney General may reasonably require.
       (b) Requirements.--Each application submitted in accordance 
     with subsection (a) shall include--
       (1) a request for a grant to be used for the purposes 
     described in this subtitle;
       (2) a description of the communities to be served by the 
     grant, including the extent of juvenile crime, juvenile 
     violence, and juvenile firearm use and possession in such 
     communities;
       (3) written assurances that Federal funds received under 
     this subtitle will be used to supplement, not supplant, non-
     Federal funds that would otherwise be available for 
     activities funded under this subsection;
       (4) a comprehensive plan described in subsection (c) 
     (hereafter in this subtitle referred to as the 
     ``comprehensive plan''); and
       (5) any additional information in such form and containing 
     such information as the Attorney General may reasonably 
     require.
       (c) Comprehensive Plan.--For purposes of subsection (b), a 
     comprehensive plan is described in this subsection it 
     includes--
       (1) a description of the juvenile crime and violence 
     problems in the jurisdiction of the applicant, including gang 
     crime and juvenile firearm use and possession;
       (2) an action plan outlining the manner in which the 
     applicant would use the grant amounts in accordance with this 
     subtitle;
       (3) a description of any resources available in the 
     jurisdiction of the applicant to implement the action plan 
     described in paragraph (2); and
       (4) a description of the plan of the applicant for 
     evaluating the performance of the juvenile gun court.

     SEC. 224. GRANT AWARDS.

       (a) Considerations.--In awarding grants under this 
     subtitle, the Attorney General shall consider--
       (1) the ability of the applicant to provide the stated 
     services;
       (2) the level of juvenile crime, violence, and drug use in 
     the community; and
       (3) to the extent practicable, achievement of an equitable 
     geographic distribution of the grant awards.
       (b) Diversity.--The Attorney General shall allot not less 
     than 0.75 percent of the total amount made available each 
     fiscal year to carry out this subtitle to applicants in each 
     State from which applicants have applied for grants under 
     this subtitle.
       (c) Indian Tribes.--The Attorney General shall allocate 
     0.75 percent of amounts made available under this subtitle 
     for grants to Indian tribes.

     SEC. 225. USE OF GRANT AMOUNTS.

       Each grant made under this subtitle shall be used--
       (1) to establish juvenile gun courts for adjudication of 
     juvenile firearm offenders;
       (2) to grant prosecutorial discretion to try, in a gun 
     court, cases involving the illegal possession, use, transfer, 
     or threatened use of a firearm by a juvenile;
       (3) to require prosecutors to transfer such cases to the 
     gun court calendar not later than 30 days after arraignment;
       (4) to require that gun court trials commence not later 
     than 60 days after transfer to the gun court;
       (5) to facilitate innovative and individualized sentencing 
     (such as incarceration, house arrest, victim impact classes, 
     electronic monitoring, restitution, and gang prevention 
     programs);
       (6) to provide services in furtherance of paragraph (5);
       (7) to limit grounds for continuances and grant 
     continuances only for the shortest practicable time;
       (8) to ensure that any term of probation or supervised 
     release imposed on a firearm offender in a juvenile gun 
     court, in addition to, or in lieu of, a term of 
     incarceration, shall include a prohibition on firearm 
     possession during such probation or supervised release and 
     that violation of that prohibition shall result in, to the 
     maximum extent permitted under State law, a term of 
     incarceration; and
       (9) to allow transfer of a case or an offender out of the 
     gun court by agreement of the parties, subject to court 
     approval.

     SEC. 226. GRANT LIMITATIONS.

       Not more than 5 percent of the amounts made available to 
     the Attorney General or a grant recipient under this subtitle 
     may be used for administrative purposes.

     SEC. 227. FEDERAL SHARE.

       (a) In General.--Subject to subsections (b) and (c), the 
     Federal share of a grant made under this subtitle may not 
     exceed 90 percent of the total cost of the program or 
     programs of the grant recipient that are funded by that grant 
     for the fiscal year for which the program receives assistance 
     under this subtitle.
       (b) Waiver.--The Attorney General may waive, in whole or in 
     part, the requirements of subsection (a).
       (c) In-Kind Contributions.--For purposes of subsection (a), 
     in-kind contributions may constitute any portion of the non-
     Federal share of a grant under this subtitle.
       (d) Continued Availability of Grant Amounts.--Any amount 
     provided to a grant recipient under this subtitle shall 
     remain available until expended.

     SEC. 228. REPORT AND EVALUATION.

       (a) Report to the Attorney General.--Not later than March 
     1, 1998, and March 1 of each year thereafter, each grant 
     recipient under this subtitle shall submit to the Attorney 
     General a report that describes, for the year to which the 
     report relates, any progress achieved in carrying out the 
     comprehensive plan of the grant recipient.
       (b) Evaluation and Report to Congress.--Not later than 
     October 1, 1998, and October 1 of each year thereafter, the 
     Attorney General shall submit to the Congress an evaluation 
     and report that contains a detailed statement regarding grant 
     awards, activities of grant recipients, a compilation of 
     statistical information submitted by grant recipients under 
     this subtitle, and an evaluation of programs established by 
     grant recipients under this subtitle.
       (c) Criteria.--In assessing the effectiveness of the 
     programs established and operated by grant recipients 
     pursuant to this subtitle, the Attorney General shall 
     consider--
       (1) the number of juveniles tried in gun court sessions in 
     the jurisdiction of the grant recipient;
       (2) a comparison of the amount of time between the filing 
     of charges and ultimate disposition in gun court and nongun 
     court cases;
       (3) the recidivism rates of juvenile offenders tried in gun 
     court sessions in the jurisdiction of the grant recipient in 
     comparison to those tried outside of drug courts;
       (4) changes in the amount of gun-related and gang-related 
     crime in the jurisdiction of the grant recipient; and
       (5) the quantity of firearms and ammunition recovered in 
     gun court cases in the jurisdiction of the grant recipient.
       (d) Documents and Information.--Each grant recipient under 
     this subtitle shall provide the Attorney General with all 
     documents and information that the Attorney General 
     determines to be necessary to conduct an evaluation of the 
     effectiveness of programs funded under this subtitle.

[[Page S330]]

     SEC. 229. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to carry out this 
     subtitle from the Violent Crime Reduction Trust Fund--
       (1) such sums as may be necessary for each of the fiscal 
     years 1998, 1999, and 2000;
       (2) $50,000,000 for fiscal year 2001; and
       (3) $50,000,000 for fiscal year 2002.
                  Subtitle D--Gang Violence Reduction

         PART 1--ENHANCED PENALTIES FOR GANG-RELATED ACTIVITIES

     SEC. 241. GANG FRANCHISING.

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

     ``SEC. 522. INTERSTATE FRANCHISING OF CRIMINAL STREET GANGS.

       ``(a) Prohibited Act.--Whoever travels in interstate or 
     foreign commerce, or causes another to do so, to recruit, 
     solicit, induce, command, or cause to create, or attempt to 
     create a franchise of a criminal street gang shall be 
     punished in accordance with subsection (c).
       ``(b) Definitions.--
       ``(1) Criminal street gang.--The term `criminal street 
     gang' has the meaning given that term in section 521 of title 
     18, United States Code.
       ``(2) Franchise.--The term `franchise' means an organized 
     group of individuals related by name, moniker, or other 
     identifier, that engages in coordinated violent crime or drug 
     trafficking activities in interstate or foreign commerce with 
     a criminal street gang in another State.
       ``(c) Penalties.--A person who violates subsection (a) 
     shall be imprisoned for not more than 10 years, fined under 
     this title, or both.
       ``(d) Sentencing Enhancement.--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 
     for the recruitment of minors in furtherance of the creation 
     of a criminal street gang franchise.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     26 of title 18, United States Code, is amended by adding at 
     the end the following:

``522. Interstate franchising of criminal street gangs.''.

     SEC. 242. GANG FRANCHISING AS A RICO PREDICATE.

       Section 1961(1) of title 18, United States Code, is 
     amended--
       (1) by striking ``or'' before ``(F)''; and
       (2) by inserting ``, or (G) an offense under section 522 of 
     this title'' before the semicolon at the end.

     SEC. 243. INCREASE IN OFFENSE LEVEL FOR PARTICIPATION IN 
                   CRIME AS GANG MEMBER.

       (a) Definition of Criminal Street Gang.--In this section, 
     the term ``criminal street gang'' has the same meaning as in 
     section 521(a) of title 18, United States Code.
       (b) Sentencing Enhancement.--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 
     with respect to any offense committed in connection with, or 
     in furtherance of, the activities of a criminal street gang 
     if the defendant is a member of the criminal street gang at 
     the time of the offense.
       (c) Consistency.--In carrying out this section, the United 
     States Sentencing Commission shall--
       (1) ensure that there is reasonable consistency with other 
     Federal sentencing guidelines; and
       (2) avoid duplicative punishment for substantially the same 
     offense.

     SEC. 244. INCREASING THE PENALTY FOR USING PHYSICAL FORCE TO 
                   TAMPER WITH WITNESSES, VICTIMS, OR INFORMANTS.

       Section 1512 of title 18, United States Code, is amended--
       (1) in subsection (a)--
       (A) in paragraph (1), by striking ``as provided in 
     paragraph (2)'' and inserting ``as provided in paragraph 
     (3)'';
       (B) by redesignating paragraph (2) as paragraph (3);
       (C) by inserting after paragraph (1) the following:
       ``(2) Whoever uses physical force or the threat of physical 
     force, or attempts to do so, with intent to--
       ``(A) influence, delay, or prevent the testimony of any 
     person in an official proceeding;
       ``(B) cause or induce any person to--
       ``(i) withhold testimony, or withhold a record, document, 
     or other object, from an official proceeding;
       ``(ii) alter, destroy, mutilate, or conceal an object with 
     intent to impair the object's integrity or availability for 
     use in an official proceeding;
       ``(iii) evade legal process summoning that person to appear 
     as a witness, or to produce a record, document, or other 
     object, in an official proceeding; and
       ``(iv) be absent from an official proceeding to which such 
     person has been summoned by legal process; or
       ``(C) hinder, delay, or prevent the communication to a law 
     enforcement officer or judge of the United States of 
     information relating to the commission or possible commission 
     of a Federal offense or a violation of conditions of 
     probation, parole, or release pending judicial proceedings;

     shall be punished as provided in paragraph (3).''; and
       (D) in paragraph (3)(B), as redesignated, by striking ``in 
     the case of'' and all that follows before the period and 
     inserting ``an attempt to murder, the use of physical force, 
     the threat of physical force, or an attempt to do so, 
     imprisonment for not more than 20 years''; and
       (2) in subsection (b), by striking ``or physical force''.

     SEC. 245. POSSESSION OF FIREARMS IN RELATION TO COUNTS OF 
                   VIOLENCE OR DRUG TRAFFICKING CRIMES.

       (a) In General.--Sections 924(c)(1) and 929(a)(1) of title 
     18, United States Code, are each amended--
       (1) by striking ``in relation to'' and inserting ``in close 
     proximity to''; and
       (2) by striking ``uses or carries'' and inserting 
     ``possesses''.
       (b) Amendment of Federal Sentencing Guidelines.--
       (1) Definitions.--In this subsection, the terms ``crime of 
     violence'' and ``drug trafficking crime'' have the same 
     meanings as in section 924(c) of title 18, United States 
     Code.
       (2) Sentencing enhancement.--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 sentence 
     enhancement with respect to any defendant who discharges a 
     firearm during or in close proximity to any crime of violence 
     or any drug trafficking crime.
       (3) Consistency.--In carrying out this subsection, the 
     United States Sentencing Commission shall--
       (A) ensure that there is reasonable consistency with other 
     Federal sentencing guidelines; and
       (B) avoid duplicative punishment for substantially the same 
     offense.

     SEC. 246. INCREASED PENALTY FOR TRANSFERRING A FIREARM TO A 
                   MINOR FOR USE IN A CRIME.

       Section 924(h) of title 18, United States Code, is amended 
     by inserting ``except if the transferee is a person who is 
     less than 18 years of age, not more than 15 years,'' before 
     ``fined in accordance with this title, or both''.

     SEC. 247. ELIMINATION OF STATUTE OF LIMITATIONS FOR MURDER.

       (a) In General.--Section 3281 of title 18, United States 
     Code, is amended to read as follows:

     ``Sec. 3281. Capital offenses and Class A felonies involving 
       murder

       ``An indictment for any offense punishable by death or an 
     indictment or information for a Class A felony involving 
     murder (as defined in section 1111 or as defined under 
     applicable State law in the case of an offense under section 
     1963(a) involving racketeering activity described in section 
     1961(1)) may be found at any time without limitation.''.
       (b) Applicability.--The amendment made by subsection (a) 
     applies to any offense for which the applicable statute of 
     limitations had not run as of the date of enactment of this 
     Act.

     SEC. 248. EXTENSION OF STATUTE OF LIMITATIONS FOR VIOLENT AND 
                   DRUG TRAFFICKING CRIMES.

       (a) In General.--Chapter 213 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 3295. Class A violent and drug trafficking offenses

       ``Except as provided in section 3281, no person shall be 
     prosecuted, tried, or punished for a Class A felony that is a 
     crime of violence or a drug trafficking crime (as that term 
     is defined in section 924(c)) unless the indictment is 
     returned or the information is filed within 10 years after 
     the commission of the offense.''.
       (b) Applicability.--The amendment made by subsection (a) 
     applies to any offense for which the applicable statute of 
     limitations had not run as of the date of enactment of this 
     Act.
       (c) Conforming Amendments.--The chapter analysis for 
     chapter 213 of title 18, United States Code, is amended--
       (1) in the item relating to section 3281, by inserting 
     ``and Class A felonies involving murder'' before the period; 
     and
       (2) by adding at the end the following:

``3295. Class A violent and drug trafficking offenses.''.

                       PART 2--GANG PARAPHERNALIA

     SEC. 251. ENHANCING LAW ENFORCEMENT ACCESS TO CLONE NUMERIC 
                   PAGERS.

       (a) Amendment to Chapter 206.--Chapter 206 of title 18, 
     United States Code, is amended--
       (1) in the chapter heading, by striking ``and Trap and 
     Trace Devices'' and inserting: ``Trap and Trace Devices, and 
     Clone Numeric Pagers'';
       (2) in the chapter analysis--
       (A) by striking ``and trap and trace device'' each place 
     that term appears and inserting ``trap and trace device, and 
     clone pager''; and
       (B) by striking ``or a trap and trace device'' each place 
     that term appears and inserting ``, a trap and trace device, 
     or a clone pager'';
       (3) in section 3121--
       (A) in the section heading, by striking ``AND TRAP AND 
     TRACE DEVICE'' and inserting ``, TRAP AND TRACE DEVICE, AND 
     CLONE PAGER''; and
       (B) by striking ``or a trap and trace device'' each place 
     that term appears and inserting ``, a trap and trace device, 
     or a clone pager'';

[[Page S331]]

       (4) in section 3122--
       (A) in the section heading, by striking ``OR A TRAP AND 
     TRACE DEVICE'' and inserting ``, A TRAP AND TRACE DEVICE, OR 
     A CLONE PAGER''; and
       (B) by striking ``or a trap and trace device'' each place 
     that term appears and inserting ``, a trap and trace device, 
     or a clone pager'';
       (5) in section 3123--
       (A) in the section heading, by striking ``OR A TRAP AND 
     TRACE DEVICE'' and inserting ``, A TRAP AND TRACE DEVICE, OR 
     A CLONE PAGER'';
       (B) by striking subsection (a) and inserting the following:
       ``(a) In General.--Upon an application made under section 
     3122 of this title, the court shall enter an ex parte order 
     authorizing the installation and use of a pen register or a 
     trap and trace device within the jurisdiction of the court, 
     or of a clone pager the service provider for which is within 
     the jurisdiction of the court, if the court finds, upon a 
     showing by certification of the attorney for the Government 
     or the State law enforcement or investigative officer, that 
     the information likely to be obtained by such installation 
     and use is relevant to an ongoing criminal investigation.'';
       (C) in subsection (b)--
       (i) in paragraph (1)--

       (I) in subparagraph (A), by inserting before the semicolon 
     the following: ``, or in the case of a clone pager, the 
     identity, if known, of the person to whom is leased, or who 
     is the subscriber of the paging device communications to 
     which will be intercepted by the clone pager''; and
       (II) in subparagraph (C), by inserting before the semicolon 
     the following: ``, or in the case of a clone pager, the 
     number of the paging device to which the clone pager is 
     identically programmed''; and

       (ii) in paragraph (2), by striking ``or trap and trace 
     device'' and inserting ``trap and trace device, or a clone 
     pager''; and
       (D) in subsection (c), by striking ``or trap and trace 
     device'' and inserting ``trap and trace device, or a clone 
     pager''; and
       (E) in subsection (d)--
       (i) in the subsection heading, by striking ``or Trap and 
     Trace Device'' and inserting ``, Trap and Trace Device, or 
     Clone Pager''; and
       (ii) in paragraph (2), by inserting ``or the paging device, 
     communications to which will be intercepted by the clone 
     pager,'' after ``attached,'';
       (6) in section 3124--
       (A) in the section heading, by striking ``OR A TRAP AND 
     TRACE DEVICE'' and inserting ``, A TRAP AND TRACE DEVICE, OR 
     A CLONE PAGER'';
       (B) by redesignating subsections (c) through (f) as 
     subsections (d) through (g), respectively; and
       (C) by inserting after subsection (b) the following:
       ``(c) Clone Pager.--Upon the request of an attorney for the 
     Government or an officer of a law enforcement agency 
     authorized to acquire and use a clone pager under this 
     chapter, a Federal court may order, in accordance with 
     section 3123(b)(2), a provider of a paging service or other 
     person to furnish to such investigative or law enforcement 
     officer, all information, facilities, and technical 
     assistance necessary to accomplish the operation and use of a 
     clone pager unobtrusively and with a minimum of interference 
     with the services that the person so ordered by the court 
     accords the party with respect to whom the programming and 
     use is to take place.'';
       (7) in section 3125--
       (A) in the section heading, by striking ``AND TRAP AND 
     TRACE DEVICE'' and inserting ``, TRAP AND TRACE DEVICE, AND 
     CLONE PAGER''; and
       (B) in subsection (a)--
       (i) by striking ``or trap and trace device'' and inserting 
     ``, a trap and trace device, or a clone pager'';
       (ii) by striking the quotation marks at the end; and
       (iii) by striking ``or trap and trace device'' each place 
     that term appears and inserting ``, trap and trace device, or 
     clone pager'';
       (8) in section 3126--
       (A) in the section heading, by striking ``AND TRAP AND 
     TRACE DEVICES'' and inserting ``, TRAP AND TRACE DEVICES, AND 
     CLONE PAGERS''; and
       (B) by inserting ``or clone pagers'' after ``devices''; and
       (9) in section 3127--
       (A) by redesignating paragraphs (5) and (6) as paragraphs 
     (6) and (7), respectively; and
       (B) by inserting after paragraph (4) the following:
       ``(5) the term `clone pager' means a numeric display device 
     that receives transmissions intended for another numeric 
     display paging device.''.
       (c) Conforming Amendments.--
       (1) Section 2511(2)(H) of title 18, United States Code, is 
     amended by striking clause (i) and inserting the following:
       ``(i) to use a pen register, a trap and trace device, or a 
     clone pager (as those terms are defined for the purposes of 
     chapter 206 (relating to pen registers, trap and trace 
     devices, and clone pagers) of this title); or''.
       (2) Section 2510(12) of title 18, United States Code, is 
     amended--
       (A) in subparagraph (B), by striking ``or'' at the end; and
       (B) by inserting after subparagraph (C) the following: ``or
       ``(D) any transmission made through a clone pager (as 
     defined in section 3127(5) of this title).''.

     SEC. 252. PROHIBITIONS RELATING 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.--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 sentencing 
     enhancement for any offense in which the defendant used body 
     armor.
       (c) Consistency.--In carrying out this section, the United 
     States Sentencing Commission shall--
       (1) ensure that there is reasonable consistency with other 
     Federal sentencing guidelines; and
       (2) avoid duplicative punishment for substantially the same 
     offense.
       (d) Applicability.--No Federal sentencing guideline 
     amendment made under 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. 253. PROHIBITIONS RELATING TO LASER SIGHTING DEVICES.

       (a) Definitions.--In this section--
       (1) the term ``firearm'' has the same meaning as in section 
     921 of title 18, United States Code; and
       (2) the term ``laser-sighting device'' includes any device 
     designed to be attached to a firearm that uses technology, 
     such as laser sighting, red-dot-sighting, night sighting, 
     telescopic sighting, or other similarly effective technology, 
     in order to enhance target acquisition.
       (b) Sentencing Enhancement.--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 sentencing 
     enhancement for any offense in which the defendant--
       (1) possessed a firearm equipped with a laser-sighting 
     device; or
       (2) possessed a firearm and the defendant (or another 
     person at the scene of the crime who was aiding in the 
     commission of the crime) possessed a laser-sighting device 
     (capable of being readily attached to the firearm).
       (c) Consistency.--In carrying out this section, the United 
     States Sentencing Commission shall--
       (1) ensure that there is reasonable consistency with other 
     Federal sentencing guidelines; and
       (2) avoid duplicative punishment for substantially the same 
     offense.
         Subtitle E--Rights of Victims in State Juvenile Courts

     SEC. 261. STATE GUIDELINES.

       (a) In General.--
       (1) State guidelines.--The Attorney General shall establish 
     guidelines for State programs to require--
       (A) prior to disposition of adjudicated juvenile 
     delinquents, that victims, or in appropriate cases their 
     official representatives, shall be provided the opportunity 
     to make a statement to the court in person or to present any 
     information in relation to the disposition;
       (B) that victims of the juvenile adjudicated delinquent be 
     given notice of the disposition; and
       (C) that restitution to victims may be ordered as part of 
     the disposition of adjudicated juvenile delinquents.
       (2) Definition of victim.--In this section, the term 
     ``victim'' means any individual against whom a crime of 
     violence has been committed that has as an element the use, 
     attempted use, or threatened use of physical force against 
     the person or property of another or by its nature involves a 
     substantial risk that physical force against the person or 
     property of another may be used in the course of committing 
     the offense.
       (b) No Cause of Action Created.--Nothing in this section 
     shall be construed to create a cause of action against any 
     State or any agency or employee thereof.
       (c) Compliance.--
       (1) Compliance.--Not later than 3 years after the date of 
     enactment of this Act, each State shall implement this 
     section, except that the Attorney General may grant an 
     additional 2 years to a State if the Attorney General 
     determines that the State is making good faith efforts to 
     implement this section.
       (2) Ineligibility for amounts.--
       (A) In general.--Beginning on the expiration of the period 
     described in paragraph (1) (or such extended period as the 
     Attorney General may provide with respect to a State under 
     that paragraph), during each fiscal year that any State fails 
     to comply with this section, that State shall receive--

[[Page S332]]

       (i) not more than 90 percent of the amount that the State 
     would otherwise receive under subtitle C of this title; and
       (ii) not more than 90 percent of the amount that the State 
     would otherwise receive under section 362 of title III.
       (B) Reallocation of amounts.--In each fiscal year, any 
     amounts that are not allocated to States described in 
     subparagraph (A) shall be allocated to otherwise eligible 
     States that are in compliance with this section on a pro rata 
     basis.
 TITLE III--PREVENTION AND TREATMENT OF YOUTH DRUG ABUSE AND ADDICTION
           Subtitle A--Protecting Youth From Dangerous Drugs

     SEC. 301. RESCHEDULING OF ``CLUB'' DRUGS.

       Notwithstanding section 201 or subsection (a) or (b) of 
     section 202 of the Controlled Substances Act (21 U.S.C. 811, 
     812(a), 812(b)) respecting the scheduling of controlled 
     substances, the Attorney General shall, by order add ketamine 
     hydrochloride to schedule III of such Act.
    Subtitle B--Development of Medicines for the Treatment of Drug 
                               Addiction

                   PART 1--PHARMACO- THERAPY RESEARCH

     SEC. 321. REAUTHORIZATION FOR MEDICATION DEVELOPMENT PROGRAM.

       Section 464P(e) of the Public Health Service Act (42 U.S.C. 
     285o-4(e)) is amended to read:
       ``(e) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section such sums as may 
     be necessary for each of the fiscal years 1998 through 2002 
     of which the following amount may be appropriated from the 
     Violent Crime Reduction Trust Fund:
       ``(1) $100,000,000 for fiscal year 2001; and
       ``(2) $100,000,000 for fiscal year 2002.''.

            PART 2--PATENT PROTECTIONS FOR PHARMACOTHERAPIES

     SEC. 331. RECOMMENDATION FOR INVESTIGATION OF DRUGS.

       Section 525(a) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 360aa(a)) is amended--
       (1) by striking ``States'' each place it appears and 
     inserting ``States, or for treatment of an addiction to 
     illegal drugs''; and
       (2) by striking ``such disease or condition'' each place it 
     appears and inserting ``such disease, condition, or treatment 
     of such addiction''.

     SEC. 332. DESIGNATION OF DRUGS.

       Section 526(a) of the Federal, Food, Drug, and Cosmetic Act 
     (21 U.S.C. 360bb(a)) is amended--
       (1) in paragraph (1)--
       (A) by inserting before the period in the first sentence 
     the following: ``or for treatment of an addiction to illegal 
     drugs'';
       (B) in the third sentence, by striking ``rare disease or 
     condition'' and inserting ``rare disease or condition, or for 
     treatment of an addiction to illegal drugs,''; and
       (C) by striking ``such disease or condition'' each place it 
     appears and inserting ``such disease, condition, or treatment 
     of such addiction''; and
       (2) in paragraph (2)--
       (A) by striking ``(2) For'' and inserting ``(2)(A) For'';
       (B) by striking ``(A) affects'' and inserting ``(i) 
     affects'';
       (C) by striking ``(B) affects'' and inserting ``(ii) 
     affects''; and
       (D) by adding at the end the following:
       ``(B) Treatment of an addiction to illegal drugs.--The term 
     `treatment of an addiction to illegal drugs' means any 
     pharmacological agent or medication that--
       ``(i) reduces the craving for an illegal drug for an 
     individual who--
       ``(I) habitually uses the illegal drug in a manner that 
     endangers the public health, safety, or welfare; or
       ``(II) is so addicted to the use of the illegal drug that 
     the individual is not able to control the addiction through 
     the exercise of self-control;
       ``(ii) blocks the behavioral and physiological effects of 
     an illegal drug for an individual described in clause (i);
       ``(iii) safely serves as a replacement therapy for the 
     treatment of drug abuse for an individual described in clause 
     (i);
       ``(iv) moderates or eliminates the process of withdrawal 
     for an individual described in clause (i);
       ``(v) blocks or reverses the toxic effect of an illegal 
     drug on an individual described in clause (i); or
       ``(vi) prevents, where possible, the initiation of drug 
     abuse in individuals at high risk.
       ``(C) Illegal drug.--The term `illegal drug' means a 
     controlled substance identified under schedules I, II, III, 
     IV, and V in section 202(c) of the Controlled Substance Act 
     (21 U.S.C. 812(c)).''.

     SEC. 333. PROTECTION FOR DRUGS.

       Section 527 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 360cc) is amended--
       (1) by striking ``rare disease or condition'' each place it 
     appears and inserting ``rare disease or condition or for 
     treatment of an addiction to illegal drugs'';
       (2) by striking ``such disease or condition'' each place it 
     appears and inserting ``such disease, condition, or treatment 
     of the addiction''; and
       (3) in subsection (b)(1), by striking ``the disease or 
     condition'' and inserting ``the disease, condition, or 
     addiction''.

     SEC. 334. OPEN PROTOCOLS FOR INVESTIGATIONS OF DRUGS.

       Section 528 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 360dd) is amended--
       (1) by striking ``rare disease or condition'' and inserting 
     ``rare disease or condition or for treatment of an addiction 
     to illegal drugs''; and
       (2) by striking ``the disease or condition'' each place it 
     appears and inserting ``the disease, condition, or 
     addiction''.

  PART 3--ENCOURAGING PRIVATE SECTOR DEVELOPMENT OF PHARMACOTHERAPIES

     SEC. 341. DEVELOPMENT, MANUFACTURE, AND PROCUREMENT OF DRUGS 
                   FOR THE TREATMENT OF ADDICTION TO ILLEGAL 
                   DRUGS.

       Chapter V of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 351 et seq.) is amended by adding at the end the 
     following:

        ``Subchapter D--Drugs for Cocaine and Heroin Addictions

     ``SEC. 551. CRITERIA FOR AN ACCEPTABLE DRUG TREATMENT FOR 
                   COCAINE AND HEROIN ADDICTIONS.

       ``(a) In General.--Subject to subsections (b) and (c), the 
     Secretary shall, through the Institute of Medicine of the 
     National Academy of Sciences, establish criteria for an 
     acceptable drug for the treatment of an addiction to cocaine 
     and for an acceptable drug for the treatment of an addiction 
     to heroin. The criteria shall be used by the Secretary in 
     making a contract, or entering to a licensing agreement, 
     under section 552.
       ``(b) Requirements.--The criteria established under 
     subsection (a) for a drug shall include requirements--
       ``(1) that the application to use the drug for the 
     treatment of addiction to cocaine or heroin was filed and 
     approved by the Secretary under this Act after the date of 
     enactment of this section;
       ``(2) that a performance based test on the drug--
       ``(A) has been conducted through the use of a randomly 
     selected test group that received the drug as a treatment and 
     a randomly selected control group that received a placebo; 
     and
       ``(B) has compared the long term differences in the 
     addiction levels of control group participants and test group 
     participants;
       ``(3) that the performance based test conducted under 
     paragraph (2) demonstrates that the drug is effective through 
     evidence that--
       ``(A) a significant number of the participants in the test 
     who have an addiction to cocaine or heroin are willing to 
     take the drug for the addiction;
       ``(B) a significant number of the participants in the test 
     who have an addiction to cocaine or heroin and who were 
     provided the drug for the addiction during the test are 
     willing to continue taking the drug as long as necessary for 
     the treatment of the addiction; and
       ``(C) a significant number of the participants in the test 
     who were provided the drug for the period of time required 
     for the treatment of the addiction refrained from the use of 
     cocaine or heroin for a period of 3 years after the date of 
     the initial administration of the drug on the participants; 
     and
       ``(4) that the drug shall have a reasonable cost of 
     production.
       ``(c) Review and Publication of Criteria.--The criteria 
     established under subsection (a) shall, prior to the 
     publication and application of such criteria, be submitted 
     for review to the Committee on the Judiciary and the 
     Committee on Economic and Educational Opportunities of the 
     House of Representatives, and the Committee on the Judiciary 
     and the Committee on Labor and Human Resources of the Senate. 
     Not later than 90 days after notifying each of the 
     committees, the Secretary shall publish the criteria in the 
     Federal Register.

     ``SEC. 552. PURCHASE OF PATENT RIGHTS FOR DRUG DEVELOPMENT.

       ``(a) Application.--
       ``(1) In general.--The patent owner of a drug to treat an 
     addiction to cocaine or heroin, may submit an application to 
     the Secretary--
       ``(A) to enter into a contract with the Secretary to sell 
     to the Secretary the patent rights of the owner relating to 
     the drug; or
       ``(B) in the case in which the drug is approved by the 
     Secretary for more than 1 indication, to enter into an 
     exclusive licensing agreement with the Secretary for the 
     manufacture and distribution of the drug to treat an 
     addiction to cocaine or heroin.
       ``(2) Requirements.--An application described in paragraph 
     (1) shall be submitted at such time and in such manner, and 
     accompanied by such information, as the Secretary may 
     require.
       ``(b) Contract and Licensing Agreement.--
       ``(1) Requirements.--The Secretary may enter into a 
     contract or a licensing agreement with a patent owner who has 
     submitted an application in accordance with (a) if the drug 
     covered under the contract or licensing agreement meets the 
     criteria established by the Secretary under section 551(a).
       ``(2) Special rule.--The Secretary may enter into--
       ``(A) not more than 1 contract or exclusive licensing 
     agreement relating to a drug for the treatment of an 
     addiction to cocaine; and
       ``(B) not more than 1 contract or licensing agreement 
     relating to a drug for the treatment of an addiction to 
     heroin.
       ``(3) Coverage.--A contract or licensing agreement 
     described in subparagraph (A) or

[[Page S333]]

     (B) of paragraph (2) shall cover not more than 1 drug.
       ``(4) Purchase amount.--Subject to amounts provided in 
     advance in appropriations Acts--
       ``(A) the amount to be paid to a patent owner who has 
     entered into a contract or licensing agreement under this 
     subsection relating to a drug to treat an addiction to 
     cocaine shall not exceed $100,000,000; and
       ``(B) the amount to be paid to a patent owner who has 
     entered into a contract or licensing agreement under this 
     subsection relating to a drug to treat an addiction to heroin 
     shall not exceed $50,000,000.
       ``(c) Transfer of Rights Under Contracts and Licensing 
     Agreement.--
       ``(1) Contracts.--A contract under subsection (b)(1) to 
     purchase the patent rights relating to a drug to treat 
     cocaine or heroin addiction shall transfer to the Secretary--
       ``(A) the exclusive right to make, use, or sell the 
     patented drug within the United States for the term of the 
     patent;
       ``(B) any foreign patent rights held by the patent owner;
       ``(C) any patent rights relating to the process of 
     manufacturing the drug; and
       ``(D) any trade secret or confidential business information 
     relating to the development of the drug, process for 
     manufacturing the drug, and therapeutic effects of the drug.
       ``(2) Licensing agreements.--A licensing agreement under 
     subsection (b)(1) to purchase an exclusive license relating 
     to manufacture and distribution of a drug to treat an 
     addiction to cocaine or heroin shall transfer to the 
     Secretary--
       ``(A) the exclusive right to make, use, or sell the 
     patented drug for the purpose of treating an addiction to 
     cocaine or heroin within the United States for the term of 
     the patent;
       ``(B) the right to use any patented processes relating to 
     manufacturing the drug; and
       ``(C) any trade secret or confidential business information 
     relating to the development of the drug, process for 
     manufacturing the drug, and therapeutic effects of the drug 
     relating to use of the drug to treat an addiction to cocaine 
     or heroin.

     ``SEC. 553. PLAN FOR MANUFACTURE AND DEVELOPMENT.

       ``(a) In General.--Not later than 90 days after the date on 
     which the Secretary purchases the patent rights of a patent 
     owner, or enters into a licensing agreement with a patent 
     owner, relating to a drug under section 551, the Secretary 
     shall develop a plan for the manufacture and distribution of 
     the drug.
       ``(b) Plan Requirements.--The plan shall set forth--
       ``(1) procedures for the Secretary to enter into licensing 
     agreements with private entities for the manufacture and the 
     distribution of the drug;
       ``(2) procedures for making the drug available to nonprofit 
     entities and private entities to use in the treatment of a 
     cocaine or heroin addiction;
       ``(3) a system to establish the sale price for the drug; 
     and
       ``(4) policies and procedures with respect to the use of 
     Federal funds by State and local governments or nonprofit 
     entities to purchase the drug from the Secretary.
       ``(c) Applicability of Procurement and Licensing Laws.--The 
     procurement and licensing laws of the United States shall be 
     applicable to procurements and licenses covered under the 
     plan described in subsection (a).
       ``(d) Review of Plan.--
       ``(1) In general.--Upon completion of the plan under 
     subsection (a), the Secretary shall notify the Committee on 
     the Judiciary and the Committee on Economic and Educational 
     Opportunities of the House of Representatives, and the 
     Committee on the Judiciary and the Committee on Labor and 
     Human Resources of the Senate, of the development of the plan 
     and publish the plan in the Federal Register. The Secretary 
     shall provide an opportunity for public comment on the plan 
     for a period of not more than 30 days after the date of the 
     publication of the plan in the Federal Register.
       ``(2) Final plan.--Not later than 60 days after the date of 
     the expiration of the comment period described in paragraph 
     (1), the Secretary shall publish in the Federal Register a 
     final plan. The implementation of the plan shall begin on the 
     date of the final publication of the plan.
       ``(e) Construction.--The development, publication, or 
     implementation of the plan, or any other agency action with 
     respect to the plan, shall not be considered agency action 
     subject to judicial review.
       ``(f) Regulations.--The Secretary may promulgate 
     regulations to carry out this section.

     ``SEC. 554. AUTHORIZATION OF APPROPRIATIONS.

       ``There is authorized to be appropriated to carry out this 
     subchapter, such sums as may be necessary in each of the 
     fiscal years 1998 through 2000.''.
             Subtitle C--Prevention and Treatment Programs

                  PART 1--COMPREHENSIVE DRUG EDUCATION

     SEC. 351. EXTENSION OF SAFE AND DRUG-FREE SCHOOLS AND 
                   COMMUNITIES PROGRAM.

       Title IV of the Elementary and Secondary Education Act (20 
     U.S.C. 7104) is amended to read as follows:
                       ``TITLE IV--AUTHORIZATIONS

     ``SEC. 4001. AUTHORIZATION OF APPROPRIATIONS.

       ``There is authorized to be appropriated for State grants 
     under subpart 1 and national programs under subpart 2, 
     $655,000,000 for fiscal years 1998 through 2000, and 
     $955,000,000 for fiscal years 2001 through 2002, of which the 
     following amounts may be appropriated from the Violent Crime 
     Reduction Trust Fund:
       ``(1) $300,000,000 for fiscal year 2001; and
       ``(2) $300,000,000 for fiscal year 2002.''.

                          PART 2--DRUG COURTS

     SEC. 361. REAUTHORIZATION OF DRUG COURTS PROGRAM.

       Section 1001(a)(20) of title I of the Omnibus Crime Control 
     and Safe Streets Act of 1968 (42 U.S.C. 3793(a)(20)) is 
     amended--
       (1) in subparagraph (E), by striking ``and'' at the end;
       (2) in subparagraph (F), by striking the period at the end 
     and inserting a semicolon; and
       (3) by adding at the end the following:
       ``(G) $400,000,000 for fiscal year 2001; and
       ``(H) $400,000,000 for fiscal year 2002.''.

     SEC. 362. JUVENILE DRUG COURTS.

       Title I of the Omnibus Crime Control and Safe Streets Act 
     of 1968 (42 U.S.C. 3711 et seq.) is amended--
       (1) by redesignating part Y as part Z;
       (2) by redesignating section 2501 as 2601; and
       (3) by inserting after part X the following:

                     ``PART Y--JUVENILE DRUG COURTS

     ``SEC. 2501. GRANT AUTHORITY.

       ``(a) Appropriate Drug Court Programs.--The Attorney 
     General may make grants to States, State courts, local 
     courts, units of local government, and Indian tribes to 
     establish programs that--
       ``(1) involve continuous early judicial supervision over 
     juvenile offenders, other than violent juvenile offenders 
     with substance abuse, or substance abuse-related problems; 
     and
       ``(2) integrate administration of other sanctions and 
     services, including--
       ``(A) mandatory periodic testing for the use of controlled 
     substances or other addictive substances during any period of 
     supervised release or probation for each participant;
       ``(B) substance abuse treatment for each participant;
       ``(C) diversion, probation, or other supervised release 
     involving the possibility of prosecution, confinement, or 
     incarceration based on noncompliance with program 
     requirements or failure to show satisfactory progress;
       ``(D) programmatic, offender management, and aftercare 
     services such as relapse prevention, health care, education, 
     vocational training, job placement, housing placement, and 
     child care or other family support service for each 
     participant who requires such services;
       ``(E) payment by the offender of treatment costs, to the 
     extent practicable, such as costs for urinalysis or 
     counseling; or
       ``(F) payment by the offender of restitution, to the extent 
     practicable, to either a victim of the offense at issue or to 
     a restitution or similar victim support fund.
       ``(b) Continued Availability of Grant Funds.--Amounts made 
     available under this part shall remain available until 
     expended.

     ``SEC. 2502. PROHIBITION OF PARTICIPATION BY VIOLENT 
                   OFFENDERS.

       ``The Attorney General shall issue regulations and 
     guidelines to ensure that the programs authorized in this 
     part do not permit participation by violent offenders.

     ``SEC. 2503. DEFINITION.

       ``In this part, the term `violent offender' means an 
     individual charged with an offense during the course of 
     which--
       ``(1) the individual carried, possessed, or used a firearm 
     or dangerous weapon;
       ``(2) the death of or serious bodily injury of another 
     person occurred as a direct result of the commission of such 
     offense; or
       ``(3) the individual used force against the person of 
     another.

     ``SEC. 2504. ADMINISTRATION.

       ``(a) Regulatory Authority.--the Attorney General shall 
     issue any regulations and guidelines necessary to carry out 
     this part.
       ``(b) Applications.--In addition to any other requirements 
     that may be specified by the Attorney General, an application 
     for a grant under this part shall--
       ``(1) include a long term strategy and detailed 
     implementation plan;
       ``(2) explain the inability of the applicant to fund the 
     program adequately without Federal assistance;
       ``(3) certify that the Federal support provided will be 
     used to supplement, and not supplant, State, tribal, or local 
     sources of funding that would otherwise be available;
       ``(4) identify related governmental or community 
     initiatives that complement or will be coordinated with the 
     proposal;
       ``(5) certify that there has been appropriate consultation 
     with all affected agencies and that there will be appropriate 
     coordination with all affected agencies in the implementation 
     of the program;
       ``(6) certify that participating offenders will be 
     supervised by one or more designated judges with 
     responsibility for the drug court program;
       ``(7) specify plans for obtaining necessary support and 
     continuing the proposed program following the conclusion of 
     Federal support; and
       ``(8) describe the methodology that will be used in 
     evaluating the program.

[[Page S334]]

     ``SEC. 2505. APPLICATIONS.

       ``To request funds under this part, the chief executive or 
     the chief justice of a State, or the chief executive or chief 
     judge of a unit of local government or Indian tribe shall 
     submit an application to the Attorney General in such form 
     and containing such information as the Attorney General may 
     reasonably require.

     ``SEC. 2506. FEDERAL SHARE.

       ``(a) In General.--The Federal share of a grant made under 
     this part may not exceed 75 percent of the total costs of the 
     program described in the application submitted under section 
     2505 for the fiscal year for which the program receives 
     assistance under this part.
       ``(b) Waiver.--The Attorney General may waive, in whole or 
     in part, the requirement of a matching contribution under 
     subsection (a).
       ``(c) In-Kind Contributions.--In-kind contributions may 
     constitute a portion of the non-Federal share of a grant 
     under this part.

     ``SEC. 2507. DISTRIBUTION OF FUNDS.

       ``(a) Geographical Distribution.--The Attorney General 
     shall ensure that, to the extent practicable, an equitable 
     geographic distribution of grant awards is made.
       ``(b) Indian Tribes.--The Attorney General shall allocate 
     0.75 percent of amounts made available under this subtitle 
     for grants to Indian tribes.

     ``SEC. 2508. REPORT.

       ``A State, Indian tribe, or unit of local government that 
     receives funds under this part during a fiscal year shall 
     submit to the Attorney General, in March of the year 
     following receipt of a grant under this part, a report 
     regarding the effectiveness of programs established pursuant 
     to this part.

     ``SEC. 2509. TECHNICAL ASSISTANCE, TRAINING, AND EVALUATION.

       ``(a) Technical Assistance and Training.--The Attorney 
     General may provide technical assistance and training in 
     furtherance of the purposes of this part.
       ``(b) Evaluations.--In addition to any evaluation 
     requirements that may be prescribed for grantees, the 
     Attorney General may carry out or make arrangements for 
     evaluations of programs that receive support under this part.
       ``(c) Administration.--The technical assistance, training, 
     and evaluations authorized by this section may be carried out 
     directly by the Attorney General, in collaboration with the 
     Secretary of Health and Human Services, or through grants, 
     contracts, or other cooperative arrangements with other 
     entities.

     ``SEC. 2510. UNAWARDED FUNDS.

       ``The Attorney General may reallocate any grant funds that 
     are not awarded for juvenile drug courts under this part for 
     use for other juvenile delinquency and crime prevention 
     initiatives.

     ``SEC. 2511. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to carry out this 
     part from the Violent Crime Reduction Trust Fund--
       ``(1) such sums as may be necessary for each of the fiscal 
     years 1998, 1999, and 2000;
       ``(2) $50,000,000 for fiscal year 2001; and
       ``(3) $50,000,000 for fiscal year 2002.''.

                         PART 3--DRUG TREATMENT

     SEC. 371. DRUG TREATMENT FOR JUVENILES.

       Title V of the Public Health Service Act (42 U.S.C. 290aa 
     et seq.) is amended by adding at the end the following:

         ``PART G--RESIDENTIAL TREATMENT PROGRAMS FOR JUVENILES

     ``SEC. 575. RESIDENTIAL TREATMENT PROGRAMS FOR JUVENILES.

       ``(a) In General.--The Director of the Center for Substance 
     Abuse Treatment shall award grants to, or enter into 
     cooperative agreements or contracts, with public and 
     nonprofit private entities for the purpose of providing 
     treatment to juveniles for substance abuse through programs 
     in which, during the course of receiving such treatment the 
     juveniles reside in facilities made available by the 
     programs.
       ``(b) Availability of Services for Each Participant.--A 
     funding agreement for an award under subsection (a) for an 
     applicant is that, in the program operated pursuant to such 
     subsection--
       ``(1) treatment services will be available through the 
     applicant, either directly or through agreements with other 
     public or nonprofit private entities; and
       ``(2) the services will be made available to each person 
     admitted to the program.
       ``(c) Individualized Plan of Services.--A funding agreement 
     for an award under subsection (a) for an applicant is that--
       ``(1) in providing authorized services for an eligible 
     person pursuant to such subsection, the applicant will, in 
     consultation with the juvenile and, if appropriate the parent 
     or guardian of the juvenile, prepare an individualized plan 
     for the provision to the juvenile or young adult of the 
     services; and
       ``(2) treatment services under the plan will include--
       ``(A) individual, group, and family counseling, as 
     appropriate, regarding substance abuse; and
       ``(B) followup services to assist the juvenile or young 
     adult in preventing a relapse into such abuse.
       ``(d) Eligible Supplemental Services.--Grants under 
     subsection (a) may be used to provide an eligible juvenile, 
     the following services:
       ``(1) Hospital referrals.--Referrals for necessary hospital 
     services.
       ``(2) HIV and aids counseling.--Counseling on the human 
     immunodeficiency virus and on acquired immune deficiency 
     syndrome.
       ``(3) Domestic violence and sexual abuse counseling.--
     Counseling on domestic violence and sexual abuse.
       ``(4) Preparation for reentry into society.--Planning for 
     and counseling to assist reentry into society, both before 
     and after discharge, including referrals to any public or 
     nonprofit private entities in the community involved that 
     provide services appropriate for the juvenile.
       ``(e) Minimum Qualifications for Receipt of Award.--
       ``(1) Certification by relevant state agency.--With respect 
     to the principal agency of a State or Indian tribe that 
     administers programs relating to substance abuse, the 
     Director may award a grant to, or enter into a cooperative 
     agreement or contract with, an applicant only if the agency 
     or Indian tribe has certified to the Director that--
       ``(A) the applicant has the capacity to carry out a program 
     described in subsection (a);
       ``(B) the plans of the applicant for such a program are 
     consistent with the policies of such agency regarding the 
     treatment of substance abuse; and
       ``(C) the applicant, or any entity through which the 
     applicant will provide authorized services, meets all 
     applicable State licensure or certification requirements 
     regarding the provision of the services involved.
       ``(2) Status as medicaid provider.--
       ``(A) In general.--Subject to subparagraphs (B) and (C), 
     the Director may make a grant, or enter into a cooperative 
     agreement or contract, under subsection (a) only if, in the 
     case of any authorized service that is available pursuant to 
     the State plan approved under title XIX of the Social 
     Security Act (42 U.S.C. 1396 et seq.) for the State 
     involved--
       ``(i) the applicant for the grant, cooperative agreement, 
     or contract will provide the service directly, and the 
     applicant has entered into a participation agreement under 
     the State plan and is qualified to receive payments under 
     such plan; or
       ``(ii) the applicant will enter into an agreement with a 
     public or nonprofit private entity under which the entity 
     will provide the service, and the entity has entered into 
     such a participation agreement plan and is qualified to 
     receive such payments.
       ``(B) Services.--
       ``(i) In general.--In the case of an entity making an 
     agreement pursuant to subparagraph (A)(ii) regarding the 
     provision of services, the requirement established in such 
     subparagraph regarding a participation agreement shall be 
     waived by the Director if the entity does not, in providing 
     health care services, impose a charge or accept reimbursement 
     available from any third party payor, including reimbursement 
     under any insurance policy or under any Federal or State 
     health benefits plan.
       ``(ii) Voluntary donations.--A determination by the 
     Director of whether an entity referred to in clause (i) meets 
     the criteria for a waiver under such clause shall be made 
     without regard to whether the entity accepts voluntary 
     donations regarding the provision of services to the public.
       ``(C) Mental diseases.--
       ``(i) In general.--With respect to any authorized service 
     that is available pursuant to the State plan described in 
     subparagraph (A), the requirements established in such 
     subparagraph shall not apply to the provision of any such 
     service by an institution for mental diseases to an 
     individual who has attained 21 years of age and who has not 
     attained 65 years of age.
       ``(ii) Definition of institution for mental diseases.--In 
     this subparagraph, the term `institution for mental diseases' 
     has the same meaning as in section 1905(i) of the Social 
     Security Act (42 U.S.C. 1396d(i)).
       ``(f) Requirements for Matching Funds.--
       ``(1) In general.--With respect to the costs of the program 
     to be carried out by an applicant pursuant to subsection (a), 
     a funding agreement for an award under such subsection is 
     that the applicant will make available (directly or through 
     donations from public or private entities) non-Federal 
     contributions toward such costs in an amount that--
       ``(A) for the first fiscal year for which the applicant 
     receives payments under an award under such subsection, is 
     not less than $1 for each $9 of Federal funds provided in the 
     award;
       ``(B) for any second such fiscal year, is not less than $1 
     for each $9 of Federal funds provided in the award; and
       ``(C) for any subsequent such fiscal year, is not less than 
     $1 for each $3 of Federal funds provided in the award.
       ``(2) Determination of amount contributed.--Non-Federal 
     contributions required in paragraph (1) may be in cash or in 
     kind, fairly evaluated, including plant, equipment, or 
     services. Amounts provided by the Federal Government, or 
     services assisted or subsidized to any significant extent by 
     the Federal Government, may not be included in determining 
     the amount of such non-Federal contributions.
       ``(g) Outreach.--A funding agreement for an award under 
     subsection (a) for an applicant is that the applicant will 
     provide outreach services in the community involved to 
     identify juveniles who are engaging in substance abuse and to 
     encourage the juveniles to undergo treatment for such abuse.

[[Page S335]]

       ``(h) Accessibility of Program.--A funding agreement for an 
     award under subsection (a) for an applicant is that the 
     program operated pursuant to such subsection will be operated 
     at a location that is accessible to low income juveniles.
       ``(i) Continuing Education.--A funding agreement for an 
     award under subsection (a) is that the applicant involved 
     will provide for continuing education in treatment services 
     for the individuals who will provide treatment in the program 
     to be operated by the applicant pursuant to such subsection.
       ``(j) Imposition of Charges.--A funding agreement for an 
     award under subsection (a) for an applicant is that, if a 
     charge is imposed for the provision of authorized services to 
     or on behalf of an eligible juvenile, such charge--
       ``(1) will be made according to a schedule of charges that 
     is made available to the public;
       ``(2) will be adjusted to reflect the economic condition of 
     the juvenile involved; and
       ``(3) will not be imposed on any such juvenile whose family 
     has an income of less than 185 percent of the official 
     poverty line, as established by the Director of the Office 
     for Management and Budget and revised by the Secretary in 
     accordance with section 673(2) of the Omnibus Budget 
     Reconciliation Act of 1981 (42 U.S.C. 9902(2)).
       ``(k) Reports to Director.--A funding agreement for an 
     award under subsection (a) is that the applicant involved 
     will submit to the Director a report--
       ``(1) describing the utilization and costs of services 
     provided under the award;
       ``(2) specifying the number of juveniles served, and the 
     type and costs of services provided; and
       ``(3) providing such other information as the Director 
     determines to be appropriate.
       ``(l) Requirement of Application.--The Director may make an 
     award under subsection (a) only if an application for the 
     award is submitted to the Director containing such 
     agreements, and the application is in such form, is made in 
     such manner, and contains such other agreements and such 
     assurances and information as the Director determines to be 
     necessary to carry out this section.
       ``(m) Equitable Allocation of Awards.--In making awards 
     under subsection (a), the Director shall ensure that the 
     awards are equitably allocated among the principal geographic 
     regions of the United States, as well as among Indian tribes, 
     subject to the availability of qualified applicants for the 
     awards.
       ``(n) Duration of Award.--
       ``(1) In general.--The period during which payments are 
     made to an entity from an award under this section may not 
     exceed 5 years.
       ``(2) Approval of director.--The provision of payments 
     described in paragraph (1) shall be subject to--
       ``(A) annual approval by the Director of the payments; and
       ``(B) the availability of appropriations for the fiscal 
     year at issue to make the payments.
       ``(3) No limitation.--This subsection may not be construed 
     to establish a limitation on the number of awards that may be 
     made to an entity under this section.
       ``(o) Evaluations; Dissemination of Findings.--The Director 
     shall, directly or through contract, provide for the conduct 
     of evaluations of programs carried out pursuant to subsection 
     (a). The Director shall disseminate to the States the 
     findings made as a result of the evaluations.
       ``(p) Reports to Congress.--
       ``(1) Initial report.--Not later than October 1, 1998, the 
     Director shall submit to the Committee on the Judiciary of 
     the House of Representatives, and to the Committee on the 
     Judiciary of the Senate, a report describing programs carried 
     out pursuant to this section.
       ``(2) Periodic reports.--
       ``(A) In general.--Not less than biennially after the date 
     described in paragraph (1), the Director shall prepare a 
     report describing programs carried out pursuant to this 
     section during the preceding 2-year period, and shall submit 
     the report to the Administrator for inclusion in the biennial 
     report under section 501(k).
       ``(B) Summary.--Each report under this subsection shall 
     include a summary of any evaluations conducted under 
     subsection (m) during the period with respect to which the 
     report is prepared.
       ``(q) Definitions.--In this section:
       ``(1) Authorized services.--The term `authorized services' 
     means treatment services and supplemental services.
       ``(2) Juvenile.--The term `juvenile' means anyone 18 years 
     of age or younger at the time that of admission to a program 
     operated pursuant to subsection (a).
       ``(3) Eligible juvenile.--The term `eligible juvenile' 
     means a juvenile who has been admitted to a program operated 
     pursuant to subsection (a).
       ``(4) Funding agreement under subsection (a).--The term 
     `funding agreement under subsection (a)', with respect to an 
     award under subsection (a), means that the Director may make 
     the award only if the applicant makes the agreement involved.
       ``(5) Treatment services.--The term `treatment services' 
     means treatment for substance abuse, including the counseling 
     and services described in subsection (c)(2).
       ``(6) Supplemental services.--The term `supplemental 
     services' means the services described in subsection (d).
       ``(r) Authorization of Appropriations.--
       ``(1) In general.--For the purpose of carrying out this 
     section and section 576 there is authorized to be 
     appropriated such sums as may be necessary for fiscal years 
     1998, 1999, and 2000. There is authorized to be appropriated 
     from the Violent Crime Reduction Trust Fund $300,000,000 in 
     each of the fiscal years 2001 and 2002.
       ``(2) Transfer.--For the purpose described in paragraph 
     (1), in addition to the amounts authorized in such paragraph 
     to be appropriated for a fiscal year, there is authorized to 
     be appropriated for the fiscal year from the special 
     forfeiture fund of the Director of the Office of National 
     Drug Control Policy such sums as may be necessary.
       ``(3) Rule of construction.--The amounts authorized in this 
     subsection to be appropriated are in addition to any other 
     amounts that are authorized to be appropriated and are 
     available for the purpose described in paragraph (1).

     ``SEC. 576. OUTPATIENT TREATMENT PROGRAMS FOR JUVENILES.

       ``(a) Grants.--The Secretary of Health and Human Services, 
     acting through the Director of the Center for Substance Abuse 
     Treatment, shall make grants to establish projects for the 
     outpatient treatment of substance abuse among juveniles.
       ``(b) Prevention.--Entities receiving grants under this 
     section shall engage in activities to prevent substance abuse 
     among juveniles.
       ``(c) Evaluation.--The Secretary of Health and Human 
     Services shall evaluate projects carried out under subsection 
     (a) and shall disseminate to appropriate public and private 
     entities information on effective projects.''.
                Subtitle D--National Drug Control Policy

     SEC. 381. REAUTHORIZATION OF OFFICE OF NATIONAL DRUG CONTROL 
                   POLICY.

       (a) Reauthorization.--Section 1009 of the National 
     Narcotics Leadership Act of 1988 (21 U.S.C. 1506) is amended 
     by striking ``1997'' and inserting ``2002''.
       (b) Authorization of Appropriations.--Section 1011 of the 
     National Narcotics Leadership Act of 1988 (21 U.S.C. 1508) is 
     amended by striking ``8'' and inserting ``13''.

     SEC. 382. STUDY ON EFFECTS OF CALIFORNIA AND ARIZONA DRUG 
                   INITIATIVES.

       (a) Definition.--In this section, the term ``controlled 
     substance'' has the same meaning as in section 102 of the 
     Controlled Substances Act (21 U.S.C. 802).
       (b) Study.--The Director of National Drug Control Policy, 
     in consultation with the Attorney General and the Secretary 
     of Health and Human Services, shall conduct a study on the 
     effect of the 1996 voter referenda in California and Arizona 
     concerning the medicinal use of marijuana and other 
     controlled substances, respectively, on--
       (1) marijuana usage in Arizona and California;
       (2) usage of other controlled substances in Arizona and 
     California;
       (3) perceptions of youth of the dangerousness of marijuana 
     and other controlled substances in Arizona and California;
       (4) emergency room admissions for drug abuse in Arizona and 
     California;
       (5) seizures of controlled substances in Arizona and 
     California;
       (6) arrest rates for use of controlled substances in 
     Arizona and California;
       (7) arrest rates for trafficking of controlled substances 
     in Arizona and California;
       (8) conviction rates in cases concerning use of controlled 
     substances in Arizona and California; and
       (9) conviction rates in jury trials concerning use of 
     controlled substances in Arizona and California.
       (c) Report.--Not later than January 1, 1998, the Director 
     of National Drug Policy, in consultation with the Attorney 
     General and the Secretary of Health and Human Services, 
     shall--
       (1) issue a report on the results of the study under 
     subsection (b); and
       (2) submit a copy of the report to the Committees on the 
     Judiciary of the House of Representatives and the Senate.
       (d) Authorizations.--There are authorized to be 
     appropriated to carry out this section such sums as may be 
     necessary for each of the fiscal years 1998 and 1999.
                    Subtitle E--Penalty Enhancements

     SEC. 391. INCREASED PENALTIES FOR USING FEDERAL PROPERTY TO 
                   GROW OR MANUFACTURE CONTROLLED SUBSTANCES.

       (a) In General.--Section 401(b)(5) of the Controlled 
     Substances Act (21 U.S.C. 841(b)(5)) is amended to read as 
     follows:
       ``(5) Offenses on federal property.--Any person who 
     violates subsection (a) by cultivating or manufacturing a 
     controlled substance on any property in whole or in part 
     owned by or leased to the United States or any department or 
     agency thereof shall be subject to twice the maximum 
     punishment otherwise authorized for the offense.''.
       (b) Sentencing Enhancement.--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 
     to ensure that violations of section 401(b)(5) of the 
     Controlled Substances Act are punished substantially more 
     severely than violations that do not occur on Federal 
     property.
       (c) Consistency.--In carrying out this subsection, the 
     United States Sentencing Commission shall--

[[Page S336]]

       (1) ensure that there is reasonable consistency with other 
     Federal sentencing guidelines; and
       (2) avoid duplicative punishment for substantially the same 
     offense.

     SEC. 392. TECHNICAL CORRECTION TO ENSURE COMPLIANCE OF 
                   FEDERAL SENTENCING GUIDELINES WITH FEDERAL LAW.

       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 Federal law''.
             TITLE IV--PROTECTING YOUTH FROM VIOLENT CRIME
               Subtitle A--Grants for Youth Organizations

     SEC. 401. GRANT PROGRAM.

       The Attorney General may make grants to States, Indian 
     tribes, and national nonprofit organizations in crime prone 
     areas, such as Boys and Girls Clubs, Police Athletic Leagues, 
     4-H Clubs, D.A.R.E. America, and Kids 'N Kops programs, for 
     the purpose of--
       (1) providing constructive activities to youth during after 
     school hours, weekends, and school vacations to prevent the 
     criminal victimization of program participants;
       (2) providing supervised activities in safe environments to 
     youth in crime prone areas;
       (3) providing antidrug education to prevent drug abuse 
     among youth;
       (4) supporting police officer training and salaries and 
     educational materials to expand D.A.R.E. America's middle 
     school campaign; or
       (5) providing constructive activities to youth in a safe 
     environment through parks and other public recreation areas.

     SEC. 402. GRANTS TO NATIONAL ORGANIZATIONS.

       (a) Applications.--
       (1) Eligibility.--In order to be eligible to receive a 
     grant under this section, the chief operating officer of a 
     national community-based organization shall submit an 
     application to the Attorney General in such form and 
     containing such information as the Attorney General may 
     reasonably require.
       (2) Application requirements.--Each application submitted 
     in accordance with paragraph (1) shall include--
       (A) a request for a grant to be used for the purposes 
     described in this subtitle;
       (B) a description of the communities to be served by the 
     grant, including the nature of juvenile crime, violence, and 
     drug use in the communities;
       (C) written assurances that Federal funds received under 
     this subtitle will be used to supplement and not supplant, 
     non-Federal funds that would otherwise be available for 
     activities funded under this subtitle;
       (D) written assurances that all activities will be 
     supervised by an appropriate number of responsible adults;
       (E) a plan for assuring that program activities will take 
     place in a secure environment that is free of crime and 
     drugs; and
       (F) any additional statistical or financial information 
     that the Attorney General may reasonably require.
       (b) Grant Awards.--In awarding grants under this section, 
     the Attorney General shall consider--
       (1) the ability of the applicant to provide the stated 
     services;
       (2) the history and establishment of the applicant in 
     providing youth activities on a nationwide basis; and
       (3) the extent to which the organizations shall achieve an 
     equitable geographic distribution of the grant awards.

     SEC. 403. GRANTS TO STATES.

       (a) Applications.--
       (1) In general.--The Attorney General may make grants under 
     this section to States for distribution to units of local 
     government and community-based organizations for the purposes 
     set forth in section 401.
       (2) Grants.--To request a grant under this section, the 
     chief executive of a State shall submit an application to the 
     Attorney General in such form and containing such information 
     as the Attorney General may reasonably require.
       (3) Application requirements.--Each application submitted 
     in accordance with paragraph (2) shall include--
       (A) a request for a grant to be used for the purposes 
     described in this subtitle;
       (B) a description of the communities to be served by the 
     grant, including the nature of juvenile crime, violence, and 
     drug use in the community;
       (C) written assurances that Federal funds received under 
     this subtitle will be used to supplement and not supplant, 
     non-Federal funds that would otherwise be available for 
     activities funded under this subtitle;
       (D) written assurances that all activities will be 
     supervised by an appropriate number of responsible adults; 
     and
       (E) a plan for assuring that program activities will take 
     place in a secure environment that is free of crime and 
     drugs.
       (b) Grant Awards.--In awarding grants under this section, 
     the State shall consider--
       (1) the ability of the applicant to provide the stated 
     services;
       (2) the history and establishment of the applicant in the 
     community to be served;
       (3) the level of juvenile crime, violence, and drug use in 
     the community;
       (4) the extent to which structured extracurricular 
     activities for youth are otherwise unavailable in the 
     community;
       (5) the need in the community for secure environments for 
     youth to avoid criminal victimization and exposure to crime 
     and illegal drugs;
       (6) to the extent practicable, achievement of an equitable 
     geographic distribution of the grant awards; and
       (7) whether the applicant has an established record of 
     providing extracurricular activities that are generally not 
     otherwise available to youth in the community.
       (c) Allocation.--
       (1) State allocations.--The Attorney General shall allot 
     not less than 0.75 percent of the total amount made available 
     each fiscal year to carry out this section to each State that 
     has applied for a grant under this section.
       (2) Indian tribes.--The Attorney General shall allot not 
     less than 0.75 percent of the total amount made available 
     each fiscal year to carry out this section to Indian tribes, 
     in accordance with the criteria set forth in subsections (a) 
     and (b).
       (3) Remaining amounts.--Of the amount remaining after the 
     allocations under paragraphs (1) and (2), the Attorney 
     General shall allocate to each State an amount that bears the 
     same ratio to the total amount of remaining funds as the 
     population of the State bears to the total population of all 
     States.

     SEC. 404. ALLOCATION; GRANT LIMITATION.

       (a) Allocation.--Of amounts made available to carry out 
     this subtitle--
       (1) 20 percent shall be for grants to national 
     organizations under section 402; and
       (2) 80 percent shall be for grants to States under section 
     403.
       (b) Grant Limitation.--Not more than 3 percent of the funds 
     made available to the Attorney General or a grant recipient 
     under this subtitle may be used for administrative purposes.

     SEC. 405. REPORT AND EVALUATION.

       (a) Report to the Attorney General.--Not later than October 
     1, 1998, and October 1 of each year thereafter, each grant 
     recipient under this subtitle shall submit to the Attorney 
     General a report that describes, for the year to which the 
     report relates--
       (1) the activities provided;
       (2) the number of youth participating;
       (3) the extent to which the grant enabled the provision of 
     activities to youth that would not otherwise be available; 
     and
       (4) any other information that the Attorney General 
     requires for evaluating the effectiveness of the program.
       (b) Evaluation and Report to Congress.--Not later than 
     March 1, 1999, and March 1 of each year thereafter, the 
     Attorney General shall submit to the Congress an evaluation 
     and report that contains a detailed statement regarding grant 
     awards, activities of grant recipients, a compilation of 
     statistical information submitted by grant recipients under 
     this subtitle, and an evaluation of programs established by 
     grant recipients under this subtitle.
       (c) Criteria.--In assessing the effectiveness of the 
     programs established and operated by grant recipients 
     pursuant to this subtitle, the Attorney General shall 
     consider--
       (1) the number of youth served by the grant recipient;
       (2) the percentage of youth participating in the program 
     charged with acts of delinquency or crime compared to youth 
     in the community at large;
       (3) the percentage of youth participating in the program 
     that uses drugs compared to youth in the community at large;
       (4) the percentage of youth participating in the program 
     that are victimized by acts of crime or delinquency compared 
     to youth in the community at large; and
       (5) the truancy rates of youth participating in the program 
     compared to youth in the community at large.
       (d) Documents and Information.--Each grant recipient under 
     this subtitle shall provide the Attorney General with all 
     documents and information that the Attorney General 
     determines to be necessary to conduct an evaluation of the 
     effectiveness of programs funded under this subtitle.

     SEC. 406. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There are authorized to be appropriated to 
     carry out this subtitle from the Violent Crime Reduction 
     Trust Fund--
       (1) such sums as may be necessary for each of the fiscal 
     years 1998 through 2000;
       (2) for fiscal year 2001, $125,000,000; and
       (3) for fiscal year 2002, $125,000,000.
       (b) Continued Availability.--Amounts made available under 
     this subtitle shall remain available until expended.
     Subtitle B--``Say No to Drugs'' Community Centers Act of 1997

     SEC. 421. SHORT TITLE; DEFINITIONS.

       (a) Short Title.--This subtitle may be cited as the ``Say 
     No to Drugs Community Centers Act of 1997''.
       (b) Definitions.--For purposes of this subtitle--
       (1) the term ``community-based organization'' means a 
     private, locally initiated organization that--
       (A) is a nonprofit organization, as that term is defined in 
     section 103(23) of the Juvenile Justice and Delinquency 
     Prevention Act of 1974 (42 U.S.C. 5603(23)); and
       (B) involves the participation, as appropriate, of members 
     of the community and community institutions, including--
       (i) business and civic leaders actively involved in 
     providing employment and business development opportunities 
     in the community;
       (ii) educators;

[[Page S337]]

       (iii) religious organizations (which shall not provide any 
     sectarian instruction or sectarian worship in connection with 
     program activities funded under this subtitle);
       (iv) law enforcement agencies; and
       (v) other interested parties;
       (2) the term ``eligible community'' means a community--
       (A) identified by an eligible recipient for assistance 
     under this subtitle; and
       (B) an area that meets such criteria as the Attorney 
     General may, by regulation, establish, including criteria 
     relating to poverty, juvenile delinquency, and crime;
       (3) the term ``eligible recipient'' means a community-based 
     organization or public school that has--
       (A) been approved for eligibility by the Attorney General, 
     upon application submitted to the Attorney General in 
     accordance with section 412(b); and
       (B) demonstrated that the projects and activities it seeks 
     to support in an eligible community involve the 
     participation, when feasible and appropriate, of--
       (i) parents, family members, and other members of the 
     eligible community;
       (ii) civic and religious organizations serving the eligible 
     community;
       (iii) school officials and teachers employed at schools 
     located in the eligible community;
       (iv) public housing resident organizations in the eligible 
     community; and
       (v) public and private nonprofit organizations and 
     organizations serving youth that provide education, child 
     protective services, or other human services to low income, 
     at-risk youth and their families;
       (4) the term ``poverty line'' means the income official 
     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; and
       (5) the term ``public school'' means a public elementary 
     school, as defined in section 1201(i) of the Higher Education 
     Act of 1965 (20 U.S.C. 1141(i)), and a public secondary 
     school, as defined in section 1201(d) of that Act (42 U.S.C. 
     1141(d)).

     SEC. 422. GRANT REQUIREMENTS.

       (a) In General.--The Attorney General may make grants to 
     eligible recipients, which grants may be used to provide to 
     youth living in eligible communities during after school 
     hours or summer vacations, the following services:
       (1) Rigorous drug prevention education.
       (2) Drug counseling and treatment.
       (3) Academic tutoring and mentoring.
       (4) Activities promoting interaction between youth and law 
     enforcement officials.
       (5) Vaccinations and other basic preventive health care.
       (6) Sexual abstinence education.
       (7) Other activities and instruction to reduce youth 
     violence and substance abuse.
       (b) Location and Use of Amounts.--An eligible recipient 
     that receives a grant under this subtitle--
       (1) shall ensure that the stated program is carried out--
       (A) when appropriate, in the facilities of a public school 
     during nonschool hours; or
       (B) in another appropriate local facility that is--
       (i) in a location easily accessible to youth in the 
     community; and
       (ii) in compliance with all applicable State and local 
     ordinances;
       (2) shall use the grant amounts to provide to youth in the 
     eligible community services and activities that include 
     extracurricular and academic programs that are offered--
       (A) after school and on weekends and holidays, during the 
     school year; and
       (B) as daily full day programs (to the extent available 
     resources permit) or as part day programs, during the summer 
     months;
       (3) shall use not more than 5 percent of the amounts to pay 
     for the administrative costs of the program;
       (4) shall not use such amounts to provide sectarian worship 
     or sectarian instruction; and
       (5) may not use the amounts for the general operating costs 
     of public schools.
       (c) Applications.--
       (1) In general.--Each application to become an eligible 
     recipient shall be submitted to the Attorney General at such 
     time, in such manner, and accompanied by such information, as 
     the Attorney General may reasonably require.
       (2) Contents of application.--Each application submitted 
     pursuant to paragraph (1) shall--
       (A) describe the activities and services to be provided 
     through the program for which the grant is sought;
       (B) contain a comprehensive plan for the program that is 
     designed to achieve identifiable goals for youth in the 
     eligible community;
       (C) describe in detail the drug education and drug 
     prevention programs that will be implemented;
       (D) specify measurable goals and outcomes for the program 
     that will include--
       (i) reducing the percentage of youth in the eligible 
     community that enter the juvenile justice system or become 
     addicted to drugs;
       (ii) increasing the graduation rates, school attendance, 
     and academic success of youth in the eligible community; and
       (iii) improving the skills of program participants;
       (E) contain an assurance that the applicant will use grant 
     amounts received under this subtitle to provide youth in the 
     eligible community with activities and services consistent 
     with subsection (g);
       (F) demonstrate the manner in which the applicant will make 
     use of the resources, expertise, and commitment of private 
     entities in carrying out the program for which the grant is 
     sought;
       (G) include an estimate of the number of youth in the 
     eligible community expected to be served under the program;
       (H) include a description of charitable private resources, 
     and all other resources, that will be made available to 
     achieve the goals of the program;
       (I) contain an assurance that the applicant will comply 
     with any evaluation under section 522, any research effort 
     authorized under Federal law, and any investigation by the 
     Attorney General;
       (J) contain an assurance that the applicant will prepare 
     and submit to the Attorney General an annual report regarding 
     any program conducted under this subtitle;
       (K) contain an assurance that the program for which the 
     grant is sought will, to the maximum extent practicable, 
     incorporate services that are provided solely through non-
     Federal private or nonprofit sources; and
       (L) contain an assurance that the applicant will maintain 
     separate accounting records for the program for which the 
     grant is sought.
       (3) Priority.--In determining eligibility under this 
     section, the Attorney General shall give priority to 
     applicants that submit applications that demonstrate the 
     greatest local support for the programs they seek to support.
       (d) Payments; Federal Share; Non-Federal Share.--
       (1) Payments.--The Attorney General shall, subject to the 
     availability of appropriations, provide to each eligible 
     recipient the Federal share of the costs of developing and 
     carrying out programs described in this section.
       (2) Federal share.--The Federal share of the cost of a 
     program under this subtitle shall be not more than--
       (A) 75 percent of the total cost of the program for each of 
     the first 2 years of the duration of a grant;
       (B) 70 percent of the total cost of the program for the 
     third year of the duration of a grant; and
       (C) 60 percent of the total cost of the program for each 
     year thereafter.
       (3) Non-federal share.--
       (A) In general.--The non-Federal share of the cost of a 
     program under this subtitle may be in cash or in kind, fairly 
     evaluated, including plant, equipment, and services. Federal 
     funds made available for the activity of any agency of an 
     Indian tribal government or the Bureau of Indian Affairs on 
     any Indian lands may be used to provide the non-Federal share 
     of the costs of programs or projects funded under this 
     subtitle.
       (B) Special rule.--Not less than 15 percent of the non-
     Federal share of the costs of a program under this subtitle 
     shall be provided from private or nonprofit sources.
       (e) Program Authority.--
       (1) In general.--
       (A) Allocations for states and indian tribes.--
       (i) In general.--In any fiscal year in which the total 
     amount made available to carry out this subtitle is equal to 
     not less than $20,000,000, from the amount made available to 
     carry out this subtitle, the Attorney General shall allocate 
     not less than 0.75 percent for grants under subparagraph (B) 
     to eligible recipients in each State.
       (ii) Indian tribes.--The Attorney General shall allocate 
     0.75 percent of amounts made available under this subtitle 
     for grants to Indian tribes.
       (B) Grants to community-based organizations and public 
     schools from allocations.--For each fiscal year described in 
     subparagraph (A), the Attorney General may award grants from 
     the appropriate State or Indian tribe allocation determined 
     under subparagraph (A) on a competitive basis to eligible 
     recipients to pay for the Federal share of assisting eligible 
     communities to develop and carry out programs in accordance 
     with this subtitle.
       (C) Reallocation.--If, at the end of a fiscal year 
     described in subparagraph (A), the Attorney General 
     determines that amounts allocated for a particular State or 
     Indian tribe under subparagraph (B) remain unobligated, the 
     Attorney General shall use such amounts to award grants to 
     eligible recipients in another State or Indian tribe to pay 
     for the Federal share of assisting eligible communities to 
     develop and carry out programs in accordance with this 
     subtitle. In awarding such grants, the Attorney General shall 
     consider the need to maintain geographic diversity among 
     eligible recipients.
       (D) Availability of amounts.--Amounts made available under 
     this paragraph shall remain available until expended.
       (2) Other fiscal years.--In any fiscal year in which the 
     amount made available to carry out this subtitle is equal to 
     or less than $20,000,000, the Attorney General may award 
     grants on a competitive basis to eligible recipients to pay 
     for the Federal share of assisting eligible communities to 
     develop and carry out programs in accordance with this 
     subtitle.
       (3) Administrative costs.--The Attorney General may use not 
     more than 3 percent of the amounts made available to carry 
     out this subtitle in any fiscal year for administrative 
     costs, including training and technical assistance.

[[Page S338]]

     SEC. 423. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to carry out this 
     subtitle from the Violent Crime Reduction Trust Fund--
       (1) for fiscal year 2001, $125,000,000; and
       (2) for fiscal year 2002, $125,000,000.
                      Subtitle C--Missing Children

     SEC. 431. AMENDMENTS TO THE MISSING CHILDREN'S ASSISTANCE 
                   ACT.

       (a) Duties and Functions of the Administrator.--Section 404 
     of the Missing Children's Assistance Act (42 U.S.C. 5773) is 
     amended--
       (1) by redesignating subsection (c) as subsection (d); and
       (2) in subsection (b)--
       (A) by striking ``(b) The Administrator'' and all that 
     follows through ``shall--'' and inserting the following:
       ``(b) Toll-Free Hotline and National Resource Center.--The 
     Administrator shall make grants to or enter into contracts 
     with the National Center for Missing and Exploited Children, 
     for purposes of--'';
       (B) in paragraph (1)--
       (i) in subparagraph (A), by striking ``establish and 
     operate'' and inserting ``providing''; and
       (ii) in subparagraph (B), by adding ``and'' at the end;
       (C) in paragraph (2)--
       (i) by striking ``establish and operate'' and inserting 
     ``operating'';
       (ii) in subparagraph (A), by inserting ``foreign 
     governments,'' after ``State and local governments''; and
       (iii) in subparagraph (D)--

       (I) by inserting ``foreign governments,'' after ``State and 
     local governments''; and
       (II) by striking ``; and'' at the end and inserting a 
     period;

       (D) in paragraph (3), by striking ``(3) periodically'' and 
     inserting the following:
       ``(c) National Incidence Studies.--The Administrator, 
     either by making grants to or entering into contracts with 
     public agencies or nonprofit private agencies, shall--
       ``(1) periodically''; and
       (E) by redesignating paragraph (4) as paragraph (2).
       (b) Grants.--Section 405(a) of the Missing Children's 
     Assistance Act (42 U.S.C. 5775(a)) is amended by inserting 
     ``the National Center for Missing and Exploited Children and 
     with'' before ``public agencies''.
           TITLE V--IMPROVING YOUTH CRIME AND DRUG PREVENTION
     Subtitle A--Comprehensive Study of Federal Prevention Efforts

     SEC. 501. STUDY BY NATIONAL ACADEMY OF SCIENCE.

       (a) In General.--The Attorney General shall enter into a 
     contract with a public or nonprofit private entity, subject 
     to subsection (b), for the purpose of conducting a study or 
     studies--
       (1) to evaluate the effectiveness of federally funded 
     programs for preventing youth violence and youth substance 
     abuse;
       (2) to evaluate the effectiveness of federally funded grant 
     programs for preventing criminal victimization of juveniles;
       (3) to identify specific Federal programs and programs that 
     receive Federal funds that contribute to reductions in youth 
     violence, youth substance abuse, and risk factors among youth 
     that lead to violent behavior and substance abuse;
       (4) to identify specific programs that have not achieved 
     their intended results; and
       (5) to make specific recommendations on programs that--
       (A) should receive continued or increased funding because 
     of their proven success; or
       (B) should have their funding terminated or reduced because 
     of their lack of effectiveness.
       (b) National Academy of Sciences.--The Attorney General 
     shall request the National Academy of Sciences to enter into 
     the contract under subsection (a) to conduct the study or 
     studies described in subsection (a). If the Academy declines 
     to conduct the study, the Attorney General shall carry out 
     such subsection through other public or nonprofit private 
     entities.
       (c) Assistance.--In conducting the study under subsection 
     (a) the contracting party may obtain analytic assistance, 
     data, and other relevant materials from the Department of 
     Justice and any other appropriate Federal agency.
       (d) Reporting Requirements.--
       (1) In general.--Not later than January 1, 2000, the 
     Attorney General shall submit a report describing the 
     findings made as a result of the study required by subsection 
     (a) to the Committee on the Judiciary and the Committee on 
     Economic and Educational Opportunity of the House of 
     Representatives and the Committee on the Judiciary and the 
     Committee on Labor and Human Resources of the Senate.
       (2) Contents.--The report required by this subsection shall 
     contain specific recommendations concerning funding levels 
     for the programs evaluated. Reports on the effectiveness of 
     such programs and recommendations on funding shall be 
     provided to the appropriate subcommittees of the Committee on 
     Appropriations of the House of Representatives and the 
     Committee on Appropriations of the Senate.
       (e) Funding.--There are authorized to be appropriated to 
     carry out the study under subsection (a) $1,000,000,000.
         Subtitle B--Evaluation Mandate for Authorized Programs

     SEC. 522. EVALUATION OF CRIME PREVENTION PROGRAMS.

       The Attorney General, with respect to the programs in 
     titles II, III, and IV of this Act shall provide, directly or 
     through grants and contracts, for the comprehensive and 
     thorough evaluation of the effectiveness of each program 
     established by this Act and the amendments made by this Act.

     SEC. 523. EVALUATION AND RESEARCH CRITERIA.

       (a) Independent Evaluations and Research.--Evaluations and 
     research studies conducted pursuant to this subtitle shall be 
     independent in nature, and shall employ rigorous and 
     scientifically recognized standards and methodologies.
       (b) Content of Evaluations.--Evaluations conducted pursuant 
     to this title may include comparison between youth 
     participating in the programs and the community at large of 
     rates of--
       (1) delinquency, youth crime, youth gang activity, youth 
     substance abuse, and other high risk factors;
       (2) risk factors in young people that contribute to 
     juvenile violence, including academic failure, excessive 
     school absenteeism, and dropping out of school;
       (3) risk factors in the community, schools, and family 
     environments that contribute to youth violence; and
       (4) criminal victimizations of youth.

     SEC. 524. COMPLIANCE WITH EVALUATION MANDATE.

       The Attorney General may require the recipients of Federal 
     assistance for programs under this Act to collect, maintain, 
     and report information considered to be relevant to any 
     evaluation conducted pursuant to section 502, and to conduct 
     and participate in specified evaluation and assessment 
     activities and functions.

     SEC. 525. RESERVATION OF AMOUNTS FOR EVALUATION AND RESEARCH.

       (a) In General.--The Attorney General, with respect to 
     titles II, III, and IV shall reserve not less than 2 percent, 
     and not more than 4 percent, of the amounts made available 
     pursuant to such titles and the amendments made by such 
     titles in each fiscal year to carry out the evaluation and 
     research required by this title.
       (b) Assistance to Grantees and Evaluated Programs.--To 
     facilitate the conduct and defray the costs of crime 
     prevention program evaluation and research, the Attorney 
     General shall use amounts reserved under this section to 
     provide compliance assistance to grantees under this Act who 
     are selected to participate in evaluations pursuant to 
     section 522.
            Subtitle C--Elimination of Ineffective Programs

     SEC.  531.  SENSE  OF  SENATE  REGARDING  FUNDING FOR 
                   PROGRAMS DETERMINED TO BE INEFFECTIVE.

       It is the sense of the Senate that programs identified in 
     the study performed pursuant to section 501 as being 
     ineffective in addressing juvenile crime and substance abuse 
     should not receive Federal funding in any fiscal year 
     following the issuance of such study.
       TITLE VI--EXTENSION OF VIOLENT CRIME REDUCTION TRUST FUND

     SEC. 601. EXTENSION OF VIOLENT CRIME REDUCTION TRUST FUND.

       (a) Violent Crime Control and Law Enforcement Act of 
     1994.--Section 310001(b) of the Violent Crime Control and Law 
     Enforcement Act of 1994 (42 U.S.C. 14211(b)) is amended--
       (1) in paragraph (5), by striking ``and'' at the end;
       (2) in paragraph (6), by striking the period at the end and 
     inserting a semicolon; and
       (3) by adding at the end the following:
       ``(7) for fiscal year 2001, $6,500,000,000; and
       ``(8) for fiscal year 2002, $6,500,000,000.''.
       (b) Balanced Budget and Emergency Deficit Control Act of 
     1985.--Section 251A(b) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 (2 U.S.C. 901a(b)) is amended--
       (1) by striking all after ``$4,904,000,000.''; and
       (2) by adding at the end the following:
       ``(E) For fiscal year 1999, $5,639,000,000.
       ``(F) For fiscal year 2000, $6,225,000,000.
       ``(G) For fiscal year 2001, $6,225,000,000.
       ``(H) For fiscal year 2002, $6,225,000,000.''.
       (c) Reduction in Discretionary Spending Limits.--Beginning 
     on the date of enactment of this Act, the discretionary 
     spending limits set forth in section 601(a)(1) of the 
     Congressional Budget Act of 1974 (2 U.S.C. 665(a)(2) (as 
     adjusted in conformance with section 251 of the Balanced 
     Budget and Emergency Deficit Control Act of 1985, and in the 
     Senate, with section 301 of House Concurrent Resolution 178 
     (104th Congress)) for fiscal years 2001 through 2002 are 
     reduced as follows:
       (1) For fiscal year 2001, for the discretionary category: 
     $6,500,000,000 in new budget authority and $6,225,000,000 in 
     outlays.
       (2) For fiscal year 2002, for the discretionary category: 
     $6,500,000,000 in new budget authority and $6,225,000,000 in 
     outlays.

  Mr. LEAHY. Mr. President, I am pleased to join with Senator Daschle 
and other Democratic Senators in introducing S. 15, the Youth Violence, 
Crime and Drug Abuse Control Act.
  Unfortunately, we need to look no further than today's headlines to 
see how badly we need this legislation. Over the past week, the 
chilling story has unfolded about Darryl Hall, a 12-year-old boy 
violently abducted on his way home from school in our Nation's Capital 
and then found dead and frozen

[[Page S339]]

with a gunshot to the back of his head. Three youths have been 
arrested, and the police suspect this heinous crime was the work of a 
gang. We must put a stop to the brutality of children killing children.
  We all want to protect the children of this country from becoming 
victims of crime, from joining gangs, and from becoming drug addicts. 
This is not a partisan issue. Gang members do not ask their new 
recruits whether they are Republican or Democrat. Criminals do not ask 
before they strike whether their victim is Republican or Democrat. We 
in Congress need to make every effort to work together to get a handle 
on this problem.
  The Democratic crime initiative we are introducing today builds on 
and continues the proven elements of the 1994 crime bill and takes the 
next steps to confront the problems of youth crime, drug abuse and gang 
violence. Our bill targets youthful offenders for certain punishment 
when they commit violent acts and offers helpful treatment when they 
need it. Although the number of juveniles arrested for violent crimes 
dipped in 1995, these numbers remain at unacceptable levels: sixty-four 
percent more juveniles were arrested for violent crimes in 1995 than in 
1987.
  Concern about the spread of gangs--the violence, the drug dealing and 
other criminal activity that gangs leave in their wake--has spread from 
our large cities to rural American towns. Indeed, one of the major 
factors responsible for the increases in juvenile crime over the past 
decade is the growth of criminal street gangs across this country. 
Although places such as Los Angeles or New York City first spring to 
mind when the word ``gang'' is mentioned, gangs are spreading across 
State boundaries and are problems today in many rural areas, as well as 
in urban centers.
  In my days as a prosecutor, gangs were unheard of in Vermont. 
Unfortunately, this is no longer the case. Just last month, the Vermont 
Corrections Commissioner reported significant increases in gang 
activity occurring in Vermont's prisons. There are also reports that 
franchises of the ``los solidos'' gang have set up shop in Rutland, and 
the ``la familia'' gang has moved into St. Johnsbury.
  Gangs violate the law, corrupt our youth, and disturb the tranquility 
of our streets. They are a problem we all now face, and they are a 
driving force in the crime wave which this Congress and the Federal 
Government must address, in partnership with our States and communities 
and with law enforcement authorities at all levels.
  What do we propose to do about it? First, we hope to work 
constructively with our colleagues from the other side of the aisle to 
deal with the problems of gangs and youth violence. We were able to do 
that in 1994. Senator Biden, who was then chairman of the Senate 
Judiciary Committee, worked tirelessly to ensure passage of the 1994 
crime law. The Democratic youth violence bill we introduce today has 
been crafted under the leadership of Senator Daschle and reflects the 
contributions of Senators Biden, Kohl, Feinstein, Kennedy, and others.
  This Democratic leadership bill builds on the successes of the 1994 
crime law, which is putting 100,000 cops on our Nation's streets and 
increased prevention and intervention efforts to keep children safe 
from crime and drugs. Specifically, our bill will:
  Expand the community oriented policing [cops] program to put 25,000 
more cops on the beat;
  Continue the Violence Against Women Act by providing $600 million to 
prosecute batterers, shelter 400,000 battered women and their children 
and continue the national domestic violence hotline; and
  Provide $5 billion to build prisons so that States requiring serious 
violent offenders to serve at least 85 percent of their sentences will 
be better able to house criminals.
  The Democratic crime bill also looks to the future with new laws and 
programs to crack down on violent youth and gang violence. These 
measures target the use of ``gang paraphernalia'', the spread of gang 
``franchises'', the intimidation of witnesses, and reform of the 
juvenile justice system, with more protection for the victims of 
juvenile crime.
  Specifically, our bill would increase the penalties for illegally 
using ``gang paraphernalia'' such as body armor and laser sighting 
devices. Police officers use kevlar vests to protect their lives and 
hence our public safety. When criminals use kevlar vests, they do so to 
ensure their escape and enjoy the fruits of their crime. Under this 
bill, they would get more time when they are caught using such body 
armor in the commission of a crime.
  The bill also makes it easier for law enforcement to use clone 
beepers to investigate gang activity. Beepers are how gang members and 
drug dealers keep in touch with each other. One tool law enforcement 
uses to investigate these criminals is a ``clone beeper'', which 
displays the same numbers displayed on the beepers of targeted 
criminals. This bill will permit law enforcement to get a clone beeper 
with the same kind of court order they already use to get information 
on the numbers dialed to or from a telephone. This is not to be 
confused with wiretap order to eavesdrop on what people say; clone 
beepers only give information on the numbers displayed on the beeper. 
The bill will speed up the process for law enforcement to get ``clone 
beepers.''
  Our bill would double the penalty for using physical violence or 
threatening physical violence against witnesses, victims or informants. 
Nothing undermines our system of justice more than scaring people away 
from providing information that helps the police, prosecutors, judges 
and juries from finding the truth.
  The bill would create a new federal crime for expanding gangs across 
State borders and increase penalties for using firearms to commit drug 
trafficking crimes and crimes of violence.
  We also propose several needed changes in the juvenile justice system 
to respond to the need to crack down on violent youth with the full 
force of the law. This means increasing the incarceration periods for 
juvenile offenders so that they may be incarcerated until the age of 26 
instead of mandatory release at the age of 21, streamlining procedures 
for prosecuting violent juveniles as adults, and building more prisons 
to incarcerate juvenile offenders. In addition, our bill creates new 
juvenile gun and drug courts to speed prosecution and sentencing for 
drug abuse and weapons violations.
  The bill also improves the rights of victims of violent juvenile 
crime. Whether the perpetrator of a violent crime is an adult or a 
juvenile, the victim should have the opportunity to speak to the 
sentencing judge and be entitled to restitution.
  Drugs have had a devastating affect on our society. It is clear that 
no solution to the juvenile crime problem will work if it does not 
address the role that drug abuse and drug trafficking play in creating 
unsafe environments for our children. For this reason, the Democratic 
crime bill includes measures to prevent and treat youth drug addiction. 
These measures include:
  Providing $200 million investment in research and development of 
medicines to treat heroin and cocaine addiction; and
  Extending the drug courts program to force more than 500,000 adult 
and juvenile drug offenders to engage in a rigorous drug testing and 
drug treatment--or face certain imprisonment.
  We also protect children from becoming the victims of crime, with 
programs that would keep children like Darryl Hall in safer 
environments. These measures include:
  Extending the Safe and Drug Free Schools Program; and
  Creating after-school ``safe havens'' where children are protected 
from drugs, gangs and crime in supervised and productive environments.
  In Vermont, we have a very successful program called ``Kids 'N Kops'' 
that brings school-age children and our law enforcement officers 
together in a fun and constructive way. Last spring, the attorney 
general attended an annual event in Vermont celebrating this program 
and urged that the program be replicated elsewhere in the country. This 
bill would help make that a reality.
  Youth crime has many causes, and no one bill can solve them all. But 
that should not paralyze us from taking sensible steps, in partnership 
with states and communities of all sizes and in all regions of the 
Nation, to begin turning the tables on youth crime and

[[Page S340]]

drug abuse. This bill proposes a balanced approach combining strong, 
targeted law enforcement measures with the prevention efforts that law 
enforcement officers on the front lines tell us are necessary to make a 
dent in the problem.
  In the final stages, the 1994 crime bill was passed over vigorous 
partisan obstacles and objections, and crime bills often spark some of 
our most partisan debates. But this time, we truly have the opportunity 
to pass a bipartisan bill with the active support of a president who is 
making youth crime prevention a priority in his second term and who 
supports the thrust of what we are proposing in this package. We have 
come forward with balanced, common-sense solutions to youth crime. We 
should debate and refine this bill as we go along, but these are not 
suggestions that should divide us along party lines.
  We look forward to working with the administration, our Republican 
colleagues and the Department of Justice--which has demonstrated its 
ability to move effectively in implementing anti-crime initiatives--in 
bringing these proposals to Congress' front burner for debate and 
prompt action.
  Mr. BREAUX. Mr. President, I am pleased to be an original cosponsor 
of this Democratic leadership bill--the youth violence, crime, and drug 
abuse bill.
  Crime ranks among the highest concerns of all Americans, no matter 
what their race or social background. Louisiana is no exception. In a 
recent poll, 86 percent of Louisianians said crime is a serious 
problem, ranking it as the No. 1 problem in our State. The city of New 
Orleans is experiencing a murder rate that is eight times higher than 
the national average. People want us and their local governments and 
State governments to do something about this problem.
  The Federal Bureau of Investigation recently released statistics 
showing that serious and violent crime dropped nationwide in the first 
half of last year. It is good news, certainly, that violent crime in 
this country has gone down; but the bad news is that juvenile crime is 
on the increase. Youth crimes, particularly homicides perpetrated with 
guns, have skyrocketed. The average cost of incarcerating a juvenile 
for just 1 year is somewhere between $23,000 and $64,000. I strongly 
support this Democratic legislation because it focuses directly on 
juveniles, punishes violent youthful offenders, and provides more 
access to treatment and prevention programs.
  We must continue the success of the COPS Program and put 25,000 more 
cops on the beat. We must create a new Federal crime targeting the 
interstate franchising spread of criminal street gangs and other 
changes aimed at gang violence, such as increasing the penalties for 
witness intimidation. We must extend the drug court program to force 
some 500,000 drug offenders to engage in rigorous drug testing and 
treatment, or face imprisonment and, finally, we must continue to 
provide funds to arrest and prosecute batterers and shelter 400,000 
battered women. Mr. President, this bill includes all of these 
provisions, and I would urge my colleagues to support it.
  For the sake of generations to come, it is time that we attack crime 
with a renewed vigor. Today's juvenile criminal becomes tomorrow's 
adult criminal. We must pass this legislation.
                                 ______
                                 
      By Mr. DASCHLE (for himself, Mr. Harkin, Mr. Johnson, Mr. Dorgan, 
        Mr. Conrad, Mr. Kerrey, Mr. Baucus, Mr. Bingaman, Mr. Kohl, Mr. 
        Feingold, Mr. Leahy, and Mr. Wellstone):
  S. 16. A bill to ensure the continued viability of livestock 
producers and the livestock industry in the United States, to assure 
foreign countries do not deny market access to United States meat and 
meat products, and for other purposes; to the Committee on Agriculture, 
Nutrition, and Forestry.


              the cattle industry improvement act of 1997

  Mr. DASCHLE. Mr. President, I am 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. 16

       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 ``Cattle 
     Industry Improvement Act of 1997''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                  TITLE I--CATTLE INDUSTRY IMPROVEMENT

Sec. 101. Prohibition on noncompetitive practices.
Sec. 102. Domestic market reporting.
Sec. 103. Import reporting.
Sec. 104. Protection of livestock producers against retaliation by 
              packers.
Sec. 105. Review of Federal agriculture credit policies.
Sec. 106. Streamlining and consolidating the United States food 
              inspection system.
Sec. 107. Labeling system for meat and meat food products produced in 
              the United States.
Sec. 108. Sense of Senate on interstate shipment of State-inspected 
              meat, poultry, and eggs.
Sec. 109. Exchange of cattle production data with Canada.

        TITLE II--MARKET ACCESS FOR UNITED STATES MEAT PRODUCTS

Sec. 201. Short title.

                Subtitle A--Identification of Countries

Sec. 211. Findings; purposes.
Sec. 212. Identification of countries that deny market access.
Sec. 213. Investigations.
Sec. 214. Authorized actions by United States Trade Representative.

           Subtitle B--Review of Third Country Meat Directive

Sec. 221. Findings.
Sec. 223. Definitions.
Sec. 224. Requirement for determination by United States Trade 
              Representative.
Sec. 225. Request for dispute settlement.
Sec. 226. Review of certain meat facilities.
                  TITLE I--CATTLE INDUSTRY IMPROVEMENT

     SEC. 101. PROHIBITION ON NONCOMPETITIVE PRACTICES.

       Section 202 of the Packers and Stockyards Act, 1921 (7 
     U.S.C. 192), is amended--
       (1) in subsection (g), by striking the period at the end 
     and inserting ``; or''; and
       (2) by adding at the end the following:
       ``(h) Engage in any practice or device that the Secretary 
     by regulation, after consultation with producers of cattle, 
     lamb, and hogs, and other persons in the cattle, lamb, and 
     hog industries, determines is a detrimental noncompetitive 
     practice or device relating to the price or a term of sale 
     for the procurement of livestock or the sale of meat or other 
     byproduct of slaughter.''.

     SEC. 102. DOMESTIC MARKET REPORTING.

       (a) Persons in Slaughter Business.--Section 203(g) of the 
     Agricultural Marketing Act of 1946 (7 U.S.C. 1622(g)) is 
     amended--
       (1) by striking ``(g) To'' and inserting the following:
       ``(g) Collection and Dissemination of Marketing 
     Information.--
       ``(1) In general.--To''; and
       (2) by adding at the end the following:
       ``(2) Domestic Market Reporting.--
       ``(A) Mandatory reporting.--Each person engaged in the 
     business of slaughtering a quantity of livestock determined 
     by the Secretary shall report to the Secretary in such manner 
     as the Secretary shall require, as soon as practicable but 
     not later than 24 hours after a transaction takes place, such 
     information relating to prices and the terms of sale for the 
     procurement of livestock and the sale of meat food products 
     and livestock products as the Secretary determines is 
     necessary to carry out this subsection.
       ``(B) Noncompliance.--Whoever knowingly fails or refuses to 
     provide to the Secretary information required to be reported 
     by subparagraph (A) shall be fined under title 18, United 
     States Code, or imprisoned for not more than 5 years, or 
     both.
       ``(C) Voluntary reporting.--The Secretary shall encourage 
     voluntary reporting by any person engaged in the business of 
     slaughtering livestock who is not subject to subparagraph 
     (A).
       ``(D) Availability of information.--The Secretary shall 
     make information received under this subsection available to 
     the public only in the aggregate and shall ensure the 
     confidentiality of persons providing the information.
       ``(E) Termination of authority.--The authority provided by 
     this paragraph shall terminate on the date that is 1 year 
     after the date of enactment of this paragraph, except that 
     the Secretary may extend the authority beyond that date if 
     the Secretary determines the extension is necessary or 
     appropriate.''.
       (b) Elimination of Outmoded Reports.--The Secretary of 
     Agriculture, after consultation with producers and other 
     affected parties, shall periodically--
       (1) eliminate obsolete reports; and
       (2) streamline the collection and reporting of data related 
     to livestock and meat and livestock products, using modern 
     data communications technology, to provide information to the 
     public on as close to a real-time basis as practicable.
       (c) Definition of ``Captive Supply''.--For the purpose of 
     regulations issued by the Secretary of Agriculture relating 
     to reporting under the Agricultural Marketing Act of 1946 (7 
     U.S.C. 1621 et seq.) and the Packers and

[[Page S341]]

     Stockyards Act, 1921 (7 U.S.C. 181 et seq.), the term 
     ``captive supply'' means livestock obligated to a packer in 
     any form of transaction in which more than 7 days elapses 
     from the date of obligation to the date of delivery of the 
     livestock.

     SEC. 103. IMPORT REPORTING.

       (a) In General.--The Secretary of Agriculture and the 
     Secretary of Commerce shall, using modern data communications 
     technology to provide the information to the public on as 
     close to a real-time basis as practicable, jointly make 
     available to the public aggregate price and quantity 
     information on imported meat food products, livestock 
     products, and livestock (as the terms are defined in section 
     2 of the Packers and Stockyards Act, 1921 (7 U.S.C. 182)).
       (b) First Report.--The Secretaries shall release to the 
     public the first report under subsection (a) not later than 
     60 days after the date of enactment of this Act.

     SEC. 104. PROTECTION OF LIVESTOCK PRODUCERS AGAINST 
                   RETALIATION BY PACKERS.

       (a) Retaliation Prohibited.--Section 202(b) of the Packers 
     and Stockyards Act, 1921 (7 U.S.C. 192(b)), is amended--
       (1) by striking ``or subject'' and inserting ``subject''; 
     and
       (2) by inserting before the semicolon at the end the 
     following: ``, or retaliate against any livestock producer on 
     account of any statement made by the producer (whether made 
     to the Secretary or a law enforcement agency or in a public 
     forum) regarding an action of any packer''.
       (b) Special Requirements Regarding Allegations of 
     Retaliation.--Section 203 of the Packers and Stockyards Act, 
     1921 (7 U.S.C. 193), is amended by adding at the end the 
     following:
       ``(e) Special Procedures Regarding Allegations of 
     Retaliation.--
       ``(1) Consideration by special panel.--The President shall 
     appoint a special panel consisting of 3 members to receive 
     and initially consider a complaint submitted by any person 
     that alleges prohibited packer retaliation under section 
     202(b) directed against a livestock producer.
       ``(2) Complaint; hearing.--If the panel has reason to 
     believe from the complaint or resulting investigation that a 
     packer has violated or is violating the retaliation 
     prohibition under section 202(b), the panel shall notify the 
     Secretary who shall cause a complaint to be issued against 
     the packer, and a hearing conducted, under subsection (a).
       ``(3) Evidentiary standard.--In the case of a complaint 
     regarding retaliation prohibited under section 202(b), the 
     Secretary shall find that the packer involved has violated or 
     is violating section 202(b) if the finding is supported by a 
     preponderance of the evidence.''.
       (c) Damages for Producers Suffering Retaliation.--Section 
     203 of the Packers and Stockyards Act, 1921 (7 U.S.C. 193) 
     (as amended by subsection (b)), is amended by adding at the 
     end the following:
       ``(f) Damages for Producers Suffering Retaliation.--
       ``(1) In general.--If a packer violates the retaliation 
     prohibition under section 202(b), the packer shall be liable 
     to the livestock producer injured by the retaliation for not 
     more than 3 times the amount of damages sustained as a result 
     of the violation.
       ``(2) Enforcement.--The liability may be enforced either by 
     complaint to the Secretary, as provided in subsection (e), or 
     by suit in any court of competent jurisdiction.
       ``(3) Other remedies.--This subsection shall not abridge or 
     alter a remedy existing at common law or by statute. The 
     remedy provided by this subsection shall be in addition to 
     any other remedy.''.

     SEC. 105. REVIEW OF FEDERAL AGRICULTURE CREDIT POLICIES.

       The Secretary of Agriculture, in consultation with the 
     Secretary of the Treasury, the Chairman of the Board of 
     Governors of the Federal Reserve System, and the Chairman of 
     the Board of the Farm Credit Administration, shall establish 
     an interagency working group to study--
       (1) the extent to which Federal lending practices and 
     policies have contributed, or are contributing, to market 
     concentration in the livestock and dairy sectors of the 
     national economy; and
       (2) whether Federal policies regarding the financial system 
     of the United States adequately take account of the weather 
     and price volatility risks inherent in livestock and dairy 
     enterprises.

     SEC. 106. STREAMLINING AND CONSOLIDATING THE UNITED STATES 
                   FOOD INSPECTION SYSTEM.

       (a) Preparation.--In consultation with the Secretary of 
     Agriculture, the Secretary of Health and Human Services, and 
     all other interested parties, the President shall prepare a 
     plan to consolidate the United States food inspection system 
     that ensures the best use of available resources to improve 
     the consistency, coordination, and effectiveness of the 
     United States food inspection system, taking into account 
     food safety risks.
       (b) Submission.--Not later than 1 year after the date of 
     enactment of this Act, the President shall submit to Congress 
     the plan prepared under subsection (a).

     SEC. 107. LABELING SYSTEM FOR MEAT AND MEAT FOOD PRODUCTS 
                   PRODUCED IN THE UNITED STATES.

       (a) Labeling.--Section 7 of the Federal Meat Inspection Act 
     (21 U.S.C. 607) is amended by adding at the end the 
     following:
       ``(g) Labeling of Meat of United States Origin.--
       ``(1) In general.--The Secretary shall develop a system for 
     the labeling of carcasses, parts of carcasses, and meat 
     produced in the United States from livestock raised in the 
     United States, and meat food products produced in the United 
     States from the carcasses, parts of carcasses, and meat, to 
     indicate the United States origin of the carcasses, parts of 
     carcasses, meat, and meat food products.
       ``(2) Assistance.--The Secretary shall provide technical 
     and financial assistance to establishments subject to 
     inspection under this title to implement the labeling system.
       ``(3) Authorization of appropriations.--There are 
     authorized to be appropriated such sums as are necessary to 
     carry out this subsection.''.

     SEC. 108. SENSE OF SENATE ON INTERSTATE SHIPMENT OF STATE-
                   INSPECTED MEAT, POULTRY, AND EGGS.

       It is the sense of the Senate that--
       (1) not later than 90 days after the date of enactment of 
     this Act, the Secretary of Agriculture should convene a 
     public meeting of State inspection officials and all other 
     interested parties to determine whether the interstate 
     shipment of State-inspected meat, poultry, and egg products 
     should be permitted; and
       (2) the meeting should be structured to ensure that all 
     parties are given an opportunity to present their views on 
     the subject described in paragraph (1).

     SEC. 109. EXCHANGE OF CATTLE PRODUCTION DATA WITH CANADA.

       The Secretary of Agriculture shall seek immediate 
     consultation with the Minister of Agriculture of Canada to 
     provide for a regular monthly exchange of cattle production 
     data, including cattle on feed, cattle slaughtered, and 
     cattle and beef shipped to the United States.
        TITLE II--MARKET ACCESS FOR UNITED STATES MEAT PRODUCTS

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Meat Products Market 
     Access Act of 1997''.
                Subtitle A--Identification of Countries

     SEC. 211. FINDINGS; PURPOSES.

       (a) Findings.--Congress makes the following findings:
       (1) The export of meat and meat products is of vital 
     importance to the economy of the United States.
       (2) In 1995, agriculture was the largest positive 
     contributor to the United States merchandise trade balance 
     with a trade surplus of $25,800,000,000.
       (3) The growth of exports of United States meat and meat 
     products should continue to be an important factor in 
     improving the United States merchandise trade balance.
       (4) Increasing exports of meat and meat products will 
     increase farm income in the United States, thereby protecting 
     family farms and contributing to the economic well-being of 
     rural communities in the United States.
       (5) Although the United States efficiently produces high-
     quality meat and meat products, United States producers 
     cannot realize their full export potential because many 
     foreign countries deny fair and equitable market access to 
     United States agricultural products.
       (6) The Foreign Agricultural Service estimates that United 
     States agricultural exports are reduced by $4,700,000,000 
     annually due to unjustifiable imposition of sanitary and 
     phytosanitary measures that deny or limit market access to 
     United States products.
       (7) The denial of fair and equitable market access for 
     United States meat and meat products impedes the ability of 
     United States farmers to export their products, thereby 
     harming the economic interests of the United States.
       (b) Purposes.--The purposes of this subtitle are--
       (1) to reduce or eliminate foreign unfair trade practices 
     and to remove constraints on fair and open trade in meat and 
     meat products;
       (2) to ensure fair and equitable market access for exports 
     of United States meat and meat products; and
       (3) to promote free and fair trade in meat and meat 
     products.

     SEC. 212. IDENTIFICATION OF COUNTRIES THAT DENY MARKET 
                   ACCESS.

       (a) Identification Required.--Chapter 8 of title I of the 
     Trade Act of 1974 is amended by adding at the end the 
     following:

     ``SEC. 183. IDENTIFICATION OF COUNTRIES THAT DENY MARKET 
                   ACCESS FOR MEAT AND MEAT PRODUCTS.

       ``(a) In General.--Not later than the date that is 30 days 
     after the date on which the annual report is required to be 
     submitted to Congressional committees under section 181(b), 
     the United States Trade Representative (hereafter in this 
     section referred to as the `Trade Representative') shall 
     identify--
       ``(1) those foreign countries that--
       ``(A) deny fair and equitable market access to United 
     States meat and meat products, or
       ``(B) apply standards for the importation of meat and meat 
     products from the United States that are not related to 
     public health concerns or cannot be substantiated by reliable 
     analytical methods; and
       ``(2) those foreign countries identified under paragraph 
     (1) that are determined by the Trade Representative to be 
     priority foreign countries.
       ``(b) Special Rules for Identifications.--
       ``(1) Criteria.--In identifying priority foreign countries 
     under subsection (a)(2), the

[[Page S342]]

     Trade Representative shall only identify those foreign 
     countries--
       ``(A) that engage in or have the most onerous or egregious 
     acts, policies, or practices that deny fair and equitable 
     market access to United States meat and meat products,
       ``(B) whose acts, policies, or practices described in 
     subparagraph (A) have the greatest adverse impact (actual or 
     potential) on the relevant United States products, and
       ``(C) that are not--
       ``(i) entering into good faith negotiations, or
       ``(ii) making significant progress in bilateral or 
     multilateral negotiations,

     to provide fair and equitable market access to United States 
     meat and meat products.
       ``(2) Consultation and consideration requirements.--In 
     identifying priority foreign countries under subsection 
     (a)(2), the Trade Representative shall--
       ``(A) consult with the Secretary of Agriculture and other 
     appropriate officers of the Federal Government, and
       ``(B) take into account information from such sources as 
     may be available to the Trade Representative and such 
     information as may be submitted to the Trade Representative 
     by interested persons, including information contained in 
     reports submitted under section 181(b) and petitions 
     submitted under section 302.
       ``(3) Factual basis requirement.--The Trade Representative 
     may identify a foreign country under subsection (a)(1) only 
     if the Trade Representative finds that there is a factual 
     basis for the denial of fair and equitable market access as a 
     result of the violation of international law or agreement, or 
     the existence of barriers, referred to in subsection (d)(3).
       ``(4) Consideration of historical factors.--In identifying 
     foreign countries under paragraphs (1) and (2) of subsection 
     (a), the Trade Representative shall take into account--
       ``(A) the history of meat and meat products trade relations 
     with the foreign country, including any previous 
     identification under subsection (a)(2), and
       ``(B) the history of efforts of the United States, and the 
     response of the foreign country, to achieve fair and 
     equitable market access for United States meat and meat 
     products.
       ``(c) Revocations and Additional Identifications.--
       ``(1) Authority to act at any time.--If information 
     available to the Trade Representative indicates that such 
     action is appropriate, the Trade Representative may at any 
     time--
       ``(A) revoke the identification of any foreign country as a 
     priority foreign country under this section, or
       ``(B) identify any foreign country as a priority foreign 
     country under this section.
       ``(2) Revocation reports.--The Trade Representative shall 
     include in the semiannual report submitted to the Congress 
     under section 309(3) a detailed explanation of the reasons 
     for the revocation under paragraph (1) of the identification 
     of any foreign country as a priority foreign country under 
     this section.
       ``(d) Fair and Equitable Market Access.--For purposes of 
     this section, a foreign country denies fair and equitable 
     market access if the foreign country effectively denies 
     access to a market for a product through the use of laws, 
     procedures, practices, or regulations which--
       ``(1) violate provisions of international law or 
     international agreements to which both the United States and 
     the foreign country are parties, or
       ``(2) constitute discriminatory nontariff trade barriers.
       ``(e) Publication.--The Trade Representative shall publish 
     in the Federal Register a list of foreign countries 
     identified under subsection (a) and shall make such revisions 
     to the list as may be required by reason of the action under 
     subsection (c).
       ``(f) Annual Report.--The Trade Representative shall, not 
     later than the date by which countries are identified under 
     subsection (a), transmit to the Committee on Ways and Means 
     and the Committee on Agriculture of the House of 
     Representatives and the Committee on Finance and the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate, a report on the actions taken under this section 
     during the 12 months preceding such report, and the reasons 
     for such actions, including a description of progress made in 
     achieving fair and equitable market access for United States 
     meat and meat products.''.
       (b) Clerical Amendment.--The table of contents for the 
     Trade Act of 1974 is amended by inserting after the item 
     relating to section 182 the following:

``Sec. 183. Identification of countries that deny market access for 
              meat and meat products.''.

     SEC. 213. INVESTIGATIONS.

       (a) Investigation Required.--Subparagraph (A) of section 
     302(b)(2) of the Trade Act of 1974 (19 U.S.C. 2412(b)(2)) is 
     amended by inserting ``or 183(a)(2)'' after ``section 
     182(a)(2)'' in the matter preceding clause (i).
       (b) Conforming Amendment.--Subparagraph (D) of section 
     302(b)(2) of such Act is amended by inserting ``concerning 
     intellectual property rights that is'' after ``any 
     investigation''.

     SEC. 214. AUTHORIZED ACTIONS BY UNITED STATES TRADE 
                   REPRESENTATIVE.

       Section 301(c)(1) of the Trade Act of 1974 (19 U.S.C. 
     2411(c)(1)) is amended--
       (1) by striking ``or'' at the end of subparagraph (C);
       (2) by striking the period at the end of subparagraph 
     (D)(iii)(II) and inserting ``; or''; and
       (3) by adding at the end the following:
       ``(E) with respect to an investigation of a country 
     identified under section 183(a)(1), to request that the 
     Secretary of Agriculture (who, upon receipt of such a 
     request, shall) direct the Food Safety and Inspection Service 
     of the Department of Agriculture to review certifications for 
     the facilities of such country that export meat and other 
     agricultural products to the United States.''.
           Subtitle B--Review of Third Country Meat Directive

     SEC. 221. FINDINGS.

       Congress makes the following findings:
       (1) The European Union's Third Country Meat Directive has 
     been used to decertify more than 400 United States facilities 
     exporting beef and pork products to the European Union even 
     though United States health inspection procedures are 
     equivalent to those provided for in the Third Country Meat 
     Directive.
       (2) An effect of the decertifications is to prohibit the 
     importation of United States beef and pork products into the 
     European Union.
       (3) As a result of the decertifications, the highly 
     competitive United States pork industry loses as much as 
     $60,000,000 each year from trade with European Union 
     countries.
       (4) In July 1987 and November 1990, at the request of 
     affected United States industries, the United States 
     initiated investigations under section 301 of the Trade Act 
     of 1974 into the European Union's administration of the Third 
     Country Meat Directive and sought resolution of the meat and 
     pork trade problems through the dispute settlement process 
     established under the General Agreement on Tariffs and Trade.
       (5) The United States Trade Representative preliminarily 
     concluded on October 10, 1992, that the European Union's 
     administration of the Third Country Meat Directive created a 
     burden on and restricted United States commerce.
       (6) Bilateral talks, initiated as a result of that finding, 
     resulted in an Exchange of Letters in which the United States 
     and the European Union concluded that the meat inspection 
     systems of the United States and the European Union provided 
     ``equivalent safeguards against public health risks'' and 
     agreed to take steps to resolve remaining differences 
     regarding meat inspection.
       (7) Even though the United States terminated the section 
     301 investigation as a result of the Exchange of Letters, the 
     United States determined that the practices under 
     investigation would have been actionable if an acceptable 
     agreement had not been reached.
       (8) United States meat and pork producers have displayed 
     consistent interest in exporting products to the European 
     Union and have undertaken substantial investment to take the 
     steps specified by the Exchange of Letters.
       (9) The European Union has failed to acknowledge changes in 
     plant safety and inspection procedures undertaken in the 
     United States specifically at the European Union's request 
     and has not fulfilled its obligation to inspect and relist 
     United States producers who have taken the steps specified by 
     the Exchange of Letters.
       (10) The actions of the European Union in conducting United 
     States plant inspections places the European Union in 
     violation of commitments made in the Exchange of Letters.
       (11) The European Union, in addition to being a party to 
     the Exchange of Letters, is a signatory to GATT 1994 and to 
     the Agreement on the Application of Sanitary and 
     Phytosanitary Measures, which requires that meat and pork 
     inspection procedures under Department of Agriculture 
     regulations be treated as equivalent to inspection procedures 
     required by the European Union under the Third Country Meat 
     Directive.
       (12) Whenever a foreign country is not satisfactorily 
     implementing an international trade measure or agreement, the 
     United States Trade Representative is required under section 
     306(b)(1) of the Trade Act of 1974 (19 U.S.C. 2416(b)(1)) to 
     determine the actions to be taken under section 301(a) of 
     such Act.

     SEC. 223. DEFINITIONS.

       For purposes of this subtitle:
       (1) Exchange of letters.--The term ``Exchange of Letters'' 
     means the exchange of letters concerning the application of 
     the Community Third Country Directive, signed in May 1991 and 
     November 1992, which constitute the agreement between the 
     United States and the European Economic Community regarding 
     the Third Country Meat Directive.
       (2) GATT 1994.--The term ``GATT 1994'' means the General 
     Agreement on Tariffs and Trade annexed to the WTO Agreement.
       (3) Third country meat directive; Community third country 
     directive.--The terms ``Third Country Meat Directive'' and 
     ``Community Third Country Directive'' mean the European 
     Union's Council Directive 72/462/EEC relating to inspection 
     and certification of slaughter and processing plants that 
     export meat and pork products to the European Union.
       (4) WTO agreement.--The term ``WTO Agreement'' means the 
     Agreement establishing the World Trade Organization entered 
     into on April 15, 1994.

[[Page S343]]

     SEC. 224. REQUIREMENT FOR DETERMINATION BY UNITED STATES 
                   TRADE REPRESENTATIVE.

       Not later than 30 days after the date of enactment of this 
     Act, the United States Trade Representative shall determine, 
     for purposes of section 306(b)(1) of the Trade Act of 1974, 
     whether the European Union has failed to implement 
     satisfactorily its obligations under the Exchange of Letters, 
     the Agreement on the Application of Sanitary and 
     Phytosanitary Measures, or any other Agreement.

     SEC. 225. REQUEST FOR DISPUTE SETTLEMENT.

       If the United States Trade Representative determines under 
     section 224 that the European Union has failed to implement 
     satisfactorily its obligations under the Exchange of Letters, 
     the Agreement on the Application of Sanitary and 
     Phytosanitary Measures, or any other agreement, the United 
     States Trade Representative shall promptly request 
     proceedings on the matter under the formal dispute settlement 
     procedures applicable to the agreement.

     SEC. 226. REVIEW OF CERTAIN MEAT FACILITIES.

       (a) Review by Food Safety and Inspection Service.--If the 
     United States Trade Representative determines pursuant to 
     section 224 that the European Union has failed to implement 
     satisfactorily its obligations under the Exchange of Letters, 
     the Agreement on the Application of Sanitary and 
     Phytosanitary Measures, or any other Agreement, the United 
     States Trade Representative shall request the Secretary of 
     Agriculture (who, upon receipt of the request, shall) direct 
     the Food Safety and Inspection Service of the Department of 
     Agriculture to review certifications for European Union 
     facilities that import meat and other agricultural products 
     into the United States.
       (b) Relationship to USTR Authority.--The review authorized 
     under subsection (a) is in addition to the authority of the 
     United States Trade Representative to take actions described 
     in section 301(c)(1) of the Trade Act of 1974 (19 U.S.C. 
     2411(c)(1)).
                                 ______
                                 
      By Mr. DASCHLE (for himself, Mr. Breaux, Mr. Kennedy, Mr. Dodd, 
        Ms. Mikulski, Mr. Dorgan, Mr. Johnson, Mr. Rockefeller, Mr. 
        Kerry, Ms. Moseley-Braun, Mr. Reid, and Mr. Lautenberg):
  S. 17. A bill to consolidate certain Federal job training programs by 
developing a system of vouchers to provide to dislocated workers and 
economically disadvantaged adults the opportunity to choose the type of 
job training that most closely meets the needs of such workers and 
adults, by establishing a one-stop career center system to provide high 
quality job training and employment-related services, and for other 
purposes; to the Committee on Labor and Human Resources.


                 the working americans opportunity act

  Mr. DASCHLE. 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. 17

       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 ``Working 
     Americans Opportunity Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.

                     TITLE I--JOB TRAINING VOUCHERS

Sec. 101. Establishment.
Sec. 102. Individual choice.
Sec. 103. Eligibility.
Sec. 104. Obtaining a voucher.
Sec. 105. Oversight and accountability.
Sec. 106. Eligibility requirements for job training providers.
Sec. 107. Evaluation of voucher system.
Sec. 108. Apportionment of funds.

        TITLE II--CONSOLIDATION OF FEDERAL JOB TRAINING PROGRAMS

Sec. 201. Consolidation of programs.

TITLE III--EMPLOYMENT-RELATED INFORMATION AND SERVICES THROUGH ONE-STOP 
                             CAREER CENTERS

Sec. 301. One-stop career centers.
Sec. 302. Access to information.
Sec. 303. Direct loans to United States workers.

                      TITLE IV--REPORTS AND PLANS

Sec. 401. Consolidation and streamlining.
Sec. 402. Report relating to income support.

                      TITLE V--GENERAL PROVISIONS

Sec. 501. Authorization of appropriations.
Sec. 502. Effective date.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) increasing international competition, technological 
     advances, and structural changes in the economy of the United 
     States present new challenges to private firms and public 
     policymakers in creating a skilled workforce with the ability 
     to adapt to change and progress;
       (2) a substantial number of workers in the United States 
     lose jobs due to the constantly changing world and national 
     economies rather than cyclical downturns, with more than 
     2,000,000 full-time workers permanently displaced annually 
     due to plant closures, production cutbacks, and layoffs;
       (3) the current response of the Federal Government to 
     dislocation and structural employment is a patchwork of 
     categorical programs, with varying eligibility requirements 
     and different sets of services and benefits;
       (4) the lack of coherence among existing Federal job 
     training programs creates administrative and regulatory 
     obstacles that hamper the efforts of individuals who are 
     seeking new jobs or reemployment;
       (5) enacted in 1944, the Servicemen's Readjustment Act of 
     1944, (commonly known as the ``G.I. Bill of Rights''), helped 
     millions of World War II veterans and, later, Korean and 
     Vietnam War veterans, finance college educations and assisted 
     in building the middle class of the United States;
       (6) restructuring the current job training system, with 
     respect to dislocated and disadvantaged workers, in a manner 
     that is conceptually similar to the G.I. Bill of Rights will 
     help millions of workers in the United States to become more 
     competitive in today's dynamic world economy, in which most 
     of the workers--
       (A) can expect to move to new jobs a number of times, 
     voluntarily or by layoff; and
       (B) must upgrade their skills continuously;
       (7) success in this ever-changing environment depends, in 
     part, on an individual's effective management of the 
     individual's career based on personal choice and reliable 
     information;
       (8) there is insufficient job market information and 
     assistance regarding access to job training opportunities 
     that lead to good employment opportunities;
       (9) only a small fraction of individuals eligible for 
     current Federal job training are now served, and by removing 
     obstacles and layers of administrative costs, more funds will 
     be made available to individuals to enable such individuals 
     to receive the job training of their choice; and
       (10) while the Federal Government proceeds to create a new 
     marketplace for job training, the Federal Government must 
     also maintain a commitment to providing intensive services to 
     assist individuals who are economically disadvantaged adults.
       (b) Purposes.--The purposes of this Act are to--
       (1) enhance the choices available to dislocated workers, 
     and economically disadvantaged adults, who want to upgrade 
     their work skills and learn new skills to compete in a 
     changing economy;
       (2) enable individuals to make choices that are best for 
     the careers of such individuals;
       (3) consolidate job training programs and provide a simple 
     voucher system that relies on individual choice and provides 
     high quality job market information;
       (4) allow an individual to tailor job training and 
     education to the personal needs of such individual so that 
     such individual may remain in long-term employment yet have 
     the means to be flexible when necessary; and
       (5) create a system that provides timely and reliable 
     information to individuals to use to assist such individuals 
     in making the best choices with respect to the use of 
     vouchers for job training.

     SEC. 3. DEFINITIONS.

       As used in this Act:
       (1) Community-based organization.--The term ``community-
     based organization'' means a private nonprofit organization 
     that--
       (A) is representative of a community or a significant 
     segment of a community; and
       (B) provides job training and employment-related services.
       (2) Dislocated worker.--
       (A) In general.--The term ``dislocated worker'' means an 
     individual who--
       (i) has been terminated or laid off, or has received a 
     notice of termination or layoff, from employment, is eligible 
     for or has exhausted entitlement to unemployment 
     compensation, and is unlikely to return to a previous 
     industry or occupation;
       (ii) has been terminated or laid off, or has received a 
     notice of termination or layoff, from employment as a result 
     of any permanent closure of, or any substantial layoff at, a 
     plant, facility, or enterprise;
       (iii) has been unemployed long-term and has limited 
     opportunities for employment or reemployment in the same or a 
     similar occupation in the area in which such individual 
     resides, including an older individual who may have 
     substantial barriers to employment by reason of age;
       (iv) was self-employed (including a farmer, a rancher, and 
     a fisher) and is unemployed as a result of general economic 
     conditions in the community in which such individual resides 
     or because of a natural disaster, subject to regulations 
     prescribed by the Secretary; or
       (v) is an employee of the Department of Defense or of a 
     private defense contractor who has been terminated or laid 
     off, or has received a notice of termination or layoff, from 
     employment as a result of the closure or realignment of a 
     military installation, or a reduction in defense spending as 
     determined by the Secretary of Defense.
       (B) Special rule for self-employed individuals.--The 
     Secretary of Labor shall establish categories of self-
     employed individuals and of economic conditions and natural 
     disasters to which subparagraph (A)(iv) applies.

[[Page S344]]

       (C) Special rule for displaced homemakers.--The term 
     ``dislocated worker'' shall, for the purpose of applying 
     provisions related to job training and employment-related 
     services under titles I and III within a State, include a 
     displaced homemaker (as defined by the Secretary of Labor in 
     regulation), if the State determines that such definition of 
     the term is appropriate and will not adversely affect the 
     delivery of services to other dislocated workers in the 
     State.
       (3) Economically disadvantaged adult.--The term 
     ``economically disadvantaged adult'' means an individual who 
     is age 18 or older and who had received an income, or is a 
     member of a family that had received a total family income, 
     for the 6-month period prior to application for the activity 
     involved (exclusive of unemployment compensation, child 
     support payments, and welfare payments) that, in relation to 
     family size, does not exceed the higher of--
       (A) 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)), for an equivalent period; or
       (B) 70 percent of the lower living standard income level, 
     for an equivalent period.
       (4) Job training provider.--The term ``job training 
     provider'' means a public agency, private nonprofit 
     organization, or private for-profit entity that delivers job 
     training.
       (5) Service delivery area.--The term ``service delivery 
     area'' means an area established under section 101 of the Job 
     Training Partnership Act (29 U.S.C. 1511).
       (6) State.--The term ``State'', used to refer to a 
     jurisdiction, means any 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, 
     the Commonwealth of the Northern Mariana Islands, the 
     Republic of the Marshall Islands, the Federated States of 
     Micronesia, and the Republic of Palau.
       (7) Workforce development entity.--The term ``workforce 
     development entity'' means a private industry council as 
     described in section 102 of the Job Training Partnership Act 
     (29 U.S.C. 1512), or such successor entity as may be 
     established by Federal statutory law specifically to serve as 
     such entity.
                     TITLE I--JOB TRAINING VOUCHERS

     SEC. 101. ESTABLISHMENT.

       The Secretary of Labor shall, pursuant to the requirements 
     of this title, establish a job training system that provides 
     vouchers to individuals for the purpose of enabling the 
     individuals to obtain job training.

     SEC. 102. INDIVIDUAL CHOICE.

       (a) In General.--Upon notification of approval of an 
     application submitted under section 104, an individual may 
     receive a voucher for a 2-year period, beginning on the date 
     on which the application is approved.
       (b) Use of Vouchers for Job Training.--
       (1) In general.--An individual who is a recipient of a 
     voucher under subsection (a) may use such voucher to pay for 
     job training obtained from a job training provider that meets 
     the requirements of section 106.
       (2) Authorized job training.--The job training described in 
     paragraph (1) may include training through--
       (A) associate degree and nondegree programs at--
       (i) two- and four-year colleges;
       (ii) vocational and technical education schools;
       (iii) private for-profit and not-for-profit training 
     organizations;
       (iv) public agencies and schools; and
       (v) community-based organizations;
       (B) employer work-based training programs; and
       (C) in the case of individuals who are economically 
     disadvantaged adults, preemployment training programs.

     SEC. 103. ELIGIBILITY.

       An individual shall be eligible to receive a voucher under 
     this title if such individual is--
       (1) a dislocated worker; or
       (2) an economically disadvantaged adult.

     SEC. 104. OBTAINING A VOUCHER.

       (a) Application.--An individual who desires to receive a 
     voucher under this title shall submit an application to the 
     State at such time, in such manner, and accompanied by such 
     information as the State may reasonably require.
       (b) Assistance to Applicants.--
       (1) One-stop career centers.--Each one-stop career center 
     established under section 301 shall--
       (A) provide applications for vouchers under this title to 
     interested individuals, assist such individuals in completing 
     such applications, and collect completed applications for 
     determination of eligibility;
       (B) provide performance-based information to the applicants 
     relating to job training providers eligible to receive 
     payment by vouchers in accordance with section 106;
       (C) provide information to the applicants on--
       (i) the local economy and availability of employment;
       (ii) profiles of local industries; and
       (iii) details of local labor market demand; and
       (D) carry out such other duties relating to the voucher 
     system as may be specified in regulations issued by the 
     Secretary of Labor.
       (2) Conflict of interest standards.--The Secretary of Labor 
     shall issue regulations establishing procedures to ensure 
     that a one-stop career center that is operated by an entity 
     that is concurrently an eligible job training provider under 
     the voucher system provides information to the applicants 
     relating to the other eligible job training providers in the 
     service delivery area in an objective and equitable manner.

     SEC. 105. OVERSIGHT AND ACCOUNTABILITY.

       (a) In General.--Not later than 6 months after the date of 
     enactment of this Act, the Secretary of Labor shall issue 
     regulations that--
       (1) specify the--
       (A) voucher application requirements;
       (B) form of the vouchers;
       (C) use of the vouchers;
       (D) method of redemption of the vouchers;
       (E) most expeditious and effective process of distribution 
     (consistent with the findings and purposes of this Act) of 
     the vouchers to eligible individuals; and
       (F) the arrangements necessary to phase in the voucher 
     system in each State in a timely manner;
       (2) specify the duties and responsibilities of job training 
     providers under a voucher system under this title;
       (3) specify the Federal and State responsibilities in 
     oversight of job training providers, including the 
     enforcement responsibilities and the determination of 
     administrative costs with respect to the voucher system under 
     this title; and
       (4) specify the manner in which economically disadvantaged 
     adults will receive adequate counseling and support services 
     necessary to take full advantage of voucher assistance under 
     this title.
       (b) Public Comment.--In issuing regulations under 
     subsection (a), the Secretary of Labor shall provide an 
     opportunity for comment from the public, including the 
     business community, labor organizations, and community-based 
     organizations.

     SEC. 106. ELIGIBILITY REQUIREMENTS FOR JOB TRAINING 
                   PROVIDERS.

       (a) Eligibility Requirements.--A job training provider 
     shall be eligible to receive payment by vouchers under this 
     title if such provider--
       (1) is--
       (A) eligible to participate in programs under title IV of 
     the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); or
       (B) determined to be eligible under the procedure described 
     in subsection (b); and
       (2) provides the performance-based information required 
     pursuant to subsection (c).
       (b) Alternative Eligibility Procedure.--
       (1) In general.--The State shall establish an alternative 
     eligibility procedure for job training providers desiring to 
     receive payment by vouchers under this title, but that are 
     not eligible to participate in programs under title IV of the 
     Higher Education Act of 1965.
       (2) Procedure requirements.--In establishing the procedure 
     described in paragraph (1), the State shall establish minimum 
     acceptable levels of performance for job training providers 
     based on factors and guidelines developed by the Secretary of 
     Labor in consultation with the Secretary of Education. Such 
     factors shall be comparable in rigor and scope to the 
     provisions of part H of title IV of the Higher Education Act 
     of 1965 (20 U.S.C. 1099a et seq.) that are used to determine 
     the eligibility of an institution of higher education to 
     participate in programs under such title and are appropriate 
     to the type of job training provider seeking eligibility 
     under this subsection and the nature of the job training to 
     be provided.
       (3) Limitation.--Notwithstanding paragraph (1), if the 
     participation of an institution of higher education in any of 
     the programs under title IV of the Higher Education Act of 
     1965 is terminated, such institution shall not be eligible to 
     receive funds under this title for a period of 2 years 
     beginning on the date of such termination.
       (c) Performance-Based Information.--
       (1) Contents.--The Secretary of Labor shall identify 
     performance-based information that is to be submitted by job 
     training providers desiring to receive payment by vouchers 
     under this title. Such information may include information 
     relating to--
       (A) the percentage of students completing the programs 
     conducted by a job training provider;
       (B) the rates of licensure of graduates of the programs 
     conducted by such job training provider;
       (C) the percentage of graduates of the programs conducted 
     by such job training provider that meet industry-specific 
     skill standards;
       (D) the rates of placement and retention in employment, and 
     earnings of, the graduates of the programs conducted by such 
     job training provider;
       (E) the percentage of graduates of the programs conducted 
     by such job training provider who obtained employment in an 
     occupation related to such programs conducted by such 
     provider; and
       (F) the warranties or guarantees provided by such job 
     training provider relating to the skill levels or employment 
     to be attained by graduates of the programs conducted by such 
     provider.
       (2) Additions.--The State may, pursuant to the approval of 
     the Secretary of Labor, prescribe additional performance-
     based information that shall be submitted by job training 
     providers pursuant to this subsection.
       (d) Administration.--
       (1) State agency.--The Governor shall designate a State 
     agency to collect, verify, and

[[Page S345]]

     disseminate the performance-based information submitted 
     pursuant to subsection (c).
       (2) Application.--A job training provider desiring to be 
     eligible to receive funds under this title shall submit the 
     information required under subsection (c) to the State agency 
     designated under paragraph (1) at such time and in such form 
     as such State agency may require.
       (3) List of eligible providers.--The State agency 
     designated under paragraph (1) shall compile a list of 
     eligible job training providers, accompanied by the 
     performance-based information submitted, and disseminate such 
     list and information to the one-stop career centers 
     established under section 301, and other appropriate entities 
     within the State.
       (4) Accuracy of information.--
       (A) In general.--If the State agency determines that a job 
     training provider submitted inaccurate performance-based 
     information under this subsection, such provider shall be 
     disqualified from receiving funds under this title for a 
     period of 2 years beginning on the date of such 
     determination, unless such provider can demonstrate, to the 
     satisfaction of the State agency designated pursuant to 
     paragraph (1), that the information was provided in good 
     faith.
       (B) Appeal.--The State shall establish a procedure for a 
     job training provider to appeal a determination by a State 
     agency that results in a disqualification under subparagraph 
     (A). Such procedure shall provide an opportunity for a 
     hearing and include appropriate time limits to ensure prompt 
     resolution of the appeal.
       (5) Assistance in developing information.--The State agency 
     designated under paragraph (1) may provide technical 
     assistance to a job training provider in developing the 
     performance-based information required under subsection (c). 
     Such assistance may include facilitating the utilization of 
     State administrative records, such as unemployment 
     compensation wage records, and conducting other appropriate 
     coordination activities.
       (6) Consultation.--The Secretary of Labor shall consult 
     with the Secretary of Education regarding the eligibility of 
     institutions of higher education to participate in programs 
     under this title.

     SEC. 107. EVALUATION OF VOUCHER SYSTEM.

       The Secretary of Labor shall annually--
       (1) monitor the effectiveness of the voucher system;
       (2) evaluate the benefit of such system to voucher 
     recipients under this title and the taxpayer; and
       (3) submit information obtained from such evaluation to the 
     appropriate committees of Congress.

     SEC. 108. APPORTIONMENT OF FUNDS.

       (a) In General.--The Secretary of Labor shall, without in 
     any way reducing the commitment of, or the level of effort 
     by, the Federal Government to improve the job training, 
     employment, and earnings of all workers and jobseekers 
     (particularly in hard-to-serve communities), apportion sums 
     appropriated under section 501 to each State for each fiscal 
     year in accordance with subsections (b) and (c), to enable 
     States and service delivery areas in the States to carry out 
     this title and title III.
       (b) Allocation by Category.--
       (1) Funding for dislocated workers.--From the sums 
     appropriated pursuant to section 501 for each fiscal year, 
     the Secretary of Labor shall determine the portion of the 
     sums to be made available for providing job training and 
     employment-related services for dislocated workers under this 
     title and title III, which shall be not less than the total 
     amount made available to the States for such purpose for 
     fiscal year 1997. The Secretary shall apportion such portion 
     among the States, based on consideration of factors described 
     in subsection (c), as appropriate.
       (2) Funding for economically disadvantaged adults.--From 
     the sums appropriated pursuant to section 501 for each fiscal 
     year, the Secretary of Labor shall determine the portion of 
     the sums to be made available for providing job training and 
     employment-related services for economically disadvantaged 
     adults under this title and title III. The Secretary shall 
     apportion such total amount among the States, based on 
     consideration of factors described in subsection (c), as 
     appropriate.
       (c) Consideration of Factors for Apportionment to States.--
     The apportionment of the portions described in subsection (b) 
     by the Secretary to each State shall be based on the 
     following factors:
       (1) The relative number of unemployed individuals who 
     reside in each State as compared to the total number of 
     unemployed individuals in all the States.
       (2) The relative excess number of unemployed individuals 
     who reside in each State as compared to the total excess 
     number of unemployed individuals in all the States.
       (3) The relative number of individuals who have been 
     unemployed for 15 weeks or more and who reside in each State 
     as compared to the total number of such individuals in all 
     the States.
       (4) The relative number of economically disadvantaged 
     adults who reside in each State as compared to the total 
     number of such adults in all the States.
       (d) State Reserve.--
       (1) Dislocated worker funds.--From the amount apportioned 
     to each State from the portion described in subsection 
     (b)(1), the State may reserve to carry out State activities, 
     including rapid response assistance (as described in section 
     314(b) of the Job Training Partnership Act, as in existence 
     on the date of enactment of this Act (29 U.S.C. 1661c(b))) 
     and State administration, an amount that is not greater than 
     the proportion of funds reserved for State activities under 
     title III of the Job Training Partnership Act, as in 
     existence on such date (29 U.S.C. 1651 et seq.) for fiscal 
     year 1997.
       (2) Economically disadvantaged adults.--From the amount 
     apportioned to each State from the portion described in 
     subsection (b)(2), the State may reserve to carry out State 
     activities, including State administration, an amount that is 
     not greater than the proportion of funds reserved for State 
     activities under part A of title II of the Job Training 
     Partnership Act, as in existence on the date of enactment of 
     this Act (29 U.S.C. 1601 et seq.) for fiscal year 1997.
       (e) Consideration of Factors for Apportionment to Service 
     Delivery Areas.--The apportionment of amounts received by 
     each State under subsection (c), and not reserved under 
     subsection (d), to service delivery areas within such State 
     shall be based on the following factors:
       (1) The relative number of unemployed individuals who 
     reside in each service delivery area within the State as 
     compared to the total number of unemployed individuals in all 
     such service delivery areas.
       (2) The relative excess number of unemployed individuals 
     who reside in each service delivery area within the State as 
     compared to the total excess number of unemployed individuals 
     in all such service delivery areas.
       (3) The relative number of individuals who have been 
     unemployed for 15 weeks or more and who reside in each 
     service delivery area within the State as compared to the 
     total number of such individuals in all such service delivery 
     areas.
       (4) The relative number of economically disadvantaged 
     adults who reside in each service delivery area within the 
     State as compared to the total number of such adults in all 
     such service delivery areas.
       (f) Funds for Vouchers.--Not less than 75 percent of funds 
     apportioned to a service delivery area under subsection (e) 
     and used for job training under this Act by the service 
     delivery area shall be made available in the form of vouchers 
     to individuals in such area who are eligible under section 
     103.
       (g) Definition.--For purposes of this section, the term 
     ``excess number of unemployed individuals'' means the number 
     that represents unemployed individuals in excess of 4.5 
     percent of the civilian labor force in a State or service 
     delivery area, as appropriate.
        TITLE II--CONSOLIDATION OF FEDERAL JOB TRAINING PROGRAMS

     SEC. 201. CONSOLIDATION OF PROGRAMS.

       (a) Sense of Congress.--It is the sense of Congress that 
     the consolidation and streamlining of Federal job training 
     programs should be accomplished without in any way reducing 
     the commitment of, or the level of effort provided by, the 
     Federal Government to improve the job training, employment, 
     and earnings of all workers and jobseekers (particularly in 
     hard-to-serve communities).
       (b) Repeals of Federal Job Training Programs.--The 
     following provisions are repealed:
       (1) Section 6(d)(4) of the Food Stamp Act of 1977 (7 U.S.C. 
     2015(d)(4)).
       (2) Section 106(b)(7) of the Job Training Partnership Act 
     (29 U.S.C. 1516(b)(7)).
       (3) Section 123 of such Act (29 U.S.C. 1533).
       (4) Section 204(d) of such Act (29 U.S.C. 1604(d)).
       (5) Part A of title II of such Act (29 U.S.C. 1601 et 
     seq.).
       (6) Section 302(c) of such Act (29 U.S.C. 1652(c)).
       (7) Part A of title III of such Act (29 U.S.C. 1661 et 
     seq.).
       (8) Section 325 of such Act (29 U.S.C. 1662d).
       (9) Section 325A of such Act (29 U.S.C. 1662d-1).
       (10) Section 326 of such Act (29 U.S.C. 1662e).
       (11) Sections 301 through 303 of such Act (29 U.S.C. 1651 
     et seq.).
       (12) The Displaced Homemakers Self-Sufficiency Assistance 
     Act (29 U.S.C. 2301 et seq.).
       (13) Subtitle C of title VII of the Stewart B. McKinney 
     Homeless Assistance Act (42 U.S.C. 11441 et seq.).
       (14) Subchapter I of chapter 421 of title 49, United States 
     Code.
       (15) Title II of Public Law 95-250 (92 Stat. 172).
TITLE III--EMPLOYMENT-RELATED INFORMATION AND SERVICES THROUGH ONE-STOP 
                             CAREER CENTERS

     SEC. 301. ONE-STOP CAREER CENTERS.

       (a) Establishment.--Each service delivery area receiving 
     funds under this Act shall develop and implement a network of 
     one-stop career centers for the area to provide access for 
     jobseekers, workers, and businesses to a comprehensive array 
     of high quality job training described in section 102(b)(2) 
     and employment-related services (including provision of 
     information) described in subsections (f) and (g).
       (b) Procedures.--Each workforce development entity for a 
     service delivery area, in conjunction with the appropriate 
     local chief elected official for the area, shall negotiate 
     with the State a method for establishing one-stop career 
     centers (including designating one-stop career center 
     operators) for the area, consistent with criteria established 
     by the Secretary of Labor.
       (c) Eligible Entities.--Each entity within the service 
     delivery area that provides the

[[Page S346]]

     services specified in subsection (f) or (g) shall be eligible 
     to be designated as a one-stop career center operator.
       (d) Performance Standards.--The Secretary of Labor shall 
     establish a performance standard system for assessing the 
     performance of each one-stop career center operator.
       (e) Period of Selection.--Each one-stop career center 
     operator shall be designated for 2-year period. Every 2 
     years, the workforce development entity for a service 
     delivery area shall reevaluate the designation of one-stop 
     career center operators for the area, based on performance 
     under the standards established under subsection (d).
       (f) Employment-Related Services to Individuals.--Each one-
     stop career center for a service delivery area may make 
     available--
       (1) outreach to make individuals aware of, and encourage 
     the use of, services available from workforce development 
     programs operating in the service delivery area;
       (2) intake and orientation to the information and services 
     available through the one-stop career center;
       (3) assistance in filing initial claims for unemployment 
     compensation;
       (4) initial assessments (including appropriate testing) of 
     the skill levels and service needs of individuals, including 
     basic skills, occupational skills, work experience, 
     employability, interest, aptitude, and supportive service 
     needs;
       (5) job search assistance, including resume and interview 
     preparation and workshops;
       (6) information relating to the supply, demand, price, and 
     quality of job training available in each service delivery 
     area in the State involved, including performance-based 
     information provided pursuant to section 106(c);
       (7) job market information, including--
       (A) data on the local economy and availability of 
     employment;
       (B) profiles of local industries;
       (C) details of local labor market demand; and
       (D) local demographic and socioeconomic characteristics;
       (8) referral to appropriate job training and employment 
     services, and to other services described in this subsection, 
     in the service delivery area;
       (9) supportive services, including child care;
       (10) job development; and
       (11) counseling.
       (g) Employment-Related Services to Employers.--Each one-
     stop career center for a service delivery area may provide to 
     employers, at the request of the employers--
       (1) information relating to supply, demand, price, and 
     quality of job training available in each service delivery 
     area in the State;
       (2) customized screening and referral of individuals for 
     employment;
       (3) customized assessment of skills of the workers of the 
     employer;
       (4) an analysis of the skill needs of the employer; and
       (5) other specialized employment and training services.

     SEC. 302. ACCESS TO INFORMATION.

       (a) Findings.--Congress finds that accurate, timely, and 
     relevant data regarding employment, job training, job skills, 
     and job training opportunities are useful for individuals 
     making choices about the careers of such individuals.
       (b) Authority.--The Secretary of Labor is authorized to 
     make arrangements to develop and provide through one-stop 
     career centers and other appropriate mechanisms relevant job 
     market information to interested individuals, including 
     voucher recipients under title I, jobseekers, employers, and 
     workers.

     SEC. 303. DIRECT LOANS TO UNITED STATES WORKERS.

       (a) Findings.--Congress finds that the William D. Ford 
     Federal Direct Loan Program authorized by part D of title IV 
     of the Higher Education Act of 1965 (20 U.S.C. 1087a et 
     seq.), is a valuable financing tool for United States workers 
     who desire to take advantage of training and education 
     programs, consistent with the goals of such workers, to learn 
     new skills for careers that may bring higher salaries and 
     improved quality of life.
       (b) Awareness.--The Department of Education shall endeavor 
     to make known the value and availability of direct loans 
     through the William D. Ford Federal Direct Loan Program 
     authorized by part D of title IV of the Higher Education Act 
     of 1965 through cooperative arrangements with one-stop career 
     centers, training and educational training programs, State 
     agencies, and other Federal agencies.
                      TITLE IV--REPORTS AND PLANS

     SEC. 401. CONSOLIDATION AND STREAMLINING.

       (a) Report on Consolidating Noncovered Federal Job Training 
     Programs.--Not later than January 1, 1998, and each year 
     thereafter, the Secretary of Labor shall prepare and submit 
     to Congress a report that describes how additional Federal 
     job training programs not covered by this Act can be 
     consolidated into a more integrated and accountable workforce 
     development system that better meets the needs of jobseekers, 
     workers, and business.
       (b) Plan on Use of Common Definitions, Measures, Standards, 
     and Cycles.--Not later than 180 days after the date of 
     enactment of this Act, the Secretary of Labor shall develop a 
     plan that, wherever practicable, requires the Federal job 
     training programs to use common definitions, common outcome 
     measures, common eligibility standards, and common funding 
     cycles in order to make such training programs more 
     accessible.

     SEC. 402. REPORT RELATING TO INCOME SUPPORT.

       (a) Sense of Congress.--It is the sense of Congress that--
       (1) many dislocated workers and economically disadvantaged 
     adults are unable to enroll in long-term job training because 
     such workers and adults lack income support after 
     unemployment compensation is exhausted;
       (2) evidence suggests that long-term job training is among 
     the most effective adjustment service in assisting dislocated 
     workers and economically disadvantaged adults to obtain 
     employment and enhance wages; and
       (3) there is a need to identify options relating to how 
     income support may be provided to enable dislocated workers 
     and economically disadvantaged adults to participate in long-
     term job training.
       (b) Report.--Not later than 120 days after the date of 
     enactment of this Act, the Secretary of Labor shall prepare 
     and submit to Congress a report that--
       (1) examines the need for income support to enable 
     dislocated workers and economically disadvantaged adults to 
     participate in long-term job training;
       (2) identifies options relating to how such income support 
     may be provided to such workers and adults; and
       (3) contains such recommendations as the Secretary of Labor 
     determines are appropriate.
                      TITLE V--GENERAL PROVISIONS

     SEC. 501. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There are authorized to be appropriated to 
     carry out titles I and III such sums as may be necessary for 
     each of fiscal years 1998 through 2002.
       (b) Program Year.--Appropriations for any fiscal year for 
     activities carried out under this Act 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.

     SEC. 502. EFFECTIVE DATE.

       This Act shall take effect on July 1, 1998.
                                 ______
                                 
      By Mr. LAUTENBERG (for himself, Mr. Baucus, Mr. Reid, Mr. 
        Moynihan, Mr. Graham, Mrs. Boxer, Mr. Wyden, Mr. Levin, Mr. 
        Torricelli, Mr. Breaux, and Mr. Kennedy):
  S. 18. A bill to assist the States and local governments in assessing 
and remediating brownfield sites and encouraging environmental cleanup 
programs, and for other purposes; to the Committee on Environmental and 
Public Works.


         the brownfields and environmental cleanup act of 1997

  Mr. LAUTENBERG. Madam President, today along with Senators Daschle, 
Baucus, Moynihan, Graham, Harry Reid, Boxer, Wyden, Levin, Torricelli, 
Sarbanes, and Breaux, I am introducing the Brownfields and 
Environmental Cleanup Act of 1997. This legislation is designed to 
foster the cleanup of potentially thousands of toxic waste sites across 
this country, and just as importantly this bill is about jobs, about 
revenue, and economic opportunity, because it will help turn abandoned 
industrial sites into engines of economic development.
  Madam President, I have been interested for a long time now in the 
issue of these abandoned, underutilized and contaminated industrial 
sites, commonly known as brownfields. Our Nation's great industrial 
tradition was the lifeblood of our Nation's economy. But this 
industrial tradition also entailed tremendous environmental costs. 
Sites were contaminated, and then when the manufacturers, the companies 
left, the legacy remained behind. Today, decaying industrial plants 
define the skyline and contaminate the land in many of our urban areas. 
Their rusting frames, like aging skyscrapers, are a silent reminder of 
those manufacturers that left, taking inner-city jobs and often inner-
city hope with them.
  Yet, Madam President, in these foul fields may lie the seeds of urban 
revitalization, and I continue to feel as I did when I introduced 
similar legislation in 1993 and 1996, that a brownfields cleanup 
program can spur significant economic development and create jobs. This 
type of cleanup initiative makes good environmental sense and good 
business sense. To appreciate, one need only look at a few of the 
brownfields success stories from across the States. Now, these are 
sites again that do not qualify as a Superfund site because they are 
not toxic enough, but they lie there and they contaminate not only the 
aesthetics of the area but also the opportunity for jobs and for 
business investment.
  A pilot project in Cleveland resulted in $3.2 million in private 
investment, a

[[Page S347]]

$1 million increase on the local tax base, and more than 170 new jobs. 
In Elizabeth, NJ, a former municipal landfill will be turned by the 
fall of 1998 into a major mall with 5,000 employees.
  Madam President, the potential for job creation across the country is 
enormous, and every revitalized brownfields may represent for someone a 
field of dreams, especially to an unemployed urban worker.
  While fostering jobs, brownfield cleanup also means that dangerous 
contaminants are removed from our environment, and the scars of decades 
of neglected industrial waste which disfigure our cities and suburbs 
and even rural areas may be finally allowed to heal. The Superfund 
Program provides Federal authority to assist in cleaning up abandoned 
waste sites that pose the most serious threats. However, there are in 
this country of ours 100,000 of these brownfield sites that do not fall 
under Superfund because of lower levels of contamination.
  What do we do? We can't just watch them keep these communities from 
revitalizing themselves. The risks posed by many of these sites may be 
relatively low and others even nonexistent, because brownfields are 
abandoned or underutilized industrial or commercial sites where 
expansion or redevelopment is complicated by real or even perceived, 
not really factually established, environmental contamination. But 
their full economic use is being stymied because there is no ready 
mechanism for getting them evaluated or, if necessary, cleaned up, even 
when the owner of the property is ready, willing and eager to do so.
  In addition, prospective purchasers and developers are reluctant to 
get involved in transactions with these properties because of their 
concern, however minimal, they might potentially create enormous 
environmental liability.
  The challenge is to turn these abandoned properties into thriving 
businesses that can generate needed jobs and act as a catalyst for 
economic development.
  My legislation would provide financial assistance in the form of 
grants to local and State governments to inventory and evaluate 
brownfields sites. This would enable interested parties to know what 
would be required to clean the site and what reuse would best suit the 
property.
  My bill would also provide grants to State and local governments to 
establish and capitalize low-interest loan programs. These funds would 
be loaned to current owners, prospective purchasers and municipalities 
to facilitate voluntary cleanup actions where traditional lending 
mechanisms are just not available. The minimum seed money involved in 
the program would leverage substantial economic payoffs, as well as 
turning lands which may be of negative worth into assets for the 
future.
  The bill also would limit the potential liability of innocent buyers 
of these properties, and it would set a standard to gauge when parties 
couldn't have reasonably known that the property was contaminated. So 
there is no hidden liability in there. There is no sudden surprise for 
someone who conscientiously and innocently made an investment, and 
suddenly they find they are liable for far, far more than their initial 
investment.
  Madam President, cleaning up brownfields will mean a safer 
environment and more jobs for places that badly need them. It will also 
send a message to those who want to invest in our urban areas that they 
don't have to leave the inner city in search of open space. They can 
build right there in our downtowns, the places that already have the 
services, the infrastructure and the people to do the job.
  There has been bipartisan interest, Madam President, in addressing 
brownfields, both in the Senate and in the other body on the other side 
of the Capitol. I am hopeful we can move this legislation forward in a 
cooperative way with support of Members on both sides of the aisle.
  I ask unanimous consent that a copy of the bill, a section-by-section 
analysis and a letter of endorsement from the Regional Planning 
Association, the country's oldest planning organization, be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 18

       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 
     ``Brownfields and Environmental Cleanup Act of 1997''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

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

       TITLE I--BROWNFIELD REMEDIATION AND ENVIRONMENTAL CLEANUP

Sec. 101. Definitions.
Sec. 102. Inventory and assessment grant program.
Sec. 103. Grants for revolving loan programs.
Sec. 104. Economic redevelopment grants.
Sec. 105. Reports.
Sec. 106. Limitations on use of funds.
Sec. 107. Effect on other laws.
Sec. 108. Regulations.
Sec. 109. Authorizations of appropriations.

                    TITLE II--PROSPECTIVE PURCHASERS

Sec. 201. Limitations on liability for response costs for prospective 
              purchasers.

                     TITLE III--INNOCENT LANDOWNERS

Sec. 301. Innocent landowners.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) past uses of land in the United States for industrial 
     and commercial purposes have created many sites throughout 
     the United States that have environmental contamination;
       (2) Congress and the governments of States and political 
     subdivisions of States have enacted laws to--
       (A) prevent environmental contamination; and
       (B) carry out response actions to correct past instances of 
     environmental contamination;
       (3) many sites are minimally contaminated, do not pose 
     serious threats to human health or the environment, and can 
     be satisfactorily remediated expeditiously with little 
     government oversight;
       (4) promoting the assessment, cleanup, and redevelopment of 
     contaminated sites could lead to significant environmental 
     and economic benefits, particularly in any case in which a 
     cleanup can be completed quickly and during a period of time 
     that meets short-term business needs;
       (5) the private market demand for sites affected by 
     environmental contamination frequently is reduced, often 
     because of uncertainties regarding liability or potential 
     cleanup costs of innocent landowners and prospective 
     purchasers under Federal law;
       (6) the abandonment or underutilization of brownfield sites 
     impairs the ability of the Federal Government and the 
     governments of States and political subdivisions of States to 
     provide economic opportunities for the people of the United 
     States, particularly the unemployed and economically 
     disadvantaged;
       (7) the abandonment or underuse of brownfield sites also 
     results in the inefficient use of public facilities and 
     services, as well as land and other natural resources, and 
     extends conditions of blight in local communities;
       (8) cooperation among Federal agencies, departments and 
     agencies of States and political subdivisions of States, 
     local community development organizations, and current owners 
     and prospective purchasers of brownfield sites is required to 
     accomplish timely response actions and the redevelopment or 
     reuse of brownfield sites;
       (9) there is a need to provide financial incentives and 
     assistance to inventory and assess certain brownfield sites 
     and facilitate the cleanup of the sites so that the sites may 
     be redeveloped for beneficial uses; and
       (10) there is a need for a program to--
       (A) encourage cleanups of brownfield sites; and
       (B) facilitate the establishment and enhancement of 
     programs by States and local governments to foster cleanups 
     of brownfield sites through capitalization of loan programs.
       (b) Purposes.--The purposes of this Act are to create new 
     business and employment opportunities through the economic 
     redevelopment of brownfield sites that generally do not pose 
     a serious threat to human health or the environment and to 
     stimulate the assessment and cleanup of brownfield sites by--
       (1) encouraging States and local governments to provide for 
     the assessment and cleanup of brownfield sites that may not 
     be remediated under other environmental laws (including 
     regulations) in effect on the date of enactment of this Act;
       (2) encouraging local governments and private parties, 
     including local community development organizations, to 
     participate in programs, such as State cleanup programs, that 
     facilitate expedited response actions that are consistent 
     with business needs at brownfield sites;
       (3) directing the Administrator of the Environmental 
     Protection Agency to establish programs that provide 
     financial assistance to--
       (A) facilitate site assessments of certain brownfield 
     sites;
       (B) encourage cleanup of appropriate brownfield sites 
     through capitalization of loan programs; and
       (C) encourage workforce development in areas adversely 
     affected by contaminated properties; and

[[Page S348]]

       (4) reducing transaction costs and paperwork, and 
     preventing needless duplication of effort and delay at all 
     levels of government.
       TITLE I--BROWNFIELD REMEDIATION AND ENVIRONMENTAL CLEANUP

     SEC. 101. DEFINITIONS.

       In this title:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Environmental Protection Agency.
       (2) Brownfield site.--The term ``brownfield site'' means a 
     facility that has or is suspected of having environmental 
     contamination that--
       (A) could prevent the timely use, development, reuse, or 
     redevelopment of the facility; and
       (B) is relatively limited in scope or severity and can be 
     comprehensively assessed and readily analyzed.
       (3) Contaminant.--The term ``contaminant'' includes any 
     hazardous substance (as defined in section 101 of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9601)).
       (4) Disposal.--The term ``disposal'' has the meaning given 
     the term in section 1004 of the Solid Waste Disposal Act (42 
     U.S.C. 6903).
       (5) Environment.--The term ``environment'' has the meaning 
     given the term in section 101 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601).
       (6) Environmental contamination.--The term ``environmental 
     contamination'' means the existence at a facility of 1 or 
     more contaminants that may pose a threat to human health or 
     the environment.
       (7) Facility.--The term ``facility'' has the meaning given 
     the term in section 101 of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601).
       (8) Grant.--The term ``grant'' includes a cooperative 
     agreement.
       (9) Ground water.--The term ``ground water'' has the 
     meaning given the term in section 101 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601).
       (10) Indian tribe.--The term ``Indian tribe'' has the 
     meaning given the term in section 101 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601).
       (11) Local government.--The term ``local government'' has 
     the meaning given the term ``unit of general local 
     government'' in the first sentence of section 102(a)(1) of 
     the Housing and Community Development Act of 1974 (42 U.S.C. 
     5302(a)(1)), except that the term includes an Indian tribe.
       (12) Natural resources.--The term ``natural resources'' has 
     the meaning given the term in section 101 of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9601).
       (13) Owner.--The term ``owner'' has the meaning given the 
     term in section 101 of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601).
       (14) Person.--The term ``person'' has the meaning given the 
     term in section 101 of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601).
       (15) Prospective purchaser.--The term ``prospective 
     purchaser'' means a prospective purchaser of a brownfield 
     site.
       (16) Release.--The term ``release'' has the meaning given 
     the term in section 101 of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601).
       (17) Response action.--The term ``response action'' has the 
     meaning given the term ``response'' in section 101 of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9601).
       (18) Site assessment.--
       (A) In general.--The term ``site assessment'' means an 
     investigation that determines the nature and extent of a 
     release or potential release of a hazardous substance at a 
     brownfield site and meets the requirements of subparagraph 
     (B).
       (B) Investigation.--For the purposes of this paragraph, an 
     investigation that meets the requirements of this 
     subparagraph--
       (i) shall include--

       (I) an onsite evaluation; and
       (II) sufficient testing, sampling, and other field-data-
     gathering activities to accurately determine whether the 
     brownfield site is contaminated and the threats to human 
     health and the environment posed by the release of 
     contaminants at the brownfield site; and

       (ii) may include--

       (I) review of such information regarding the brownfield 
     site and previous uses as is available at the time of the 
     review; and
       (II) an offsite evaluation, if appropriate.

       (19) State.--The term ``State'' has the meaning given the 
     term in section 101 of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601).

     SEC. 102. INVENTORY AND ASSESSMENT GRANT PROGRAM.

       (a) In General.--The Administrator shall establish a 
     program to award grants to States or local governments to 
     inventory brownfield sites and to conduct site assessments of 
     brownfield sites.
       (b) Scope of Program.--
       (1) Grant awards.--To carry out subsection (a), the 
     Administrator may, on approval of an application, provide 
     financial assistance to a State or local government.
       (2) Grant application.--An application for a grant under 
     this section shall include, to the extent practicable, each 
     of the following:
       (A) An identification of the brownfield sites for which 
     assistance is sought and a description of the effect of the 
     brownfield sites on the community, including a description of 
     the nature and extent of any known or suspected environmental 
     contamination within the areas.
       (B) A description of the need of the applicant for 
     financial assistance to inventory brownfield sites and 
     conduct site assessments.
       (C) A demonstration of the potential of the grant 
     assistance to stimulate economic development, including the 
     extent to which the assistance will stimulate the 
     availability of other funds for site assessment, site 
     identification, or environmental remediation and subsequent 
     redevelopment of the areas in which eligible brownfield sites 
     are situated.
       (D) A description of the local commitment as of the date of 
     the application, which shall include a community involvement 
     plan that demonstrates meaningful community involvement.
       (E) A plan that shows how the site assessment, site 
     identification, or environmental remediation and subsequent 
     development will be implemented, including--
       (i) an environmental plan that ensures the use of sound 
     environmental procedures;
       (ii) an explanation of the appropriate government authority 
     and support for the project as in existence on the date of 
     the application;
       (iii) proposed funding mechanisms for any additional work; 
     and
       (iv) a proposed land ownership plan.
       (F) A statement on the long-term benefits and the 
     sustainability of the proposed project that includes--
       (i) the ability of the project to be replicated nationally 
     and measures of success of the project; and
       (ii) to the extent known, the potential of the plan for 
     each area in which an eligible brownfield site is situated to 
     stimulate economic development of the area on completion of 
     the environmental remediation.
       (G) Such other factors as the Administrator considers 
     relevant to carry out this title.
       (3) Approval of application.--
       (A) In general.--In making a decision whether to approve an 
     application under paragraph (1), the Administrator shall--
       (i) consider the need of the State or local government for 
     financial assistance to carry out this section;
       (ii) consider the ability of the applicant to carry out an 
     inventory and site assessment under this section;
       (iii) ensure a fair distribution of grant funds between 
     urban and nonurban areas; and
       (iv) consider such other factors as the Administrator 
     considers relevant to carry out this section.
       (B) Grant conditions.--As a condition of awarding a grant 
     under this section, the Administrator may, on the basis of 
     the criteria considered under subparagraph (A), attach such 
     conditions to the grant as the Administrator determines 
     appropriate.
       (4) Grant amount.--The amount of a grant awarded to any 
     State or local government under subsection (a) for inventory 
     and site assessment of 1 or more brownfield sites shall not 
     exceed $200,000.
       (5) Termination of grants.--If the Administrator determines 
     that a State or local government that receives a grant under 
     this subsection is in violation of a condition of a grant 
     referred to in paragraph (3)(B), the Administrator may 
     terminate the grant made to the State or local government and 
     require full or partial repayment of the grant.

     SEC. 103. GRANTS FOR REVOLVING LOAN PROGRAMS.

       (a) In General.--
       (1) Establishment.--The Administrator shall establish a 
     program to award grants to be used by State or local 
     governments to capitalize revolving loan funds for the 
     cleanup of brownfield sites.
       (2) Loans.--The loans may be provided by the State or local 
     government to finance cleanups of brownfield sites by the 
     State or local government, or by an owner or a prospective 
     purchaser of a brownfield site (including a local government) 
     at which a cleanup is being conducted or is proposed to be 
     conducted.
       (b) Scope of Program.--
       (1) In general.--
       (A) Grants.--In carrying out subsection (a), the 
     Administrator may award a grant to a State or local 
     government that submits an application to the Administrator 
     that is approved by the Administrator.
       (B) Use of grant.--The grant shall be used by the State or 
     local government to capitalize a revolving loan fund to be 
     used for cleanup of 1 or more brownfield sites.
       (C) Grant application.--An application for a grant under 
     this section shall be in such form as the Administrator 
     determines appropriate. At a minimum, the application shall 
     include the following:
       (i) Evidence that the grant applicant has the financial 
     controls and resources to administer a revolving loan fund in 
     accordance with this title.
       (ii) Provisions that--

       (I) ensure that the grant applicant has the ability to 
     monitor the use of funds provided to loan recipients under 
     this title;

[[Page S349]]

       (II) ensure that any cleanup conducted by the applicant is 
     protective of human health and the environment; and
       (III) ensure that any cleanup funded under this Act will 
     comply with all applicable Federal and State laws that apply 
     to the cleanup.

       (iii) Identification of the criteria to be used by the 
     State or local government in providing for loans under the 
     program. The criteria shall include the financial standing of 
     the applicants for the loans, the use to which the loans will 
     be put, the provisions to be used to ensure repayment of the 
     loan funds, and the following:

       (I) A complete description of the financial standing of the 
     applicant that includes a description of the assets, cash 
     flow, and liabilities of the applicant.
       (II) A written statement that attests that the cleanup of 
     the site would not occur without access to the revolving loan 
     fund.
       (III) The proposed method, and anticipated period of time 
     required, to clean up the environmental contamination at the 
     brownfield site.
       (IV) An estimate of the proposed total cost of the cleanup 
     to be conducted at the brownfield site.
       (V) An analysis that demonstrates the potential of the 
     brownfield site for stimulating economic development on 
     completion of the cleanup of the brownfield site.

       (2) Grant approval.--In determining whether to award a 
     grant under this section, the Administrator shall consider--
       (A) the need of the State or local government for financial 
     assistance to clean up brownfield sites that are the subject 
     of the application, taking into consideration the financial 
     resources available to the State or local government;
       (B) the ability of the State or local government to ensure 
     that the applicants repay the loans in a timely manner;
       (C) the extent to which the cleanup of the brownfield site 
     or sites would reduce health and environmental risks caused 
     by the release of contaminants at, or from, the brownfield 
     site or sites;
       (D) the demonstrable potential of the brownfield site or 
     sites for stimulating economic development on completion of 
     the cleanup;
       (E) the demonstrated ability of the State or local 
     government to administer such a loan program;
       (F) the demonstrated experience of the State or local 
     government regarding brownfield sites and the reuse of 
     contaminated land, including whether the government has 
     received any grant under the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601 et seq.) to assess brownfield sites, except that 
     applicants who have not previously received such a grant may 
     be considered for awards under this section;
       (G) the efficiency of having the loan administered by the 
     level of government represented by the applicant entity;
       (H) the experience of administering any loan programs by 
     the entity, including the loan repayment rates;
       (I) the demonstrations made regarding the ability of the 
     State or local government to ensure a fair distribution of 
     grant funds among brownfield sites within the jurisdiction of 
     the State or local government; and
       (J) such other factors as the Administrator considers 
     relevant to carry out this section.
       (3) Grant amount.--The amount of a grant made to a State or 
     local applicant under this section shall not exceed $500,000.
       (4) Revolving loan fund approval.--Each application for a 
     grant to capitalize a revolving loan fund under this section 
     shall, as a condition of approval by the Administrator, 
     include a written statement by the State or local government 
     that--
       (A) cleanups to be funded under the loan program of the 
     State or local government shall be conducted under the 
     auspices of, and in compliance with, the State voluntary 
     cleanup program or State Superfund program or Federal 
     authority;
       (B) the cleanup or proposed voluntary cleanup is cost-
     effective; and
       (C) the estimated total cost of the cleanup is reasonable.
       (c) Grant Agreements.--Each grant under this section for a 
     revolving loan fund shall be made pursuant to a grant 
     agreement. At a minimum, the grant agreement shall include 
     provisions that ensure the following:
       (1) Compliance with law.--The grant recipient will include 
     in all loan agreements a requirement that the loan recipient 
     shall comply with all applicable Federal and State laws 
     applicable to the cleanup and shall ensure that the cleanup 
     is protective of human health and the environment.
       (2) Repayment.--The State or local government will require 
     repayment of the loan consistent with this title.
       (3) Use of funds.--The State or local government will use 
     the funds solely for purposes of establishing and 
     capitalizing a loan program in accordance with this title and 
     of cleaning up the environmental contamination at the 
     brownfield site or sites.
       (4) Repayment of funds.--The State or local government will 
     require in each loan agreement, and take necessary steps to 
     ensure, that the loan recipient will use the loan funds 
     solely for the purposes stated in paragraph (3), and will 
     require the return of any excess funds immediately on a 
     determination by the appropriate State or local official that 
     the cleanup has been completed.
       (5) Nontransferability.--The funds will not be 
     transferable, unless the Administrator agrees to the transfer 
     in writing.
       (6) Liens.--
       (A) Definitions.--In this paragraph, the terms ``security 
     interest'' and ``purchaser'' have the meanings given the 
     terms in section 6323(h) of the Internal Revenue Code of 
     1986.
       (B) Liens.--A lien in favor of the grant recipient shall 
     arise on the contaminated property subject to a loan under 
     this section.
       (C) Coverage.--The lien shall cover all real property 
     included in the legal description of the property at the time 
     the loan agreement provided for in this section is signed, 
     and all rights to the property, and shall continue until the 
     terms and conditions of the loan agreement have been fully 
     satisfied.
       (D) Timing.--The lien shall--
       (i) arise at the time a security interest is appropriately 
     recorded in the real property records of the appropriate 
     office of the State, county, or other governmental 
     subdivision, as designated by State law, in which the real 
     property subject to the lien is located; and
       (ii) be subject to the rights of any purchaser, holder of a 
     security interest, or judgment lien creditor whose interest 
     is or has been perfected under applicable State law before 
     the notice has been filed in the appropriate office of the 
     State, county, or other governmental subdivision, as 
     designated by State law, in which the real property subject 
     to the lien is located.
       (7) Other conditions.--The State or local government will 
     comply with such other terms and conditions as the 
     Administrator determines are necessary to protect the 
     financial interests of the United States and to protect human 
     health and the environment.
       (d) Audits.--
       (1) In general.--The Inspector General of the Environmental 
     Protection Agency shall audit a portion of the grants awarded 
     under this section to ensure that all funds are used for the 
     purposes set forth in this section.
       (2) Future grants.--The result of the audit shall be taken 
     into account in awarding any future grants to the State or 
     local government.

     SEC. 104. ECONOMIC REDEVELOPMENT GRANTS.

       (a) Expenditures From the Superfund.--Amounts in the 
     Hazardous Substance Superfund established by section 9507 of 
     the Internal Revenue Code of 1986 shall be made available 
     consistent with, and for the purposes of carrying out, the 
     grant programs established under sections 102 and 103.
       (b) Authority To Award Grants.--There is authorized to be 
     appropriated from the Hazardous Substance Superfund for 
     grants to State and local governments under sections 102 and 
     103, $25,000,000 for each of fiscal years 1998 through 2002.

     SEC. 105. REPORTS.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, and not later than January 31 of each 
     of the 3 calendar years thereafter, the Administrator shall 
     prepare and submit a report describing the results of each 
     program established under this title to--
       (1) the Committee on Environment and Public Works of the 
     Senate; and
       (2) the Committee on Commerce of the House of 
     Representatives.
       (b) Contents of Report.--Each report shall, with respect to 
     each of the programs established under this title, include a 
     description of--
       (1) the number of applications received by the 
     Administrator during the preceding calendar year;
       (2) the number of applications approved by the 
     Administrator during the preceding calendar year; and
       (3) the allocation of assistance under sections 102 and 103 
     among the States and local governments.

     SEC. 106. LIMITATIONS ON USE OF FUNDS.

       (a) Excluded Facilities.--A grant for site inventory and 
     assessment under section 102 or to capitalize a revolving 
     loan fund under section 103 may not be used for any activity 
     involving--
       (1) a facility that is the subject of a planned or an 
     ongoing response action under the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601 et seq.), except for a facility for which a preliminary 
     assessment, site investigation, or removal action has been 
     completed and with respect to which the Administrator has 
     decided not to take further response action, including cost 
     recovery action;
       (2) a facility included, or proposed for inclusion, on the 
     National Priorities List maintained by the Administrator 
     under the Comprehensive Environmental Response, Compensation, 
     and Liability Act of 1980 (42 U.S.C. 9601 et seq.);
       (3) a facility with respect to which a record of decision, 
     other than a no-action record of decision, has been issued by 
     the President under section 104 of the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9604) with respect to the facility;
       (4) a facility that is subject to corrective action under 
     section 3004(u), 3008(h) of the Solid Waste Disposal Act (42 
     U.S.C. 6924(u) or 6928(h)) to which a corrective action 
     permit or order has been issued or modified to require the 
     implementation of corrective measures;
       (5) any land disposal unit with respect to which a closure 
     notification under subtitle C of the Solid Waste Disposal Act 
     (42 U.S.C. 6921 et seq.) has been submitted and closure 
     requirements have been specified in a closure plan or permit;

[[Page S350]]

       (6) a facility at which there has been a release of a 
     polychlorinated biphenyl and that is subject to the Toxic 
     Substances Control Act (15 U.S.C. 2601 et seq.);
       (7) a facility with respect to which an administrative 
     order on consent or a judicial consent decree requiring 
     cleanup has been entered into by the President and is in 
     effect under--
       (A) the Comprehensive Environmental Response, Compensation, 
     and Liability Act of 1980 (42 U.S.C. 9601 et seq.);
       (B) the Solid Waste Disposal Act (42 U.S.C. 6901 et seq.);
       (C) the Federal Water Pollution Control Act (33 U.S.C. 1251 
     et seq.);
       (D) the Toxic Substances Control Act (15 U.S.C. 2601 et 
     seq.); or
       (E) the Safe Drinking Water Act (42 U.S.C. 300f et seq.);
       (8) a facility at which assistance for response activities 
     may be obtained under subtitle I of the Solid Waste Disposal 
     Act (42 U.S.C. 6991 et seq.) from the Leaking Underground 
     Storage Tank Trust Fund established by section 9508 of the 
     Internal Revenue Code of 1986; and
       (9) a facility owned or operated by a department, agency, 
     or instrumentality of the United States, except for land held 
     in trust by the United States for an Indian tribe.
       (b) Fines and Cost-Sharing.--A grant made under this title 
     may not be used to pay any fine or penalty owed to a State or 
     the Federal Government, or to meet any Federal cost-sharing 
     requirement.
       (c) Other Limitations.--
       (1) In general.--Funds made available to a State or local 
     government under the grant programs established under 
     sections 102 and 103 shall be used only to inventory and 
     assess brownfield sites as authorized by this title and for 
     capitalizing a revolving loan fund as authorized by this 
     title, respectively.
       (2) Responsibility for cleanup action.--Funds made 
     available under this title may not be used to relieve a local 
     government or State of the commitment or responsibilities of 
     the local government or State under State law to assist or 
     carry out cleanup actions at brownfield sites.

     SEC. 107. EFFECT ON OTHER LAWS.

       Nothing in this title affects the liability or response 
     authorities for environmental contamination under any other 
     law (including any regulation), including--
       (1) the Comprehensive Environmental Response, Compensation, 
     and Liability Act of 1980 (42 U.S.C. 9601 et seq.);
       (2) the Solid Waste Disposal Act (42 U.S.C. 6901 et seq.);
       (3) the Federal Water Pollution Control Act (33 U.S.C. 1251 
     et seq.);
       (4) the Toxic Substances Control Act (15 U.S.C. 2601 et 
     seq.); and
       (5) the Safe Drinking Water Act (42 U.S.C. 300f et seq.).

     SEC. 108. REGULATIONS.

       (a) In General.--The Administrator may issue such 
     regulations as are necessary to carry out this title.
       (b) Procedures and Standards.--The regulations shall 
     include such procedures and standards as the Administrator 
     considers necessary, including procedures and standards for 
     evaluating an application for a grant or loan submitted under 
     this title.

     SEC. 109. AUTHORIZATIONS OF APPROPRIATIONS.

       (a) Site Assessment Program.--There is authorized to be 
     appropriated to carry out section 102 $10,000,000 for each of 
     fiscal years 1998 through 2002.
       (b) Economic Redevelopment Assistance Program.--There is 
     authorized to be appropriated to carry out section 103 
     $15,000,000 for each of fiscal years 1998 through 2002.
       (c) Availability of Funds.--The amounts appropriated under 
     this section shall remain available until expended.
                    TITLE II--PROSPECTIVE PURCHASERS

     SEC. 201. LIMITATIONS ON LIABILITY FOR RESPONSE COSTS FOR 
                   PROSPECTIVE PURCHASERS.

       (a) Limitations on Liability.--Section 107 of the 
     Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9607) is amended by adding 
     at the end the following:
       ``(n) Limitations on Liability for Prospective 
     Purchasers.--Notwithstanding paragraphs (1) through (4) of 
     subsection (a), to the extent the liability of a person, with 
     respect to a release or the threat of a release from a 
     facility, is based solely on subsection (a)(1), the person 
     shall not be liable under this Act if the person--
       ``(1) is a bona fide prospective purchaser of the facility; 
     and
       ``(2) does not impede the performance of any response 
     action or natural resource restoration at a facility.''.
       (b) Prospective Purchaser and Windfall Lien.--Section 107 
     of the Comprehensive Environmental Response, Compensation, 
     and Liability Act of 1980 (as amended by subsection (a)) is 
     amended by inserting after subsection (n) the following:
       ``(o) Prospective Purchaser and Windfall Lien.--
       ``(1) In general.--In any case in which there are 
     unrecovered response costs at a facility for which an owner 
     of the facility is not liable by reason of subsection (n), 
     and the conditions described in paragraph (3) are met, the 
     United States shall have a lien on the facility, or may 
     obtain, from the appropriate responsible party or parties, a 
     lien on other property or other assurances of payment 
     satisfactory to the Administrator, for the unrecovered costs.
       ``(2) Amount; duration.--The lien--
       ``(A) shall be for an amount not to exceed the increase in 
     fair market value of the property attributable to the 
     response action at the time of a subsequent sale or other 
     disposition of the property;
       ``(B) shall arise at the time costs are first incurred by 
     the United States with respect to a response action at the 
     facility;
       ``(C) shall be subject to the requirements for notice and 
     validity specified in subsection (l)(3); and
       ``(D) shall continue until the earlier of satisfaction of 
     the lien or recovery of all response costs incurred at the 
     facility.
       ``(3) Conditions.--The conditions referred to in paragraph 
     (1) are the following:
       ``(A) Response action.--A response action for which there 
     are unrecovered costs is carried out at the facility.
       ``(B) Fair market value.--The response action increases the 
     fair market value of the facility above the fair market value 
     of the facility that existed on the date that is 180 days 
     before the response action was commenced.''.
       (c) Definition of Bona Fide Prospective Purchaser.--Section 
     101 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9601) is 
     amended by adding at the end the following:
       ``(39) Bona fide prospective purchaser.--The term `bona 
     fide prospective purchaser' means a person who acquires 
     ownership of a facility after the date of enactment of the 
     Brownfields and Environmental Cleanup Act of 1997, or a 
     tenant of such a person, who can establish each of the 
     following by a preponderance of the evidence:
       ``(A) Disposal prior to acquisition.--All active disposal 
     of hazardous substances at the facility occurred before the 
     person acquired the facility.
       ``(B) Inquiry.--
       ``(i) In general.--The person made all appropriate inquiry 
     into the previous ownership and uses of the facility in 
     accordance with generally accepted good commercial and 
     customary standards and practices.
       ``(ii) Standards.--The standards and practices issued by 
     the Administrator under paragraph (35)(B)(ii) shall satisfy 
     the requirements of this subparagraph.
       ``(iii) Residential property.--In the case of property in 
     residential or other similar use at the time of purchase by a 
     nongovernmental or noncommercial entity, a site inspection 
     and title search that reveal no basis for further 
     investigation shall satisfy the requirements of this 
     subparagraph.
       ``(C) Notices.--The person provided all legally required 
     notices with respect to the discovery or release of any 
     hazardous substances at the facility.
       ``(D) Care.--The person exercised appropriate care with 
     respect to hazardous substances found at the facility by 
     taking reasonable steps to--
       ``(i) stop ongoing releases;
       ``(ii) prevent threatened future releases of hazardous 
     substances; and
       ``(iii) prevent or limit human or natural resource exposure 
     to hazardous substances previously released into the 
     environment.
       ``(E) Cooperation, assistance, and access.--The person 
     provides full cooperation, assistance, and facility access to 
     such persons as are authorized to conduct response actions at 
     the facility, including the cooperation and access necessary 
     for the installation, integrity, operation, and maintenance 
     of any complete or partial response action at the facility.
       ``(F) Relationship.--The person is not liable, or is not 
     affiliated with any other person that is potentially liable, 
     for response costs at the facility, through any direct or 
     indirect familial relationship, or any contractual, 
     corporate, or financial relationship other than that created 
     by the instruments by which title to the facility is conveyed 
     or financed.''.
                     TITLE III--INNOCENT LANDOWNERS

     SEC. 301. INNOCENT LANDOWNERS.

       (a) Knowledge of Inquiry Requirement.--Section 101(35) of 
     the Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (42 U.S.C. 9601(35)) is amended by 
     striking subparagraph (B) and inserting the following:
       ``(B) Knowledge of inquiry requirement.--
       ``(i) Definition of contamination.--In this subparagraph, 
     the term `contamination' means an existing release, a past 
     release, or the threat of a release of a hazardous substance.
       ``(ii) Requirement.--

       ``(I) Inquiry.--To establish that the defendant had no 
     reason to know (under subparagraph (A)(i)), the defendant 
     must have made, at the time of the acquisition, all 
     appropriate inquiry (as well as comply with clause (vii)) 
     into the previous ownership and uses of the facility, 
     consistent with good commercial or customary practice in an 
     effort to minimize liability.
       ``(II) Considerations.--For the purpose of subclause (I) 
     and until the President issues or designates standards as 
     provided in clause (iv), the court shall take into account--

       ``(aa) any specialized knowledge or experience on the part 
     of the defendant;
       ``(bb) the relationship of the purchase price to the value 
     of the property if uncontaminated;
       ``(cc) commonly known or reasonably ascertainable 
     information about the property;
       ``(dd) the obviousness of the presence or likely presence 
     of contamination at the property; and

[[Page S351]]

       ``(ee) the ability to detect the contamination by 
     appropriate investigation.
       ``(iii) Conduct of environmental assessment.--A person who 
     has acquired real property shall be considered to have made 
     all appropriate inquiry within the meaning of clause (ii)(I) 
     if--

       ``(I) the person establishes that, within 180 days prior to 
     the date of acquisition, an environmental site assessment of 
     the real property was conducted that meets the requirements 
     of clause (iv); and
       ``(II) the person complies with clause (vii).

       ``(iv) Environmental site assessment.--

       ``(I) In general.--An environmental site assessment meets 
     the requirements of this clause if the assessment is 
     conducted in accordance with the standards set forth in the 
     American Society for Testing and Materials (ASTM) Standard 
     E1527-94, titled `Standard Practice for Environmental Site 
     Assessments: Phase I Environmental Site Assessment Process' 
     or with any alternative standards issued by regulation by the 
     President or issued or developed by other entities and 
     designated by regulation by the President.
       ``(II) Study of practices.--Before issuing or designating 
     alternative standards under subclause (I), the President 
     shall conduct a study of commercial and industrial practices 
     concerning environmental site assessments in the transfer of 
     real property in the United States.

       ``(v) Considerations in issuing standards.--In issuing or 
     designating any standards under clause (iv), the President 
     shall consider requirements governing each of the following:

       ``(I) Conduct of an inquiry by an environmental 
     professional.
       ``(II) Interviews of each owner, operator, and occupant of 
     the property to determine information regarding the potential 
     for contamination.
       ``(III) Review of historical sources as necessary to 
     determine each previous use and occupancy of the property 
     since the property was first developed. In this subclause, 
     the term `historical sources' means any of the following, if 
     reasonably ascertainable: each recorded chain of title 
     document regarding the real property, including each deed, 
     easement, lease, restriction, and covenant, any aerial 
     photograph, fire insurance map, property tax file, United 
     States Geological Survey 7.5 minutes topographic map, local 
     street directory, building department record, and zoning/land 
     use record, and any other source that identifies a past use 
     or occupancy of the property.
       ``(IV) Determination of the existence of any recorded 
     environmental cleanup lien against the real property that has 
     arisen under any Federal, State, or local law.
       ``(V) Review of reasonably ascertainable Federal, State, 
     and local government records of any facility that is likely 
     to cause or contribute to contamination at the real property, 
     including, as appropriate--

       ``(aa) any investigation report for the facility;
       ``(bb) any record of activities likely to cause or 
     contribute to contamination at the real property, including 
     any landfill or other disposal location record, underground 
     storage tank record, hazardous waste handler and generator 
     record, and spill reporting record; and
       ``(cc) any other reasonably ascertainable Federal, State, 
     and local government environmental record that could reflect 
     an incident or activity that is likely to cause or contribute 
     to contamination at the real property.

       ``(VI) A visual site inspection of the real property and 
     each facility and improvement on the real property and a 
     visual site inspection of each immediately adjacent property, 
     including an investigation of any hazardous substance use, 
     storage, treatment, or disposal practice on the property.
       ``(VII) Any specialized knowledge or experience on the part 
     of the person that acquired the property.
       ``(VIII) The relationship of the purchase price to the 
     value of the property if uncontaminated.
       ``(IX) Commonly known or reasonably ascertainable 
     information about the property.
       ``(X) The obviousness of the presence or likely presence of 
     contamination at the property, and the ability to detect the 
     contamination by appropriate investigation.

       ``(vi) Reasonably ascertainable.--A record shall be 
     considered to be reasonably ascertainable for purposes of 
     clause (v) if a copy or reasonable facsimile of the record is 
     publicly available by request (within reasonable time and 
     cost constraints) and the record is practicably reviewable.
       ``(vii) Appropriate inquiry.--A person shall not be treated 
     as having made all appropriate inquiry under clause (ii)(I) 
     unless--

       ``(I) the person has maintained a compilation of the 
     information reviewed and gathered in the course of any 
     environmental site assessment;
       ``(II) the person exercised appropriate care with respect 
     to hazardous substances found at the facility by taking 
     reasonable steps to--

       ``(aa) stop ongoing releases of hazardous substances;
       ``(bb) prevent threatened future releases of hazardous 
     substances; and
       ``(cc) prevent or limit human or natural resource exposure 
     to hazardous substances previously released into the 
     environment; and

       ``(III) the person provides full cooperation, assistance, 
     and facility access to such persons as are authorized to 
     conduct response actions at the facility, including the 
     cooperation and access necessary for the installation, 
     integrity, operation, and maintenance of any complete or 
     partial response action at the facility.

       ``(viii) Site inspection and title search.--In the case of 
     property for residential use or other similar use purchased 
     by a nongovernmental or noncommercial entity, a site 
     inspection and title search that reveal no basis for further 
     investigation shall satisfy the requirements of clause 
     (ii).''.
       (b) Regulatory Authority.--
       (1) In general.--The Administrator of the Environmental 
     Protection Agency may--
       (A) issue such regulations as the Administrator considers 
     necessary to carry out the amendment made by this section; 
     and
       (B) delegate and assign any duties or powers imposed on or 
     assigned to the Administrator by the amendment made by this 
     section, including the authority to issue regulations.
       (2) Authority to clarify and implement.--The authority 
     under paragraph (1) includes authority to clarify or 
     interpret all terms, including the terms used in this 
     section, and to implement any provision of the amendment made 
     by this section.
                                                                    ____


Section-by-Section Summary of the Brownfields and Environmental Cleanup 
                              Act of 1997

       Section 1 states the short title: the ``Brownfields and 
     Environmental Cleanup Act of 1997.''
       Section 2(a) makes 10 findings summarizing the brownfields 
     problem, and affirming a need for financial incentives and 
     assistance to redevelop brownfield sites; and (b) states the 
     purpose of the bill: economic redevelopment of the sites.


       title i--brownfield remediation and environmental cleanup

       Section 101 presents 19 definitions of terms used in the 
     bill.
       Section 102 Inventory and Assessment Grant Program. The 
     bill directs EPA to establish a program of grants to local 
     governments to inventory brownfield sites within their 
     jurisdictions, and to conduct site characterizations of sites 
     targeted for cleanup under a state cleanup program. It sets 
     eight requirements of what the grant application must 
     contain, and establishes the criteria EPA is to use in 
     deciding whether to approve a grant. EPA may attach 
     conditions to the grant award, and may terminate the grant if 
     the conditions are violated. Grants may not exceed $200,000.
       Section 103. Grants for Revolving Loan Programs. The bill 
     directs EPA to establish a grant program for state and local 
     governments to capitalize loan programs for site cleanup. The 
     loan fund is to be used by the local or state entity to make 
     loans to finance brownfield cleanups by the owner or a 
     prospective purchaser of an affected site. The grant 
     application must demonstrate the government's ability to 
     manage a revolving loan program and oversee loans they grant 
     under the program. Twelve factors to be considered by EPA in 
     determining whether to award a grant are laid out. A loan 
     program grant to a local or State applicant shall not exceed 
     $500,000.
       Section 104 authorizes $25 million to be appropriated from 
     the Superfund for each of fiscal years 1997 through 2001 for 
     the programs provided for in sections 101 and 102.
       Section 105 requires EPA to submit an annual report to the 
     congressional authorizing committees describing the 
     achievements of each program, including the number of 
     applications received and approved, and detailing the 
     allocation of assistance among the states and local 
     governments.
       Section 106 limits how funds may be used. No grant may be 
     used to pay fines or penalties to a state or the federal 
     government, or for federal cost-sharing requirements. Nor may 
     it be used to relieve a state or local government of its 
     cleanup responsibility under state law at affected sites.
       Section 107. Statutory Construction. The section states 
     that nothing in this title is intended to affect the 
     liability of response authorities of any other law, including 
     the Comprehensive Environmental Response, Compensation, and 
     Liability Act (CERCLA, or the Superfund Act), the Solid Waste 
     Disposal Act, the Federal Water Pollution Control Act, and 
     the Safe Drinking Water Act.
       Section 108 authorizes EPA to promulgate regulations to 
     carry out the Act.
       Section 109 specifies that $10 million of the section 104 
     appropriation shall be for the section 101 site 
     characterization program each year, and $15 million shall be 
     for the section 102 economic redevelopment assistance 
     program. The appropriations shall remain available until 
     expended.


                    title II--prospective purchasers

       Section 201(a). Liability Limitation. The bill amends 
     section 107 of CERCLA, exempting a bona fide prospective 
     purchaser from liability provided he does not impede the 
     performance of response actions or natural resource 
     restoration at a facility.
       Section 1201(b). Windfall Lien. The bill further amends 
     section 107 to give the United States a lien on the facility 
     when a response action has been carried out at the facility 
     and there are unrecovered response costs for which the 
     prospective purchaser is not liable. Alternatively, the 
     United States may obtain from the appropriate responsible 
     party a lien on other property or other assurances of 
     payment. The lien shall not be for

[[Page S352]]

     more than the increase in fair market value of the property 
     attributable to the response action.
       Section 201(c) amends section 101 of CERCLA to define 
     ``bona fide prospective purchaser.'' The definition requires 
     that: all disposal of hazardous substances occurred before 
     the person acquired the facility; the purchaser made all 
     appropriate inquiry into its previous ownership and uses; the 
     person provided proper notice regarding the discovery of 
     hazardous substances at the facility; he exercised 
     appropriate care; he provided full cooperation, assistance, 
     and facility access to those conducting the response action; 
     and there is no family or business relationship with a 
     potentially responsible party at the facility.


                     title iii--innocent landowners

       Section 301(a) amends section 101(35) of CERCLA clarifying 
     the exception from liability of innocent landowners. The 
     requirements that such a person make ``all appropriate 
     inquiry'' is satisfied if he has an environmental site 
     assessment conducted within the 180 days preceding the 
     acquisition of the property ``Environmental site assessment'' 
     means one conducted in accordance with the American Society 
     of Testing and Materials (ASTM) standard for a Phase I 
     environmental site assessment (Standard E1527-94), or an 
     alternative standard issued by the President. To be treated 
     as having made ``all appropriate inquiry,'' a person must: 
     (1) maintain a compilation of the information gathered in the 
     course of the site assessment; (2) exercise appropriate care 
     by stopping on-going releases, preventing threatened future 
     releases, and limiting human and natural resource exposure to 
     hazardous substances; and (3) provide full cooperation 
     assistance, and facility access to persons conducting 
     response actions at the facility. For the purposes of this 
     subsection and 101(35) (the definition of ``contractual 
     relationship''), the term ``contamination'' means an 
     existing release, a past release, or the threat of a 
     release.
       The court shall take into account any specialized knowledge 
     of the defendant, the relationship of the purchase price to 
     the value of the property if uncontaminated, commonly known 
     information about the property, the obviousness of the 
     presence of contamination at the property, and the ability to 
     detect the contamination. EPA shall issue or designate 
     standards and practices that satisfy these requirements. The 
     bill identifies 10 factors for EPA to consider in issuing the 
     standards:
       1. Conduct of an inquiry by an environmental professional.
       2. Interviews with past and present owners, operators, and 
     occupants of the facility.
       3. A review of historical sources, such as chain of title 
     documents, aerial photographs, building department records, 
     and land use records.
       4. A search for recorded environmental liens, filed under 
     Federal, state, or local law.
       5. A review of Federal, state, and local government records 
     (such as waste disposal records), underground storage tank 
     records, and hazardous waste handling, generation, treatment, 
     disposal, and spill records.
       6. A visual inspection of the facility, and adjoining 
     properties.
       7. Any specialized knowledge or experience on the part of 
     the defendant.
       8. The relationship of the purchase price to the value of 
     the property if uncontaminated.
       9. Commonly known or reasonably ascertainable information 
     about the property.
       10. The obviousness of the presence of contamination, and 
     the ability to detect it by appropriate investigation.
       In the case of a property for residential or similar use 
     purchased by a nongovernmental or noncommercial entity, a 
     site inspection and title search are sufficient to satisfy 
     the requirements.
       Section 301(b) authorizes EPA to issue regulations to carry 
     out section 301, and gives it the authority to clarify or 
     interpret all terms.


                                    Regional Plan Association,

                                     Newark, NJ, January 20, 1997.
     Senator Frank Lautenberg,
     Hart Office Building, Washington, DC.
     Re: Brownfields and Environmental Cleanup Act of 1997.
       Dear Senator Lautenberg: As Director of the New Jersey 
     Office of Regional Plan Association, I am happy to support 
     your proposed Brownfields and Environmental Cleanup Act. RPA 
     is the country's oldest private, non profit regional planning 
     organization charged with improving transportation, 
     environmental conservation and economic development in the 
     31-county New York, New Jersey and Connecticut metropolitan 
     area. RPA has been a leading force in brownfields 
     redevelopment in New Jersey, having successfully coordinated 
     the award-winning OENJ brownfields Model Redevelopment 
     Project in Elizabeth, and overseeing the Legislative and 
     Regulatory Reform committee of the EPA Brownfields Pilot 
     Project in Newark.
       The proposed Brownfields and Environmental Cleanup Act of 
     1997 will go a long way towards stimulating redevelopment of 
     the region's abandoned, contaminated land. In particular, the 
     provisions for local site characterization grants and site 
     cleanup loans will provide an important incentive for local 
     governments to prioritize and implement redevelopment of 
     critical sites within their municipalities. The liability 
     limitations under Section 201 are also important incentives 
     at the federal level to encourage prospective purchasers to 
     invest in brownfields redevelopment. Some of these provisions 
     are being discussed at the State level in New Jersey. The 
     passage of federal legislation will greatly assist our 
     efforts to promote brownfields cleanup nationwide.
       I am grateful for this opportunity to support your far-
     reaching legislation, and wish you the best of luck in its 
     speedy passage.
           Sincerely,
                                                  Linda P. Morgan,
                                                         Director.
                                 ______
                                 
      By Mr. DODD (for himself, Mr. Daschle, Mr. Kennedy, Ms. Mikulski, 
        Mr. Rockefeller, Mrs. Murray, Mr. Torricelli, and Mrs. Boxer):
  S. 19. A bill to provide funds for child care for low-income working 
families, and for other purposes; to the Committee on Labor and Human 
Resources


                working families child care act of 1997

  Mr. DODD. Mr. President, I rise today to introduce the Working 
Families Child Care Act of 1997.
  Mr. President, balancing the daunting responsibilities of work with 
the responsibilities of raising children is always a difficult task. It 
is especially challenging when so many parents today are working 
outside the home and are forced to depend on child care.
  Not surprisingly, these challenges are especially acute for low 
income, working families. In fact according to a national child care 
study, when compared to all other income groups, the working poor are 
the least likely to receive assistance with child care costs--even 
though it consumes a disproportionate share of their income--24 
percent, compared to 6 percent for middle income families.
  What's more, it's a constant struggle for low income families to 
remain self sufficient without child care assistance. In a survey of 
families on a waiting list in one community, it was found that of those 
paying for child care, 71 percent faced serious debt or bankruptcy.
  Currently, in 38 States and the District of Columbia the working poor 
are on waiting lists to receive child care. Georgia has 41,000 on its 
waiting list; Texas 36,000; Illinois 20,000; Alabama 20,000. Most of 
the States which don't have a waiting list either don't keep one, are 
expecting to create one in the future, or currently are experiencing a 
brief respite.
  In my own State of Connecticut, new openings for child care 
assistance were frozen in November 1993. When new slots became 
available, for only two days this past summer, 5,500 applications were 
received.
  During the last Congress, we intensely debated the issue of child 
care--in the larger context of welfare reform legislation. The original 
welfare legislation in January 1995 cut funds for child care and 
eliminated critically important health and safety standards.
  In the 104th Congress I continued to fight for child care, offering 
amendments to increase funding and ensure quality. While I disagreed 
with the final welfare reform bill, I am pleased that many of these 
amendments succeeded and that in the end, the final bill included child 
care funding of $14.2 billion over 6 years and restored rigorous health 
and safety standards.

  However, while the bill we passed made significant and crucial 
strides in providing child care for welfare recipients--there is still 
work to be done.
  The bill I am proposing today will address the issue of child care 
for low income working families and make it easier for them to access 
adequate child care assistance.
  First, this legislation restores $1.4 billion in child care funding.
  According to a recent CBO report, even if states meet the work 
requirements of the welfare bill they will still be short $1.4 billion 
for money needed to continue serving certain low income working 
families. These aren't new recipients we're talking about, but instead 
families who were receiving child care assistance prior to passage of 
welfare reform legislation.
  The legislation I am introducing today will prevent working parents 
from losing child care assistance simply as a result of the welfare 
reform bill.
  Second, it begins to address the shortage of assistance for working 
families, by raising the authorization for child care subsidies for low 
income working families from $1 billion per year to $2 billion per 
year.

[[Page S353]]

  And finally, it authorizes $500 million per year through 2002 to help 
communities meet supply shortages in areas such as infant care and 
school age care.
  Even when subsidies are available, child care can be difficult to 
obtain. According to the National Academy of Sciences, there is 
``Consistent evidence of a relatively low supply of care for infants, 
for school age children, for children with disabilities and special 
health care needs and for parents with unconventional or shifting work 
hours.''
  What's more, a 1995 GAO study based in Michigan found a shortage of 
infant and special needs child care in inner cities and a shortage of 
all types of child care in rural areas. So, we're not simply talking 
about financial assistance for child care, but whether child care 
actually exists.
  This shortage of child care is a problem for both working families 
and welfare recipients who want to become self-sufficient. How can we 
expect someone to make the difficult transition from welfare to work 
when they cannot find an adequate provider for an infant or are forced 
to have a 6, 7 or 8 year old spend hours alone at home when the school 
day ends?
  This lack of supervision can have a devastating long-term impact. One 
study found that children who start to take care of themselves in 
elementary school are significantly more likely to report high use of 
alcohol by the eighth grade. Eighth graders left home alone for 11 or 
more hours a week report significantly greater use of cigarettes, 
alcohol, and marijuana then children not left home alone. We know all 
this, and yet only one third of the schools in low income neighborhoods 
offer school age child care, compared with 52 percent in more affluent 
areas.
  For those struggling to make the difficult journey to self-
sufficiency, the lack of available child care before 9, after 5, and on 
weekends can be an enormous problem. What's worse, such arrangements 
put the safety of a child in question.
  The reality is that nearly 1 in 5 full time workers--14.3 million--
work nonstandard hours. More than 1 in 3 are women. However, only 10 
percent of child care centers and 6 percent of family day care provide 
care on weekends. Yet one third of working mothers with incomes below 
poverty and one fourth of mothers with income above poverty, but below 
$25,000, work on weekends.
  An additional supply problem is that head start and other 
prekindergarten programs are part day and part year. As a result, they 
often do not meet the needs of parents who work full time. Less than 30 
percent of Head Start programs operate on a full-time, full-year basis.
  Simply put, child care funds need to be available to make these 
programs accessible for working parents. In my view, we as a nation 
have a solemn commitment to guarantee that children will not be left to 
fend for themselves while their parents are working to put food on the 
table.
  Child care is one of the most important ingredients for helping poor 
working families achieve and maintain economic security. Like parents 
in any community and of any financial background, low income families 
need to know that when they go to work, their children will receive the 
care and assistance they need.
  The bill I am introducing today will make it easier for low income, 
working families to balance the responsibilities of work and caring for 
their children. I urge all my colleagues to join together in supporting 
this legislation--for the good of America's children.

                                 S. 19

       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 ``Working 
     Families Child Care 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. Findings.
Sec. 3. Assistance for low-income working families.
Sec. 4. Grants for child care supply shortages.
Sec. 5. Report on access to child care by low-income working families.
Sec. 6. Effective date.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Availability and affordability of quality child care is 
     a major obstacle for working parents who struggle to remain 
     self-sufficient.
       (A) Compared to all other income groups, the working poor 
     are the least likely to receive assistance with their child 
     care costs.
       (B) Low-income families spend 24 percent of their household 
     income on child care, whereas middle-income families spend 6 
     percent of their household income on child care.
       (C) 38 States have waiting lists for child care for the 
     working poor. Among those States, Georgia has 41,000 
     individuals on its waiting list, Texas has 36,000 individuals 
     on its waiting list, and Illinois and Alabama each have 
     20,000 individuals on their waiting lists.
       (D) One survey of low-income families on a waiting list for 
     subsidized child care found that of those families paying for 
     child care out of their own funds, 71 percent faced serious 
     debt or bankruptcy.
       (E) Half of the States and the District of Columbia, even 
     before the enactment of the Personal Responsibility and Work 
     Opportunity Reconciliation Act of 1996 (Public Law 104-193, 
     110 Stat. 2105) during the 104th Congress, increased the 
     proportion of child care slots or dollars going to families 
     on welfare, rather than to working poor families.
       (2) The Congressional Budget Office estimates that there 
     will be $1,400,000,000 less expenditures of child care funds 
     for working poor families as a result of the States 
     implementing the work requirements imposed under the Personal 
     Responsibility and Work Opportunity Reconciliation Act of 
     1996 (Public Law 104-193, 110 Stat. 2105).
       (3) Important types of child care are not available in 
     certain States including infant care, school-age care, care 
     for children with disabilities and special health care needs, 
     and child care for parents with unconventional or shifting 
     work hours.
       (A) A 1995 State study by the Comptroller General of the 
     United States found a shortage of child care for infants and 
     children with special needs in inner cities, and a shortage 
     of all types of child care in rural areas.
       (B) Only \1/3\ of the schools in low-income neighborhoods 
     offer school-age child care, compared with 52 percent of 
     schools in more affluent areas offering such care.
       (C) Eighth-graders who are left home alone for 11 or more 
     hours a week report significantly greater use of cigarettes, 
     alcohol, and marijuana than eighth-graders who are not left 
     home alone.
       (D) Existing child care arrangements do not accommodate the 
     work schedules of many working women. According to a 1995 
     statistic published by the Department of Labor, 14,300,000 
     workers, nearly 1 in 5 full-time workers work nonstandard 
     hours, and more than 1 in 3 of those workers are women.
       (E) Only 10 percent of child care centers and 6 percent of 
     family day care providers offer child care on weekends. Yet 
     \1/3\ of working mothers with annual incomes below the 
     poverty level and \1/4\ of mothers with annual incomes above 
     the poverty level but below $25,000 work on weekends.
       (F) Less than 30 percent of Head Start programs operate on 
     a full-time, full-year basis.

     SEC. 3. ASSISTANCE FOR LOW-INCOME WORKING FAMILIES.

       Section 658B of the Child Care Development Block Grant Act 
     of 1990 (42 U.S.C. 9858) is amended to read as follows:

     ``SEC. 658B. FUNDING OF GRANTS.

       ``(a) Authorization of Appropriations.--Except as provided 
     in subsection (b), there is authorized to be appropriated to 
     carry out this subchapter $2,000,000,000 for each of fiscal 
     years 1997 through 2002.
       ``(b) Appropriation.--The Secretary shall pay, from funds 
     in the Treasury not otherwise appropriated, $1,400,000,000 
     for fiscal years 1997 through 2002, through the awarding of 
     grants to States under this subchapter for the purpose of 
     providing child care services for families who have left the 
     State program of assistance under part A of title IV of the 
     Social Security Act because of employment, families that are 
     at risk of becoming dependent on such assistance program, and 
     low-income working families described in section 
     658E(c)(3)(D). Funds shall be paid under this subsection to 
     the States in the same manner, and subject to the same 
     requirements and limitations, as funds are paid to the States 
     under section 418 of the Social Security Act (42 U.S.C. 
     618).''.

     SEC. 4. GRANTS FOR CHILD CARE SUPPLY SHORTAGES.

       (a) Grants for Child Care Supply Shortages.--Section 
     658E(c)(3) of the Child Care Development Block Grant Act of 
     1990 (42 U.S.C. 9858c(c)(3)) is amended by adding at the end 
     the following:
       ``(E) Child care supply shortages.--
       ``(i) In general.--A State shall ensure that 100 percent of 
     amounts paid to the State out of funds appropriated under 
     section 658B(a)(2) with respect to each of the fiscal years 
     1997 through 2002 shall be used to carry out child care 
     activities described in clause (ii) in geographic areas 
     within the State that have a shortage, as determined by the 
     State, in consultation with localities, of child care 
     services.
       ``(ii) Child care activities described.--The child care 
     activities described in this clause include the following:

       ``(I) Infant care programs.
       ``(II) Before- and after-school child care programs.
       ``(III) Resource and referral programs.
       ``(IV) Nontraditional work hours child care programs.

[[Page S354]]

       ``(V) Extending the hours of pre-kindergarten programs to 
     provide full-day services.
       ``(VI) Any other child care programs that the Secretary 
     determines are appropriate.''.

       (b) Authorization of Appropriations.--Section 658B(a) of 
     the Child Care Development Block Grant Act of 1990 (42 U.S.C. 
     9858(a)), as amended by section 2, is amended--
       (1) by striking ``Except as provided in'' and inserting the 
     following:
       ``(1) In general.--Except as provided in paragraph (2) 
     and''; and
       (2) by adding at the end the following:
       ``(2) Child care supply shortages.--There is authorized to 
     be appropriated to carry out section 658E(c)(3)(E), 
     $500,000,000 for each of fiscal years 1997 through 2002.''.
       (c) Conforming Amendment.--Section 658(c)(3)(A) of the 
     Child Care Development Block Grant Act of 1990 (42 U.S.C. 
     9858c(c)(3)(A)) is amended by striking ``(D)'' and inserting 
     ``(E)''.

     SEC. 5. REPORT ON ACCESS TO CHILD CARE BY LOW-INCOME WORKING 
                   FAMILIES.

       (a) State Reporting Requirement.--Section 658K(a)(2) of the 
     Child Care Development Block Grant Act of 1990 (42 U.S.C. 
     9858i(a)(2)) is amended--
       (1) in subparagraph (D), by striking ``and'' at the end; 
     and
       (2) by inserting after subparagraph (E), the following:
       ``(F) the total number of families described in section 
     658B(b) that were eligible for but did not receive assistance 
     under this subchapter or under section 418 of the Social 
     Security Act and a description of the obstacles to providing 
     such assistance; and
       ``(G) the total number of families described in section 
     658B(b) that received assistance provided under this 
     subchapter or under section 418 of the Social Security Act 
     and a description of the manner in which that assistance was 
     provided;''.
       (b) Secretarial Reporting Requirement.--Section 658L of the 
     Child Care Development Block Grant Act of 1990 (42 U.S.C. 
     9858j) is amended by inserting ``, with particular emphasis 
     on access of low-income working families,'' after ``public''.

     SEC. 6. EFFECTIVE DATE.

       This Act and the amendments made by this Act take effect as 
     if included in the enactment of the Personal Responsibility 
     and Work Opportunity Reconciliation Act of 1996 (Public Law 
     104-193, 110 Stat. 2105).
                                 ______
                                 
      By Mr. DASCHLE (for himself, Mr. Reid, Mr. Lieberman, Mr. Dorgan, 
        Mr. Breaux, Mr. Kohl, Mr. Wyden, and Mr. Bingaman):
  S. 20. A bill to amend the Internal Revenue Code of 1986 to increase 
the rate and spread the benefits of economic growth, and for other 
purposes; to the Committee on Finance.


     targeted investment incentive and economic growth act of 1997

  Mr. DASCHLE. I ask unanimous consent that the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 20

       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.

       (a) Short Title.--This Act may be cited as the ``Targeted 
     Investment Incentive and Economic Growth Act of 1997''.
       (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.
             TITLE I--TAXATION OF CAPITAL GAINS AND LOSSES

     SEC. 101. ROLLOVER OF CAPITAL GAINS ON CERTAIN SMALL BUSINESS 
                   INVESTMENTS.

       (a) In General.--Part III of subchapter O of chapter 1 
     (relating to common nontaxable exchanges) is amended by 
     adding at the end the following new section:

     ``SEC. 1045. ROLLOVER OF GAIN ON SMALL BUSINESS INVESTMENTS.

       ``(a) Nonrecognition of Gain.--In the case of the sale of 
     any eligible small business investment with respect to which 
     the taxpayer elects the application of this section, gain 
     from such sale shall be recognized only to the extent that 
     the amount realized on such sale exceeds--
       ``(1) the cost of any other eligible small business 
     investment purchased by the taxpayer during the 6-month 
     period beginning on the date of such sale, reduced by
       ``(2) any portion of such cost previously taken into 
     account under this section.

     This section shall not apply to any gain which is treated as 
     ordinary income for purposes of this subtitle.
       ``(b) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Purchase.--The term `purchase' has the meaning given 
     such term by section 1043(b)(4).
       ``(2) Eligible small business investment.--Except as 
     otherwise provided in this section, the term `eligible small 
     business investment' means any stock in a domestic 
     corporation, and any partnership interest in a domestic 
     partnership, which is originally issued after December 31, 
     1996, if--
       ``(A) as of the date of issuance, such corporation or 
     partnership is a qualified small business entity,
       ``(B) such stock or partnership interest is acquired by the 
     taxpayer at its original issue (directly or through an 
     underwriter)--
       ``(i) in exchange for money or other property (not 
     including stock), or
       ``(ii) as compensation for services (other than services 
     performed as an underwriter of such stock or partnership 
     interest), and
       ``(C) the taxpayer has held such stock or interest at least 
     6 months as of the time of the sale described in subsection 
     (a).

     A rule similar to the rule of section 1202(c)(3) shall apply 
     for purposes of this section.
       ``(3) Active business requirement.--Stock in a corporation, 
     and a partnership interest in a partnership, shall not be 
     treated as an eligible small business investment unless, 
     during substantially all of the taxpayer's holding period for 
     such stock or partnership interest, such corporation or 
     partnership meets the active business requirements of 
     subsection (c). A rule similar to the rule of section 
     1202(c)(2)(B) shall apply for purposes of this section.
       ``(4) Qualified small business entity.--
       ``(A) In general.--The term `qualified small business 
     entity' means any domestic corporation or partnership if--
       ``(i) such entity (and any predecessor thereof) had 
     aggregate gross assets (as defined in section 1202(d)(2)) of 
     less than $25,000,000 at all times before the issuance of the 
     interest described in paragraph (2), and
       ``(ii) the aggregate gross assets (as so defined) of the 
     entity immediately after the issuance (determined by taking 
     into account amounts received in the issuance) are less than 
     $25,000,000.
       ``(B) Aggregation rules.--Rules similar to the rules of 
     section 1202(d)(3) shall apply for purposes of this 
     paragraph.
       ``(c) Active Business Requirement.--
       ``(1) In general.--For purposes of subsection (b)(3), the 
     requirements of this subsection are met by a qualified small 
     business entity for any period if--
       ``(A) the entity is engaged in the active conduct of a 
     trade or business, and
       ``(B) at least 80 percent (by value) of the assets of such 
     entity are used in the active conduct of a qualified trade or 
     business (within the meaning of section 1202(e)(3)).

     Such requirements shall not be treated as met for any period 
     if during such period the entity is described in subparagraph 
     (A), (B), (C), or (D) of section 1202(e)(4).
       ``(2) Special rule for certain activities.--For purposes of 
     paragraph (1), if, in connection with any future trade or 
     business, an entity is engaged in--
       ``(A) startup activities described in section 195(c)(1)(A),
       ``(B) activities resulting in the payment or incurring of 
     expenditures which may be treated as research and 
     experimental expenditures under section 174, or
       ``(C) activities with respect to in-house research expenses 
     described in section 41(b)(4),

     such entity shall be treated with respect to such activities 
     as engaged in (and assets used in such activities shall be 
     treated as used in) the active conduct of a trade or 
     business. Any determination under this paragraph shall be 
     made without regard to whether the entity has any gross 
     income from such activities at the time of the determination.
       ``(3) Certain rules to apply.--Rules similar to the rules 
     of paragraphs (5), (6), (7), and (8) of section 1202(e) shall 
     apply for purposes of this subsection.
       ``(d) Certain Other Rules To Apply.--Rules similar to the 
     rules of subsections (f), (g), (h), and (j) of section 1202 
     shall apply for purposes of this section, except that a 6-
     month holding period shall be substituted for a 5-year 
     holding period where applicable.
       ``(e) Basis Adjustments.--If gain from any sale is not 
     recognized by reason of subsection (a), such gain shall be 
     applied to reduce (in the order acquired) the basis for 
     determining gain or loss of any eligible small business 
     investment which is purchased by the taxpayer during the 6-
     month period described in subsection (a).
       ``(f) Statute of Limitations.--If any gain is realized by 
     the taxpayer on the sale or exchange of any eligible small 
     business investment and there is in effect an election under 
     subsection (a) with respect to such gain, then--
       ``(1) the statutory period for the assessment of any 
     deficiency with respect to such gain shall not expire before 
     the expiration of 3 years from the date the Secretary is 
     notified by the taxpayer (in such manner as the Secretary may 
     by regulations prescribe) of--
       ``(A) the taxpayer's cost of purchasing other eligible 
     small business investments which the taxpayer claims results 
     in nonrecognition of any part of such gain,
       ``(B) the taxpayer's intention not to purchase other 
     eligible small business investments within the 6-month period 
     described in subsection (a), or
       ``(C) a failure to make such purchase within such 6-month 
     period, and
       ``(2) such deficiency may be assessed before the expiration 
     of such 3-year period notwithstanding the provisions of any 
     other law or rule of law which would otherwise prevent such 
     assessment.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out the purposes 
     of this section, including regulations to prevent the

[[Page S355]]

     avoidance of the purposes of this section through splitups, 
     shell corporations, partnerships, or otherwise and 
     regulations to modify the application of section 1202 to the 
     extent necessary to apply such section to a partnership 
     rather than a corporation.''
       (b) Conforming Amendment.--Paragraph (23) of section 
     1016(a) is amended--
       (1) by striking ``or 1044'' and inserting ``, 1044, or 
     1045'', and
       (2) by striking ``or 1044(d)'' and inserting ``, 1044(d), 
     or 1045(e)''.
       (c) Clerical Amendment.--The table of sections for part III 
     of subchapter O of chapter 1 is amended by adding at the end 
     the following new item:

``Sec. 1045. Rollover of gain on small business investments.''

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

     SEC. 102. LOSSES ON ELIGIBLE SMALL BUSINESS INVESTMENTS.

       (a) Increase in Maximum Amount.--Section 1244(b) (relating 
     to maximum amount for any taxable year) is amended--
       (1) by striking ``$50,000'' in paragraph (1) and inserting 
     ``$150,000'', and
       (2) by striking ``$100,000'' in paragraph (2) and inserting 
     ``$300,000''.
       (b) Extension of Application of Section 1244 to Partnership 
     Interest and Increase in Value of Corporations Eligible for 
     Application.--
       (1) Extension to partnerships.--So much of section 1244(c) 
     as precedes paragraph (2) is amended to read as follows:
       ``(c) Section 1244 Interest Defined.--
       ``(1) Section 1244 interest.--For purposes of this 
     section--
       ``(A) In general.--The term `section 1244 interest' means 
     an eligible small business investment (as defined in section 
     1045(b)(1)) in a qualified small business entity (as defined 
     in section 1045(b)(4)) if such entity, during the period of 
     its 5 most recent taxable years ending before the date the 
     loss on such investment was sustained, derived more than 50 
     percent of its aggregate gross receipts from sources other 
     than royalties, rents, dividends, interests, annuities, and 
     sales or exchanges of stocks or securities.
       ``(B) Transition rule.--Any stock in a domestic corporation 
     issued before January 1, 1997, which was section 1244 stock 
     under this section on December 31, 1996 (determined under 
     this section as in effect on such date), shall be treated as 
     a section 1244 interest for purposes of this section.''
       (2) Conforming amendments.--
       (A) Section 1244(a) is amended by striking ``section 1244 
     stock'' and inserting ``a section 1244 interest''.
       (B) Section 1244(c)(2) is amended--
       (i) by striking ``paragraph (1)(c)'' in the heading and 
     inserting ``paragraph (1)'',
       (ii) by striking ``paragraph (1)(C)'' each place it appears 
     and inserting ``paragraph (1)'',
       (iii) by striking ``corporation'' each place it appears and 
     inserting ``entity'', and
       (iv) by striking ``Paragraph (1)(C)'' in subparagraph (C) 
     and inserting ``Paragraph (1)''.
       (C) Section 1244(c) is amended by striking paragraph (3).
       (D) Section 1244(d) is amended--
       (i) by striking ``section 1244 stock'' each place it 
     appears and inserting ``a section 1244 interest'',
       (ii) by striking ``stock'' each place it appears and 
     inserting ``interest'',
       (iii) by striking ``paragraphs (1)(C) and (3)(A) of 
     subsection (c)'' in paragraph (2) and inserting ``subsection 
     (c)(1)'', and
       (iv) by striking ``(other than subparagraph (C) thereof)'' 
     and inserting ``(other than the gross receipts test 
     thereof)''.
       (E)(i) The heading for section 1244 is amended by striking 
     ``stock'' and inserting ``interest''.
       (ii) The item relating to section 1244 in the table of 
     sections for part IV of subchapter P of chapter 1 is amended 
     by striking ``stocks'' and inserting ``interests''.
       (F) Section 165(m)(5) is amended by striking ``stock'' and 
     inserting ``interests''.
       (G) Section 1274(c)(3)(A)(i) is amended--
       (i) by inserting ``, as in effect on the day before the 
     date of enactment of subclause (IV)'' after ``section 
     1244(c)(3)'' in subclauses (II) and (III),
       (ii) by striking ``or'' at the end of subclause (II),
       (iii) by striking the period at the end of subclause (III) 
     and inserting ``, or'', and
       (iv) by adding at the end the following new subclause:

       ``(IV) by a section 1244 interest (as defined in section 
     1244(c)(1)).''

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

     SEC. 103. MODIFICATIONS TO EXCLUSION OF GAIN ON CERTAIN SMALL 
                   BUSINESS STOCK.

       (a) Exclusion Available to Corporations.--
       (1) In general.--Subsection (a) of section 1202 is amended 
     by striking ``other than a corporation''.
       (2) Technical amendment.--Subsection (c) of section 1202 is 
     amended by adding at the end the following new paragraph:
       ``(4) Stock held among members of controlled group not 
     eligible.--Stock shall not be treated as qualified small 
     business stock if such stock was at any time held by any 
     member of the parent-subsidiary controlled group (as defined 
     in subsection (d)(3)) which includes the qualified small 
     business.''
       (b) Repeal of Minimum Tax Preference.--
       (1) In general.--Section 57(a) is amended by striking 
     paragraph (7).
       (2) Technical amendment.--Section 53(d)(1)(B)(ii)(II) is 
     amended by striking ``, (5), and (7)'' and inserting ``and 
     (5)''.
       (c) Stock of Larger Businesses Eligible for Exclusion.--
       (1) Section 1202(d)(1) is amended by striking 
     ``$50,000,000'' each place it appears and inserting 
     ``$100,000,000''.
       (2) Section 1202(d) is amended by adding at the end the 
     following new paragraph:
       ``(4) Inflation adjustment of asset limitation.--In the 
     case of stock issued in any calendar year after 1997, the 
     $100,000,000 amount contained in paragraph (1) shall be 
     increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1996' 
     for `calendar year 1992' in subparagraph (B) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $1,000,000, such amount shall be rounded to the 
     next lower multiple of $1,000,000.''
       (d) Per-Issuer Limitation.--Section 1202(b)(1)(A) is 
     amended by striking ``$10,000,000'' and inserting 
     ``$20,000,000''.
       (e) Other Modifications.--
       (1) Working capital limitation.--Section 1202(e)(6) is 
     amended by striking ``2 years'' each place it appears and 
     inserting ``5 years''.
       (2) Redemption rules.--Section 1203(c)(3) 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 limitation of this section.''
       (f) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to stock issued after the date of the enactment of this 
     Act.
       (2) Special rule.--The amendments made by subsection (b), 
     (d), and (e) shall apply to stock issued after August 10, 
     1993.

     SEC. 104. EXEMPTION FROM TAX FOR GAIN ON SALE OF PRINCIPAL 
                   RESIDENCE.

       (a) In General.--Section 121 (relating to one-time 
     exclusion of gain from sale of principal residence by 
     individual who has attained age 55) is amended to read as 
     follows:

     ``SEC. 121. EXCLUSION OF GAIN FROM SALE OF PRINCIPAL 
                   RESIDENCE.

       ``(a) Exclusion.--Gross income shall not include gain from 
     the sale or exchange of property if, during the 5-year period 
     ending on the date of the sale or exchange, such property has 
     been owned and used by the taxpayer as the taxpayer's 
     principal residence for periods aggregating 2 years or more.
       ``(b) Limitations.--
       ``(1) Dollar limitation.--The amount of gain excluded from 
     gross income under subsection (a) with respect to any sale or 
     exchange shall not exceed $250,000 ($500,000 in the case of a 
     joint return where both spouses meet the use requirement of 
     subsection (a)).
       ``(2) Application to only 1 sale or exchange every 2 
     years.--

       ``(A) In general.--Subsection (a) shall not apply to any 
     sale or exchange by the taxpayer if, during the 2-year period 
     ending on the date of such sale or exchange, there was any 
     other sale or exchange by the taxpayer or his spouse to which 
     subsection (a) applied.
       ``(B) Premarriage sales by spouse not taken into account.--
     If, but for this subparagraph, subsection (a) would not apply 
     to a sale or exchange by a married individual by reason of a 
     sale or exchange by such individual's spouse before their 
     marriage--
       ``(i) subparagraph (A) shall be applied without regard to 
     the sale or exchange by such individual's spouse, but
       ``(ii) the amount of gain excluded from gross income under 
     subsection (a) with respect to the sale or exchange by such 
     individual shall not exceed $250,000.
       ``(C) Pre-1997 sales not taken into account.--Subparagraph 
     (A) shall be applied without regard to any sale or exchange 
     before January 1, 1997.
       ``(c) Exclusion for Taxpayers Failing To Meet Certain 
     Requirements.--
       ``(1) In general.--In the case of a sale or exchange to 
     which this subsection applies, the ownership and use 
     requirements of subsection (a) shall not apply and subsection 
     (b)(2) shall not apply; but the amount of gain excluded from 
     gross income under subsection (a) with respect to such sale 
     of exchange shall not exceed--
       ``(A) the amount which bears the same ratio to the amount 
     which would be so excluded if such requirements had been met, 
     as
       ``(B) the shorter of--
       ``(i) the aggregate periods, during the 5-year period 
     ending on the date of such sale or exchange, such property 
     has been owned and used by the taxpayer as the taxpayer's 
     principal residence, or
       ``(ii) the period after the date of the most recent prior 
     sale or exchange by the taxpayer or his spouse to which 
     subsection (a) applied and before the date of such sale or 
     exchange,
     bears to 2 years.
       ``(2) Sales and exchanges to which subsection applies.--
     This subsection shall apply to any sale or exchange if--

[[Page S356]]

       ``(A) subsection (a) would not (but for this subsection) 
     apply to such sale or exchange by reason of--
       ``(i) a failure to meet the ownership and use requirements 
     of subsection (a), or
       ``(ii) subsection (b)(2), and
       ``(B) such sale or exchange is by reason of a change in 
     place of employment, health, or other unforeseen 
     circumstances.
       ``(d) Special Rules.--
       ``(1) Joint returns.--For purposes of this section, if a 
     husband and wife make a joint return for the taxable year of 
     the sale or exchange of property, subsection (a) shall, 
     subject to the provisions of subsection (b), apply if either 
     spouse meets the ownership and use requirements of subsection 
     (a) with respect to such property.
       ``(2) Property of deceased spouse.--For purposes of this 
     section, in the case of an unmarried individual whose spouse 
     is deceased on the date of the sale or exchange of property, 
     the period such unmarried individual owned such property 
     shall include the period such deceased spouse held such 
     property before death.
       ``(3) Tenant-stockholder in cooperative housing 
     corporation.--For purposes of this section, if the taxpayer 
     holds stock as a tenant-stockholder (as defined in section 
     216) in a cooperative housing corporation (as defined in such 
     section), then--
       ``(A) the holding requirements of subsection (a) shall be 
     applied to the holding of such stock, and
       ``(B) the use requirements of subsection (a) shall be 
     applied to the house or apartment which the taxpayer was 
     entitled to occupy as such stockholder.
       ``(4) Involuntary conversions.--
       ``(A) In general.--For purposes of this section, the 
     destruction, theft, seizure, requisition, or condemnation of 
     property shall be treated as the sale of such property.
       ``(B) Application of section 1033.--In applying section 
     1033 (relating to involuntary conversions), the amount 
     realized from the sale or exchange of property shall be 
     treated as being the amount determined without regard to this 
     section, reduced by the amount of gain not included in gross 
     income pursuant to this section.
       ``(C) Property acquired after involuntary conversion.--If 
     the basis of the property sold or exchanged is determined (in 
     whole or in part) under section 1033(b) (relating to basis of 
     property acquired through involuntary conversion), then the 
     holding and use by the taxpayer of the converted property 
     shall be treated as holding and use by the taxpayer of the 
     property sold or exchanged.
       ``(5) Recognition of gain attributable to depreciation.--
     Subsection (a) shall not apply to so much of the gain from 
     the sale of any property as does not exceed the portion of 
     the depreciation adjustments (as defined in section 
     1250(b)(3)) attributable to periods after December 31, 1996, 
     in respect of such property.
       ``(6) Determination of use during periods of out-of-
     residence care.--In the case of a taxpayer who--
       ``(A) becomes physically or mentally incapable of self-
     care, and
       ``(B) owns property and uses such property as the 
     taxpayer's principal residence during the 5-year period 
     described in subsection (a) for periods aggregating at least 
     1 year,

     then the taxpayer shall be treated as using such property as 
     the taxpayer's principal residence during any time during 
     such 5-year period in which the taxpayer owns the property 
     and resides in any facility (including a nursing home) 
     licensed by a State or political subdivision to care for an 
     individual in the taxpayer's condition.
       ``(7) Determination of marital status.--In the case of any 
     sale or exchange, for purposes of this section--
       ``(A) the determination of whether an individual is married 
     shall be made as of the date of the sale or exchange, and
       ``(B) an individual legally separated from his spouse under 
     a decree of divorce or of separate maintenance shall not be 
     considered as married.
       ``(e) Denial of Exclusion for Expatriates.--This section 
     shall not apply to any sale or exchange by an individual if 
     the treatment provided by section 877(a)(1) applies to such 
     individual.
       ``(f) Election To Have Section Not Apply.--This section 
     shall not apply to any sale or exchange with respect to which 
     the taxpayer elects not to have this section apply.
       ``(g) Residences Acquired in Rollovers Under Section 
     1034.--For purposes of this section, in the case of property 
     the acquisition of which by the taxpayer resulted under 
     section 1034 (as in effect on the day before the date of the 
     enactment of this sentence) in the nonrecognition of any part 
     of the gain realized on the sale or exchange of another 
     residence, in determining the period for which the taxpayer 
     has owned and used such property as the taxpayer's principal 
     residence, there shall be included the aggregate periods for 
     which such other residence (and each prior residence taken 
     into account under section 1223(7) in determining the holding 
     period of such property) had been so owned and used.''
       (b) Repeal of Nonrecognition of Gain on Rollover of 
     Principal Residence.--Section 1034 (relating to rollover of 
     gain on sale of principal residence) is hereby repealed.
       (c) Conforming Amendments.--
       (1) The following provisions of the Internal Revenue Code 
     of 1986 are each amended by striking ``section 1034'' and 
     inserting ``section 121'': sections 25(e)(7), 56(e)(1)(A), 
     56(e)(3)(B)(i), 143(i)(1)(C)(i)(I), 163(h)(4)(A)(i)(I), 
     280A(d)(4)(A), 464(f)(3)(B)(i), 1033(h)(3), 1274(c)(3)(B), 
     6334(a)(13), and 7872(f)(11)(A).
       (2) Paragraph (4) of section 32(c) is amended by striking 
     ``(as defined in section 1034(h)(3))'' and by adding at the 
     end the following new sentence: ``For purposes of the 
     preceding sentence, the term `extended active duty' means any 
     period of active duty pursuant to a call or order to such 
     duty for a period in excess of 90 days or for an indefinite 
     period.''
       (3) Subparagraph (A) of 143(m)(6) is amended by inserting 
     ``(as in effect on the day before the date of the enactment 
     of the Targeted Investment Incentive and Economic Growth Act 
     of 1997)'' after ``1034(e)''.
       (4) Subsection (e) of section 216 is amended by striking 
     ``such exchange qualifies for nonrecognition of gain under 
     section 1034(f)'' and inserting ``such dwelling unit is used 
     as his principal residence (within the meaning of section 
     121)''.
       (5) Section 512(a)(3)(D) is amended by inserting ``(as in 
     effect on the day before the date of the enactment of the 
     Targeted Investment Incentive and Economic Growth Act of 
     1997)'' after ``1034''.
       (6) Paragraph (7) of section 1016(a) is amended by 
     inserting ``(as in effect on the day before the date of the 
     enactment of the Targeted Investment Incentive and Economic 
     Growth Act of 1997)'' after ``1034'' and by inserting ``(as 
     so in effect)'' after ``1034(e)''.
       (7) Paragraph (3) of section 1033(k) is amended to read as 
     follows:
       ``(3) For exclusion from gross income of gain from 
     involuntary conversion of principal residence, see section 
     121.''
       (8) Subsection (e) of section 1038 is amended to read as 
     follows:
       ``(e) Principal residences.--If--
       ``(1) subsection (a) applies to a reacquisition of real 
     property with respect to the sale of which gain was not 
     recognized under section 121 (relating to gain on sale of 
     principal residence); and
       ``(2) within 1 year after the date of the reacquisition of 
     such property by the seller, such property is resold by him,

     then, under regulations prescribed by the Secretary, 
     subsections (b), (c), and (d) of this section shall not apply 
     to the reacquisition of such property and, for purposes of 
     applying section 121, the resale of such property shall be 
     treated as a part of the transaction constituting the 
     original sale of such property.''
       (9) Paragraph (7) of section 1223 is amended by inserting 
     ``(as in effect on the day before the date of the enactment 
     of the Targeted Investment Incentive and Economic Growth Act 
     of 1997)'' after ``1034''.
       (10) Paragraph (7) of section 1250(d) is amended to read as 
     follows:
       ``(7) Disposition of principal residence.--Subsection (a) 
     shall not apply to a disposition of property to the extent 
     used by the taxpayer as his principal residence (within the 
     meaning of section 121, relating to gain on sale of principal 
     residence).''
       (11) Subsection (c) of section 6012 is amended by striking 
     ``(relating to one-time exclusion of gain from sale of 
     principal residence by individual who has attained age 55)'' 
     and inserting ``(relating to gain from sale of principal 
     residence)''.
       (12) Paragraph (2) of section 6212(c) is amended by 
     striking subparagraph (C) and by redesignating the succeeding 
     subparagraphs accordingly.
       (13) Section 6504 is amended by striking paragraph (4) and 
     by redesignating the succeeding paragraphs accordingly.
       (14) The item relating to section 121 in the table of 
     sections for part III of subchapter B of chapter 1 is amended 
     to read as follows:

``Sec. 121. Exclusion of gain from sale of principal residence.''
       (15) The table of sections for part III of subchapter O of 
     chapter 1 of such Code is amended by striking the item 
     relating to section 1034.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to sales and exchanges after December 31, 1996.
       (2) Binding contracts, etc.--At the election of the 
     taxpayer, the amendments made by this section shall not apply 
     to a sale or exchange after December 31, 1996, if--
       (A) such sale or exchange is pursuant to a contract which 
     was binding on the date of the enactment of this Act, or
       (B) without regard to such amendments, gain would not be 
     recognized under section 1034 of the Internal Revenue Code of 
     1986 (as in effect on the day before the date of the 
     enactment of this Act) on such sale or exchange by reason of 
     a new residence acquired on or before such date.

     This paragraph shall not apply to any sale or exchange by an 
     individual if the treatment provided by section 877(a)(1) of 
     the Internal Revenue Code of 1986 applies to such individual.
                      TITLE II--RETIREMENT SAVINGS

     SEC. 201. INCREASE IN DEDUCTION FOR CONTRIBUTIONS TO 
                   INDIVIDUAL RETIREMENT PLANS.

       (a) In General.--Section 219(b)(1)(A) is amended by 
     striking ``$2,000'' and inserting ``$2,500''.
       (b) Conforming Amendments.--Subsections (a)(1), (b), and 
     (j) of section 408 are each amended by striking ``$2,000'' 
     each place it appears and inserting ``$2,500''.

[[Page S357]]

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

     SEC. 202. ROLLOVER OF GAIN FROM SALE OF FARM ASSETS TO 
                   INDIVIDUAL RETIREMENT PLANS.

       (a) In General.--Part III of subchapter O of chapter 1 
     (relating to common nontaxable exchanges) is amended by 
     inserting after section 1034 the following new section:

     ``SEC. 1034A. ROLLOVER OF GAIN ON SALE OF FARM ASSETS INTO 
                   ASSET ROLLOVER ACCOUNT.

       ``(a) Nonrecognition of Gain.--Subject to the limits of 
     subsection (c), if a taxpayer has a qualified net farm gain 
     from the sale of a qualified farm asset, then, at the 
     election of the taxpayer, gain (if any) from such sale shall 
     be recognized only to the extent such gain exceeds the 
     contributions to 1 or more asset rollover accounts of the 
     taxpayer for the taxable year in which such sale occurs.
       ``(b) Asset Rollover Account.--
       ``(1) General rule.--Except as provided in this section, an 
     asset rollover account shall be treated for purposes of this 
     title in the same manner as an individual retirement plan.
       ``(2) Asset rollover account.--For purposes of this title, 
     the term `asset rollover account' means an individual 
     retirement plan which is designated at the time of the 
     establishment of the plan as an asset rollover account. Such 
     designation shall be made in such manner as the Secretary may 
     prescribe.
       ``(c) Contribution Rules.--
       ``(1) No deduction allowed.--No deduction shall be allowed 
     under section 219 for a contribution to an asset rollover 
     account.
       ``(2) Aggregate contribution limitation.--Except in the 
     case of rollover contributions, the aggregate amount for all 
     taxable years which may be contributed to all asset rollover 
     accounts established on behalf of an individual shall not 
     exceed--
       ``(A) $400,000 ($200,000 in the case of a separate return 
     by a married individual), reduced by
       ``(B) the amount by which the aggregate value of the assets 
     held by the individual (and spouse) in individual retirement 
     plans (other than asset rollover accounts) exceeds $100,000.

     The determination under subparagraph (B) shall be made as of 
     the close of the taxable year for which the determination is 
     being made.
       ``(3) Annual contribution limitations.--
       ``(A) General rule.--The aggregate contribution which may 
     be made in any taxable year to all asset rollover accounts 
     shall not exceed the lesser of--
       ``(i) the qualified net farm gain for the taxable year, or
       ``(ii) an amount determined by multiplying the number of 
     years the taxpayer is a qualified farmer by $10,000.
       ``(B) Spouse.--In the case of a married couple filing a 
     joint return under section 6013 for the taxable year, 
     subparagraph (A) shall be applied by substituting `$20,000' 
     for `$10,000' for each year the taxpayer's spouse is a 
     qualified farmer.
       ``(4) Time when contribution deemed made.--For purposes of 
     this section, a taxpayer shall be deemed to have made a 
     contribution to an asset rollover account 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 (not including extensions thereof).
       ``(d) Qualified Net Farm Gain; Etc.--For purposes of this 
     section--
       ``(1) Qualified net farm gain.--The term `qualified net 
     farm gain' means the lesser of--
       ``(A) the net capital gain of the taxpayer for the taxable 
     year, or
       ``(B) the net capital gain for the taxable year determined 
     by only taking into account gain (or loss) in connection with 
     a disposition of a qualified farm asset.
       ``(2) Qualified farm asset.--The term `qualified farm 
     asset' means an asset used by a qualified farmer in the 
     active conduct of the trade or business of farming (as 
     defined in section 2032A(e)).
       ``(3) Qualified farmer.--
       ``(A) In general.--The term `qualified farmer' means a 
     taxpayer who--
       ``(i) during the 5-year period ending on the date of the 
     disposition of a qualified farm asset materially participated 
     in the trade or business of farming, and
       ``(ii) owned (or who with the taxpayer's spouse owned) 50 
     percent or more of such trade or business during such 5-year 
     period.
       ``(B) Material participation.--For purposes of this 
     paragraph, a taxpayer shall be treated as materially 
     participating in a trade or business if the taxpayer meets 
     the requirements of section 2032A(e)(6).
       ``(4) Rollover contributions.--Rollover contributions to an 
     asset rollover account may be made only from other asset 
     rollover accounts.
       ``(e) Distribution Rules.--For purposes of this title, the 
     rules of paragraphs (1) and (2) of section 408(d) shall apply 
     to any distribution from an asset rollover account.
       ``(f) Individual Required To Report Qualified 
     Contributions.--
       ``(1) In general.--Any individual who--
       ``(A) makes a contribution to any asset rollover account 
     for any taxable year, or
       ``(B) receives any amount from any asset rollover account 
     for any taxable year,

     shall include on the return of tax imposed by chapter 1 for 
     such taxable year and any succeeding taxable year (or on such 
     other form as the Secretary may prescribe) information 
     described in paragraph (2).
       ``(2) Information required to be supplied.--The information 
     described in this paragraph is information required by the 
     Secretary which is similar to the information described in 
     section 408(o)(4)(B).
       ``(3) Penalties.--For penalties relating to reports under 
     this paragraph, see section 6693(b).''
       (b) Contributions Not Deductible.--Section 219(d) (relating 
     to other limitations and restrictions) is amended by adding 
     at the end the following new paragraph:
       ``(5) Contributions to asset rollover accounts.--No 
     deduction shall be allowed under this section with respect to 
     a contribution under section 1034A.''
       (c) Excess Contributions.--
       (1) In general.--Section 4973 (relating to tax on excess 
     contributions to individual retirement accounts, certain 
     section 403(b) contracts, and certain individual retirement 
     annuities) is amended by adding at the end the following new 
     subsection:
       ``(e) Asset Rollover Accounts.--For purposes of this 
     section, in the case of an asset rollover account referred to 
     in subsection (a)(1), the term `excess contribution' means 
     the excess (if any) of the amount contributed for the taxable 
     year to such account over the amount which may be contributed 
     under section 1034A.''
       (2) Conforming amendments.--
       (A) Section 4973(a)(1) is amended by inserting ``an asset 
     rollover account (within the meaning of section 1034A),'' 
     after the comma at the end.
       (B) The heading for section 4973 is amended by inserting 
     ``ASSET ROLLOVER ACCOUNTS,'' after ``CONTRACTS''.
       (C) The table of sections for chapter 43 is amended by 
     inserting ``asset rollover accounts,'' after ``contracts'' in 
     the item relating to section 4973.
       (d) Technical Amendments.--
       (1) Section 408(a)(1) (defining individual retirement 
     account) is amended by inserting ``or a qualified 
     contribution under section 1034A,'' before ``no 
     contribution''.
       (2) Section 408(d)(5)(A) is amended by inserting ``or 
     qualified contributions under section 1034A'' after 
     ``rollover contributions''.
       (3)(A) Section 6693(b)(1)(A) is amended by inserting ``or 
     1034A(f)(1)'' after ``408(o)(4)''.
       (B) Section 6693(b)(2) is amended by inserting ``or 
     1034A(f)(1)'' after ``408(o)(4)''.
       (4) The table of sections for part III of subchapter O of 
     chapter 1 is amended by inserting after the item relating to 
     section 1034 the following new item:

``Sec. 1034A. Rollover of gain on sale of farm assets into asset 
              rollover account.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to sales and exchanges after the date of the 
     enactment of this Act.
                  TITLE III--PERFORMANCE STOCK OPTIONS

     SEC. 301. PERFORMANCE STOCK OPTIONS.

       (a) In General.--Part II of subchapter D of chapter 1 
     (relating to certain stock options) is amended by 
     redesignating section 424 as section 425 and by inserting 
     after section 423 the following new section:

     ``SEC. 424. PERFORMANCE STOCK OPTIONS.

       ``(a) In General.--Section 421(a) shall apply with respect 
     to the transfer of a share of stock to any person pursuant to 
     the exercise of a performance stock option if no disposition 
     of such share is made by such person within 1 year after the 
     transfer of such share to such person.
       ``(b) Performance Stock Option.--For purposes of this 
     part--
       ``(1) In general.--The term `performance stock option' 
     means an option to purchase stock of any corporation 
     described in paragraph (4) which is granted to any person--
       ``(A) in connection with the performance of services for an 
     entity described in paragraph (4), and
       ``(B) upon the attainment of performance goals established 
     by the entity.
       ``(2) Additional requirements.--An option shall not be 
     treated as a performance stock option unless the following 
     requirements are met:
       ``(A) Nondiscrimination.--Either--
       ``(i) the option is granted to an employee who, at the time 
     of the grant, is not a highly compensated employee, or
       ``(ii) immediately after the grant of the option, employees 
     who are not highly compensated employees hold performance 
     share options which permit the acquisition of at least 50 
     percent of all shares which may be acquired pursuant to all 
     performance stock options outstanding (whether or not 
     exercisable) as of such time.

     For purposes of clause (ii), only that portion of the options 
     held by persons other than nonhighly compensated employees 
     which results in the requirements of clause (ii) not being 
     met shall be treated as options which are not performance 
     stock options, and such portion shall be allocated among 
     options held by such persons in such manner as the Secretary 
     may prescribe.
       ``(B) Specific number of options.--The option is granted 
     pursuant to a plan that includes either--
       ``(i) the aggregate number of shares that may be issued 
     under options granted under the plan, or

[[Page S358]]

       ``(ii) a method by which the aggregate number of shares 
     that may be issued under options granted under the plan can 
     be determined (without regard to whether such aggregate 
     number may change under such method),

     and which is approved by the stockholders of the granting 
     corporation within 12 months before or after the date such 
     plan is adopted.
       ``(C) Time when option granted.--The option is granted 
     within 10 years after the date the plan described in 
     subparagraph (B) is adopted, or the date such plan is 
     approved by the stockholders, whichever is earlier.
       ``(D) Time for exercising option.--The option by its terms 
     is not exercisable after the expiration of 10 years from the 
     date such option is granted.
       ``(E) Option price.--Except as provided in paragraph (6) of 
     subsection (c), the option price is not less than the fair 
     market value of the stock at the time the option is granted.
       ``(F) Transferability.--The option by its terms is not 
     transferable by the person holding the option, other than--
       ``(i) in the case of an individual, by will or the laws of 
     descent and distribution, or pursuant to a qualified domestic 
     relations order (as defined in subsection (p) of section 
     414), and
       ``(ii) in the case of any other person, by any transaction 
     in which gain or loss is not recognized in whole or in part.
       ``(3) Election not to treat option as performance stock 
     option.--An option shall not be treated as a performance 
     stock option if--
       ``(A) as of the time the option is granted the terms of 
     such option provide that it will not be treated as a 
     performance stock option, or
       ``(B) as of the time such option is exercised the grantor 
     and holder agree that such option will not be treated as a 
     performance stock option.
       ``(4) Entities to which section applies.--This section 
     shall apply to an option granted to a person who performs 
     services for--
       ``(A) the corporation issuing the option, or its parent or 
     subsidiary corporation,
       ``(B) a partnership in which the corporation issuing the 
     option holds (at the time of the grant) a capital or profits 
     interest representing at least 20 percent of the total 
     capital or profits interest of the partnership, or
       ``(C) a corporation or a parent or subsidiary corporation 
     of such corporation issuing or assuming a stock option in a 
     transaction to which section 425(a) applies.
       ``(5) Highly compensated employee.--For purposes of this 
     subsection, the term `highly compensated employee' has the 
     meaning given such term by section 414(q).
       ``(c) Special Rules.--
       ``(1) Good faith efforts to value stock.--If a share of 
     stock is acquired pursuant to the exercise by any person of 
     an option which would fail to qualify as a performance stock 
     option under subsection (b) because there was a failure in an 
     attempt, made in good faith, to meet the requirement of 
     subparagraph (E) of subsection (b)(2), the requirement of 
     subparagraph (E) of subsection (b)(2) shall be considered to 
     have been met.
       ``(2) Permissible provisions.--An option that meets the 
     requirements of subsection (b) shall be treated as a 
     performance stock option even if--
       ``(A) the option holder may pay for the stock with stock of 
     the corporation granting the option,
       ``(B) the option holder has the right to receive property 
     at the time of the exercise of the option,
       ``(C) the right to exercise all or any portion of a 
     performance stock option may be subject to any condition, 
     contingency or other criteria (including, without limitation, 
     the continued performance of services, achievement of 
     performance objectives, or the occurrence of any event) which 
     are determined in accordance with the provisions of the plan 
     or the terms of such option, or
       ``(D) the option is subject to any condition not 
     inconsistent with the provisions of subsection (b).
       ``(3) Fair market value.--For purposes of this section, the 
     fair market value of stock shall be determined without regard 
     to any restriction other than a restriction that, by its 
     terms, will never lapse.
       ``(4) Definition of parent and subsidiary corporations.--
     For purposes of this section, the terms `parent corporation' 
     and `subsidiary corporation' have the meanings given such 
     terms by subsections (e) and (f) of section 425 except that 
     such subsections shall be applied by substituting `20 
     percent' for `50 percent' each place it appears.
       ``(5) Performance criteria.--In the case of a performance 
     stock option that provides that its exercise is subject to 
     any conditions or criteria described in subparagraph (C) of 
     paragraph (2), the date or time the option is granted with 
     respect to each share that may be acquired shall be the date 
     or time the original performance share option is granted and 
     subject to the provisions of section 425(h), no portion of 
     the option shall be treated as granted at any other time.
       ``(6) Conversion of options.--If--
       ``(A) there is a transfer of an incentive stock option in 
     exchange for a performance stock option, and
       ``(B) the number of shares that may be acquired pursuant to 
     such performance stock option and the transferred incentive 
     stock option are the same,

     then the option acquired shall qualify as a performance stock 
     option if the option price pursuant to the performance share 
     option is no less than the option price under the transferred 
     incentive stock option.''
       (b) Conforming Amendments.--
       (1) Section 421(a) is amended by striking ``or 423(a)'' and 
     inserting ``, 423(a), or 424(a)''.
       (2) Section 421(b) is amended--
       (A) by striking ``or 423(a)'' and inserting ``, 423(a), or 
     424(a)'', and
       (B) by striking ``or 423(a)(1)'' and inserting ``423(a)(1), 
     or 424(a)''.
       (3) Section 421(c)(1)(A) is amended by inserting ``and the 
     holding period requirement of section 424(a)'' after 
     ``423(a)''.
       (4)(A) Sections 421(a)(2), 422(a)(2), and 423(a)(2) are 
     each amended by striking ``424(a)'' and inserting ``425(a)''.
       (B) Clause (ii) of section 402(e)(4)(E) is amended by 
     striking ``424'' and inserting ``425''.
       (5) Section 423(b)(3) is amended by striking ``424(d)'' and 
     inserting ``425(d)''.
       (6) Section 425(a), as redesignated by subsection (a), is 
     amended by striking ``424(a)'' and inserting ``425(a)''.
       (7) Section 425(c)(3)(A)(ii), as redesignated by subsection 
     (a), is amended by striking ``or 423(a)(1)'' and inserting 
     ``, 423(a)(1), or 424(a)''.
       (8) Section 425(g), as redesignated by subsection (a), is 
     amended by striking ``and 423(a)(2)'' and inserting ``, 
     423(a)(2) and 424(b)(4) (as modified by section 424(c)(4))''.
       (9) Section 425(j), as redesignated by subsection (a) 
     (relating to cross-references), is amended by inserting 
     ``performance stock option'' after ``employee stock purchase 
     plans,''.
       (10) Section 1042(c)(1)(B)(ii) is amended by striking ``or 
     423'' and inserting ``423, or 424''.
       (11)(A) Section 6039(a)(1) is amended by inserting ``or 
     performance stock option'' after ``incentive stock option''.
       (B) Section 6039(b)(1) is amended by inserting ``, 
     performance share option,'' after ``incentive stock option''.
       (C) Section 6039(c) is amended by striking ``and'' at the 
     end of paragraph (1), by striking the period at the end of 
     paragraph (2) and inserting ``, and'' and by adding at the 
     end the following new paragraph:
       ``(3) the term `performance share option', see 424(b).''
       (12) The table of sections for part II of subchapter D of 
     chapter 1 is amended by striking the item relating to section 
     424 and inserting the following new items:

``Sec. 424. Performance stock options.

``Sec. 425. Definitions and special rules.''

     SEC. 302. TAX TREATMENT OF GAIN ON PERFORMANCE SHARE OPTIONS.

       (a) Exclusion.--
       (1) In general.--Part I of subchapter P of chapter 1 
     (relating to capital gains and losses) is amended by adding 
     at the end the following new section:

     ``SEC. 1203. 50-PERCENT EXCLUSION FOR GAIN FROM STOCK 
                   ACQUIRED THROUGH PERFORMANCE STOCK OPTIONS.

       ``(a) General Rule.--Gross income shall not include 50 
     percent of the gain from the disposition of any stock 
     acquired pursuant to the exercise of a performance stock 
     option if such disposition occurs more than 2 years after the 
     date on which such option was exercised with respect to such 
     stock.
       ``(b) Definitions and Rules.--For purposes of this 
     section--
       ``(1) Performance stock option.--The term `performance 
     stock option' has the meaning given such term by section 
     424(b).
       ``(2) Certain acquisitions disregarded.--If stock described 
     in subsection (a) is disposed of and the basis of the person 
     acquiring the stock is determined by reference to the basis 
     of the stock in the hands of the person who acquired it 
     through exercise of the performance stock option, such person 
     shall be treated as acquiring such stock pursuant to such 
     option on the date such stock was acquired pursuant to the 
     exercise of such option.
       ``(3) Exercise by estate.--If a performance stock option is 
     exercised after the death of an individual holder by the 
     estate of the decedent, or by a person who acquired the right 
     to exercise such option by bequest or inheritance or by 
     reason of the death of the decedent, the 2-year holding 
     requirement of subsection (a) shall not apply to the 
     disposition by such estate or person.''
       (2) Conforming amendments.--
       (A) Section 172(d)(2) (relating to modifications with 
     respect to net operating loss deduction) is amended to read 
     as follows:
       ``(2) Capital gains and losses of taxpayers other than 
     corporations.--In the case of a taxpayer other than a 
     corporation--
       ``(A) the amount deductible on account of losses from sales 
     or exchanges of capital assets shall not exceed the amount 
     includable on account of gains from sales or exchanges of 
     capital assets, and
       ``(B) the exclusion provided by section 1202 shall not be 
     allowed.''
       (B) 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 described in section 1202(a), proper adjustment shall be 
     made for any exclusion allowable to the estate or trust under 
     section 1202 or 1203. In the case of a trust, the deduction 
     allowed by this subsection shall be subject to section 681 
     (relating to unrelated business income).''
       (C) Paragraph (3) of section 643(a) is amended by adding at 
     the end thereof the following new sentence: ``The exclusion

[[Page S359]]

     under section 1202 or 1203 shall not be taken into account.''
       (D) Paragraph (4) of section 691(c) is amended by striking 
     ``1202, and 1211'' and inserting ``1202, 1203, and 1211''.
       (E) The second sentence of paragraph (2) of section 871(a) 
     is amended by inserting ``such gains and losses shall be 
     determined without regard to sections 1202 and 1203 and'' 
     after ``except that''.
       (F) The table of sections for part I of subchapter P of 
     chapter 1 is amended by adding after the item relating to 
     section 1202 the following new item:

``Sec. 1203. 50-percent exclusion for gain from stock acquired through 
              performance stock options.''
       (b) Treatment for Wage Withholding and Employment Taxes.--
       (1) FICA taxes.--Section 3121(a) (defining wages) is 
     amended by striking ``or'' at the end of paragraph (20), by 
     striking the period at the end of paragraph (21) and 
     inserting ``, or'', and by adding after paragraph (21) the 
     following new paragraph:
       ``(22) any gain from the exercise of a performance stock 
     option (as defined in section 424(b)) or from the disposition 
     of stock acquired pursuant to the exercise of such a 
     performance stock option.''
       (2) FUTA taxes.--Section 3306(b) (defining wages) is 
     amended by striking ``or'' at the end of paragraph (16), by 
     striking the period at the end of paragraph (17) and 
     inserting ``, or'', and by adding after paragraph (17) the 
     following new paragraph:
       ``(18) any gain described in section 3121(a)(22).''
       (3) Wage withholding.--
       (A) Section 3401(a) (defining wages) is amended by striking 
     ``or'' at the end of paragraph (20), by striking the period 
     at the end of paragraph (21) and inserting ``, or'', and by 
     adding at the end the following new paragraph:
       ``(22) any gain from the exercise of a performance stock 
     option (as defined in section 424(b)) or from the disposition 
     of stock acquired pursuant to such a performance stock 
     option.''
       (B) Section 421(b) (relating to effect of disqualifying 
     disposition) is amended by adding at the end the following 
     new sentence: ``A deduction to the employer corporation in 
     the case of a transfer pursuant to an option described in 
     section 422, 423, or 424 shall not be disallowed by reason of 
     a failure to withhold tax under chapter 24 with respect to 
     gain on stock acquired in the transfer.''

     SEC. 303. EFFECTIVE DATE.

       The amendments made by this title shall apply to options 
     granted after the date of the enactment of this Act.
                  TITLE IV--EMPLOYER-PROVIDED TRAINING

     SEC. 401. EXTENSION OF EXCLUSION FOR EDUCATIONAL ASSISTANCE 
                   PROGRAMS.

       (a) In General.--Section 127 is amended by striking 
     subsection (d) and by redesignating subsection (e) as 
     subsection (d).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 402. STUDY OF NONDISCRIMINATION RULES APPLICABLE TO 
                   EDUCATIONAL ASSISTANCE PROGRAMS.

       (a) Study.--The Secretary of Labor, in consultation with 
     the Secretary of the Treasury, shall conduct a study which 
     examines--
       (1) the pattern in which taxpayers providing job-related 
     training and education assistance programs under section 127 
     of the Internal Revenue Code of 1986 extend such benefits to 
     highly compensated employees and nonhighly compensated 
     employees;
       (2) the merits and administrative feasibility of applying 
     nondiscrimination rules to job-related training and 
     educational assistance programs under section 127 of the 
     Internal Revenue Code of 1986 which are similar to the 
     nondiscrimination rules applicable to employer-provided 
     pension plans; and
       (3) the merits and administrative feasibility of 
     conditioning the exclusion for job-related training and 
     section 127 assistance on an employee remaining with the 
     employer for at least 1 year after receiving the training or 
     educational assistance.
       (b) Report.--Not later than 9 months after the date of the 
     enactment of this Act, the Secretary of Labor shall report to 
     the Congress the results of the study conducted under 
     subsection (a), including any recommendations for legislation 
     as the Secretary determines appropriate.
                       TITLE V--ESTATE TAX RELIEF

     SEC. 501. 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) $900,000, reduced by the amount of any exclusion 
     allowed under this section with respect to the estate of a 
     previously deceased spouse of the decedent.
       ``(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-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--

[[Page S360]]

       ``(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
       ``(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).''.
       (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. 502. PORTION OF ESTATE TAX SUBJECT TO 4-PERCENT INTEREST 
                   RATE INCREASED TO $1,600,000.

       (a) In General.--Subparagraph (B) of section 6601(j)(2) 
     (defining 4-percent portion) is amended by striking 
     ``$345,800'' and inserting ``$600,800''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying after December 31, 
     1996.

     SEC. 503. CERTAIN CASH RENTALS OF FARMLAND NOT TO CAUSE 
                   RECAPTURE OF SPECIAL ESTATE TAX VALUATION.

       (a) In General.--Subsection (c) of section 2032A (relating 
     to tax treatment of dispositions and failures to use for 
     qualified use) is amended by adding at the end the following 
     new paragraph:
       ``(8) Certain cash rental not to cause recapture.--For 
     purposes of this subsection, a qualified heir shall not be 
     treated as failing to use property in a qualified use solely 
     because such heir rents such property on a net cash basis to 
     a member of the decedent's family, but only if, during the 
     period of the lease, such member of the decedent's family 
     uses such property in a qualified use.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to rentals occurring after December 
     31, 1976.
                  TITLE VI--TRANSPORTATION INVESTMENT

     SEC. 601. FINDINGS.

       Congress finds that--
       (1) decaying roads and bridges are clogging the economic 
     lifelines and hampering growth of communities around the 
     country, costing nearly $40,000,000,000 in annual losses from 
     traffic congestion alone;
       (2) with ``just-in-time'' manufacturing a critical aspect 
     of our economic competitiveness, a modern, efficient 
     transportation system is more vital now than ever;
       (3) user fee revenues continue to flow into our 
     transportation trust funds for their intended purpose of 
     infrastructure investment;
       (4) Federal budget constraints have prevented States from 
     fully utilizing all amounts of the transportation trust fund 
     revenues made available to them;

[[Page S361]]

       (5) at the same time, recent Federal initiatives have 
     equipped States with new infrastructure financing tools that 
     help attract private investment, stimulate the Nation's 
     economy, and create jobs; and
       (6) enabling States to use a portion of their unobligated 
     balances of apportioned Highway Trust Fund revenues via these 
     new financing tools will maximize the benefits of vitally 
     needed infrastructure investments.

     SEC. 602. PROGRAM STRUCTURE.

       (a) In General.--The Secretary of Transportation (referred 
     to in this title as the ``Secretary'') shall make available 
     to a State a portion of the State's unobligated balance in 
     accordance with section 603.
       (b) Qualifying Project.--Federal funds made available under 
     this title may be used only to provide assistance with 
     respect to a project eligible for assistance under section 
     133(b) of title 23, United States Code.
       (c) Project Administration.--A project receiving assistance 
     under this title shall be carried out in accordance with 
     title 23, United States Code.

     SEC. 603. FUNDING.

       (a) Unobligated Balances.--
       (1) In general.--For each fiscal year, upon the request of 
     a State, the Secretary shall make available to the State to 
     carry out projects eligible for assistance under this title 
     an aggregate amount not to exceed 10 percent, as of the last 
     day of the preceding fiscal year, of the funds that were 
     apportioned to the State under sections 104(b)(1), 104(b)(3), 
     104(b)(5), 144, and 160 of title 23, United States Code, and 
     are not obligated.
       (2) Urbanized areas over 200,000.--Funds that were 
     apportioned to a State under section 104(b)(3) or 160 of 
     title 23, United States Code, and attributed to an urbanized 
     area of the State with an urbanized area population of over 
     200,000 under section 133(d)(3) of that title may be made 
     available by the Secretary under paragraph (1) only if the 
     metropolitan planning organization designated for the area 
     concurs, in writing, with that use.
       (b) Use of Funds.--
       (1) State infrastructure banks.--
       (A) In general.--A State shall contribute the amounts made 
     available to the State under subsection (a)(1) to the State 
     infrastructure bank established by the State in accordance 
     with section 350 of the National Highway System Designation 
     Act of 1995 (23 U.S.C. 101 note; 109 Stat. 618). Federal 
     funds contributed to the bank under this subparagraph shall 
     constitute a capitalization grant for the infrastructure 
     bank.
       (B) Disbursements.--The Secretary shall ensure that the 
     disbursements of the Federal funds referred to in 
     subparagraph (A) to the infrastructure bank shall be at a 
     rate consistent with historic rates for the Federal-aid 
     highway program.
       (2) Grants.--In lieu of contributing the funds to an 
     infrastructure bank, and upon approval by the Secretary, a 
     State may obligate amounts made available to the State under 
     subsection (a)(1) for a project eligible for assistance under 
     section 602(b).
       (3) No obligation limitation.--No limitation shall apply to 
     obligations of amounts made available under subsection 
     (a)(1).
                                 ______
                                 
      By Mr. MOYNIHAN:
  S. 21. A bill to establish a medical education trust fund, and for 
other purposes; to the Committee on Finance.


              the medical education trust fund act of 1997

  Mr. MOYNIHAN. Mr. President, I rise to reintroduce legislation that 
would establish a medical education trust fund to support America's 142 
accredited medical schools and 1,250 teaching hospitals. These 
institutions are national treasures; they are the very best in the 
world. Yet today they find themselves in a precarious financial 
situation as market forces reshape the health care delivery system in 
the United States. Explicit and dedicated funding for these 
institutions, which this legislation will provide, will ensure that the 
United States continues to lead the world in the quality of its health 
care system.
  This legislation requires that the public sector, through the 
Medicare and Medicaid programs, and the private sector, through an 
assessment on health insurance premiums, contribute broad-based and 
fair financial support.


                             brief history

  My particular interest in this subject began in 1994, when the 
Finance Committee took up the President's Health Security Act. I was 
chairman of the committee at the time. In January of that year, I asked 
Dr. Paul Marks, M.D., president of Memorial Sloan-Kettering Cancer 
Center in New York City, if he would arrange a seminar for me on health 
care issues. He agreed, and gathered a number of medical school deans 
together one morning in New York.
  Early on in the meeting, one of the seminarians remarked that the 
University of Minnesota might have to close its medical school. In an 
instant I realized I had heard something new. Minnesota is a place 
where they open medical schools, not close them. How, then, could this 
be? The answer was that Minnesota, being Minnesota, was a leading State 
in the growth of competitive health care markets, in which competing 
managed care organizations try to deliver services at lower costs. In 
this environment, HMO's and the like do not send patients to teaching 
hospitals, absent which you cannot have a medical school.
  We are in the midst of a great era of discovery in medical science. 
It is certainly not a time to close medical schools. This great era of 
medical discovery is occurring right here in the United States, not in 
Europe like past ages of scientific discovery. And it is centered in 
New York City. This heroic age of medical science started in the late 
1930's. Before then, the average patient was probably as well off, 
perhaps better, out of a hospital as in one. Progress from that point 
sixty years ago has been remarkable. The last few decades have brought 
us images of the inside of the human body based on the magnetic 
resonance of bodily tissues; laser surgery; micro surgery for 
reattaching limbs; and organ transplantation, among other wonders. 
Physicians are now working on a gene therapy that might eventually 
replace bypass surgery. I can hardly imagine what might be next.
  After months of hearings and debate on the President's Health 
Security Act, I became convinced that special provisions would have to 
be made for medical schools, teaching hospitals, and medical research 
if we were not to see this great moment in medical science suddenly 
constrained. To that end, when the Committee on Finance voted 12 to 8 
on July 2, 1994 to report the Health Security Act, it included a 
Graduate Medical Education and Academic Health Centers Trust Fund. The 
trust fund provided an 80-percent increase in Federal funding for 
academic medicine; as importantly, it represented stable, long-term 
funding. While nothing came of the effort to enact universal health 
care coverage, the medical education trust fund enjoyed widespread 
support. An amendment by Senator Malcolm Wallop to kill the trust fund 
by striking the source of its revenue--a 1.75-percent assessment on 
health insurance premiums--failed on a 7 to 13 vote in the Finance 
Committee.
  I continued to press the issue in the first session of the 104th 
Congress. On September 29, 1995, during Finance Committee consideration 
of budget reconciliation legislation, I offered an amendment to 
establish a similar trust fund. With a new majority in control and the 
committee in the midst of considering a highly partisan budget 
reconciliation bill, my amendment failed on a tie vote, 10 to 10. 
Notably, however, the House version of the reconciliation bill did 
include a graduate medical education trust fund. That provision 
ultimately passed both houses as part of the conference agreement, 
which was subsequently vetoed by President Clinton. The budget 
resolution for fiscal year 1997 as passed by Congress also appeared to 
assume that a similar trust fund was to be included in the Medicare 
reconciliation bill--a bill which never materialized.
  The chairman of the House Ways and Means Committee, Representative 
Bill Archer, was largely responsible for the inclusion of trust fund 
provisions in the Balanced Budget Act of 1995 and the budget resolution 
for fiscal year 1997. He and I share a strong commitment to ensuring 
the continued success of our system of medical education. Indeed, 
Chairman Archer and I were both honored last year to receive the 
American Association of Medical Colleges' Public Service Excellence 
Award.

  That is the history of this effort, briefly stated.


                          need for legislation

  Medical education is one of America's most precious public resources. 
Within our increasingly competitive health care system, it is rapidly 
becoming a public good--that is, a good from which everyone benefits, 
but for which no one is willing to pay. Therefore, it would be 
explicitly financed with contributions from all sectors of the health 
care system, not just the Medicare Program as is the case today. The 
fiscal pressures of a competitive health market are increasingly 
closing off traditional implicit revenue sources

[[Page S362]]

(such as additional payments from private payers) that have supported 
medical schools, graduate medical education, and research until now. In 
its June, 1995 Report to Congress, the Prospective Payment Assessment 
Commission [ProPAC], created to advise Congress on Medicare Hospital 
Insurance [Part A] payment, summarized the situation of teaching 
hospitals as follows:

       As competition in the health care system intensifies, the 
     additional costs borne by teaching hospitals will place them 
     at a disadvantage relative to other facilities. The role, 
     scale, function, and number of these institutions 
     increasingly will be challenged. . . . Accelerating price 
     competition in the private sector . . . is reducing the 
     ability of teaching hospitals to obtain the higher patient 
     care rates from other payers that traditionally have 
     contributed to financing the costs associated with graduate 
     medical education.

  ProPAC's June, 1996 Report to Congress confirmed that ``major 
teaching hospitals have the dual problems of higher overall losses from 
uncompensated care and less above-cost revenue from private insurers.''
  The State of New York provides a good example of what is happening as 
health care markets become more competitive. Effective at the end of 
the 1996 calendar year, New York repealed a State law that set hospital 
rates. Hospitals must now negotiate their fees with each and every 
health plan in the State. Where teaching hospitals were once guaranteed 
a payment that recognized, to some degree, its higher costs of 
providing services, the private sector is free to squeeze down payments 
to hospitals with no such recognition. While the State of New York 
operates funding pools that provide partial support for graduate 
medical education and uncompensated care, it is largely up to the 
teaching hospitals to try to win higher rates than other hospitals when 
negotiating contracts with health plans. Some may succeed in doing so, 
but most will probably not. New York's State law was unique, but the 
same process of negotiation between hospitals and private health plans 
takes place across the country. Who, in this context, will pay for the 
higher costs of operating teaching hospitals?

  It is obvious that teaching hospitals can no longer rely on higher 
payments from private payers to do so. Nor should they. The 
establishment of this trust fund, which explicitly reimburses teaching 
hospitals for the costs of graduate medical education, will ensure that 
teaching hospitals can pursue their vitally important patient care, 
training, and research missions in the face of an increasingly 
competitive health system.
  Medical schools also face an uncertain future. There are many policy 
issues that need to be examined regarding the role of medical schools 
in our health system, but two threats faced by medical schools require 
immediate attention. This legislation addresses both. First, many 
medical schools are immediately threatened by the dire financial 
condition of their affiliated teaching hospitals. Medical schools rely 
on teaching hospitals to provide a place for their faculty to practice 
and perform research, a place to send third and fourth-year medical 
school students for training, and for some direct revenues. By 
improving the financial condition of teaching hospitals, this 
legislation significantly improves the outlook for medical schools.
  The second immediate threat faced by medical schools stems from their 
reliance on a portion of the clinical practice revenue generated by 
their faculties to support their operations. As competition within the 
health system intensifies and managed care proliferates, these revenues 
are shrinking. This legislation provides payments to medical schools 
from the trust fund that are designed to partially offset this loss of 
revenue.
  None of the foregoing is meant to suggest that the new competitive 
forces reshaping health care have brought only negative results. To the 
contrary, the onset of competition has had many beneficial effects, the 
dramatic curtailing of growth in health insurance premiums being the 
most obvious. But as Monsignor Charles J. Fahey of Fordham warned in 
testimony before the Finance Committee in 1994, we must be wary of the 
``commodification of health care,'' by which he meant that health care 
is not just another commodity. We can rely on competition to hold down 
costs in much of the health system, but we must not allow it to bring a 
premature end to this great age of medical discovery, an age made 
possible by this country's exceptionally well-trained health 
professionals and superior medical schools and teaching hospitals. This 
legislation complements a competitive health market by providing tax-
supported funding for the public services provided by teaching 
hospitals and medical schools.


                       description of legislation

  Accordingly, the medical education trust fund established in the 
legislation I have just reintroduced would receive funding from three 
sources broadly representing the entire health care system: a 1.5 
percent tax on health insurance premiums--the private sector's 
contribution--Medicare and Medicaid--the latter two sources comprising 
the public sector's contribution. The relative contribution from each 
of these sources will be in rough proportion to the medical education 
costs attributable to their respective covered populations.
  Over the 5 years following enactment, the medical education trust 
fund provides average annual payments of about $17 billion. The tax on 
health insurance premium--including self-insured health plans--raises 
approximately $4 billion per year for the trust fund. Federal health 
programs contribute about $13 billion per year to the trust fund: $9 
billion in transfers of Medicare graduate medical education payments 
and $4 billion in federal Medicaid spending.
  This legislation is only a first step. It establishes the principle 
that, as a public good, medical education should be supported by 
dedicated, long-term Federal funding. To ensure that the United States 
continues to lead the world in the quality of its medical education and 
its health system as a whole, the legislation would also create a 
Medical Education Advisory Commission to conduct a thorough study and 
make recommendations, including the potential use of demonstration 
projects, regarding the following: alternative and additional sources 
of medical education financing; alternative methodologies for financing 
medical education; policies designed to maintain superior research and 
educational capacities in an increasingly competitive health system; 
the appropriate role of medical schools in graduate medical education; 
and policies designed to expand eligibility for graduate medical 
education payments to institutions other than teaching hospitals.
  Mr. President, the services provided by this Nation's teaching 
hospitals and medical schools--ground breaking research, highly skilled 
medical care, and the training of tomorrow's physicians--are vitally 
important and must be protected in this time of intense economic 
competition in the health system.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 21

       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 ``Medical 
     Education Trust Fund Act of 1997''.
       (b) Table of Contents.--The table of contents of this title 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Medical Education Trust Fund.
Sec. 3. Amendments to medicare program.
Sec. 4. Amendments to medicaid program.
Sec. 5. Assessments on insured and self-insured health plans.
Sec. 6. Medical Education Advisory Commission.
Sec. 7. Demonstration projects.

     SEC. 2. MEDICAL EDUCATION TRUST FUND.

       The Social Security Act (42 U.S.C. 300 et seq.) is amended 
     by adding after title XX the following new title:

               ``TITLE XXI--MEDICAL EDUCATION TRUST FUND


                      ``table of contents of title

``Sec. 2101. Establishment of Trust Fund.
``Sec. 2102. Payments to medical schools.
``Sec. 2103. Payments to teaching hospitals.

     ``SEC. 2101. ESTABLISHMENT OF TRUST FUND.

       ``(a) In General.--There is established in the Treasury of 
     the United States a fund to be known as the Medical Education 
     Trust Fund (in this title referred to as the `Trust Fund'), 
     consisting of the following accounts:

[[Page S363]]

       ``(1) The Medical School Account.
       ``(2) The Medicare Teaching Hospital Indirect Account.
       ``(3) The Medicare Teaching Hospital Direct Account.
       ``(4) The Non-Medicare Teaching Hospital Indirect Account.
       ``(5) The Non-Medicare Teaching Hospital Direct Account.

     Each such account shall consist of such amounts as are 
     allocated and transferred to such account under this section, 
     sections 1876(a)(7), 1886(j) and 1931, and section 4503 of 
     the Internal Revenue Code of 1986. Amounts in the accounts of 
     the Trust Fund shall remain available until expended.
       ``(b) Expenditures From Trust Fund.--Amounts in the 
     accounts of the Trust Fund are available to the Secretary for 
     making payments under sections 2102 and 2103.
       ``(c) Investment.--
       ``(1) In general.--The Secretary of the Treasury shall 
     invest amounts in the accounts of the Trust Fund which the 
     Secretary determines are not required to meet current 
     withdrawals from the Trust Fund. Such investments may be made 
     only in interest-bearing obligations of the United States. 
     For such purpose, such obligations may be acquired on 
     original issue at the issue price, or by purchase of 
     outstanding obligations at the market price.
       ``(2) Sale of obligations.--The Secretary of the Treasury 
     may sell at market price any obligation acquired under 
     paragraph (1).
       ``(3) Availability of income.--Any interest derived from 
     obligations held in each such account, and proceeds from any 
     sale or redemption of such obligations, are hereby 
     appropriated to such account.
       ``(d) Monetary Gifts to Trust Fund.--There are appropriated 
     to the Trust Fund such amounts as may be unconditionally 
     donated to the Federal Government as gifts to the Trust Fund. 
     Such amounts shall be allocated and transferred to the 
     accounts described in subsection (a) in the same proportion 
     as the amounts in each of the accounts bears to the total 
     amount in all the accounts of the Trust Fund.

     ``SEC. 2102. PAYMENTS TO MEDICAL SCHOOLS.

       ``(a) Federal Payments to Medical Schools for Certain 
     Costs.--
       ``(1) In general.--In the case of a medical school that in 
     accordance with paragraph (2) submits to the Secretary an 
     application for fiscal year 1998 or any subsequent fiscal 
     year, the Secretary shall make payments for such year to the 
     medical school for the purpose specified in paragraph (3). 
     The Secretary shall make such payments from the Medical 
     School Account in an amount determined in accordance with 
     subsection (b), and may administer the payments as a 
     contract, grant, or cooperative agreement.
       ``(2) Application for payments.--For purposes of paragraph 
     (1), an application for payments under such paragraph for a 
     fiscal year is in accordance with this paragraph if--
       ``(A) the medical school involved submits the application 
     not later than the date specified by the Secretary; and
       ``(B) the application is in such form, is made in such 
     manner, and contains such agreements, assurances, and 
     information as the Secretary determines to be necessary to 
     carry out this section.
       ``(3) Purpose of payments.--The purpose of payments under 
     paragraph (1) is to assist medical schools in maintaining and 
     developing quality educational programs in an increasingly 
     competitive health care system.
       ``(b) Availability of Trust Fund for Payments; Annual 
     Amount of Payments.--
       ``(1) Availability of trust fund for payments.--The 
     following amounts shall be available for a fiscal year for 
     making payments under subsection (a) from the amount 
     allocated and transferred to the Medical School Account under 
     sections 1876(a)(7), 1886(j), 1931, 2101(c)(3) and (d), and 
     section 4503 of the Internal Revenue Code of 1986:
       ``(A) In the case of fiscal year 1998, $200,000,000.
       ``(B) In the case of fiscal year 1999, $300,000,000.
       ``(C) In the case of fiscal year 2000, $400,000,000.
       ``(D) In the case of fiscal year 2001, $500,000,000.
       ``(E) In the case of fiscal year 2002, $600,000,000.
       ``(F) In the case of each subsequent fiscal year, the 
     amount specified in this paragraph in the previous fiscal 
     year updated through the midpoint of the year by the 
     estimated percentage change in the general health care 
     inflation factor (as defined in subsection (d)) during the 
     12-month period ending at that midpoint, with appropriate 
     adjustments to reflect previous underestimations or 
     overestimations under this subparagraph in the projected 
     health care inflation factor.
       ``(2) Amount of payments for medical schools.--
       ``(A) In general.--Subject to the annual amount available 
     under paragraph (1) for a fiscal year, the amount of payments 
     required under subsection (a) to be made to a medical school 
     that submits to the Secretary an application for such year in 
     accordance with subsection (a)(2) is an amount equal to an 
     amount determined by the Secretary in accordance with 
     subparagraph (B).
       ``(B) Development of formula.--The Secretary shall develop 
     a formula for allocation of funds to medical schools under 
     this section consistent with the purpose described in 
     subsection (a)(3).
       ``(c) Medical School Defined.--For purposes of this 
     section, the term `medical school' means a school of medicine 
     (as defined in section 799 of the Public Health Service Act) 
     or a school of osteopathic medicine (as defined in such 
     section).
       ``(d) General Health Care Inflation Factor.--The term 
     `general health care inflation factor' means the consumer 
     price index for medical services as determined by the Bureau 
     of Labor Statistics.

     ``SEC. 2103. PAYMENTS TO TEACHING HOSPITALS.

       ``(a) Formula Payments to Eligible Entities.--
       ``(1) In general.--In the case of any fiscal year beginning 
     after September 30, 1997, the Secretary shall make payments 
     to each eligible entity that, in accordance with paragraph 
     (2), submits to the Secretary an application for such fiscal 
     year. Such payments shall be made from the Trust Fund, and 
     the total of the payments to the eligible entity for the 
     fiscal year shall equal the sum of the amounts determined 
     under subsections (b), (c), (d), and (e).
       ``(2) Application.--For purposes of paragraph (1), an 
     application shall contain such information as may be 
     necessary for the Secretary to make payments under such 
     paragraph to an eligible entity during a fiscal year. An 
     application shall be treated as submitted in accordance with 
     this paragraph if it is submitted not later than the date 
     specified by the Secretary, and is made in such form and 
     manner as the Secretary may require.
       ``(3) Periodic payments.--Payments under paragraph (1) to 
     an eligible entity for a fiscal year shall be made 
     periodically, at such intervals and in such amounts as the 
     Secretary determines to be appropriate (subject to applicable 
     Federal law regarding Federal payments).
       ``(4) Administrator of programs.--The Secretary shall carry 
     out responsibility under this title by acting through the 
     Administrator of the Health Care Financing Administration.
       ``(5) Eligible entity.--For purposes of this title, the 
     term `eligible entity', with respect to any fiscal year, 
     means--
       ``(A) for payment under subsections (b) and (c), an entity 
     which would be eligible to receive payments for such fiscal 
     year under--
       ``(i) section 1886(d)(5)(B), if such payments had not been 
     terminated for discharges occurring after September 30, 1997;
       ``(ii) section 1886(h), if such payments had not been 
     terminated for cost reporting periods beginning after 
     September 30, 1997; or
       ``(iii) both sections; or
       ``(B) for payment under subsections (d) and (e)--
       ``(i) an entity which meets the requirement of subparagraph 
     (A); or
       ``(ii) an entity which the Secretary determines should be 
     considered an eligible entity.
       ``(b) Determination of Amount From Medicare Teaching 
     Hospital Indirect Account.--
       ``(1) In general.--The amount determined for an eligible 
     entity for a fiscal year under this subsection is the amount 
     equal to the applicable percentage of the total amount 
     allocated and transferred to the Medicare Teaching Hospital 
     Indirect Account under sections 1876(a)(7) and 1886(j)(1), 
     and subsections (c)(3) and (d) of section 2101 for such 
     fiscal year.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage for any fiscal year is equal 
     to the percentage of the total payments which would have been 
     made to the eligible entity in such fiscal year under section 
     1886(d)(5)(B) if--
       ``(A) such payments had not been terminated for discharges 
     occurring after September 30, 1997; and
       ``(B) such payments included payments for individuals 
     enrolled in a plan under section 1876, except that for fiscal 
     years 1998, 1999, and 2000, only the applicable percentage 
     (as defined in section 1876(a)(7)(B)) of such payments shall 
     be taken into account.
       ``(c) Determination of Amount From Medicare Teaching 
     Hospital Direct Account.--
       ``(1) In general.--The amount determined for an eligible 
     entity for a fiscal year under this subsection is the amount 
     equal to the applicable percentage of the total amount 
     allocated and transferred to the Medicare Teaching Hospital 
     Direct Account under sections 1876(a)(7) and 1886(j)(2), and 
     subsections (c)(3) and (d) of section 2101 for such fiscal 
     year.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage for any fiscal year is equal 
     to the percentage of the total payments which would have been 
     made to the eligible entity in such fiscal year under section 
     1886(h) if--
       ``(A) such payments had not been terminated for cost 
     reporting periods beginning after September 30, 1997; and
       ``(B) such payments included payments for individuals 
     enrolled in a plan under section 1876, except that for fiscal 
     years 1998, 1999, and 2000, only the applicable percentage 
     (as defined in section 1876(a)(7)(B)) of such payments shall 
     be taken into account.
       ``(d) Determination of Amount From Non-Medicare Teaching 
     Hospital Indirect Account.--
       ``(1) In general.--The amount determined for an eligible 
     entity for a fiscal year under this subsection is the amount 
     equal to the applicable percentage of the total amount 
     allocated and transferred to the Non-Medicare Teaching 
     Hospital Indirect Account for such fiscal year under section 
     1931, subsections

[[Page S364]]

     (c)(3) and (d) of section 2101, and section 4503 of the 
     Internal Revenue Code of 1986.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage for any fiscal year for an 
     eligible entity is equal to the percentage of the total 
     payments which, as determined by the Secretary, would have 
     been made in such fiscal year under section 1886(d)(5)(B) 
     if--
       ``(A) such payments had not been terminated for discharges 
     occurring after September 30, 1997; and
       ``(B) non-medicare patients were taken into account in lieu 
     of medicare patients.
       ``(e) Determination of Amount From Non-Medicare Teaching 
     Hospital Direct Account.--
       ``(1) In general.--The amount determined for an eligible 
     entity for a fiscal year under this subsection is the amount 
     equal to the applicable percentage of the total amount 
     allocated and transferred to the Non-Medicare Teaching 
     Hospital Direct Account for such fiscal year under section 
     1931, subsections (c)(3) and (d) of section 2101, and section 
     4503 of the Internal Revenue Code of 1986.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage for any fiscal year for an 
     eligible entity is equal to the percentage of the total 
     payments which, as determined by the Secretary, would have 
     been made in such fiscal year under section 1886(h) if--
       ``(A) such payments had not been terminated for cost 
     reporting periods beginning after September 30, 1997; and
       ``(B) non-medicare patients were taken into account in lieu 
     of medicare patients.''.

     SEC. 3. AMENDMENTS TO MEDICARE PROGRAM.

       (a) In General.--Section 1886 of the Social Security Act 
     (42 U.S.C. 1395ww) is amended--
       (1) in subsection (d)(5)(B), in the matter preceding clause 
     (i), by striking ``The Secretary shall provide'' and 
     inserting the following: ``For discharges occurring before 
     October 1, 1997, the Secretary shall provide'';
       (2) in subsection (h)--
       (A) in paragraph (1), in the first sentence, by striking 
     ``the Secretary shall provide'' and inserting ``the Secretary 
     shall, subject to paragraph (6), provide''; and
       (B) by adding at the end the following new paragraph:
       ``(6) Limitation.--
       ``(A) In general.--The authority to make payments under 
     this subsection shall not apply with respect to--
       ``(i) cost reporting periods beginning after September 30, 
     1997; and
       ``(ii) any portion of a cost reporting period beginning on 
     or before such date which occurs after such date.
       ``(B) Rule of construction.--This paragraph may not be 
     construed as authorizing any payment under section 1861(v) 
     with respect to graduate medical education.''; and
       (3) by adding at the end the following new subsection:
       ``(j) Transfers to Medical Education Trust Fund.--
       ``(1) Indirect costs of medical education.--
       ``(A) Transfer.--
       ``(i) In general.--From the Federal Hospital Insurance 
     Trust Fund, the Secretary shall, for fiscal year 1998 and 
     each subsequent fiscal year, transfer to the Medical 
     Education Trust Fund an amount equal to the amount estimated 
     by the Secretary under subparagraph (B).
       ``(ii) Allocation.--Of the amount transferred under clause 
     (i)--

       ``(I) there shall be allocated and transferred to the 
     Medical School Account an amount which bears the same ratio 
     to the total amount available under section 2102(b)(1) for 
     the fiscal year (reduced by the balance in such account at 
     the end of the preceding fiscal year) as the amount 
     transferred under clause (i) bears to the total amounts 
     transferred to the Medical Education Trust Fund under title 
     XXI (excluding amounts transferred under subsections (c)(3) 
     and (d) of section 2101) for such fiscal year; and
       ``(II) the remainder shall be allocated and transferred to 
     the Medicare Teaching Hospital Indirect Account.

       ``(B) Determination of amounts.--The Secretary shall make 
     an estimate for each fiscal year involved of the nationwide 
     total of the amounts that would have been paid under 
     subsection (d)(5)(B) to hospitals during the fiscal year if 
     such payments had not been terminated for discharges 
     occurring after September 30, 1997.
       ``(2) Direct costs of medical education.--
       ``(A) Transfer.--
       ``(i) In general.--From the Federal Hospital Insurance 
     Trust Fund and the Federal Supplementary Medical Insurance 
     Trust Fund, the Secretary shall, for fiscal year 1998 and 
     each subsequent fiscal year, transfer to the Medical 
     Education Trust Fund an amount equal to the amount estimated 
     by the Secretary under subparagraph (B).
       ``(ii) Allocation.--Of the amount transferred under clause 
     (i)--

       ``(I) there shall be allocated and transferred to the 
     Medical School Account an amount which bears the same ratio 
     to the total amount available under section 2102(b)(1) for 
     the fiscal year (reduced by the balance in such account at 
     the end of the preceding fiscal year) as the amount 
     transferred under clause (i) bears to the total amounts 
     transferred to the Medical Education Trust Fund under title 
     XXI (excluding amounts transferred under subsections (c)(3) 
     and (d) of section 2101) for such fiscal year; and
       ``(II) the remainder shall be allocated and transferred to 
     the Medicare Teaching Hospital Direct Account.

       ``(B) Determination of amounts.--For each hospital, the 
     Secretary shall make an estimate for the fiscal year involved 
     of the amount that would have been paid under subsection 
     (h) to the hospital during the fiscal year if such 
     payments had not been terminated for cost reporting 
     periods beginning after September 30, 1997.
       ``(C) Allocation between funds.--In providing for a 
     transfer under subparagraph (A) for a fiscal year, the 
     Secretary shall provide for an allocation of the amounts 
     involved between part A and part B (and the trust funds 
     established under the respective parts) as reasonably 
     reflects the proportion of direct graduate medical education 
     costs of hospitals associated with the provision of services 
     under each respective part.''.
       (b) Medicare HMO's.--Section 1876(a) of the Social Security 
     Act (42 U.S.C. 1395mm(a)) is amended by inserting after 
     paragraph (6) the following new paragraph:
       ``(7)(A) In determining the adjusted average per capita 
     cost under paragraph (4) for fiscal years after 1997, the 
     Secretary shall not take into account the applicable 
     percentage of costs under sections 1886(d)(5)(B) (indirect 
     costs of medical education) and 1886(h) (direct graduate 
     medical education costs).
       ``(B) For purposes of subparagraph (A), the applicable 
     percentage is--
       ``(i) for fiscal year 1998, 25 percent;
       ``(ii) for fiscal year 1999, 50 percent;
       ``(iii) for fiscal year 2000, 75 percent; and
       ``(iv) for fiscal year 2001 and each subsequent fiscal 
     year, 100 percent.
       ``(C)(i) There is appropriated and transferred to the 
     Medical Education Trust Fund each fiscal year an amount equal 
     to the aggregate amounts not taken into account under 
     paragraph (4) by reason of subparagraph (A).
       ``(ii) Of the amounts transferred under clause (i)--
       ``(I) there shall be allocated and transferred to the 
     Medical School Account an amount which bears the same ratio 
     to the total amount available under section 2102(b)(1) for 
     the fiscal year (reduced by the balance in such account at 
     the end of the preceding fiscal year) as the amount 
     transferred under clause (i) bears to the total amounts 
     transferred to the Medical Education Trust Fund under section 
     2101 (excluding amounts transferred under subsections (c)(3) 
     and (d) of such section) for such fiscal year; and
       ``(II) the remainder shall be allocated and transferred to 
     the Medicare Teaching Hospital Indirect Account under such 
     section and the Medicare Teaching Hospital Direct Account 
     under such section in the same proportion as the amounts 
     attributable to the costs under sections 1886(d)(5)(B) and 
     1886(h) were of the amounts transferred under clause (i).
       ``(iii) The Secretary shall make payments under clause (i) 
     from the Federal Hospital Insurance Trust Fund and the 
     Federal Supplementary Medical Insurance Trust Fund, in the 
     same manner as the Secretary determines under section 
     1886(j).''.

     SEC. 4. AMENDMENTS TO MEDICAID PROGRAM.

       (a) In General.--Title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.) is amended--
       (1) by redesignating section 1931 as section 1932; and
       (2) by inserting after section 1930, the following new 
     section:


                    ``transfer of funds to accounts

       ``Sec. 1931. (a) Transfer of Funds.--
       ``(1) In general.--For fiscal year 1998 and each subsequent 
     fiscal year, the Secretary shall transfer to the Medical 
     Education Trust Fund an amount equal to the amount determined 
     under subsection (b).
       ``(2) Allocation.--Of the amount transferred under 
     paragraph (1)--
       ``(A) there shall be allocated and transferred to the 
     Medical School Account an amount which bears the same ratio 
     to the total amount available under section 2102(b)(1) for 
     the fiscal year (reduced by the balance in such account at 
     the end of the preceding fiscal year) as the amount 
     transferred under paragraph (1) bears to the total amounts 
     transferred to the Medical Education Trust Fund under title 
     XXI (excluding amounts transferred under subsections (c)(3) 
     and (d) of section 2101) for such fiscal year; and
       ``(B) the remainder shall be allocated and transferred to 
     the Non-Medicare Teaching Hospital Indirect Account and the 
     Non-Medicare Teaching Hospital Direct Account, in the same 
     proportion as the amounts transferred to each account under 
     section 1886(j) relate to the total amounts transferred under 
     such section for such fiscal year.
       ``(b) Amount Determined.--
       ``(1) Outlays for acute medical services during preceding 
     fiscal year.--Beginning with fiscal year 1998, the Secretary 
     shall determine 5 percent of the total amount of Federal 
     outlays made under this title for acute medical services, as 
     defined in paragraph (2), for the preceding fiscal year.
       ``(2) Acute medical services defined.--The term `acute 
     medical services' means items and services described in 
     section 1905(a) other than the following:
       ``(A) Nursing facility services (as defined in section 
     1905(f)).
       ``(B) Intermediate care facility for the mentally retarded 
     services (as defined in section 1905(d)).

[[Page S365]]

       ``(C) Personal care services (as described in section 
     1905(a)(24)).
       ``(D) Private duty nursing services (as referred to in 
     section 1905(a)(8)).
       ``(E) Home or community-based services furnished under a 
     waiver granted under subsection (c), (d), or (e) of section 
     1915.
       ``(F) Home and community care furnished to functionally 
     disabled elderly individuals under section 1929.
       ``(G) Community supported living arrangements services 
     under section 1930.
       ``(H) Case-management services (as described in section 
     1915(g)(2)).
       ``(I) Home health care services (as referred to in section 
     1905(a)(7)), clinic services, and rehabilitation services 
     that are furnished to an individual who has a condition or 
     disability that qualifies the individual to receive any of 
     the services described in a previous subparagraph.
       ``(J) Services furnished in an institution for mental 
     diseases (as defined in section 1905(i)).
       ``(c) Entitlement.--This section constitutes budget 
     authority in advance of appropriations Acts and represents 
     the obligation of the Federal Government to provide for the 
     payment to the Non-Medicare Teaching Hospital Indirect 
     Account, the Non-Medicare Teaching Hospital Direct Account, 
     and the Medical School Account of amounts determined in 
     accordance with subsections (a) and (b).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall be effective on and after October 1, 1997.

     SEC. 5. ASSESSMENTS ON INSURED AND SELF-INSURED HEALTH PLANS.

       (a) General Rule.--Subtitle D of the Internal Revenue Code 
     of 1986 (relating to miscellaneous excise taxes) is amended 
     by adding after chapter 36 the following new chapter:

                ``CHAPTER 37--HEALTH RELATED ASSESSMENTS

``Subchapter A. Insured and self-insured health plans.

         ``Subchapter A--Insured and Self-Insured Health Plans

``Sec. 4501. Health insurance and health-related administrative 
              services.
``Sec. 4502. Self-insured health plans.
``Sec. 4503. Transfer to accounts.
``Sec. 4504. Definitions and special rules.

     ``SEC. 4501. HEALTH INSURANCE AND HEALTH-RELATED 
                   ADMINISTRATIVE SERVICES.

       ``(a) Imposition of Tax.--There is hereby imposed--
       ``(1) on each taxable health insurance policy, a tax equal 
     to 1.5 percent of the premiums received under such policy, 
     and
       ``(2) on each amount received for health-related 
     administrative services, a tax equal to 1.5 percent of the 
     amount so received.
       ``(b) Liability for Tax.--
       ``(1) Health insurance.--The tax imposed by subsection 
     (a)(1) shall be paid by the issuer of the policy.
       ``(2) Health-related administrative services.--The tax 
     imposed by subsection (a)(2) shall be paid by the person 
     providing the health-related administrative services.
       ``(c) Taxable Health Insurance Policy.--For purposes of 
     this section--
       ``(1) In general.--Except as otherwise provided in this 
     section, the term `taxable health insurance policy' means any 
     insurance policy providing accident or health insurance with 
     respect to individuals residing in the United States.
       ``(2) Exemption of certain policies.--The term `taxable 
     health insurance policy' does not include any insurance 
     policy if substantially all of the coverage provided under 
     such policy relates to--
       ``(A) liabilities incurred under workers' compensation 
     laws,
       ``(B) tort liabilities,
       ``(C) liabilities relating to ownership or use of property,
       ``(D) credit insurance, or
       ``(E) such other similar liabilities as the Secretary may 
     specify by regulations.
       ``(3) Special rule where policy provides other coverage.--
     In the case of any taxable health insurance policy under 
     which amounts are payable other than for accident or health 
     coverage, in determining the amount of the tax imposed by 
     subsection (a)(1) on any premium paid under such policy, 
     there shall be excluded the amount of the charge for the 
     nonaccident or nonhealth coverage if--
       ``(A) the charge for such nonaccident or nonhealth coverage 
     is either separately stated in the policy, or furnished to 
     the policyholder in a separate statement, and
       ``(B) such charge is reasonable in relation to the total 
     charges under the policy.

     In any other case, the entire amount of the premium paid 
     under such policy shall be subject to tax under subsection 
     (a)(1).
       ``(4) Treatment of prepaid health coverage arrangements.--
       ``(A) In general.--In the case of any arrangement described 
     in subparagraph (B)--
       ``(i) such arrangement shall be treated as a taxable health 
     insurance policy,
       ``(ii) the payments or premiums referred to in subparagraph 
     (B)(i) shall be treated as premiums received for a taxable 
     health insurance policy, and
       ``(iii) the person referred to in subparagraph (B)(i) shall 
     be treated as the issuer.
       ``(B) Description of arrangements.--An arrangement is 
     described in this subparagraph if under such arrangement--
       ``(i) fixed payments or premiums are received as 
     consideration for any person's agreement to provide or 
     arrange for the provision of accident or health coverage to 
     residents of the United States, regardless of how such 
     coverage is provided or arranged to be provided, and
       ``(ii) substantially all of the risks of the rates of 
     utilization of services is assumed by such person or the 
     provider of such services.
       ``(d) Health-Related Administrative Services.--For purposes 
     of this section, the term `health-related administrative 
     services' means--
       ``(1) the processing of claims or performance of other 
     administrative services in connection with accident or health 
     coverage under a taxable health insurance policy if the 
     charge for such services is not included in the premiums 
     under such policy, and
       ``(2) processing claims, arranging for provision of 
     accident or health coverage, or performing other 
     administrative services in connection with an applicable 
     self-insured health plan (as defined in section 4502(c)) 
     established or maintained by a person other than the person 
     performing the services.

     For purposes of paragraph (1), rules similar to the rules of 
     subsection (c)(3) shall apply.

     ``SEC. 4502. SELF-INSURED HEALTH PLANS.

       ``(a) Imposition of Tax.--In the case of any applicable 
     self-insured health plan, there is hereby imposed a tax for 
     each month equal to 1.5 percent of the sum of--
       ``(1) the accident or health coverage expenditures for such 
     month under such plan, and
       ``(2) the administrative expenditures for such month under 
     such plan to the extent such expenditures are not subject to 
     tax under section 4501.

     In determining the amount of expenditures under paragraph 
     (2), rules similar to the rules of subsection (d)(3) apply.
       ``(b) Liability for Tax.--
       ``(1) In general.--The tax imposed by subsection (a) shall 
     be paid by the plan sponsor.
       ``(2) Plan sponsor.--For purposes of paragraph (1), the 
     term `plan sponsor' means--
       ``(A) the employer in the case of a plan established or 
     maintained by a single employer,
       ``(B) the employee organization in the case of a plan 
     established or maintained by an employee organization, or
       ``(C) in the case of--
       ``(i) a plan established or maintained by 2 or more 
     employers or jointly by 1 or more employers and 1 or more 
     employee organizations,
       ``(ii) a voluntary employees' beneficiary association under 
     section 501(c)(9), or
       ``(iii) any other association plan,

     the association, committee, joint board of trustees, or other 
     similar group of representatives of the parties who establish 
     or maintain the plan.
       ``(c) Applicable Self-Insured Health Plan.--For purposes of 
     this section, the term `applicable self-insured health plan' 
     means any plan for providing accident or health coverage if 
     any portion of such coverage is provided other than through 
     an insurance policy.
       ``(d) Accident or Health Coverage Expenditures.--For 
     purposes of this section--
       ``(1) In general.--The accident or health coverage 
     expenditures of any applicable self-insured health plan for 
     any month are the aggregate expenditures paid in such month 
     for accident or health coverage provided under such plan to 
     the extent such expenditures are not subject to tax under 
     section 4501.
       ``(2) Treatment of reimbursements.--In determining accident 
     or health coverage expenditures during any month of any 
     applicable self-insured health plan, reimbursements (by 
     insurance or otherwise) received during such month shall be 
     taken into account as a reduction in accident or health 
     coverage expenditures.
       ``(3) Certain expenditures disregarded.--Paragraph (1) 
     shall not apply to any expenditure for the acquisition or 
     improvement of land or for the acquisition or improvement of 
     any property to be used in connection with the provision of 
     accident or health coverage which is subject to the allowance 
     under section 167, except that, for purposes of paragraph 
     (1), allowances under section 167 shall be considered as 
     expenditures.

     ``SEC. 4503. TRANSFER TO ACCOUNTS.

       ``For fiscal year 1998 and each subsequent fiscal year, 
     there are hereby appropriated and transferred to the Medical 
     Education Trust Fund amounts equivalent to taxes received in 
     the Treasury under sections 4501 and 4502, of which--
       ``(1) there shall be allocated and transferred to the 
     Medical School Account an amount which bears the same ratio 
     to the total amount available under section 2102(b)(1) for 
     the fiscal year (reduced by the balance in such account at 
     the end of the preceding fiscal year) as the amount 
     transferred to the Medical Education Trust Fund under title 
     XXI of the Social Security Act under this section bears to 
     the total amounts transferred to such Trust Fund (excluding 
     amounts transferred under subsections (c)(3) and (d) of 
     section 2101 of such Act) for such fiscal year; and
       ``(2) the remainder shall be allocated and transferred to 
     the Non-Medicare Teaching Hospital Indirect Account and the 
     Non-Medicare Teaching Hospital Direct Account, in the same 
     proportion as the amounts transferred to such account under 
     section 1886(j) relate to the total amounts transferred under 
     such section for such fiscal year.

     Such amounts shall be transferred in the same manner as under 
     section 9601.

[[Page S366]]

     ``SEC. 4504. DEFINITIONS AND SPECIAL RULES.

       ``(a) Definitions.--For purposes of this subchapter--
       ``(1) Accident or health coverage.--The term `accident or 
     health coverage' means any coverage which, if provided by an 
     insurance policy, would cause such policy to be a taxable 
     health insurance policy (as defined in section 4501(c)).
       ``(2) Insurance policy.--The term `insurance policy' means 
     any policy or other instrument whereby a contract of 
     insurance is issued, renewed, or extended.
       ``(3) Premium.--The term `premium' means the gross amount 
     of premiums and other consideration (including advance 
     premiums, deposits, fees, and assessments) arising from 
     policies issued by a person acting as the primary insurer, 
     adjusted for any return or additional premiums paid as a 
     result of endorsements, cancellations, audits, or 
     retrospective rating. Amounts returned where the amount is 
     not fixed in the contract but depends on the experience of 
     the insurer or the discretion of management shall not be 
     included in return premiums.
       ``(4) United states.--The term `United States' includes any 
     possession of the United States.
       ``(b) Treatment of Governmental Entities.--
       ``(1) In general.--For purposes of this subchapter--
       ``(A) the term `person' includes any governmental entity, 
     and
       ``(B) notwithstanding any other law or rule of law, 
     governmental entities shall not be exempt from the taxes 
     imposed by this subchapter except as provided in paragraph 
     (2).
       ``(2) Exempt governmental programs.--In the case of an 
     exempt governmental program--
       ``(A) no tax shall be imposed under section 4501 on any 
     premium received pursuant to such program or on any amount 
     received for health-related administrative services pursuant 
     to such program, and
       ``(B) no tax shall be imposed under section 4502 on any 
     expenditures pursuant to such program.
       ``(3) Exempt governmental program.--For purposes of this 
     subchapter, the term `exempt governmental program' means--
       ``(A) the insurance programs established by parts A and B 
     of title XVIII of the Social Security Act,
       ``(B) the medical assistance program established by title 
     XIX of the Social Security Act,
       ``(C) any program established by Federal law for providing 
     medical care (other than through insurance policies) to 
     individuals (or the spouses and dependents thereof) by reason 
     of such individuals being--
       ``(i) members of the Armed Forces of the United States, or
       ``(ii) veterans, and
       ``(D) any program established by Federal law for providing 
     medical care (other than through insurance policies) to 
     members of Indian tribes (as defined in section 4(d) of the 
     Indian Health Care Improvement Act).
       ``(c) No Cover Over to Possessions.--Notwithstanding any 
     other provision of law, no amount collected under this 
     subchapter shall be covered over to any possession of the 
     United States.''.
       (b) Clerical Amendment.--The table of chapters for subtitle 
     D of the Internal Revenue Code of 1986 is amended by 
     inserting after the item relating to chapter 36 the following 
     new item:

``Chapter 37. Health related assessments.''

       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to premiums received, and expenses 
     incurred, with respect to coverage for periods after 
     September 30, 1997.

     SEC. 6. MEDICAL EDUCATION ADVISORY COMMISSION.

       (a) Establishment.--There is hereby established an advisory 
     commission to be known as the Medical Education Advisory 
     Commission (in this section referred to as the ``Advisory 
     Commission'').
       (b) Duties.--
       (1) In general.--The Advisory Commission shall--
       (A) conduct a thorough study of all matters relating to--
       (i) the operation of the Medical Education Trust Fund 
     established under section 2;
       (ii) alternative and additional sources of graduate medical 
     education funding;
       (iii) alternative methodologies for compensating teaching 
     hospitals for graduate medical education;
       (iv) policies designed to maintain superior research and 
     educational capacities in an increasing competitive health 
     system;
       (v) the role of medical schools in graduate medical 
     education; and
       (vi) policies designed to expand eligibility for graduate 
     medical education payments to institutions other than 
     teaching hospitals;
       (B) develop recommendations, including the use of 
     demonstration projects, on the matters studied under 
     subparagraph (A) in consultation with the Secretary of Health 
     and Human Services and the entities described in paragraph 
     (2);
       (C) not later than January 1999, submit an interim report 
     to the Committee on Finance of the Senate, the Committee on 
     Ways and Means of the House of Representatives, and the 
     Secretary of Health and Human Services; and
       (D) not later than January 2001, submit a final report to 
     the Committee on Finance of the Senate, the Committee on Ways 
     and Means of the House of Representatives, and the Secretary 
     of Health and Human Services.
       (2) Entities described.--The entities described in this 
     paragraph are--
       (A) other advisory groups, including the Council on 
     Graduate Medical Education, the Prospective Payment 
     Assessment Commission, and the Physician Payment Review 
     Commission;
       (B) interested parties, including the Association of 
     American Medical Colleges, the Association of Academic Health 
     Centers, and the American Medical Association;
       (C) health care insurers, including managed care entities; 
     and
       (D) other entities as determined by the Secretary of Health 
     and Human Services.
       (c) Number and Appointment.--The membership of the Advisory 
     Commission shall include 9 individuals who are appointed to 
     the Advisory Commission from among individuals who are not 
     officers or employees of the United States. Such individuals 
     shall be appointed by the Secretary of Health and Human 
     Services, and shall include individuals from each of the 
     following categories:
       (1) Physicians who are faculty members of medical schools.
       (2) Officers or employees of teaching hospitals.
       (3) Officers or employees of health plans.
       (4) Deans of medical schools.
       (5) Such other individuals as the Secretary determines to 
     be appropriate.
       (d) Terms.--
       (1) In general.--Except as provided in paragraph (2), 
     members of the Advisory Commission shall serve for the lesser 
     of the life of the Advisory Commission, or 4 years.
       (2) Service beyond term.--A member of the Advisory 
     Commission may continue to serve after the expiration of the 
     term of the member until a successor is appointed.
       (e) Vacancies.--If a member of the Advisory Commission does 
     not serve the full term applicable under subsection (d), the 
     individual appointed to fill the resulting vacancy shall be 
     appointed for the remainder of the term of the predecessor of 
     the individual.
       (f) Chair.--The Secretary of Health and Human Services 
     shall designate an individual to serve as the Chair of the 
     Advisory Commission.
       (g) Meetings.--The Advisory Commission shall meet not less 
     than once during each 4-month period and shall otherwise meet 
     at the call of the Secretary of Health and Human Services or 
     the Chair.
       (h) Compensation and Reimbursement of Expenses.--Members of 
     the Advisory Commission shall receive compensation for each 
     day (including travel time) engaged in carrying out the 
     duties of the Advisory Commission. Such compensation may not 
     be in an amount in excess of the maximum rate of basic pay 
     payable for level IV of the Executive Schedule under section 
     5315 of title 5, United States Code.
       (i) Staff.--
       (1) Staff director.--The Advisory Commission shall, without 
     regard to the provisions of title 5, United States Code, 
     relating to competitive service, appoint a Staff Director who 
     shall be paid at a rate equivalent to a rate established for 
     the Senior Executive Service under 5382 of title 5, United 
     States Code.
       (2) Additional staff.--The Secretary of Health and Human 
     Services shall provide to the Advisory Commission such 
     additional staff, information, and other assistance as may be 
     necessary to carry out the duties of the Advisory Commission.
       (j) Termination of the Advisory Commission.--The Advisory 
     Commission shall terminate 90 days after the date on which 
     the Advisory Commission submits its final report under 
     subsection (b)(1)(D).
       (k) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as may be necessary to carry out 
     the purposes of this section.

     SEC. 7. DEMONSTRATION PROJECTS.

       (a) Establishment.--The Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall establish, by regulation, guidelines for the 
     establishment and operation of demonstration projects which 
     the Medical Education Advisory Commission recommends under 
     subsection (b)(1)(B) of section 6.
       (b) Funding.--
       (1) In general.--For any fiscal year after 1997, amounts in 
     the Medical Education Trust Fund under title XXI of the 
     Social Security Act shall be available for use by the 
     Secretary in the establishment and operation of demonstration 
     projects described in subsection (a).
       (2) Funds available.--
       (A) Limitation.--Not more than \1/10\ of 1 percent of the 
     funds in such trust fund shall be available for the purposes 
     of paragraph (1).
       (B) Allocation.--Amounts under paragraph (1) shall be paid 
     from the accounts established under paragraphs (2) through 
     (5) of section 2101(a) of the Social Security Act, in the 
     same proportion as the amounts transferred to such accounts 
     bears to the total of amounts transferred to all 4 such 
     accounts for such fiscal year.
       (c) Limitation.--Nothing in this section shall be construed 
     to authorize any change in the payment methodology for 
     teaching hospitals and medical schools established by this 
     Act.
                                                                    ____


        Summary of the Medical Education Trust Fund Act of 1997


                                Overview

       The legislation establishes a Medical Education Trust Fund 
     to support America's 142

[[Page S367]]

     medical schools and 1,250 teaching hospitals. These 
     institutions are in a precarious financial situation as 
     market forces reshape the health care delivery system. 
     Explicit and dedicated funding for these institutions will 
     guarantee that the United States continues to lead the world 
     in the quality of its health care system.
       The Medical Education Trust Fund Act of 1997 recognizes the 
     need to begin moving away from existing medical education 
     payment policies. Funding would be provided for demonstration 
     projects and alternative payment methods, but permanent 
     policy changes would await a report from a new Medical 
     Education Advisory Commission established by the bill. The 
     primary and immediate purpose of the legislation is to 
     establish as Federal policy that medical education is a 
     public good which should be supported by all sectors of the 
     health care system.
       To ensure that the burden of financing medical education is 
     shared equitably by all sectors, the Medical Education Trust 
     Fund will receive funding from three sources: a 1.5 percent 
     assessment on health insurance premiums (the private sector's 
     contribution), Medicare, and Medicaid (the public sector's 
     contribution). The relative contribution from each of these 
     sources is in rough proportion to the medical education costs 
     attributable to their respective covered populations.
       Over the five years following enactment, the Medical 
     Education Trust Fund will provide average annual payments of 
     about $17 billion, roughly doubling federal funding for 
     medical education. The assessment on health insurance 
     premiums (including self-insured health plans) contributes 
     approximately $4 billion per year to the Trust Fund. Federal 
     health programs contribute about $13 billion per year to the 
     Trust Fund: $9 billion in transfers of current Medicare 
     graduate medical education payments and $4 billion in federal 
     Medicaid spending.


  Estimated average annual trust fund revenue by source, first 5 years

                        [In billions of dollars]

1.5 percent assessment................................................4
Medicare..............................................................9
Medicaid..............................................................4
                                                               ________
                                                               
      Total..........................................................17


                     interim payment methodologies

                      Payments to Medical Schools

       Medical schools rely on a portion of the clinical practice 
     revenue generated by their faculties to support their 
     operations. As competition within the health system 
     intensifies and managed care proliferates, these revenues are 
     being constrained. Payments to medical schools from the Trust 
     Fund are designed to partially offset this loss of revenue. 
     Initially, these payments will be based upon an interim 
     methodology developed by the Secretary of Health and Human 
     Services.

                     Payments to Teaching Hospitals

       To cover the costs of education, teaching hospitals have 
     traditionally charged higher rates than other hospitals. As 
     private payers become increasingly unwilling to pay these 
     higher rates, the future of these important institutions, and 
     the patient care, training, and research they provide, is 
     placed at risk. Payments from the Trust Fund reimburse 
     teaching hospitals for both the direct \1\ and indirect \2\ 
     costs of graduate medical education.
---------------------------------------------------------------------------
     \1\ *Footnotes to appear at end of article.
---------------------------------------------------------------------------
       Payments for direct costs are based on the actual of costs 
     of employing medical residents. Payments for indirect costs 
     are based on the number of patients cared for in each 
     hospital and the severity of their illnesses as well as a 
     measure of the teaching load in that hospital.\3\ For the 
     purposes of payments to teaching hospitals, the allocation of 
     Medicare funds is based on the number of Medicare patients in 
     each hospital; the allocation of the tax revenue and Medicaid 
     funds is based on the number of non-Medicare patients in each 
     hospital.
       The legislation also includes a ``carve out'' of graduate 
     medical education payments from Medicare's payment to HMOs. 
     Under current law, this payment is based on Medicare's 
     average fee-for-service costs--including graduate medical 
     education costs. Therefore, every time a Medicare beneficiary 
     enrolls in an HMO, money that was being paid to teaching 
     hospitals for medical education in the form of additional 
     payments for direct and indirect costs, is paid instead to an 
     HMO as part of a monthly premium. There is no requirement 
     that HMOs use any of this payment to support medical 
     education. Over a four-year period, the legislation removes 
     graduate medical education payments from HMO payment 
     calculation. These funds are deposited into the Medical 
     Education Trust Fund and paid directly to teaching hospitals.


                 medical education advisory commission

       The legislation also establishes a Medical Education 
     Advisory Commission to conduct a study and make 
     recommendations, including the potential use of demonstration 
     projects, regarding the following: Operations of the Medical 
     Education Trust Fund; alternative and additional sources of 
     medical education financing; alternative methodologies for 
     distributing medical education payments; policies designed to 
     maintain superior research and educational capacities in an 
     increasingly competitive health system; the role of medical 
     schools in graduate medical education; and policies designed 
     to expand eligibility for graduate medical education payments 
     to institutions other than teaching hospitals.
       The Commission, comprised of nine individuals appointed by 
     the Secretary of Health and Human Services, will be required 
     to issue an interim report no later than January 1, 1999, and 
     a final report no later than January 1, 2001.


                               footnotes

     \1\ Medical residents' salaries are the primary direct cost.
     \2\ These indirect costs include the cost of treating more 
     seriously ill patients and the costs of additional tests that 
     may be ordered by medical residents.
     \3\ The legislation will use Medicare's measure of teaching 
     load as an interim measure.
                                 ______
                                 
      By Mr. MOYNIHAN:
  S. 22. A bill to establish a bipartisan national commission to 
address the year 2000 computer problem; to the Committee on 
Governmental Affairs.


               the year 2000 computer problem legislation

  Mr. MOYNIHAN. Mr. President, 1,074 days. Rather, one thousand 
seventy-four days and counting. We have 1,074 days until January 1, 
2000. Historically, the passage of the century has caused quite a stir. 
Until now, however, there has been little factual basis on which 
doomsayers and apocalyptic fearmongers could spread their gospel. I 
rise today, on the first day of legislative business in the 105th 
Congress, to warn that we have cause for fear.
  In the 6th century AD, the Western world began the practice of 
numbering years consecutively. The 6th-century monk, Dionysius Exiguus 
(known as ``Denis the Small''), introduced the first consecutive year 
calendar. Popular mythology would have us believe that at the end of 
the first millennium, Christians and pagans everywhere were cowering in 
fear of the end of the world. Yet, current historians believe that at 
the end of the year 999, much of the populace had no idea what year it 
was, and thus no idea that the millennium was coming to a close. In an 
ironic twist of fate, many calendars in our current, most advanced 
technological society ever may be as inaccurate as those of the people 
who faced the beginning of the Second Millennia A.D.
  I have no proof that the Sun is about to rise on the apocalyptic 
millennium of which chapter 20 of the Book of Revelation speaks, nor do 
I have proof that, armed with flood and catastrophe, the Four Horseman 
will arrive on January 1, 2000. I do know, however, that a seemingly 
innocuous ``computer glitch'' relating to how computers use the date 
could wreak worldwide havoc. This lack of recognition on the part of 
computers--called the year 2000 Computer Problem, or ``Y2K'' as 
computer aficionados call it--could cause everything from the failure 
of weapons systems, widespread disruption of business operations, the 
miscalculation of taxes by the Internal Revenue Service, possible 
misdiagnosis or improper medical treatment due to errors in medical 
records, to incorrect traffic signals at street corners across the 
country.
  In the 1950's and 1960's, computer programmers decided that, in order 
to minimize the consumption of computer memory, most computer languages 
would be designed to express the date with only six digits. In this 
format, the date of this speech would be 97-01-21. The century 
designation ``19'' is assumed. The problem is that many programs will 
read January 1, 2000 as January 1, 1900. Millions of computer programs 
will not function correctly because they cannot recognize the 21st 
century. The answer to this problem is a costly, time-consuming process 
of rewriting the computer codes.
  Estimates to fix the problem in the United States alone are in the 
range of $300 billion ($600 billion worldwide). That's billion with a 
``B''. Experts have estimated that about half the cost of upgrading 
U.S. computers will have to be paid by Government entities. 
Furthermore, the cost of fixing the `Y2K' problem will increase at 20-
50 percent per year due to the decreasing supply of, and increasing 
demand for, the skilled professionals who can rewrite the codes.

  There is no time to cower at the immensity and pervasiveness of the 
problem, even though it is true that at our current rate of addressing 
this problem, millions of computer programs across the globe will not 
recognize the year 2000. We have developed the medicine to cure the 
disease. It is our job to recognize the extent of our ills and the 
time-consuming nature of the cure.
  I now enter my second year warning of this problem. People have begun 
to

[[Page S368]]

listen. But neither the public nor private sector is anywhere near 
where they need to be. I congratulate my counterparts in the other 
Chamber of Congress, namely Representative Stephen Horn, Representative 
Carolyn Maloney, Representative Connie Morella, and Representative John 
Tanner, who have held hearings on this matter and helped uncover the 
Federal Government's lack of preparation for this crisis. The 
administration has only begun to stir.
  In his November 25, 1996 letter (answering my July 31st letter to the 
President) Franklin Raines, the Director of the Office of Management 
and Budget, stated that:

       We have been meeting with senior agency officials and 
     urging them to complete their assessments of the scope of the 
     problem now, so they will have time to fix it. We have 
     assurances that all of their systems will either be fixed, 
     replaced, or scrapped before 2000, and we will continue to 
     monitor their progress. As we develop the President's 1998 
     budget, we are working with the agencies to assure that there 
     is adequate funding to support agency year 2000 activities.

  Mr. Raines paints a much more comfortable picture than was revealed 
in the Congressional findings of just 2 months prior. In September 
1996, the House Committee on Government Oversight reported that: only 9 
of the 24 departments and agencies (which the Committee had just 
queried) had a plan for addressing the problem; five had not even 
designated an official within the organization to be responsible for 
the problem; and 17 of the departments and agencies lacked any cost 
estimates for the problem. I am encouraged that Representative Stephen 
Horn (R-CA) will continue his subcommittee's oversight hearings on 
February 24, 1997.
  Yet, someone or something needs to ensure that the Federal 
Government, State governments, and all sectors of the economy are 
``Year 2000 Compliant.'' The OMB has neither the staff nor the 
resources to do this alone. I am introducing today a revamped bill that 
will set up a Commission to address this problem.
  Commissions are not by definition weak. This commission will assume 
responsibility for assuring that all Federal agencies are Year 2000 
compliant by January 1, 1999 ( a year early, so as to leave enough time 
for testing--some say the longest part). The Commission will be 
composed of experts on the Federal response and the State response in 
order to face the problems of integration. The Commission will 
prioritize which agencies are most at risk of not performing vital 
functions, and through its reports to the President and Congress, it 
will recommend the appropriate triage process and medicine. It it not 
enough to recognize that this problem exists. Unless we install the 
doctors for the triage, the Y2K disease will manifest itself in all 
sectors of government and the economy.

  We are told that the President will include adequate funding for the 
Executive Agencies in his budget plan for fiscal year 1998. My hope is 
that Congress will recognize the importance of providing the funding 
now; for if we wait, not only will the costs rise, but we are liable to 
see major Government agencies and State governments unable to perform 
critical functions.
  It is January 21 of 1997; we have 1,074 days remaining until January 
1, 2000. Too late to lament, time to act.
  In the first stanza of his epic work, ``The Second Coming,'' Yeats 
wrote of the onslaught of the apocalypse:

     Turning and turning in the widening gyre
     The falcon cannot hear the falconer;
     Things fall apart; the center cannot hold;
     Mere anarchy is loosed upon the world,
     The blood dimmed tide is loosed . . .

  At the upcoming turn of the millennium, we cannot test what ``blood 
dimmed tide'' computer malfunctions could loose on our society.
                                 ______
                                 
      By Mr. SPECTER (for himself and Ms. Moseley-Braun):
  S. 23. A bill to promote a new urban agenda, and for other purposes; 
to the Committee on Finance.


           new agenda for aiding america's cities act of 1997

  Mr. SPECTER. Mr. President, I have sought recognition to introduce 
legislation that will deal with the plight of our nation's cities and 
Washington's increasing neglect of them. There is an urgent need to 
improve our urban economies and the quality of life for the millions of 
American who live in our cities. My proposal, the ``New Agenda For 
Aiding America's Cities Act of 1997'' is based on legislation which I 
introduced in the 103rd and 104th Congress along with my distinguished 
colleague, Senator Carol Moseley-Braun, and I am pleased she is again 
joining in this effort. The bill constitutes an effort to give our 
cities some much-needed attention, but reflects the federal budget 
constraints which govern all that we in Congress do these days.
  This bill, based in significant part on suggestions by Philadelphia 
Mayor Edward G. Rendell and the League of Cities, offers aid to the 
cities without increasing federal expenditures and by re-instituting 
important cost-effective tax breaks which have been discontinued.
  If we are to really address many of the very serious social issues 
that we face--unemployment, teenage pregnancy, welfare dependency, and 
other pressing issues--we cannot give up on our cities. There must be 
new strategies for dealing with the problems of urban America. The days 
of creating ``Great Society'' federal aid programs are clearly past, 
but that is no excuse for the national government to turn a blind eye 
to the problems of the cities.
  The goals of this initiative have strong bipartisan support as 
indicated during the vice-presidential debate in the 1996 campaign, 
where both the Republican and Democratic candidates spoke of the need 
to focus our economic resources in our nation's urban areas. The recent 
November elections reaffirm the basic principle of limited government. 
Limited government, however, does not mean an uncaring or do-nothing 
government.
  The impact of last year's welfare reform legislation also requires 
close scrutiny on what will be happening to America's big cities.
  Urban areas remain integral to America's greatness as centers of 
commerce, industry, education, health care, and culture. Yet urban 
areas, particularly the inner cities which tend to have a 
disproportionate share of our nation's poor, also have special needs 
which must be recognized. We must develop ways of aiding our cities 
that do not require either new taxes or more government bureaucracy.
  I commend the Mayor of Philadelphia, Edward Rendell, for his efforts 
to revitalize America's cities. Collaborating with the Conference of 
Mayors and the National League of Cities, he proposed in 1994 a ``New 
Urban Agenda.'' Much of that proposal is the basis of this legislation.
  As a Philadelphia resident, I have first-hand knowledge of the 
growing problems that plague our cities. As of 1990, Philadelphia had 
over 300,000 individuals in poverty. Reflecting on my experience as a 
Philadelphian, I have long supported a variety of programs to assist 
our cities, such as increased funding for Community Development Block 
Grants and legislation to establish enterprise and empowerment zones. 
To encourage similar efforts, in April, 1994, I hosted my Senate 
Republican colleagues on a visit to explore urban problems in my 
hometown. We talked with people who wanted to obtain work, but had 
found few opportunities. We saw a crumbling infrastructure and its 
impact on residents and businesses. We were reminded of the devastating 
effect that the loss of inner city businesses and jobs has had on our 
neighborhoods in America's cities. What my Republican colleagues saw 
then in Philadelphia is the urban rule across our country and not the 
exception.
  There are many who do not know of city life, who are far removed from 
the cities and would not be expected to have any key interest in what 
goes on in the big cities of America. I cite my own boyhood experience 
illustratively: Born in Wichita, Kansas, raised in Russell, a small 
town of 5,000 people on the plains of Kansas, where there is not much 
detailed knowledge of what goes on in Philadelphia, Pennsylvania, or 
other big cities like Los Angeles, San Francisco, New York, Miami, 
Pittsburgh, Dallas, Detroit or Chicago.
  Those big cities are alien to people in much of America. But there is 
a growing understanding that the problems of big cities contribute 
significantly to the general problems affecting our nation and have an 
economic impact, at the very least, on our small towns. For rural 
America to prosper, we need to make sure that urban America prospers 
and vice-versa. For example, if

[[Page S369]]

cities had more economic growth, taxes could be reduced on all 
Americans at the federal and state level because revenues would 
increase and social welfare spending would be reduced.
  What are the problems? Crime for one. Take the Bloods and the Crips 
gangs from Los Angeles, California, and similar gangs; that are all 
over America. They are in Lancaster, Pennsylvania; Des Moines, Iowa; 
Portland, Oregon; Jackson, Mississippi; Racine, Wisconsin; and 
Martinsburg, West Virginia. They are literally everywhere, big city and 
small city alike.
  According to the National League of Cities 1992 report, ``State of 
America's Cities,'' 397 randomly selected municipal leaders said that 
after overall economic conditions, crime and drugs were the second and 
third items that had caused their cities to deteriorate the most in the 
prior five years. In Atlanta, the number of crimes per 100,000 people 
was 17,067, making it number one in 1995. We have all heard of that 
unenviable moniker for our nation's capital--the ``murder capital.''
  Not just municipal leaders voice concern about crime's impact. Mr. 
Scott Zelov, President of VIZ Manufacturing in the Germantown section 
of Philadelphia, told my staff that his workers can't even walk to work 
in safety anymore, making it difficult for him to retain his employees 
and to continue to stay in business, causing him to consider moving out 
of the city to a safer location or even closing his business 
altogether.
  Dan DeRitis, owner of Sisko, Inc., a property management and 
development company in the University City section of West 
Philadelphia, wrote to me to tell me while he has been a resident and 
business owner in West Philadelphia for more than twenty years, and 
while the city had been good to him and his family in the past, 
recently, he has had reason to fear for the safety of his children, his 
employees and ultimately, his business. He looks desperately for 
reasons to stay, but everyday it gets harder and harder.
  Joblessness and a less skilled work force is another problem. To 
facilitate economic development and job creation in the United States, 
I supported the Balanced Budget Act of 1995, which contained such 
provisions as the Job Training Partnership Act and the Targeted Job Tax 
Credit. As Congress put the final touches on that legislation, I 
circulated a joint letter from several Senators to then-Majority Leader 
Dole and Speaker Gingrich recommending spurring job creation and 
economic growth in our cities through several urban initiatives such 
as: a targeted capital gains exclusion, commercial revitalization tax 
credit, historic rehabilitation tax credit, and child care credit.
  As part of that effort, on December 19, 1995, I arranged a meeting 
between Majority Leader Dole and Mayors Edward Rendell of Philadelphia, 
Thomas Menino of Boston, Richard Daley of Chicago, and Victor Ashe, of 
Knoxville, Tennessee, to discuss their top tax priorities, which were 
reflected in the joint letter to the Majority Leader Dole and Speaker 
Gingrich. In that meeting the Mayors stressed the necessity of 
strengthening economic growth in our urban centers to impact directly 
on social ills identified with weak economic infrastructures. These 
problems include poverty, crime, and joblessness. Census data from 1990 
shows that many of our urban centers suffered from critically high 
poverty rates as of 1989.
  As of 1990, New York City led the way, with 1.3 million individuals 
in poverty. My home of Philadelphia had 313,374 individuals in poverty 
at that time. These facts emphasize the need for more efforts to be 
focused on strengthening our inner city businesses which, in turn, will 
boost local economies and serve to provide more jobs, reduce poverty 
and, hopefully, reduce crime.
  I have previously introduced legislation to provide targeted tax 
incentives for investing in small minority- or women-owned businesses. 
Small businesses provide the bulk of the jobs in this country. Many 
minority entrepreneurs, for instance, have told me that they are 
dedicated to staying in the cities to employ people there, but continue 
to confront capital access issues. My ``Minority and Women Capital 
Formation Act of 1993'' would have helped remove the capital access 
barriers, thereby enabling these entrepreneurs to grow their businesses 
and payrolls.
  Municipal leaders are stressing many of the same concerns that 
business people are voicing. In a July, 1994 National League of Cities 
report dealing with poverty and economic development, municipal leaders 
ranked inadequate skills and education of workers as one of the top 
three reasons, in addition to shortage of jobs and below-poverty wages, 
for poverty and joblessness in their cities. They said, according to 
the survey, that more jobs must be created through local economic 
development initiatives.

  This ``skills deficit'' is highlighted in an urban revitalization 
plan prepared in 1991 by the National Urban League called ``Playing to 
Win: A Marshall Plan for America's Cities.'' The report cites a 
statistic by the Commission on Achieving Necessary Skills which showed 
that 60 percent of all 21-25 year-olds lack the basic reading and 
writing skills needed for the modern workplace, and only 10 percent of 
those in that age group have enough mathematical competence for today's 
jobs.
  The economic problems our cities are facing are not easy to deal with 
or answer. In a report by the National League of Cities entitled ``City 
Fiscal Conditions in 1996,'' municipal officials from 381 cities 
answered questions on the economic state of their cities. In response 
to state budgetary problems, 21.7 percent of responding cities reduced 
municipal employment and 18.5 percent had frozen municipal employment. 
Nearly 6 out of 10 cities raised or imposed new taxes or user fees 
during the past twelve months.
  These numbers are of concern to me and I believe they highlight the 
need for federal legislation to enhance the ability of cities to 
achieve competitive economic status. An added concern is that city 
managers are forced to balance cuts in services or enact higher taxes. 
Neither choice is easy and it often counteracts municipal efforts to 
retain residents or businesses.
  One issue, in particular, that is hurting many cities is the erosion 
of their tax bases, evidenced particularly by middle-class flight to 
the suburbs. Mr. Ronald Walters, professor of Political Science at 
Howard University, in testimony before the Senate Banking Committee in 
April 1993, stated that in 1950, 23 percent of the American population 
lived outside central cities; by 1988, that number was up to 46 
percent.
  In an October 9, 1994 article in The Washington Post Magazine, David 
Finkel profiled Ward 7 of Washington, DC and wrote that Ward 7 lost 
13,000 residents between 1980 and 1990 alone. He noted further that the 
population decline in Washington, DC has averaged 10,000 people a year 
since 1990. This trend continues into 1997. These losses are 
devastating, not only to the financial stability of the city, but to 
the social fabric as well.
  On the financial side, statistics show that those people fleeing 
cities were earning an average of $30,000 to $75,000 a year. On the 
social side, roughly half of these are African-American middle-class 
families. By losing this critical demographic group, the city loses 
much of what makes it strong.
  Eroding tax bases are also caused by job-flight and job loss. 
Professor Walters testified that Chicago lost 47 percent of its 
manufacturing jobs between 1972 and 1982. Los Angeles lost 327,000 
jobs, half of which were in the manufacturing sector. More recently, 
according to Census data, New York City had only 11.4 percent of its 
population employed in manufacturing. According to Stephen Moore and 
Dean Stansel in a March, 1994 USA Today Magazine article, since the 
1970's more than 50 Fortune 500 company headquarters have fled New York 
City, representing a loss of over 500,000 jobs.
  It is clear that the social fabric of our cities is also 
deteriorating. The issues of infant mortality and single-parent 
families are tragic problems that plague American urban areas. 
According to 1990 Census data, Washington, DC ranked first out of 77 
cities for infant death rates per 1,000 live births in 1988. Detroit 
led the same number of cities in the percentage of one-parent 
households in 1990 at 53 percent.
  When I traveled to Pittsburgh in 1984, I saw one-pound babies for the 
first time and I learned that Pittsburgh had the highest infant 
mortality rate of African-American babies of any city in the United 
States. It is a human tragedy for a child to be born weighing 16

[[Page S370]]

ounces with attendant problems that last a lifetime. I wondered, how 
could that be true of Pittsburgh, which has such enormous medical 
resources. It was an amazing thing for me to see a one-pound baby, 
about as big as my hand. Indeed, our cities are desperate, and the 
issues are heavy.
  Historically, cities have been the center of commerce and culture. 
Surrounding communities have relied on a thriving, growing economy in 
our metropolitan areas to provide jobs and opportunities. As I have 
noted though, over the past several decades, America's cities have 
struggled with the loss or exodus of residents, businesses and industry 
and other problems. The resulting tax base shrinkage causes enormous 
budget problems for city governments. Across the country, cities such 
as New York, Los Angeles, and the District of Columbia have experienced 
the flight of major industries to the suburbs.
  As a result, city residents who remain are faced with problems 
ranging from increased tax burdens and lesser services to dwindling 
economic opportunities, leading to welfare dependence and unemployment 
assistance. In the face of all this, what do we do?
  The federal government has attempted to revitalize our ailing urban 
infrastructure by providing federal funding for transit and sewer 
systems, roads and bridges. I have supported this. For example, as a 
member of the Transportation Appropriations Subcommittee and as co-
chair of an informal Senate Transit Coalition, I have been a strong 
supporter of public transit which provides critically needed 
transportation services in urban areas. Transit helps cities meet clean 
air standards, reduce traffic congestion, and allows disadvantaged 
persons access to jobs. Federal assistance for urban areas, however, 
has become increasingly scarce as we grapple with the nation's deficit 
and debt. Therefore, we must find alternatives to reinvigorate our 
nation's cities so they can once again be economically productive areas 
providing promising opportunities for residents and neighboring areas.
  I believe there are ways Congress can assist the cities. In 1994, 
Mayor Rendell came up with a legislative package which contains many 
good ideas. I have since added and revised provisions to take into 
account new developments at the federal, state and local levels.
  First, recognizing that the federal government is the nation's 
largest purchaser of goods and services, this legislation would require 
that no less than 15 percent of federal government purchases be made 
from businesses and industries within designated urban Empowerment 
Zones and Enterprise Communities. Similarly, it would require that not 
less than 15 percent of foreign aid funds be redeemed through purchases 
of products manufactured in urban Empowerment Zones and Enterprise 
Communities. I presented this idea to then-Treasury Secretary Bentsen 
at a March 22, 1994, hearing of the Appropriations Subcommittee on 
Foreign Operations. The Secretary responded favorably.
  I have also written to several mayors across the country regarding 
this concept. By letter dated July 28, 1994, Miami Mayor Stephen P. 
Clark responded: ``Miami's selection as a procurement center for 
foreign aid would be a natural complement to our status as the Business 
Capital of the Americas.'' Miami has a wide range of businesses, such 
as high-technology firms and medical equipment manufacturers that would 
benefit from this provision. And by letter dated April 6, 1994, 
Harrisburg, Pennsylvania Mayor Stephen R. Reed wrote: ``Many of our 
existing businesses would no doubt seize upon the opportunity to 
broaden their market by engaging in export activity triggered by 
foreign aid vouchers. . . Therefore, in brief, we believe the voucher 
proposal has considerable merit and that this city would benefit from 
the same.'' I ask unanimous consent that a copy of my letter and the 
letters from Mayor Clark and Mayor Reed be included in the Record at 
the end of my statement.
  The second major provision of this bill would commit the federal 
government to play an active role in restoring the economic health of 
our cities by encouraging the location, or relocation, of federal 
facilities in urban areas. To accomplish this, all federal agencies 
would be required to prepare and submit to the President an Urban 
Impact Statement detailing the impact that relocation or downsizing 
decisions would have on the affected city. Presidential approval would 
be required to place a federal facility outside an urban area, or to 
downsize a city-based agency.
  The third critical component of this bill would revive and expand 
federal tax incentives that were eliminated or restricted in the Tax 
Reform Act of 1986. Until there is passage of legislation on the flat 
tax, which would provide benefits superior to all targeted tax breaks, 
I believe America's cities should have the advantages of such tax 
benefits. These provisions offer meaningful incentives to business to 
invest in our cities. I am calling for the restoration of the Historic 
Rehabilitation Tax Credit which supports inner city revitalization 
projects. According to information provided by Mayor Rendell, there 
were 8,640 construction jobs involved in 356 projects in Philadelphia 
from 1978 to 1985 stimulated by the Historic Rehabilitation Tax Credit. 
In Chicago, 302 projects prior to 1985 generated $524 million in 
investment and created 20,695 jobs. In St. Louis, 849 projects 
generated $653 million in investment and created 27,735 jobs.
  Nationally, according to National Park Service estimates for the 16 
years before the 1986 Act, the Historic Rehabilitation Tax Credit 
stimulated $16 billion in private investment for the rehabilitation of 
24,656 buildings and the creation of 125,306 homes which included 
23,377 low and moderate income housing units. The 1986 Tax Act 
dramatically reduced the pool of private investment capital available 
for rehabilitation projects. In Philadelphia, projects dropped from 356 
to 11 by 1988 from 1985 levels. During the same period, investments 
dropped 46 percent in Illinois and 92 percent in St. Louis.

  Another tool is to expand the authorization of commercial industrial 
development bonds. Under the Tax Reform Act of 1986, authorization for 
commercial industrial bonds was permitted to expire. Consequently, 
private investment in cities declined. For instance, according to Mayor 
Rendell, from 1986--the last year commercial development bonds were 
permitted--to 1987, the total number of city-supported projects in 
Philadelphia was reduced by more than half.
  Industrial development or private activity bonds encourage private 
investment by allowing, under certain circumstances, tax-exempt status 
for projects where more than 10 percent of the bond proceeds are used 
for private business purposes. The availability of tax-exempt 
commercial industrial development bonds will encourage private 
investment in cities, particularly the construction of sports, 
convention and trade show facilities; free standing parking facilities 
owned and operated by the private sector; air and water pollution 
facilities owned and operated by the private sector; and, industrial 
parks.
  The bill I am introducing would allow this. It would also increase 
the small issue exemption--which means a way to help finance private 
activity in the building of manufacturing facilities--from $10 million 
to $50 million to allow increased private investment in our cities.
  A minor change in the federal tax code related to arbitrage rebates 
on municipal bond interest earnings could also free additional capital 
for infrastructure and economic development by cities. Currently, 
municipalities are required to rebate to the federal government any 
arbitrage--a financial term meaning interest earned in excess of 
interest paid on the debt--earned from the issuance of tax-free 
municipal bonds. I am informed that compliance, or the cost for 
consultants to perform the complicated rebate calculations, is actually 
costing municipalities more than the actual rebate owed to the 
government. This bill would allow cities to keep the arbitrage earned 
so that they can use it to fund city projects and for other necessary 
purposes.
  My legislation also provides important incentives for businesses to 
invest and locate in our nation's cities. Specifically, the bill 
includes a provision which I have advocated to provide a 50 percent 
exclusion for capital gains tax purposes for any gain resulting from 
targeted investments in small businesses located in urban empowerment

[[Page S371]]

zones, enterprise communities, or enterprise zones. I also want to note 
that the exclusion would extend to any venture funds that invest in 
those small businesses, which is critical because venture funds are 
often the lifeblood of a small business. This is one of the incentives 
I recommended to Senator Dole in December, 1995 for inclusion in the 
Balanced Budget Act of 1995 which was later vetoed by President 
Clinton. A targeted capital gains exclusion will serve as a catalyst 
for job creation and economic growth in our cities by encouraging 
additional private investment in our urban areas.
  A fourth provision of this legislation provides needed reforms to 
regulations concerning affordable housing. This legislation provides 
language to study streamlining federal housing program assistance to 
urban areas into ``block grant'' form so that municipal agencies can 
better serve local residents. Affordable housing is not currently 
widely available to most low income families. According to the National 
Housing Law Project, in 1996, only one in four families were eligible 
to receive HUD assistance. The bill would improve the circumstances of 
public housing tenants by encouraging the location of newly built units 
on the lots of demolished older housing and allowing the original 
residents to move into the new units. This provision will contribute to 
community stability and promote urban renewal.
  Last, this bill helps urban areas by taking several important steps 
toward reforming the current Superfund law. First, the legislation 
authorizes a federal brownfields program to help clean up idle or 
underused industrial and commercial facilities and waives federal 
liability for persons who fully comply with a state cleanup plan to 
clean sites in urban areas pursuant to state law, provided that the 
site is not listed or proposed to be listed on the National Priorities 
List. The Environmental Protection Agency currently operates this pilot 
program under general authority provided by the Superfund law. My 
legislation would make this a permanent program and substantially 
increase the funding levels from $36.7 million to a $50 million 
authorized level for FY'98. The EPA could expend funds to identify and 
examine potential idle or underused Brownfield sites and to provide 
grants to States and local governments of up to $200,000 per site to 
put them back to productive use. One such grant has been used to great 
success by Pittsburgh Mayor Tom Murphy, and I hope this provision will 
generate additional success stories of redeveloping urban brownfields.
  The Brownfields program allows sites with minor levels of toxic waste 
to be cleaned up by State and local governments with federal and non-
federal funds. Companies and individuals who are interested in 
developing land into industrial, commercial, recreational, or 
residential use are often reluctant to purchase property with any level 
of toxic waste because of a fear of being saddled with cleanup 
liability under the Superfund law. Through expanded Brownfields grants, 
cleanup at such sites will be expedited and will encourage 
redevelopment of otherwise unusable urban property.
  My bill would also waive federal liability for persons who fully 
comply with a state cleanup plan to clean sites in urban areas pursuant 
to state law, providing that the site is not listed or proposed to be 
listed on the National Priorities List. Many states, including 
Pennsylvania, have developed their own toxic waste cleanup programs and 
have done good work to clean up many of these sites. Pennsylvania 
Governor Tom Ridge has developed an extensive plan, where contaminated 
sites are made safe based on sound science by returning the site to 
productive use through the development of uniform cleanup standards, by 
creating a set of standardized review procedures, by releasing owners 
and developers from liability who fully comply with the state cleanup 
standards and procedures, and by providing financial assistance. 
However, the efforts of states like Pennsylvania are often stifled 
because the federal government has not been willing to work with the 
States to release owners and developers from liability, even when they 
fully comply with the state plans.
  This section of my bill only applies only to sites that are not on 
the National Priorities List. These are sites that the state has 
identified for which the state has created a comprehensive cleanup 
plan. If the federal government has concerns with the cleanup procedure 
or the safety of the site, then the government has full authority to 
place that site on the National Priority List. The plans, like that 
developed by Governor Ridge, deal with sites not controlled by the 
Superfund law. By not allowing the individual states to take the 
initiative to clean up these sites, and by not providing a waiver for 
federal liability to those who fully comply with the procedures and 
standards of the state cleanup, the federal government chills the 
efforts of the states to work to clean up their own sites. This 
provision takes a significant step toward encouraging states to take 
the responsibility for their toxic waste sites and to encourage the 
effective cleanup of these sites in our nation's urban areas.
  In the 103d Congress, my ``New Urban Agenda Act'' (S. 2535) contained 
a section that would eliminate unfunded federal mandates based on 
legislation I cosponsored in the 103d Congress (S. 993) which was 
introduced by my distinguished colleague from Idaho, Senator Dirk 
Kempthorne. There is no longer a need to include that provision in my 
urban agenda bill because Congress enacted the unfunded federal 
mandates bill in February, 1995.
  Mr. President, it may well be that America has given up on its 
cities. That is a stark statement, but it is one which I believe may be 
true--that America has given up on its cities. But this Senator has not 
done so. And I believe there are others in this body on both sides of 
the aisle who have not done so.
  As one of a handful of United States Senators who lives in a big 
city, I understand both the problems and the promise of urban America. 
This legislation for our cities is good public policy. The plight of 
our cities must be of extreme concern to America. We can ill-afford for 
them to wither and die. I am committed to a new urban agenda that 
relies on market forces, and not welfare-statism, for urban 
revitalization. I invite the input and assistance of my colleagues in 
order to fashion a strong approach assisting the cities with their 
pressing problems.
  I ask unanimous consent that my bill be printed in the Record as if 
read, along with an Executive Summary. I thank the Chair and yield the 
floor.

                           Executive Summary


           new agenda for aiding america's cities act of 1997

       A. Promote Urban Economic Development through Empowerment 
     and Enterprise Zones. Requires a portion of federal and 
     foreign aid purchases (not less than 15 percent) to be from 
     businesses operating in urban zones, and commits the 
     government to purchase recycled products from businesses 
     operating in urban zones.
       B. Locating/Relocating Federal Facilities in Distressed 
     Urban Areas. Requires an urban impact statement, with 
     Presidential approval, that details the impact on cities of 
     agency downsizing or relocation. Under the bill, a 
     ``distressed urban area'' follows HUD's definition, namely 
     any city having a population of more than 100,000.
       C. Revives and Expands Federal Tax Incentives. Expands the 
     Historic Rehabilitation Tax Credit which was reduced in 1986. 
     It would restore the issuance of tax-free industrial 
     development bonds and would allow cities to keep the 
     arbitrage earned from the issuance of tax-free municipal 
     bonds. Currently, local governments are required to rebate to 
     the federal government arbitrage earned from the issuance of 
     tax-free municipal bonds, and often spend more on compliance 
     than on the actual rebate.
       D. Contains Incentives for Businesses. To encourage 
     businesses to invest and locate in our nation's cities, 
     provides a 50 percent exclusion for capital gains tax 
     purposes for any gain resulting from targeted investments in 
     small businesses located in urban empowerment zones, 
     enterprise communities, or enterprise zones. The exclusion 
     also extends to any venture that invest in those small 
     businesses.
       E. Lifts Federal Restrictions on Community-Based Housing 
     Development. To boost the efficiency of regional housing 
     authorities, a study would be done to streamline current and 
     future housing programs into ``block grants.'' The bill would 
     also allow the reconstruction of new units on demolished 
     sites, and relocate the original tenants to the newly 
     constructed units.
       F. Reforms Superfund Law to Encourage Industrial Cleanup. 
     Authorizes an expanded federal brownfields grant program to 
     help clean up idle or underused industrial and commercial 
     facilities. Also provides regulatory relief by waiving 
     federal liability for businesses and individuals that fully 
     comply with a state cleanup plan to clean sites in

[[Page S372]]

     urban areas pursuant to state law, provided that the site is 
     not listed or proposed to be listed on the National 
     Priorities List.

                                 S. 23

       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 ``New Urban 
     Agenda 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. Findings and purposes.

       TITLE I--FEDERAL COMMITMENT TO URBAN ECONOMIC DEVELOPMENT

Sec. 101. Federal purchases from businesses in empowerment zones, 
              enterprise communities, and enterprise zones.
Sec. 102. Minimum allocation of foreign assistance for purchase of 
              certain United States goods.
Sec. 103. Preference for location of manufacturing outreach centers in 
              urban areas.
Sec. 104. Preference for construction and improvement of Federal 
              facilities in distressed urban areas.
Sec. 105. Definitions.

   TITLE II--TAX INCENTIVES TO STIMULATE URBAN ECONOMIC DEVELOPMENT.

Sec. 201. Treatment of rehabilitation credit under passive activity 
              limitations.
Sec. 202. Rehabilitation credit allowed to offset portion of 
              alternative minimum tax.
Sec. 203. Commercial industrial development bonds.
Sec. 204. Increase in amount of qualified small issue bonds permitted 
              for facilities to be used by related principal users.
Sec. 205. Simplification of arbitrage interest rebate waiver.
Sec. 206. Qualified residential rental project bonds partially exempt 
              from state volume cap.
Sec. 207. Expansion of qualified wages subject to work opportunity 
              credit.
Sec. 208. Exclusion for capital gains on certain investments within 
              empowerment zones and enterprise communities.

             TITLE III--COMMUNITY-BASED HOUSING DEVELOPMENT

Sec. 301. Block grant study.
Sec. 302. Demolition and disposition of public housing.

          TITLE IV--RESPONSE TO URBAN ENVIRONMENTAL CHALLENGES

Sec. 401. Release from liability of persons that fulfill requirements 
              of State and local law.
Sec. 402. Brownfield program.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that--
       (1) cities in the United States have been facing an 
     economic downhill trend in the past several years; and
       (2) a new approach to help such cities prosper is 
     necessary.
       (b) Purposes.--It is the purpose of this Act to--
       (1) provide various incentives for the economic growth of 
     cities in the United States;
       (2) provide an economic agenda designed to reverse current 
     urban economic trends; and
       (3) revitalize the jobs and tax base of such cities without 
     significant new Federal outlays.
       TITLE I--FEDERAL COMMITMENT TO URBAN ECONOMIC DEVELOPMENT

     SEC. 101. FEDERAL PURCHASES FROM BUSINESSES IN EMPOWERMENT 
                   ZONES, ENTERPRISE COMMUNITIES, AND ENTERPRISE 
                   ZONES.

       (a) Requirements.--The Office of Federal Procurement Policy 
     Act (41 U.S.C. 401 et seq.) is amended by adding at the end 
     the following new section:


     ``purchases from businesses in empowerment zones, enterprise 
                   communities, and enterprise zones

       ``Sec. 38. (a) Minimum Purchase Requirement.--Not less than 
     15 percent of the total amount expended by executive agencies 
     for the purchase of goods in a fiscal year shall be expended 
     for the purchase of goods from businesses located in 
     empowerment zones, enterprise communities, or enterprise 
     zones.
       ``(b) Recycled Products.--To the maximum extent practicable 
     consistent with applicable law, the head of an executive 
     agency shall purchase recycled products that meet the needs 
     of the executive agency from businesses located in 
     empowerment zones, enterprise communities, or enterprise 
     zones.
       ``(c) Regulations.--The Federal Acquisition Regulations 
     shall include provisions that ensure the attainment of the 
     minimum purchase requirement set out in subsection (a).
       ``(d) Definitions.--In this section:
       ``(1) The term `empowerment zone' means a zone designated 
     as an empowerment zone pursuant to subchapter U of chapter 1 
     of the Internal Revenue Code of 1986 (26 U.S.C. 1391 et 
     seq.).
       ``(2) The term `enterprise community' means a community 
     designated as an enterprise community pursuant to subchapter 
     U of chapter 1 of the Internal Revenue Code of 1986 (26 
     U.S.C. 1391 et seq.).
       ``(3) The term `enterprise zone' has the meaning given such 
     term in section 701(a)(1) of the Housing and Community 
     Development Act of 1987 (42 U.S.C. 11501(a)(1)).''.
       (b) Effective Date.--Section 38 of the Office of Federal 
     Procurement Policy Act, as added by subsection (a), shall 
     take effect on the date of the enactment of this Act and 
     shall apply with respect to fiscal years beginning after 
     September 30, 1996.
       (c) Conforming Amendment.--The table of contents in section 
     1(b) of the Office of Federal Procurement Policy Act is 
     amended by adding at the end the following new item:

``Sec. 38. Purchases from businesses in empowerment zones, enterprise 
              communities, and enterprise zones.''.

     SEC. 102. MINIMUM ALLOCATION OF FOREIGN ASSISTANCE FOR 
                   PURCHASE OF CERTAIN UNITED STATES GOODS.

       (a) Allocation of Assistance.--Notwithstanding any other 
     provision of law, effective beginning with fiscal year 1997, 
     not less than 15 percent of United States assistance provided 
     in a fiscal year shall be provided in the form of credits 
     which may only be used for the purchase of United States 
     goods produced, manufactured, or assembled in empowerment 
     zones, enterprise communities, or enterprise zones within the 
     United States.
       (b) United States Assistance.--As used in this section, the 
     term ``United States assistance'' means--
       (1) any assistance under the Foreign Assistance Act of 1961 
     (22 U.S.C. 2151 et seq.);
       (2) sales, or financing of sales under the Arms Export 
     Control Act (22 U.S.C. 2751 et seq.); and
       (3) assistance and other activities under the Support for 
     East European Democracy (SEED) Act of 1989 (22 U.S.C. 5401 et 
     seq.).

     SEC. 103. PREFERENCE FOR LOCATION OF MANUFACTURING OUTREACH 
                   CENTERS IN URBAN AREAS.

       (a) Designation.--In designating an organization as a 
     manufacturing outreach center under paragraph (11) of section 
     5 of the Stevenson-Wydler Technology Innovation Act of 1980 
     (15 U.S.C. 3704(11)), the Secretary of Commerce shall, to the 
     maximum extent practicable, designate organizations that are 
     located in empowerment zones, enterprise communities, or 
     enterprise zones.
       (b) Financial Assistance.--In utilizing a competitive, 
     merit-based review process to determine the manufacturing 
     outreach centers to which to provide financial assistance 
     under such section, the Secretary shall give such additional 
     preference to centers located in empowerment zones, 
     enterprise communities, and enterprise zones as the Secretary 
     determines appropriate in order to ensure the continuing 
     existence of such centers in such zones.

     SEC. 104. PREFERENCE FOR CONSTRUCTION AND IMPROVEMENT OF 
                   FEDERAL FACILITIES IN DISTRESSED URBAN AREAS.

       (a) Preference.--Notwithstanding any other provision of 
     law, in determining the location for the construction of a 
     new facility of a department or agency of the Federal 
     Government, in determining to improve an existing facility 
     (including an improvement in lieu of such construction), or 
     in determining the location to which to relocate functions of 
     a department or agency, the head of the department or agency 
     making the determination shall take affirmative action to 
     construct or improve the facility, or to relocate the 
     functions, in a distressed urban area.
       (b) Urban Impact Statement.--A determination to construct a 
     new facility of a department or agency of the Federal 
     Government, to improve an existing facility, or to relocate 
     the functions of a department or agency may not be made until 
     the head of the department or agency making the determination 
     prepares and submits to the President a report that--
       (1) in the case of a facility to be constructed--
       (A) identifies at least one distressed urban area that is 
     an appropriate location for the facility;
       (B) describes the costs and benefits arising from the 
     construction and utilization of the facility in the area, 
     including the effects of such construction and utilization on 
     the rate of unemployment in the area; and
       (C) describes the effect on the economy of the area of the 
     closure or consolidation, if any, of Federal facilities 
     located in the area during the 10-year period ending on the 
     date of the report, including the total number of Federal and 
     non-Federal employment positions terminated in the area as a 
     result of such closure or consolidation;
       (2) in the case of a facility to be improved that is not 
     located in a distressed urban area--
       (A) identifies at least one facility located in a 
     distressed urban area that would serve as an appropriate 
     alternative location for the facility;
       (B) describes the costs and benefits arising from the 
     improvement and utilization of the facility located in such 
     area as an alternative location for the facility to be 
     improved, including the effect of the improvement and 
     utilization of the facility so located on the rate of 
     unemployment in such area; and
       (C) describes the effect on the economy of such area of the 
     closure or consolidation, if any, of Federal facilities 
     located in such area during the 10-year period ending on the 
     date of the report, including the total number of

[[Page S373]]

     Federal and non-Federal employment positions terminated in 
     such area as a result of such closure or consolidation;
       (3) in the case of a facility to be improved that is 
     located in a distressed urban area--
       (A) describes the costs and benefits arising from the 
     improvement and continuing utilization of the facility in the 
     area, including the effect of such improvement and continuing 
     utilization on the rate of unemployment in the area; and
       (B) describes the effect on the economy of the area of the 
     closure or consolidation, if any, of Federal facilities 
     located in the area during the 10-year period ending on the 
     date of the report, including the total number of Federal and 
     non-Federal employment positions terminated in the area as a 
     result of such closure or consolidation; or
       (4) in the case of a relocation of functions--
       (A) identifies at least one distressed urban area that 
     would serve as an appropriate location for the carrying out 
     of the functions;
       (B) describes the costs and benefits arising from carrying 
     out the functions in the area, including the effect of 
     carrying out the functions on the rate of unemployment in the 
     area; and
       (C) describes the effect on the economy of the area of the 
     closure or consolidation, if any, of Federal facilities 
     located in the area during the 10-year period ending on the 
     date of the report, including the total number of Federal and 
     non-Federal employment positions terminated in the area as a 
     result of such closure or consolidation.
       (c) Applicability to Department of Defense Facilities.--The 
     requirements set forth in subsections (a) and (b) shall apply 
     to a determination to construct or improve any facility of 
     the Department of Defense, or to relocate any functions of 
     the Department, unless the President determines that the 
     waiver of the application of such requirements to the 
     facility, or to such relocation, is in the national interest.
       (d) Definition.--In this section, the term ``distressed 
     urban area'' means any city having a population of more than 
     100,000 that meets (as determined by the Secretary of Housing 
     and Urban Development) the qualifications for making an Urban 
     Development Action Grant to a community experiencing severe 
     economic distress that are otherwise established for large 
     cities and urban counties under subpart G of part 570 of 
     title 24, Code of Federal Regulations.

     SEC. 105. DEFINITIONS.

       As used in this title:
       (1) The term ``empowerment zone'' means a zone designated 
     as an empowerment zone pursuant to subchapter U of chapter 1 
     of the Internal Revenue Code of 1986 (26 U.S.C. 1391 et 
     seq.).
       (2) The term ``enterprise community'' means a community 
     designated as an enterprise community pursuant to subchapter 
     U of chapter 1 of the Internal Revenue Code of 1986 (26 
     U.S.C. 1391 et seq.).
       (3) The term ``enterprise zone'' has the meaning given such 
     term in section 701(a)(1) of the Housing and Community 
     Development Act of 1987 (42 U.S.C. 11501(a)(1)).
    TITLE II--TAX INCENTIVES TO STIMULATE URBAN ECONOMIC DEVELOPMENT

     SEC. 201. TREATMENT OF REHABILITATION CREDIT UNDER PASSIVE 
                   ACTIVITY LIMITATIONS.

       (a) General Rule.--Paragraphs (2) and (3) of section 469(i) 
     of the Internal Revenue Code of 1986 (relating to $25,000 
     offset for rental real estate activities) are amended to read 
     as follows:
       ``(2) Dollar limitations.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the aggregate amount to which paragraph (1) 
     applies for any taxable year shall not exceed $25,000, 
     reduced (but not below zero) by 50 percent of the amount (if 
     any) by which the adjusted gross income of the taxpayer for 
     the taxable year exceeds $100,000.
       ``(B) Phaseout not applicable to low-income housing 
     credit.--In the case of the portion of the passive activity 
     credit for any taxable year which is attributable to any 
     credit determined under section 42--
       ``(i) subparagraph (A) shall not apply, and
       ``(ii) paragraph (1) shall not apply to the extent that the 
     deduction equivalent of such portion exceeds--

       ``(I) $25,000, reduced by
       ``(II) the aggregate amount of the passive activity loss 
     (and the deduction equivalent of any passive activity credit 
     which is not so attributable and is not attributable to the 
     rehabilitation credit determined under section 47) to which 
     paragraph (1) applies after the application of subparagraph 
     (A).

       ``(C) $55,500 limit for rehabilitation credits.--In the 
     case of the portion of the passive activity credit for any 
     taxable year which is attributable to the rehabilitation 
     credit determined under section 47--
       ``(i) subparagraph (A) shall not apply, and
       ``(ii) paragraph (1) shall not apply to the extent that the 
     deduction equivalent of such portion exceeds--

       ``(I) $55,500, reduced by
       ``(II) the aggregate amount of the passive activity loss 
     (and the deduction equivalent of any passive activity credit 
     which is not so attributable) to which paragraph (1) applies 
     for the taxable year after the application of subparagraphs 
     (A) and (B).

       ``(3) Adjusted gross income.--For purposes of paragraph 
     (2)(A), adjusted gross income shall be determined without 
     regard to--
       ``(A) any amount includable in gross income under section 
     86,
       ``(B) any amount excludable from gross income under section 
     135, 911, 931, or 933,
       ``(C) any amount allowable as a deduction under section 
     219, and
       ``(D) any passive activity loss.''.
       (b) Conforming Amendments.--
       (1) Subparagraph (B) of section 469(i)(4) of the Internal 
     Revenue Code of 1986 is amended to read as follows:
       ``(B) Reduction for surviving spouse's exemption.--For 
     purposes of subparagraph (A), the $25,000 amounts under 
     paragraph (2)(A) and (2)(B)(ii) and the $55,500 amount under 
     paragraph (2)(C)(ii) shall each be reduced by the amount of 
     the exemption under paragraph (1) (determined without regard 
     to the reduction contained in paragraph (2)(A)) which is 
     allowable to the surviving spouse of the decedent for the 
     taxable year ending with or within the taxable year of the 
     estate.''.
       (2) Subparagraph (A) of section 469(i)(5) of such Code is 
     amended by striking clauses (i), (ii), and (iii) and 
     inserting the following:
       ``(i) `$12,500' for `$25,000' in subparagraphs (A) and 
     (B)(ii) of paragraph (2),
       ``(ii) `$50,000' for `$100,000' in paragraph (2)(A)'', and
       ``(iii) `$27,750' for `$55,500' in paragraph (2)(C)(ii).''.
       (3) The subsection heading for subsection (i) of section 
     469 of such Code is amended by striking ``$25,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service on or after the 
     date of the enactment of this Act, in taxable years ending on 
     or after such date.

     SEC. 202. REHABILITATION CREDIT ALLOWED TO OFFSET PORTION OF 
                   ALTERNATIVE MINIMUM TAX.

       (a) In General.--Section 38(c) of the Internal Revenue Code 
     of 1986 (relating to limitation based on amount of tax) is 
     amended by redesignating paragraph (3) as paragraph (4) and 
     by inserting after paragraph (2) the following new paragraph:
       ``(3) Rehabilitation investment credit may offset portion 
     of minimum tax.--
       ``(A) In general.--In the case of the rehabilitation 
     investment tax credit--
       ``(i) this section and section 39 shall be applied 
     separately with respect to such credit, and
       ``(ii) for purposes of applying paragraph (1) to such 
     credit--

       ``(I) the tentative minimum tax under subparagraph (A) 
     thereof shall be reduced by the minimum tax offset amount 
     determined under subparagraph (B) of this paragraph, and
       ``(II) the limitation under paragraph (1) (as modified by 
     subclause (I)) shall be reduced by the credit allowed under 
     subsection (a) for the taxable year (other than the 
     rehabilitation investment tax credit).

       ``(B) Minimum tax offset amount.--For purposes of 
     subparagraph (A)(ii)(I), the minimum tax offset amount is an 
     amount equal to--
       ``(i) in the case of a taxpayer not described in clause 
     (ii), the lesser of--

       ``(I) 25 percent of the tentative minimum tax for the 
     taxable year, or
       ``(II) $20,000, or

       ``(ii) in the case of a C corporation other than a closely 
     held C corporation (as defined in section 469(j)(1)), 5 
     percent of the tentative minimum tax for the taxable year.
       ``(C) Rehabilitation investment tax credit.--For purposes 
     of this paragraph, the term `regular investment tax credit' 
     means the portion of the credit under subsection (a) which is 
     attributable to the credit determined under section 47.''.
       (b) Conforming Amendment.--Section 38(d) of the Internal 
     Revenue Code of 1986 (relating to components of investment 
     credit) is amended by adding at the end the following new 
     paragraph:
       ``(4) Special rule for rehabilitation credit.--
     Notwithstanding paragraphs (1) and (2), the rehabilitation 
     investment tax credit (as defined in subsection (c)(2)(C)) 
     shall be treated as used last.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 203. COMMERCIAL INDUSTRIAL DEVELOPMENT BONDS.

       (a) Facility Bonds.--
       (1) In general.--Subsection (a) of section 142 of the 
     Internal Revenue Code of 1986 (relating to exempt facility 
     bond) is amended by striking ``or'' at the end of paragraph 
     (11), by striking the period at the end of paragraph (12) and 
     inserting a comma, and by adding at the end the following new 
     paragraphs:
       ``(13) sports facilities,
       ``(14) convention or trade show facilities,
       ``(15) freestanding parking facilities,
       ``(16) air or water pollution control facilities, or
       ``(17) industrial parks.''.
       (2) Industrial parks defined.--Section 142 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new subsection:
       ``(k) Industrial Parks.--A facility shall be treated as 
     described in subsection (a)(17) only if all of the property 
     to be financed by the net proceeds of the issue--
       ``(1) is--
       ``(A) land, and
       ``(B) water, sewage, drainage, or similar facilities, or 
     transportation, power, or communication facilities incidental 
     to the use of such land as an industrial park, and
       ``(2) is not structures or buildings (other than with 
     respect to facilities described in paragraph (1)(B)).''.

[[Page S374]]

       (3) Conforming amendments.--
       (A) Section 147(c) of the Internal Revenue Code of 1986 
     (relating to limitation on use for land acquisition) is 
     amended by adding at the end the following new paragraph:
       ``(4) Special rule for industrial parks.--In the case of a 
     bond described in section 142(a)(17), paragraph (1)(A) shall 
     be applied by substituting `50 percent' for `25 percent'.''.
       (B) Section 147(e) of such Code (relating to no portion of 
     bonds may be issued for skyboxes, airplanes, gambling 
     establishments, etc.) is amended by striking ``A private 
     activity bond'' and inserting ``Except in the case of a bond 
     described in section 142(a)(13), a private activity bond''.
       (b) Small Issue Bonds.--Section 144(a)(12) of the Internal 
     Revenue Code of 1986 (relating to termination of qualified 
     small issue bonds) is amended--
       (1) by striking ``any bond'' in subparagraph (A)(i) and 
     inserting ``any bond described in subparagraph (B)'',
       (2) by striking ``a bond'' in subparagraph (A)(ii) and 
     inserting ``a bond described in subparagraph (B)'', and
       (3) by striking subparagraph (B) and inserting the 
     following:
       ``(B) Bonds for farming purposes.--A bond is described in 
     this subparagraph if it is issued as part of an issue 95 
     percent or more of the net proceeds of which are to be used 
     to provide any land or property not in accordance with 
     section 147(c)(2).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after December 31, 1996.

     SEC. 204. INCREASE IN AMOUNT OF QUALIFIED SMALL ISSUE BONDS 
                   PERMITTED FOR FACILITIES TO BE USED BY RELATED 
                   PRINCIPAL USERS.

       (a) In General.--Clause (i) of section 144(a)(4)(A) of the 
     Internal Revenue Code of 1986 (relating to $10,000,000 limit 
     in certain cases) is amended by striking ``$10,000,000'' and 
     inserting ``$50,000,000''.
       (b) Clerical Amendment.--The heading of paragraph (4) of 
     section 144(a) of the Internal Revenue Code of 1986 is 
     amended by striking ``$10,000,000'' and inserting 
     ``$50,000,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) obligations issued after the date of the enactment of 
     this Act, and
       (2) capital expenditures made after such date with respect 
     to obligations issued on or before such date.

     SEC. 205. SIMPLIFICATION OF ARBITRAGE INTEREST REBATE WAIVER.

       (a) In General.--Clause (ii) of section 148(f)(4)(C) of the 
     Internal Revenue Code of 1986 (relating to exception from 
     rebate for certain proceeds to be used to finance 
     construction expenditures) is amended to read as follows:
       ``(ii) Spending requirement.--The spending requirement of 
     this clause is met if 100 percent of the available 
     construction proceeds of the construction issue are spent for 
     the governmental purposes of the issue within the 3-year 
     period beginning on the date the bonds are issued.''.
       (b) Conforming Amendments.--
       (1) Clause (iii) of section 148(f)(4)(C) of the Internal 
     Revenue Code of 1986 (relating to exception for reasonable 
     retainage) is repealed.
       (2) Subclause (II) of section 148(f)(4)(C)(vi) of such Code 
     (relating to available construction proceeds) is amended by 
     striking ``2-year period'' and inserting ``3-year period''.
       (3) Subclause (I) of section 148(f)(4)(C)(vii) of such Code 
     (relating to election to pay penalty in lieu of rebate) is 
     amended by striking ``, with respect to each 6-month period 
     after the date the bonds were issued,'' and ``, as of the 
     close of such 6-month period,''.
       (4) Clause (viii) of section 148(f)(4)(C) of such Code 
     (relating to election to terminate 1\1/2\ percent penalty) is 
     amended by striking ``to any 6-month period'' in the matter 
     preceding subclause (I).
       (5) Clause (ii) of section 148(c)(2)(D) of such Code 
     (relating to bonds used to provide construction financing) is 
     amended by striking ``2 years'' and inserting ``3 years''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 206. QUALIFIED RESIDENTIAL RENTAL PROJECT BONDS 
                   PARTIALLY EXEMPT FROM STATE VOLUME CAP.

       (a) In General.--Section 146(g) of the Internal Revenue 
     Code of 1986 (relating to exception for certain bonds) is 
     amended by striking ``and'' at the end of paragraph (3), by 
     striking the period at the end of paragraph (4) and inserting 
     ``, and'', and by inserting after paragraph (4) the 
     following:
       ``(5) 75 percent of any exempt facility bond issued as part 
     of an issue described in section 142(a)(7) (relating to 
     qualified residential rental projects).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 207. EXPANSION OF QUALIFIED WAGES SUBJECT TO WORK 
                   OPPORTUNITY CREDIT.

       (a) Increase in Percentage.--Section 51(a) of the Internal 
     Revenue Code of 1986 (relating to determination of amount) is 
     amended by striking ``35 percent'' and inserting ``50 
     percent''.
       (b) First 3 Years of Wages Subject to Credit.--Section 51 
     of the Internal Revenue Code of 1986 (relating to amount of 
     credit) is amended--
       (1) in subsections (a) and (b)(3), by striking ``first-
     year''; and
       (2) in subsection (b)--
       (A) by striking paragraphs (1) and (2) and inserting the 
     following:
       ``(1) In general.--The term `qualified wages' means the 
     wages paid or incurred by the employer during the taxable 
     year--
       ``(A) with respect to an individual who is a member of a 
     targeted group, and
       ``(B) attributable to service rendered by such individual 
     during the 3-year period beginning with the day the 
     individual begins work for the employer.''; and
       (B) by redesignating paragraph (3) as paragraph (2).
       (b) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after the date of the enactment of this Act.

     SEC. 208. EXCLUSION FOR CAPITAL GAINS ON CERTAIN INVESTMENTS 
                   WITHIN EMPOWERMENT ZONES AND ENTERPRISE 
                   COMMUNITIES.

       (a) In General.--Part II of subchapter U of chapter 1 of 
     the Internal Revenue Code of 1986 is amended by adding at the 
     end the following new section:

     ``SEC. 1395. EXCLUSION FOR GAIN FROM ZONE OR COMMUNITY 
                   INVESTMENTS.

       ``(a) General Rule.--In the case of a taxpayer, gross 
     income shall not include any qualified capital gain 
     recognized on the sale or exchange of a qualified zone asset 
     held for more than 3 years.
       ``(b) Qualified Zone Asset.--For purposes of this section--
       ``(1) In general.--The term `qualified zone asset' means, 
     with respect to any qualified small business--
       ``(A) any qualified zone stock,
       ``(B) any qualified zone property, and
       ``(C) any qualified zone partnership interest.
       ``(2) Qualified small business.--
       ``(A) In general.--The term `qualified small business' 
     means any entity or proprietorship the aggregate gross assets 
     (within the meaning of section 1202(d)(2)) of which do not 
     exceed $50,000,000.
       ``(B) Application of rules.--In determining if an entity or 
     proprietorship is a qualified small business, rules similar 
     to the rules of subsections (a) and (b) of section 52 shall 
     apply.
       ``(3) Qualified zone stock.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `qualified zone stock' means any stock in a domestic 
     corporation if--
       ``(i) such stock is acquired by the taxpayer on original 
     issue from the corporation solely in exchange for cash,
       ``(ii) as of the time such stock was issued, such 
     corporation was an enterprise zone business (or, in the case 
     of a new corporation, such corporation was being organized 
     for purposes of being an enterprise zone business), and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such stock, such corporation qualified as an 
     enterprise zone business.
       ``(B) Redemptions.--The term `qualified zone stock' shall 
     not include any stock acquired from a corporation which made 
     a substantial stock redemption or distribution (without a 
     bona fide business purpose therefor) in an attempt to avoid 
     the purposes of this section.
       ``(4) Qualified zone property.--
       ``(A) In general.--The term `qualified zone property' has 
     the meaning given to such term by section 1397C, except that 
     references to empowerment zones shall be treated as including 
     references to enterprise communities.
       ``(5) Qualified zone partnership interest.--The term 
     `qualified zone partnership interest' means any interest in a 
     partnership if--
       ``(A) such interest is acquired by the taxpayer from the 
     partnership solely in exchange for cash,
       ``(B) as of the time such interest was acquired, such 
     partnership was an enterprise zone business (or, in the case 
     of a new partnership, such partnership was being organized 
     for purposes of being an enterprise zone business), and
       ``(C) during substantially all of the taxpayer's holding 
     period for such interest, such partnership qualified as an 
     enterprise zone business.
     A rule similar to the rule of paragraph (2)(B) shall apply 
     for purposes of this paragraph.
       ``(6) Treatment of subsequent purchasers.--The term 
     `qualified zone asset' includes any property which would be a 
     qualified zone asset but for paragraph (3)(A)(i), section 
     1397(a)(1)(B), or paragraph (5)(A) in the hands of the 
     taxpayer if such property was a qualified zone asset in the 
     hands of any prior holder.
       ``(7) 10-year safe harbor.--If any property ceases to be a 
     qualified zone asset by reason of paragraph (3)(A)(iii), 
     section 1397(a)(1)(C), or paragraph (5)(C) after the 10-year 
     period beginning on the date the taxpayer acquired such 
     property, such property shall continue to be treated as 
     meeting the requirements of such paragraph; except that the 
     amount of gain to which subsection (a) applies on any sale or 
     exchange of such property shall not exceed the amount which 
     would be qualified capital gain had such property been sold 
     on the date of such cessation.
       ``(8) Treatment of zone or community terminations.--The 
     termination of any designation of an area as an empowerment 
     zone or enterprise community shall be disregarded for 
     purposes of determining whether any property is a qualified 
     zone asset.
       ``(c) Other Definitions and Special Rules.--For purposes of 
     this section--

[[Page S375]]

       ``(1) Enterprise zone business.--For purposes of this 
     section, the term `enterprise zone business' has the meaning 
     given to such term by section 1394(b)(3).''.
       ``(2) Qualified capital gain.--Except as otherwise provided 
     in this subsection, the term `qualified capital gain' means 
     any long-term capital gain.
       ``(3) Certain gain on real property not qualified.--The 
     term `qualified capital gain' shall not include any gain 
     which would be treated as ordinary income under section 1250 
     if section 1250 applied to all depreciation rather than the 
     additional depreciation.
       ``(4) Gain attributable to periods after termination of 
     zone or community designation not qualified.--The term 
     `qualified capital gain' shall not include any gain 
     attributable to periods after the termination of any 
     designation of an area as an empowerment zone or enterprise 
     community.
       ``(d) Treatment of Pass-Thru Entities.--
       ``(1) Sales and exchanges.--Gain on the sale or exchange of 
     an interest in a pass-thru entity which is a qualified small 
     business held by the taxpayer (other than an interest in an 
     entity which was an enterprise zone business during 
     substantially all of the period the taxpayer held such 
     interest) for more than 3 years shall be treated as gain 
     described in subsection (a) to the extent such gain is 
     attributable to amounts which would be qualified capital gain 
     on qualified zone assets (determined as if such assets had 
     been sold on the date of the sale or exchange) held by such 
     entity for more than 3 years and throughout the period the 
     taxpayer held such interest. A rule similar to the rule of 
     paragraph (2)(B) shall apply for purposes of the preceding 
     sentence.
       ``(2) Distributions.--
       ``(A) In general.--Any amount included in income by reason 
     of holding an interest in a pass-thru entity (other than an 
     entity which was an enterprise zone business during 
     substantially all of the period the taxpayer held the 
     interest to which such inclusion relates) shall be treated as 
     gain described in subsection (a) if such amount meets the 
     requirements of subparagraph (B).
       ``(B) Requirements.--An amount meets the requirements of 
     this subparagraph if--
       ``(i) such amount is attributable to gain on the sale or 
     exchange by the pass-thru entity of property which is a 
     qualified zone asset in the hands of such entity and which 
     was held by such entity for the period required under 
     subsection (a), and
       ``(ii) such amount is includible in the gross income of the 
     taxpayer by reason of the holding of an interest in such 
     entity which was held by the taxpayer on the date on which 
     such pass-thru entity acquired such asset and at all times 
     thereafter before the disposition of such asset by such pass-
     thru entity.
       ``(C) Limitation based on interest originally held by 
     taxpayer.--Subparagraph (A) shall not apply to any amount to 
     the extent such amount exceeds the amount to which 
     subparagraph (A) would have applied if such amount were 
     determined by reference to the interest the taxpayer held in 
     the pass-thru entity on the date the qualified zone asset was 
     acquired.
       ``(3) Pass-thru entity.--For purposes of this subsection, 
     the term `pass-thru entity' means--
       ``(A) any partnership,
       ``(B) any S corporation,
       ``(C) any regulated investment company, and
       ``(D) any common trust fund.
       ``(e) Sales and Exchanges of Interests in Partnerships and 
     S Corporations Which are Qualified Zone Businesses.--In the 
     case of the sale or exchange of an interest in a partnership, 
     or of stock in an S Corporation, which was an enterprise zone 
     business during substantially all of the period the taxpayer 
     held such interest or stock) is an enterprise zone business, 
     the amount of qualified capital gain shall be determined 
     without regard to--
       ``(1) any intangible, and any land, which is not an 
     integral part of any qualified business (as defined in 
     section 1397B(d)), and
       ``(2) gain attributable to periods before the designation 
     of an area as an empowerment zone or enterprise community.
       ``(f) Certain Tax-Free and Other Transfers.--For purposes 
     of this section--
       ``(1) In general.--In the case of a transfer of a qualified 
     zone asset to which this subsection applies, the transferee 
     shall be treated as--
       ``(A) having acquired such asset in the same manner as the 
     transferor, and
       ``(B) having held such asset during any continuous period 
     immediately preceding the transfer during which it was held 
     (or treated as held under this subsection) by the transferor.
       ``(2) Transfers to which subsection applies.--This 
     subsection shall apply to any transfer--
       ``(A) by gift,
       ``(B) at death, or
       ``(C) from a partnership to a partner thereof of a 
     qualified zone asset with respect to which the requirements 
     of subsection (d)(2) are met at the time of the transfer 
     (without regard to the 3-year holding requirement).
       ``(3) Certain rules made applicable.--Rules similar to the 
     rules of section 1244(d)(2) shall apply for purposes of this 
     section.''.
       (b) Conforming Amendments.--
       (1) Section 172(d)(2)(B) of the Internal Revenue Code of 
     1986 (relating to modifications with respect to net operating 
     loss deduction) is amended by striking ``section 1202'' and 
     inserting ``sections 1202 and 1395B''.
       (2) Section 642(c)(4) of such Code (relating to 
     adjustments) is amended by inserting ``or 1395B(a)'' after 
     ``section 1202(a)'' and by inserting ``or 1395B'' after 
     ``section 1202''.
       (3) Section 643(a)(3) of such Code (defining distributable 
     net income) is amended by striking ``section 1202'' and 
     inserting ``sections 1202 and 1395B''.
       (4) Section 691(c)(4) of such Code (relating to 
     coordination with capital gain provisions) is amended by 
     striking ``1202, and 1211'' and inserting ``1202, 1395B, and 
     1211''.
       (5) The second sentence of section 871(a)(2) of such Code 
     (relating to capital gains of aliens present in the United 
     States 183 days or more) is amended by inserting ``or 1395B'' 
     after ``section 1202''.
       (6) Part II of subchapter U of chapter 1 of such Code is 
     amended to read as follows:

      ``PART II--INCENTIVES FOR EMPOWERMENT ZONES AND ENTERPRISE 
                            COMMUNITIES.''.

       (7) The table of parts of subchapter U of chapter 1 of such 
     Code is amended to read as follows:

``Part II. Incentives for empowerment zones and enterprise 
              communities.''.
       (8) The table of sections of part II of subchapter U of 
     chapter 1 of such Code is amended by adding at the end the 
     following new item:

``Sec. 1395. Exclusion for gain from zone or community investments.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.
             TITLE III--COMMUNITY-BASED HOUSING DEVELOPMENT

     SEC. 301. BLOCK GRANT STUDY.

       (a) Study.--
       (1) In general.--The Secretary of Housing and Urban 
     Development shall conduct a study regarding--
       (A) the feasibility of consolidating existing public and 
     low-income housing programs under the United States Housing 
     Act of 1937 into a comprehensive block grant system of 
     Federal aid that--
       (i) provides assistance on an annual basis;
       (ii) maximizes funding certainty and flexibility; and
       (iii) minimizes paperwork and delay; and
       (B) the possibility of administering future public and low-
     income housing programs under the United States Housing Act 
     of 1937 in accordance with such a block grant system.
       (2) Public housing/section 8 moving to work 
     demonstration.--In conducting the study described in 
     paragraph (1), the Secretary of Housing and Urban Development 
     shall consider data from and assessments of the demonstration 
     program conducted under section 204 of the Omnibus 
     Consolidated Rescissions and Appropriations Act of 1996 
     (Public Law 104-134, 110 Stat. 1321).
       (b) Report to Comptroller General.--Not later than 18 
     months after the date of enactment of this Act, the Secretary 
     of Housing and Urban Development shall submit to the 
     Comptroller General of the United States a report that 
     includes--
       (1) the results of the study conducted under subsection 
     (a); and
       (2) any recommendations for legislation.
       (c) Report to Congress.--Not later than 24 months after the 
     date of enactment of this Act, the Comptroller General of the 
     United States shall submit to the Congress a report that 
     includes--
       (1) an analysis of the report submitted under subsection 
     (b); and
       (2) any recommendations for legislation.

     SEC. 302. DEMOLITION AND DISPOSITION OF PUBLIC HOUSING.

       Section 18(b) of the United States Housing Act of 1937 (42 
     U.S.C. 1437p(b)) is amended--
       (1) in paragraph (1), by striking ``and'' at the end;
       (2) in paragraph (2), by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(3) the public housing agency develops a plan that 
     provides, subject to the approval of both the unit of general 
     local government in which the property on which the units to 
     be demolished or disposed of are located and the local public 
     housing agency, for--
       ``(A) the eventual reconstruction of units on the same 
     property on which the units to be demolished or disposed of 
     are located; and
       ``(B) the ultimate relocation of displaced tenants to that 
     property.''.
          TITLE IV--RESPONSE TO URBAN ENVIRONMENTAL CHALLENGES

     SEC. 401. RELEASE FROM LIABILITY OF PERSONS THAT FULFILL 
                   REQUIREMENTS OF STATE AND LOCAL LAW.

       Section 107 of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9607) (as 
     amended by section 2) is amended by adding at the end the 
     following:
       ``(o) Release From Liability of Persons That Fulfill 
     Requirements of State and Local Law.--
       ``(1) In general.--Neither the President nor any other 
     person may bring an administrative or judicial enforcement 
     action under this Act with respect to a facility located in 
     an urban area that is not listed or proposed for listing on 
     the National Priorities List against a person that has 
     fulfilled all requirements applicable to the person under 
     State and local law to conduct response action at the 
     facility, as evidenced by a release from liability issued by 
     authorized State and

[[Page S376]]

     local officials, to the extent that the administrative or 
     judicial action would seek to require response action that is 
     within the scope of the response action conducted in 
     accordance with State and local law.
       ``(2) Urban area defined.--For purposes of paragraph (1), 
     the term `urban area' has the meaning given that term under 
     section 1393(a)(3) of the Internal Revenue Code of 1986.''.

     SEC. 402. BROWNFIELD PROGRAM.

       Title I of the Comprehensive Environmental Response, 
     Compensation, and Liability Act of 1980 (42 U.S.C. 9601 et 
     seq.) is amended by adding at the end the following:

     ``SEC. 127. BROWNFIELD PROGRAM.

       ``(a) Definition of Brownfield Facility.--In this section, 
     the term `brownfield facility' means--
       ``(1) a parcel of land that contains an abandoned, idled, 
     or underused commercial or industrial facility, the expansion 
     or redevelopment of which is complicated by the presence or 
     potential presence of a hazardous substance; but
       ``(2) does not include--
       ``(A) a facility that is the subject of a removal or 
     planned removal under this title;
       ``(B) a facility that is listed or has been proposed for 
     listing on the National Priorities List or that has been 
     removed from the National Priorities List;
       ``(C) a facility that is subject to corrective action under 
     section 3004(u) or 3008(h) of the Solid Waste Disposal Act 
     (42 U.S.C. 6924(u) or 6928(h)) at the time at which an 
     application for a grant or loan concerning the facility is 
     submitted under this section;
       ``(D) a land disposal unit with respect to which--
       ``(i) a closure notification under subtitle C of the Solid 
     Waste Disposal Act (42 U.S.C. 6921 et seq.) has been 
     submitted; and
       ``(ii) closure requirements have been specified in a 
     closure plan or permit;
       ``(E) a facility with respect to which an administrative 
     order on consent or judicial consent decree requiring cleanup 
     has been entered into by the United States under this Act, 
     the Solid Waste Disposal Act (42 U.S.C. 6901 et seq.), the 
     Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), 
     the Toxic Substances Control Act (15 U.S.C. 2601 et seq.), or 
     the Safe Drinking Water Act (42 U.S.C. 300f et seq.);
       ``(F) a facility that is owned or operated by a department, 
     agency, or instrumentality of the United States; or
       ``(G) a portion of a facility, for which portion, 
     assistance for response activity has been obtained under 
     subtitle I of the Solid Waste Disposal Act (42 U.S.C. 6991 et 
     seq.) from the Leaking Underground Storage Tank Trust Fund 
     established under section 9508 of the Internal Revenue Code 
     of 1986.
       ``(b) Maintenance of Brownfield Program.--The Administrator 
     shall maintain the brownfield program established by the 
     Administrator before the date of enactment of this section.
       ``(c) Elements of Program.--In conducting the brownfield 
     program, the Administrator may--
       ``(1) expend funds to identify and examine idle or 
     underused industrial and commercial facilities for inclusion 
     in the brownfield program; and
       ``(2) provide grants to State and local governments to 
     clean up brownfields and return brownfields to productive 
     use.
       ``(d) Maximum Grant Amount.--A grant under subsection (c) 
     shall not exceed $200,000 with respect to any brownfield 
     facility.
       ``(e) Authorization of Appropriations.--There are 
     authorized to be appropriated out of the Hazardous Substance 
     Superfund to carry out this section--
       ``(1) $50,000,000 for fiscal year 1998;
       ``(2) $55,000,000 for fiscal year 1999; and
       ``(3) $60,000,000 for fiscal year 2000.''.
                                 ______
                                 
      By Mr. SPECTER:
  S. 24. A bill to provide improved access to health care, enhance 
informed individual choice regarding health care services, lower health 
care costs through the use of appropriate providers, improve the 
quality of health care, improve access to long-term care, and for other 
purposes; to the Committee on Finance.


                   HEALTH CARE ASSURANCE ACT OF 1997

  Mr. SPECTER. Mr. President, the start of the 105th Congress gives 
those of us in the Senate and the House a new opportunity to make a 
real difference in the lives of the American people. It is a chance for 
us to learn from the past concerning how to best respond to the 
challenges that are before us and forge important alliances to enable 
us to pass legislation that is important to the American people. One of 
our first priorities must be additional reforms of our Nation's health 
care system.

  In the 104th Congress, I was pleased to cosponsor the Health 
Insurance Portability and Accountability Act of 1996, better known as 
the Kassebaum-Kennedy bill (S. 1028). There is no question that 
Kassebaum-Kennedy made significant steps forward in addressing 
troubling issues in health care. The bill's incremental approach to 
health care reform is what allowed it to generate consensus support in 
the Senate; we knew that it did not address every single problem in the 
health care delivery system, but it would make life better for millions 
of American men, women, and children.
  There is much more that needs to be done. Accordingly, today I am 
introducing the Health Care Assurance Act of 1997, which, if enacted, 
will take us further down the path of incremental reforms started by 
Kassebaum-Kennedy. It is my firm belief that the best approach to 
addressing our Nation's health care problems is to enact reforms that 
improve upon our current market based health care system without 
completely overhauling our current system. My bill is intended to 
initiate and stimulate discussion in order to move the health care 
reform debate forward. I welcome any suggestions my colleagues may have 
concerning how the bill can be improved, as long as such suggestions 
are consistent with the incremental approach to reform that has proven 
to be the only way to obtain successful health care reform.
  I want to note at the outset that through a State-run voucher system, 
my legislation would address health care coverage for the first time 
for the vast majority of the 10 million American children who lack 
health care insurance today. My proposal is compassionate and efficient 
and will preserve patient choice as its hallmark.

                          ____________________