[Congressional Record Volume 143, Number 5 (Wednesday, January 22, 1997)]
[Senate]
[Pages S634-S652]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mrs. HUTCHISON:
  S. 179. A bill to reform the financing of Federal elections, and for 
other purposes; to the Committee on Rules and Administration.


         the campaign finance reform and disclosure act of 1997

  Mrs. HUTCHISON. Mr. President, the bill that I introduce is the 
Campaign Finance Reform and Disclosure Act of 1997. This important 
legislation will correct several of the abuses that we have seen take 
place under the present system and will demonstrate to the American 
people that we in Congress intend to do everything possible to bring 
campaign-related activities into the light of day. Moreover, this bill 
will not force the American taxpayer to further subsidize Federal 
campaigns, nor will it impose an elaborate new system of costly and 
burdensome campaign regulations. First, the act will require that at 
least 60 percent of a Senate candidate's campaign funds come from 
individuals within that Senator's home State. It will terminate the 
mass mail franking privilege for Senators during the year in which he 
or she is seeking election, and thereby end one of the more substantial 
advantages of incumbents over challengers.
  The bill will also make the contribution limits for political action 
committees equal to those in place for individuals, and will index that 
uniform limit to the rate of inflation. I believe PAC's serve a 
beneficial and necessary purpose in our system by allowing groups of 
individuals, whether at their place of employment, through an issue 
advocacy group, or elsewhere, to participate in a more direct way in 
the grassroots political process that is at the heart of our electoral 
system. But I want those PACs to have the same allowances and the same 
limitations as individuals, so that one does not have a 
disproportionate advantage over the other. The bill accomplishes this 
in a simple and responsible way by leveling the playing field between 
people who contribute to candidates directly and those who choose to 
leverage their contribution through PAC's. Individuals who wish to 
contribute money should continue to have that choice.
  However, I do not believe that candidates should have the right to 
buy and then resell their office. Therefore, this bill will also place 
a limitation of $250,000 on the amount that a congressional candidate 
may repay himself from campaign funds for personal loans he or she 
makes to the campaign. Again, this will help level the playing field 
for all candidates.
  In addition, the Campaign Finance Reform and Disclosure Act will ban 
once and for all campaign contributions by noncitizens. The use of 
campaign funds for personal use will also be totally banned. And 
political parties will be prohibited from accepting contributions 
earmarked for specific candidates, thereby bypassing the limitations 
that are in our laws today.
  Mr. President, these are the main provisions of my legislation to 
reform our campaign finance laws. As the Senate continues to address 
this most important issue, I encourage my colleagues to review these 
simple and workable proposals and to answer the American people's call 
for reform in this area.
                                 ______
                                 
      By Mrs. HUTCHISON:
  S. 180. A bill to amend the Internal Revenue Code of 1986 to allow 
married individuals to contribute to an IRA even if their spouse is a 
participant in a pension plan; to the Committee on Finance.


                       homemaker ira legislation

  Mrs. HUTCHISON. Mr. President, this bill closes a loophole in the 
homemaker IRA bill that we passed in the last Congress. We made the 
homemakers of our country equal to wage earners in their ability to 
save for their retirement futures through individual retirement 
accounts. Presently, every person who is working at home or working 
outside the home can set aside $2,000 a year that earns tax-free 
interest for their retirement security. However, what families are not 
able to do under existing law and what this bill will enable them to 
do, up to $40,000 in income, is to save under a homemaker IRA even if 
the homemaker's spouse has a pension plan. This revision is critical to 
encourage average-income families to save for their retirement.
  Mr. President, if our young people will avail themselves of this 
wonderful new opportunity which Congress has given them to allow 
homemakers as well as those who work outside the home to contribute 
$2,000 a year to an IRA, by the time they retire at age 65, they will 
be able to build a nest egg of a remarkable $1 million, if they both 
start contributing the maximum allowable amount from age 25--$1 million 
for this working, one-income family. If they even wait until they are 
35, they would be able to build up $500,000 for retirement.
  This is an opportunity that I hope every young couple will look at 
and take advantage of to provide for their retirement security. Last 
year we in Congress did the right thing by extending the IRA to 
homemakers. Now we simply need to ensure that this opportunity is 
available to all families of up to $40,000 of income. This bill will do 
just that.
                                 ______
                                 
      By Mr. GRASSLEY (for himself, Mr. Dorgan, Mr. Gorton, Mr. Baucus, 
        Mr. Lott, Mr. Nickles, Mr. Gramm, Mr. Hatch, Mr. Breaux, Ms. 
        Moseley-Braun, Mr. Conrad, Mr. Kerrey, Mr. Daschle, Mr. Shelby, 
        Mr. Bumpers, Mr. Hutchinson, Mr. McCain, Mrs. Feinstein, Mr. 
        Campbell, Mr. Harkin, Mr. Craig, Mr. Kempthorne, Mr. Durbin, 
        Mr. Lugar, Mr. Coats, Mr. Brownback, Mr. Roberts, Mr. Ford, Mr. 
        McConnell, Mr. Sarbanes, Ms. Snowe, Mr. Abraham, Mr. Grams, Mr. 
        Bond, Mr. Cochran, Mr. Burns, Mr. Helms, Mr. Hagel, Mr. 
        Bingaman, Mr. DeWine, Mr. Inhofe, Mr. Wyden, Mr. Johnson, Mrs. 
        Hutchison, Mr. Warner, Mrs. Murray, Mr. Enzi, Mr. Kohl, Ms. 
        Mikulski, Mrs. Boxer, Mr. Robb, Mr. Gregg,

[[Page S635]]

        Mr. Ashcroft, and Mr. Wellstone):
  S. 181. A bill to amend the Internal Revenue Code of 1986 to provide 
that installment sales of certain farmers not be treated as a 
preference item for purposes of the alternative minimum tax; to the 
Committee on Finance.


       the family farm alternative minimum tax relief act of 1997

  Mr. GRASSLEY. Mr. President, today, as I introduce this legislation 
called the Family Farm Alternative Minimum Tax Relief Act of 1997, it 
is a way that 54 of us in this body--and we will still yet get more 
cosponsors, I am sure--are saying, ``Shame on the Internal Revenue 
Service.'' This is our effort to hold the tax-collecting bureaucracy of 
the U.S. Government accountable to what Congress intended. We are 
holding them accountable to the taxpayers, and we will reduce somewhat 
the power of the IRS which comes through intimidation. I have worked 
very closely with three other Senators in a bipartisan fashion, Senator 
Dorgan, Senator Gorton, and Senator Baucus. I thank them for their 
leadership and their cooperation. We have been joined now by 50 of our 
colleagues in a broad bipartisan effort, with the support of the 
leadership of both parties, meaning Senator Lott and Senator Daschle. I 
think that the sort of membership cosponsoring this legislation speaks 
louder, frankly, than anything I can say about the rationale behind 
this bill.
  This bill repeals a very large problem created by the IRS regarding 
farmer-deferred contract arrangements. The problem is currently at a 
crisis level because it is income tax time. Particularly, it is income 
tax time for the farmers of America who must file earlier than others.
  The IRS has found a way to tax farmers for their deferred sales 
contracts. This is contrary to congressional intent. I know the 
Presiding Officer is from Kansas and he understands this, but some 
might not. A deferred sales contract is a situation where a farmer 
delivers his crop this year and gets paid by the local cooperative 
elevator, or privately owned elevator, or some other buyer next year. 
Since Congress intends farmers to be able to use the cash accounting 
method, deferred contracts have been a perfectly acceptable method to 
defer income to another year for taxation. It has been perfectly legal 
over a long period of time.
  Now the IRS has unilaterally decided to deem these traditional 
deferred sales contracts as if, in the words of the IRS, these were 
``installment sales'' agreements. The problem is that installment sales 
are subject to the alternative minimum tax. Then, of course, by doing 
this, the IRS puts the family farmer in trouble for things that, over a 
long period of time, have been entirely legal.
  This IRS initiative is a way for the IRS to deny farmers the use of 
the cash accounting method. When Congress passed the Tax Reform Act of 
1986, it specifically intended that farmers retain the cash accounting 
method. That same act repealed the income averaging method for farmers. 
Income averaging was a way for farmers to level out their regularly 
large fluctuations of income between years. Farmers can have those 
fluctuations because, while local farmers are affected by local weather 
and the weather all over the world.
  Listen to the prices of soybeans today. You will find that whether or 
not it rains right now in Brazil or Argentina is impacting the price of 
soybeans in Iowa and Kansas. The crop prices are affected by crop 
disease and a host of other things that ordinary taxpayers take for 
granted, that farmers have no control over. When income averaging was 
repealed, Congress intended farmers to retain the cash method of 
accounting. We are here today with this bill because the IRS has 
effectively repealed cash accounting, in opposition to the intent of 
Congress.
  Cash accounting is repealed because the traditional deferred sales 
contracts are the practical application of cash accounting. By applying 
the alternative minimum tax, IRS has repealed the deferral in deferred 
contracts. They are contracts but no longer deferred income. Thus, the 
IRS has unilaterally broken the promise that Congress made to farmers, 
and our legislation rights that wrong.
  Ironically, the IRS knows it is in the wrong on this matter, but, of 
course, the IRS is going to go ahead anyway. After all, they encourage, 
from the top to the bottom of the IRS bureaucracy, auditors to go out 
and find all the income they can to tax, and to stretch the law as far 
as they can. And if they do it in this instance, in the case of taxing 
deferred sales contracts, do you think the Internal Revenue 
Commissioner or the Secretary of the Treasury is going to say to some 
auditor out there--slap their hands and say, ``You are wrong''? No, 
they are not going to do that. That would be the right thing to do, but 
they are not going to do that because that would discourage this 
attitude we have had in the IRS. They want to go out and get every 
dollar they can, even if they have to stretch the law to do it.
  Well, in a sense, the Secretary of the Treasury, Robert Rubin--and I 
thank him--and IRS Commissioner Richardson--and I thank her--have 
agreed that this problem results from what they call legislative 
oversight in 1986, because they do not want to say their auditors may 
be wrong. So, they have agreed, in the spirit of this Presidency, this 
second term of office, that we are going to be bipartisan and we are 
going to work together to solve these problems. So Secretary Rubin and 
IRS Commissioner Richardson have said they would not oppose this 
legislation. They agree that Congress did not intend for farmer 
deferred contracts to make these contract incomes subject to the AMT. 
However, as I indicated, these two individuals believe they still must 
enforce what they know to be a bad law. Hence, the urgent need for our 
legislation.
  You know, it would be really simple for the Commissioner to say, ``We 
are wrong. We are not going to collect this money.'' But they cannot do 
that, presumably.
  Not only is this ruling of the IRS effective right now and into the 
future, it is also retroactive. It is retroactive because, since it is 
a new interpretation of an old law, the IRS can pretend it has not 
changed its position, though it obviously has. Since it is retroactive, 
farmers are exposed to audit, not only for the current year and upon 
future years, but also on previous years. This problem is now in crisis 
proportions for farmers. The IRS made its retroactive change in October 
of 1996. At that time, much of the 1996 crop was already harvested. 
Farmers had already entered the traditional binding deferred contracts. 
They normally do this throughout the 12 months of the year. So, do we 
wonder why it is all of a sudden a crisis among farmers?
  Before the IRS release, farmers had every reason to believe they 
would enjoy the same legal tax treatment previously allowed by IRS.
  Congress and the President must address and solve this problem as 
soon as possible. Farmers are required to file their tax returns before 
March 1, 1997. This is unlike most other taxpayers who have until April 
15. If Congress waits until after March 1 to fix this problem, then 
hundreds of thousands of farmers all across this country will already 
have been injured.
  The IRS knows it is wrong on this issue, but it is out of control. It 
injures its own public relations by actions such as this. It is a sad 
commentary that it takes an emergency action of Congress to make the 
IRS do its job as Congress intended. Nonetheless, our bill will do 
exactly that.
  Mr. President, besides being on the Finance Committee where this 
legislation will be considered, I happen to also be a member of a 
commission the Congress set up last year to restructure the IRS. There 
are two Senators, two House Members, and 13 people from the private 
sector on that commission. We have 1 year from last fall to make our 
report to the Congress.
  The charter from the Congress to all 17 of us is to, in a sense, make 
the IRS more user friendly. Although we are at the same time kept from 
recommending changes in tax policy, how we administer the existing Tax 
Code is what we are dealing. We are examining how the IRS does its work 
and what we can do to enhance that from an efficiency standpoint. We 
want to save the taxpayers money and also to make IRS more customer 
friendly.
  After 6 months of being on this commission--though the ultimate good 
is

[[Page S636]]

making the IRS more efficient and more customer friendly--it is my 
opinion that we need to make the Tax Code so simple that every single 
taxpayer understands the Tax Code as well as any IRS auditor 
understands that Tax Code. The complexity of the Tax Code gives the IRS 
its power. It is the mystery of the Tax Code, a mystery that the 
bureaucrat can sort through and understand, and the inability of the 
taxpayer to do that which brings the power of the auditor that gives 
IRS its power. The power to intimidate comes through the tax system.
  So I ask my colleagues to observe the action of the commission to 
restructure the IRS and work with Senator Kerrey from Nebraska and 
myself as representatives of the Senate on this issue. Let us know your 
opinions, but also understand that the complexity of the Tax Code is 
the major problem that we must fix. The bill that I am introducing 
today is just one very small example of the complexity of the Tax Code. 
It is an action against the intimidation of the IRS and impacts. In 
most cases, IRS usually attacks maybe just a few hundred taxpayers 
throughout the United States on some issues. On this particular issue, 
affecting a practice that has been legal by the farmers of the United 
States of America for decades, they are attacking thousands and 
thousands. They want farmers to think that all of a sudden what they 
have been doing is now presumably wrong.
  I hope that Congress will work very quickly to pass this legislation 
before that March 1 deadline. It is badly needed to prevent an 
irreparable injury to farmers, and to make the Tax Code more 
understandable for the taxpayers. We also are sending a clear signal to 
the IRS: Shame on you.
  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. 181

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Family Farm Alternative 
     Minimum Tax Relief Act of 1997''.

     SEC. 2. MINIMUM TAX NOT TO APPLY TO FARMERS' INSTALLMENT 
                   SALES.

       (a) In General.--The last sentence of paragraph (6) of 
     section 56(a) (relating to treatment of installment sales in 
     computing alternative minimum taxable income) is amended to 
     read as follows: ``This paragraph shall not apply to any 
     disposition--
       ``(A) in the case of a taxpayer using the cash receipts and 
     disbursements method of accounting, described in section 
     453(l)(2)(A) (relating to farm property), or
       ``(B) with respect to which an election is in effect under 
     section 453(l)(2)(B) (relating to timeshares and residential 
     lots).''
       (b) Effective Dates.--
       (1) In general.--The amendment made by this section shall 
     apply to taxable years beginning after December 31, 1987.
       (2) Special rule for 1987.--In the case of taxable years 
     beginning in 1987, the last sentence of section 56(a)(6) of 
     the Internal Revenue Code of 1986 (as in effect for such 
     taxable years) shall be applied by inserting ``or in the case 
     of a taxpayer using the cash receipts and disbursements 
     method of accounting, any disposition described in section 
     453(l)(2)(A)'' after ``section 453C(e)(4)''.
                                  ____

                                       Department of the Treasury,


                                     Internal Revenue Service,

                                Washington, DC, December 19, 1996.
     Hon. Charles E. Grassley,
     U.S. Senate,
     Washington, DC.
       Dear Senator Grassley: Thank you for giving me the 
     opportunity to meet with you to discuss your concerns about 
     an Internal Revenue Service Technical Advice Memorandum or 
     TAM concerning the tax treatment of farmers. The TAM stated 
     that farmers utilizing deferred payment contracts for the 
     sale of farm commodities were required to include the amount 
     of the advanced sale for Alternative Minimum Tax or AMT 
     purposes in the year of sale.
       As I told you in our meeting, we believe that this TAM 
     correctly interprets current law. I understand that Congress 
     may consider legislation early next session to change this 
     result for farmers who use the cash method of accounting. As 
     you may be aware, Secretary Rubin, in a letter to Senator 
     Daschle on the same issue, stated the following regarding 
     this legislative change, ``We would support the goals of this 
     effort, as a reasonable tax policy, and recognize it is 
     likely that Congress was not aware of the effect that its 
     1986 amendments to the AMT would have on farmers. I welcome 
     the opportunity to work with you to address this matter 
     through corrective legislation.''
       We also will be pleased to work with you and Treasury on 
     the corrective legislation. Please feel free to contact me if 
     I can be of any further assistance.
           Sincerely,
                                        Margaret Miner Richardson.

  sMr. DORGAN. Mr. President, today Senator Grassley and I are 
introducing legislation called the Family Farm Alternative Minimum Tax 
Relief Act. This legislation deals with a tax matter affecting farmers 
that is a foreign subject to some people. But, simplified, what has 
happened is the Internal Revenue Service has turned logic on its head 
and said to family farmers, ``We're going to ask you to pay taxes on 
income you have not yet received.'' There is no basis for them doing 
that. That is not what we ever intended them to do.
  It is not the way they interpreted the law previously or the 
instructions for IRS auditors and accountants all across the country or 
farmers across the country, but they have now decided to change the way 
they do business. The brain is apparently disconnected from the hand, 
and the hand writes that farmers should pay taxes on income they have 
not received.
  I introduced the first piece of legislation on this. The Senator from 
Washington pointed out it was introduced in the House. But 18 months 
before it was introduced in the House in the last Congress, I 
introduced legislation to try to correct this.
  When we introduced it today, Senator Grassley from Iowa and I have 
organized a group of 54 Senators who support this legislation, 
including the cosponsorship of the Republican leader and the Democratic 
leader, including the support of the Treasury Secretary and of the 
agricultural community.
  We are going to pass this. It ought not be necessary for us to pass 
this legislation, because the IRS should not have made the mistake it 
made. It should not have turned logic on its head. But we must pass it 
because in this country when the IRS makes a mistake, everybody pays. 
Somebody once said, ``You have a right to be wrong in America.'' But 
the IRS does not have that right. When they are wrong in this case, 
family farmers are going to have to pay unfairly. And we are going to 
change that.
  Mr. President, today I'm joined by Senator Grassley and a majority of 
our colleagues in the Senate in reintroducing my legislation to rectify 
a serious tax problem confronting our family farmers.
  The Internal Revenue Service [IRS] has, in my opinion, mistakenly 
taken a position that threatens to hit many farmers with huge tax bills 
for using deferred payment commodity contracts, which have been 
routinely used in their businesses for decades. In my judgment, the 
IRS's position is dead-wrong and is going to impose an unintended and 
unacceptable financial hardship on the farming industry.
  For years, family farmers have used deferred payment contracts to 
sell their commodities in order to better manage their business income. 
For example, a typical grain contract between a farmer and grain 
elevator calls upon a farmer to sell and deliver grain to a grain 
elevator--often because the farmer does not have adequate storage--for 
a fixed amount. In many cases, one or more payments paid by the 
elevator to the farmer under the contract occur after the close of the 
farmer's taxable year.
  For regular tax purposes, farmers are allowed to defer income from 
the deferred payments under the grain contracts in computing their 
regular tax liability. But because the IRS apparently now views all 
deferred payment grain contracts as installment sales, it now requires 
them to add back this income in computing the Alternative Minimum Tax 
[AMT] in the tax year preceding the year of payment. As a result, 
thousands of family farmers are potentially facing hefty tax bills 
because they are being whip-sawed by a new IRS policy which effectively 
repeals their ability to use such contracts, and to benefit from the 
cash basis method of accounting.
  To make matters worse, many farmers were advised by tax experts and 
IRS field representatives, for that matter, that some traditional 
deferred payment commodity contracts will not amount to an installment 
sale that would require an AMT calculation. For this reason, many 
farmers have not made AMT adjustments on their income tax returns. Now 
they are being

[[Page S637]]

told by the IRS that they may owe large tax bills on income that they 
will not receive until later. This position is based upon an incorrect 
interpretation by the IRS which ignores the fact that our family 
farmers are, by law, permitted to manage their business operations on a 
cash basis.
  That's why we are reintroducing my legislation from the last Congress 
to ensure that our family farmers are allowed to engage in deferred 
payment transactions and get the same kind of tax treatment they have 
always received.
  We do not believe that Congress intended this kind of tax treatment 
for farmers using deferred payment commodity contracts for legitimate 
business purposes. Moreover, Treasury Department officials, who agree 
that this misguided IRS position was likely not the intent of Congress, 
support the goals of this effort as ``reasonable tax policy, and * * * 
welcome the opportunity to work with Congress to address this matter 
through corrective legislation.''
  Our bill simply makes clear the original intent of Congress which is 
to allow farmers to continue to receive the tax benefit provided from 
the use of cash method accounting and from installment sales for their 
deferred payment transactions.
  I urge my colleagues to include this much-needed legislation--which 
is strongly supported by the agricultural community--in any revenue 
measure considered by the Senate this year. This measure needs to be 
considered quickly to resolve any lingering doubt about the correct tax 
treatment for farmers using deferred commodity contracts.
  Mr. ABRAHAM. Mr. President, today I join several of my colleagues in 
cosponsoring the Family Farm Alternative Minimum Tax Relief Act of 
1997. This legislation will permit farmers to continue to defer tax 
liability through the use of deferred payment contracts.
  Like other businesses, farmers are subject to the same peaks and 
valleys in consumer demand that govern product pricing and earned 
income. Unlike other businesses, however, farmers are also subject to 
the uncertainties of Mother Nature. In agriculture, poor growing 
seasons are inevitable. Probably every farmer has had a crop devastated 
by harsh weather or been challenged to feed their livestock because of 
resulting shortages.
  The ability to defer tax liability on deferred payment contracts 
helps farmers prepare for these difficult times. To put it simply, 
deferred payment contracts allow farmers to receive a portion of 
payment on a crop in the next year. In addition to deferring payment, 
farmers also defer their resulting tax liability to the following year. 
Deferring payments and tax liabilities is a limited form of income 
averaging that allows individuals to cope with seasonal difficulties.
  Now, a recent IRS decision has put this important economic tool in 
jeopardy. The IRS has stated that payments made under a deferred 
payment contract are subject to the Alternative Minimum Tax [AMT]. 
Under the IRS ruling, taxes on the latter year's payments are now due 
in the first year of the contract. With the sudden repeal of deferred 
tax liability, farmers all across the country now face unexpected, 
sizable tax bills and many could be driven out of business. This is 
absolutely unacceptable.
  Mr. President, for the sake of this Nation's farmers, the IRS 
interpretation must be repealed. Since 1986, the only tool left for 
deferring tax liability has been the use of deferred payment contracts. 
In just the last 4 years, however, farmers in the midwest have suffered 
one of the centuries worst floods, the west has endured a terrible 
drought and last year, a long winter and tremendous rainfall 
significantly reduced Michigan's drybean, soybean, corn, and wheat 
harvests.
  The Family Farm Alternative Minimum Tax Relief Act of 1997 will 
permit farmers to continue to defer tax liability through the use of 
deferred payment contracts and I am pleased to be a cosponsor. With tax 
time fast approaching, I hope that this bill can be acted upon by both 
Chambers of Congress and sent to the President for his signature as 
soon as possible.
  Mr. President, the President of the Michigan Farm Bureau, Jack 
Laurie, recently explained the significance of the IRS's ruling in the 
Michigan Farm Bureau's Farm News. I think this article illustrates 
clearly the reasons why this legislation is necessary and I ask 
unanimous consent that this article be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

           Recent Tax Policy Issues Profound for Agriculture

       As the year draws to a close, many of us will be making 
     crucial tax management decisions as a normal course of 
     business. Making advance purchases of inputs for next year, 
     delaying sales, and/or deferred payment contracts allow 
     producers to manage tax burdens in good and in bad years.
       Tax code provisions, such as cash accounting and deferred 
     payment contracts, provide important financial and tax 
     management tools for producers. Recognizing the impact of 
     budget cuts for agricultural programs, Congress included 
     language in the 1996 budget resolution that pledged to 
     reexamine agricultural cuts unless, among other things, 
     Congress acted to provide mechanisms to allow farmers to 
     average tax loads over strong and weak income years.
       Several pieces of Farm Bureau-supported legislation to 
     allow income averaging were considered by the 104th Congress 
     but were not enacted into law. Farm Bureau will be working to 
     secure their passage as the bills are reintroduced next year.
       Farm Bureau supports the option of cash accounting for 
     farmers and the continuation and expansion of tax code 
     provisions that allow farmers to match income with expenses. 
     Farm Bureau also supports the reinstatement of income 
     averaging for farm income and the creation of ``farmer 
     savings plans,'' which would allow farmers to put money into 
     a pre-tax account for use during emergencies.
       Farmers are also at risk of losing another tax management 
     tool, thanks in large part to a recent change in tax policy 
     interpretation by the Internal Revenue Service in how the 
     agency will treat deferred payments. Recent rulings in 
     Washington state and in Iowa penalize farmers attempting to 
     average their income and tax burdens from year to year 
     through the use of deferred payment contracts.
       The IRS has begun classifying deferred payment contracts as 
     a tax preference by allowing farmers to delay income through 
     deferred payment contracts for their regular tax calculation 
     but not for their Alternative Minimum Tax calculation, which 
     can result in additional tax liabilities for farmers.
       Several farmers in Washington state and Iowa are currently 
     being examined by the IRS regarding the use of forward 
     contracting in the sale of their crops. At least 35 
     Washington farm families are currently in IRS appeals 
     awaiting the opinion of the Tax Court. Commodities included 
     in the proposed adjustments include sweet corn, beans, hogs, 
     potatoes, onions, and various seed crops.
       Why is the IRS pursuing this issue? The answer is pretty 
     simple. By disallowing farmers to defer income into the next 
     year via deferred payment, they essentially throw two years 
     of income into one year. This in turn increases the amount of 
     taxes due, significantly, in some cases. There has been no 
     change in the law, only a change in the IRS interpretation.
       Legislation was introduced last year to provide that 
     installment sales not be treated as preference with respect 
     to the Alternative Minimum Tax. This language would have 
     retroactively exempted farmers who entered into deferred 
     payments contracts from being subject to Alternative Minimum 
     Tax.
       Unfortunately, this legislation did not pass. However, 
     there is already a movement underway to pursue this issue 
     again at the start of the next congressional session. Several 
     senators from Iowa, North Dakota, Montana, and Washington 
     will introduce legislation in January to clarify that 
     deferred payment contracts are not a tax preference item that 
     subjects farmers to AMT.
       Michigan Farm Bureau will be working to secure the support 
     of Sens. Carl Levin and Spencer Abraham for this legislation. 
     As you go through the process of completing your farm books 
     and begin tax preparation, I encourage you to take a moment 
     to let your respective U.S. Representative and both of your 
     Senators know how vital these tax management tools are and 
     what their loss will mean to your operation.
           Sincerely,
                                                      Jack Laurie,
                                                        President.

  Mr. CAMPBELL. Mr. President, today my colleagues, Senators Chuck 
Grassley and Byron Dorgan, introduced legislation which will correct a 
tax problem facing many farmers across the country, including many in 
the State of Colorado. Along with over 40 of my Senate colleagues, I am 
pleased to join Senators Grassley and Dorgan as an original cosponsor 
to this bill.
  Farmers have typically used the deferred payment contract system as a 
means for managing their business income. It is common for a farmer to 
forward contract to sell a product. Under this type of contract, a 
farmer may deliver the product in a given tax year, and he may not 
receive one lump-sum

[[Page S638]]

payment at the time of delivery. In fact, the payments may be spread 
over 2 tax years.
  Up until recently, the farmer was taxed on this income only for the 
actual amount received in a given tax year. However, last October, the 
Internal Revenue Service issued a ruling which disallows this practice. 
Under the ruling, all payments received under a deferred payment 
contract are subject to the Alternative Minimum Tax. Now, regardless of 
whether the actual payments under the contract are spread out over a 
multiple year period, the payments will be taxable in the year the 
contract is made.
  Needless to say, this ruling requiring farm families to pay a tax on 
income they have not yet received places an unfair burden on those 
families. Farmers cannot control the weather, especially in Colorado 
where farmers fall victim to everything from tornados to droughts. 
Because of the uncertainties inherent in farming, deferred payment 
contracts offer farmers a critical financial management tool. We must 
allow them to manage the risks without unfairly penalizing them.
  With the farmers' early filing deadline looming on the horizon, there 
is a need to act upon this legislation as quickly as possible. Many 
farmers are already calculating their taxes for their early deadline 
and without a reversal of the IRS' ruling, they will be forced to 
comply at what will no doubt be a severe financial burden for many.
  I urge my colleagues to support this important piece of legislation 
and pass it in a timely manner.
  Mr. GRASSLEY. Mr. President, I yield 5 minutes to the Senator from 
Minnesota. I thank him for his cosponsorship of this legislation, 
because in the State of Minnesota obviously he has, as in my State of 
Iowa, many farmers who are affected by the action of the IRS. I yield 5 
minutes.
  Mr. GRAMS. Thank you very much.
  Mr. President, I rise in strong support of the bill introduced today 
by my colleagues, Senator Grassley and Senator Dorgan, to clarify the 
intent of Congress and to allow farmers and ranchers to use deferred 
payment contracts without tax penalty under the alternative minimum 
tax.
  Last year this Congress passed, and the President signed, the most 
sweeping reforms in agricultural policy in 60 years, giving our farmers 
and ranchers the freedom to farm. Farmers can now plant for the market, 
not for Uncle Sam.
  But our commitment to agriculture did not--and cannot--end there. We 
promised farmers and ranchers regulatory reform, free and fair trade, 
market-oriented tools to better manage their risk, and tax relief. 
Unfortunately, the Internal Revenue Service has caused us to radically 
depart from this commitment in regard to tax relief. By ruling that 
producers are subject to tax liability on deferred payment contracts in 
the year the contract is signed, instead of when he or she actually 
receives the payment, the IRS has dealt American agriculture a very 
serious blow.
  Cash-based accounting, as it is often called, is extremely important 
to Minnesota farmers because incomes fluctuate so radically from year 
to year depending on what Mother Nature decides to unleash on us. This 
is especially important in my home State of Minnesota because, as many 
of you know, some say it is the land of 9 months of winter and then 3 
months of poor sledding.
  But adding further to the importance of cash-based accounting is the 
fact that farmers and ranchers are only paid once or twice a year. 
Understandably, many farmers and ranchers like to receive their 
payments in installments. And that is much the way school teachers do 
over the summer months. Getting paid in increments can ease their cash 
flow problems that might otherwise occur.
  Congress, to its credit, has always understood these unique 
circumstances and therefore always intended agriculture to have the 
benefit of cash-based accounting. As late as 1980, Congress reaffirmed 
this. But according to the IRS, this all changed in amendments to the 
Tax Code in 1986. I disagree. Without rehashing all of the arguments of 
why this decision is in error, let me offer just one.
  As one Rutgers University tax law professor observed, had this been 
the intent of the proposed changes to the Tax Code in 1986, surely 
there would have been large-scale opposition at that time. And, no 
doubt, the opposition would have been spearheaded by Senator Grassley, 
who sits on the tax writing committee. But there was not a word about 
it. Maybe that is why it took the IRS a decade to find out why.
  None of us want to point fingers at who is responsible for this 
mistake. We only want congressional intent carried out. If the most 
efficient way of accomplishing this end is to pass legislation to 
clarify things, then that is what we should do.
  Mr. President, I am proud to be an original cosponsor of this bill. I 
commend Senators Grassley and Dorgan for their leadership on this 
issue. I urge timely consideration and passage of this extremely 
important bill.
  Mr. GORTON. Mr. President, the Senator from Iowa, Mr. Grassley, my 
friend Senator Dorgan from North Dakota, who is on the floor, and I and 
51 other Senators have introduced today a bill on the alternative 
minimum tax as it is being unjustly and without precedent applied to 
farmers in all of our States and across the United States of America.
  In short, farmers are now being told that they must pay taxes on 
income that they have not received. I repeat that, Mr. President. Our 
farmers are now being told by the Internal Revenue Service that they 
are to pay taxes on income that they have not received when they have 
transferred ownership of their crops to some other entity but are not 
to receive payment for those crops until the next tax year.

  Mr. President, that is unprecedented. It is unjust. It is a terrible 
burden on many farmers who live under difficult circumstances and from 
hand to mouth. And it is not what Congress has intended in any of its 
amendments to the Internal Revenue Code.
  It is wrong, Mr. President. It was discovered or started initially, I 
regret to say, in the State of Washington last year aimed against a 
particular potato farmer. It has now spread like wildfire all across 
the country and it has become the policy of the Internal Revenue 
Service.
  A year ago, one Member of the House of Representatives from my State, 
George Nethercutt, introduced a bill on this without it being able to 
attain the attention that has been focused on it since that time. As I 
said, there are now 54 Members of this body who are sponsors of this 
bill to bring pure justice back to the administration of the Internal 
Revenue Code as it respects our farmers.
  I am convinced that as soon as we have a revenue bill from the House, 
which under the Constitution must deal with such a bill first, that we 
will pass this proposal almost unanimously. Mr. President, so far we 
have no revenue estimate on it. It was estimated last year to be 
minimal because of course these taxes will in fact be collected when 
the cash is received by the farmers.
  Farmers are not attempting through this bill to avoid a tax 
obligation. They are simply asking for the simple justice that that tax 
obligation not be imposed upon them until they have received the income 
on which the obligation is based.
  It is for that reason and under the leadership of the Senator from 
Iowa and the Senator from North Dakota, who is here and whom I believe 
is next, that this bill is drafted, that we have made this proposal. We 
have now received the support of Mr. Rubin, the Secretary of the 
Treasury.
  I do not know of any reasonable opposition or, for that matter, any 
opposition at all to doing justice in this case. I am delighted we have 
such strong support for this bill. I urge not only action on this bill, 
Mr. President, but the promptest action possible for the Senate to 
remedy an injustice against our farmers.
  Mr. ENZI. Mr. President, I, too, join my new colleagues in 
cosponsoring this legislation. It is important that we act on this 
legislation before April 15 to correct a ruling by the Internal Revenue 
Service regarding the alternative minimum tax. It is a ruling that 
could dramatically and unfairly increase the tax burden on our farmers 
who use the cash method of accounting and who utilize installment sales 
on crops and livestock.

[[Page S639]]

  It is interesting to me that this tax problem is one of the first 
issues needing legislative correction to present itself to the 105th 
Congress. It is interesting because the problem arises in the areas of 
small business and accounting, two areas in which I feel I have some 
particularly relevant insight. I am a small businessman and an 
accountant--the only accountant in the Senate, in fact.
  I have wondered for a long time why United States tax policymakers 
continue to subject small business owners to the onerous burden of 
calculating both corporate and alternative minimum tax liabilities. The 
fact is that fewer than 2 percent of the companies filing Federal 
income tax returns end up paying the alternative minimum tax. Still, 
all of these companies, many of them small businesses, have to maintain 
separate sets of records for tax purposes, and that is at a 
considerable cost.
  In 1993, a Joint Tax Committee analysis confirmed what I as a small 
business owner and corporate accountant already knew, that compliance 
with the alternative minimum tax requirements can add 15 to 20 percent 
to a company's accounting bills at tax time. The effect is that we bury 
100 percent of our small businesses in paperwork in order to increase 
tax revenue for about 2 percent of corporate tax filers. If that is not 
an unnecessary burden, I do not know what is.
  The legislation that is introduced today will amend the 1986 Tax 
Reform Act to clarify confusion that was unintentionally created by the 
revenue act of 1987. I do not blame the IRS for the position it takes 
in the technical advice memorandum filed in 1995, which states that 
installment sales of farm property are not exempt from the alternative 
minimum tax liability in the year that it is expensed. It is the job of 
the IRS to maximize tax revenue within the confines of the 
congressionally approved statutes. The question then is, did Congress 
intend to subject cash receipts on forward commodity sales to a 
farmer's prior year alternative minimum tax? I do not believe that the 
99th Congress intended to do that. For 10 years the IRS has not applied 
this rule in this way. To do so now is a retroactive tax increase on 
farmers. We, the 105th Congress, should make the necessary 
clarifications and pass this bill.
  I believe the bill will pass because reasonable people can recognize 
simple facts and should agree to correct the problem. I am proud to be 
a cosponsor of the legislation, but I also hope that it will renew 
interest in reviewing the issue of alternative minimum tax reform in 
general. One of the issues I promised my constituents I would pursue if 
elected to the Senate is simplification of the U.S. Tax Code, and I 
believe that the phaseout of the alternative minimum tax is a necessary 
part of that promise. The alternative minimum tax inhibits capital 
investment, ties up resources and credits, and piles unnecessary 
compliance costs particularly on small business. It actually produces 
relatively small amounts of Federal revenue, not all of which would be 
foregone using regular tax computation.
  The problem this bill would correct typifies the difficulties small 
business owners in our country have complying with this onerous AMT 
law. I was pleased that the last Congress was able to achieve consensus 
on a very good AMT reform bill, a bill that unfortunately became 
entangled in the highly emotional web of election year politics and 
subsequently suffered a swift death at the hands of the President.
  I do believe we can and should move toward a more sensible corporate 
tax system, and I hope the administration is willing to work with us on 
that.
  Mr. DASCHLE. Mr. President, I would like to express my strong support 
for the legislation Senators Grassley and Dorgan are introducing today. 
The bill addresses one of the most pressing problems facing many family 
farms, and I am proud to cosponsor it.
  Last fall, the IRS released a technical memorandum calling into 
question the tax treatment of deferred crop sales. Released during the 
harvest just as farmers were making marketing decisions, this apparent 
shift in policy created enormous confusion in the farm community. I say 
apparent shift in policy because, strictly speaking, the technical 
advice memorandum applies only to one taxpayer; the IRS has yet to 
issue a formal revenue ruling on the matter as guidance for all 
taxpayers.
  It has been a long-standing and common practice for farmers to sell 
their crops on a deferred basis. Farmers often delay their receipts 
from commodity sales into future years in order to maximize their 
marketing opportunities and average their incomes over good and bad 
years. The legal basis for these deferred contracts dates at least as 
far back as an IRS revenue ruling issued in 1958.
  Congress has repeatedly expressed its intention that smaller farms be 
permitted to manage their affairs on a cash-basis system of accounting. 
If implemented, the policy described in the IRS memorandum would have 
the effect of eliminating this important tool for many family farmers.
  In my view, the IRS has mistakenly interpreted tax law and 
legislative history in arriving at the conclusion that deferred 
contract receipts are a ``preference'' for purposes of calculating 
alternative minimum tax liability. I and a number of my colleagues 
communicated this directly to the Secretary of the Treasury last month, 
and he agreed to support legislation to correct the problem.
  Mr. President, I would hope that we could obtain agreement on both 
sides of the aisle to pass this legislation as promptly as possible. 
Doing so could save many families tens of thousands of dollars this 
winter--money they never anticipated owing to the government.
  On November 21st of last year, I asked the Treasury Department to 
either suspend the application or narrow the scope of the IRS 
memorandum in order to prevent this from happening. Today, I would like 
to call publicly on the IRS to reconsider its resistance to my request. 
The Treasury Department supports our effort to fix this problem 
legislatively, and half of the Senate is cosponsoring the Grassley-
Dorgan bill. Why force taxpayers to pay money this winter that they in 
good faith never thought they owed, and then place them in the position 
of having to file an amended return to get their money back when the 
legislation passes later this year? Surely, there must be a better way, 
and, in the interest of taxpayer service, I urge the IRS to try to find 
it.
  Let's not forget that farmers are the backbone of rural America and 
one of the foundations of our economy. Family farmers tell me often of 
the hardships they face in managing businesses that are often as 
unpredictable as the weather. The apparent change in IRS policy on 
deferred commodity contracts does not help matters.
  I congratulate Senators Grassley and Dorgan on their legislation and 
look forward to working with them to secure its speedy passage.
  Mr. SARBANES. Mr. President, I am pleased to join as an original 
cosponsor of the Family Farmer Alternative Minimum Tax Relief Act of 
1997. This legislation will provide relief for family farmers from a 
recent Internal Revenue Service decision regarding deferred payment 
contracts which could result in sizable and unexpected tax bills for 
the coming year.
  For over 16 years, family farmers in Maryland and across the country 
have used deferred payment contracts to sell their crops and livestock 
in order to better manage and even out their business income from year 
to year. The tax code has specifically permitted farmers to manage 
their business on a cash basis of accounting and use deferred payment 
contracts without AMT liability. However, a recent IRS decision to 
enforce alternative minimum taxation on all crop and livestock sales, 
including deferred payment contracts, effectively repeals farmers' 
ability to use these contracts to move their tax liability into future 
years. If relief is not soon provided, many family farmers will face 
sizable--and unexpected--tax bills for the coming tax year. The purpose 
of this legislation is to clarify the law and ensure that family 
farmers can continue to receive the tax benefit provided from the use 
of the cash method of accounting and from installment sales for their 
deferred payment commodities contracts as Congress originally intended.
  I hope the committee will schedule hearings on this matter as quickly 
as possible so that this legislation can be

[[Page S640]]

enacted prior to the taxation filing deadline. I urge my colleagues to 
join me in supporting this important legislation.
                                 ______
                                 
      By Mr. BYRD:
  S. 182. A bill to make available for obligation such sums as are 
necessary to pay the Federal share of completion of construction of the 
Appalachian development highway system, and for other purposes; to the 
Committee on Environment and Public Works.


       the appalachian development highway system completion act

  Mr. BYRD. Mr. President, I rise today to introduce a critically 
important measure to ensure that sufficient funds will be made 
available over the next six years to complete the Appalachian 
Development Highway System by the year 2003, some 38 years after the 
initial authorization of this vital 3,025-mile highway network.
  As Senators are aware, the funding authorizations for the Federal-Aid 
Highway program will expire at the end of fiscal year 1997. 
Consequently, one of the most important pieces of legislation we will 
take up during this congressional session will be the reauthorization 
of the Intermodal Surface Transportation Efficiency Act, or ISTEA. This 
legislation will provide new direction for our Federal highway and 
transit programs for the next six years. I commend the Majority Leader 
for recognizing the importance of this legislation in his remarks on 
the Senate Floor during the first day of this session, during which he 
cited his hope that we might turn to it prior to the Easter recess.
  Our colleagues in the other body have already completed several 
hearings on the reauthorization of ISTEA, and I understand that the 
Senate Environment and Public Works Committee will begin its hearings 
shortly. As we approach the drafting of a new, comprehensive, Federal-
aid highway bill, I am introducing this bill today so that my 
colleagues have available to them my proposal to ensure that the 
Federal government finally completes its commitment to the Appalachian 
Development Highway System in all affected thirteen states.
  The necessity to expand highway access to spur the development of the 
Appalachian region was first cited by the President's Appalachian 
Regional Commission of 1964. The Commission's report stated: 
``Developmental activities in Appalachia cannot proceed until the 
regional isolation has been overcome by a transportation network which 
provides access to and from the rest of the nation and within the 
region itself. The remoteness and isolation of the region . . . are the 
very basis of the Appalachian lag. Its penetration by an adequate 
transportation network is the first requisite of its full participation 
in industrial America.''
  One year later, the Appalachian Regional Development Act of 1965 
authorized several programs for the development of the region, the 
first of which called for the construction of a new highway network. 
According to the Act, these highways ``will open up an area or areas 
with a developmental potential where commerce and communication have 
been inhibited by lack of adequate access.'' Subsequent amendments to 
the act defined the 3,025 miles that comprise the Appalachian 
Development Highway System.
  Unfortunately, today, we find that while the Interstate Highway 
System is virtually 100 percent complete, the Appalachian Development 
Highway System is only 76 percent complete. Of the 3,025 miles that 
comprise the Appalachian system, roughly 725 miles remain unfinished. 
These unfinished miles are spread throughout the 13 states that have 
counties within the statutorily designated boundaries of Appalachia. 
These states include Alabama, Georgia, Kentucky, Maryland, Mississippi, 
New York, North Carolina, Ohio, Pennsylvania, South Carolina, 
Tennessee, Virginia, and West Virginia.
  Mr. President, the purpose of my legislation is to ensure that we 
expeditiously complete this vital highway network. Its completion is 
even more important today than it was 30 years ago, not only for the 
local economies of the Appalachian region but also for the entire 
nation. The citizens of Appalachia are required to drive through the 
existing, inadequate road system--dangerous, narrow roads which 
generally wind through the paths of river valleys and stream beds 
between mountains. These roads are, more often than not, two-lane roads 
that are squeezed into very limited rights-of-way. They are 
characterized by low travel speeds and long travel distances. They were 
often built to inadequate design standards and, thus, present very 
hazardous driving conditions.
  Just last year, the Federal Highway Administration published a report 
indicating that substandard road conditions are a factor in 30 percent 
of all fatal highway accidents. I am quite sure that the percentage is 
a great deal higher in the Appalachian region. [In my own state, the 
inadequate two-lane road that currently lies along the alignment of our 
largest uncompleted segment of the ADHS represents the second most 
dangerous road in the entire state.] The Federal Highway Administration 
has found that upgrading two-lane roads to four-lane divided highways 
has served to decrease fatal traffic accidents by 71 percent and that 
widening traffic lanes has served to reduce fatalities by 21 percent. 
These are precisely the kinds of road improvements that will be funded 
through the legislation which I am introducing today. And until this 
legislation is enacted, many citizens will die unnecessarily on 
inadequate, unsafe roads.
  While several of the thirteen Appalachian states have enjoyed 
significant economic expansion and job growth over the last three 
decades, each such state continues to have pockets of severe economic 
distress characterized by low academic achievement, chronic 
unemployment, and an inadequate tax base. There are still children in 
Appalachia who lack decent transportation routes to school. There are 
still pregnant mothers, elderly citizens, and others who lack timely 
road access to area hospitals. There are many people who cannot obtain 
sustainable well-paying jobs because of poor road access to major 
employment centers. These critical conditions affect not only the 
citizens of these local communities but also the economy of the entire 
nation. Instead of enjoying the full productive potential of all the 
citizens of Appalachia, our nation must bear the costs of Federal 
assistance that must be provided to those who cannot adequately care 
for themselves through no fault of their own--costs associated with 
unemployment benefits, health care, school lunch programs, etc.

  The Appalachian Regional Commission has conducted a number of studies 
and surveys which confirm the linkage between economic prosperity and 
the completion of segments of the Appalachian Highway System. These 
same studies also highlight the fact that it is almost impossible for 
communities still awaiting completion of their segments of these 
highways to attract businesses and investment opportunities to their 
areas, largely due to an inadequate transportation system, inhibiting 
their access to the national markets.
  The most rigorous of these studies was financed by the National 
Science Foundation and published just a year and a half ago. This study 
covered a twenty-year period and compared conditions in Appalachian 
counties versus similarly-situated counties outside the Appalachian 
region. When looking at conditions in the sixty-two rural Appalachian 
counties, the study revealed that the income levels of those counties 
with substantially complete Appalachian Development highways grew 80 
percent faster and that earnings grew 62 percent faster than did the 
counties without such highway access.
  Mr. President, the people of Appalachia have waited long enough for 
the Federal Government to fulfill its commitment to the Appalachian 
region. The bill I am introducing today will ensure that sufficient 
funds are set aside in the next major highway bill to complete the 
remaining 24 percent of the Appalachian Development Highway System in 
the thirteen-state region. This bill takes a different approach from 
that of the prior authorization acts for the Appalachian Highway 
System. The bill calls for direct contract authority to be made 
available from the highway trust fund. This contract authority would be 
distributed to the thirteen states of the Appalachian Region solely for 
the purpose of completing the 725 unfinished miles of the Appalachian 
Development Highway System.
  One of the primary reasons why completion of the Appalachian Highway

[[Page S641]]

System has lagged behind that of the Interstate Highway System is 
because the interstate system has benefited from the direct 
availability of highway trust funds while the Appalachian Development 
Highway System has been required to be financed largely through 
incremental annual appropriations of general funds.
  The bill I introduce today also makes clear that funds provided to 
the Appalachian states for the completion of the Appalachian 
Development Highway system will be provided in addition to the funds 
those states will receive from the Federal Aid Highway Program for 
their customary purposes. These states should not be required to choose 
between the maintenance of their interstate and other federal highways 
and the completion of the Appalachian system.
  Under this bill, states will still be required to provide the 
standard 20 percent matching share for Federal funds for the completion 
of these roads, as is the case for all major Federal aid highway 
programs. The bill authorizes the Secretary to distribute ``such sums 
as are necessary'' for the completion of the Appalachian Development 
Highway System. Similar to the manner in which Federal funds are 
currently administered for Appalachian highways, the funds provided 
under this bill will be administered by the Appalachian Regional 
Commission (ARC). The ARC, with the cooperation of the Federal Highway 
Administration, is currently updating its estimate for the cost to 
complete the system. This study is expected to be completed by May 1 of 
this year, and I anticipate that, when this bill is incorporated into 
this year's highway legislation, it will identify and authorize the 
appropriate dollar figure that results from this ongoing study.
  I should point out, Mr. President, that the Administration shares my 
goal for the completion of the Appalachian Development Highway System 
in the near term. In addition to having written to President Clinton 
several times in support of this legislative approach, I met with him 
personally in the Oval Office on December 16, 1996--last year. I have 
also had meetings on this subject with his OMB Director, Mr. Franklin 
Raines, and his Federal Highway Administrator and Transportation 
Secretary-designate, Mr. Rodney Slater. I am confident that the 
Administration will be supportive of my efforts to complete the 
construction of the ADHS as soon as possible.
  So, Mr. President, I urge all my colleagues to support this 
legislation. Our entire nation has benefited from the improvements 
brought about by the Appalachian Development Highway System. So, too, 
will we all benefit from its completion in the near future.
  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. 182

       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 ``Appalachian Development 
     Highway System Completion Act''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) the Appalachian Regional Development Act of 1965 (40 
     U.S.C. App.) enacted into law a Federal commitment to the 
     completion of the Appalachian development highway system for 
     the purpose of expanding highway access to the Appalachian 
     region;
       (2) economic prosperity within the Appalachian region since 
     that time has been brought about by, and has centered around, 
     the availability of adequate highway access;
       (3) the rationale behind the completion of the Appalachian 
     development highway system is as sound today as it was in 
     1965, but while the Interstate System is nearly 100 percent 
     complete, the Appalachian development highway system is only 
     76 percent complete;
       (4) those areas in which the Appalachian development 
     highway system is not yet complete suffer from inadequate 
     road systems characterized by low travel speeds, long travel 
     distances, and unsafe conditions; and
       (5) there are unfinished miles of the Appalachian 
     development highway system in all 13 of the States with 
     counties in the statutorily-designated Appalachian region.

     SEC. 3. COMPLETION OF APPALACHIAN DEVELOPMENT HIGHWAY SYSTEM.

       (a) Authorization.--
       (1) In general.--Subject to subsection (d), there are 
     authorized to be appropriated out of the Highway Trust Fund 
     (other than the Mass Transit Account) for the period of 
     fiscal years 1998 through 2003 such sums as are necessary to 
     fund the Federal share of the total estimated cost of 
     completion of construction of the Appalachian development 
     highway system authorized by section 201 of the Appalachian 
     Regional Development Act of 1965 (40 U.S.C. App.), as 
     determined by the Secretary of Transportation.
       (2) Transfer and administration of funds.--The Secretary 
     shall transfer the funds made available by paragraph (1) to 
     the Appalachian Regional Commission, which shall be 
     responsible for the administration of the funds.
       (b) Federal Share.--The Federal share under this section 
     shall be 80 percent.
       (c) Apportionment to States.--In carrying out subsection 
     (a), the Secretary shall apportion the funds to the 13 States 
     in the Appalachian region in accordance with each State's 
     portion of the total estimated cost of completion.
       (d) Allocation Percentages.--One-sixth of the funds 
     allocated by subsection (a) for the construction shall be 
     available for obligation in each of fiscal years 1998 through 
     2003.
       (e) Delegation to States.--Subject to title 23, United 
     States Code, the Secretary shall delegate responsibility for 
     completion of construction of each segment of the Appalachian 
     development highway system under this section to the State in 
     which the segment is located, upon request of the State.
       (f) Advance Construction.--When a State that has been 
     delegated responsibility for construction of a segment under 
     subsection (c)--
       (1) has obligated all funds allocated under this section 
     for construction of the segment; and
       (2) proceeds to construct the segment without the aid of 
     Federal funds in accordance with all procedures and all 
     requirements applicable to the segment, except insofar as the 
     procedures and requirements limit the State to the 
     construction of segments with the aid of Federal funds 
     previously allocated to the State;

     the Secretary, upon approval of the application of a State, 
     shall pay to the State the Federal share of the cost of 
     construction of the segment at such time as additional funds 
     are allocated for the segment under subsection (d).
       (g) Contract Authority.--Funds authorized by this section 
     shall be available for obligation in the same manner as if 
     the funds were apportioned under chapter 1 of title 23, 
     United States Code, except that--
       (1) the Federal share of the cost of any construction under 
     this section shall be determined in accordance with 
     subsection (b); and
       (2) the funds shall remain available until expended.
       (h) Inapplicability of Obligation Limitations.--
     Notwithstanding any other provision of law, any obligation 
     limitation enacted for any of fiscal years 1998 through 2003 
     shall not apply to obligations authorized under this section.
       (i) Other State Funds.--Funds made available to a State 
     under this section shall not be considered in determining the 
     apportionments and locations that any State shall be entitled 
     to receive, under title 23, United States Code, and other 
     law, of amounts in the Highway Trust Fund.
                                 ______
                                 
      By Mr. DODD (for himself, Mr. Daschle, Mr. Kennedy, Mrs. 
        Feinstein, and Mr. Kerry):
  S. 183. A bill to amend the Family and Medical Leave Act of 1993 to 
apply the act to a greater percentage of the U.S. work force, and for 
other purposes; to the Committee on Labor and Human Resources.


           THE FAMILY AND MEDICAL LEAVE FAIRNESS ACT OF 1997

  Mr. DODD. Mr. President, we do a great deal of important business 
here in the U.S. Senate, but much of it seems arcane and distant from 
the lives of American families. But last evening, with the airing of a 
CBS made for TV movie, ``A Child's Wish,'' we had a particularly moving 
example of the power we have to make a positive difference in the lives 
of America's families. I don't know how many of my colleagues had a 
chance to see it. It was a fictional story based on the true life 
experiences of two families impacted by the Family and Medical Leave 
Act signed into law by President Clinton in 1993.
  Dixie Yandle was one of those children. I believe she came from North 
Carolina, I say to my colleague from North Carolina. Dixie's father 
lost his job during her struggle with cancer as he sought to spend more 
time with her. She and her parents testified in fact before the 
Congress about the need for family medical leave legislation so that 
what happened to them would not happen to the other parents.
  The second child, Melissa Weaver, was also diagnosed with cancer that 
ultimately proved to be fatal. But due to the Family and Leave Act the 
family was able to spend the last days of her life together. Melissa's 
story is one of many that I heard in 1994 during a series of public 
hearings of the Commission on Family and Medical Leave on

[[Page S642]]

the impact of the Family and Medical Leave Act.
  ``A Child's Wish'' took the lives of these two children and wove them 
together to dramatize how important the Family and Medical Leave Act is 
and how meaningful it is to families. I am hopeful that this movie may 
have helped a lot of people understand the legislation better.
  Today, at a time when many Americans are deeply cynical toward the 
work we do here in Washington, the family and medical leave stands in 
sharp contrast.
  Not only is this legislation making a real difference in the lives of 
the American people, but it has been judged by a bipartisan commission 
to be an unqualified success.
  The Family and Medical Leave Act fulfilled a genuine need among 
America's working families to take leave in times of medical and family 
need.
  With this legislation we established in law a basic standard of 
decency toward America's families.
  Eligible employees were guaranteed 12 weeks of unpaid leave during 
times of genuine family need--such as a birth or adoption, placement of 
a foster child, or in times of serious medical emergency for a child, 
spouse or parent.
  This minimal benefit--unpaid leave--is providing millions of workers 
and their families with vital assistance during times of crisis.
  Yet, even with the apparent success of the FMLA there is still more 
work to be done.
  Millions of Americans continue to face painful choices involving 
their competing responsibilities to family and work.
  Employees not covered by the Family and Medical Leave Act are still 
often told that they must choose between sick family members and their 
jobs.
  In fact today, 43 percent of private sector employees remain 
unprotected by the Family and Medical Leave Act because their employer 
does not meet the current 50 or more employee threshold.
  This legislation I introduce today--the Family and Medical Leave 
Fairness Act of 1997--will extend the Family and Medical Leave Act to 
millions of Americans who remain uncovered.
  This bill would lower the threshold to include coverage for companies 
with 25 or more workers.
  This small step would provide 13 million additional workers with the 
protection of the Family and Medical Leave Act--raising the total 
percentage of the private sector work force covered by the FMLA to 71 
percent.
  In my view, these workers deserve the same job security in times of 
family and medical emergency that workers in lager companies receive 
from the Family and Medical Leave Act.
  With this legislation they will receive it.
  Now, for those of my colleagues who still harbor doubts about the 
success of the Family and Medical Leave Act I strongly urge them to 
examine a recent bipartisan report that documents the positive impact 
of this legislation.
  When the bill was passed in 1993, provisions in the legislation 
established a commission to examine the impact of the act on workers 
and businesses.
  The Family and Medical Leave Commission's analysis spanned 2\1/2\ 
years.
  It included independent research and field hearings across the 
country to learn first hand about the act's impact from individuals and 
the business community.
  The report's conclusions are clear--the Family and Medical Leave Act 
is helping to expand opportunities for working Americans while at the 
same time not placing any undue burden on employers.
  According to the Commission's final report, the Family and Medical 
Leave Act represents ``A significant step in helping a larger cross-
section of working Americans meet their medical and family care giving 
needs while still maintaining their jobs and economic security.''
  Due to this legislation, Americans now possess greater opportunities 
to keep their health benefits, maintain job security, and take longer 
leaves for a greater number of reasons.
  In fact, according to the bipartisan commission--12 million workers 
took job-protected leave for reasons covered by the Family and Medical 
Leave Act during the 18 months of its study.
  But, not only are American workers reaping the benefits. The law is 
working for American business as well. In fact, the conclusions of the 
bipartisan report are a far cry from the concerns that were voiced when 
this law was being considered in Congress.
  The vast majority of businesses--over 94 percent--report little to no 
additional costs associated with the Family and Medical Leave Act.
  More than 92 percent reported no noticeable effect on profitability.
  And nearly 96 percent reported no noticeable effect on business 
growth.
  Additionally, 83 percent of employers reported no noticeable impact 
on employee productivity.
  In fact, 12.6 percent actually reported a positive effect on employee 
productivity from the Family and Medical Leave Act, twice as many as 
reported a negative effect.
  And not only did employers report that compliance with the Family and 
Medical Leave Act was relatively easy and of minimal cost, but 
worksites with a small number of employees generally reported greater 
ease of administration and even smaller costs than large worksites.
  Today, I introduce this legislation with the hope and expectation 
that we can put aside our political differences and build on the 
success of the Family and Medical Leave Act. Last November, the 
American people gave us a mandate--a mandate for good governance.
  The Family and Medical Leave represents the fulfillment of this goal 
and I urge all my colleagues to join with me in supporting this 
critically important legislation for America's working families.
  I think the fact that the law has been working so well has made a 
sufficient difference in people's lives in moments of crises. The fact 
that people are able to be there particularly when a child is dying, so 
that you have the love of parents and a family coming together and you 
don't have to choose between that job and your family is a wonderful 
thing. It has made such a difference in people's lives.
  There have been many issues dealt with in this body over 16 years, 
and there is none that I am more proud of than the day that this body 
voted to support the family and medical leave legislation, and when 
President Clinton signed it into law.
  I am pleased to be joined in this effort by Senator Daschle, Senator 
Kennedy, Senator Feinstein, and Senator Kerry. Mr. President, I can't 
miss the opportunity to briefly say that a friend of mine who is here 
from Pennsylvania, who I know is going to speak on the nomination of 
Madeleine Albright, but the body should know that the Senator from 
Pennsylvania, Senator Specter, was an invaluable ally in that effort 
beginning in the first day we arrived in the Senate some 16 years ago. 
We formed a caucus on children's needs. I thank him for his efforts 
over the years in that regard.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. Mr. President, I thank my colleague from Connecticut for 
those generous comments. He and I cochaired the Children's Caucus in 
the early 1980's. And he mentioned that he and I cosponsored the first 
family leave act exactly 10 years ago at this time--it was in 1987--
which was very important legislation.
                                 ______
                                 
      By Mr. D'AMATO:
  S. 184. A bill to provide for adherence with the MacBride Principles 
of Economic Justice by United States persons doing business in Northern 
Ireland, and for other purposes; to the Committee on Finance.


   the northern ireland fair employment practices and principles of 
                      economic justice act of 1997

  Mr. D'AMATO.
  Mr. President, I rise today to offer the Northern Ireland Fair 
Employment Practices and Principles of Economic Justice Act of 1997. 
This amendment seeks to deter efforts to use the work place as an arena 
of discrimination in Northern Ireland.
  The Northern Ireland Fair Employment Practices and Principles of 
Economic Justice Act of 1997 incorporates the MacBride Principles, 
which are modeled after the famous Sullivan Principles, one of the 
initial efforts to apply United States pressure to change the system of 
apartheid in South Africa. The MacBride Principles are named

[[Page S643]]

in honor of the late Sean MacBride, winner of the Nobel Peace Prize and 
co-founder of Amnesty International.
  This amendment will enlist the cooperation of United States companies 
active in Northern Ireland in the campaign to force the end of 
discrimination in the workplace by:
  First, eliminating religious discrimination in managerial, 
supervisory, administrative, clerical, and technical jobs and 
significantly increasing the representation in such jobs of individuals 
from under represented religious groups.
  Second, providing adequate security for the protection of minority 
employees at the workplace.
  Third, banning provocative sectarian and political emblems from the 
workplace.
  Fourth, publicly advertising all job openings and undertaking special 
recruitment efforts to attract applicants from under represented 
religious groups, and establishing procedures to identify and recruit 
minority individuals with potential for further advancement, including 
managerial programs.
  Fifth, establishing layoff, recall, and termination procedures which 
do not favor particular religious groupings.
  Sixth, abolishing job reservations, apprenticeship restrictions, and 
differential employment criteria which discriminate on the basis of 
religious or ethnic origin.
  Seventh, developing and expanding upon existing training and 
educational programs that will prepare substantial numbers of minority 
employees for managerial, supervisory, administrative, clerical, and 
technical jobs.
  Eighth, appointing a senior management staff member to oversee the 
U.S. company's compliance with the principles described above.
  It is in the workplace in Northern Ireland, which can be used to 
eliminate discrimination, where improving the employment opportunities 
for the underprivileged will help factor out the economic causes of the 
current strife in Northern Ireland. This will hopefully begin the 
process toward a peaceful resolution of the so-called troubles.
  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. 184

       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 ``Northern Ireland Fair 
     Employment Practices and Principles of Economic Justice Act 
     of 1997''.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) Currently, overall unemployment in Northern Ireland is 
     approximately 13 percent, as compared to 9 percent in the 
     rest of the United Kingdom.
       (2) Unemployment in the minority community in Northern 
     Ireland is 16 percent (22 percent for males and 8 percent for 
     females), and in some portions of the minority community 
     unemployment has historically exceeded 70 percent.
       (3) The British Government Fair Employment Commission 
     (F.E.C.), formerly the Fair Employment Agency (F.E.A.), has 
     consistently reported that a member of the minority community 
     is two times more likely to be unemployed than a member of 
     the majority community.
       (4) The Investor Responsibility Research Center (IRRC), 
     Washington, District of Columbia, lists more than 90 United 
     States companies doing business in Northern Ireland, which 
     employ approximately 11,000 individuals.
       (5) The religious minority population of Northern Ireland 
     is subject to discriminatory hiring practices by some United 
     States businesses.
       (6) The MacBride Principles are a nine point set of 
     guidelines for fair employment in Northern Ireland which 
     establishes a corporate code of conduct to promote equal 
     access to regional employment but does not require 
     disinvestment, quotas, or reverse discrimination.

     SEC. 3. RESTRICTION ON IMPORTS.

       An article from Northern Ireland may not be entered, or 
     withdrawn from warehouse for consumption, in the customs 
     territory of the United States unless there is presented at 
     the time of entry to the customs officer concerned 
     documentation indicating that the enterprise which 
     manufactured or assembled such article was in compliance at 
     the time of manufacture with the principles described in 
     section 5.

     SEC. 4. COMPLIANCE WITH FAIR EMPLOYMENT PRINCIPLES.

       (a) Compliance.--Any United States person who--
       (1) has a branch or office in Northern Ireland, or
       (2) controls a corporation, partnership, or other 
     enterprise in Northern Ireland,

     in which more than ten people are employed shall take the 
     necessary steps to ensure that, in operating such branch, 
     office, corporation, partnership, or enterprise, those 
     principles relating to employment practices set forth in 
     section 5 are implemented and this Act is complied with.
       (b) Report.--Each United States person referred to in 
     subsection (a) shall submit to the Secretary--
       (1) a detailed and fully documented annual report, signed 
     under oath, on showing compliance with the provisions of this 
     Act; and
       (2) such other information as the Secretary determines is 
     necessary.

     SEC. 5. MACBRIDE PRINCIPLES OF ECONOMIC JUSTICE.

       The principles referred to in section 4 are the MacBride 
     Principles of Economic Justice, which are as follows:
       (1) Increasing the representation of individuals from 
     underrepresented religious groups in the workforce, including 
     managerial, supervisory, administrative, clerical, and 
     technical jobs.
       (2) providing adequate security for the protection of 
     minority employees at the workplace.
       (3) Banning provocative sectarian or political emblems from 
     the workplace.
       (4) Providing that all job openings be advertised publicly 
     and providing that special recruitment efforts be made to 
     attract applicants from underrepresented religious groups.
       (5) Providing that layoff, recall, and termination 
     procedures do not favor a particular religious group.
       (6) Abolishing job reservations, apprenticeship 
     restrictions, and differential employment criteria which 
     discriminate on the basis of religion.
       (7) Providing for the development of training programs that 
     will prepare substantial numbers of minority employees for 
     skilled jobs, including the expansion of existing programs 
     and the creation of new programs to train, upgrade, and 
     improve the skills of minority employees.
       (8) Establishing procedures to assess, identify, and 
     actively recruit minority employees with the potential for 
     further advancement.
       (9) Providing for the appointment of a senior management 
     staff member to be responsible for the employment efforts of 
     the entity and, within a reasonable period of time, the 
     implementation of the principles described in paragraphs (1) 
     through (8).

     SEC. 6. PROHIBITION.

       Nothing in this Act shall require quotas or reverse 
     discrimination or mandate their use.

     SEC. 7. WAIVER OF PROVISIONS.

       (a) Waiver of Provisions.--In any case in which the 
     President determines that compliance by a United States 
     person with the provisions of this Act would harm the 
     national security of the United States, the President may 
     waive those provisions with respect to that United States 
     person. The President shall publish in the Federal Register 
     each waiver granted under this section and shall submit to 
     the Congress a justification for granting each such waiver. 
     Any such waiver shall become effective at the end of ninety 
     days after the date on which the justification is submitted 
     to the Congress unless the Congress, within that ninety-day 
     period, adopts a joint resolution disapproving the waiver. In 
     the computation of such ninety-day period, there shall be 
     excluded the days on which either House of Congress is not in 
     session because of an adjournment of more than three days to 
     a day certain or because of an adjournment of the Congress 
     sine die.
       (b) Consideration of Resolutions.--
       (1) Any resolution described in subsection (a) shall be 
     considered in the Senate in accordance with the provisions of 
     section 601(b) of the International Security Assistance and 
     Arms Export Control Act of 1976.
       (2) For the purpose of expediting the consideration and 
     adoption of a resolution under subsection (a) in the House of 
     Representatives, a motion to proceed to the consideration of 
     such resolution after it has been reported by the appropriate 
     committee shall be treated as highly privileged in the House 
     of Representatives.

     SEC. 8. DEFINITIONS AND PRESUMPTIONS.

       (a) Definitions.--For the purpose of this Act--
       (1) the term ``United States person'' means any United 
     States resident or national and any domestic concern 
     (including any permanent domestic establishment of any 
     foreign concern);
       (2) the term ``Secretary'' means the Secretary of Commerce; 
     and
       (3) the term ``Northern Ireland'' includes the counties of 
     Antrim, Armagh, Derry, Down, Tyrone, and Fermanagh.
       (b) Presumption.--A United States person shall be presumed 
     to control a corporation, partnership or other enterprise in 
     Northern Ireland if--
       (1) the United States person beneficially owns or controls 
     (whether directly or indirectly) more than 50 percent of the 
     outstanding voting securities of the corporation, 
     partnership, or enterprise;
       (2) the United States person beneficially owns or controls 
     (whether directly or indirectly) 25 percent or more of the 
     voting securities of the corporation, partnership, or 
     enterprise, if no other person owns or controls (whether 
     directly or indirectly) an equal or larger percentage;

[[Page S644]]

       (3) the corporation, partnership, or enterprise is operated 
     by the United States person pursuant to the provisions of an 
     exclusive management contract;
       (4) a majority of the members of the board of directors of 
     the corporation, partnership, or enterprise are also members 
     of the comparable governing body of the United States person;
       (5) the United States person has authority to appoint the 
     majority of the members of the board of directors of the 
     corporation, partnership, or enterprise; or
       (6) the United States person has authority to appoint the 
     chief operating officer of the corporation, partnership, or 
     enterprise.

     SEC. 9. EFFECTIVE DATE.

       This Act shall take effect 180 days after the date of 
     enactment of this Act.
                                 ______
                                 
      By Mr. AKAKA:
  S. 186. A bill to amend the Energy Policy and Conservation Act with 
respect to purchases from the strategic petroleum reserve by entities 
in the insular areas of the United States, and for other purposes; to 
the Committee on Energy and Natural Resources.


                   the emergency petroleum supply act

  Mr. AKAKA. Mr. President, today I am introducing the Emergency 
Petroleum Supply Act, a bill to ensure that Hawaii has access to the 
strategic petroleum reserve during an oil supply disruption. The 
Emergency Petroleum Supply Act would guarantee Hawaii oil at a fair 
price and give tankers bound for Hawaii priority loading during an 
emergency.
  This legislation passed the Senate in two previous Congresses. During 
the 104th Congress, the Senate Committee on Energy and Natural 
Resources once again approved the bill. Only the inability of the House 
to adopt strategic petroleum reserve reforms has prevented my bill from 
becoming law. I will work aggressively during the 105th Congress to 
enact this measure.
  The objective of the Emergency Petroleum Supply Act can be summarized 
in one word: access. Because of its tremendous distance from the Gulf 
Coast, Hawaii needs guaranteed access to the strategic petroleum 
reserve [SPR], as well as priority access to the SPR loading docks.
  My bill addresses both these concerns. First, it provides a mechanism 
to guarantee an award of SPR oil. Hawaii's energy companies will be 
allowed to submit binding offers for a fixed quantity of oil at a price 
equal to the average of all successful bids. This concept is modeled 
after the Federal Government's method of selling Treasury bills. It 
would give Hawaii ready access to emergency oil supplies at a price 
that is fair to the Government. Without this bill, Hawaii's energy 
companies, and the population they serve, face the risk that their bid 
for SPR oil would be rejected and that oil inventories would run dry.
  The second component of my bill addresses the problem of delay. The 
Emergency Petroleum Supply Act grants Hawaii-bound ships expedited 
access to SPR loading docks. It would be a terrible misfortune if 
deliveries to Hawaii were delayed because the tanker scheduled to carry 
emergency supplies was moored in the Gulf of Mexico, waiting in line 
for access to the SPR loading docks.
  As any grade-school geography student knows, Hawaii is a long way 
from the Gulf of Mexico, especially when you have to transit the Panama 
Canal. The distance between the SPR loading docks and Honolulu, by way 
of the canal, is 7,000 miles--more than one-quarter of the distance 
around the globe.
  But distance alone is not the issue. When you add together the time 
between the decision to draw down the reserve and the time for oil from 
the reserve to reach our shores, the seriousness of the problem 
emerges. It takes time to solicit and accept bids for SPR oil, time to 
locate and position tankers, time for tankers to wait in line to gain 
access to SPR loading docks, and more time to transit the canal to 
Hawaii. Obviously, Hawaii is at the end of a very, very long supply 
line. People overlook the fact that insular areas have a limited supply 
of petroleum products on hand at any time. While Hawaii waited for 
emergency supplies to arrive, oil inventories could run dry and our 
economy could grind to a halt.
  Recently, the Department of Energy asked Hawaii's East-West Center to 
study this problem. The East-West Center report concluded that my SPR 
access measure ``is an excellent proposal which would greatly reassure 
the islands that their basic needs would be maintained.''
  The East-West Center report provides strong justification for 
granting Hawaii special access to SPR oil during an energy emergency. 
The report found that a major oil supply disruption would have a much 
more severe impact on the Pacific islands than on the rest of the 
United States. Although all of Asia would experience some degree of 
inflation and recession, the small economies of the insular areas would 
be virtually unprotected from volatile economic forces. While the rest 
of the United States does not have to rely on ocean transport from 
other nations for essential goods and services, the economies of Hawaii 
and the Pacific islands are heavily dependent on ocean-borne trade and 
foreign visitors.
  The need for this provision is further justified by a December 1993 
Department of Energy/State of Hawaii analysis of Hawaii's energy 
security which found the following:

       Hawaii depends on imported oil for over 92 percent of its 
     energy. This makes Hawaii the most vulnerable State in the 
     Nation to the disruption of its economy and way of life in 
     the event of a disruption of the world oil market or rapid 
     oil price increases.
       Currently, 40 percent of Hawaii's oil comes from Alaska and 
     the remainder from the Asia-Pacific region. The export 
     capabilities of these domestic and foreign sources of supply 
     are projected to decline by approximately 50 percent by the 
     year 2000. This will likely increase Hawaii's dependence on 
     oil reserves of the politically unstable Middle East.
       Hawaii is also vulnerable to possible supply disruptions in 
     the event of a crisis. The long distance from the U.S. 
     Strategic Petroleum Reserve in Louisiana and Texas, combined 
     with a declining number of U.S.-flag tankers capable of 
     transiting the Panama Canal, make timely emergency deliveries 
     problematic.

  Other studies have consistently verified Hawaii's energy 
vulnerability and its need for special access to the SPR. An analysis 
by Mr. Bruce Wilson, an accomplished oil economist, determined that the 
delivery of SPR oil to Hawaii from the Gulf of Mexico could take as 
long as 53 days. That exceeds the State's average commercial working 
inventory by 23 days. As Mr. Wilson's research shows, an oil supply 
disruption is Hawaii's greatest nightmare.
  Some suggest that market forces will ensure that Hawaii and the 
territories receive the oil they need during an energy emergency. 
Unfortunately, these are the same market forces that cause Hawaii's 
consumers to pay 50 percent more per gallon of gasoline than consumers 
pay on the Mainland. When a crisis hits, our energy prices can double 
or triple.
  Hawaii may be the 50th State, but we deserve the same degree of 
energy security that the rest of the Nation enjoys. It's simply a 
matter of equity. Hawaii's tax dollars help fill and maintain the 
reserve; Hawaii should enjoy the energy security the SPR is designed to 
provide.
  My bill will safeguard Hawaii from the harsh economic consequences of 
an oil emergency. The Emergency Petroleum Supply Act is not only good 
energy policy, it's good economic policy for Hawaii.
  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. 186

       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 ``Emergency Petroleum Supply 
     Act''.

     SEC. 2. PURCHASES FROM STRATEGIC PETROLEUM RESERVE BY 
                   ENTITIES IN INSULAR AREAS OF UNITED STATES.

       Section 161 of the Energy Policy and Conservation Act (42 
     U.S.C. 6241) is amended by adding at the end the following:
       ``(j) Purchases From Strategic Petroleum Reserve by 
     Entities in Insular Areas of United States.--
       ``(1) Definitions.--In this subsection:
       ``(A) Binding offer.--The term `binding offer' means a bid 
     submitted by the State of Hawaii for an assured award of a 
     specific quantity of petroleum product, with a price to be 
     calculated pursuant to this Act, that obligates the offeror 
     to take title to the petroleum product without further 
     negotiation or recourse to withdraw the offer.
       ``(B) Category of petroleum product.--The term `category of 
     petroleum product' means a master line item within a notice 
     of sale.

[[Page S645]]

       ``(C) Eligible entity.--The term `eligible entity' means an 
     entity that owns or controls a refinery that is located 
     within the State of Hawaii.
       ``(D) Full tanker load.--The term `full tanker load' means 
     a tanker of approximately 700,000 barrels of capacity, or 
     such lesser tanker capacity as may be designated by the State 
     of Hawaii.
       ``(E) Insular area.--The term `insular area' means the 
     Commonwealth of Puerto Rico, the Commonwealth of the Northern 
     Mariana Islands, the United States Virgin Islands, Guam, 
     American Samoa, the Republic of the Marshall Islands, the 
     Federated States of Micronesia, and the Republic of Palau.
       ``(F) Offering.--The term `offering' means a solicitation 
     for bids for a quantity or quantities of petroleum product 
     from the Strategic Petroleum Reserve as specified in the 
     notice of sale.
       ``(G) Notice of sale.--The term `notice of sale' means the 
     document that announces--
       ``(i) the sale of Strategic Petroleum Reserve products;
       ``(ii) the quantity, characteristics, and location of the 
     petroleum product being sold;
       ``(iii) the delivery period for the sale; and
       ``(iv) the procedures for submitting offers.
       ``(2) In general.--In the case of an offering of a quantity 
     of petroleum product during a drawdown of the Strategic 
     Petroleum Reserve--
       ``(A) the State of Hawaii, in addition to having the 
     opportunity to submit a competitive bid, may--
       ``(i) submit a binding offer, and shall on submission of 
     the offer, be entitled to purchase a category of a petroleum 
     product specified in a notice of sale at a price equal to the 
     volumetrically weighted average of the successful bids made 
     for the remaining quantity of the petroleum product within 
     the category that is the subject of the offering; and
       ``(ii) submit 1 or more alternative offers, for other 
     categories of the petroleum product, that will be binding if 
     no price competitive contract is awarded for the category of 
     petroleum product on which a binding offer is submitted under 
     clause (i); and
       ``(B) at the request of the Governor of the State of 
     Hawaii, a petroleum product purchased by the State of Hawaii 
     at a competitive sale or through a binding offer shall have 
     first preference in scheduling for lifting.
       ``(3) Limitation on quantity.--
       ``(A) In general.--In administering this subsection, in the 
     case of each offering, the Secretary may impose the 
     limitation described in subparagraph (B) or (C) that results 
     in the purchase of the lesser quantity of petroleum product.
       ``(B) Portion of quantity of previous imports.--The 
     Secretary may limit the quantity of a petroleum product that 
     the State of Hawaii may purchase through a binding offer at 
     any offering to \1/12\ of the total quantity of imports of 
     the petroleum product brought into the State during the 
     previous year (or other period determined by the Secretary to 
     be representative).
       ``(C) Percentage of offering.--The Secretary may limit the 
     quantity that may be purchased through binding offers at any 
     offering to 3 percent of the offering.
       ``(4) Adjustments.--
       ``(A) In general.--Notwithstanding any limitation imposed 
     under paragraph (3), in administering this subsection, in the 
     case of each offering, the Secretary shall, at the request of 
     the Governor of the State of Hawaii, or an eligible entity 
     certified under paragraph (7), adjust the quantity to be sold 
     to the State of Hawaii in accordance with this paragraph.
       ``(B) Upward adjustment.--The Secretary shall adjust upward 
     to the next whole number increment of a full tanker load if 
     the quantity to be sold is--
       ``(i) less than 1 full tanker load; or
       ``(ii) greater than or equal to 50 percent of a full tanker 
     load more than a whole number increment of a full tanker 
     load.
       ``(C) Downward adjustment.--The Secretary shall adjust 
     downward to the next whole number increment of a full tanker 
     load if the quantity to be sold is less than 50 percent of a 
     full tanker load more than a whole number increment of a full 
     tanker load.
       ``(5) Delivery to other locations.--The State of Hawaii may 
     enter into an exchange or a processing agreement that 
     requires delivery to other locations, if a petroleum product 
     of similar value or quantity is delivered to the State of 
     Hawaii.
       ``(6) Standard sales provisions.--Except as otherwise 
     provided in this Act, the Secretary may require the State of 
     Hawaii to comply with the standard sales provisions 
     applicable to purchasers of petroleum product at competitive 
     sales.
       ``(7) Eligible entities.--
       ``(A) In general.--Subject to subparagraphs (B) and (C) and 
     notwithstanding any other provision of this paragraph, if the 
     Governor of the State of Hawaii certifies to the Secretary 
     that the State has entered into an agreement with an eligible 
     entity to carry out this Act, the eligible entity may act on 
     behalf of the State of Hawaii to carry out this subsection.
       ``(B) Limitation.--The Governor of the State of Hawaii 
     shall not certify more than 1 eligible entity under this 
     paragraph for each notice of sale.
       ``(C) Barred company.--If the Secretary has notified the 
     Governor of the State of Hawaii that a company has been 
     barred from bidding (either prior to, or at the time that a 
     notice of sale is issued), the Governor shall not certify the 
     company under this paragraph.
       ``(7) Supplies of petroleum products.--At the request of 
     the governor of an insular area, the Secretary shall, for a 
     period not to exceed 180 days following a drawdown of the 
     Strategic Petroleum Reserve, assist the insular area in its 
     efforts to maintain adequate supplies of petroleum products 
     from traditional and non-traditional suppliers.''.

     SEC. 3. REGULATIONS.

       (a) In General.--The Secretary of Energy shall issue such 
     regulations as are necessary to carry out the amendment made 
     by section 2.
       (b) Administrative Procedure.--Regulations issued to carry 
     out the amendment made by section 2 shall not be subject to--
       (1) section 523 of the Energy Policy and Conservation Act 
     (42 U.S.C. 6393); or
       (2) section 501 of the Department of Energy Organization 
     Act (42 U.S.C. 7191).

     SEC. 4. EFFECTIVE DATE.

       The amendment made by section 2 takes effect on the earlier 
     of--
       (1) the date that is 180 days after the date of enactment 
     of this Act; or
       (2) the date that final regulations are issued under 
     section 3.
       By Mr. GLENN:

  S. 193. A bill to provide protections to individuals who are the 
human subject of research; to the Committee on Labor and Human 
Resources.


                 HUMAN RESEARCH SUBJECT PROTECTION ACT

  Mr. GLENN. Madam President, I rise today to introduce the Human 
Research Subject Protection Act of 1997. I send the bill to the desk.
  The PRESIDING OFFICER. The bill will be received and appropriately 
referred.
  Mr. GLENN. Madam President, if I approached any Senator here and I 
said, ``You did not know it, but the last time they went to the doctor 
or went to the hospital, your wife or your husband or your daughter or 
your son became the subject of a medical experiment that they were not 
even told about. They were given medicine, they were given pills, they 
were given radiation, they were given something and were not even told 
about this, were not even informed about it, yet they are under some 
experimental research that might possibly do them harm--maybe some good 
will come out of it, but maybe it will do them harm also--but they do 
not know about it,'' people would laugh at that and say that is 
ridiculous. That cannot possibly happen in this country. Yet, that very 
situation is what this piece of legislation is supposed to address.
  I have been in public life and have served this country for many 
years. Frankly, I do not think too many things that I see surprise me 
anymore about our laws and about Government. Three years ago, though, I 
began to learn about a gap in our legal system that does truly concern 
me. In 1993 the Governmental Affairs Committee began to investigate the 
cold war radiation experiments. These experiments are one of the 
unfortunate legacies of the cold war, when our Government sponsored 
experiments involving radiation on our own citizens without their 
consent. They did not even know the experiments were being run on them. 
It was without their consent.
  One of the most infamous of these experiments took place in my own 
State of Ohio, when scores of patients at the University of Cincinnati 
were subjected to large doses of radiation during experimental 
treatments, without their consent, without their informed consent. 
During the course of this investigation, I began to ask the question, 
what protections are in place to prevent such abuses from happening 
again? What law prohibits experimenting on people without their 
informed consent?
  What I found, when I looked into it, is there is no law on the books 
requiring that informed consent be obtained. More important, I believe 
there is a need for such a law, as there continue to be cases where 
this basic right--I do view it as a basic right--is abused. As I 
started out, I would like to put this on a personal level for everyone 
of my colleagues. You just think about your own family, your own son, 
your own daughter, or grandchildren who might be, the next time they go 
to a doctor, the subject of some medical experiment that they are not 
even told about. I do not think there can be many things more un-
American than that.
  With the introduction of this bill today I hope to begin the process 
of correcting some serious gaps in our

[[Page S646]]

legal system. I want to make clear right now I am not seeking to bring 
medical research to a screeching halt. Please do not anybody at NIH, or 
anybody doing research throughout this country, think we are trying to 
stop that. We are not. That is not my intent and not the intent of this 
bill.
  This country has the very finest health care system in the world, in 
part because of basic research. In fact, in large part because we have 
put more effort, more resources, more of our treasure into health 
research than any other nation in this world. In fact, I believe most 
people are not opposed to participating themselves in scientific 
research, if they are told about the pros and the cons. That is the 
goal of this legislation, to make sure that people have the appropriate 
information to make an informed choice about their medical treatment.
  Everyone listening today probably has heard of the Nuremberg Code. 
That is the list of 10 ethical research principles which were produced 
as part of the judgment against Nazi physicians who engaged in truly 
heinous medical experiments during World War II.
  The first principle of the Nuremberg Code states that the voluntary 
consent of the human subject of research is absolutely essential. 
Unfortunately, as we look back through our history since the late 
1940's, it appears that researchers in America may not have taken all 
that Nuremberg lesson completely to heart.
  I ask my colleagues what the following names might have in common: 
thalidomide, Tuskegee, and Willowbrook?
  Well, the answer is that these are all sad examples of unethical 
research conducted in the United States, and in the United States well 
after the Nuremberg Code was issued, adopted and worldwide attention 
had been focused on some of the abuses of that time during World War 
II.
  Given this history, I find it astounding that even after Nuremberg, 
the thalidomide babies, Willowbrook, Tuskegee and the cold war 
radiation experiments, and who knows how many other cases, we still 
don't have a law on our books requiring that informed consent--those 
two words, ``informed consent''--be obtained prior to conducting 
research on human subjects.
  I have had research conducted on me because of my past activities 
before I came to the Senate in the space program and so on, but I knew 
what was being looked at, what was being tried. I knew the objectives 
of it, and I was willing to do that. I was happy to do it. But it was 
informed consent that I had personally, and I knew what I was getting 
into and glad to do it.
  I think most people feel the same way. If they know what they are 
getting into and they feel there is a good purpose to it, they are 
willing to do it. But to do research on people when they don't even 
know what the research or the medicines or the radiation is that is 
being tried on them, I think is unconscionable.

  What it comes down to is there are no criminal fines or penalties for 
violating the spirit or the letter of that Nuremberg Code that should 
be the basis of all of our informed consent in this country.
  In fact, our own Constitution says, ``The right of the people to be 
secure in their persons . . . shall not be violated.''
  So there is no explicit statutory prohibition against improper 
research. I must add that just because there is no law on the books 
does not mean there are no protections for people from unethical 
medical or scientific research.
  These tragic incidents I have mentioned have resulted in changes in 
the way human research subjects are treated. I don't want to 
misrepresent this, because there is a very elaborate system of 
protections that have developed over the years. Unfortunately, though, 
this system does have some gaps and, if enacted, I believe this 
legislation will close those gaps.
  Let me briefly describe the system that is currently in place.
  Regulations governing the protection of human research subjects were 
issued by the Department of Health, Education, and Welfare in 1974 and 
may be found at part 46 of title 45 of the Code of Federal Regulations.
  In 1991, 10 years after a recommendation of a congressionally 
chartered Presidential advisory board, 16 other agencies adopted a 
portion of this rule, a portion of the rule to apply to research that 
these agencies sponsored. And at that point, these regulations became 
known as the common rule.
  The common rule requires research institutions receiving Federal 
support and Federal agencies conducting research to establish 
committees, and these are known as--the shorthand version is IRB's--
Institutional Review Boards. Their job is to review research proposals 
for risk of harm to human subjects and to perform other duties to 
protect human research subjects.
  The common rule also stipulates requirements related to informed 
consent, how researchers must inform potential subjects of the risks to 
which they, as study participants, agree to be exposed.
  It should also be noted that HHS regulations contain additional 
protections not included in the common rule for research involving 
vulnerable populations; namely, pregnant women, fetuses, subjects of in 
vitro fertilization research, prisoners and children. No other Federal 
agency has adopted these additional protections.
  Several mechanisms have been developed by HHS and research 
institutions over the years to extend the common-rule protections to 
more people. For example, many, but not all, research institutions 
which receive some Federal support voluntarily apply common-rule 
guidelines to all research conducted at their institutions.
  Additionally, in order to receive approval for a drug or device from 
the Food and Drug Administration, a research institution or 
pharmaceutical company must comply with the requirements of the common 
rule as administered by the FDA.
  In addition to the Federal regulations, most professional medical 
societies and associations have adopted ethical codes of conduct 
regarding research.
  The first such ethical code, called the Helsinki Code, was adopted by 
the World Medical Association in 1964. So it has been on the books for 
a long time. Since that time, other prominent organizations, like the 
American Medical Association, the American Society for Clinical 
Investigation, and the American Federation of Clinical Research have 
also adopted such ethical codes.
  Most recently, in October 1995, the President exhibited, I believe, 
strong leadership and established the National Bioethics Advisory 
Commission, NBAC. This had been a long time coming. It had been 
suggested, but no one had ever gone ahead and done this, and the 
President exerted the leadership and established the NBAC.
  Quite simply, the scientific and ethical issues which the NBAC are 
supposed to evaluate represent some of the most important, some of the 
most complex and controversial questions of our time. NBAC's input will 
be critical to informed policymaking for both the legislative and 
executive branches.
  The two primary goals of NBAC are to, first, evaluate the current 
level of compliance of Federal agencies to the common rule, and, 
second, evaluate the common rule and advise both the executive and 
legislative branches on any changes that might be needed to it.
  I very strongly support the work of the NBAC but recently have become 
extremely concerned to hear that more than 15 months after its 
establishment, the NBAC is still operating with a volunteer staff. It 
was my understanding that a number of Federal agencies supported the 
creation of the NBAC and agreed to back up their support with resources 
and staff. Some NBAC members have stated in public meetings that they 
are frustrated with the progress the Commission is making and attribute 
the slow pace to the lack of resources. Additionally, the resource 
problem may be limiting the number of meetings of the Commission.
  Further, if this problem is not resolved in the near term, the 
Commission may have to stop meeting altogether. I sent a letter to the 
President's science adviser a few days ago, Dr. John Gibbons, to 
express my concerns about this. Dr. Gibbons was working to resolve this 
funding problem, which I view as an urgent priority.
  I am very glad to announce--as a matter of fact, it was just today--
that these groups in Government that are interested in this had a 
meeting under Dr. Gibbons' leadership, and the $1.6 million that was 
supposed to accrue

[[Page S647]]

from these different agencies to be used by the NBAC is now 
forthcoming. So the NBAC is now funded so they can do the job they were 
originally supposed to do.
  We are very glad to say that has happened just today, and I am glad 
it happened today, just when I am introducing this bill, because it 
looks as though we now truly are moving to support the NBAC that did 
not receive the kind of monetary support, the kind of funding that we 
thought it was going to have when it was first formed a year and a half 
ago.
  There are a number of existing mechanisms that do protect human 
research subjects today. In fact, in March of 1996, the GAO reported to 
me that the testing protection system has reduced the likelihood of 
serious abuses from occurring. However, the GAO also pointed out a 
number of weaknesses and gaps in the current system.
  There are at least four areas, four major gaps.
  First, not all agencies have adopted the common rule, including 
agencies that currently sponsor research involving human subjects. The 
Department of Labor and the Nuclear Regulatory Commission are examples 
of agencies that sponsor such research but those agencies have not 
adopted the common rule, which I think they should have.
  Second, the common rule's research is voluntarily applied in many 
cases. Most institutions which receive Federal funds will voluntarily 
apply the common rule to all research conducted at their institution. 
However, not all research institutions adopt this policy. And in any 
case, if any improper research is discovered at these institutions, 
there are very few steps available to the Federal Government to do much 
about it.
  Third, a private institution or a researcher who conducts 
nonfederally funded research or is not seeking approval of a drug or 
device with the FDA does not have to apply the principles of the common 
rule to its research. In other words, there is a huge area of all the 
private medical research out there that is not under the common rule 
unless they just choose themselves to just voluntarily do it.
  Fourth, no Federal agency, other than HHS, has applied the additional 
protections described in 45 CFR 46 for vulnerable populations--pregnant 
women and their fetus, children, prisoners--to their own research. So 
the purpose of this legislation is to help close the gaps that exist 
within the current system for protecting research subjects.
  Well, is there really a problem out there?
  Is this just a paper loophole that I am trying to close?
  Unfortunately, Mr. President, there are ongoing problems with 
inappropriate, ethically suspect research on human subjects. It is 
difficult to know the extent of such problems because information is 
not collected in any formal manner on human research.

  The Cleveland Plain-Dealer in my home State of Ohio has recently 
reported in a whole series of articles, after much investigation of 
this issue. And I quote from them:

       What the government lacks in hard data about humans, it 
     more than makes up for with volumes of statistics about 
     laboratory animals. Wonder how many guinea pigs were used in 
     U.S. research? The Agriculture Department knows: 333,379. How 
     many hamsters in Ohio? 2,782.

  So we have all this data on animals and little on human beings. I 
would hasten to add that the guinea pigs the Plain-Dealer refers to are 
the four-legged kind too and not the guinea pigs that are humans being 
used for research.
  The reason we know so much about the use of animals in research is 
that we have laws governing the handling and treatment of them.
  For example, the Animal Welfare Act requires that certain minimum 
standards be maintained when using animals in research.
  Let me give you some recent examples which indicate why, 
notwithstanding the common rule and the other protections that are in 
place, I think additional protections are needed in statute.
  In 1994-95, in an effort to explore the rights and interests of 
people currently involved in radiation research conducted or sponsored 
by the Federal Government, the Presidential Advisory Committee on Human 
Radiation Experiments conducted an in-depth review of 125 research 
projects funded by HHS, DOE, DOD, VA, and NASA. According to the ACHRE 
report:

       Our review suggests that there are significant deficiencies 
     in some aspects of the current system for the protection of 
     human subjects.

  The ACHRE found that documents provided to IRB's often did not 
contain enough information about topics that are central to the ethics 
of research involving human subjects. In some cases the committee found 
it was difficult to assess the scientific merit of a protocol based on 
the documentation provided.
  ACHRE's report states that some consent forms studied by the 
committee are--and I quote--

       . . . flawed in morally significant respects, not merely 
     because they are difficult to read but because they are 
     uninformative or even misleading.

  The report states further:

       Our review also raises serious concerns about some research 
     involving children and adults with questionable decision-
     making capacity.

  And the ACHRE concludes:

       All told, the documents of almost half the studies reviewed 
     by the committee that involved greater than minimal risk [to 
     the subject] raised serious or moderate concerns.

  That is a horrible indictment.
  As I mentioned earlier, from December 15 to 18, 1996, the Cleveland 
Plain-Dealer published a series of articles entitled ``Drug Trials: Do 
People Know the Truth About Experiments.''

       And I want to give credit to the people that worked on 
     that. Keith Epstein, has covered Capitol Hill here and has 
     written much and done much investigative reporting working on 
     this, as did Mr. Sloat, S-l-o-a-t, Bill Sloat. Those two 
     fellows worked on this and did a great job in pointing out 
     some of the problems that still exist. And we have talked to 
     them about some of these things.

  The Plain-Dealer uncovered a number of disturbing cases, very 
disturbing cases as a matter of fact, where people were either unaware 
of the fact that they were involved in research or were not provided 
full information about potential side effects of research. The series 
raises very serious questions about the adequacy of our current system 
of protecting human research subjects.
  The Plain-Dealer found, for example, of ``4,154 FDA inspections of 
researchers testing new drugs on people [since 1977] . . . more than 
half the researchers were cited by FDA inspectors for failing to 
clearly disclose the experimental nature of their work.''
  Another serious finding in this series is that researchers who 
receive the most severe penalty by the FDA, being designated 
``Disqualified Investigators,'' have little fear of this fact being 
found out by their peers or patients. One of the articles discusses 
potentially serious problems in the way research conducted outside of 
the United States is incorporated into applications for drug approvals 
in the United States.
  The Plain-Dealer uncovered much evidence to suggest that the Federal 
Government continues to sponsor research where informed consent is not 
obtained. And this fact disturbed me greatly also.
  On November 14, 1996, the Wall Street Journal published an article 
that examined the practice at one pharmaceutical firm, Eli Lilly and 
Co. in using homeless alcoholics in their clinical trials. The article 
raises some disturbing questions about the quality of the phase I 
trials conducted by this one company. Also serious ethical questions 
are raised concerning the appropriateness of paying homeless alcoholics 
significant sums to be human guinea pigs. It is not clear from the 
article whether these tests were reviewed by any IRB.
  On December 27, 1996, the New York Times reported on a New York State 
appeals court ruling which found that the State's rules governing 
psychiatric experiments on children and the mentally ill were 
unconstitutional. The court found that the rules did not adequately 
protect people who, because of age or illness, cannot give informed 
consent to take part in drug tests or other experiments. The article 
mentions 10 to 15 of the 400 psychiatric experiments covered by the 
ruling as being ``privately financed'' and therefore outside the 
coverage of Federal rules.
  How would you like it if your father, mother, son or daughter, 
husband, wife was in one of those institutions and was having 
experiments conducted on

[[Page S648]]

them without your knowing about it or without them knowing about it? 
That is what we are up against.
  On August 15, 1994, the New York Times reported on ethical and legal 
questions regarding a company's efforts to promote a drug that can make 
some children grow taller than they otherwise would. The drug in 
question, Protropin, has been approved by FDA for use in children whose 
bodies do not make sufficient quantities of human growth hormone. 
However, once approved, doctors may prescribe it for other purposes at 
their discretion. In this case the company was apparently surveying 
schools for short children and then trying to funnel those children to 
doctors who would prescribe the drug whether or not the children lacked 
the human growth hormone. This unapproved research was occurring 
without the oversight of an IRB. And at least 15,000 children have 
taken this drug.
  Another illustration of the precarious coverage of the common rule 
occurred in 1995 when it became known that researchers from the Center 
for Reproductive Health at the University of California Irvine, were 
fertilizing humans and implanting theses in different mothers without 
the consent of the donor. This research was not being funded by any 
Federal agency; however, NIH was funding more than $20 million worth of 
other research at the university. Even though several internal and 
external investigations by the university and the district attorney 
were being conducted on this experiment, a clarifying moment occurred 
when investigators from OPRR visited UC Irvine early last year. These 
investigators reminded university officials of the common rule; the 
fact that the university had agreed to apply it to all research 
conducted there--through OPRR's assurance process; and that NIH was 
currently funding a good deal of research at the institution. Within a 
week of OPRR's visit, the university took public action to halt the 
research and formally investigate the researchers.

  On October 10, 1994, the New York Times reported on a New York doctor 
who adopted two types of drugs approved by FDA for cancer treatment and 
stomach ulcers for an unapproved use to perform nonsurgical abortions. 
The article quotes the doctor saying that in 121 of 126 cases his 
approach was successful. The remaining five cases required surgery to 
complete the procedure. Because the drugs were FDA approved and the 
doctor was not funded or connected to federally sponsored research, no 
IRB or approved informed consent procedures were required. Apparently, 
each patient signed a three-page consent form, but this was not 
approved by an IRB. According to the Times, once FDA approves a drug, 
physicians are generally allowed to use it for off label purposes.
  Now Mr. President, some of the issues discussed in these articles are 
problems with how the common rule itself is being applied. Some of 
these examples illustrate the gaps in the common rule coverage. My 
legislation will address both the coverage and the application of the 
common rule.
  Now how precisely would the legislation work?
  It would require all research facilities to register with HHS. 
Registration shall include: First, statement of principles governing 
the research facility in its conduct of human subject research; second, 
designation of the official responsible for all human subject; third, 
designation of membership roster of IRB(s); and fourth, attestation 
that the research facility is complying with the protection 
requirements of the common rule.
  The legislation includes a grandfather provision for all research 
entities which currently have negotiated project assurances with HHS. 
The vast majority of research facilities have such assurances.
  The legislation contains a 3-year reregistration requirement.
  The legislation includes criminal penalties for failure to comply 
with the act. Therefore, if enacted it would be a felony offense to 
experiment on someone without their informed consent.
  The intent therefore of this legislation is twofold: First, to fill 
in the gaps of coverage of the common rule by requiring all research 
involving human subjects to abide by the rule; and second, to elevate 
the importance of conducting research ethically, the bill provides 
criminal fines and penalties for failure to comply with the 
requirements of this law, and by extension 45 CFR 46.
  Finally Mr. President, my legislation would codify a recommendation 
which the Advisory Committee on Human Radiation Experiments made 
regarding the conduct of classified research involving human subjects.

  Specifically, the advisory committee recommended that informed 
consent of all human subjects of classified research be required, and 
that such requirement not be subject to waiver or exemption. Under 
current rule and executive order, it is possible to waive informed 
consent and IRB review for classified research. Title II of this 
legislation would prohibit the waiver of either informed consent or IRB 
review for classified research.
  The advisory committee also recommended that human subjects of 
classified research be provided with certain information regarding that 
research. My legislation would require that such subjects be 
information concerning: First, the identify of the sponsoring Federal 
agency; second, a statement that the research involves classified 
information; and third, an unclassified description of the purpose of 
the research.
  Mr. President I have tried today to briefly lay out the case for the 
need for the legislation I am introducing. I know that my colleague 
from Ohio, Senator DeWine, is also concerned about the issues I have 
raised today, and about those that appeared last month in the Plain 
Dealer. I believe that he has requested that the chairman of the Labor 
and Human Resources Committee hold hearings on this subject. I think 
that is entirely appropriate. And I hope that this legislation could be 
considered in that process. I look forward to working with the Labor 
Committee in this regard.
  I do not claim to have the magic bullet solution with this bill. 
However, I believe there are some key principles which should guide the 
Senate's consideration of this legislation. These principles are:
  First, informed consent and independent review of experiments 
involving human subjects must be required.
  Second, anyone who violates the right of research subject to have 
informed consent, should be held criminally responsible for that 
violation.
  I want to put this in personal terms once again. You can imagine your 
spouse, husband, wife, father, mother, children, being experimented on 
without your knowledge or their knowledge. That is unconscionable, and 
we should not permit that. This legislation will close many of the 
loopholes that permit that to happen now.
  As the legislative process moves ahead, it is certain that the bill 
will undergo scrutiny and amendments. But I think the outcome, if this 
legislation is enacted into law, will be improved protections for all 
Americans.
  Madam President, obviously, I welcome any cosponsors on this 
legislation. I will be sending out a ``dear colleague'' letter to all 
the offices, and I hope we get a good response to that. I think there 
are very few Senators who will not back this when they hear what can 
happen then to them, their families, and their constituents back home, 
if we do not pass something like this.
  I think this is many years overdue. I don't want to scare people to 
death with this, because I think most of the research in this country 
is conducted in a way that is good and is with informed consent--in 
most cases. But just the few examples that I have mentioned here today, 
as well as the articles in the Cleveland Plain Dealer and New York 
Times I quoted from, indicate there is still a very major problem in 
this area and one that we want to close the gaps on so that no American 
is subjected to experiments like this, unless they know exactly what is 
going on and have given informed consent.
  Thank you. I yield the floor.
                                 ______
                                 
      By Mr. CHAFEE (for himself, Mr. Moynihan, Mr. Abraham, and Mr. 
        Kyl):
  S. 194. A bill to amend the Internal Revenue Code of 1986 to make 
permanent the section 170(e)(5) rules pertaining to gifts of publicly 
traded stock to certain private foundations and for other purposes; to 
the Committee on Finance.

[[Page S649]]

                    private foundations legislation

  Mr. CHAFEE. Mr. President, today, I am introducing legislation which 
makes permanent the full value deduction for gifts of appreciated stock 
to private foundations. I am pleased that my distinguished colleagues, 
Senator Moynihan and Senator Abraham, have agreed to join me in this 
effort.
  Since 1984, donors have been allowed to deduct the full fair market 
value of certain gifts of public traded stock to private foundations. 
This provision of the tax code was added as part of the Tax Reform Act 
of 1984 to encourage individuals to create foundations during their 
lifetime. Unfortunately, when this section was enacted it included a 
sunset date of December 31, 1994 which was extended through May 31, 
1997 as part of the Small Business Jobs Protection Act. Without this 
provision, the number of new foundations--as well as additional 
endowments to existing foundations--is likely to fall off dramatically.
  Private foundations are nonprofit organizations that support 
charitable activities in order to serve the common good. They provide 
support by making grants to other nonprofit agencies, or through 
operating their own programs. In some cases, such as scholarships and 
disaster relief, foundations may make grants to individuals.
  Foundations are created with endowments--money given by individuals, 
families, or corporations. They make grants or operate programs with 
the income earned from investing the endowments. Since most foundations 
have permanent endowments, they do not need to raise funds each year 
from the public in order to continue their work. Freed from these 
constraints, foundations are perfectly positioned to act as the 
research and development arm of society.
  In a 1965 Report on Private Foundations, the Treasury Department 
recognized the special nature of foundations by describing them as 
``uniquely qualified to initiate thought and action, experiment with 
new untried ventures, dissent from prevailing attitudes, and act 
quickly and flexibly.'' Indeed, foundations reflect the innovative 
spirit of the individuals and corporations that endow them.
  There are more than 34,000 private foundations in America today that 
provide over $9 billion annually to support innumerable projects, large 
and small. Among other things, they help the poor and disadvantaged, 
advance scientific and medical research, and strengthen the American 
educational system.
  Let me give you a few examples of some of the medical advances that 
have occurred as a result of the financial assistance provided by 
private foundations: The polio vaccine developed by Dr. Jonas Salk in 
1953 after the Sarah Scaife Foundation provided him with the money he 
needed to establish and equip his virus laboratory.
  With the help of the Commonwealth Fund, Dr. Papanicolaou discovered 
in 1923 that cervical cancer could be diagnosed before a woman 
presented any symptoms. That breakthrough led to the basic and now 
routine diagnostic technique known as the Pap smear.
  In 1951, Dr. Max Theiler received the Nobel Prize in medicine for his 
work in developing the yellow fever vaccine. That effort was the direct 
result of a 30-year, all-out commitment by the Rockefeller Foundation 
to eradicate this disease.
  But, Mr. President, private foundations have been involved in many 
more aspects of our daily lives than simply funding medical advances. 
Dr. John V.N. Dorr was an engineer in the early 1950's. He speculated 
that many accidents occurring on our Nation's highways during inclement 
weather were the result of drivers hugging the white lines painted in 
the middle of the road. Dorr believed that if similar lines were 
painted on the shoulder side of the road, lives could be saved.
  Dorr convinced transportation engineers in Westchester County, NY, to 
test his theory along a particularly treacherous stretch of highway. 
The dropoff in accidents along this part of the road was dramatic, and 
Dr. Dorr used his own foundation to publicize the demonstration's 
results nationally. Today, although State funds are now used to paint 
white lines on the shoulder side of the Nation's highways, every person 
traveling in motor vehicles is indebted to Dorr and his foundation for 
implementing this lifesaving discovery.
  As these examples indicate, private foundations provide a great many 
benefits to our society. By permanently extending this tax incentive, 
we can continue to encourage individuals to dedicate a substantial 
portion of their wealth to public, rather than private purposes. I hope 
my colleagues will support this legislation.
  Our bill permanently extends the tax incentive for an individual who 
contributes stock to a private foundation. This provision currently 
expires on May 31, 1997.
  Under this bill, a taxpayer who contributes publicly traded stock to 
a private foundation would be allowed a deduction for the full fair 
market value of the stock. Absent this legislation, the deduction would 
be limited to the cost basis of the stock, which for many donors 
effectively eliminates the incentive to make the donation.
  The legislation also conforms the due date for a private foundation's 
first quarter estimated tax payment with the filing date for the annual 
tax return. Currently, a private foundation is required to make its 
first quarter estimated tax payment on April 15, even though the annual 
income tax return is not due until May 15. Under this bill, a 
foundation's first estimated tax payment would be due on May 15.
  Finally, the bill also simplifies the rules governing distributions 
from a private foundation to a charity located outside the United 
States.
  A similar proposal introduced in the 104th Congress was estimated by 
the Joint Committee on Taxation to cost $287 million over 5 years.
  Mr. MOYNIHAN. Mr. President, I am pleased to join my distinguished 
colleague, Senator Chafee, in introducing this legislation to extend 
permanently the full, fair market value deduction for gifts of publicly 
traded stock to private foundations.
  Much of the focus in Congress over the last several years has been on 
efforts to control or reduce Government spending in order to balance 
the budget. As programs are cut to meet budget constraints, pressure 
will be placed on other sectors, particularly the independent sector, 
to fill the void. Already, the extent to which nonprofit institutions 
in the United States perform functions that are typically governmental 
undertakings in other countries is perhaps not fully understood or 
appreciated. It is a unique feature of our society of inestimable value 
and must be sustained. As demand on the independent sector grows, we 
must support its efforts to promote the common good and confront social 
problems.
  A bit of history: prior to 1969, contributions of appreciated 
property were deductible at their fair market value. In 1969, Congress 
adopted a number of rules to address certain abuses then occurring with 
respect to a small number of private foundations. These included a 
series of targeted Treasury Department recommendations to impose excise 
tax penalties on self-dealing transactions, excess business holdings, 
insufficient distributions for charitable purposes, and the like. 
However, in response to the negative publicity surrounding private 
foundations at the time, Congress felt it necessary to impose other 
restrictions beyond the targeted Treasury proposals. These included a 
provision to limit the deduction for gifts of appreciated property to 
private foundations to the donor's basis, usually, the original 
purchase price.
  After 1969, the IRS and other experts concluded that the targeted 
antiabuse rules worked well to correct the problems with private 
foundations. And nothing indicated that the 1969 limit on deductibility 
of gifts of appreciated property to private foundations was necessary 
to prevent abuse, at least to the extent that the property's value was 
readily determinable. Thus, in 1984, Congress approved a rule, that 
sunset after 10 years, providing a deduction for the full value of 
gifts of publicly traded stock to private foundations. This temporarily 
restored parity of treatment to contributions of stock to public 
charities--already fully deductible--and to private foundations.
  Then came the Tax Reform Act of 1986, which was largely an effort to 
broaden the tax base and reduce rates. One such base-broadening 
provision was the creation of a tax preference under the individual 
alternative minimum tax [AMT] for gifts of appreciated

[[Page S650]]

property to charitable organizations. Thus, taxpayers subject to the 
AMT could only deduct the basis of property donated to charitable 
organizations.
  As it turned out, the 1986 Tax Act worked all too well. Not only was 
the base broadened, but charitable giving of appreciated property 
nearly disappeared. And the charitable organizations let us know that 
our action had hurt them financially in such a way that not only they, 
but the larger public trust they serve, were suffering. Thus, at the 
behest of this Senator, in 1990 Congress at first temporarily, and then 
in 1993 permanently, repealed the tax preference for contributions of 
appreciated property.
  At the end of 1994, however, the full deduction for contributions of 
appreciated stock to private foundations expired. It had been intended 
as a 10-year experiment; the 10 years ran out, and the experiment was 
over. But most observers concluded that the experiment had worked--the 
private foundation rules continued to work reasonably well to prevent 
abuse, even while gifts of appreciated stock were fully deductible. In 
particular, the rule was not a source of compliance problems for the 
Internal Revenue Service. Thus, we agreed to extend the provision 
temporarily just last year in the Small Business Job Protection Act. 
Unfortunately, it will expire once again at the end of May. There being 
no harm done by this provision, and much good, it is a rule we should 
like to see extended once again--and this time permanently.
  Mr. President, no reason exists to provide different treatment under 
the Tax Code for gifts of appreciated stock to private foundations than 
is provided for such gifts to public charities. Private foundations are 
an important component of our nonprofit, independent sector. They make 
vast contributions to our society in the areas of education, health, 
disaster relief, the advancement of knowledge and the preservation of 
historical and cultural artifacts, to name only a few. Government must 
play a role in ensuring that nonprofit institutions not merely survive, 
but thrive--particularly during an era of Government cutbacks. The 
legislation we introduce today will be a great help in this regard. I 
look forward to its early and favorable consideration in the 105th 
Congress.
                                 ______
                                 
      By Mr. McCAIN:
  S. 196. A bill to amend the Public Buildings Act of 1959 to require 
the Administrator of General Services to prioritize construction and 
alteration projects in accordance with merit-based needs criteria, and 
for other purposes; to the Committee on Environment and Public Works.


 the federal building construction and alteration funding improvement 
                                  act

  Mr. McCAIN. Mr. President, today I am introducing legislation to 
establish a system to ensure that funding for the construction and 
repair of Federal buildings is allocated according to need and 
priority.
  First, the bill would require the President to submit the 
administration's building construction budget request in the form of a 
prioritized list of projects. Second, and most importantly, the bill 
would require the General Services Administration to prepare and 
maintain a ranked priority list of all ongoing and proposed 
construction projects. The list would be updated and reprioritized with 
each new project added either through administrative or congressional 
action.
  Last year, Congress provided nearly $900 million for Federal building 
construction and major repairs not including the funds provided to the 
Department of Defense. Over the past 5 years Congress obligated over $4 
billion for this purpose. This is an enormous sum of money. Clearly, 
the Federal building construction program can and must share in the 
sacrifice as we seek to gain, control over the deficit.
  As we rein in spending, it is more critical now than ever to ensure 
that scarce financial resources are allocated to our highest 
priorities. In order to trim the fat in an informed and efficient 
manner, Congress, the administration and the taxpaying public must know 
what our construction priorities are.
  During debate on the rescission bill in the last Congress, the Senate 
considered proposals to cut Federal construction funding. The list of 
projects proposed for defunding was rather arbitrary and capricious. 
The tenets of good government dictate that when we reduce spending, our 
lowest priorities should be put on the chopping block first. Yet, 
Congress cannot readily determine what those priorities are. By 
requiring the General Services Administration, which administers the 
Federal building fund, to maintain a ranked list of project priorities, 
we can be sure that funding decisions will be made on the basis of 
merit rather than politics or congressional caprice.
  Mr. President, foremost, this legislation will help us address the 
pork barrel politics which has played far too great a role in the 
process of Federal building construction. Currently, when a Member of 
Congress decides a new building is needed in his or her State or 
district, the General Services Administration conducts what is known as 
an 11b survey to determine the need. In most cases, the GSA determines 
that a need exists. The study is then used to justify project 
authorization and appropriation, even though a finding of need is not a 
finding that such a project is a priority.
  As projects that are not in the President's budget request are added 
by Congress, we do not always have a clear idea of where they are 
ranked among competing priorities. Passage of this legislation will 
ensure that this vital information is readily available.
  I urge the relevant committees to expeditiously examine this proposal 
so that we can approve rapidly this relatively minor but, I believe, 
important and helpful change in procedure.
                                 ______
                                 
      By Mr. ROTH (for himself, Mr. Lott, Mr. Breaux, Mr. Grassley, Mr. 
        Nickles, Mr. Murkowski, Mr. Abraham, Mr. Kyl, Mr. Helms, Mr. 
        D'Amato, Mr. Craig, Mrs. Hutchison, Mr. McConnell, Mr. Thomas, 
        Mr. Gordon H. Smith, Mr. DeWine, Mr. Inhofe, Mr. Bryan, Mr. 
        Roberts, Ms. Mikulski, Mr. Smith, Mr. Hatch, Mr. Bennett, Mr. 
        Kempthorne, Mr. Inouye, Mr. Enzi, Mr. Ford, Mr. Burns, Mr. 
        Lieberman, Mr. Hagel, Mr. Gramm, Mr. Dodd, Ms. Collins, Mr. 
        Gregg, Mr. Grams, Mr. Bond, and Mr. Kohl):
  S. 197. A bill to amend the Internal Revenue Code of 1986 to 
encourage savings and investment through individual retirement 
accounts, and for other purposes; to the Committee on Finance.


           the savings and investment incentives act of 1997

  Mr. ROTH. Mr. President, today we reintroduce the super IRA, a 
savings plan that is well-known as the Roth-Breaux super IRA.
  I'm honored again to be joined by Senator John Breaux, in introducing 
this bill. I believe now, as I did last Congress, that this is 
extremely well conceived legislation that succeeds in strengthening two 
fundamental components of our society: the family and the future of our 
economy. Much has been written and said about both of these lately, 
particularly as we look to a new century. Likewise, we're hearing more 
and more about the need to promote personal responsibility and self-
sufficiency.
  The Roth-Breaux super IRA will have a positive influence in all of 
these areas. Congress understands this. That's why Congress has passed 
similar legislation in the past. We all know that Washington must 
promote policies that strengthen family and create an environment where 
our economy can grow, this is why our IRA legislation in the past has 
been marked by a strong, cooperative, bipartisan spirit. In 1991, 
legislation similar to this had 78 cosponsors. In 1994, we had 58 
cosponsors and in 1995, 52 cosponsors. I believe this legislation will 
find similar support.
  Why? Because this super IRA will go a long way toward strengthening 
our families and restoring equity to work-at-home spouses and other 
workers without pensions. It will also boost our Nation's saving rate 
and lead to capital formation, increased investment and economic 
growth. The lack of saving in this country, as we all know, is a real 
concern. Chairman Alan Greenspan at the Federal Reserve says that the 
single most important long-term economic issue for this country is 
savings--savings that are essential for jobs, opportunity, and growth.
  This super IRA has been designed to address our Nation's need for 
savings

[[Page S651]]

and to provide families with as much flexibility as possible to use 
their savings not only for their security, but for the important goals 
and challenges in life. For example, this super IRA allows withdrawals 
to be made penalty-free to purchase first homes, to pay for college, 
and to cover expenses during extended periods of unemployment.
  This super IRA removes many of the Tax Code's barriers to retirement 
saving. First, this bill increases and phases out the IRA's income 
limits over 4 years, and increases the contribution limit to keep up 
with inflation. Furthermore, one of the key features of our bill is 
that we separate the IRA and the 401(k) or 403(b), so Americans can 
save the maximum in both, and so that spouses who work at home will not 
have their savings limited by their husband's or wife's 401(k).
  To strengthen the way this super IRA serves our families, this 
legislation not only allows parents to use penalty free withdrawals to 
help their children meet these goals and challenges, but children can 
use their IRA's to help their parents. Grandparents can make penalty 
free withdrawals to help grandchildren. And grandchildren can use their 
IRA's to help their grandparents. Our objective is to make this IRA as 
family oriented, as flexible and as useful as possible. It will go a 
long way toward promoting opportunity and reliance on self and family.
  Let me stress, this super IRA bill builds on what we did in the Small 
Business job Protection Act of 1996 and eliminates the unequal 
treatment of work-at-home spouses that now exists under current law. 
This bill allows spouses--husbands or wives--who work at home to make 
equal IRA contributions, up to $2,000, in their own accounts regardless 
of whether their spouse has an employer pension.
  With the super IRA, we also create a new type of individual 
retirement account--an IRA in which an individual's contribution is not 
tax deductible, but where the earnings can be withdrawn tax free if the 
account is open for at least 5 years, and the account owner is at least 
59\1/2\ when the funds are withdrawn.
  Mr. President, it's clear to see why this is a bill whose time has 
come. We have passed it before--in both Houses of Congress--now we must 
pass it again. It serves the individual. It serves the family. It 
serves the Nation. It is equitable, restoring spousal contributions to 
where they should be. It is flexible, offering penalty free withdrawals 
for life's necessities. It promises the vital capital formation America 
needs to invest in its future. And it builds upon the very important 
concept of self-reliance.
  Mr. BREAUX. Mr. President, today Senator Roth and I are introducing 
the Savings and Investment Incentive Act of 1997. We have introduced 
this bill in past Congresses but it is even more timely now as the 
pressure builds to secure the retirement of the baby boomers.
  The facts are staring us in the face. Within 30 years one out of 
every five Americans will be over 65. The baby boomers are 76 million 
strong, doubling the number of Social Security beneficiaries by the 
year 2040.
  At the same time, Social Security outlays will begin out pacing 
Social Security receipts in 2013 and the Social Security trust fund 
will be bankrupt in 2029 if we don't take the necessary steps to 
preserve it. And our national savings rate is only 1 percent of GDP. 
This is one-half of what it was in 1970. By comparison, we save half as 
much as the Germans and one-third as much as the Japanese. This is a 
serious problem. We need to address it by reducing the budget deficit 
and eliminating the drain it places on our national savings but we need 
to address it in other ways, as well.
  The Super IRA bill makes changes in the rules governing IRA's that 
will expand the availability of the IRA as a savings vehicle. The 
income caps will be eliminated over a 5-year period. Our bill creates a 
new kind of IRA that allows taxpayers to earn tax-free income. Funds 
can be withdrawn from either the current form of IRA or the new IRA to 
purchase a first home, meet a family's income needs during an extended 
period of unemployment or to pay for educational expenses.
  IRA's have broad bipartisan support as demonstrated by the list of 
cosponsors. I hope that we will work together to pass this legislation 
this year.
                                 ______
                                 
      By Mr. McCAIN:
  S. 198. A bill to prohibit campaign expenditures for services of 
lobbyists, and for other purposes; to the Committee on Rules and 
Administration.


           THE LOBBYING CONFLICT OF INTEREST ELIMINATION ACT

  Mr. McCAIN. Mr. President today I am introducing legislation entitled 
the ``Lobbying Conflict of Interest Elimination Act.'' This bill would 
ban a candidate or a candidate's authorized committee from paying 
registered lobbyists for political services. Additionally, the bill 
would mandate that any political contributions made by a registered 
lobbyist be reported by such individual when he or she files his or her 
lobbying disclosure report as mandated in the Lobbying Disclosure Act.
  In the last Congress, we were successful in passing legislation that 
bans gifts from lobbyists to Members and staff in order to put a wall 
between lobbyists who seek to curry special favor by the giving of 
gifts. Unfortunately, a loophole allows lobbyists to serve as 
fundraisers for Members of Congress, which could result in an increase 
in their influence.
  Mr. President, this practice must stop. Registered lobbyists who work 
for campaigns as fundraisers clearly represent a conflict of interest. 
When a campaign employs an individual who also lobbies that Member, the 
perception of undue and unfair influence is raised. This legislation 
would stop such practices.
  The two important changes made by this legislation represent a 
substantial effort to close any loopholes that exist in our lobbying 
and gift laws. The Congress has begun to make great strides to restore 
the public's confidence in this institution. We must continue that good 
work.
                                 ______
                                 
      By Mr. McCAIN:
  S. 199. A bill to require industry cost-sharing for the construction 
of certain new federally funded research facilities, and for other 
purposes; to the Committee on Governmental Affairs.


         the federal research financing improvement act of 1997

  Mr. McCAIN. Mr. President, today I am introducing legislation to 
restore fairness and fiscal accountability to the Federal Government's 
many research and development programs and activities. The bill would 
require that commercial interests share the cost of constructing and 
operating new Federal research facilities that are intended to benefit 
their industries.
  Last year, the Federal Government spent $73 billion for research 
programs, including facility construction. Many of these programs are 
intended primarily to assist private industries and are sponsored by a 
host of Federal agencies, predominantly the Department of Defense, the 
Department of Agriculture, the Department of Commerce, and the National 
Research Council.
  For example, the Department of Agriculture spends nearly $750 million 
per year for 116 centers under the Agriculture Research Service. These 
federally funded centers are designed to help a variety of agricultural 
industries, many of which have enormous resources and do not require 
Federal assistance. I understand the agency is planning to construct 
even more facilities. Last year, Congress appropriated $26 million to 
construct a new swine research center at Iowa State University, even 
though we already have 12 Federal centers dedicated to swine research. 
This additional facility will cost nearly $10 million a year to 
operate.
  Mr. President, I recognize the importance of research and development 
to our competitiveness and economic growth, although I seriously 
question why we need 13 centers dedicated to swine research. 
Nevertheless, given our serious fiscal condition at a time when we are 
contemplating significant reductions in practically every area of 
domestic discretionary spending, I see absolutely no reason why 
Government research that benefits private industries, many of them 
quite prosperous, should not be cost-shared by the private sector.
  Regarding swine research centers, the pork industry generates nearly 
$66 billion per year. Surely, it is reasonable to expect the industry, 
and the many others that directly benefit from Federal research, to 
share the cost of the centers and its operation. I should add that the 
legislation would not require cost sharing for any research

[[Page S652]]

conducted for the purpose of helping industry comply with Federal 
regulations.
  Mr. President, industry is historically more cautious with their 
resources than the Federal Government. If the private sector will not 
expend their resources for a program that is intended for their 
benefit, one must question why we should feel compelled to spend the 
taxpayers' hard-earned money on the same venture. Public-private cost-
sharing arrangements for commercially oriented Federal research will 
ensure that proposed activities are truly cost-beneficial and that the 
potential outcomes of the research are worth the dollars invested.
  Again, I realize and appreciate the importance of research and 
development. I believe, however, that the legislation is a prudent and 
responsible approach which, no doubt, can be improved, but which should 
receive the Senate's full and timely consideration. I hope that we can 
have a hearing in the very near future to examine what I believe is a 
very important fiscal issue.
                                 ______
                                 
      By Mr. AKAKA (for himself and Mr. Inouye):
  S.J. Res. 10. A joint resolution to consent to certain amendments 
enacted by the Legislature of the State of Hawaii to the Hawaiian Homes 
Commission Act, 1920; to the Committee on Energy and Natural Resources.


 the hawaiian homes commission act, 1920 amendments consent act of 1997

  Mr. AKAKA. Mr. President, I ask unanimous consent that the text of 
the joint resolution be printed in the Record.
  There being no objection, the joint resolution was ordered to be 
printed in the Record, as follows:

                              S.J. Res. 10

       Resolved by the Senate and House of Representatives of the 
     United States of America in Congress assembled,
       That, as required by section 4 of the Act entitled ``An Act 
     to provide for the admission of the State of Hawaii into the 
     Union'', approved March 18, 1959 (73 Stat. 4), the United 
     States consents to the following amendments to the Hawaiian 
     Homes Commission Act, 1920, adopted by the State of Hawaii in 
     the manner required for State legislation:
       (1) Act 339 of the Session Laws of Hawaii, 1993.
       (2) Act 37 of the Session Laws of Hawaii, 1994.

                          ____________________