Congressional Record, Volume 143 Issue 10 (Thursday, January 30, 1997)

[Congressional Record Volume 143, Number 10 (Thursday, January 30, 1997)]
[Senate]
[Pages S856-S897]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Ms. MOSELEY-BRAUN (for herself, Mr. Abraham, Mr. D'Amato, Mr.
Jeffords, Mr. Lieber- man, Mr. Daschle and Mrs. Murray):
S. 235. A bill to amend the Internal Revenue Code of 1986 to
encourage economic development through the creation of additional
empowerment zones and enterprise communities and to encourage the
cleanup of contaminated brownfield sites; to the Committee on Finance.

THE COMMUNITY EMPOWERMENT ACT OF 1997

Ms. MOSELEY-BRAUN. Mr. President, it gives me great pleasure,
together with my colleagues, Senators Abraham, D'Amato, Jeffords,
Lieberman, Murray, and Daschle to reintroduce the Community Empowerment
Act of 1997. This legislation is designed to create new jobs and spur
economic growth by encouraging the cleanup and reuse of contaminated
industrial and commercial sites known as Brownfields. This bill also
creates 20 new additional empowerment zones and 80 new enterprise
communities all across the Nation.

I like to call them environmentally challenged sites. They are sites
on which there has been some contamination but not to a level
sufficient to reach Superfund status. But they are contaminated
nonetheless. They are, on the one hand, excellent locations for
industrial and commercial redevelopment because the transportation,
more often than not, already exists. The infrastructure, the utilities,
and the labor force already exists.
However, these properties are often unattractive to potential
redevelopers because of the known, unknown, or perceived contamination
that may exist on the property. This factor creates an incentive for
companies to locate and develop in greenfields, which are undeveloped
areas generally in the suburbs. This urban flight contributes to urban
sprawl, taking jobs away from the city.
It also results in the paving off of many of the greenfield areas of
our country.
The challenge for all of us is to stop this trend. And one way to do
that is by encouraging businesses through the Tax Code to redevelop and
to reuse the existing brownfield sites; to reclaim, if you will, sites
that have been contaminated which have been used or used up.
At present, if an industrial property owner does environmental damage
to their property and then cleans up the site, the owner is allowed to
deduct the cost of that cleanup from a single year's earnings. However,
in a strange twist of logic, someone who buys an environmentally
damaged piece of property and cleans up that property is not allowed to
expense these cleanup costs, but instead must capitalize the cost and
depreciate the cleanup expense over many years.
The result of this? The result has been an urban landscape littered
with vacant or abandoned properties, properties that attract crime and
bring down property values in surrounding neighborhoods.
Confronting the brownfields issue can help to address many of the
problems that face high unemployment in older communities, including
job creation, economic renewal, environmental justice, and
environmental improvement. The collective efforts of everyone,
particularly the nonprofit community, the private sector, government at
all levels, developers, and community groups, are essential to begin
the process of returning brownfields property back to productive use
and to bring economic growth back to disadvantaged cities and rural
areas.
Under the provisions of this legislation, qualifying brownfields will
be provided full first-year expensing of environmental cleanup costs
under the Federal Tax Code. Full first-year expensing simply means that
a tax deduction will be allowed for the cleanup costs in the year that
those costs are incurred.
The Community Empowerment Act provides tax incentives that we hope
will break through some of the current barriers preventing the private
sector from investing in brownfields cleanup projects.
So it provides a carrot, if you will, to the private sector to begin
to help not only with the environmental cleanup but also with urban
redevelopment. So it becomes a win-win in both regards in that way.
In my own State of Illinois, the brownfields provisions will have a
major impact on efforts to help restore neglected and abandoned
industrial areas. It will facilitate the cleanup of some 300 to 500
sites in Illinois, each of

[[Page S857]]

which has a remediation cost ranging from $250,000 to $500,000 per
site.
The Treasury Department estimates that this act will provide $2
billion in tax incentives that will leverage an additional $10 billion
in private investment, returning an estimated 30,000 brownfields across
the country to productive use again. The $2 billion investment will be
included in the President's balanced budget plan and so it will be paid
for.
The Federal assistance that this proposal envisions will be
concentrated in neighborhoods with the most severe problems and that
are truly in need of such investment. The bill targets four areas.
First, the empowerment zones and enterprise communities across the
country.
Second, areas with a poverty rate of 20 percent or more that are near
industrial or former industrial sites.
Third, existing EPA brownfields pilot areas. The Environmental
Protection Agency has already designated brownfields sites across the
country.
Fourth, areas with a population of under 2,000 or more than 75
percent of which is zoned for industrial or commercial use.
So this is not just a big-city solution. This is something that will
affect the cities, the suburbs, and the rural areas as well in
providing an incentive to reclaim these environmentally challenged
areas of our country.
In my hometown, in Chicago, Mayor Daley has taken the initiative to
establish a brownfields pilot program which has made public investment
leverage substantial private investment dollars. One of these projects
is known as the Scott Peterson Meats Co., in Chicago. The site had been
tax delinquent for several years when Scott Peterson Meats and the city
began to work together. The city conducted an assessment of potential
hazards that were identified and which included asbestos-containing
materials, lead-based paints, and some 11 underground storage tanks,
some of which were filled with tar. The city paid for environmental
investigation, cleanup, and building demolition, which totaled some
$250,000 in contractor costs. Due to the city's investment, however,
the company, Scott Peterson Meats, then turned around and invested an
additional $5.2 million in a new smokehouse on its existing property,
and it has hired over 100 additional employees to date. So with the
win-win of environmental cleanup and urban reclamation we also have job
creation coming out of this legislative initiative.

Another example of a successful public-private partnership pulling
people together to clean up a brownfields site is the Madison Equipment
site located in Illinois. This abandoned industrial building was a
neighborhood eyesore. Scavengers had stolen most of the wiring and
plumbing, and illegal or what is called midnight dumping of trash and
debris was rampant. Madison Equipment needed expansion space, but it
feared the environmental liability. However, in 1993, the city of
Chicago took the initiative to invest just a little over $3,000 in this
project, in this environmental reclamation, this brownfields project,
and 1 year later the company, Madison, put in $180,000 of its own to
redevelop the building. The critical reason that lenders and investors
look at this area now is because the city committed the public
investment to spur private redevelopment and investment. When local
government demonstrates the confidence to commit public funds, private
financial institutions are more likely to follow suit. These types of
examples show how a little investment can go a long way and how we can
engage the partnership between the public and the private sector in
nonbureaucratic ways in order to spur a result that truly is in the
public interest.
Chicago's pilot project will successfully return all the pilot sites
to productive use for a total of about $850,000 in public money. This
pilot project is a perfect example of what this legislation can
accomplish on a national level. But in order to make it happen,
cooperation is the key. Effective strategies require strong
partnerships among government, industry, organized labor, community
groups, developers, environmentalists, and financiers, who all realize
that when their efforts are aligned, when we work together, progress is
made easier.
The second component of this legislation is the establishment of 20
more empowerment zones and 80 additional enterprise communities. They
will receive a variety of tools for redevelopment from the Government.
First, they receive a package of tax incentives and flexible grants
available over a 10-year period.
Second, they receive priority consideration for other Federal
empowerment programs.
Third, they receive assistance in removing bureaucratic redtape and
regulatory barriers that prevent innovative uses of the Federal
assistance that they have received.
This approach recognizes that a top-down, big Government solution
does not work in these times and what we have to do is enhance public-
private partnerships and the involvement and engagement of all sectors
in order to bring about again the public policy result that we are all
desirous of seeing.
Economic empowerment can be achieved, but it is best done, I believe,
through these public-private partnerships. Economic revitalization in
this Nation's most distressed communities is essential to the growth of
our entire country. With the concept of team effort, we can rebuild
cities by stimulating investments and creating jobs. Environmental
protection used in this way can and will be good business. It is also
good policy. With this legislation, we will begin the effort to restore
economic growth back into our country's industrial centers and rural
communities all the while improving our environment.
Again, I wish to thank my colleagues, Senators Abraham, D'Amato,
Jeffords, Lieberman, Murray, and Daschle for their original
cosponsorship of this legislation and for making this legislation a
truly bipartisan effort. I urge all of my colleagues to join in
supporting the quick passage of this legislation.
I ask unanimous consent that the full text of the bill and a section-
by-section analysis be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

S. 235

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

SECTION 1. AMENDMENT OF 1986 CODE.

Except as otherwise expressly provided, whenever in this
Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the
reference shall be considered to be made to a section or
other provision of the Internal Revenue Code of 1986.
TITLE I--ADDITIONAL EMPOWERMENT ZONES

SEC. 101. ADDITIONAL EMPOWERMENT ZONES.

(a) In General.--Paragraph (2) of section 1391(b) (relating
to designations of empowerment zones and enterprise
communities) is amended--
(1) by striking ``9'' and inserting ``11'',
(2) by striking ``6'' and inserting ``8'', and
(3) by striking ``750,000'' and inserting ``1,000,000''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act,
except that designations of new empowerment zones made
pursuant to such amendments shall be made during the 180-day
period beginning on the date of the enactment of this Act.
TITLE II--NEW EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES

SEC. 201. DESIGNATION OF ADDITIONAL EMPOWERMENT ZONES AND
ENTERPRISE COMMUNITIES.

(a) In General.--Section 1391 (relating to designation
procedure for empowerment zones and enterprise communities)
is amended by adding at the end the following new subsection:
``(g) Additional Designations Permitted.--
``(1) In general.--In addition to the areas designated
under subsection (a)--
``(A) Enterprise communities.--The appropriate Secretaries
may designate in the aggregate an additional 80 nominated
areas as enterprise communities under this section, subject
to the availability of eligible nominated areas. Of that
number, not more than 50 may be designated in urban areas and
not more than 30 may be designated in rural areas.
``(B) Empowerment zones.--The appropriate Secretaries may
designate in the aggregate an additional 20 nominated areas
as empowerment zones under this section, subject to the
availability of eligible nominated areas. Of that number, not
more than 15 may be designated in urban areas and not more
than 5 may be designated in rural areas.
``(2) Period designations may be made.--A designation may
be made under this subsection after the date of the enactment
of this subsection and before January 1, 1999.

[[Page S858]]

``(3) Modifications to eligibility criteria, etc.--
``(A) Poverty rate requirement.--
``(i) In general.--A nominated area shall be eligible for
designation under this subsection only if the poverty rate
for each population census tract within the nominated area is
not less than 20 percent and the poverty rate for at least 90
percent of the population census tracts within the nominated
area is not less than 25 percent.
``(ii) Treatment of census tracts with small populations.--
A population census tract with a population of less than
2,000 shall be treated as having a poverty rate of not less
than 25 percent if--

``(I) more than 75 percent of such tract is zoned for
commercial or industrial use, and
``(II) such tract is contiguous to 1 or more other
population census tracts which have a poverty rate of not
less than 25 percent (determined without regard to this
clause).

``(iii) Exception for developable sites.--Clause (i) shall
not apply to up to 3 noncontiguous parcels in a nominated
area which may be developed for commercial or industrial
purposes. The aggregate area of noncontiguous parcels to
which the preceding sentence applies with respect to any
nominated area shall not exceed 1,000 acres (2,000 acres in
the case of an empowerment zone).
``(iv) Certain provisions not to apply.--Section 1392(a)(4)
(and so much of paragraphs (1) and (2) of section 1392(b) as
relate to section 1392(a)(4)) shall not apply to an area
nominated for designation under this subsection.
``(v) Special rule for rural empowerment zones and
enterprise communities.--The Secretary of Agriculture may
designate not more than 1 empowerment zone, and not more than
5 enterprise communities, in rural areas without regard to
clause (i) if such areas satisfy emigration criteria
specified by the Secretary of Agriculture.
``(B) Size limitation.--
``(i) In general.--The parcels described in subparagraph
(A)(iii) shall not be taken into account in determining
whether the requirement of subparagraph (A) or (B) of section
1392(a)(3) is met.
``(ii) Special rule for rural areas.--If a population
census tract (or equivalent division under section
1392(b)(4)) in a rural area exceeds 1,000 square miles or
includes a substantial amount of land owned by the Federal,
State, or local government, the nominated area may exclude
such excess square mileage or governmentally owned land and
the exclusion of that area will not be treated as violating
the continuous boundary requirement of section 1392(a)(3)(B).
``(C) Aggregate population limitation.--The aggregate
population limitation under the last sentence of subsection
(b)(2) shall not apply to a designation under paragraph
(1)(B).
``(D) Previously designated enterprise communities may be
included.--Subsection (e)(5) shall not apply to any
enterprise community designated under subsection (a) that is
also nominated for designation under this subsection.
``(E) Indian reservations may be nominated.--
``(i) In general.--Section 1393(a)(4) shall not apply to an
area nominated for designation under this subsection.
``(ii) Special rule.--An area in an Indian reservation
shall be treated as nominated by a State and a local
government if it is nominated by the reservation governing
body (as determined by the Secretary of Interior).''
(b) Employment Credit Not To Apply to New Empowerment
Zones.--Section 1396 (relating to empowerment zone employment
credit) is amended by adding at the end the following new
subsection:
``(e) Credit Not To Apply to Empowerment Zones Designated
Under Section 1391(g).--This section shall be applied without
regard to any empowerment zone designated under section
1391(g).''
(c) Increased Expensing Under Section 179 Not To Apply in
Developable Sites.--Section 1397A (relating to increase in
expensing under section 179) is amended by adding at the end
the following new subsection:
``(c) Limitation.--For purposes of this section, qualified
zone property shall not include any property substantially
all of the use of which is in any parcel described in section
1391(g)(3)(A)(iii).''
(d) Conforming Amendments.--
(1) Subsections (e) and (f) of section 1391 are each
amended by striking ``subsection (a)'' and inserting ``this
section''.
(2) Section 1391(c) is amended by striking ``this section''
and inserting ``subsection (a)''.

SEC. 202. VOLUME CAP NOT TO APPLY TO ENTERPRISE ZONE FACILITY
BONDS WITH RESPECT TO NEW EMPOWERMENT ZONES.

(a) In General.--Section 1394 (relating to tax-exempt
enterprise zone facility bonds) is amended by adding at the
end the following new subsection:
``(f) Bonds for Empowerment Zones Designated Under Section
1391(g).--
``(1) In general.--In the case of a new empowerment zone
facility bond--
``(A) such bond shall not be treated as a private activity
bond for purposes of section 146, and
``(B) subsection (c) of this section shall not apply.
``(2) Limitation on amount of bonds.--
``(A) In general.--Paragraph (1) shall apply to a new
empowerment zone facility bond only if such bond is
designated for purposes of this subsection by the local
government which nominated the area to which such bond
relates.
``(B) Limitation on bonds designated.--The aggregate face
amount of bonds which may be designated under subparagraph
(A) with respect to any empowerment zone shall not exceed--
``(i) $60,000,000 if such zone is in a rural area,
``(ii) $130,000,000 if such zone is in an urban area and
the zone has a population of less than 100,000, and
``(iii) $230,000,000 if such zone is in an urban area and
the zone has a population of at least 100,000.
``(C) Special rules.--
``(i) Coordination with limitation in subsection (c).--
Bonds to which paragraph (1) applies shall not be taken into
account in applying the limitation of subsection (c) to other
bonds.
``(ii) Current refunding not taken into account.--In the
case of a refunding (or series of refundings) of a bond
designated under this paragraph, the refunding obligation
shall be treated as designated under this paragraph (and
shall not be taken into account in applying subparagraph (B))
if--

``(I) the amount of the refunding bond does not exceed the
outstanding amount of the refunded bond, and
``(II) the refunded bond is redeemed not later than 90 days
after the date of issuance of the refunding bond.

``(3) New empowerment zone facility bond.--For purposes of
this subsection, the term `new empowerment zone facility
bond' means any bond which would be described in subsection
(a) if only empowerment zones designated under section
1391(g) were taken into account under sections 1397B and
1397C.''
(b) Effective Date.--The amendment made by this section
shall apply to obligations issued after the date of the
enactment of this Act.

SEC. 203. MODIFICATIONS TO ENTERPRISE ZONE FACILITY BOND
RULES FOR ALL EMPOWERMENT ZONES AND ENTERPRISE
COMMUNITIES.

(a) Modifications Relating to Enterprise Zone Business.--
Paragraph (3) of section 1394(b) (defining enterprise zone
business) is amended to read as follows:
``(3) Enterprise zone business.--
``(A) In general.--Except as modified in this paragraph,
the term `enterprise zone business' has the meaning given
such term by section 1397B.
``(B) Modifications.--In applying section 1397B for
purposes of this section--
``(i) Businesses in enterprise communities eligible.--
References in section 1397B to empowerment zones shall be
treated as including references to enterprise communities.
``(ii) Waiver of requirements during startup period.--A
business shall not fail to be treated as an enterprise zone
business during the startup period if--

``(I) as of the beginning of the startup period, it is
reasonably expected that such business will be an enterprise
zone business (as defined in section 1397B as modified by
this paragraph) at the end of such period, and
``(II) such business makes bona fide efforts to be such a
business.

``(iii) Reduced requirements after testing period.--A
business shall not fail to be treated as an enterprise zone
business for any taxable year beginning after the testing
period by reason of failing to meet any requirement of
subsection (b) or (c) of section 1397B if at least 35 percent
of the employees of such business for such year are residents
of an empowerment zone or an enterprise community. The
preceding sentence shall not apply to any business which is
not a qualified business by reason of paragraph (1), (4), or
(5) of section 1397B(d).
``(C) Definitions relating to subparagraph (b).--For
purposes of subparagraph (B)--
``(i) Startup period.--The term `startup period' means,
with respect to any property being provided for any business,
the period before the first taxable year beginning more than
2 years after the later of--

``(I) the date of issuance of the issue providing such
property, or
``(II) the date such property is first placed in service
after such issuance (or, if earlier, the date which is 3
years after the date described in subclause (I)).

``(ii) Testing period.--The term `testing period' means the
first 3 taxable years beginning after the startup period.
``(D) Portions of business may be enterprise zone
business.--The term `enterprise zone business' includes any
trades or businesses which would qualify as an enterprise
zone business (determined after the modifications of
subparagraph (B)) if such trades or businesses were
separately incorporated.''
(b) Modifications Relating to Qualified Zone Property.--
Paragraph (2) of section 1394(b) (defining qualified zone
property) is amended to read as follows:
``(2) Qualified zone property.--The term `qualified zone
property' has the meaning given such term by section 1397C;
except that--
``(A) the references to empowerment zones shall be treated
as including references to enterprise communities, and
``(B) section 1397C(a)(2) shall be applied by substituting
`an amount equal to 15 percent of the adjusted basis' for `an
amount equal to the adjusted basis'.''

[[Page S859]]

(c) Effective Date.--The amendments made by this section
shall apply to obligations issued after the date of the
enactment of this Act.

SEC. 204. MODIFICATIONS TO ENTERPRISE ZONE BUSINESS
DEFINITION FOR ALL EMPOWERMENT ZONES AND
ENTERPRISE COMMUNITIES.

(a) In General.--Section 1397B (defining enterprise zone
business) is amended--
(1) by striking ``80 percent'' in subsections (b)(2) and
(c)(1) and inserting ``50 percent'',
(2) by striking ``substantially all'' each place it appears
in subsections (b) and (c) and inserting ``a substantial
portion'',
(3) by striking ``, and exclusively related to,'' in
subsections (b)(4) and (c)(3),
(4) by adding at the end of subsection (d)(2) the following
new flush sentence:
``For purposes of subparagraph (B), the lessor of the
property may rely on a lessee's certification that such
lessee is an enterprise zone business.'',
(5) by striking ``substantially all'' in subsection (d)(3)
and inserting ``at least 50 percent'', and
(6) by adding at the end the following new subsection:
``(f) Treatment of Businesses Straddling Census Tract
Lines.--For purposes of this section, if--
``(1) a business entity or proprietorship uses real
property located within an empowerment zone,
``(2) the business entity or proprietorship also uses real
property located outside the empowerment zone,
``(3) the amount of real property described in paragraph
(1) is substantial compared to the amount of real property
described in paragraph (2), and
``(4) the real property described in paragraph (2) is
contiguous to part or all of the real property described in
paragraph (1),

then all the services performed by employees, all business
activities, all tangible property, and all intangible
property of the business entity or proprietorship that occur
in or is located on the real property described in paragraphs
(1) and (2) shall be treated as occurring or situated in an
empowerment zone.''
(b) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning on or after the date of the
enactment of this Act.
(2) Special rule for enterprise zone facility bonds.--For
purposes of section 1394(b) of the Internal Revenue Code of
1986, the amendments made by this section shall apply to
obligations issued after the date of the enactment of this
Act.
TITLE III--EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS

SEC. 301. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

(a) In General.--Part VI of subchapter B of chapter 1 is
amended by adding at the end the following new section:

``SEC. 198. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

``(a) In General.--A taxpayer may elect to treat any
qualified environmental remediation expenditure which is paid
or incurred by the taxpayer as an expense which is not
chargeable to capital account. Any expenditure which is so
treated shall be allowed as a deduction for the taxable year
in which it is paid or incurred.
``(b) Qualified Environmental Remediation Expenditure.--For
purposes of this section--
``(1) In general.--The term `qualified environmental
remediation expenditure' means any expenditure--
``(A) which is otherwise chargeable to capital account, and
``(B) which is paid or incurred in connection with the
abatement or control of hazardous substances at a qualified
contaminated site.
``(2) Special rule for expenditures for depreciable
property.--Such term shall not include any expenditure for
the acquisition of property of a character subject to the
allowance for depreciation which is used in connection with
the abatement or control of hazardous substances at a
qualified contaminated site; except that the portion of the
allowance under section 167 for such property which is
otherwise allocated to such site shall be treated as a
qualified environmental remediation expenditure.
``(c) Qualified Contaminated Site.--For purposes of this
section--
``(1) Qualified contaminated site.--
``(A) In general.--The term `qualified contaminated site'
means any area--
``(i) which is held by the taxpayer for use in a trade or
business or for the production of income, or which is
property described in section 1221(1) in the hands of the
taxpayer,
``(ii) which is within a targeted area, and
``(iii) which contains (or potentially contains) any
hazardous substance.
``(B) Taxpayer must receive statement from state
environmental agency.--An area shall be treated as a
qualified contaminated site with respect to expenditures paid
or incurred during any taxable year only if the taxpayer
receives a statement from the appropriate agency of the State
in which such area is located that such area meets the
requirements of clauses (ii) and (iii) of subparagraph (A).
``(C) Appropriate state agency.-- For purposes of
subparagraph (B), the appropriate agency of a State is the
agency designated by the Administrator of the Environmental
Protection Agency for purposes of this section. If no agency
of a State is designated under the preceding sentence, the
appropriate agency for such State shall be the Environmental
Protection Agency.
``(2) Targeted area.--
``(A) In general.--The term `targeted area' means--
``(i) any population census tract with a poverty rate of
not less than 20 percent,
``(ii) a population census tract with a population of less
than 2,000 if--

``(I) more than 75 percent of such tract is zoned for
commercial or industrial use, and
``(II) such tract is contiguous to 1 or more other
population census tracts which meet the requirement of clause
(i) without regard to this clause,

``(iii) any empowerment zone or enterprise community (and
any supplemental zone designated on December 21, 1994), and
``(iv) any site announced before February 1, 1997, as being
included as a brownfields pilot project of the Environmental
Protection Agency.
``(B) National priorities listed sites not included.--Such
term shall not include any site which is on the national
priorities list under section 105(a)(8)(B) of the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (as in effect on the date of the
enactment of this section).
``(C) Certain rules to apply.--For purposes of this
paragraph, the rules of sections 1392(b)(4) and 1393(a)(9)
shall apply.
``(D) Treatment of certain sites.--For purposes of this
paragraph, a single contaminated site shall be treated as
within a targeted area if--
``(i) a substantial portion of the site is located within a
targeted area described in subparagraph (A) (determined
without regard to this subparagraph), and
``(ii) the remaining portions are contiguous to, but
outside, such targeted area.
``(d) Hazardous Substance.--For purposes of this section--
``(1) In general.--The term `hazardous substance' means--
``(A) any substance which is a hazardous substance as
defined in section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, and
``(B) any substance which is designated as a hazardous
substance under section 102 of such Act.
``(2) Exception.--Such term shall not include any substance
with respect to which a removal or remedial action is not
permitted under section 104 of such Act by reason of
subsection (a)(3) thereof.
``(e) Deduction Recaptured as Ordinary Income on Sale,
Etc.--Solely for purposes of section 1245, in the case of
property to which a qualified environmental remediation
expenditure would have been capitalized but for this
section--
``(1) the deduction allowed by this section for such
expenditure shall be treated as a deduction for depreciation,
and
``(2) such property (if not otherwise section 1245
property) shall be treated as section 1245 property solely
for purposes of applying section 1245 to such deduction.
``(f) Coordination With Other Provisions.--Sections 280B
and 468 shall not apply to amounts which are treated as
expenses under this section.
``(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''
(b) Clerical Amendment.--The table of sections for part VI
of subchapter B of chapter 1 is amended by adding at the end
the following new item:

``Sec. 198. Expensing of environmental remediation costs.''

(c) Effective Date.--The amendments made by this section
shall apply to expenditures paid or incurred after the date
of the enactment of this Act, in taxable years ending after
such date.
____

Section-by-Section Analysis

Title I--Additional Empowerment Zones

Section 101 would authorize the designation of an
additional two urban empowerment zones under the 1994 first
round.

Title II--New Empowerment Zones and Enterprise Communities

Section 201 authorizes a second round of designations,
consisting of 80 enterprise communities and 20 empowerment
zones. Of the 80 enterprise communities, 50 would be in urban
areas and 30 would be in rural areas. Of the 20 empowerment
zones, 15 would be in urban areas and 5 would be in rural
areas. The designations would be made before January 1, 1999.
Certain of the eligibility criteria applicable in the first
round would be modified for the second round of designations.
First, the poverty criteria would be relaxed somewhat, so
that unlike the first round there would be no requirement
that at least 50 percent of the population census tracts have
a poverty rate of 35 percent or more. In addition, the
poverty criteria will not be applicable to areas specified in
the application as developable for commercial or industrial
purposes (1,000 acres in the case of an enterprise community,
2,000 acres in the case of an empowerment zone), and these
areas will not be taken into account in applying the size
limitations (e.g., 20 square miles for urban areas, 1,000
square miles for rural areas). The Secretary of Agriculture
will be authorized to designate up to one rural empowerment
zones and five rural enterprise communities

[[Page S860]]

based on specified emigration criteria without regard to the
minimum poverty rates set forth in the statute. Rural census
tracts in excess of 1,000 square miles or including a
substantial amount of governmentally owned land may exclude
such excess mileage or governmentally owned land from the
nominated area. Unlike the first round, Indian reservations
will be eligible to be nominated (and the nomination may be
submitted by the reservation governing body without the State
government's participation). The empowerment zone employment
credit will not be available to businesses in the new
empowerment zones, and the increased expensing under section
179 will not be available in the developable acreage areas of
empowerment zones.
Section 202 authorizes a new category of tax-exempt
financing for businesses in the new empowerment zones. These
bonds, rather than being subject to the current State volume
caps, will be subject to zone-specific caps. For each rural
empowerment zone, up to $60 million in such bonds may be
issued. For an urban empowerment zone with a population under
100,000, $130 million of these bonds may be issued. For each
urban empowerment zone with a population of 100,000 or more,
$230 million of these bonds may be issued.
Section 203 liberalizes the current definition of an
``enterprise zone business'' for purposes of the tax-exempt
financing available under both the first and second rounds.
Businesses will be treated as satisfying the applicable
requirements during a 2-year start-up period if it is
reasonably expected that the business will satisfy those
requirements by the end of the start-up period and the
business makes bona fide efforts to that end. Following
the start-up period a 3-year testing period will begin,
after which certain enterprise zone business requirements
will no longer be applicable (as long as more than 35
percent of the business' employees are residents of the
empowerment zone or enterprise community). The rules under
which substantially renovated property may be ``qualified
zone property,'' and thereby be eligible to be financed
with tax-exempt bonds, would also be liberalized slightly.
Section 204 liberalizes the definition of enterprise
business for purposes of both the tax-exempt financing
provisions and the additional section 179 expensing by
reducing from 80 percent to 50 percent the amount of total
gross income that must be derived within the empowerment zone
or enterprise community, by reducing how much of the
business' property and employees' services must be located in
or provided within the zone or community, and by easing the
restrictions governing when rental businesses will qualify as
enterprise zone businesses. A special rule is also provided
to clarify how a business that straddles the boundary of an
empowerment zone or enterprise community (e.g., by straddling
a population census tract boundary) is treated for purposes
of the enterprise zone business definition.

title iii--expensing of environmental remediation costs

Section 301 would provide a current deduction for certain
remediation costs incurred with respect to qualified sites.
Generally, these expenses would be limited to those paid or
incurred in connection with the abatement or control of
environmental contaminants. This deduction would apply for
alternative minimum tax purposes as well as for regular tax
purposes.
Qualified sites would be limited to those properties that
satisfy use, geographic, and contamination requirements. The
use requirement would be satisfied if the property is held by
the taxpayer incurring the eligible expenses for use in a
trade or business or for the production of income, or if the
property is of a kind properly included in the inventory of
the taxpayer. The geographic requirement would be satisfied
if the property is located in (i) any census tract that has a
poverty rate of 20 percent or more, (ii) any other census
tract (a) that has a population under 2,000, (b) 75 percent
or more of which is zoned for industrial or commercial use,
and (c) that is contiguous to one or more census tracts with
a poverty rate of 20 percent or more, (iii) an area
designated as a federal EZ or EC or (iv) an area subject to
one of the 40 EPA Brownfields Pilots announced prior to
February 1997. Both urban and rural sites may qualify.
Superfund National Priority listed sites would be excluded.
The contamination requirement would be satisfied if
hazardous substances are present or potentially present on
the property. Hazardous substances would be defined generally
by reference to sections 101(14) and 102 of the Comprehensive
Environmental Response Compensation and Liability Act
(CERCLA), subject to additional limitations applicable to
asbestos and similar substances within buildings, certain
naturally occurring substances such as radon, and certain
other substances released into drinking water supplies due to
deterioration through ordinary use.
To claim the deduction under this provisions, the taxpayer
would be required to obtain a statement that the site
satisfies the geographic and contamination requirements from
a State environmental agency designated by the Environmental
Protection Agency for such purposes or, if no such agency has
been designated by the EPA, by the EPA itself.
This deduction would be subject to recapture under current-
law section 1245. Thus, any gain realized on disposition
generally would be treated as ordinary income, rather than
capital gain, up to the amount of deductions taken with
respect to the property.

Mr. D'AMATO. Mr. President, I join my colleagues, Senators
Moseley-Braun, Abraham, Jeffords, Daschle, Lieberman, and Murray, in
introducing legislation that will provide a new tax incentive to
encourage the private sector to clean up thousands of contaminated,
abandoned sites known as brownfields. Brownfield sites are abandoned or
vacant commercial and industrial properties suspected of being
environmentally contaminated.
Under current law, the IRS has determined that costs incurred to
clean up land and ground water are deductible as business expenses, as
long as the costs are incurred by the same taxpayer that contaminated
the land, and that taxpayer plans to use the land after the cleanup for
the same purposes used prior to the cleanup. That means that new owners
who wish to use land suspected of environmental contamination for a new
purpose, would be precluded from deducting the costs of cleanup in the
year incurred. They would only be allowed to capitalize the costs and
depreciate them over time. Therefore, it is time for us to recognize
the need for aggressive economic development policies for the future
economic health of communities around the country, and to recognize the
inequity of current tax law. My colleagues and I believe that our
legislation is the type of initiative the Federal Government needs to
encourage development of once abandoned, unproductive sites that will
bring real economic benefits to urban distressed and rural areas across
the United States. By encouraging redevelopment, jobs will be created,
economic growth will continue, property values will increase as well as
local tax revenues.
Mr. President, I am proud to say that in my State of New York, the
city of Elmira has been selected as a fourth round finalist for the
EPA's Brownfields Economic Redevelopment Initiative Demonstration Pilot
Program. The city of Elmira has primed an unsightly and unsafe urban
brownfield and is now in the final stages of turning it into a revenue-
and jobs-producing venture. The city of Elmira initiated this important
project with no guarantees of public or private funding and has done
this at very minimal cost to taxpayers. Can you imagine what could and
would be done if the public and private sector had the encouragement to
also become involved?
Mr. President, I urge my colleagues on both sides of the aisle to
join us in cosponsoring this important legislation.
Mr. JEFFORDS. Mr. President, I am pleased to join with
Senators Moseley-Braun, D'Amato, Abraham, and Lieberman in sponsoring
the Community Empowerment Act of 1997, which will encourage the cleanup
of abandoned industrial sites known as brownfields in Vermont and
across the country.
The term ``brownfields'' refers to contaminated industrial sites.
Most of these sites were abandoned during the 1970's and 1980's, as
industrial development migrated away from urban areas to the greener
landscape of the suburbs. One such site in Vermont is the Holden-
Leonard Mill, a 20-building complex in Bennington, VT, that is poised
to become a brownfields success story after 10 years of work.
Once employing one-quarter of Bennington's work force, the mill shut
down in 1939 and then was owned by a patchwork of owners until the
1980's. After soil tests disclosed high levels of pollutants, the mill
sat empty after 1986. Fortunately, a buyer of the site came forward in
1992 and with cooperation between the business, State agencies, and the
EPA the mill has been refurbished and over 200 new employees have been
hired. The process, however, of revitalizing this site began in 1986
and is still going on.
Our aim with this legislation is to provide tax incentives to
businesses willing to clean up and redevelop brownfields sites so that
more brownfield sites can be returned to productive use and so that the
process doesn't have to take 10 years.
Last November, I sponsored a forum on brownfields redevelopment in
Burlington, VT. There is only one unpolluted site in Burlington
available for industrial development. Yet there are currently 17
brownfields sites in the city, all with great potential for

[[Page S861]]

development. I toured several of these sites and saw this potential
first hand. Burlington is both an EPA brownfields pilot city and an
enterprise community. Under our legislation, businesses that acquire
these sites would be able to claim tax deductions for their
environmental cleanup costs. With tax incentives for brownfields
redevelopment, I am hoping that we will see more of these abandoned
sites returned to productive use.
We treasure our open spaces in Vermont, and we are looking at ways to
give incentives to companies to invest in our downtowns. When a company
builds a facility on a brownfield site it takes advantage of existing
infrastructure. the revitalization of a brownfield site means one less
farm or field is paved over or forest cut down for the sake of a new
plant or facility.
I urge my colleagues to join us in supporting this bill.
Mr. LIEBERMAN. Mr. President, I am delighted to join this
distinguished group of Senators in introducing legislation to provide
tax incentives for the cleanup of brownfields. This legislation will
provide a powerful incentive to clean-up these sites. And that clean up
will be followed by more jobs and more economic growth in areas that
very much need both of those things. I am encouraged by the broad,
bipartisan support both here in the Congress and in the administration
and in the environmental community and in the business community, to
provide tax incentives to get these sites cleaned up.
Brownfield sites are abandoned commercial and industrial properties
that are environmentally contaminated. Developers and lenders avoid
these sites both for liability reasons and because the tax incentives
for cleaning up these sites is so limited. The result is an urban
landscape littered with vacant and abandoned properties--properties
which invite crime, depress surrounding housing and commercial prices,
and hinder economic growth in these areas. Additionally, by
discouraging the clean-up of brownfields, we are encouraging the
development of undeveloped areas known as greenfields.
This bill is simple: it allows taxpayers who purchase contaminated
properties to deduct the costs of cleaning up brownfields in the year
that cleanup expenses occur. This tax incentive would apply to existing
and future empowerment zones and enterprise communities, in areas with
a poverty rate of 20 percent or more and in adjacent industrial and
commercial areas and in existing brownfields pilot areas as designated
by the Environmental Protection Agency. Currently, a taxpayer who buys
a contaminated property and cleans it up must spread the costs of that
cleanup over time. We expect the cost of this bill to be about $2
billion over 7 years. The administration has estimated that this
proposal may bring as many as 30,000 brownfield sites back to
productive use.
In Connecticut, my home State, we know first hand about the problems
these brownfield sites can pose for a community. In her soon to be
released study of various brownfields sites, Edith M. Pepper of the
Northeast-Midwest Institute included the Bryant Electric Plant in
Bridgeport, CT, as one of her case studies. As she notes, the Bryant
Electric Plant shut down in 1988 after 90 years of operating in
Bridgeport's west end. It is no secret that Bridgeport is in difficult
shape economically. Closing this 500,000 square foot facility did
nothing to help that situation.
However, as Ms. Pepper notes in her case study of this brownfields
site, it appears that hope is on the way. A non-profit development
group, the West End Community Development Corp. [CDC] is working to
form a large business park on and around the Bryant site. Over $15
million has already been invested in the site, including a significant
amount for cleanup. According to city officials, the developer plans to
create 300-400 new jobs and invest $20-50 million in Bridgeport's west
end.
The brownfields bill we are introducing today could help in
Bridgeport. Undoubtedly it could help in places like New Haven and
Hartford as well.
The bill we are introducing today expands upon a bill that Senator
Abraham and I introduced in the last Congress, S. 1542. That bill
limited these cleanup incentives to the 104 empowerment zones and
enterprise communities that exist in 42 States across the country. I am
delighted by today's effort to expand on the number of regions and
sites that will be covered in the brownfields legislation and I urge my
colleagues to join us in cosponsoring this important
legislation.
Mr. ABRAHAM. Mr. President, I join Senator Moseley-Braun,
Senator Jeffords, Senator Lieberman, Senator D'Amato, and others in
introducing the Community Empowerment Act of 1997. This legislation
builds upon the legislation Senator Lieberman and I introduced last
Congress, as well as the similar legislation introduced by Senators
Moseley-Braun, D'Amato, and Jeffords.
Having now joined forces for the new Congress, the Moseley-Braun-
Abraham legislation will provide tax incentives for the environmental
cleanup of brownfields located in economically distressed areas. There
are between 100,000 and 300,000 of these sites across the country, Mr.
President, and they are a blight on both the landscape and the economy
of our communities.
I am sponsoring this legislation because, in my view, too many of our
troubled cities, towns, and rural areas have both environmental and
economic problems. These problems conspire to produce an endless cycle
of impoverishment. Contaminated sites are abandoned and new companies
refuse to take over the property for fear of environmental lawsuits
from government and/or private parties. As a result, contamination and
joblessness continue and even get worse.
For example, a survey of Toledo, OH businesses found that
environmental concerns were affecting 62 percent of the area's
commercial and industrial real estate transactions. These effects are
all but universally negative in terms of job creation and economic
development.
Another example: Construction of a $3 million lumber treatment plant
in Hammond, IN, was abandoned after low levels of contamination were
found at the proposed site. The developer concluded that uncertain
costs and potential liabilities outweighed the site's benefits.
The city of Hammond lost construction jobs, 75 full-time lumber plant
jobs, and any reasonable prospect that a developer would assume the
risk of developing property anywhere on the 20 acre site.
In Flint, the former site of Thrall Oil Co., now sits vacant.
Economic development officials believe this property should attract
future manufacturing development. Unfortunately, because the Michigan
Department of Environmental Quality has labeled it ``contaminated,''
developers cannot be found.
For decades now, Mr. President, the Federal Government has tried,
with little success, to revitalize economically distressed areas. The
blight remains. Urban renewal and various welfare programs too often
have only made things worse by spawning dependency on government help.
Environmental laws have fared little better. Intended to force cleanup
of contaminated sites, these laws instead have scared away potential
investors with potentially unlimited liability, including liability for
contamination the investors did not cause or even know about.
Environmental regulations and liability established under the Federal
Superfund Program along with various other Federal and State
environmental rules have helped create thousands of these brownfield
properties in the United States. These are industrial or commercial
sites suspected of being in some way environmentally contaminated.
Although not serious threats to public health and safety, these
properties have become unavailable for economic use, because legal
rules make them too financially risky for investment and job creation.
Potential liability scares businesses and investors away from these
sites, creating permanently abandoned blights on the urban and rural
landscape. Investors are afraid of being dragged into multimillion-
dollar litigation and cleanup over contamination they did not cause.
Worse, investors willing to shoulder the liability of a potential
environmental cleanup find that they cannot write off the cost of
environmental remediation of brownfields. Instead these costs must be
spread over a number of years. Thus, the Tax Code and environmental
laws combine to scare away potential sources of investment and growth,

[[Page S862]]

often from our most economically distressed areas.
To help both our economy and our environment, the Moseley-Braun-
Abraham legislation would target tax benefits at brownfields in
economically distressed areas to encourage cleanup and job creation. We
would allow investors in brownfields to expense their cleanup costs
immediately--without having to split these costs up over a number of
years. This will have three positive effects.
First, these incentives will help our communities. By encouraging
redevelopment of abandoned, unproductive sites, these tax incentives
will reinvigorate economic growth in distressed communities across the
country. They will provide economic opportunity rather than government
dependence by encouraging investment and entrepreneurship where it is
most needed.
Second, this legislation will help the environment. These tax
incentives will significantly improve our ability to clean up
environmentally contaminated sites. The legacy of existing cleanup laws
is a remarkable lack of progress. With thousands of sites across the
country categorized as brownfields, we need to start cleaning them now,
and we need private investment to get the job done. Furthermore,
encouraging brownfields cleanup will save undeveloped land from
unnecessary development. For every brownfield that is cleaned up and
reused there will be a green field that remains clean and unused.
Third, this solution, unlike those attempted in the past, utilizes the
private sector to reclaim contaminated land and reinvigorate distressed
communities. By encouraging private investment, rather than attempting
to purchase or force cooperation with government mandates, we can free
up private capital and initiative to do its job of revitalizing these
distressed areas.
By adopting this approach, the Senate will take a significant step
toward revitalized, reinvigorated, and renewed urban and rural zones.
With the incentives, included in this amendment, good jobs and a clean
environment will go together, to everyone's benefit. I thank Senators
Moseley-Braun, D'Amato, Lieberman, Jeffords, and our other cosponsors
for joining me in this important effort, and I look forward to seeing
meaningful brownfields reforms passed this Congress.
By Mr. GRAMS (for himself, Mr. Abraham, Mr. Ashcroft, Mr.
Faircloth, Mr. Hutchinson, Mr. Kyl, Mr. McCain, Mr. Stevens
and Mr. Hagel):
S. 236. A bill to abolish the Department of Energy, and for other
purposes; to the Committee on Energy and Natural Resources.

THE DEPARTMENT OF ENERGY ABOLISHMENT ACT

Mr. GRAMS. Mr. President, I introduce legislation aimed at improving
government as we know it. The Department of Energy Abolishment Act of
1997 comes after nearly two decades of debate. The basic question has
always remained the same: Why should we expend taxpayer dollars on this
Cabinet-level agency? And today, we ask the same question.
Following a year's worth of discussions on the blueprint I am putting
forth, much progress has been made. When the 104th Congress began to
tackle this issue, we looked at three main issues. First, we examined
the fact that the Department of Energy no longer has a mission--which
is clearly reflected by the fact that nearly 85 percent of its budget
is expended upon nonenergy programs. Next, we studied those programs
charged to the DOE and reviewed its ability to meet the related job
requirements. And finally, we looked at the DOE's bloated budget in
light of the first two criterion--determining whether the taxpayers
should be forced to expend over $16 billion annually on this hodge-
podge collection.
Nearly a year later, this Nation continues to grow increasingly
dependent upon foreign oil--in total contrast to the DOE's core
mission. Even in light of this administration's focus on alternative
energy, the DOE expends less than one-fifth of its budget on energy-
related programs. And after examining key DOE mission programs, such as
the Civilian Nuclear Waste program, it is clear that the goals of those
missions are not being met.
So we are challenged to either accept the status quo or move to
change it. I must admit that the status quo may be easier in the short-
term. But in the context of the proverbial big picture, we cannot
afford to turn our backs. Besides the fact that it is the role of
Congress to oversee taxpayer expenditures and ensure a fair rate of
return on their investments, this Nation is faced with a national debt
in excess of $5.3 trillion.
However, gaining consensus on the need for change is easier than
effecting such change. So, last year I worked with the Senate Task
Force on Government Agency Elimination to develop a blueprint. Under
the direction of the former Senate Majority Leader, Senator Dole, I
worked with Senators Faircloth, Abraham, and Stevens to study proposals
on the DOE.
After months of discussions with experts in the fields of energy and
defense, we introduced legislation--legislation which is the core of
the bill I am introducing today.
Let me be the first to state that the ideas contained within this
bill are not all of my own. Just as the idea to eliminate the
Department of Energy is not a new one--since its creation in 1978,
experts have been clamoring to abolish this agency in search of a
mission. This bill represents the comments and input of many who have
worked in these fields for decades, but like all things--I consider it
a work in progress.
As many of our colleagues will recall, the Senate Energy and Natural
Resources Committee held a hearing on this very bill last September.
During the hearing, we received testimony from such distinguished
witnesses as the Former Assistant Energy Secretary Shelby Brewer and
the Former Defense Secretary Caspar Weinberger in support of the
proposal. Having either directly run these programs, or relied upon
them, they provided strong firsthand evidence as to the detriment of
leaving things as they are.
The committee also received testimony from the current Acting
Secretary and then-Assistant Energy Secretary, Charlie Curtis, who
testified in support of improving the delivery of the Department's
missions, at lower cost, for the benefit of the American people. His
testimony focused upon how the DOE was working to improve its efforts
to fulfill various missions, and how changing horses midstream would
derail the DOE's efforts. In his remarks, Mr. Curtis dismissed the DOE
Abolishment Act because the DOE did not believe it appropriate to
entertain matters of this moment and complexity in the context of a
bill which has as its proposed objective changing the organizational
structure and fate of the Department of Energy.
What the DOE fails to recognize is that the conclusions--to abolish
the DOE--arise from an analysis of the Department's activities, rather
than from any antigovernment ideology or mere desire to reduce
government spending, as pointed out by Dr. Irwin Stelzer of the
American Enterprise Institute. Supporters of the DOE Abolishment Act
have always agreed that there are core functions performed by the DOE
which must continue to be done, but the DOE has yet to provide a
compelling argument as to why the DOE itself must continue to exist or
successfully respond to our reasons for its elimination.
But Mr. Curtis' objections are understandable when placed in the
context of remarks by Nobel-prize economist, Dr. Milton Friedman: ``The
Department of Energy offers an excellent example of a major difference
between private and government projects. If a private project is a
failure, it will be closed down; if a government project is a failure,
it will be expanded. * * * It is in the self-interest of the Government
officials in charge to keep the project alive; and they always have the
ready excuse that the reason for failure was the lack of sufficient
funds.''
So today, I am joined by my colleagues, Senator Abraham of Michigan,
Senator Ashcroft of Missouri, Senator Faircloth of North Carolina,
Senator Hutchinson of Arkansas, Senators Kyl and McCain of Arizona and
Senator Stevens of Alaska, in reaffirming congressional intent to
change the Department of Energy as we know it.
Under the Department of Energy Abolishment Act of 1997, we dismantle
the patchwork quilt of government initiatives--reassembling them into
agencies better equipped to accomplish

[[Page S863]]

their basic goals; we refocus and increase Federal funding toward basic
research by eliminating corporate welfare; and, we abolish the bloated,
duplicative upper management bureaucracy.
First, we begin by eliminating Energy's Cabinet-level status and
establish a 3-year Resolution Agency to oversee the transition. This is
critical to ensuring progress continues to be made on the core
programs.
Under title I, the Federal Energy Regulatory Commission [FERC] is
spun off to become an independent agency, like it was prior to the
creation of the DOE. The division which oversees hearings and appeals
is eliminated, with all pending cases transferred to the Department of
Justice for resolution within 1 year. The functions of the Energy
Information Administration are transferred to the Department of the
Interior with the instruction to privatize as many as possible. And
with the exception of research being conducted by the DOE labs, basic
science and energy research functions are transferred to Interior for
determination on which are basic research, and which can be privatized.
Those deemed as core research will be transferred to the National
Science Foundation and reviewed by an independent commission. Those
that are more commercial in nature will be subject to disposition
recommendations by the Secretary of the Interior.
The main reasoning behind this is to ensure the original mission of
the DOE--to develop this Nation's energy independence--is carried out.
With scarce taxpayer dollars currently competing against defense and
cleanup programs within the DOE, it's no surprise that little progress
has been made. However, by refocusing dollars into competitive
alternative energy research--we will maximize the potential for areas
such as solar, wind, biomass, and so forth. For States like Minnesota,
where the desire for renewable energy technologies is high, growth in
these areas could help fend off our growing dependence upon foreign oil
while protecting our environment.
Under Title II, the laboratory structure within the DOE is revamped.
First, the three defense labs are transferred to the Defense
Department. They include Sandia, Los Alamos and Lawrence Livermore. The
remaining labs are studied by a nondefense energy laboratory
commission. This independent commission operates much like the Base
Closure Commission and can recommend restructuring, privatization, or a
transfer to the DOD as alternatives to closure. Congress is granted
fast-track authority to adopt the Commission's recommendations.
Title III attempts to assess an inventory of the Power Marketing
Administration's assets, liabilities, and so forth. This inventory is
aimed at ensuring fair treatment of current customers and a fair return
to the taxpayers. All issues, including payments by current customers
must be included in the General Accounting Office's [GAO] audit.
Petroleum reserves are the focus of title IV. The Naval Petroleum
Reserve is targeted for immediate sale. Any of the reserves that are
unable to be disposed of within the 3-year window will be sold
transitionally from the Interior Department. With the Strategic
Petroleum Reserve, it is transferred to the Defense Department and an
audit on value and maintenance costs is conducted by the GAO. Then, the
DOD is charged with determining how much oil to maintain for national
security purposes after reviewing the GAO report.
Under titles V and VI, all of the national security and environmental
restoration-management activities to the Department of Defense.
Therefore, all defense-related activities are transferred back to
Defense, but are placed in a new civilian controlled agency--Defense
Nuclear Programs Agency--to ensure budget firewalls and civilian
control over sensitive activities such as arms control and
nonproliferation activities.
And the program which has received much criticism as of late, the
Civilian Nuclear Waste Program, is transferred to the Corps of
Engineers. This section dovetails legislation adopted by the Senate
last Congress. A key element is that the interim storage site is
designated at Nevada's test site area 25. Building upon legislation I
introduced last Congress, the GAO is directed to recommend
privatization options and provide cost saving estimates for the overall
program.
For 35 States, including my home State of Minnesota, timely
resolution to the nuclear waste issue is essential. The continued
impasse over the designation of interim and permanent waste sites
implies additional slippages in the DOE's legal requirement to accept
nuclear waste by 1998. Minnesota stands to lose nearly 30 percent of
its energy resources shortly after the turn of the century, but 34
other States face similar crisis. Having paid over $250 million into
the Nuclear Waste Trust Fund, Minnesota's ratepayers want resolution,
not the continual foot-dragging we have seen from the DOE. And when we
look at the $12 billion collected to date in contrast to the lack of
progress over the past 15 years, it is clear that the status quo is not
working. That is primarily the impetus behind today's announcement by
the Nuclear Waste Strategy Coalition that they are petitioning the
Courts for approval to stop payments to the Nuclear Waste Trust Fund.
Until the Court order in July, the DOE even denied accountability for
the program. It is time for a change if we want results. This
legislation provides that change.
Overall, outside models estimate savings between $19 and $23 billion
in the first 5 years, and approximately $5 to $7 billion annually
thereafter. This is in sharp contrast to the former Secretary's
Strategic Alignment Initiative, which boasts unconfirmed savings of $14
billion but no savings in the outyears.
In introducing this bill, our goals are to build upon the issues
raised during last year's hearing; to hold additional hearings in
conjunction with those who have expressed concerns over the Department
of Energy--including Senator Brownback of Kansas, chairman of the
Government Affairs Subcommittee on Government Management Oversight;
and, to move forward on implementing a widely supported proposal. And,
in the coming weeks, Representative Tiahrt of Kansas will be
introducing companion legislation in the House of Representatives in
the near future.
Contrary to proponents of the status quo, the momentum is far from
being derailed. In fact, if we were to look at the Department of
Energy's own Report on External Regulation issued in December 1996,
even its own working group recommended transferring the regulation of
its nuclear facilities to outside entities. The report concluded that
by through external regulation, and adoption of the private sector's
safety culture, program safety and public confidence would be greatly
enhanced. We agree. And we would like to see such concepts applied
across the board to DOE's programs--and the DOE ultimately eliminated.
We welcome any input to that end from the administration.
And so looking back over the past year--examining how the debate has
transformed from one of whether or not to maintain the status quo, to
one of how to change it--I am encouraged over the progress we have
made. Today, we mark the beginning of the debate on achieving our goal
of streamlining government and improving the delivery of government
services at lower costs to the American taxpayers. One year from now,
it is my hope that we will be working toward the implementation of a
restructuring plan on the Department of Energy.
______

By Mr. BUMPERS:
S. 237. A bill to provide for retail competition among electric
energy suppliers for the benefit and protection of consumers, and for
other purposes; to the Committee on Energy and Natural Resources.

the electric consumers protection act of 1997

Mr. BUMPERS. Mr. President, I rise today to introduce the Electric
Consumers Protection Act of 1997. This bill provides for the transition
toward deregulation and competition in electricity generation.
While very few people, including myself, find a discussion of the
electric utility industry and the many laws and regulations governing
the industry exciting, the fact is that electricity is an extremely
important commodity which affects everyone on a daily basis. Any event
that increases or reduces electric rates can impact: First, the lives
of the poor and those on fixed incomes that

[[Page S864]]

depend on electricity to heat their homes in the winter and cool them
in the summer; second, the price of goods we buy every day; as well as,
third, the competitiveness of our factories. In addition, decisions
made by electric generators often have a direct effect on our
environment as well as our national security.
So, it is not at all inconsequential that the electric industry,
which has remained relatively static for the last 60 years, is about to
undergo a fundamental change. Instead of the traditional vertically
integrated local utility, which generates power at its own plants,
transmits that power over its own lines, and sells that power to all
consumers in a particular area, consumers will soon be bombarded with
all sorts of offers from companies competing to become their power
supplier, and other entrepreneurs will be seeking to buy large blocks
of power to serve certain kinds of consumers. Naturally, these changes
are bound to create considerable apprehension among utilities, their
shareholders, and consumers.
Mr. President, there are some who would prefer that we maintain the
status quo. However, it is becoming increasingly certain that
competition is inevitable. At least six States--California, New
Hampshire, Rhode Island, Pennsylvania, Vermont, and Massachusetts--have
already enacted legislation or promulgated regulations providing for
competition. A number of other States have established proceedings to
determine how to move toward competition. In all, more than 40 States
have either ordered, or are examining the possibility of requiring,
deregulation of the retail electric markets.
Theoretically, introducing competition among electric power providers
should produce greater efficiencies and lower electric rates. Certainly
large industrial consumers of electricity would see significant
reductions in their energy bills, but I am more concerned about the
potential impact on residential and small commercial consumers--the
biscuit cookers as we call them in Arkansas. Generating companies may
be less eager to compete to serve these customers, especially those
located in rural areas. This reduced bargaining power could also end up
causing residential and small commercial customers to pay for those
costs arising from the transition to competition--that is, stranded
costs--costs that industrial consumers can more easily avoid.

I believe it is the role of both Congress and the States to ensure
that the biscuit cookers also benefit. It is not enough to simply
proclaim that the days of the utilities' vertically integrated
monopolies are over. We also have a solemn obligation to be fair to
utility companies that have been operating in reliance on the ground
rules we all created over the last 60 years. This will require a
careful balancing of competing interests. Everyone will benefit by
restructuring if it is done properly, and I consider this an absolutely
essential result.
Mr. President, I am introducing this bill to begin the debate in the
105th Congress about how best to promote an orderly transition to a
competitive retail electric market. This legislation is designed with
the goals of allowing all consumers to enjoy the benefits of
competition while not penalizing utilities for prudent decisions they
made under the previous regulatory system.
There is significant debate over whether Congress should even pass
legislation on this subject. The argument that the States should decide
these issues certainly has some merit. After all, retail electric
service has generally been the domain of the States, although
requirements imposed at the Federal level by both FERC and Congress
have had a direct impact on retail rates and service.
But I personally believe a State-by-State approach could produce a
lot of unintended consequences which would limit the benefits
associated with retail competition. Electric generation markets are
becoming increasingly regional and even multiregional. What happens in
one State can have direct and indirect impacts on consumers and
utilities located in another State. Utilities operating in more than
one State can be subjected to conflicting regulatory regimes which
could impact the way they operate their systems and the electric rates
paid by consumers.
This phenomenon is best illustrated by the multistate utility holding
companies registered under the Public Utility Holding Company Act
[PUHCA}. I have had a lot of experience with registered holding
companies because two of them serve my home State of Arkansas. These
holding companies generally plan for, and operate, generating
facilities on a systemwide basis for the benefit of customers in the
entire region served by the company. If restructuring proceeds on a
State-by-State basis, these holding companies would find themselves
subjected to different requirements which could negatively impact
consumers.

For example, the Entergy System serves retail customers in parts of
Louisiana, Texas, Mississippi, and Arkansas. If Louisiana and Texas
were to order retail competition and Arkansas and Mississippi decided
to delay competition, it would be difficult, if not impossible, for
Entergy to operate a system of generating facilities designed to serve
a particular load over a four-State area. It is quite possible that
consumers in Arkansas and Mississippi would wind up paying more for
their service. Entergy's captive customers in Arkansas and Mississippi
could be further disadvantaged to the extent Entergy were to become
financially imperiled as a result of the retail competition orders in
Texas and Louisiana.
A State-by-State approach to retail competition also presents
problems where utilities operate entirely within a single State. It
would make no sense for a utility in a State that does not require
retail competition, to be able to sell power at retail in an adjoining
State that requires retail competition, while a utility subjected to
retail competition is unable to mitigate its losses by competing for
customers in the adjoining State. Such a result both increases stranded
costs and distorts the generation marketplace.
My legislation requires that retail competition be implemented in
each State by 2003. States will continue to have the option of choosing
an earlier starting date. In addition, the States can individually
oversee the transition to competition.
Moreover, if Congress is going to mandate retail competition then I
believe we have an obligation to provide for utility recovery of its
stranded investment in facilities that become uneconomic as a result of
the transition to retail competition. That is not to say that a utility
is automatically entitled to recover every penny of its investment.
Rather, my bill limits utilities to recovery of their investments that:
First, were prudent when incurred; second, are legitimate and
verifiable; and third, cannot be mitigated by selling power to others
in the competitive market.
My bill provides that if a utility seeks to recover stranded costs, a
State commission would establish the level of such costs pursuant to an
administrative determination or after the utility auctions off its
assets to establish the market value of these facilities. Once the
stranded costs are calculated, consumers would be assessed a wires
charge to compensate the utility for its stranded costs.

It is vital that, as we proceed with electric restructuring, we act
to ensure that the generation markets are truly competitive. It will do
no good to remove Federal and State rate regulation if consumers do not
have access to a sufficient number of potential power marketers. We
have already seen this problem in other industries that have
deregulated, where after an initial flurry of competitors entering a
particular market, significant consolidation occurred.
Utilities obviously should not be allowed to use their advantageous
positions with regard to transmission and distribution to gain a
competitive advantage in the generation market. Utilities should not
use funds from their transmission and distribution systems to subsidize
their generation businesses. In addition, my bill requires the
implementation of independent system operators [ISO's] to oversee the
operation of transmission systems in each region.
We also must be mindful that power suppliers might not be falling all
over themselves to serve certain consumers, especially those located in
rural areas. My bill contains a universal service requirement to ensure
that everyone who wants electric service has the opportunity to buy it
at reasonable rates.

[[Page S865]]

The bill also authorizes States to collect fees from all consumers to
help pay for the universal service obligation.
Mr. President, there are currently a number of utility-based programs
which provide societal benefits. For instance, the Public Utility
Regulatory Policies Act [PURPA] provides for utility purchases of
energy generated at certain plants which use renewable resources or
cogeneration. In addition, many States have programs requiring
utilities to contribute to energy conservation and to help low-income
people pay their energy bills. The costs of these programs are passed
through to ratepayers. It will be more difficult for utilities to
continue to implement these programs in a competitive retail
environment. My bill authorizes States to collect wire charges to help
pay for these kinds of programs.
Congressman Dan Schaefer has developed a proposal designed to promote
the use of renewable generation. His portfolio approach would require
each company selling power at retail to generate a portion of its power
using renewable resources or to purchase credits from those companies
that do generate in excess of the minimum requirements. I think it is
very important that we do everything possible to promote the use of
renewable energy and my bill contains a similar proposal.

Mr. President, over the last 25 years we have made substantial
progress in cleaning our air and rivers, lakes and streams. It has come
at a fairly big cost, but I doubt anyone would turn the clock back on
our successes.
There are understandable conflicting positions about what will happen
with the introduction of competition. Some argue that competition will
increase the use of natural gas, which is more friendly to the
environment than coal. Others argue that existing coal generating
plants that were grandfathered in under the provisions of the Clean Air
Act will be utilized more frequently. It is difficult to know who is
right. But I think it is fair to say that we all have an obligation to
protect our air quality and we shouldn't take this issue lightly. My
bill requires EPA to submit a study to Congress within 2 years
analyzing the issue and suggesting any changes to our laws that may
need to be made to protect the environment.
Mr. President, the issues addressed by the Electric Consumers
Protection Act of 1997 are very complex and far reaching. It is going
to take Congress some time in order to sort them out and develop a
consensus for a comprehensive approach to electric generation
deregulation. I am introducing this bill today to begin the debate and
propose one roadmap as to how we may get there. I look forward to
working with my colleagues and all interested parties as we proceed to
examine this very important issue over the next 2 years.
Mr. President, I ask unanimous consent that a copy of the bill and a
summary of the bill be placed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

S. 237

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

Sec. 1. Short title and table of contents.
Sec. 2. Findings.
Sec. 3. Severability.

TITLE I--RETAIL COMPETITION

Sec. 101. Definitions.
Sec. 102. Mandatory retail access.
Sec. 103. Aggregation.
Sec. 104. Prior implementation.
Sec. 105. State regulation.
Sec. 106. Stranded cost recovery.
Sec. 107. Multistate utility company stranded costs.
Sec. 108. Universal service.
Sec. 109. Public benefits.
Sec. 110. Renewable energy.
Sec. 111. Transmission.
Sec. 112. Cross-subsidization.
Sec. 113. Competitive generation markets.
Sec. 114. Nuclear decommissioning costs.
Sec. 115. Tennessee Valley Authority.
Sec. 116. Enforcement.

TITLE II--PUBLIC UTILITY HOLDING COMPANIES

Sec. 201. Repeal of the Public Utility Holding Company Act of 1935.
Sec. 202. Definitions.
Sec. 203. Exemptions.
Sec. 204. Federal access to books and records.
Sec. 205. State access to books and records.
Sec. 206. Affiliate transactions.
Sec. 207. Clarification of regulatory authority.
Sec. 208. Effect on other regulation.
Sec. 209. Enforcement.
Sec. 210. Savings provision.
Sec. 211. Implementation.
Sec. 212. Resources.

TITLE III--PUBLIC UTILITY REGULATORY POLICIES ACT

Sec. 301. Definition.
Sec. 302. Facilities.
Sec. 303. Contracts.
Sec. 304. Savings clause.
Sec. 305. Effective date.

TITLE IV--ENVIRONMENTAL PROTECTION

Sec. 401. Study.

SEC. 2. FINDINGS.

The Congress finds that:
(a) Congress has the authority to enact laws, under the
Commerce Clause of the United States Constitution, regarding
the wholesale and retail generation, transmission,
distribution, and sale of electric energy in interstate
commerce.
(b) It is in the public interest that consumers receive
reliable and inexpensive electric service and competition
among electric suppliers can produce these benefits.
(c) Electric utility companies that prudently incurred
costs pursuant to a regulatory structure that required them
to provide electricity to consumers should not be penalized
during the transition to competition.
(d) Consumers will not benefit from the introduction of
competition among electric suppliers if certain suppliers
have undue market power.
(e) It is important to encourage conservation and the use
of renewable resources to reduce reliance on fossil fuels and
to promote domestic energy security.
(f) The transition to electric competition should not
degrade reliability nor cause consumers to lose electric
service.

SEC. 3. SEVERABILITY.

If any provision of this Act, or the application of such
provision to any person or circumstances, shall be held
invalid, the remainder of the Act, and the application of
such provision to persons or circumstances other than those
as to which it is held invalid, shall not be affected
thereby.
TITLE I--RETAIL COMPETITION

SEC. 101. DEFINITIONS.

For purposes of this title:
(1) The term ``affiliate'' shall have the same meaning
given the term in section 202(10) of this Act.
(2) The term ``aggregator'' means any person that purchases
or acquires retail electric energy on behalf of two or more
consumers.
(3) The term ``Commission'' means the Federal Energy
Regulatory Commission.
(4) The term ``consumer'' means a person who purchases
retail electric energy.
(5) The term ``corporation'' means any corporation, joint-
stock company, partnership, association, cooperative,
municipal utility, business trust, organized group of
persons, whether incorporated or not, or a receiver or
receivers, trustee or trustees of any of the foregoing.
(6) The term ``large hydroelectric facility'' means a
facility which has a power production capacity, which
together with any other facilities located at the same site
is greater than 80 megawatts.
(7) The terms ``local distribution facilities'' and
``retail transmission facilities'' mean facilities used to
provide retail electric energy to consumers.
(8) The term ``mitigation'' means any widely accepted
business practice used by a retail electric energy provider
to dispose of or reduce uneconomic assets or costs.
(9) The term ``person'' means an individual or corporation.
(10) The term ``public utility holding company'' shall have
the same meaning given the term in section 202(6) of this
Act.
(11) The term ''renewable energy'' means electricity
generated from solar, wind, waste, except for municipal solid
waste, biomass, hydroelectric or geothermal resources.
(12) The term ``Renewable Energy Credit'' means a tradable
certificate of proof that one unit (as determined by the
Commission) of renewable energy was generated by any person.
(13) The term ``retail electric competition'' means the
ability of each consumer in a particular State to purchase
retail electric energy from any person seeking to sell
electric energy to such consumer.
(14) The term ``retail electric energy'' means electric
energy and ancillary services sold for ultimate consumption.
(15) The term ``retail electric energy provider'' means any
person who distributes retail electric energy to consumers
regardless of whether the consumers purchase such energy from
the provider or another supplier.
(16) The term ``retail electric energy supplier'' means any
person which sells retail electric energy to consumers.
(17) The term ``State'' means any State or the District of
Columbia.
(18) The term ``State regulatory authority'' means any
State agency, including a municipality, which has ratemaking
authority with respect to the rates of any retail electric
energy provider and the Tennessee Valley Authority.

[[Page S866]]

(19) The term ``transmission system'' means all facilities,
including federally-owned facilities, transmitting
electricity in interstate commerce in a particular region,
including those located in the State of Texas and those
providing international interconnections, but does not
include local distribution and retail transmission facilities
as defined by the Commission.
(20) The term ``wholesale electric energy'' means electric
energy and related services sold for resale.
(21) The term ``wholesale electric energy supplier'' means
any person which sells wholesale electric energy.

SEC. 102. MANDATORY RETAIL ACCESS.

(a) Customer Choice.--Beginning on December 15, 2003 each
consumer shall have the right to purchase retail electric
energy from any person, subject to any limitations imposed
pursuant to section 105(a) of this Act, offering to sell
retail electric energy to such consumer.
(b) Local Distribution and Retail Transmission
Facilities.--Beginning on December 15, 2003 all persons
seeking to sell retail electric energy shall have reasonable
and nondiscriminatory access, on an unbundled basis, to the
local distribution and retail transmission facilities of all
retail electric energy providers and all related services.

SEC. 103. AGGREGATION.

Subject to any limitations imposed pursuant to section
105(a) of this Act, a group of consumers or any person acting
on behalf of such group may purchase or acquire retail
electric energy for the members of the group if they are
located in a State or States where there is retail electric
competition.

SEC. 104. PRIOR IMPLEMENTATION.

(a) State Action.--A State or State regulatory authority,
if authorized under State law, may require retail electric
energy providers selling retail electric energy to consumers
in such State to provide reasonable and nondiscriminatory
access, on an unbundled basis, to its local distribution and
retail transmission facilities and all related services to
competing retail electric energy suppliers prior to December
15, 2003.
(b) Nonregulated Providers.--A retail electric energy
provider not subject to the jurisdiction of a State
regulatory authority may elect to provide reasonable and
nondiscriminatory access, on an unbundled basis, to its local
distribution and retail transmission facilities and all
related services to competing retail electric energy
suppliers prior to December 15, 2003.
(c) Grandfather.--Legislation enacted by a State or a
regulation issued by a State regulatory authority prior to
January 30, 1997 which has the effect of requiring retail
electric competition on or before December 15, 2003, shall be
deemed to be in compliance with the requirements of sections
102, 106 and 107 of this Act, for so long as such retail
electric competition exists.

SEC. 105. STATE REGULATION.

(a) State Requirements.--Nothing in this Act shall prohibit
a State or a State regulatory authority from imposing
requirements on persons seeking to sell retail electric
energy to consumers in that State which are intended to
promote the public interest, including requirements related
to reliability and the provision of information to consumers
and other retail electric suppliers. Any such requirements
must be applied on a nondiscriminatory basis and may not
be used to exclude any class of potential suppliers, such
as retail electric energy providers, from the opportunity
to sell retail electric energy providers, from the
opportunity to sell retail electric energy.
(b) Maintenance of State Authority.--Nothing in this Act is
intended to prohibit a State from enacting laws or imposing
regulations related to retail electric energy service that
are consistent with the requirements of this Act.
(c) Continued State Authority Over Distribution.--A State
or State regulatory authority may continue to regulate local
distribution and retail transmission service currently
subject to State regulation in any manner consistent with
this Act.

SEC. 106. STRANDED COST RECOVERY.

(a) Application for Recovery.--A retail electric energy
provider that was subject to the jurisdiction of a State
regulatory authority prior to the date of enactment of this
Act may submit an application to the State regulatory
authority seeking calculation of its total stranded costs in
that State if--
(1) subsequent to January 30, 1997, the State regulatory
authority has issued a regulation or the State has enacted
legislation requiring retail electric competition which does
not provide for the full recovery of stranded costs; of
(2) the retail electric energy provider's customers have
access to retail competition as a result of the requirements
of Section 102 of this Act.
(b) Calculation of Stranded Costs.--
(1) If a State regulatory authority calculates the
applicant's stranded costs pursuant to subsection (a), the
authority shall choose, within six months after the receipt
of the application, between the calculation methodologies
described in subsection (f) of this section.
(2) If a State regulatory authority does not calculate the
retail electric energy provider's total stranded costs, the
Commission shall calculate the provider's stranded costs
using the methodology described in subsection (f)(2) of this
section.
(c) Nonregulated Utilities.--A retail electric energy
provider that is not subject to regulation by a State
regulatory authority prior to the date of enactment of this
Act may calculate the amount of its total stranded costs
pursuant to either methodology described in subsection (f) of
this section.
(d) Right of Recovery.--A retail electric energy provider
shall be entitled to full recovery of its stranded costs,
over a reasonable period of time, through a non-bypassable
Stranded Cost Recovery Charge imposed on its distribution and
retail transmission customers.
(e) Prohibition on Cost-Shifting.--No class of consumers in
a State shall be assessed a Stranded Cost Recovery Charge
that a State regulatory authority or the Commission,
whichever is applicable, determines is in excess of the
class' proportional responsibility for the retail electric
energy provider's costs that existed prior to the
implementation of retail electric competition in such State.
(f) Calculation of Stranded Costs.--For purposes of this
section and section 107 of this Act, the term ``stranded
costs'' means either (1) all legitimate, prudently incurred
and verifiable investments made by a retail electric energy
provider in generation assets, including binding power
purchase contracts, and related regulatory assets which would
have been recoverable but for the implementation of retail
electric competition following the date of enactment of this
Act, and which cannot be reasonably mitigated or (2) if a
retail electric energy provider sells all of its generating
facilities, the difference between the book value of such
facilities less the amount received from their sale. Nothing
in this title is intended to permit a reassessment of
prudence with regard to the incurrence of costs related to a
particular generating facility or contract in the event a
State Regulatory Authority or the Commission has already made
a legally binding determination.

SEC. 107. MULTISTATE UTILITY COMPANY STRANDED COSTS.

(a) Limitation on Obligation.--Customers of a retail
electric energy provider that serves customers in more than
one State or that is affiliated with another retail electric
energy provider shall only be responsible for stranded costs
associated with retail electric competition in the State or
area in which such customers are located.
(b) Regional Generating Facilities.--
(1) The consent of Congress is given for the creation of a
regional board if--
(A) each State regulatory authority regulating an affiliate
of a public utility holding company with affiliate retail
electric energy providers serving customers in more than one
state elects to join such a board;
(B) an affiliate of the public utility holding company owns
and/or operates a generating facility and sells power from
that facility to two or more affiliates of the same holding
company and did not sell retail electric energy prior to
January 30, 1997 (hereinafter referred to as the ``wholesale
generating company''); and
(C) the public utility holding company notifies each State
regulatory authority which regulates a retail electric energy
provider affiliated with the holding company that it intends
to seek recovery of the stranded costs associated with the
generating facility or facilities (described in subsection
(b)(1)(B)) owned by the wholesale generating company
affiliated with such holding company.
(2) The regional board shall be formed if each State
regulatory authority elects to create the board within six
months after receiving the notification described in
subsection (b)(1)(C). If such elections are not made within
the requisite time period, the Commission shall assume the
responsibilities of the board as described in this section.
(3) The regional board shall have one year after the date
it is formed to calculate, on a unanimous basis, the stranded
costs associated with the generating facility which is the
subject of the proceeding in accordance with the definition
contained in section 106(f) of the Act and to allocate such
costs among the retail electric energy provider affiliates of
the public utility holding company on a just and reasonable
and nondiscriminatory basis.
(4) If the regional board fails to make either or both
determinations, as described in subsection (b)(3) in the
requisite time period, the Commission shall make the
determination or determinations that have yet to be made.
(5) After its level of stranded costs is determined
pursuant to this subsection, the wholesale generating company
affiliate of the holding company shall be entitled to fully
recover its stranded costs, over a reasonable period of time,
from the retail electric energy provider affiliates to which
it sells electric energy pursuant to the procedures
established by this subsection.
(6) A retail electric energy provider's stranded cost
payment obligations pursuant to this subsection shall be
deemed stranded costs for the purposes of sections 106 and
107 of this Act.

SEC. 108. UNIVERSAL SERVICE.

(a) Service Obligation.--After December 15, 2003, each
retail electric energy provider shall be obligated to sell
retail electric energy to, or purchase retail electric energy
on behalf of, any consumer in a particular State served by
such retail electric energy provider if the State regulatory
authority located in such State has determined that such
consumer does not have reasonable access to

[[Page S867]]

competing retail electric energy suppliers and the consumer
has not chosen an alternative supplier.
(b) Compensation.--
(1) If the retail electric energy provider performing the
service described in subsection (a) is subject to
State regulatory authority regulation of its distribution
services, such provider shall be compensated at a just and
reasonable rate established by such regulatory authority.
(2) If the retail electric energy provider performing the
service described in subsection (a) is not subject to
distribution service regulation by a State regulatory
authority, such provider shall establish the appropriate
level of compensation.
(3) A State or a State regulatory authority, if authorized
by the State, may impose a nonbypassable Universal Service
Charge imposed on the distribution and retail transmission
customers of all retail electric energy providers in such
State to fund all or part of the compensation provided in
subsections (b)(1) and (b)(2).
(4) A State regulatory authority or the retail electric
energy provider, if it establishes its own level of
compensation pursuant to subsection (b)(2), may require the
consumer receiving retail electric energy pursuant to
subsection (a) to pay for all or part of the compensation
provided in subsections (b)(1) and (b)(2).

SEC. 109. PUBLIC BENEFITS.

Nothing in this Act shall prohibit a State or State
regulatory authority from assessing charges on consumers to
fund public benefit programs such as those designed to aid
low-income energy consumers, promote energy research and
development or achieve energy efficiency and conservation.

SEC. 110. RENEWABLE ENERGY.

(a) Minimum Renewable Requirement.--Beginning on January 1,
2004 and each year thereafter, every retail electric energy
supplier shall submit to the Commission Renewable Energy
Credits in an amount equal to the required annual percentage
of the total retail electric energy sold by such supplier in
the preceding calendar year.
(b) State Renewable Energy Programs.--Nothing in this
section shall be construed to prohibit any State or any State
regulatory authority from requiring additional renewable
energy generation in that State under any program adopted by
the State.
(c) Required Annual Percentage.--Beginning in calendar year
2003, the required annual percentage for each retail electric
energy supplier shall be 5 percent. Thereafter, the required
annual percentage for each such supplier shall be 9 percent
beginning in calendar year 2008 and 12 percent beginning in
calendar year 2013.
(d) Submission of Credits.--A retail electric energy
supplier may satisfy the requirements of subsection (a)
through the submission of--
(1) Renewable Energy Credits issued by the Commission under
this section for renewable energy sold by such supplier in
such calendar year.
(2) Renewable Energy Credits issued by the Commission under
this section to any other retail electric energy supplier for
renewable energy sold in such calendar year by such other
supplier and acquired by such retail electric energy
supplier.
(3) Any combination of the foregoing.

A Renewable Energy Credit that is submitted to the Commission
for any year may not be used for any other purposes
thereafter.
(e) Issuance of Renewable Energy Credits.--
(1) The Commission shall establish by rule after notice and
opportunity for hearing but not later than one year after the
date of enactment of this Act, a National Renewable Energy
Trading Program to issue Renewable Energy Credits to retail
electric suppliers. Renewable Energy Credits shall be
identified by type of generation and the State in which the
facility is located. Under such program, the Commission shall
issue--
(A) one-half of one Renewable Energy Credit to any retail
electric energy supplier who sells one unit of renewable
energy generated at a large hydroelectric facility;
(B) one Renewable Energy Credit to any retail electric
energy supplier who sells one unit of renewable energy
generated at a facility, other than a large hydroelectric
facility, built prior to the date of enactment of this Act;
and
(C) two Renewable Energy Credits to any retail electric
supplier who sells one unit of renewable energy generated at
a facility, other than a large hydroelectric facility, built
on or after the date of enactment of this Act.
(2) The Commission shall impose and collect a fee on
recipients of Renewable Energy Credits in an amount equal to
the administrative costs of issuing, recording, monitoring
the sale or exchange, and tracking such Credits.
(f) Sale or Exchange.--Renewable Energy Credits may be sold
or exchanged by the person issued or the person who acquires
the Credit. A Renewable Energy Credit for any year that is
not used to satisfy the minimum renewable sales requirement
of this section for that year may not be carried forward for
use in another year. The Commission shall promulgate
regulations to provide for the issuance, recording,
monitoring the sale or exchange, and tracking of such
Credits. The Commission shall maintain records of all sales
and exchanges of Credits. No such sale or exchange shall be
valid unless recorded by the Commission.
(g) Rules and Regulations.--The Commission shall promulgate
such rules and regulations as may be necessary to carry out
this section, including such rules and regulations requiring
the submission of such information as may be necessary to
verify the annual electric generation and renewable energy
generation of any person applying for Renewable Energy
Credits under this section or to verify and audit the
validity of Renewable Energy Credits submitted by any person
to the Commission.
(h) Annual Reports.--The Commission shall gather available
data and measure compliance with the requirements of this
section and the success of the National Renewable Energy
Trading Program established under this section. On an annual
basis not later than May 31 of each year, the Commission
shall publish a report for the previous year that includes
compliance data, National Renewable Energy Trading Program
results, and steps taken to improve the Program results.
(i) Sunset.--The requirements of this section shall cease
to apply on December 31, 2019.

SEC. 111. TRANSMISSION.

(a) Transmission Regions.--Within two years after the date
of enactment of this Act, the Commission shall establish the
broadest feasible transmission regions and designate an
Independent System Operator to manage and operate the
transmission system in each region beginning on December 15,
2003. In establishing transmission regions and designating
Independent System Operators the Commission shall give
deference to Independent System Operators approved by the
Commission prior to the date of enactment of this Act, if it
would be consistent with the requirements of this section.
(b) Independent System Operators.--A person designated as
an Independent System Operator shall not be subject to the
control of--
(1) any person owning any transmission facilities located
in the region in which the Independent System Operator will
operate; or
(2) any retail electric energy supplier selling retail
electric energy to consumers in the region in which the
Independent System Operator will operate.
(c) Regional Transmission Oversight Board.--After the
Commission has designated an Independent System Operator for
a particular transmission system, each State that is part of
the transmission region established by the Commission may
elect to join a Regional Transmission Oversight Board. If all
States within the transmission region so elect within 180
days after the Commission designates an Independent System
Operator for the transmission region, the Board shall be
formed.
(d) Board Membership.--The Regional Transmission Oversight
Board shall be composed of an equal number of members from
each State which is a member of the Board. The Board shall
prescribe its own rules for organization, practice and
procedure for carrying out the functions assigned by this
section.
(e) Transmission Regulation.--
(1) If a Regional Transmission Oversight Board is formed,
it shall have the same authority as the Commission has
pursuant to sections 205, 206, 211, and 212 of the Federal
Power Act (16 U.S.C. 824d, 824e, 824j, and 824k), as amended
by this Act, with respect to the transmission of electric
energy in interstate commerce by the Independent System
Operator within the transmission region designated by the
Commission. Any actions taken by such Board pursuant to this
subsection shall be consistent with Commission precedent.
(2) If a Regional Transmission Oversight Board is not
formed for a particular region, the Commission shall continue
to have authority over the transmission of electric energy in
interstate commerce by the Independent System Operator within
the transmission region designated by the Commission.
(3) The Commission shall have authority over the
transmission of electric energy in interstate commerce
between two or more transmission regions designated by the
Commission.
(4) Section 212(f) of the Federal Power Act (16 U.S.C.
824k(f) shall be repealed on the date the Tennessee Valley
Authority becomes a retail electric energy supplier.
(5) Section 212(g) of the Federal Power Act (16 U.S.C.
824k(g) is amended by adding ``prior to December 15, 2003''
immediately following ``utilities''.
(6) The prohibition outlined by section 212(h) of the
Federal Power Act (16 U.S.C. 824k(h)) shall be inapplicable
either:
(A) in any situation where a retail electric energy
supplier is seeking access to a transmission facility for the
purpose of selling retail electric energy to a consumer
located in a State that has authorized retail electric
competition prior to December 15, 2003; or
(B) in all cases beginning on December 15, 2003.
(f) Rules.--On or before January 1, 2002, the Commission
shall issue binding rules for it and the various Regional
Transmission Boards, governing oversight of the Independent
System Operators, designed to promote transmission
reliability and efficiency and competition among retail and
wholesale electric energy suppliers, including rules related
to transmission rates that inhibit competition and
efficiency.

[[Page S868]]

SEC. 112. CROSS-SUBSIDIZATION.

Nothing in this Act is intended to permit retail electric
energy providers from recovering in its distribution and
retail transmission rates any costs associated with
unregulated activities.

SEC. 113. COMPETITIVE GENERATION MARKETS.

(a) Mergers.--
(1) Section 203(a) of the Federal Power Act (16 U.S.C.
824b(a)) is amended by adding ``including the promotion of
competitive wholesale and retail electric generation
markets,'' immediately following ``public interest''.
(2) Add the following new subsections at the end of section
203 of the Federal Power Act (16 U.S.C. 824b):
``(c) Acquisition of Natural Gas Utility Company.--No
public utility shall acquire the facilities or securities of
a natural gas utility company unless the Commission finds
that such acquisition is in the public interest.
``(d) Definition.--For purposes of this section, the term
``natural gas utility company'' means any company that owns
or operates facilities used for the transmission at
wholesale, or the distribution at retail (other than the
distribution only in enclosed portable containers) of natural
or manufactured gas for heat, light, or power.
(b) Market Power.--The Commission shall take such actions
as it determines are necessary to prohibit any retail
electric energy supplier or retail electric energy provider
or any affiliate thereof, from using its ownership or control
of resources to maintain a situation inconsistent with
effective competition among retail and wholesale electric
suppliers.

SEC. 114. NUCLEAR DECOMMISSIONING COSTS.

To ensure safety with regard to the public health and safe
decommissioning of nuclear generating units, retail and
wholesale electric energy suppliers and retail electric
energy providers owning nuclear generating units prior to the
date of enactment of this Act shall be entitled and obligated
to recover, from their customers, all reasonable costs
associated with Federal and State requirements for the
decommissioning of such nuclear generating units.

SEC. 115. TENNESSEE VALLEY AUTHORITY.

(a) Competition in Service Territory.--Notwithstanding any
other provision of law, all retail and wholesale electric
energy suppliers shall have the right to sell retail and
wholesale electric energy to consumers that currently
purchase retail or wholesale electric energy either directly
from the Tennessee Valley Authority or persons purchasing
electric energy from the Tennessee Valley Authority,
beginning on December 15, 2003 or, if the Tennessee Valley
Authority, in its capacity as a State regulatory authority,
chooses an earlier date, such earlier date.
(b) Ability To Sell Electric Energy.--Notwithstanding any
other provision of law, the Tennessee Valley Authority shall
be able to sell retail electric energy and wholesale electric
energy to any person, subject to any State restrictions
imposed pursuant to section 105 of this Act, beginning on the
date retail electric competition in the Authority's service
territory, as described in subsection (a), become effective.
(c) Protection of U.S. Treasury.--This section shall be
inapplicable if the Secretary of Energy, in consultation with
the Office of Management and Budget, determines that the
application of this section is contrary to the financial
interest of the United States.

SEC. 116. ENFORCEMENT.

(a) Violation of the Act.--If any individual or corporation
or any other retail electric energy supplier or provider
fails to comply with the requirements of this Act, any
aggrieved person may bring an action against such entity to
enforce the requirements of this Act in the appropriate
Federal district court.
(b) State or Commission Action.--Notwithstanding any other
provision of law, any person seeking redress from an action
taken by a State Regulatory Authority, the Commission or a
regulatory board pursuant to this Act shall bring such action
in the appropriate circuit of the United States Court of
Appeals.
TITLE II--PUBLIC UTILITY HOLDING COMPANIES

SEC. 201. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF
1935.

The Public Utility Holding Company Act of 1935, as amended,
15 U.S.C. 79 et seq., is hereby repealed, effective one year
from the date of enactment of this Act.

SEC. 202. DEFINITIONS.

For purposes of this title:
(1) The term ``person'' means an individual or company.
(2) The term ``company'' means a corporation, joint stock
company, partnership, association, business trust, organized
group of persons, whether incorporated or not, or a receiver
or receivers, trustee or trustees of any of the foregoing.
(3) The term ``electric utility company'' means any company
that owns or operates facilities used for the generation,
transmission or distribution of electric energy for sale.
(4) The term ``gas utility company'' means any company that
owns or operates facilities used for distribution at retail
(other than the distribution only in enclosed portable
containers) of natural or manufactured gas for heat, light or
power.
(5) The term ``public utility company'' means an electric
utility company or gas utility company but does not mean a
qualifying facility as defined in the Public Utility
Regulatory Policies Act of 1992, or an exempt wholesale
generator or a foreign utility company defined by the Energy
Policy Act of 1992.
(6) The term ``public utility holding company'' means (A)
any company that directly or indirectly owns, controls, or
holds with power to vote, 10 percent or more of the
outstanding voting securities of a public utility company or
of a holding company of any public utility company; and (B)
any person, determined by the Commission, after notice and
opportunity for hearing, to exercise directly or indirectly
(either alone or pursuant to an arrangement or understanding
with one or more persons) such a controlling influence over
the management or policies of any public utility or holding
company as to make it necessary or appropriate for the
protection of consumers with respect to rates that such
person be subject to the obligations, duties, and liabilities
imposed in this title upon holding companies.
(7) The term ``subsidiary company'' of a holding company
means (A) any company 10 percent or more of the outstanding
voting securities of which are directly or indirectly owned,
controlled, or held with power to vote, by such holding
company; and (B) any person the management or policies of
which the Commission, after notice and opportunity for
hearing, determines to be subject to a controlling influence,
directly or indirectly, by such holding company (either alone
or pursuant to an arrangement or understanding with one or
more other persons) so as to make it necessary for the
protection of consumers with respect to rates that such
person be subject to the obligations, duties, and liabilities
imposed in this title upon subsidiary companies of holding
companies.
(8) The term ``holding company system'' means a holding
company together with its subsidiary companies.
(9) The term ``associate company'' of a company means any
company in the same holding company system with such company.
(10) The term ``affiliate'' of a company means any company
5 percent or more of whose outstanding voting securities are
owned, controlled, or held with power to vote, directly or
indirectly, by a company.
(11) The term ``voting security'' means any security
presently entitling the owner or holder thereof to vote in
the direction or management of the affairs of a company.
(12) The term ``Commission'' means the Federal Energy
Regulatory Commission.
(13) The term ``State Commission'' means any commission,
board, agency, or officer, by whatever name designated, of a
State, municipality, or other political subdivision of a
State that under the law of such State has jurisdiction to
regulate public utility companies.

SEC. 203. EXEMPTIONS.

(A) Federal and State Agencies.--No provision of this title
shall apply to: (1) the United States, (2) a State or any
political subdivision of a State, (3) any foreign
governmental authority not operating in the United States,
(4) any agency, authority, or instrumentality of any of the
foregoing, or (5) any officer, agent, or employee of any of
the foregoing acting as such in the course of his official
duty.
(b) Unnecessary Provisions.--The Commission, by rule or
order, may conditionally or unconditionally exempt any person
or transaction, or any class or classes of persons or
transactions, from any provision or provisions of this
title or of any rule or regulation thereunder, if the
Commission finds that regulation of such person or
transaction is not relevant to the rates of a public
utility company. The Commission shall not grant such an
exemption, except with regard to section 204 of this Act,
unless all affected State commissions consent.
(c) Retail Competition.--The provisions of this title shall
not apply to a holding company and every associate company of
such holding company if the Commission certifies that the
retail customers of every public utility subsidiary of such
holding company have access to alternative sources of
electricity in a manner that no longer requires regulation of
the holding company for the protection of consumers.

SEC. 204. FEDERAL ACCESS TO BOOKS AND RECORDS.

(a) Provision of Books and Records.--Every holding company
and associate company thereof shall maintain, and make
available to the Commission, such books, records, accounts,
and other documents as the Commission deems relevant to costs
incurred by a public utility company that is an associate
company of such holding company and necessary or appropriate
for the protection of consumers with respect to rates.
(b) Examination of Books and Records.--The Commission may
examine the books and records of any company in a holding
company system, or any affiliate thereof, as the Commission
deems relevant to costs incurred by a public utility company
within such holding company system and necessary or
appropriate for the protection of consumers with respect to
rates.
(c) Protected Information.--No member, officer, or employee
of the Commission shall divulge any fact or information that
may come to his knowledge during the course of examination of
books, accounts, or other information as hereinbefore
provided, except insofar as he may be directed by the
Commission or by a court.

SEC. 205. STATE ACCESS TO BOOKS AND RECORDS.

(a) Provision of Books and Records.--Every holding company
and associate company thereof, shall maintain, and make

[[Page S869]]

available to each State Commission regulating the rates of
any public utility subsidiary of such holding company, such
books, records, accounts, and other documents as the State
Commission deems relevant to costs incurred by a public
utility company that is an associate company of such holding
company and necessary or appropriate for the protection of
consumers with respect to rates.
(b) Protected Information.--No member, officer, or employee
of a State Commission shall divulge any fact or information
that may come to his knowledge during the course of
examination of books, accounts, or other information as
hereinbefore provided, except insofar as he may be directed
by the State Commission or a court.

SEC. 206. AFFILIATE TRANSACTIONS.

(a) Interaffiliate Transactions.--Both the Commission, with
regard to wholesale rates, and State Commissions, with regard
to retail rates, shall have the authority to determine
whether a public utility company may recover in rates any
costs of goods and services acquired by such public utility
company from an associate company after July 1, 1994,
regardless of when the contract for the acquisition of such
goods and services was entered into.
(b) Associate Companies.--Both the Commission, with regard
to wholesale rates, and State Commissions, with regard to
retail rates, shall have the authority to determine whether a
public utility company may recover in rates any costs
associated with an activity performed by an associate
company.
(c) Interaffiliate Power Transactions.--
(1) Each State Commission shall have the authority to
examine the prudence of a wholesale electric power purchase
made by a public utility, which is not an associate company
of a public utility holding company, providing retail
electric service subject to regulation by the State
Commission.
(2) Each State Commission shall have the authority to
examine the prudence of a wholesale electric power purchase
made by a public utility, which is an associate company of a
public utility holding company, providing retail electric
service subject to regulation by the State Commission,
provided that the costs related to such purchase have not
been allocated among two or more associated companies of such
public utility holding company, by the Commission prior to
the date of enactment and there is no subsequent reallocation
after the date of enactment.

SEC. 207. CLARIFICATION OF REGULATORY AUTHORITY.

No public utility which is an associate company of a
holding company may recover in rates from wholesale or retail
customers any costs not associated with the provision of
electric service to such customers, including those direct
and indirect costs related to investments not associated with
the provision of electric service to those customers, unless
the Commission, with regard to wholesale rates, or a State
Commission, with regard to retail rates, explicitly consents.

SEC. 208. EFFECT ON OTHER REGULATION.

Nothing in this Act shall preclude a State Commission from
exercising its jurisdiction under otherwise application law
to protect utility consumers.

SEC. 209. ENFORCEMENT.

The Commission shall have the same powers as set forth in
sections 306 through 317 of the Federal Power Act (16 U.S.C.
825d-825p) to enforce the provisions of this Act.

SEC. 210. SAVINGS PROVISION.

Nothing in this title prohibits a person from engaging in
activities in which it is legally engaged or authorized to
engage on the date of enactment of this title provided that
it continues to comply with the terms of any authorization,
whether by rule or by order.

SEC. 211. IMPLEMENTATION.

The Commission shall promulgate regulations necessary or
appropriate to implement this title not later than six months
after the date of enactment of this title.

SEC. 212. RESOURCES.

All books and records that relate primarily to the function
hereby vested in the Commission shall be transferred from the
Securities and Exchange Commission to the Commission.
TITLE III--PUBLIC UTILITY REGULATORY POLICIES ACT

SEC. 301. DEFINITION.

For purposes of this title, the term ``facility'' means a
facility for the generation of electric energy or an addition
to or expansion of the generating capacity of such a
facility.

SEC. 302. FACILITIES.

Section 210 of the Public utility Regulatory Policies Act
of 1978 (16 U.S.C. 824a-3) shall not apply to any facility
which begins commercial operation after the effective date of
this title, except a facility for which a power purchase
contract entered into under such section was in effect on
such effective date.

SEC. 303. CONTRACTS.

After the effective date of this title or after the date on
which retail electric competition, as defined in title I of
this Act, is implemented in all of its service territories,
whichever is earlier, no public utility shall be required to
enter into a new contract or obligation to purchase or sell
electric energy pursuant to section 210 of the Public Utility
Regulatory Policies Act of 1978.

SEC. 304. SAVINGS CLAUSE.

Notwithstanding sections 302 and 303, nothing in this title
shall be construed:
(a) as granting authority to the Commission, a State
regulatory authority, electric utility, or electric consumer,
to reopen, force, the renegotiation of, or interfere with the
enforcement of power purchase contracts or arrangements in
effect on the effective date of this Act between a qualifying
small power producer and any electric utility or electric
consumer, or any qualifying cogenerator and any electric
utility or electric consumer.
(b) To affect the rights and remedies of any party with
respect to such a power purchase contract or arrangement, or
any requirement in effect on the effective date of this Act
to purchase or to sell electric energy from or to a
qualifying small power production facility or qualifying
cogeneration facility.

SEC. 305. EFFECTIVE DATE.

This title shall take effect on December 15, 2003.
TITLE IV--ENVIRONMENTAL PROTECTION

SEC. 401. STUDY.

The Environmental Protection Agency, in consultation with
other relevant Federal agencies, shall prepare and submit a
report to Congress by January 1, 2000, which examines the
implications of differences in applicable air pollution
emissions standards for wholesale and retail electric
generation competition and for public health and the
environment. The report shall recommend changes to Federal
law, if any are necessary, to protect public health and the
environment.
____

Electric Consumers Protection Act of 1997--Section-by-Section Analysis

Title I--Retail Competition

Section 101--Definitions

Section 102--Mandatory Retail Access

All consumers (including current customers of investor-
owned, municipal and rural cooperative electric utilities)
have the right to purchase retail electric energy beginning
on December 15, 2003.
All retail electric energy suppliers (entities selling
retail electric energy) have access to local distribution and
retail transmission facilities beginning on December 15,
2003.

Section 103--Aggregation

A group of consumers or any entity acting on behalf of such
group is authorized to aggregate to purchase retail electric
energy for the members of the group if they live in a State
where retail electric competition exists.

Section 104--Prior Implementation

States may require retail electric competition prior to
January 1, 2003.
Municipal electric utilities and rural electric cooperative
utilities (not regulated by State regulatory authorities) may
provide for retail electric competition in their service
territories prior to December 15, 2003.
If a State enacted legislation or imposed a regulation
prior to January 30, 1997, which requires retail electric
competition prior to December 15, 2003, the legislation or
regulation is deemed consistent with the mandatory retail
access and stranded costs sections of the Act.

Section 105--State Regulation

States may impose requirements on retail electric energy
suppliers to protect the public interest.
No class of potential retail electric energy suppliers can
be excluded from selling retail electric energy.
States may continue to regulate local distribution and
retail transmission service provided by retail electric
energy providers (local distribution companies).

Section 106--Stranded Cost Recovery

A utility providing retail electric service subject to
State regulation prior to the date of enactment, which is
seeking recovery of its stranded costs, must request the
State regulatory authority to calculate the amount of its
stranded costs associated with the implementation of retail
competition.
If the State regulatory authority agrees to calculate the
utility's stranded costs it has two options: A. Determine the
level of the utility's legitimate, prudently incurred and
verifiable investments in generating assets and related
regulatory assets that can't be mitigated; or B. require the
utility to sell all of its generating facilities and then
subtract the revenue received from the book value of the
assets sold.
If the State does not calculate the stranded costs, FERC
must require the utility to sell its generating facilities in
order to calculate stranded costs.
A municipal electric utility or a rural electric
cooperative not subject to regulation by a State regulatory
authority may calculate its own stranded costs through either
method authorized for State regulatory authorities
calculating regulated utility stranded costs.
Once a utility has had its stranded costs calculated, it is
entitled to recover such costs from its retail customers
taking distribution or retail transmission service pursuant
to a nonbypassable Stranded Cost Recovery Charge.
No class of customers (such as a utility's residential
customers) can be required to pay a Stranded Cost Recovery
Charge in excess of its proportional responsibility for
utility costs prior to the implementation of retail electric
competition.

[[Page S870]]

Section 107--Multistate Utility Company Stranded Costs

Customers served by utility companies operating in more
than one state either directly or through an affiliate are
only responsible for stranded costs arising from retail
electric competition in the State they reside.
All of the states regulating utility subsidiaries of a
multistate utility holding company may form a regional board
to calculate the stranded costs of a wholesale electric
supplier subsidiary of the holding company that does not sell
any retail electric energy and to allocate such costs among
the utility subsidiaries of the holding company.
If the regional board is not formed or if the members of
the regional board fail to produce a consensus on either
determination required of the board, FERC shall perform the
board's responsibilities.
Once the wholesale subsidiary's stranded costs have been
determined, the subsidiary is entitled to recover such costs
from its affiliated utility companies in the manner allocated
by the board or FERC and the utility companies are entitled
to recover such costs from its customers.

Section 108--Universal Service

If, after December 15, 2003, a State regulatory authority
determines that a consumer does not have sufficient access to
competing retail electric energy suppliers, the retail
electric energy provider is obligated to sell power to or
purchase power on behalf of the consumer.
The retail electric energy provider is entitled to just and
reasonable compensation for the service performed.
States may impose a nonbypassable Universal Service Charge
on distribution and retail transmission consumers to help pay
for the retail electric energy provider's compensation.

Section 109--Public Benefits

States are not prohibited by the Act from imposing charges
on retail electric energy consumers to fund public benefit
programs (i.e. low-income and energy efficiency).

Section 110--Renewable Energy

Beginning in 2003, all retail electric energy suppliers are
required to either (1) sell at least a minimum amount of
renewable energy as part of the total amount of energy it
sells or (2) purchase credits from retail electric energy
suppliers that sell renewable energy in excess of the minimum
requirements.
One-half of one Renewable Energy Credit will be provided to
retail electric energy suppliers selling power generated from
a large hydroelectric facility (more than 80 MW). One
Renewable Energy Credit will be provided to retail electric
energy suppliers selling power generated at all other
renewable electric facilities built prior to the date of
enactment. Two Renewable Energy Credits will be provided to
retail electric energy suppliers selling power generated at
all other renewable electric facilities built subsequent to
the date of enactment.
Retail electric energy suppliers are required to have
Credits worth 5% of its generation beginning in 2003, 9% of
its generation beginning in 2008 and 12% of its generation
beginning in 2013.
The requirements of this section expire on December 31,
2019.

Section 111--Transmission

Within two years of the date of enactment FERC must
establish transmission regions and designate an Independent
System Operator (ISO) to manage and operate all of the
transmission facilities in each region beginning on December
15, 2003.
The ISO can't be affiliated with any person owning
transmission facilities in the region or any retail electric
energy supplier selling retail energy in the region.
The States making up a particular transmission region can
form a Regional Transmission Oversight Board to oversee the
ISO. If the Board is formed, it shall have the same authority
FERC currently has over transmission pursuant to the Federal
Power Act. If the Board is not formed; FERC shall retain
authority.
FERC is required to issue rules by January 1, 2002
applicable to its and the Board's oversight of the ISOs to
promote transmission reliability and efficiency and
competition among retail and wholesale electric energy
suppliers.
The Federal Power Act prohibition on FERC requiring
transmission access for the purposes of retail wheeling is
repealed on January 1, 2003 or at an earlier date for a
particular retail wheeling request in a State that has retail
electric competition prior to December 15, 2003.

Section 112--Cross-Subsidization

Retail electric energy providers are not authorized by this
Act to recover costs related to unregulated activities in the
rates it charges for retail transmission and distribution
services.

Section 113--Competitive Generation Markets

FERC's authority over utility mergers pursuant to the
Federal Power Act is extended to electric utility mergers
with natural gas utility companies.
FERC review of mergers must take into account the impact of
a merger on competitive wholesale and retail electric
generation markets.
FERC has authority to take actions necessary to prohibit
retail electric energy suppliers and providers from using
their control of resources to inhibit retail and wholesale
electric competition.

Section 114--Nuclear Decommissioning Costs

Utilities owning nuclear power plants prior to the date of
enactment are entitled to recover costs to fund
decommissioning of the plants from their customers.

Section 115--Tennessee Valley Authority

Beginning on December 15, 2003 (or an earlier date if it so
decides) the Tennessee Valley Authority (TVA) can sell retail
and wholesale electric energy outside of its service
territory and its retail and wholesale customers can buy
energy from other sellers.
If the Secretary of Energy, in consultation with OMB,
determines that this section would be contrary to the
financial interest of the U.S., the section shall not be
applicable.

Section 116--Enforcement

All aggrieved persons may bring actions in U.S. District
Court to enforce a provision of the Act against individuals,
corporations and other retail electric energy providers and
suppliers.
An appeal of a decision made by FERC or a State regulatory
authority shall be filed in a U.S. Circuit Court of Appeals.

TITLE II--PUBLIC UTILITY HOLDING COMPANIES

Section 201--Repeal of PUHCA

PUHCA is repealed one year from the date of enactment of
the Act.

Section 202--Definitions

Section 203--Exemptions

The title does not apply to federal or state agencies or
foreign governmental authorities not operating in the U.S.
FERC may exempt anyone from any of the requirements of the
title if the Commission finds the particular regulation not
relevant to public utility company rates and the affected
States consent.
The provisions of the title don't apply to a particular
holding company when retail electric competition exists in
the service territory of each utility subsidiary of the
holding company.

Section 204--Federal Access to Books and Records

Each holding company and associate company of the holding
company must make its books and records available to FERC.

Section 205--State Access to Books and Records

Each holding company and associate company of the holding
company must make its books and records available to each
State regulatory authority regulating a utility subsidiary of
the holding company.

Section 206--Affiliate Transactions

FERC, with regard to wholesale rates and States, with
regard to retail rates, have the authority to determine
whether a public utility affiliate of a holding company may
recover its costs associated with a non-power transaction
with an affiliated company if such costs arose after July 1,
1994.
State regulatory authorities have the authority to review
the prudence of a utility's wholesale power purchases from
nonaffiliated sellers.
State regulatory authorities have the authority to review
the prudence of a utility's wholesale power purchase from an
affiliated seller in the same holding company system unless
FERC has allocated the costs of the purchase among two or
more utility subsidiaries of the holding company prior to the
date of enactment and there is no subsequent reallocation.

Section 207--Clarification of Regulatory Authority

FERC, with regard to wholesale rates, and State regulatory
authorities, with regard to retail rates, must explicitly
consent, before a utility affiliate of a utility holding
company can recover costs in rates that are not directly
related to the provision of electric service to its
customers.

Section 208--Effect on Other Regulation

State regulatory authorities can exercise their
jurisdiction under otherwise applicable law to protect
utility consumers.

Section 209--Enforcement

FERC has the same enforcement authority under this title as
it does under the Federal Power Act.

Section 210--Savings Provision

A person engaging in an activity it was legally entitled to
engage in on the date of enactment may continue to be
entitled to engage in the activity.

Section 211--Implementation

FERC must promulgate regulations to implement the title
within 6 months of the date of enactment.

Section 212--Resources

The SEC must transfer its books and records related to
holding company regulation to the FERC.

title iii--public utility regulatory policies act

Section 301--Definition

Section 302--Facilities

Section 210 of PURPA doesn't apply to facilities beginning
commercial operation after the effective date of the title
unless the power purchase contract related to the facility
was in effect on the effective date.

Section 303--Contracts

Public utilities are no longer required to enter into new
purchase contracts under Section 210 of PURPA once their is
retail electric competition in their service territories.

Section 304--Savings Clause

This title does not affect existing power purchase
contracts under PURPA.

[[Page S871]]

Section 305--Effective Date

The effective date of the title is December 15, 2003.

title iv--environmental protection

Section 401--Study

EPA must submit a study to Congress by January 1, 2000
which examines the implications of wholesale and retail
electric competition on the emission of pollutants and
recommends and changes to law, if any are necessary, to
protect public health and the environment.
______

By Mr. GRAMS (for himself and Mr. Graham):
S. 238. A bill to amend title XVIII of the Social Security Act to
ensure Medicare reimbursement for certain ambulance services, and to
improve the efficiency of the emergency medical system, and for other
purposes; to the Committee on Finance.

THE EMERGENCY MEDICAL SERVICES EFFICIENCY ACT

Mr. GRAMS. Mr. President, I have come to the floor today, with the
support of my colleague from Florida, Senator Graham, to introduce an
important health care proposal that is designed to improve our
emergency medical system and to ultimately benefit our constituents who
depend on these services. The area is one I believe has not received
the attention that it deserves.
In a nation where some 268,000 Americans turn to the 911 emergency
response system for help every single day, our population relies on the
readiness, efficiency and the quick response of our emergency medical
system. It is something on which the American people have come to
depend, a service we nearly take for granted. We don't know when we
need it, but we want it to work well when we do. The men and women who
risk their lives in delivering emergency care are true heroes, yet
their desire to improve the services they provide is rarely recognized
by Congress.
The nightly news is filled with the stories of local emergency
response problems. You may recall the tragedy in Philadelphia in 1994
when a young boy died on the steps of his church after being beaten. It
took police 40 minutes to respond after the first 911 call was
received.
Here in the District of Columbia, some residents have waited for more
than 25 minutes before an ambulance responded to their 911 medical
emergency. Far too often, Congress fails to respond until there is a
national crisis, but we can't afford to wait for a crisis to occur
before we respond to the needs of our emergency medical system.
Patients' lives are at risk if Congress doesn't begin to help the
system become more efficient.
Currently, emergency medical service providers are not consulted when
Washington is formulating national policy which affects their ability
to respond in a timely and in an efficient manner, and there is no
coordinated Government focus on EMS, no collection of national data and
statistics which I believe would help Congress and the administration
develop more effective policies to help improve EMS.
Furthermore, there is no lead EMS agency to provide guidance and
direction to Congress and the States when implementing Federal policies
concerning Medicare reimbursement issues, emergency management
planning, or the effect of Federal regulations on EMS providers. This
lack of coordination often negatively impacts providers of EMS and our
constituents who rely upon them.
Later this year, Congress will be reauthorizing the Intermodal
Surface Transportation Efficiency Act, for which its supporters will be
asking for $26 billion in transportation spending, and yet the
emergency medical services communities will likely not have a voice in
improving our transportation system. That is the very system they
depend upon to ensure that when they are dispatched to a patient in
need of emergency medical services, the highway design or newest
technologies will allow them to respond quickly and efficiently. EMS
providers need a seat at the table.

I find it ironic that we expect so much from our EMS system and yet,
when they seek assistance, we continue to ignore their 911 call for
help.
That is why I am today introducing the Emergency Medical Services
Efficiency Act of 1997. My legislation sets out a blueprint for
responding to the needs of our emergency medical system and begins to
address just a few of their concerns Washington has long ignored.
First, the Grams-Graham bill will require Medicare to reimburse for
ambulance services provided for emergency medical care based on the
original diagnosis by a prudent layperson, instead of the ultimate
diagnosis determined by health professionals in the emergency room.
Mr. President, the division of emergency medical services for the
city of St. Paul, MN, prepared a list for me of just some of their 1996
emergency ambulance transports that began as a 911 call for help, but
were eventually denied payment by Medicare.
Among the cases where payment was denied include a 79-year-old
female, on several prescription medications, who had fallen in the
night and was suffering from vertigo; a 72-year-old male, on numerous
prescription medications, who had fallen on the sidewalk, had
lacerations on his arm, a cut over his right eye, and was confused; and
also a 95-year-old female who awoke confused and weak, possibly
suffering from a stroke.
In each of these incidents, emergency services personnel responded to
what they believed to be medical emergencies. Even though the cases
were ultimately ruled nonemergencies, the EMS providers should have
been reimbursed by Medicare for the emergency transport service that
they provided.
As Joseph A. Grafft, EMS Manager for the FIRE/EMS Center at
Metropolitan State University in St. Paul noted in a letter to me,
``Ambulance providers are not physicians and do not diagnose patients.
They deal with presenting symptoms and give care based on these
symptoms. The physicians diagnose and make the final determination.
Ambulance providers should not be penalized for doing their job.''
Our bill ensures that Medicare reimbursements are based on the
original diagnoses of the 911 callers. At the same time, we do not seek
reimbursements for medical conditions that are clearly not life-
threatening.
Second, our bill establishes two separate advisory councils comprised
of emergency service providers and others. The first will advise the
Health Care Financing Administration on issues pertaining to Medicare
reimbursement. The second advisory council will make recommendations to
the administration and Congress in regard to improving the efficiency
and coordination of our emergency medical system.
Third, our bill will designate a lead-EMS agency, to be established
at the direction of the Secretary of Transportation in consultation
with the Secretary of Health and Human Services. The Secretary will
make recommendations to Congress as to which functions should be
transferred to the Transportation Department in order to streamline and
coordinate the EMS system.
Finally, our bill directs the Secretary of Transportation to
establish a national database for the collection of statistics relating
to the delivery of emergency medical services within our national
transportation system and national emergency response system.
The Secretary will set forth the appropriate criteria for national
data collection in consultation with State EMS agencies to ensure the
least burdensome data collection reporting procedures. We would hope
this database could be tied to an existing data collection system.
I believe these four provisions will begin to address a few of the
needs that the EMS community has brought to my attention. This bill
will allow Congress, the President, as well as State and local
officials to have the resources and also the facts they need to make
necessary improvements in emergency medical care to patients.
Dr. Daniel Hankins, president of the Minnesota Chapter of the
American College of Emergency Physicians, made that point eloquently in
a recent letter to me. He said, ``For too long EMS has been forgotten
when health care legislation has been proposed.''
He went on to say, ``EMS is a small, but crucial part of the overall
health care system. It is in most rural areas the only lifeline for
access into emergency care. It is a fragile safety net . . . that is
only held together by the dedication of the many volunteers that
comprise the EMS system.''
Mr. President, I am pleased that I am joined today by the senior
Senator

[[Page S872]]

from the State of Florida in the introduction of this legislation. We
are proud to have a large number of organizations--organizations
dedicated to improving emergency medical care--supporting our
legislation.
I ask unanimous consent that a complete list of these organizations
be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

List of Organizations Supporting the Emergency Medical Services
Efficiency Act

(1) Minnesota Ambulance Association.
(2) Minnesota Air Medical Council.
(3) Healthspan Transportation.
(4) Lifelink III.
(5) Minnesota Emergency Medical Services Association.
(6) South Central Minnesota Emergency Medical Services
Program.
(7) Minnesota Chapter, College of Emergency Physicians.
(8) Gold Cross Ambulance Service.
(9) North Memorial Health Care.
(10) Minnesota Hospital and Healthcare Partnership.
(11) West Central Minnesota Emergency Medical Services
Program.
Mr. GRAMS. Thank you, Mr. President. The Emergency Medical Services
Efficiency Act is not the answer to all of the problems. But it is the
first step in addressing the concerns of a very important segment of
both our health care and transportation systems. This bill is a
blueprint for further improvements in emergency medical services to
help all Americans.
By introducing today's legislation early in the session, it is my
hope that we will call attention to the needs of EMS providers and move
forward to a more comprehensive bill, one that addresses additional
concerns that are equally important to the EMS community as those we
have addressed here today.
Over the next few weeks, I will be working with EMS providers in
Minnesota and throughout the country to look at improving four key
areas: regulatory oversight, technology improvements in medicine and
transportation, insurance reimbursement issues, and the EMS functions
which should be transferred and streamlined under the Department of
Transportation.
Senator Graham has worked tirelessly to ensure that the definition of
``prudent layperson'' apply not only to ambulance service but also to
care provided at emergency departments. In our second bill, it is our
intent to include Senator Graham's new language to ensure that patients
are not denied reimbursement for emergency care because they failed to
obtain proper certification or authorization from their insurance
provider. I look forward to working with the American Association of
Health Plans, which today announced new policies to clarify how health
plans should cover emergency care, in developing an appropriate
legislative solution.
The legislation we introduce today and our subsequent work will be
part of an ongoing effort we hope to include in the newly drafted Rural
Health Improvement Act. This important overall effort, in which I have
also been involved, will help ensure that rural areas are not
overlooked in our desire to improve health care delivery.
So finally, Mr. President, I look forward to working with Senator
Graham, Senator Thomas, and others in the months and weeks ahead to
improve emergency medical services for patients and providers and
ensure the most efficient use of scarce tax dollars. The American
people expect--and of course deserve--nothing less.
Thank you very much, Mr. President.
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. 238

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 Medical Services
Efficiency Act of 1997''.
TITLE I--MEDICARE COVERAGE OF CERTAIN AMBULANCE SERVICES

SEC. 101. MEDICARE COVERAGE OF CERTAIN AMBULANCE SERVICES.

(a) Coverage.--Section 1861(s)(7) of the Social Security
Act (42 U.S.C. 1395x(s)(7)) is amended by striking
``regulations;'' and inserting ``regulations, except that
such regulations shall not fail to treat ambulance services
as medical and other health services solely because the
ultimate diagnosis of the individual receiving the ambulance
services results in the conclusion that ambulance services
were not necessary, as long as the request for ambulance
services is made after the sudden onset of a medical
condition that is manifested by symptoms of such sufficient
severity, including severe pain, that a prudent layperson,
who possesses an average knowledge of health and medicine,
could reasonably expect to result, without immediate medical
attention, in--
``(A) placing the individual's health in serious jeopardy;
``(B) serious impairment to the individual's bodily
functions; or
``(C) serious dysfunction of any bodily organ or part of
the individual;''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to items and services provided on or after the
date of enactment of this Act.
TITLE II--AMBULANCE SERVICES ADVISORY GROUP FOR THE HEALTH CARE
FINANCING ADMINISTRATION

SEC. 201. ESTABLISHMENT OF ADVISORY GROUP.

(a) Establishment.--There is established an advisory group
to be known as the Health Care Financing Administration
Advisory Group for Ambulance Services (in this title referred
to as the ``Advisory Group'').
(b) Membership.--
(1) Composition.--The Advisory Group shall be composed of
17 members of whom--
(A) 1 shall be appointed by the Director of each of the 10
operating districts within the National Highway and Traffic
Safety Administration;
(B) 1 shall be appointed by the President;
(C) 2 shall be appointed by the Administrator of the Health
Care Financing Administration;
(D) 1 shall be appointed by the Majority Leader of the
Senate;
(E) 1 shall be appointed by the Minority Leader of the
Senate;
(F) 1 shall be appointed by the Speaker of the House of
Representatives; and
(G) 1 shall be appointed by the Minority Leader of the
House of Representatives.
(2) Inclusion of certain disciplines on advisory group.--In
making appointments of members under paragraph (1), the
appointing officials described in each subparagraph of that
paragraph shall consult and collaborate with each other in
order to ensure that the following groups are represented on
the Advisory Group:
(A) Physicians who provide emergency medical services.
(B) Individuals who provide emergency ground and air
transport services.
(C) Volunteer, private, and public emergency medical
service providers.
(D) Trauma care providers.
(E) Patient's rights advocates.
(3) Background.--Except in the case of a member of the
Advisory Group described in paragraph (2)(E), any member of
the Advisory Group appointed under paragraph (1) should have
significant experience with the provision of ambulance
services under the medicare program under title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.).
(4) Date.--The appointments of the members of the Advisory
Group shall be made not later than January 1, 1998.
(c) Period of Appointment; Vacancies.--Members shall be
appointed for a term of 4 years. Any vacancy in the Advisory
Group shall not affect its powers, but shall be filled in the
same manner as the original appointment.
(d) Initial Meeting.--Not later than 30 days after the date
on which all members of the Advisory Group have been
appointed, the Advisory Group shall hold its first meeting.
(e) Meetings.--The Advisory Group shall meet at the call of
the Chairperson.
(f) Quorum.--A majority of the members of the Advisory
Group shall constitute a quorum, but a lesser number of
members may hold hearings.
(g) Chairperson and Vice Chairperson.--The Advisory Group
shall select a Chairperson and Vice Chairperson from among
its members.

SEC. 202. DUTIES OF THE ADVISORY GROUP.

(a) Study.--The Advisory Group shall conduct a thorough
study of all matters relating to the provision of ambulance
services under the medicare program under title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.), which shall
include matters relating to the reimbursement of such
services under the medicare program.
(b) Recommendations.--The Advisory Group shall develop
recommendations regarding the improvement of all matters
relating to the provision of ambulance services under the
medicare program under title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.).
(c) Report.--Not later than 2 years after the date of
enactment of this Act and annually thereafter, the Advisory
Group shall submit a report to the Administrator of the
Health Care Financing Administration which shall contain a
detailed statement of the results of the matters studied by
the Advisory Group pursuant to subsection (a), together with
the Advisory Group's recommendations formulated pursuant to
subsection (b).

SEC. 203. POWERS OF THE ADVISORY GROUP.

(a) Hearings.--The Advisory Group may hold such hearings,
sit and act at such times and places, take such testimony,
and receive such evidence as the Advisory Group considers
necessary to carry out the purposes of this title.

[[Page S873]]

(b) Information From Federal Agencies.--The Advisory Group
may secure directly from any Federal department or agency
such information as the Advisory Group considers necessary to
carry out the provisions of this title. Upon request of the
Chairperson of the Advisory Group, the head of such
department or agency shall furnish such information to the
Advisory Group.
(c) Postal Services.--The Advisory Group may use the United
States mails in the same manner and under the same conditions
as other departments and agencies of the Federal Government.
(d) Gifts.--The Advisory Group may accept, use, and dispose
of gifts or donations of services or property.

SEC. 204. ADVISORY GROUP PERSONNEL MATTERS.

(a) Compensation of Members.--Members of the Advisory Group
shall receive no additional pay, allowances, or benefits by
reason of their service on the Advisory Group.
(b) Travel Expenses.--The members of the Advisory Group
shall be allowed travel expenses, including per diem in lieu
of subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of
business in the performance of services for the Advisory
Group.
(c) Staff.--
(1) In general.--The Chairperson of the Advisory Group may,
without regard to the civil service laws and regulations,
appoint and terminate an executive director and such other
additional personnel as may be necessary to enable the
Advisory Group to perform its duties. The employment of an
executive director shall be subject to confirmation by the
Advisory Group.
(2) Compensation.--The Chairperson of the Advisory Group
may fix the compensation of the executive director and other
personnel without regard to the provisions of chapter 51 and
subchapter III of chapter 53 of title 5, United States Code,
relating to classification of positions and General Schedule
pay rates, except that the rate of pay for the executive
director and other personnel may not exceed the rate payable
for level V of the Executive Schedule under section 5316 of
such title.
(d) Detail of Government Employees.--Any Federal Government
employee may be detailed to the Advisory Group without
compensation in addition to that received for service as an
employee of the United States, and such detail shall be
without interruption or loss of civil service status or
privilege.
(e) Procurement of Temporary and Intermittent Services.--
The Chairperson of the Advisory Group may procure temporary
and intermittent services under section 3109(b) of title 5,
United States Code, at rates for individuals which do not
exceed the daily equivalent of the annual rate of basic pay
prescribed for level V of the Executive Schedule under
section 5316 of such title.

SEC. 205. FUNDING.

The Secretary of Health and Human Services shall provide to
the Advisory Group, out of funds otherwise available to such
Secretary, such sums as are necessary to carry out the
purposes of the Advisory Group under this title.

SEC. 206. APPLICABILITY OF FEDERAL ADVISORY COMMITTEE ACT.

Section 14 of the Federal Advisory Committee Act (5 U.S.C.
App.) shall not apply to the Advisory Group.
TITLE III--FEDERAL ADVISORY COUNCIL FOR EMERGENCY AMBULANCE SERVICES

SEC. 301. DEFINITION.

As used in this title, the term ``emergency ambulance
services''--
(1) means resources used by a qualified public, private, or
nonprofit entity to deliver medical care under emergency
conditions--
(A) that occur as a result of the condition of a patient;
or
(B) that occur as a result of a natural disaster or similar
situation; and
(2) includes services delivered by an emergency ambulance
employee that is licensed or certified by a State as an
emergency medical technician, a paramedic, a registered
nurse, a physician assistant, or a physician.

SEC. 302. ESTABLISHMENT OF ADVISORY COUNCIL.

(a) Establishment.--There is established an advisory
council to be known as the Federal Advisory Council for
Emergency Ambulance Services (in this title referred to as
the ``Advisory Council'').
(b) Membership.--
(1) Composition.--The Advisory Council shall be composed of
23 members, of whom--
(A) 1 shall be a member of the International Fire Chief's
Association, appointed by the President from nominations
submitted by the Executive Director of the International Fire
Chief's Association;
(B) 1 shall be a member of the International Association of
Firefighters, appointed by the President from nominations
submitted by the general president of the International
Association of Firefighters;
(C) 1 shall be a member of the American Ambulance
Association, appointed by the President from nominations
submitted by the executive vice president of the American
Ambulance Association;
(D) 1 shall be a member of the National Association of
Emergency Medical Services Physicians, appointed by the
President from nominations submitted by the executive
director of the National Association of Emergency Medical
Services Physicians;
(E) 4 shall be appointed by the President, of whom--
(i) 1 shall be a representative of a volunteer ambulance
service;
(ii) 1 shall be a representative of a hospital-based
ambulance service;
(iii) 1 shall be a representative of a private ambulance
service; and
(iv) 1 shall be a representative of an air ambulance
service;
(F) 1 shall be an individual who is appointed by the
Majority Leader of the Senate;
(G) 1 shall be an individual who is appointed by the
Minority Leader of the Senate;
(H) 1 shall be an individual who is appointed by the
Speaker of the House of Representatives;
(I) 1 shall be an individual who is appointed by the
Minority Leader of the House of Representatives;
(J) 2 shall be employees of the Occupational Safety and
Health Administration, appointed by the Secretary of Labor;
(K) 1 shall be an employee of the United States Coast
Guard, appointed by the Secretary of Transportation;
(L) 2 shall be employees of the National Transportation
Safety Board, appointed by the chairman of the National
Transportation Safety Board;
(M) 2 shall be employees of the National Highway Traffic
Safety Administration of the Department of Transportation,
appointed by the Secretary of Transportation;
(N) 2 shall be employees of the Federal Emergency
Management Agency, appointed by the Director of the Federal
Emergency Management Agency; and
(O) 2 shall each be a member of a governing body of an
Indian tribe (as that term is defined in section 4(e) of the
Indian Self-Determination and Education Assistance Act (25
U.S.C. 450b(e)).
(2) Additional requirements.--
(A) Geographical representation and urban and rural
representation.--In making appointments of members under
paragraph (1), the appointing officials described in such
paragraph shall, through consultation and collaboration with
each other, select--
(i) members who are geographically representative of the
United States; and
(ii) members who are representative of rural areas and
urban areas.
(B) Special rule.--The appointing officials described in
subparagraph (A) shall ensure that, of the members
appointed--
(i) 11 shall be representative of rural areas;
(ii) 11 shall be representative of urban areas; and
(iii) 1 shall be representative of a rural area or an urban
area, as provided for in subparagraph (C).
(C) Alternate representation.--The appointing officials
described in subparagraph (A) shall appoint members under
subparagraph (B)(iii) by alternating between a member
representing a rural area and a member representing an urban
area.
(3) Date.--The appointments of the members of the Advisory
Council shall be made not later than January 1, 1998.
(c) Period of Appointment; Vacancies.--
(1) Period of appointment.--Members shall be appointed for
a term of 4 years.
(2) Vacancy.--
(A) In general.--Any vacancy in the Advisory Council shall
not affect the powers of the Advisory Council, but shall be
filled in the same manner as the original appointment.
(B) Filling unexpired terms.--An individual chosen to fill
a vacancy under this paragraph shall be appointed for the
unexpired term of the member replaced.
(d) Initial Meeting.--Not later than 30 days after the date
on which all members of the Advisory Council have been
appointed, the Advisory Council shall hold its first meeting.
(e) Meetings.--The Advisory Council shall meet at the call
of the Chairperson.
(f) Quorum.--A majority of the members of the Advisory
Council shall constitute a quorum, but a lesser number of
members may hold hearings.
(g) Chairperson and Vice Chairperson.--The Advisory Council
shall select a Chairperson and Vice Chairperson from among
the members of the Advisory Council.

SEC. 303. DUTIES OF THE ADVISORY COUNCIL.

(a) Study.--
(1) In general.--The Advisory Council shall conduct a study
of--
(A) the workplace conditions and safety requirements with
regard to employees who provide emergency ambulance services,
including a review of the emergency ambulance services
regulations and standards promulgated by the Secretary of
Labor through the Occupational Safety and Health
Administration;
(B) the emergency management planning functions of the
Federal Emergency Management Agency; and
(C) the transportation-related functions of the Department
of Transportation related to the provision of emergency
ambulance services, including--
(i) the functions carried out under the Intelligent
Vehicle-Highway Systems Act of 1991 (part B of title VI of
the Intermodal Surface Transportation Efficiency Act of 1991,
Public Law 102-240); and
(ii) any other issue related to the provision of emergency
ambulance services that the Secretary of Transportation
recommends for study by the Advisory Council.
(2) Interpretation of data.--As part of the study conducted
under this subsection, the Advisory Council shall use and
interpret the data collected by the Office of Emergency
Medical Services Data Collection of

[[Page S874]]

the Department of Transportation established under section
402.
(b) Recommendations.--The Advisory Council shall develop
recommendations with regard to--
(1) the improvement of workplace conditions of employees
who provide emergency ambulance services;
(2) the appropriate application by the Occupational Safety
and Health Administration of occupational safety and health
standards and regulations to employees who are employed to
provide emergency ambulance services; and
(3) addressing the issues, and improving the functions,
referred to in subparagraphs (B) and (C) of subsection
(a)(1).
(c) Report.
(1) Submission of report to agency officials.--Not later
than 2 years after the date of enactment of this Act and
annually thereafter, the Advisory Council shall prepare and
submit to the Secretary of Labor, the Secretary of Commerce,
and the Director of the Federal Emergency Management
Administration a report that includes--
(A) a detailed statement of the results of the matters
studied by the Advisory Council under subsection (a); and
(B) the recommendations of the Advisory Council developed
under subsection (b).
(2) Submission of report to congress.--Not later than 2
years after the date of enactment of this Act and annually
thereafter, the Advisory Council shall prepare and submit to
the appropriate committees of Congress the report described
in paragraph (2).

SEC. 304. POWERS OF THE ADVISORY COUNCIL.

(a) Hearings.--The Advisory Council may hold such hearings,
sit and act at such times and places, take such testimony,
and receive such evidence as the Advisory Council considers
necessary to carry out the purposes of this title.
(b) Information From Federal Agencies.--The Advisory
Council may secure directly from any Federal department or
agency such information as the Advisory Council considers
necessary to carry out the provisions of this title. Upon
request of the Chairperson of the Advisory Council, the head
of such department or agency shall furnish such information
to the Advisory Council.
(c) Postal Services.--The Advisory Council may use the
United States mails in the same manner and under the same
conditions as other departments and agencies of the Federal
Government.
(d) Gifts.--The Advisory Council may accept, use, and
dispose of gifts or donations of services or property.

SEC. 305. ADVISORY COUNCIL PERSONNEL MATTERS.

(a) Compensation of Members.--Members of the Advisory
Council shall receive no additional pay, allowances, or
benefits by reason of the service of the members on the
Advisory Council.
(b) Travel Expenses.--The members of the Advisory Council
shall be allowed travel expenses, including per diem in lieu
of subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from the homes or regular places of business
of the members in the performance of services for the
Advisory Council.
(c) Staff.--
(1) In general.--The Chairperson of the Advisory Council
may, without regard to the civil service laws and
regulations, appoint and terminate an executive director and
such other additional personnel as may be necessary to enable
the Advisory Council to perform the duties of the Advisory
Council. The employment of an executive director shall be
subject to confirmation by the Advisory Council.
(2) Compensation.--The Chairperson of the Advisory Council
may fix the compensation of the executive director and other
personnel without regard to the provisions of chapter 51 and
subchapter III of chapter 53 of title 5, United States Code,
relating to classification of positions and General Schedule
pay rates, except that the rate of pay for the executive
director and other personnel may not exceed the rate payable
for level V of the Executive Schedule under section 5316 of
such title.
(d) Detail of Government Employees.--Any Federal Government
employee may be detailed to the Advisory Council without
compensation in addition to that received for service as an
employee of the United States, and such detail shall be
without interruption or loss of civil service status or
privilege.
(e) Procurement of Temporary and Intermittent Services.--
The Chairperson of the Advisory Council may procure temporary
and intermittent services under section 3109(b) of title 5,
United States Code, at rates for individuals which do not
exceed the daily equivalent of the annual rate of basic pay
prescribed for level V of the Executive Schedule under
section 5316 of such title.

SEC. 306. FUNDING.

The Secretary of Labor, the Secretary of Commerce, and the
Director of the Federal Emergency Management Agency shall
provide to the Advisory Council, out of funds otherwise
available to such agency heads, such sums as are necessary to
carry out the purposes of the Advisory Council under this
title.

SEC. 307. APPLICABILITY OF FEDERAL ADVISORY COMMITTEE ACT.

Section 14 of the Federal Advisory Committee Act (5 U.S.C.
App.) shall not apply to the Advisory Council.
TITLE IV--DATA COLLECTION AND ADMINISTRATION BY DEPARTMENT OF COMMERCE

SEC. 401. PROPOSAL FOR TRANSFER OF CERTAIN EMERGENCY MEDICAL
SERVICES FUNCTIONS.

(a) Proposal.--
(1) In general.--Not later than 180 days after the date of
enactment of this Act, the Secretary of Transportation, in
consultation with the Secretary of Health and Human Services
and the Chairman of the National Transportation Safety Board,
shall develop a proposal for transferring to the National
Highway Traffic Safety Administration of the Department of
Transportation any transportation-related functions of any
other Federal agency concerning emergency medical services,
other than the functions referred to in paragraph (2).
(2) Exceptions.--The proposal prepared under paragraph (1)
shall not provide for the transfer of any function--
(A) of the Department of Defense; or
(B) related to a Federal health care program (including the
medicare program under title 18 of the Social Security Act
(42 U.S.C. 1395 et seq.) and the medicaid program under title
19 of the Social Security Act (42 U.S.C. 1396 et seq.)).
(b) Report.--Upon completion of the proposal under
subsection (a), the Secretary of Transportation shall submit
to Congress a report that contains the proposal, together
with any legislative recommendations that the Secretary
determines to be appropriate for carrying out the proposal.

SEC. 402. ESTABLISHMENT OF THE OFFICE OF EMERGENCY MEDICAL
SERVICES DATA COLLECTION.

(a) Establishment.--There is established in the Department
of Transportation an office to be known as the ``Office of
Emergency Medical Services Data Collection'' (referred to in
this section as the ``Office''). The Office shall serve as a
clearinghouse for data collected in accordance with the
regulations promulgated under subsection (c).
(b) Director.--The Secretary of Transportation shall
appoint an individual to serve as the Director of the Office
(referred to in this section as the ``Director'').
(c) Regulations.--
(1) In general.--The Secretary of Transportation, acting
through the Director, and in consultation with the Secretary
of Health and Human Services, the Chairman of the National
Transportation Safety Board, and appropriate representatives
of the agencies of States that have primary responsibility
for regulating emergency medical services, shall promulgate
regulations to establish a uniform data collection
requirement concerning the collection, on a nationwide basis,
of data relating to the provision of emergency medical
services.
(2) Use of existing information services.--In promulgating
the regulations under this subsection, the Secretary of
Transportation shall, to the maximum extent practicable,
provide for the use of information services that are in
existence at the time that the regulations are promulgated,
including State data collection services.
(d) State Defined.--As used in this section, the term
``State'' means each of the several States of the United
States, the District of Columbia, and the territories and
possessions of the United States.
______

By Mr. DASCHLE (for himself, Mr. Johnson, Mr. Conrad, Mr. Dorgan,
Mr. Baucus, Mr. Harkin and Mr. Kerrey):
S. 239. A bill to amend the Internal Revenue Code of 1986 relating to
the treatment of livestock sold on account of weather related
conditions; to the Committee on Finance.

INVOLUNTARY CONVERSION OF LIVESTOCK LEGISLATION

Mr. DASCHLE. Mr. President, today I am reintroducing legislation to
provide equitable treatment under the tax law for farmers and ranchers
who are forced to sell their livestock prematurely due to extreme
weather conditions. I am joined in this effort by Senators Johnson,
Conrad, Dorgan, Baucus, and Harkin.
The last few weeks have seen the most extreme winter weather of the
century in the upper Midwest. Prolonged sub-zero temperatures and back-
to-back blizzards continue to devastate herds of cattle and other
livestock. An estimated 50,000 cattle have died since the beginning of
the year, and countless thousands of other head of livestock are under
extreme stress. The President declared the region a national disaster
area on January 10.
A few summers ago, Midwestern States suffered severe floods, which
devastated lives and property along these States' rivers and
shorelines. President Clinton responded quickly by providing disaster
assistance, $2.5 billion, including $1 billion for agriculture, in
emergency aid to flooded areas in the Midwest.
In addition to receiving disaster payments, many farmers were able to
take advantage of provisions in the Internal Revenue Code designed
primarily to spread out the impact of taxes on farmers in these
situations. Ironically, however, while farmers who lose their

[[Page S875]]

crops due to floods are covered under these provisions, farmers who
must involuntarily sell livestock due to flood and other extreme
weather conditions, are not.
Normally, a taxpayer who uses the cash method of accounting, as most
farmers do, must report income in the year in which he or she actually
receives the income. The Tax Code, however, outlines certain exceptions
to this rule where disaster conditions generate income to the farmer
that otherwise would not have been received at that time. For example,
one exception allows farmers who receive insurance proceeds or disaster
payments when crops are destroyed or damaged due to drought, flood, or
any other natural disaster to include those proceeds in income in the
year following the disaster, if that is when the income from the crops
otherwise would have been received.
Two other provisions deal with involuntary conversion of livestock.
The first provision enables livestock producers who are forced to sell
herds due to drought conditions to defer tax on any gain from these
sales by reinvesting the proceeds in similar property within a 2-year
period. The second provision allows livestock producers who choose not
to reinvest in similar property to elect to include proceeds from the
sale of the livestock in taxable income in the year following the sale.
For no apparent reason, the two provisions dealing with livestock do
not mention the situation where livestock is involuntarily sold due to
flooding, blizzards, or other extreme conditions. Thus, these weather
emergencies do not trigger the benefits of those provisions. Yet, many
livestock producers are currently being compelled to sell livestock
because they are under stress, just as they were forced to by the
floods the other year to sell their animals because the crops necessary
to feed the livestock and the fences for containing them had been
washed out.
Our proposal would expand the availability of the existing livestock
tax provisions to include involuntary conversions of livestock due to
flooding and other extreme, weather related conditions. This would
conform the treatment of crops and livestock in this respect.
Last Congress, I introduced this bill in the Senate as S. 109, and my
colleague, Senator Johnson, introduced a companion measure in the
House--H.R. 1588--when he was a Member of that body. Similar
legislation was passed by Congress as part of the Revenue Act of 1992.
Unfortunately, that legislation was subsequently vetoed for unrelated
reasons. The Department of the Treasury testified in support of the
change in the last Congress. In 1995, the Joint Committee on Taxation
estimated the revenue loss from my bill to be $17 million over 6 years.
Let me emphasize that the tax provisions we are dealing with here
affect the timing of tax payments, not forgiveness of tax liability.
The distinguished Governor of South Dakota, William Janklow, called me
a few days ago and emphasized how important it would be for Congress to
make this change as soon as possible. I hope my colleagues will agree
that we should not shut out some farmers--livestock producers--from the
disaster related provisions of the Tax Code simply because the natural
disaster involved was severe winter conditions or a flood instead of a
drought. That just doesn't make sense.
The American Farm Bureau Federation and the National Farmers Union
have endorsed the bill. I urge my colleagues to give it favorable and
early consideration.
Mr. President, I ask 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. 239

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

SECTION 1. TREATMENT OF LIVESTOCK SOLD ON ACCOUNT OF WEATHER-
RELATED CONDITIONS.

(a) Deferral of Income Inclusion.--Subsection (e) of
section 451 of the Internal Revenue Code of 1986 (relating to
special rules of proceeds from livestock sold on account of
drought) is amended--
(1) by striking ``drought conditions, and that these
drought conditions'' in paragraph (1) and inserting
``drought, flood, or other weather-related conditions, and
that such conditions''; and
(2) by inserting ``, Flood, or Other Weather-Related
Conditions'' after ``Drought'' in the subsection heading.
(b) Involuntary Conversions.--Subsection (e) of section
1033 of such Code (relating to livestock sold on account of
drought) is amended--
(1) by inserting ``, flood, or other weather-related
conditions'' before the period at the end thereof; and
(2) by inserting ``, Flood, or Other Weather-Related
Conditions'' after ``Drought'' in the subsection heading.
(c) Effective Date.--The amendments made by this section
shall apply to sales and exchanges after December 31, 1996.

Mr. DORGAN. Mr. President, I'm pleased to join Senator Daschle and
others in reintroducing legislation to bring much-needed tax relief to
family farmers and ranchers whose businesses have suffered from unduly
harsh weather conditions in the Upper Midwest this winter.
Livestock producers in North Dakota and other States in the Northern
Plains have been facing unusually extreme conditions during this
winter. North Dakota has experienced at least a half-dozen blizzards,
winds of up to 50 miles per hour, and wind chills of near 80 below
zero.
Our livestock producers have had great difficulty in moving snow and
keeping paths open to both feed and livestock. Our interstate highways
have been closed seven times this winter so it is easy to imagine the
difficulties that our rural people have had in keeping township roads
open and usable.
Some are beginning to compare this winter to the infamous winter of
1886 which nearly wiped out the cattle industry on the Northern Plains.
That was the year in which Teddy Roosevelt lost his cattle herd on his
ranch in the North Dakota badlands.
When this winter is over, we will be able to make some judgments as
to whether this winter will be another of those history-making times
which will haunt the memories of another generation of farmers and
ranchers in the Dakotas.
But right now, we need to do everything possible to ease the burdens
that our livestock producers are facing. The U.S. Department of
Agriculture has been working very hard to get workable programs to help
producers get to their livestock and feed. They have also been working
on the longer range problem of helping ranchers and farmers with the
extra feed supplies that are needed to get these cattle through the
winter.
While USDA has had some problems in getting those programs on the
ground, we certainly appreciate the Department's efforts especially
when we consider the limited tools that are currently available to
them. It should be noted that the Emergency Livestock Feed Assistance
program that would normally have been available for such a situation
was suspended by the 1996 farm law. This has put USDA in a position of
having very limited resources and authorities for this emergency.
Compounding the problems of our livestock producers have been the
very low cattle prices that have come from a combination of being at
the bottom of a cattle pricing cycle together with record levels of
concentration in the marketplace.
Our producers have had a hard time maintaining their herds even
without this winter emergency. That is why it is extremely important
that we help them through this time period.
Some of our producers are making the choice to either sell their
cattle altogether or reduce the size of their herd, rather than to
continue to maintain them at high costs and high risk.
Unfortunately our current tax laws hinder such sales in the case of
most weather-related disasters except for drought. If a farmer or
rancher is forced to sell cattle or other livestock prematurely this
winter, they will be burdened with a large tax bill. There is no
provision at present for tax deferral of gains on involuntary
conversions of livestock for severe winter conditions. The Tax Code
allows for such deferrals only for drought conditions.
In the last session of Congress, I cosponsored legislation with
Senator Daschle that would have expanded this tax provision to respond
to a variety of severe weather conditions.
Our legislation would allow a farmer or rancher to defer paying taxes
on the proceeds of an involuntary sale of livestock due to severe
weather-related emergencies if he reinvests the proceeds in similar
property down the

[[Page S876]]

road. A farmer or rancher who decides not to reinvest the proceeds
under these circumstances may elect to report the proceeds from the
sale on the next year's tax return. This legislation, which is
supported by the Administration, builds upon similar provisions in the
Tax Code which is provided in the case of forced livestock sales due to
drought.
Initial estimates following the January 10th blizzard across our
State indicated that about 2,000 livestock producers were selling
nearly 35,000 additional cattle as a result of that storm. The weekly
reports from the North Dakota Agricultural Statistics Service indicate
that cattle sales continue to be more than 20 percent above normal in
the State.
This legislation will give these producers an additional tool in
managing their operations so that these involuntary conversions do not
impose additional financial hardships upon them.
Again I am pleased to once again cosponsor this legislation with
Senator Daschle to help our producers meet the unusual conditions of
this winter. I urge my colleagues to join us in this effort.
______

By Mr. McCAIN:

S. 240. A bill to provide for the protection of books and materials
of the Library of Congress, and for other purposes; to the Committee on
Rules and Administration.

THE LIBRARY OF CONGRESS BOOK PROTECTION ACT

Mr. McCAIN. Mr. President, today I am introducing legislation
to help protect the valuable resources of the Library of Congress. The
Library of Congress Protection Act will help the Library of Congress
stop abuses of its free book loan program by authorizing the Library to
impose fines for books that are long overdue.
I am introducing this legislation to empower Library of Congress
officials to crack down on individuals who seriously abuse their
Library privileges, by keeping books too long or failing to return
them. Library of Congress officials should not have to tolerate the
fact that many individuals are apparently unconcerned about returning
the books that taxpayers provide for them. Congress should not prevent
the Library from instituting strengthened policies to hold severely
delinquent borrowers responsible for their tardiness.
This legislation will enable the Library of Congress to implement a
reasonable overdue book charge policy similar to those of most public
libraries across America. By doing so, the many Members of Congress,
congressional staffers, and executive branch employees who benefit from
this magnificent institution will have an added incentive to comply
with the generous loan policies of the Library of Congress.
This proposal is very basic, but it will afford Library officials the
leverage and flexibility they need to address this problem. This bill
will help Library of Congress officials keep better track of their
resources, and will spur many delinquent borrowers to return the books
that taxpayers provide for them completely free of charge.
The Library of Congress Book Protection Act would direct the Library
to implement an overdue book charge policy for books improperly held
over 70 days. These individuals or offices will have their privileges
suspended until their fines are paid in full. Library of Congress
officials will, however, be able to waive such penalties when
appropriate. The Library would also be authorized to retain the funds
received from late book fines, as well. Finally, the offices of
severely delinquent borrowers and the fines they owe will be published
in the annual report submitted by the Library to its oversight
committees.
While figures for the 104th Congress have not been published yet,
preliminary data shows that as of December 28, 1996, over 2,200 books
were over 30 days overdue. Figures published by the Library during the
103d Congress showed that out of the 20,000 books that were out on
loan, over one-third were listed as overdue. One half of the 4,200
books on loan to congressional staff and the media were listed as
overdue, and 1 in 5 books out on loan to Members, committees, and
congressional support agencies had been overdue for more than 2 months.
Library of Congress officials state that over 300,000 books are missing
from their collections dating back to 1978, and the estimated cost of
these thefts is $12 million.
I am concerned about the fact that it is all too easy for individuals
to disregard their responsibility to return books to the Library of
Congress in a timely manner. This negligence is not only unfair to the
other users of the Library, but it also drains the Library's resources
in chasing down overdue or missing books.
In addition to Members of Congress and congressional staff, the
Library of Congress also makes loans to executive branch departments
and agencies, the judiciary and diplomatic corps, the press, and other
institutions. As I have mentioned, Mr. President, the Library of
Congress is barred from charging late fees for overdue books in
contrast to virtually every other publicly funded library in America.
Furthermore, the Library cannot retain any funds that might be
collected due to the loss or damage of loaned books. It's clearly time
to change these unwise restrictions and strengthen the Library's
ability to protect its resources, and I hope Members of the Senate will
support this legislation to do so.
Surely, it's not asking too much of the individuals and offices
fortunate enough to use the Library of Congress to do so in a
responsible manner. Even under the new borrowing guidelines that would
be instituted by this legislation, there really is no reason for any
well-intentioned borrower ever to have to pay late fines or have their
privileges suspended. I'm optimistic that the mere specter of having to
pay overdue book fines will coax delinquent borrowers into
responsibility renewing their book loans or returning the books.
I hope that the Senate will adopt this legislation to implement
prudent new guidelines in the book loan policies of the Library of
Congress.
_____

By Mr. McCAIN:
S. 241. A bill to amend the Internal Revenue Code of 1986 to allow a
family-owned business exclusion from the gross estate subject to estate
tax, and for other purposes; to the Committee on Finance.

THE AMERICAN FAMILY-OWNED BUSINESS ACT

Mr. McCAIN. Mr. President, I rise today to introduce the
American Family-Owned Business Act--a bill that will preserve the
American family businesses and save jobs across the country. This bill
cuts estate tax rates in half and also creates a new exclusion that
completely eliminates the estate tax for small businesses. Under the
new exclusion, family-owned businesses can exempt up to $1.5 million of
family business assets from their estate. If a family business is
valued at more than $1.5 million, the excess is taxed at one-half of
the current rates--thus providing a maximum tax rate of 27.5 percent.
This legislation was introduced in the last Congress by my good
friend, the former majority leader, Bob Dole. Although this legislation
was included in S. 2, The Family Tax Relief Act, I feel so strongly
about the need for estate tax relief for family-owned businesses and
farmers that I felt it was necessary to introduce this legislation on
its own.
The current Federal estate tax is just too burdensome on the American
family. Time and time again, farmers and other business owners across
the country have told me that estate tax rates are just too high. They
rise quickly from 18 to 55 percent, effectively making the Government a
50-50 partner in a family business.
Even the most sophisticated estate tax planning and the purchase of
life insurance cannot sufficiently mitigate the effects of these high
rates, leaving families no recourse but to sell their businesses to pay
the estate tax. This bill will stop these forced sales from happening
again.
I agree with many who say that estate tax rates should be reduced
across the board, or repealed entirely. I applaud my colleague, Senator
Kyl, who is leading the effort to repeal the estate tax. And I hope
that we do that some day. But given our current budget crisis, we will
likely have to take an incremental approach on the estate tax. This
legislation takes an important step in that direction.
This legislation will protect and preserve family enterprises. We
know too

[[Page S877]]

well the adverse impact of an estate tax-forced sale. The family loses
its livelihood, the family business employees lose their jobs, and the
community suffers.
We must do all that we can to help family-owned businesses not only
survive, but also prosper. They are the job creators in this country.
In the 1980's alone, family businesses accounted for an increase of
more than 20 million private-sector jobs.
By relieving families of the burden of the estate tax and letting
them keep their businesses, they can continue to prosper. And when
families continue to operate their businesses, we all benefit--the
business' employees keep their jobs, the government receives income
taxes on business profits, and the families retain their livelihood.
The bill requires heirs to participate in the family business. These
participation rules are deliberately flexible and recognize that
different family businesses need differing levels of participation by
heirs.
The estate tax is not a Democratic or a Republican problem, or one
that affects only rural or urban families. There are farmers, ranchers,
or other family businesses in each State that would benefit from this
legislation.
This bill provides the critical relief needed for American families'
businesses. I urge my colleagues to support this effort, and I hope
that Congress will act expeditiously on this important
legislation.
______

By Mr. McCAIN:
S. 242. A bill to require a 60-vote supermajority in the Senate to
pass any bill increasing taxes; to the Committee on the Budget and the
Committee on Governmental Affairs, jointly, pursuant to the order of
August 4, 1977, with instructions that if one committee reports, the
other committee have 30 days to report or be discharged.

Tax Fairness and Accountability Act of 1996

Mr. McCAIN. Mr. President I introduce legislation entitled the
``Tax Fairness and Accountability Act of 1997.'' This legislation
requires a supermajority vote in the Senate in order to raise taxes and
eliminates the 60-vote Congressional Budget Act point of order against
reducing taxes. A supermajority vote requirement is the strongest
possible defense for this body's spending excesses. By requiring 60
votes in the Senate to approve a tax increase rather than a simple
majority, we will ensure that Congress does not balance the budget on
the backs of taxpayers.
Although our national debt currently stands at over $5.3 trillion,
Congress' insatiable appetite for spending has not diminished. Our
inability to reach a balanced budget for the past 28 years is not due
to undertaxation but rather over spending. It is time that we place
limits on the ability of government to casually dip into the pockets of
an already overtaxed citizenry.
According to the Tax Foundation, Americans spend more on their tax
bill than food, shelter and clothing combined. This is simply
outrageous. The American people cannot afford to be taxed anymore.
Arizonans, for example, had to work until almost the beginning of May
to pay their tax bill. Today nearly 40 percent of the American family's
paycheck goes toward some kind of tax.
There have been numerous studies that show when Congress increases
taxes it increases spending by a greater amount. One study by the Joint
Economic Committee, showed that for every dollar that was raised in
taxes, Congress spent $1.16. Thus, the deficit reduction claimed by
those who support raising taxes is lost. The 1990 budget debacle is the
best example of Congress' chronic disease called tax and spend. Under
the 1990 budget deal Congress was supposed to cut spending but of
course it never did. The tough spending caps that were put in place
under this agreement, were raised by Congress in order to satisfy their
insatiable appetite for spending. We must do everything in our power to
find a remedy for this disease. The supermajority vote requirement is
the first dose of the medicine.
This legislation is so important because politicians have forgotten
whose money they are spending in Washington. Americans work very hard
for the money they earn and send to Washington. Again and again studies
show that people are working harder for less and are spending more time
at work. In many families one or both parents must work two and three
jobs just to make ends meet, leaving less and less time for family.
Congress needs to take heed of these facts and recognize that families
all across America are being forced to tighten their belts as the tax
man continues to take an evergrowing portion of their money. Balancing
the budget should require Congress to tighten their belt by reducing
spending, not by asking Americans to pay more. I hope the Senate will
act quickly on this important legislation.
By Mr. McCAIN (for himself, Mr. Hollings, Mr. Ford, and Mr.
Gorton):
S. 243. A bill to provide for a short term reinstatement of expired
Airport and airway trust fund taxes, and for other purposes; to the
Committee on Finance.

REINSTATEMENT OF THE AVIATION EXCISE TAXES

Mr. McCAIN. Mr. President, I rise today to introduce a bill,
cosponsored by Senators Hollings and Ford, to reinstate the aviation
excise taxes until September 29, 1997.
On December 31, 1996, the aviation excise taxes expired. The aviation
excise taxes include a 10-percent passenger ticket tax, a 6.25-percent
freight waybill tax, a $6 per person international departure tax, and
fuel taxes imposed upon general aviation aircraft. These taxes were the
principal source of revenues for the airport and airway trust fund,
which funds most of the budget of the Federal Aviation Administration
[FAA] and all of the FAA capital programs.
Recent estimates by the General Accounting Office [GAO] and the FAA
indicate that, unless the excise taxes are reinstated, the trust fund
will be out of available moneys by March or April of this year. The FAA
will have to terminate spending on its capital programs--the safety and
security enhancements that we have worked so hard to institute.
It is unconscionable to allow the FAA to go without money that is
absolutely essential to fund the safety and security programs of the
national air transportation system.
The current estimates of when the trust fund will be out of available
money--which I just learned today--are much more dire than originally
anticipated. There are several reasons for the unexpected worsening of
the FAA's fiscal situation.
The Treasury Department may have mistakenly credited the trust fund
with $1.5 billion. Under normal circumstances, there is a gap in the
time between the collection of taxes on airline tickets and the payment
of those taxes into the Treasury by the airlines. In addition, those
taxes are first paid into the general fund before being credited to the
trust fund. When the aviation excise tax expired, so did the authority
to transfer the revenues from the general fund to the trust fund.
The result of this process is that billions in tax revenues from 1996
are not paid to Treasury until 1997. Because those revenues cannot be
transferred out of the general fund, the trust fund may have far less
money than originally estimated. The trust fund could be out of
available money by March, with curtailment of spending beginning even
before that time because of the stringent provisions of the Anti-
Deficiency Act.
On one particular point, I want to be very clear--the taxes should
not be extended for more than a few months. We have a process in place
to explore alternative long-term funding mechanisms to ensure the
fiscal viability of the FAA and its important safety and security
missions. Until the results of those studies are available and
alternative mechanisms are in place, we must ensure that adequate
funding is provided for these programs.
These taxes were allowed to expire at the end of last December so
that reinstatement of the taxes would count for new revenues which can
be used to offset tax cuts or spending in other parts of the Federal
budget. Playing budget games with these excise taxes is simply
deplorable. The excise taxes paid by the users of the national air
transportation system must be dedicated to that system.
Mr. President, if the situation was dangerous before, it has now
reached a very critical point. We must not delay any longer. Therefore,
I am introducing this bill to take immediate action

[[Page S878]]

to begin the process of reinstating the aviation excise taxes until
September 29, 1997. I will work closely with Senators Lott and Daschle
to ensure early Senate action on this vitally important measure, so
that the safety of our airline transportation system is not adversely
affected.
Mr. HOLLINGS. Mr. President, I rise today in support of extending the
aviation ticket tax through the end of fiscal year 1997. This tax is
very important to the day-to-day operation of our Nation's aviation
system. Money to improve, maintain, and run our airports is 100 percent
supported by fees paid by the users of the air transportation system.
It is not paid for by the taxes we all pay on April 15. Every time they
fly, people have been paying the user fees in the form of a ticket tax.
That money has been going into the airport and airway trust fund, and
the money is then disbursed through the appropriations process. We tell
people to pay these fees, and we tell them we will then spend it on
airports.
However, there is one small problem. The ticket tax expired at the
end of 1996. Due to budget games, the money that we thought would be in
the trust fund is not there. Originally we were advised that the trust
fund would be broke in July, but now it appears that it will be
depleted as early as March. If this situation is not corrected,
millions of dollars in airport modernization projects, aviation safety
enhancements, and airport security efforts will have to be delayed or
terminated. The obvious answer to this untenable situation is to
reinstate the aviation ticket tax, and that is why I am cosponsoring
Senator McCain's bill. I urge my fellow colleagues to quit playing
budget games and start fulfilling Government's primary function--
preserving the safety of the American people.
Mr. FORD. Mr. President, today I join my colleagues in cosponsoring a
bill to reinstate the aviation ticket tax through September 29, 1997.
This tax goes directly into the aviation trust fund. The tax has
already expired and we cannot allow the trust fund to go broke. If that
occurs, then it will be very difficult for us to continue to maintain
the safety and security initiatives that are needed in order to secure
and ensure the safety of our aviation system.
I do not need to remind my colleagues of the importance of aviation
safety. Over the past year, we have seen too many headlines which have
underscored the need for a safe and secure aviation system. I urge my
colleagues to act expeditiously on this very important matter.
Mr. GORTON. Mr. President, on January 1, 1997, the aviation system in
the United States received a serious blow when the aviation excise
taxes lapsed. Together, these taxes--the 10-percent passenger ticket
tax; the 6.25-percent cargo waybill tax; the $6.00 per person
international departure tax; and certain general aviation fuel taxes--
account for more than 90 percent of the revenues in the airport and
airway trust fund, which funds the Federal Aviation Administration and
its programs.
Without the collection of these revenues, the uncommitted balance of
the airport and airway trust fund is quickly being depleted. In fact,
it is running dry at a rate of $175 per second --more than $15 million
every day. Yesterday, officials at the Department of the Treasury
announced that if no action is taken to reimpose these taxes, the trust
fund could be insolvent as early as March.
For this reason, I am pleased to join my colleagues, Senators McCain,
Hollings, and Ford, in sponsoring the Airport and Airway Trust Fund
Taxes Short Term Reinstatement Act. This legislation will extend the
existing system of aviation excise taxes through September 29, 1997,
and give Internal Revenue Service authority to transfer previously
collected aviation excise taxes into the airport and airway trust fund.
The numerous aviation tragedies in 1996 have, I believe, lowered the
public's confidence in the safety of the U.S. aviation system. While
our system continues to be the safest aviation system in the world,
Congress owes it to the American people to consider this legislation as
quickly as possible to ensure aviation safety, security, and capital
investment are not jeopardized in any manner.
______

By Mr. McCAIN:
S. 244. A bill to amend the Internal Revenue Code of 1986 to repeal
the increase in the tax on Social Security benefits; to the Committee
on Finance.

THE SENIOR CITIZENS' EQUITY ACT

Mr. McCAIN. Mr. President, I introduce legislation that repeals the
increase in tax on Social Security benefits. The Omnibus Budget
Reconciliation Act of 1993 increased the taxable proportion of Social
Security benefits from 50 to 85 percent for Social Security recipients
whose threshold incomes exceed $34,000--(single)--and $44,000--
(couples). The legislation I am introducing today simply phases out
this increase gradually over a 4-year period. In 1997, the applicable
percentage would be 75 percent; in 1998, 65 percent; in 1999, 60
percent; in 2000, 55 percent; and finally in 2001, the taxable
percentage would return to 50 percent.
I believe the increase in the taxable portion of Social Security
benefits was blatantly unfair because it changed the rules in the
middle of the game. Responsible senior citizens who had carefully
planned for their retirement were penalized and saw their income fall
while their marginal tax rate skyrocketed. Nearly 9,000 seniors
representing 23.4 percent of recipients are affected by this provision.
These Seniors relied on, and based their decisions on, the old law, and
they have no recourse to go back in time to change their decisions
based on the new law.
Clearly, we should be encouraging all Americans to save and invest
for the future. We can no longer expect that Social Security benefits
will take care of all our retirement needs. If Congress continues to
change the rules after plans and investment decisions have been made,
we will diminish the incentive for Americans to prepare for the future
and plan accordingly.
I am consistently amazed by the perverse disincentives Congress
enacts. Aside from being patently unfair, taxing 85 percent of Social
Security benefits above the current income levels creates a tremendous
disincentive for affected seniors to work. It simply doesn't make sense
to work if every dollar you earn over the threshold drastically reduces
your Social Security benefits.
I am pleased that this legislation is supported by the National
Committee to Preserve Social Security and Medicare and the Seniors
Coalition. I ask unanimous consent to submit their letters of
endorsement into the Record.
The problems with this additional tax on Social Security benefits are
strikingly similar to the Social Security earnings limit. I am pleased
that Congress finally enacted an increase in the earnings limit last
year and I hope that we will act expeditiously on this legislation.
There being no objection, the letters were ordered to be printed in
the Record, as follows:

The Seniors Coalition,

Fairfax, VA, January 27, 1997.
Hon. John McCain,
U.S. Senate,
Washington, DC.
Dear Senator McCain: On behalf of the 2.4 million members
of The Seniors Coalition, I would like to express our strong
support for your legislation repealing the 1993 increase in
taxes on Social Security benefits. While this legislation is
desirable, total repeal would be preferable.
The arguments you made at the time of introduction are
certainly persuasive. However, they apply as much to a tax on
50 percent of benefits as they do to a tax on 85 percent of
benefits. We understand the arguments in favor of taxes on
some portion of benefits, and recognize the supposed adverse
revenue impacts from total repeal. Accordingly, while The
Seniors Coalition would prefer to see total repeal of all
taxes on Social Security benefits, we do recommend immediate
passage of your bill at least rolling back the 1993 increase.
We will be happy to make this case in public hearings, and
you certainly have permission to use our support to promote
passage of the bill.
Please let us know if there are further steps we can take
to move this legislation to passage.
Sincerely,
Thair Phillips,
Chief Executive Officer.
____

National Committee To Preserve

Social Security and Medicare,

Washington, DC, January 28, 1997.
Hon. John McCain,
U.S. Senate, Russell Senate Office Building, Washington, DC.
Dear Senator McCain: The National Committee to Preserve
Social Security and Medicare welcomes as a major step in the
right direction your legislation to repeal the inequitable
tax increase on Social Security benefits enacted as part of
the 1993 budget reconciliation bill.

[[Page S879]]

The Omnibus Budget Reconciliation Act of 1993 increased the
amount of Social Security benefits subject to tax from 50
percent to 85 percent for individual beneficiaries with
income above $34,000 or for couples with income above
$44,000. The ``Senior Citizens' Equity Act'' would gradually
phase out this increase and return the taxable percentage to
50 percent by the year 2001.
The 1993 tax increase affects not only wealthy seniors but
also middle income seniors. It unfairly penalizes responsible
senior citizens who planned for their retirement through
employment, saving, and investment. Many National Committee
Members need or want to work, but they also deserve to
receive their retirement benefits. Whether the senior works
out of the need for income or the pleasure of working, taxing
85 percent of social security benefits over the current
income thresholds exacts a high price. The increased tax rate
only discourages work and retirement savings.
Moreover, a Price-Waterhouse analysis demonstrated that the
1993 bill targeted seniors by increasing their tax burden
more than non-seniors in every income category--on average
twice as great for senior families as non-senior families.
Middle income seniors experienced a disproportionately large
tax increase under the 1993 bill. For your information, we
are enclosing a summary of the Price-Waterhouse data.
On behalf of older Americans, we thank you for your work to
enact this important legislation.
Sincerely,
Martha A. McSteen,
President.
Enclosure.

Budget Reconciliation Conference Agreement Unfairly Targets America's
Seniors

The table below, compiled by Price-Waterhouse, demonstrates
that the budget reconciliation conference agreement targets
seniors by increasing their tax burden more than non-seniors
in every income category--on average twice as great for
senior families as non-senior families.
Families in the lowest income category will receive a tax
cut of 28.1% while elderly families in the same category will
see a tax increase of 4.6%. Senior families in the second
lowest income category will see a tax increase of 3.8% while
all families in the same category will see a reduction of
1.1%. While seniors in these groups are unaffected by the
increased tax on Social Security benefits, they are affected
by the energy tax and receive little or no assistance from
the earned income tax credit.
Middle income seniors also will see a disproportionately
large tax increase. Seniors with income between $24,000 and
$72,000 will have tax increases that are 2.5 to 6 times
higher than non-senior families without children in
comparable income classes.
Under the conference bill, seniors will face an average
increased tax burden of 7.5%, more than double the 3.5%
increase for non-seniors without children.

PERCENTAGE CHANGE IN FEDERAL TAXES \1\ FROM RECONCILIATION CONFERENCE
BILL BY 2-PERSON FAMILY INCOME CLASSES \2\ BY FAMILY TYPE
[1994 income levels for 1998 proposed tax law]
------------------------------------------------------------------------
Non-
senior
Adjusted family income for 2 persons Senior families All
families w/o families
children
------------------------------------------------------------------------
0-$12,900.............................. 4.6 -4.3 -28.1
$12,901-$23,600........................ 3.8 0.8 -1.1
$23,601-$35,300........................ 2.8 1.0 1.0
$35,301-$53,300........................ 2.3 0.9 1.0
$53.301-$72,000........................ 6.4 1.0 1.4
$$72,000 or more....................... 9.8 6.5 8.4
All.................................... 7.5 3.5 3.8
------------------------------------------------------------------------
\1\ Includes all permanent tax changes in conference agreement and
includes the outlay portion of the earned income tax credit.
\2\ Percentage change in taxes is for all families by family size
adjusted income quintiles. For example, first quindle is for families
with incomes below 145% of the poverty threshold (e.g., a 2 person
family income of less than $12,900).

Source: Congressional Budget Office data complied by Price Waterhouse.
CBO distribution table dated August 2, 1993.

______

By Mr. SARBANES (for himself and Ms. Mikulski):
S. 245. A bill to amend title 28, United States Code, to authorize
the appointment of additional bankruptcy judges for the judicial
district of Maryland; to the Committee on the Judiciary.

JUDGESHIP LEGISLATION

Mr. SARBANES. Mr. President, I rise for myself and my distinguished
colleague from Maryland, Senator Mikulski, to introduce a bill crucial
to the administration of justice and the economy in our State. This
bill provides for two additional bankruptcy judgeships in the Federal
Judicial District of Maryland. A look at the conditions currently
facing Maryland's bankruptcy judges reveals the critical need for these
new judgeships.
Recent years have witnessed a sharp rise in bankruptcy filings
nationwide. Last year, for the first time in our history, filings
during a 12-month period--June 1995-June 1996--exceeded 1 million, a
21.4-percent rise from the prior 12-month period. This trend has many
causes, including greater access to credit, a lagging economy in some
regions, and public and private downsizing. Such sharp increases in
filings strain the ability of bankruptcy judges to administer justice
promptly and effectively, and jeopardize the stabilization of creditor-
debtor relations that is, after all, the goal of bankruptcy law.
No State has been more affected by these trends than Maryland.
Bankruptcies there have quadrupled in the past decade. As filings rise
nationwide, Maryland rates of increase have significantly exceeded
Federal rates. No end appears to be in sight. Maryland filings during
January-November 1996 exceeded State filings during the same period in
1995 by 36 percent; in the July-November 1996 period, State filings
exceeded by 45 percent filings during the same period in 1995.
In 1991, the U.S. Judicial Conference, using a 1990 Federal Judicial
Center time-management study, adopted a case-weighting system for
bankruptcy judges, under which different types of cases were assigned
different degrees of difficulty and overall weighted case-hour goals
were established for the judges. Under this system, the average U.S.
bankruptcy judge has a weighted case-hour load of about 1,250 hours per
year. The Judicial Conference generally does not consider a request for
new bankruptcy judgeships by a Federal judicial district unless the
average case-hour total for the district's judges exceeds 1,500.
Given these yardsticks, the burdens facing the district of Maryland's
bankruptcy judges are truly astounding.
In 1993, the national weighted case-hour average was 1,362 hours; by
contrast, the Maryland average for that year was 59 percent greater--
2,168 hours.
In 1994, the national average was 1,227 hours; the 1994 Maryland
average was 75 percent greater--2,143 hours.
In 1995, the national average was 1,149 hours; the 1995 Maryland
average was 72 percent greater--1,982 hours.
In 1996, the national average was 1,272 hours; the Maryland total for
that year was 75 percent greater--2,230 hours.
So for each of the last 4 years, the average weighted case-hours for
Maryland's bankruptcy judges have exceeded by a wide margin not only
the national average, but also the 1,500-hour yardstick used by the
Judicial Conference to rate requests for additional judges.
Other States have faced temporary overloads, but only Maryland can
claim the dubious distinction of having one of the Nation's most
overworked bankruptcy courts for each of the last 4 years. In fact,
only the District of Maryland has ranked in the top 3 among the 91
Federal judicial districts during each of the 8 biannual evaluations of
bankruptcy judges' case-hours since September 1992.
This situation cries out for remedial action. Recognizing as much,
the Judicial Conference recommended to the 104th Congress that Maryland
receive an additional bankruptcy judgeship. Unfortunately, this
proposal was not enacted into law and, as a result, the problem has
worsened considerably.
I have cited data on increased bankruptcy filings in Maryland during
late 1996. If Maryland received one additional bankruptcy judge
tomorrow, the case-hours per judge in the district would still be
1,784, 141 percent of the national average and well in excess of the
1,500-hour mark used to rate a district's need for new judges.
In fact, even if Maryland received two new bankruptcy judges, its per
judge caseload would still exceed the national average by 18 percent.
To place Maryland at the national average, three additional bankruptcy
judges would be required. Yet this bill adds only two judgeships, the
minimum response according to those most familiar with the problem.
This is the number recommended to the Judicial Conference by the Fourth
Circuit Judicial Council, and I fully expect the Judicial Conference to
include two new Maryland judgeships in its spring recommendations to
Congress.
New judgeships are essential not only for effective judicial
administration,

[[Page S880]]

but also for Maryland's economy. Bankruptcy laws are crafted to foster
orderly, constructive relationships between debtors and creditors
during times of economic difficulty. This in turn results in businesses
being reorganized, jobs--provided by creditors and debtors--preserved,
and debts managed fairly. Overworked bankruptcy courts have a
destabilizing effect on this system.
Consider an example. Bankruptcy law provides debtors temporary relief
from the claims of creditors, allowing the debtor to adopt a
reorganization plan, thereby improving its chances of recovery, and
keeping creditors from cutting in line in front of other creditors who
have priority claims on debtor assets. But the law also allows a court
to grant creditors relief from a stay where the creditor shows that its
claim will not receive adequate protection under normal procedures.
Under this procedure, a court must hold a hearing 30 days after an
application for relief from the stay, or automatically grant relief.

Because of the importance of these hearings, Maryland's bankruptcy
judges routinely set aside 1 day per week to conduct them. One such
judge, on December 6, 1996, had on his calendar 125 motions for relief
from stay, a caseload that obviously precludes these cases from being
fully heard. Thus, creditors seeking to cut in line, to the detriment
of the debtor, other creditors, and the orderly administration of the
bankrupt estate, may file for relief from stay, knowing that the case
will not likely be heard and that the creditor will receive automatic
relief under the law. Failure to hold a timely hearing may result in
the inability of a debtor to reorganize, or in the cheating of other
worthy creditors.
Similarly, the extreme caseloads faced by Maryland's bankruptcy
judges allow dishonest debtors to dissipate assets, again at the
expense of worthy creditors.
In short, the inevitable delays occasioned by the lack of judges harm
both creditors and debtors, thereby imperiling businesses and the
people employed by them. Is it any wonder that private bankruptcy
practitioners and business groups also support additional bankruptcy
judges for the District of Maryland? To quote Susan Souder, president
of the Maryland Federal Bar Association, ``Maryland citizens,
businesses, and lenders should be entitled to the same protection of
the courts as their counterparts in other States.'' Currently they do
not receive such protection. Two new bankruptcy judges in the District
of Maryland are imperative if we are to address this critical problem.
In closing, let me commend the dedicated efforts of Maryland's four
sitting bankruptcy judges--Chief Judge Paul Mannes and Judges Duncan
Kier, James Schneider, and Steve Derby. Their dedication to the
administration of justice is especially impressive given the
extraordinary burdens placed upon them.
Ms. MIKULSKI. Mr. President, I am pleased to join with my colleague,
Senator Paul S. Sarbanes, in sponsoring this important legislation.
This bill would authorize the appointment of additional bankruptcy
judges for the state of Maryland.
Bankruptcy filings nationwide have dramatically increased. In my
State of Maryland, over 20,000 individuals and businesses filed
bankruptcy last year. Unfortunately, bankruptcy filings have hit a peak
nationwide with both individuals and businesses seeking relief from
financial debt. While the economic climate in Maryland is much better
than in many parts of the country, the recent recession has had an
impact on consumers in my State.
This bill will give relief to bankruptcy judges, who hear cases in
Maryland. These judges have had a growing caseload to process. This is
good news for consumers, who are seeking a reorganization of their
debts and creditors seeking to protect their rights. It is critical
that consumers are able to have their bankruptcy petitions processed in
a timely manner. For the debtor seeking to protect his home under a
chapter 13 filing, this bill will help expedite the process and allow
the bankruptcy judge to give full consideration to the petition.
Maryland's bankruptcy judges have had to struggle to keep up with the
growing docket. Because of the current heavy caseload, judges cannot
schedule hearings in a timely manner. This adversely affects the
debtor's reorganization and delays distributions to creditors.
The District of Maryland currently has four bankruptcy judges. The
Judicial Conference recommended the authorization of an additional
judge. Their findings were based on the weighted caseload per judge,
which is a good indicator of a judge's workload.
Maryland's judges are working strenuously in the best interests of
both debtors and creditors. But, their caseload requires additional
assistance. Maryland needs at a minimum one more bankruptcy judge, but
would prefer two more judges.
Judges from other districts have helped Maryland's bankruptcy judges.
However, these judges have had to struggle with their own increasing
caseloads.
The Judicial Conference found that Maryland's judges have a caseload
per judge that is 70 percent above the national average. Clearly, the
bankruptcy judges in Maryland's district are overwhelmed by the
caseload. Even with the addition of another bankruptcy judge,
Maryland's judges would still have a caseload that is above the
national average. So, I hope we will be able to provide two additional
slots.
I hope my colleagues will support this legislation. It is important
for consumers and creditors to process their claims. It is also
important to provide equity in handling the caseload in Maryland's
bankruptcy courts.
______

By Mr. GREGG:
S. 246. A bill to amend title XVIII of the Social Security Act to
provide greater flexibility and choice under the Medicare Program; to
the Committee on Finance.

MEDICARE LEGISLATION

Mr. GREGG. Mr. President, this piece of legislation which I have just
sent to the desk is an update of the legislation which I introduced
last year to address what is obviously one of the most critical issues
which we face as a Congress, and that is the question of the solvency
of the Medicare trust funds and the proper way to deliver health care
to our senior citizens.
Last year the bill that I am introducing was basically used as the
core concept for the structural reform which was included in the
balance budget bill which was passed by this Senate and by the Congress
and sent to the President, which he unfortunately decided to veto.
The bill that I have just introduced is an attempt to once again
bring forward what I consider to be a number of very constructive and
important initiatives in the area of making Medicare a more effective
system of health care for our senior citizens.
We have all heard the facts, the facts being that the Medicare system
is broken, that it is not only broken but that it is headed
aggressively toward bankruptcy, that this year it lost $9.2 billion or
spent $9.2 billion more in the part A trust fund than it had taken in,
that the losses are increasing and will be more than $40 billion
annually by the year 2000, and that, as I mentioned, the part A trust
fund in Medicare will be broke, will be insolvent as of the year 2001,
the early part of 2001, actually January.
I think the actuaries may have fudged a little bit there so they
would not have to say 2000. I think we are going to find quickly that
the insolvency of the trust fund is going to occur in the year 2000,
which is not very far away from us.
What happens when the part A trust fund goes insolvent? Basically,
the senior citizens do not have a health care system and do not have an
insurance system. There is no provision in the law today that allows us
to supply health care if there are no funds to pay for it in the part A
trust fund. So the system will literally not exist, and senior citizens
will be without a health insurance system.
We should have addressed this last year, of course. And there was an
attempt to address it last year. But because of the politics of the
season, because we were in an election year--both for this Congress and
for the Presidency--it was not addressed, even though sincere attempts
were made from this side of the aisle.
Those sincere attempts included, in significant part, the bill which
I have

[[Page S881]]

just reintroduced. But they were confronted by an opposition which
demagoged the issue and said that the proposals to try to bring about
solvency in the Medicare part A trust fund were actually going to
undermine that system when in fact what is undermining the system is
the pending insolvency of the trust fund.
President Clinton, this year, to his credit, has decided to step up
to the issue of Medicare or at least said he is going to publicly, and
suggested that he will propose $138 billion in savings in the Medicare
accounts.
Of course, last year when Republicans proposed savings in the
Medicare accounts, they were accused of cutting Medicare. I will not
use that term because I believe that we need to pursue an effort of
constructive dialog here. But it is ironic that this year the President
would be calling his proposal to save $138 billion as a constructive
attempt to address Medicare when last year it was characterized as a
savaging and extreme act, both by members of the President's party and
by the Vice President, when we proposed savings not much higher than
what are being proposed by the President today.
Unfortunately, in proposing his $138 billion in savings, the
President has used a lot of old ideas and what you might call attempts
to address the Medicare system at the margin. Unfortunately, also,
although not accounted for allegedly in the $138 billion of savings, he
has also used a massive bookkeeping gimmick of moving home health care
out of the part A trust fund allegedly into the part B trust fund, so
actually it is under the taxpayers of America and into the general
fund. It is an incredible act of flim-flam and one which hopefully will
not be accepted by this Congress.
Independent of that, the real problem of the $138 billion is not that
it is inappropriate; it is that it does not address the underlying
structural problem of Medicare. It addresses lower payments to
providers, mostly. But the problem of Medicare is not the extra dollar
we are paying to this provider or the extra 5 percent we are paying to
that provider, it is the fact that it is presently structurally not
supportable, the fact that the costs of Medicare are simply going up
much faster than the cost of the Government generally and the rate of
inflation. Not only generally, but also the rate of inflation in the
health care industry.
The system is designed as a 1960's automobile. It was created in the
1960's. In the 1960's it was not a Cadillac system. Everybody knows
that. It was probably an Oldsmobile. But it is the exact same
Oldsmobile designed in the 1960's that is now on the road in the
1990's. It has been patched and repaired and fixed up here and there,
but we are still driving down the road in the 1990's in a 1960's car.
It is not working. It is not working because it does not acknowledge
the fact that the health care delivery system in this country has
changed fundamentally since the 1960's.
In the 1950's and 1960's most people had a doctor by name, an
individual. Most people pursued what was known as fee-for-service
medicine where they hired their doctor. Their doctor referred them to
another doctor if they had a problem. They hired that doctor, and they
went around hiring individual doctors. Today, health care is not
provided that way in the private sector, or, for that matter, in the
public sector, if you are a member of the Federal Government. Today,
the way it is provided, usually you have a prepaid plan where you pay
an amount upfront and you participate in a plan that provides you a
variety of options with a variety of different physicians to go to. It
may be in the form of an HMO or PPO or PSO, or it may be in the form of
some hybrid, but there are usually a variety of different ways you get
health care. Only rarely today in the private sector and in the Federal
employee sector is that health care provided in the manner of going out
and hiring an individual physician and then moving forward on a fee-
for-service basis through the system.
Yet, we still have Medicare delivering the vast amount of its care,
the vast amount of its service, under the fee-for-service system, which
has created an inflation factor in the Medicare system in the cost of
delivery of that system which is basically making it unaffordable and
leading to the bankruptcy of the part A trust fund. Because there is no
competition today in the senior citizens' health dollars, because the
system remains a closed system where fee-for-service really is only the
viable way--there are a few HMO's, but they are very limited in their
applicability--then, as a result, we have not brought the market force
into the system, we have not brought efficiencies into the system, and
we have not seen occur in Medicare what has occurred in the general
health care delivery system in this country.

Over the last 3 years, the rate of inflation of health care costs in
this country, the inflationary rate of growth of health care costs in
this country, were less than the general rate of inflation. The general
rate of inflation was about 3 percent. The rate of growth of health
care costs was below that number in the last 3 years in the private
sector. Yet, in the Medicare system, the rate of growth of health care
has remained about 10 percent.
What my legislation does essentially is give seniors more options.
That is why it is called choice care. It says to senior citizens, you
can go out in the marketplace and participate in the system you
presently have if you want to, in the fee-for-service system. There is
no reason you cannot stay in the system you are presently in, or,
alternatively, you can go into one of the other delivery systems--HMO,
PPO, or PSO--whatever you want to pursue. It gives the senior citizen,
if you want to simplify it, it gives the senior citizen the same
options, essentially, that a person who works for the Federal
Government has who is under the Federal employee health benefits
program. I, as a Member of Congress, have an option to choose a number
of different health care plans. Why should not the senior citizens have
that same option?
Basically, we asked that question, and we say they should. They
should. Not only would it be more advantageous for a senior citizen to
be able to go out and pick any number of health care programs, but it
would be more advantageous for us, the Federal Government, and for the
taxpayers to have those options, because we would bring competition
into the system and hopefully, as a result, bring market forces into
the system and, as a result, help to reduce the rate of growth of
health care costs to something closer to what we are seeing in the
private sector.
We never expect that a program designed for seniors will have the
same rate of growth of health care costs as the private sector because
seniors, regrettably, have more health problems. We know we can do
better than a 10-percent annual rate of growth. In fact, to make the
trust fund solvent, we do not have to get to the private sector rate of
growth. We do not have to get to a 3 percent or less rate of growth. We
can make the trust fund solvent with rate of growth somewhere between 6
or 7 percent annually.
We are only talking about reducing the rate of growth of the Medicare
trust fund by 3 percent; we are talking about continuing to allow it to
grow by 6 to 7 percent. This is a huge increase, a huge amount of new
dollars flowing into the health care system every year. It is a result
of the fact we are able to still balance the trust fund and make it
solvent with that type of rate of growth that we create a huge
marketplace incentive for people to compete for senior dollars in
health care. It is that desire for competition, that use of competition
which will lead us to a more competitive system, a more efficient
system, and for a system which will actually deliver better health care
to seniors.
We put some protections in here, also, to make it clear that seniors
are not giving up anything by participating in choice care. First off,
as I mentioned, they have the right to stay with fee-for-service, their
present plan, if they want to. Second, any plan that wants to compete
for a senior citizen dollar must provide the core services which are
presently provided under the Medicare system. You may say, if that is
the case, why are they ever going to be able to charge less if they
have to provide the same amount as the senior presently gets? It is
called the marketplace. There are ways to provide the same services and
pay less for them and have them cost less by having more efficiencies
in the provider. The

[[Page S882]]

marketplace will produce that sort of efficiency and you will have less
costs.

Also, we give seniors the right to opt out if they choose another
type of health care delivery service. If they are uncomfortable with
it, they can disenroll from that service.
Furthermore, and most importantly, we do not allow people who are
competing for the seniors' dollars to discriminate. In other words, if
you are a provider and you are going to make yourself available to
supply senior citizens with health care, you have to take all comers.
There cannot be any attempt to screen out people because they have
preexisting conditions. So it will not have adverse risk selection.
The practical implications of this are that a senior will annually
receive a booklet or proposal, much like we receive as Federal
employees, which will outline the various health care systems which are
available to that senior. What I see happening is that there are going
to be a lot of health care providers who will say, ``Hey, we can
provide that senior with the same health care they are getting today,''
because of the 6 to 7 percent annual increase. ``We can provide that
senior with that same health care and throw some other benefits in,
too. We can offer prescription care, we can offer eyeglasses, we can
offer a variety of things that are not presently available under
Medicare because we know that we can more efficiently deliver the
service than the senior is presently getting on fee-for-service.''
What I expect will happen and what I am pretty confident will happen
and what people who have looked at this in depth say will happen is
that the marketplace will bring forward a variety of different options
from which seniors will have a choice. At the same time, we will give
seniors an incentive to go out and look at those choices because what
we will say to seniors is, ``Listen, today, we pay about $4,800 a year
for your health care per senior. You, senior citizen, to the extent you
choose a health care delivery service,'' which, again, has to have the
core delivery services that you presently get so they cannot reduce
their price because they are not delivering you what you need,'' to the
extent you choose a delivery service which costs less than $4,800, we
will let you, the senior, keep 75 percent of the savings.''
So if the annual premium of an HMO supplying seniors with the same
service is say $4,500 and the senior chooses to go with that HMO
because the senior maybe has a family member--a son or daughter who is
working and a member of that HMO--and the son or daughter say, ``They
can give us pretty good service,'' that senior will get to keep the
difference between $4,800 and $4,500, or $300. That senior will get to
keep 25 percent of that difference, and 75 percent will be returned to
the trust fund.
So what we have created here is a market event where a senior citizen
can get a savings by shopping thoughtfully and efficiently for their
health care, and where the health care providers have an incentive to
come in and compete for that health care dollar. What does that cause?
That causes efficiency. It causes the marketplace to create efficiency.
We have learned that the Federal Government can't produce efficiency.
We have learned that by having a nationalized system, which is what
Medicare is, you do not have an efficient system; that you have an
inefficient system. What we know from experience is the way you create
efficiency and lower costs is by having competition and having a
playing field where the consumer is protected, which is exactly what
this does.
So this proposal would give the seniors an incentive to be thoughtful
purchasers, and would give the marketplace an incentive to come in and
be thoughtful competitors, or strong competitors for the senior citizen
dollars.
Another issue that is raised and is legitimate is the question of
reimbursement and how we are going to reimburse these provider groups.
The President has proposed that we cut the rate of reimbursement for
HMO's from 95 to 90 percent arbitrarily across the board. I am not
going to criticize the President for trying to address the cost of
growth. I think that is important. But there is a better way to do
this. The fact is that the reimbursement system as it is presently
structured is out of kilter. For health care services which are
identical--and in some cases they are better in the lower-cost States
than the higher-cost States--the reimbursements are not identical. They
are totally out of whack.

For example, there is a beneficiary reimbursement in South Dakota of
about $200 per person. But on Staten Island it cost about $767 per
person. Studies by Dr. Weinberg at Dartmouth, and a number of other
professionals, have concluded that the service isn't any better but
that it is simply an issue of regional disparity. And in fact in New
Hampshire, which happens to be one of the lowest-cost health care
States in the country--a little more than South Dakota but not much
more--we are rated the No. 1 State in the country for health care
delivery systems. Yet, our delivery systems are done at a cost which is
one-third the price of what it cost on Staten Island.
So this regional disparity has basically penalized States and areas
that are trying to be efficient and effective in delivering their
health care.
Take Hawaii, for example. Hawaii has one of the highest costs of
living in the country because of the fact that it is an island, and
everything has to be shipped in, I guess. But at the same time Hawaiian
medical care is one of the most efficient cost delivery systems in the
country. So they are penalized. Those health care systems are penalized
by a lower reimbursement rate.
What we suggest--and this is a complicated issue--we are suggesting
that as we go forward with this Choice Care proposal that we begin to
level out the playing field on reimbursement so that we no longer are
rewarding the inefficient, and so that the efficient receive the proper
payment. We do this by not cutting anybody because we are increasing
funding for Medicare throughout this period by 6 to 7 percent. We do
not have to cut anything. What we are going to do is slow the rate of
increase to those areas that have a much higher reimbursement and
accelerate the rate of increase to those with lower reimbursement
areas.
As a result, we will at some point--there is a timeframe in our bill
that allows for this--about 5 to 7 years from now get to a period where
we have everybody in a much narrower band of reimbursement which leads
to a much more efficient market.
So the underlying theme here is simple. Under the Choice Care plan,
which as I mentioned was adopted in significant proportions, or the
concepts were adopted in significant proportions in the last budget,
seniors should be given essentially the same choices that members of
the Federal Government have and that the average working American has--
the ability to go out in the marketplace and choose from a variety of
different health care providers. And in making that choice they should
be given an incentive to be efficient.
So we are going to reward them by giving them a return on the amount
that they save, and at the same time we are going to say to the
marketplace we are no longer going to disproportionately reward
inefficient areas at the expense of efficient areas, and at the same
time we are going to say to the seniors, ``You have a variety of
options to choose from. But, if you want to stay where you are, and you
are happy where you are, you can do that.''

So how does this help the Federal Government in the end? How does
this get Medicare costs under control? It basically amounts to a major
structural reform of the system. It is not playing at the edges the way
the President proposes. It is a major structural reform. In the end we
will have brought the marketplace into the system, we will have created
an atmosphere where seniors will be looking at a variety of choices for
health care, and where efficiency will be something that will have to
be undertaken by the provider groups. They are going to be able to get
the seniors' participation, and those seniors today who are in their
fee-for-service probably are not going to opt into this overly
aggressively because they were raised in the 1950's and 1960's with
fee-for-service. We understand that. But what we also understand is
that the coming generation of seniors has been in a workplace
environment where the variety of health care service delivery system
has been available to them. They are comfortable with a variety of
health care delivery systems. And as such they are not going to shy
away from taking advantage of the marketplace.

[[Page S883]]

So, as we go down the road we will get the type of savings we need.
We will see that rate of growth reduced from 10 percent back to 6 or 7
percent. That is still a substantial rate of growth. Then we will have
put in place something that can give us a long-term lasting hope for
restructure of reform, or reform in the Medicare trust fund in order to
avoid the bankruptcy. If we do not do this, the trust fund part A goes
bankrupt. It is that simple. That is not acceptable.
If we do not undertake structural reform, if we simply undertake the
reform at the margins, like the President has proposed, we put off that
bankruptcy maybe for 2, 3, or 4 years. But it still occurs. Our
obligation as policymakers is to make the more fundamental broader
changes that are needed for a long-term solution to this problem. And
this is one major step in that direction.
Mr. President, I appreciate your time and yield the floor.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President I really enjoyed the remarks of my
distinguished colleague from New Hampshire. He makes a lot of very
telling and important points in the field of health care. I think he
deserves to be listened to, as certainly the distinguished doctor
sitting in the chair, the Presiding Officer. As everybody knows, he has
great interest in health care matters.
And I just want to say that I appreciate the work of both of these
Senators, the Senator from New Hampshire and the Senator from
Tennessee, in this area.
______

By Mr. WYDEN (for himself and Mr. Gordon H. Smith):

S. 247. A bill for the relief of Rose-Marie Barbeau-Quinn; to the
Committee on the Judiciary.

PRIVATE RELIEF LEGISLATION

Mr. WYDEN. Mr. President, I introduce private relief
legislation for Ms. Rose-Marie Barbeau-Quinn. Senator Hatfield
championed Ms. Barbeau-Quinn's cause in the 104th Congress, and at his
request and the request of many in the Portland area, I and Senator
Smith are now picking up the legislation to make Ms. Barbeau-Quinn a
citizen of this country.
Ms. Barbeau-Quinn, a native of Canada, is a long time member of the
Portland community and resident of Oregon. She lived in Portland with
her now deceased husband, Mr. Michael Quinn since 1976, and together
they ran the Vat and Tonsure Tavern, a unique and respected restaurant
in the Portland area. While Ms. Barbeau-Quinn and her husband lived
together for over 16 years, they did not actually marry until shortly
before Michael Quinn's death in 1991.
Since Oregon does not recognize common law marriage, and Ms. Barbeau-
Quinn was not married the 2 years required by immigration law, she has
not been able to file for permanent residency in this country. While I
do not intend to introduce many private relief bills, because of
Senator Hatfield's involvement in this matter and Ms. Barbeau-Quinn's
compelling case, I think it is appropriate that the Senate pass
legislation to ensure that Ms. Barbeau-Quinn remains a member of the
Portland community for many years to come.
______

By Mrs. FEINSTEIN (for herself and Mr. Reid):
S. 248. A bill to establish a Commission on Structural Alternatives
for the Federal Courts of Appeals; to the Committee on the Judiciary.

THE STRUCTURAL ALTERNATIVES FOR THE FEDERAL COURTS OF APPEALS
COMMISSION ESTABLISHMENT ACT OF 1997

Mrs. FEINSTEIN. Mr. President, today, with my distinguished
colleague, Harry Reid, I am introducing S. 248, a bill to establish a
Commission on Structural Alternatives for the Federal Courts of
Appeals.
The Commission proposal emerged last year during a debate over a
controversial bill to divide the Ninth Circuit Court of Appeals. As a
result of that discussion, it became clear to me and the majority of my
colleagues that there was no consensus on how best to resolve the
problem of caseload growth in the U.S. courts. The idea of a study
commission gained broad support and has independent merit.
Legislation to form a study commission was approved twice by the
Senate in the 104th Congress: in March 1996 as a stand-alone bill, and
later in the session as part of the Senate amendments to H.R. 3610, the
Omnibus Consolidated Appropriations Act of 1997. Although the Senate
amendment was not included in the final version of H.R. 3610 signed by
the President on September 23, 1996, the initial funding for the
Commission was appropriated therein. The authorizing legislation
deserves a speedy enactment by the 105th Congress.
The Commission legislation we are offering today is evenhanded, fair,
and genuinely bipartisan. It will consist of two members appointed by
the Chief Justice of the United States, two members appointed by the
President, two members appointed by the majority leader of the Senate,
two members appointed by the minority leader of the Senate, two members
appointed by the Speaker of the House of Representatives, and two
members appointed by the minority leader of the House of
Representatives.
The object is to have a balanced group of individuals who will
examine the issues fairly and give full consideration of all relevant
perspectives. With a balanced membership, we can be confident that the
Commission's recommendations will be given due weight by all three
branches of the National Government.

BROAD SUPPORT FOR A STUDY COMMISSION

The proposal for a study commission on Federal appellate structure
has won enthusiastic support from prominent judges and scholars.
To underscore the need for this legislation, as well as its
importance, I can do no better than quote from Judge Diarmuid F.
O'Scannlain, who has served with distinction on the Ninth Circuit since
his appointment by President Reagan in 1986. In a recent symposium in
the Montana Law Review, Judge O'Scannlain wrote in favor of the study
commission bill offered last year:

As one member of the Court of Appeals most affected, I view
[a study commission] as a far superior alternative to [a bill
that] would have immediatedly divided the Ninth Circuit. The
[study commission] bill also provides an historic opportunity
to develop a comprehensive blueprint for the structure of the
federal courts of appeals generally, and the Ninth Circuit in
particular, for the 21st Century. No comprehensive review of
the structure of the federal courts has been undertaken since
the study chaired by . . . Senator Roman Hruska of Nebraska
in the 1970s (the ``Hruska Commission''), and in my view such
a review is most timely.

Chief Judge Proctor Hug., Jr. of the Ninth Circuit, also writing in
the Montana Law Review symposium, observed:

Based upon its prior experience with the academic community
and the benefits obtained from their insightful
recommendations, the Ninth Circuit strongly supported Senator
Dianne Feinstein's proposed legislation to establish a study
commission . . . to take a full and fair look at the entire
federal appellate system and to make recommendations to the
Congress for how and where to make reforms.

Another participant in the symposium was Prof. Arthur D. Hellman of
the University of Pittsburgh School of Law, a leading national
authority on the Federal appellate courts. Professor Hellman wrote:

. . . Congress should proceed systematically by creating a
new, focused commission to examine the problems of the entire
appellate system and make recommendations that will serve the
country for the long run.

In a similar vein, Prof. Carl Tobias of the University of Montana Law
School, a respected scholar of Federal procedure, has written in the
National Law Journal:

A preferable route would be to appoint a national
commission to seek solutions to the problems of the appellate
system as it is currently constituted, and ways of handling
its increasing dockets with efficiency. Careful study should
provide sufficient information to make a fully informed
decision . . . The time is now ripe for Congress to authorize
such a study, rather than engage in piecemeal reform.

THE COMMISSION

Our bill directs the Commission to study ``the present division of
the United States into the several judicial circuits.'' Next, the
statute calls for a study of ``the structure and alignment of the
Federal Court of Appeals system, with particular reference to the Ninth
Circuit.'' Finally, the Commission must ``report to the President and
the Congress its recommendations for such

[[Page S884]]

changes in circuit boundaries or structure as may be appropriate for
the expeditious and effective disposition of the caseload of the
Federal Courts of Appeal, consistent with fundamental concepts of
fairness and due process.''
The language of the statute leaves no doubt that one task of the
Commission would be to undertake a careful, objective analysis of the
arguments raised by proposals to divide the ninth circuit. However, it
is equally clear that the Commission's mandate is not limited to the
ninth circuit or to the delineation of circuit boundaries generally.
This reflects the fact that circuit alignment is one of a set of
interrelated structural arrangements that govern the operation of the
courts of appeal.
To ensure expeditious consideration of the issues at all levels, S.
248, contains three important deadlines. Section 2(b) requires that
appointment of members be made within 60 days of enactment. Section 6
requires the Commission to submit its report within 2 years of the date
on which its seventh member is appointed. Section 7 requires that the
Senate Judiciary Committee act on the report no later than 60 days
after submission.
There are three reasons why the Commission should be given 2 years in
which to carry out its work. First, before the Commission can formulate
its recommendations, it will have to secure informed, objective answers
to specific and difficult questions. These questions cannot be answered
merely through contemplation, or even by consultation with experts.
They will require research, and research takes time.
Second, an important part of Commission process is obtaining public
input. In particular, at an appropriate stage in its deliberations, the
Commission should issue a draft report for public comment. Responses
from constituencies should be taken into account in formulating the
final recommendations.
Third, the 2-year timespan is supported by the experience of other
commissions, such as the Hruska Commission of 1973 and Bankruptcy
Commission of 1994. It may be argued that if, as with the Hruska
Commission, the initial deadline proves unworkable, Congress can always
extend it. But that is the wrong lesson to be drawn from the experience
of the Hruska Commission. It is far more efficient to provide initially
for the 2-year lifespan than to put everyone to the time and effort of
seeking an extension later.
Our proposed Commission will be fair, and it will have sufficient
time to conduct a credible study. The Commission will help determine
the proper course for the future of our national judiciary, and
therefore I urge my distinguished colleagues to support S. 248.
Mr. REID. Mr. President, the issue of whether to divide the Ninth
Circuit Court of Appeals is one in which I have been very involved with
since the initial proposal. I made clear my opposition to the proposed
split last year, and I am still convinced that such an unnecessary and
costly venture is unwarranted. However, I have agreed to the
establishment of a commission to study the judicial circuits, the
structure and alignment of the Federal court of appeals system, and to
report to the President and the Congress its recommendations for such
changes in the circuit boundaries or structure as may be appropriate
for the expeditious and effective disposition of the caseload of the
Federal courts of appeal.
Today, Senator Feinstein and I are introducing a bill to create this
commission. The commission makeup is fair, evenhanded, and bipartisan.
It will consist of two members appointed by the President, two members
appointed by the Chief Justice of the United States, two members
appointed by the majority leader of the Senate, two members appointed
by the minority leader of the Senate, two members appointed by the
Speaker of the House of Representatives, and two members appointed by
the minority leader of the House of Representatives. I think this is
the most fair and equitable way to study this issue.
In today's environment of fiscal belt tightening, it is crucial that
we carefully scrutinize proposals such as splitting a judicial circuit.
It is necessary that we curtail the development of costly Federal
proposals and engage in studied cost-benefit analysis before we create
new programs. There are many unanswered questions in splitting the
Ninth Circuit Court of Appeals. What are the costs associated with such
a division? Will this require the construction of new courthouses and
hiring of additional judges? If so, how many and how much? And what are
the benefits of a division? The commission we propose will answer all
of these questions before we even consider any possible division.
Further, the commission will examine the structure and function of all
the Federal courts of appeal.
This is a reasonable proposal for the establishment of a vital
commission. I urge my colleagues to support this bill.
______

By Mr. D'AMATO (for himself, Ms. Snowe, Mrs. Feinstein, Mr.
Hollings, Mr. Moynihan, Mr. Domenici, Mr. Faircloth, Ms.
Moseley-Braun, Mr. Biden, Mr. Inouye, Mr. Murkowski, Mr. Dodd,
Mr. Kerrey, Mr. Hatch, Mr. Gregg, Mr. Smith, and Mr. Ford):
S. 249. A bill to require that health plans provide coverage for a
minimum hospital stay for mastectomies and lymph node dissection for
the treatment of breast cancer, coverage for reconstructive surgery
following mastectomies, and coverage for secondary consultations; to
the Committee on Finance.

the women's health and cancer rights act of 1997

Mr. D'AMATO. Mr. President, I come here today and rise to introduce a
bill that I think is unfortunately necessary, unfortunately because
HMO's and insurance carriers--and I don't mean this for all, but we are
seeing a growing tendency--are doing the kinds of things nobody would
have imagined, and they are doing it and interfering with good, sound
medical care, because they are more interested in the bottom line.

Indeed, there are some who are already beginning to drumbeat against
health maintenance organizations per se, and we would be losers,
because there are important innovations and savings that can be made,
but those savings and innovations should not be made at the expense of
the traditional and important and sacred--sacred--right that a patient
should have with their physician.
Maybe it takes the specter of cancer and breast cancer, in
particular, because people are concerned and it is a fright, to get
people to focus on what is taking place, and that is insurance carriers
placing arbitrary limits on patients as it relates to the length of
stay or time that they can use a medical facility, a hospital.
It is interesting and, indeed, ironic that as I make these remarks,
the presiding officer who sits in the chair and presides over the
Senate today is a distinguished Senator and a distinguished citizen who
spent so much of his life in the area of healing and of practicing
medicine and who knows better than I. I am so pleased to be able to
have his counsel and to share these thoughts with him today personally.
While I introduce this legislation on behalf of 16 colleagues in the
Senate of the United States and 20-plus Representatives in the House,
Democrats and Republicans--totally bipartisan--I do not suggest that
this is the cure-all for what we see taking place. Indeed, we have
specifically limited this legislative initiative.
There were calls and outcries that HMO's and insurance carriers be
required to provide at least a minimum of time as it relates to
mastectomies. Many in the medical profession came forward and said,
``We think that is the worst kind of legislation. We would rather see
no time, nor do we think that the health providers should be setting
times.''
That is a larger debate for a larger area, but I subscribe to that,
and I think that we should say very clearly here in the U.S. Senate and
Congress, By gosh, insurance carriers should not be saying, ``If there
is a particular disease, we are only going to insure you up to X
hours.''
What happens if there is a complication? It may be that a procedure,
whether it be a mastectomy or whether it be prostate cancer or whether
it be some other disease, that ordinarily, under normal circumstances,
there is an average length of time. It might be 1 day, 2 days, 3 days.
But who is to say, if there is a complication and it takes 6 days or 2
weeks, are we then going to

[[Page S885]]

say something that ordinarily would be covered in insurance policies,
that somehow because someone has adopted a rule--and why they have
adopted that rule; I don't know how they can practice that, they are
not practitioners--that we are going to exclude you if you go over that
period of time?
This is wrong. This should not be the way in which we attempt to
manage health care costs, and it is, I believe, taken by many people to
mean the greed of the industry.
The fact that there are now today many in the HMO business, some
almost startup companies overnight, making millions and millions of
dollars--I am not against profits, but if you are going to make profits
by denying adequate basic medical treatment, then that is wrong, that
is immoral and we in the Congress of the United States have a business
to do something about it.
I know there are going to be those who say let the marketplace work,
let free competition work. Well, that is naive. To simply say that by
insisting on a minimum standard, that minimums be observed, that no one
interferes with the patient and that very special relationship with the
doctor--we are now seeing that taking place, because there are those
carriers who are punishing doctors, punishing them by denying them
adequate compensation or penalizing them by denying them moneys they
otherwise would have because they recommend treatments that may cost
that insurance carrier more but which they feel are necessary for the
safety, health, and protection of their patients.
How dare we permit and countenance that kind of thing today? We know
it is going on, and to the health maintenance organizations and to the
insurance carriers who say it is not going on and this legislation is
not necessary, well, if it is not necessary, don't oppose it. It is
that simple. If you are not penalizing doctors or rewarding them
because they hold back on treatments that might cost more and which are
necessary, then why should you be opposed to it? If you are not
arbitrarily limiting the time that a patient may have or necessary
treatments, then why would you be opposed to it?
This legislation basically says you cannot do that, you cannot
prescribe 48 hours as it relates to mastectomies. You cannot deny that
doctor-patient relationship by penalizing a doctor. We say you are not
permitted to do that, or rewarding a doctor on the basis of cost-
effectiveness.

In a third provision, we say that when it comes to the devastating
disease and the specter of cancer, not only breast cancer, but prostate
cancer--all cancers--that people are entitled to a second opinion.
There is not anyone I know who, if they faced a diagnosis and were
given a particular course of treatment that would be suggested, that
they would not look for a second opinion. That is fact.
If the doctor and the attending physician recommended a second
opinion, our legislation says the company must pay for that. If that
physician feels that there is a need to get some specialist outside of
the organization, outside of that HMO, the company must pay for that.
What do we say to the average worker who has no independent resources
who can't pay $500 or $1,000, or whatever it might be for that
specialist, for that second opinion? You cannot have it?
So, Mr. President, we provide that with respect to this particular
disease. I believe we should go further, and I think in the fullness of
the discussions and the legislative actions that this Congress will
undertake that we will examine this, and your committee, the Health
Committee, in particular will be looking at it.
But I think certainly at this time we should begin to say, Listen, as
it relates to this particular disease of cancer, where the treating and
attending physician recommends a second opinion, that patient should
have the ability and the right to be covered and have that second
opinion.
I am going to relate two specific examples, because we have spent
some time in shaping and putting together this legislation and it is by
no ways written in stone or steel. It is in the sand, it is something
to be looked at, something to be worked with. I look forward to the
help and recommendations of the distinguished Senator from Tennessee,
who presides today, on how we can improve and make this legislative
effort a better one.
Last, but not least, in the area of breast cancer in particular, one
of the very shattering thoughts and a fear that women live with today
is the fact that they may be one of the eight who is diagnosed with
breast cancer, and that is a national average. They are concerned about
the treatment that might permanently disfigure them and, therefore, it
becomes absolutely imperative that, as a nation, we indicate to people
that there are courses of treatment that cannot only save a life but,
indeed, do not have to be disfiguring, and in this way, as it relates
to breast cancer in particular, have more women coming in for early
diagnosis and treatment and avoid, No. 1, death, and, No. 2,
disfigurement, because we provide that breast cancer reconstruction and
that reconstructive surgery not be considered cosmetic.
If someone loses an ear, that surgery is not considered cosmetic.
However, incredibly, we find insurance carriers denying reconstruction
on the basis that it is cosmetic. So we create a double tragedy by
denying women who have that disease and who don't have the ability to
pay for reconstruction the ability to have that. And, second, and
probably just as important, there are many who will not go for early
diagnosis, and, therefore, the treatment is not available to them until
it is too late. That has to be avoided.
So we provide that HMO's and insurance carriers must make this
available. It is not an option that they can just simply turn away.
The title of our bill is called the ``Women's Health and Cancer
Rights Act of 1997.''
Mr. President, I rise today to introduce the Women's Health and
Cancer Rights Act of 1997. This important reform legislation will
significantly change the way insurance companies provide coverage for
women diagnosed with breast cancer. The problem of the so-called drive-
through mastectomies must be eliminated from our society. Physicians
must not be forced to have their best medical judgment questioned by
insurance companies who put their bottom line before a woman's health.
The women of New York and America deserve better.
Today, there are 2.6 million women living with breast cancer. In 1997
alone, more than 184,000 women will be diagnosed with breast cancer
and, tragically, 44,000 women will die of this dreaded disease. Breast
cancer is still the most common form of cancer in women; every 3
minutes another woman is diagnosed and every 11 minutes another woman
dies of breast cancer. The D'Amato-Feinstein-Snowe legislation makes
critically important changes in how breast cancer patients receive
medical care.
Specifically, the bill requires health insurance companies to cover
an unlimited stay in the hospital following mastectomies, lumpectomies,
and lymph node dissection for the treatment of breast cancer when the
attending physician decides a longer stay is necessary. Every physician
would have the freedom to prescribe longer stays when necessary, and
the confidence that insurers will not punish them for practicing sound
medical treatment. My bill would make it illegal to penalize a doctor
for following good medical judgment. The time for a hospital stay will
no longer be an arbitrary determination made on the basis of saving
money.

Another important provision of the D'Amato-Feinstein-Snowe bill
ensures that mastectomy patients will have access to reconstructive
surgery. Scores of women have been denied reconstructive surgery
following mastectomies because insurers have deemed the procedure
cosmetic and not medically necessary. It is absolutely unacceptable and
wrong that many insurers deem this essential surgery as cosmetic, and
it is a practice that must be changed.
The Women's Health and Cancer Rights Act also includes a unique
provision for coverage of second opinions by specialists. The bill
would require health care providers to pay for secondary consultations
when cancer tests come back either negative or positive. This important
provision will help identify false negatives as well as false
positives. Additionally, if the attending physician recommends
consultation by a specialist not covered by the

[[Page S886]]

health plan, the bill would allow the doctor to make such a referral at
no additional cost to the patient.
This legislation is particularly important for the women of Long
Island. Our families have been ravaged by this horrible disease. Our
grandmothers, mothers and daughters, sisters and wives, children and
friends have been afflicted at rates that are unexplained and far too
high.
We must continue to work together to find a cure for breast cancer.
But until a cure is found, we must ensure that women receive the
treatment they deserve. This legislation protects women and anyone ever
diagnosed with cancer. It is the most comprehensive bill introduced in
the Senate and I am proud to offer it today.
I want to thank Senator Feinstein and Senator Snowe for the
contributions that they have made as it relates to helping prepare this
legislation. The Women's Health and Cancer Rights Act is important. It
is important again that we preserve adequate, decent, affordable
medical care and not tamper with that sacred relationship that should
be preserved between a doctor and his patient.
I would like, if I might, to share with the Senate the remarks of a
great surgeon, Dr. Larry Norton, Chief of Breast Cancer Medicine at
Sloan Kettering, one of the great cancer hospitals in this Nation. He
is reflecting about a patient. I will not read all of it. He tells why,
I think, this legislation is so necessary. He said:

There was a patient that I saw on a second opinion not too
long ago who paid herself for a second opinion because her
HMO . . . wouldn't [do that]. I saw her and told her about a
therapy that was very scientifically based that we thought
was superior here, in fact clinical trials have demonstrated
to be superior, and it has become a standard now, throughout
the United States. . . . we offered her that particular
treatment.
Speaking to the person on the other end of the phone at her
managed care plan, and I managed to work my way up to the
physician level through several clerical levels. . . .

Here is the chief of surgery at Sloan Kettering Memorial calling an
HMO to suggest this course of treatment. I want to describe what is
going on. He had to call clerk after clerk after clerk, and he finally
got someone who was a physician. By the way, most people cannot do that
and they cannot work through that. And he was told that they would not
pay for the care.
He went on to say--and this is the person on the other end:

. . . Dr. Norton, we are not saying . . .

Imagine, this is an HMO, a doctor on the other side of the HMO. He is
saying:

. . . Dr. Norton, we are not saying that [it] is not the
right treatment, we are just saying that we are not going to
pay for it.

By the way, what I am reading to you is testimony he gave publicly
about 10 days ago in New York at Sloan Memorial. He went on to say:

I put the phone down, shaking, and called her [that is, his
patient] to discuss this with her, and her 10-year-old son
answered the phone. I said who I was and he said, calling to
his mother, ``Mommy, your doctor is on the phone.'' I knew at
that moment that the discussion that she could not get the
care that was appropriate was not what I was going to say.
Through enormous efforts, and through the support of my
terrific institution, [we] were able to provide her that care
and things turned out very well for her, as we could have
anticipated.

The doctor goes on to say:

The point is that there is a holy alliance between the
doctor and the patient, and the entire structure of medicine
is because of that holy alliance. It is a religious
experience [a religious experience] to take care of a patient
well and, if you feel any less motivation, you are not [going
to be] doing your job as a physician. We feel that kind of
motivation here. We are living in an era where a lot of steps
are coming between the doctors and the patients. Their
motivations are not necessarily the same motivations that
have driven us to this point of advance.
What we see before us today . . .

He talks about legislation and the fact that it was a bipartisan
effort to protect that relationship, that special relationship that I
know that the President understands well.
Again, we are going to hear cries of intrusion, or about the
marketplace. Well, since when do you tell me we do not have a right to
set basic minimums? We do that in many areas. We do that as it relates
to quality of food. We do that as it relates to protecting our drinking
water. We certainly have a right to say you cannot interfere with that
special relationship by punishing a doctor because he is giving what he
feels is the proper medical advice and withholding from him and having
him think that he may be penalized. That is wrong. That is wrong.
Mr. President, I want to share another experience. When we initially
talked about introducing this bill, we did not talk about breast cancer
reconstruction. And I got a call from the executive director of the
American College of Obstetricians and Gynecologists of New York, a
remarkable woman by the name of Mary McCarthy. She said, ``Senator,
we've been making studies.'' She was a person who brought to our
attention, Senator Feinstein and Senator Snowe, and others, the fact
that there was this great problem of insurance carriers not providing
for reconstructive surgery when it came to the breast and considering
it as cosmetic.
Let me just read to you her words which communicate the problem. Not
only is she the executive director of the American College of
Obstetricians and Gynecologists of New York, she goes on to say:

I am a breast cancer patient myself. I would like to share
[with you] my experiences on the three major subjects
within the bill, the mastectomy surgery, the
reconstructive surgery and the second opinion.

She says:

I thought I was very well informed on health care and I
thought I had excellent health care coverage. Yet my own
reconstructive surgery and my second opinion were both denied
by my health care plan. My reconstruction was denied last
April as not medically necessary.

She went on to say she was able to eventually get this surgery. She
said:

I am concerned that other women do not have these kinds of
resources. I would like to touch, although personal, on the
importance of reconstructive surgery for women who opt to
have reconstruction surgery. My mastectomy was clinically
curative surgery, but my reconstruction was emotionally
healing. There is no longer a reminder every day of my
cancer. When I get dressed in the morning, in an intimate
moment with my husband, if I have my nightgown on at home
with my kids, I look normal and I feel normal. If you lose an
ear or a testicle, or part of your face to cancer, there is
no question that reconstruction is covered. Yet denials for
breast [cancer] reconstruction are serious and they are
rising.
For a disease with the magnitude of cancer, it is very
important to have access to second opinions and to be able to
[go] outside your HMO, if necessary, for the kind of
expertise you need. To my surprise, and to the surprise of my
physicians within my plan, my plan adamantly refused to
authorize my second opinion. I paid for my second opinion
myself, not all women have these resources . . . No family
should be forced to assume this kind of responsibility.

Then she goes on to say something.

When I was in the hospital after my surgery . . . [the
nurses] actually cringed [the people responsible for taking
care of me] and looked upset when they changed my dressing. I
spoke candidly to my husband, who is loving and caring and
goes with me to most of my medical appointments, and he felt
that he could not have handled the emotional or the clinical
responsibility of helping with drains and bandages. The
appropriate length of stay is critically needed and the
language in the bill to ensure that the appropriate stay for
each individual is met is vital.

What she is saying is that if she had been discharged, her husband
could not have taken care of her. And you just simply cannot set a time
limit.
Mr. President, I want to offer that bill. I send it to the desk with
the cosponsors. I commend all of my colleagues to join in this
legislative effort. It is one that we will be serious and purposeful
for. I hope we can have hearings sooner rather than later.
Again, as I said, this is totally bipartisan in nature. Cancer does
not look to see the politics of its victims. In particular, we address
some of the major concerns as they relate to cancer. But I think
problems that we have go well beyond this. This is something that this
Congress should become involved in, the vital interest of the health of
all of our citizens.
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. 249

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 ``Women's Health and Cancer
Rights Act of 1997''.

SEC. 2. FINDINGS.

Congress finds that--

[[Page S887]]

(1) the offering and operation of health plans affect
commerce among the States;
(2) health care providers located in a State serve patients
who reside in the State and patients who reside in other
States; and
(3) in order to provide for uniform treatment of health
care providers and patients among the States, it is necessary
to cover health plans operating in 1 State as well as health
plans operating among the several States.

SEC. 3. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974.

(a) In General.--Subpart B of part 7 of subtitle B of title
I of the Employee Retirement Income Security Act of 1974 (as
added by section 603(a) of the Newborns' and Mothers' Health
Protection Act of 1996 and amended by section 702(a) of the
Mental Health Parity Act of 1996) is amended by adding at the
end the following new section:

``SEC. 713. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR
MASTECTOMIES AND LYMPH NODE DISSECTIONS FOR THE
TREATMENT OF BREAST CANCER, COVERAGE FOR
RECONSTRUCTIVE SURGERY FOLLOWING MASTECTOMIES,
AND COVERAGE FOR SECONDARY CONSULTATIONS.

``(a) Inpatient Care.--
``(1) In general.--A group health plan, and a health
insurance issuer providing health insurance coverage in
connection with a group health plan, that provides medical
and surgical benefits shall ensure that inpatient coverage
with respect to the treatment of breast cancer is provided
for a period of time as is determined by the attending
physician, in consultation with the patient, to be medically
appropriate following--
``(A) a mastectomy;
``(B) a lumpectomy; or
``(C) a lymph node dissection for the treatment of breast
cancer.
``(2) Exception.--Nothing in this section shall be
construed as requiring the provision of inpatient coverage if
the attending physician and patient determine that a shorter
period of hospital stay is medically appropriate.
``(b) Reconstructive Surgery.--A group health plan, and a
health insurance issuer providing health insurance coverage
in connection with a group health plan, that provides medical
and surgical benefits with respect to a mastectomy shall
ensure that, in a case in which a mastectomy patient elects
breast reconstruction, coverage is provided for--
``(1) all stages of reconstruction of the breast on which
the mastectomy has been performed; and
``(2) surgery and reconstruction of the other breast to
produce a symmetrical appearance;

in the manner determined by the attending physician and the
patient to be appropriate, and consistent with any fee
schedule contained in the plan.
``(c) Prohibition on Certain Modifications.--In
implementing the requirements of this section, a group health
plan, and a health insurance issuer providing health
insurance coverage in connection with a group health plan,
may not modify the terms and conditions of coverage based on
the determination by a participant or beneficiary to request
less than the minimum coverage required under subsection (a)
or (b).
``(d) Notice.--A group health plan, and a health insurance
issuer providing health insurance coverage in connection with
a group health plan shall provide notice to each participant
and beneficiary under such plan regarding the coverage
required by this section in accordance with regulations
promulgated by the Secretary. Such notice shall be in writing
and prominently positioned in any literature or
correspondence made available or distributed by the plan or
issuer and shall be transmitted--
``(1) in the next mailing made by the plan or issuer to the
participant or beneficiary;
``(2) as part of any yearly informational packet sent to
the participant or beneficiary; or
``(3) not later than January 1, 1998;

whichever is earlier.
``(e) Secondary Consultations.--
``(1) In general.--A group health plan, and a health
insurance issuer providing health insurance coverage in
connection with a group health plan, that provides coverage
with respect to medical and surgical services provided in
relation to the diagnosis and treatment of cancer shall
ensure that full coverage is provided for secondary
consultations by specialists in the appropriate medical
fields (including pathology, radiology, and oncology) to
confirm or refute such diagnosis. Such plan or issuer shall
ensure that full coverage is provided for such secondary
consultation whether such consultation is based on a positive
or negative initial diagnosis. In any case in which the
attending physician certifies in writing that services
necessary for such a secondary consultation are not
sufficiently available from specialists operating under the
plan with respect to whose services coverage is otherwise
provided under such plan or by such issuer, such plan or
issuer shall ensure that coverage is provided with respect to
the services necessary for the secondary consultation with
any other specialist selected by the attending physician for
such purpose at no additional cost to the individual beyond
that which the individual would have paid if the specialist
was participating in the network of the plan.
``(2) Exception.--Nothing in paragraph (1) shall be
construed as requiring the provision of secondary
consultations where the patient determines not to seek such a
consultation.
``(f) Prohibition on Penalties or Incentives.--A group
health plan, and a health insurance issuer providing health
insurance coverage in connection with a group health plan,
may not--
``(1) penalize or otherwise reduce or limit the
reimbursement of a provider or specialist because the
provider or specialist provided care to a participant or
beneficiary in accordance with this section;
``(2) provide financial or other incentives to a physician
or specialist to induce the physician or specialist to keep
the length of inpatient stays of patients following a
mastectomy, lumpectomy, or a lymph node dissection for the
treatment of breast cancer below certain limits or to limit
referrals for secondary consultations; or
``(3) provide financial or other incentives to a physician
or specialist to induce the physician or specialist to
refrain from referring a participant or beneficiary for a
secondary consultation that would otherwise be covered by the
plan or coverage involved under subsection (e).''.
(b) Clerical Amendment.--The table of contents in section 1
of such Act, as amended by section 603 of the Newborns' and
Mothers' Health Protection Act of 1996 and section 702 of the
Mental Health Parity Act of 1996, is amended by inserting
after the item relating to section 712 the following new
item:

``Sec. 713. Required coverage for minimum hospital stay for
mastectomies and lymph node dissections for the treatment
of breast cancer, coverage for reconstructive surgery
following mastectomies, and coverage for secondary
consultations.''.

(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply with respect to plan years beginning on or after the
date of enactment of this Act.
(2) Special rule for collective bargaining agreements.--In
the case of a group health plan maintained pursuant to 1 or
more collective bargaining agreements between employee
representatives and 1 or more employers ratified before the
date of enactment of this Act, the amendments made by this
section shall not apply to plan years beginning before the
later of--
(A) the date on which the last collective bargaining
agreements relating to the plan terminates (determined
without regard to any extension thereof agreed to after the
date of enactment of this Act), or
(B) January 1, 1998.

For purposes of subparagraph (A), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any
requirement added by this section shall not be treated as a
termination of such collective bargaining agreement.

SEC. 4. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT RELATING
TO THE GROUP MARKET.

(a) In General.--Subpart 2 of part A of title XXVII of the
Public Health Service Act (as added by section 604(a) of the
Newborns' and Mothers' Health Protection Act of 1996 and
amended by section 703(a) of the Mental Health Parity Act of
1996) is amended by adding at the end the following new
section:

``SEC. 2706. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR
MASTECTOMIES AND LYMPH NODE DISSECTIONS FOR THE
TREATMENT OF BREAST CANCER, COVERAGE FOR
RECONSTRUCTION SURGERY FOLLOWING MASTECTOMIES,
AND COVERAGE FOR SECONDARY CONSULTATIONS.

[[Page S888]]

this section, a group health plan, and a health insurance
issuer providing health insurance coverage in connection with
a group health plan, may not modify the terms and conditions
of coverage based on the determination by a participant or
beneficiary to request less than the minimum coverage
required under subsection (a) or (b).
``(d) Notice.--A group health plan, and a health insurance
issuer providing health insurance coverage in connection with
a group health plan shall provide notice to each participant
and beneficiary under such plan regarding the coverage
required by this section in accordance with regulations
promulgated by the Secretary. Such notice shall be in writing
and prominently positioned in any literature or
correspondence made available or distributed by the plan or
issuer and shall be transmitted--
``(1) in the next mailing made by the plan or issuer to the
participant or beneficiary;
``(2) as part of any yearly informational packet sent to
the participant or beneficiary; or
``(3) not later than January 1, 1998;

whichever is earlier.
``(e) Secondary Consultations.--
``(1) In general.--A group health plan, and a health
insurance issuer providing health insurance coverage in
connection with a group health plan that provides coverage
with respect to medical and surgical services provided in
relation to the diagnosis and treatment of cancer shall
ensure that full coverage is provided for secondary
consultations by specialists in the appropriate medical
fields (including pathology, radiology, and oncology) to
confirm or refute such diagnosis. Such plan or issuer shall
ensure that full coverage is provided for such secondary
consultation whether such consultation is based on a positive
or negative initial diagnosis. In any case in which the
attending physician certifies in writing that services
necessary for such a secondary consultation are not
sufficiently available from specialists operating under the
plan with respect to whose services coverage is otherwise
provided under such plan or by such issuer, such plan or
issuer shall ensure that coverage is provided with respect to
the services necessary for the secondary consultation with
any other specialist selected by the attending physician for
such purpose at no additional cost to the individual beyond
that which the individual would have paid if the specialist
was participating in the network of the plan.
``(2) Exception.--Nothing in paragraph (1) shall be
construed as requiring the provision of secondary
consultations where the patient determines not to seek such a
consultation.
``(f) Prohibition on Penalties or Incentives.--A group
health plan, and a health insurance issuer providing health
insurance coverage in connection with a group health plan,
may not--
``(1) penalize or otherwise reduce or limit the
reimbursement of a provider or specialist because the
provider or specialist provided care to a participant or
beneficiary in accordance with this section;
``(2) provide financial or other incentives to a physician
or specialist to induce the physician or specialist to keep
the length of inpatient stays of patients following a
mastectomy, lumpectomy, or a lymph node dissection for the
treatment of breast cancer below certain limits or to limit
referrals for secondary consultations; or
``(3) provide financial or other incentives to a physician
or specialist to induce the physician or specialist to
refrain from referring a participant or beneficiary for a
secondary consultation that would otherwise be covered by the
plan or coverage involved under subsection (e).''.
(b) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to group health plans for plan years beginning on or
after the date of enactment of this Act.
(2) Special rule for collective bargaining agreements.--In
the case of a group health plan maintained pursuant to 1 or
more collective bargaining agreements between employee
representatives and 1 or more employers ratified before the
date of enactment of this Act, the amendments made by this
section shall not apply to plan years beginning before the
later of--
(A) the date on which the last collective bargaining
agreements relating to the plan terminates (determined
without regard to any extension thereof agreed to after the
date of enactment of this Act), or
(B) January 1, 1998.

SEC. 5. AMENDMENT TO THE PUBLIC HEALTH SERVICE ACT RELATING
TO THE INDIVIDUAL MARKET.

(a) In General.--Subpart 3 of part B of title XXVII of the
Public Health Service Act (as added by section 605(a) of the
Newborn's and Mother's Health Protection Act of 1996) is
amended by adding at the end the following new section:

``SEC. 2752. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR
MASTECTOMIES AND LYMPH NODE DISSECTIONS FOR THE
TREATMENT OF BREAST CANCER AND SECONDARY
CONSULTATIONS.

``The provisions of section 2706 shall apply to health
insurance coverage offered by a health insurance issuer in
the individual market in the same manner as they apply to
health insurance coverage offered by a health insurance
issuer in connection with a group health plan in the small or
large group market.''.
(b) Effective Date.--The amendment made by this section
shall apply with respect to health insurance coverage
offered, sold, issued, renewed, in effect, or operated in the
individual market on or after the date of enactment of this
Act.

SEC. 6. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

(a) In General.--Chapter 100 of the Internal Revenue Code
of 1986 (relating to group health plan portability, access,
and renewability requirements) is amended by redesignating
sections 9804, 9805, and 9806 as sections 9805, 9806, and
9807, respectively, and by inserting after section 9803 the
following new section:

``SEC. 9804. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR
MASTECTOMIES AND LYMPH NODE DISSECTIONS FOR THE
TREATMENT OF BREAST CANCER, COVERAGE FOR
RECONSTRUCTIVE SURGERY FOLLOWING MASTECTOMIES,
AND COVERAGE FOR SECONDARY CONSULTATIONS.

``(a) Inpatient Care.--
``(1) In general.--A group health plan that provides
medical and surgical benefits shall ensure that inpatient
coverage with respect to the treatment of breast cancer is
provided for a period of time as is determined by the
attending physician, in consultation with the patient, to be
medically appropriate following--
``(A) a mastectomy;
``(B) a lumpectomy; or
``(C) a lymph node dissection for the treatment of breast
cancer.
``(2) Exception.--Nothing in this section shall be
construed as requiring the provision of inpatient coverage if
the attending physician and patient determine that a shorter
period of hospital stay is medically appropriate.
``(b) Reconstructive Surgery.--A group health plan that
provides medical and surgical benefits with respect to a
mastectomy shall ensure that, in a case in which a mastectomy
patient elects breast reconstruction, coverage is provided
for--
``(1) all stages of reconstruction of the breast on which
the mastectomy has been performed; and
``(2) surgery and reconstruction of the other breast to
produce a symmetrical appearance;

in the manner determined by the attending physician and the
patient to be appropriate, and consistent with any fee
schedule contained in the plan.
``(c) Prohibition on Certain Modifications.--In
implementing the requirements of this section, a group health
plan may not modify the terms and conditions of coverage
based on the determination by a participant or beneficiary to
request less than the minimum coverage required under
subsection (a) or (b).
``(d) Notice.--A group health plan shall provide notice to
each participant and beneficiary under such plan regarding
the coverage required by this section in accordance with
regulations promulgated by the Secretary. Such notice shall
be in writing and prominently positioned in any literature or
correspondence made available or distributed by the plan and
shall be transmitted--
``(1) in the next mailing made by the plan to the
participant or beneficiary;
``(2) as part of any yearly informational packet sent to
the participant or beneficiary; or
``(3) not later than January 1, 1998;

whichever is earlier.
``(e) Secondary Consultations.--
``(1) In general.--A group health plan that provides
coverage with respect to medical and surgical services
provided in relation to the diagnosis and treatment of cancer
shall ensure that full coverage is provided for secondary
consultations by specialists in the appropriate medical
fields (including pathology, radiology, and oncology) to
confirm or refute such diagnosis. Such plan or issuer shall
ensure that full coverage is provided for such secondary
consultation whether such consultation is based on a positive
or negative initial diagnosis. In any case in which the
attending physician certifies in writing that services
necessary for such a secondary consultation are not
sufficiently available from specialists operating under the
plan with respect to whose services coverage is otherwise
provided under such plan or by such issuer, such plan or
issuer shall ensure that coverage is provided with respect to
the services necessary for the secondary consultation with
any other specialist selected by the attending physician for
such purpose at no additional cost to the individual beyond
that which the individual would have paid if the specialist
was participating in the network of the plan.
``(2) Exception.--Nothing in paragraph (1) shall be
construed as requiring the provision of secondary
consultations where the patient determines not to seek such a
consultation.
``(f) Prohibition on Penalties.--A group health plan may
not--
``(1) penalize or otherwise reduce or limit the
reimbursement of a provider or specialist because the
provider or specialist provided care to a participant or
beneficiary in accordance with this section;
``(2) provide financial or other incentives to a physician
or specialist to induce the

[[Page S889]]

physician or specialist to keep the length of inpatient stays
of patients following a mastectomy, lumpectomy, or a lymph
node dissection for the treatment of breast cancer below
certain limits or to limit referrals for secondary
consultations; or
``(3) provide financial or other incentives to a physician
or specialist to induce the physician or specialist to
refrain from referring a participant or beneficiary for a
secondary consultation that would otherwise be covered by the
plan involved under subsection (e).''.
(b) Conforming Amendments.--
(1) Sections 9801(c)(1), 9805(b) (as redesignated by
subsection (a)), 9805(c) (as so redesignated),
4980D(c)(3)(B)(i)(I), 4980D(d)(3), and 4980D(f)(1) of such
Code are each amended by striking ``9805'' each place it
appears and inserting ``9806''.
(2) The heading for subtitle K of such Code is amended to
read as follows:
``Subtitle K--Group Health Plan Portability, Access, Renewability, and
Other Requirements''.
(3) The heading for chapter 100 of such Code is amended to
read as follows:

``CHAPTER 100--GROUP HEALTH PLAN PORTABILITY, ACCESS, RENEWABILITY, AND
OTHER REQUIREMENTS''.

(4) Section 4980D(a) of such Code is amended by striking
``and renewability'' and inserting ``renewability, and
other''.
(c) Clerical Amendments.--
(1) The table of contents for chapter 100 of such Code is
amended by redesignating the items relating to sections 9804,
9805, and 9806 as items relating to sections 9805, 9806, and
9807, and by inserting after the item relating to section
9803 the following new item:

``Sec. 9804. Required coverage for minimum hospital stay for
mastectomies and lymph node dissections for the treatment
of breast cancer, coverage for reconstructive surgery
following mastectomies, and coverage for secondary
consultations.''.

(2) The item relating to subtitle K in the table of
subtitles for such Code is amended by striking ``and
renewability'' and inserting ``renewability, and other''.
(3) The item relating to chapter 100 in the table of
chapters for subtitle K of such Code is amended by striking
``and renewability'' and inserting ``renewability, and
other''.
(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply with respect to plan years beginning on or after the
date of enactment of this Act.
(2) Special rule for collective bargaining agreements.--In
the case of a group health plan maintained pursuant to 1 or
more collective bargaining agreements between employee
representatives and 1 or more employers ratified before the
date of enactment of this Act, the amendments made by this
section shall not apply to plan years beginning before the
later of--
(A) the date on which the last collective bargaining
agreements relating to the plan terminates (determined
without regard to any extension thereof agreed to after the
date of enactment of this Act), or
(B) January 1, 1998.

Mrs. FEINSTEIN. Madam President, as cochair of the Senate Cancer
Coalition, I am pleased today to join with Senator D'Amato in
introducing S. 249, the Women's Health and Cancer Rights Act of 1997.

The Bill

This bill does four things:
For treatment of breast cancer, it requires insurance plans to allow
physicians to determine the length of a patient's hospital stay
according to medical necessity; and it requires health insurance plans
to cover breast reconstruction following a mastectomy.
For treatment of all cancers, it requires health insurance plans to
cover second opinions by specialists whether the initial diagnosis is
positive or negative; and it prohibits insurance plans from financially
penalizing or rewarding a physician for providing medically necessary
care or for referring a patient for a second opinion

Two California Cases

I have received two letters from constituents describing firsthand
their treatment by insurance companies in having a mastectomy.
Nancy Couchot, age 60, of Newark, CA, wrote me that she had a
modified radical mastectomy on November 4, 1996, at 11:30 a.m. and was
released by 4:30 p.m. She could not walk and the hospital staff did not
help her ``even walk to the bathroom.'' She says, ``Any woman, under
these circumstances, should be able to opt for an overnight stay to
receive professional help and strong pain relief.''
Victoria Berck, of Los Angeles, wrote that she had a mastectomy and
lymph node removal at 7:30 a.m. on November 13, 1996, and was released
from the hospital 7 hours later, at 2:30 p.m. Ms. Berck was given
instructions on how to empty two drains attached to her body and sent
home. She concludes, ``No civilized country in the world has mastectomy
as an outpatient procedure.''
These are but two examples of what, unfortunately, is becoming a
national nightmare--insurance plans interfering with professional
medical judgment and refusing to cover hospital stays of mastectomy
patients.

Need for the Bill

Increasingly, insurance companies are dropping and reducing inpatient
hospital coverage of mastectomies. This is beyond the pale. It is
unconscionable.
The Wall Street Journal on November 6 reported that ``some health
maintenance organizations are creating an uproar by ordering that
mastectomies be performed on an outpatient basis. At a growing number
of HMOs, surgeons must document ``medical necessity'' to justify even a
one-night hospital admission.''
In 1997, over 184,000 women--or 1 in every 8 American women--will be
diagnosed with invasive breast cancer and 44,300 women will die from
breast cancer; 2.6 million American women are living with breast cancer
today. In my State, 20,000 women will be diagnosed with breast cancer
and 5,000 will die or one every 27 minutes. San Francisco has among the
highest incidence rates of breast cancer in the world.
After a mastectomy, patients must cope with pain from the surgery,
with psychological loss--the trauma of an amputation--and with drainage
tubes. These patients need medical care from trained professionals,
medical care that they cannot provide themselves at home.
In the last 10 years, the length of overnight hospital stays for
mastectomies has declined from 4 to 6 days to 2 to 3 days to, in some
cases, no days. With the average cost of one day in the hospital at
$930, if insurance plans refuse to cover a hospital stay, patients are
forced to go home.

Breast Reconstruction

Insurance plans also refuse to cover breast reconstruction. Our bill
requires coverage. Breast reconstruction is an important followup part
of breast cancer treatment and recovery. One study found that 84
percent of patients were denied insurance coverage for reconstruction
of the removed breast. Commendably, my State has passed a law requiring
coverage of breast reconstruction after a mastectomy. However, we need
a national standard, covering all insurance policies.

Second Opinions Covered

Another important feature of our bill is insurance coverage of second
opinions for all cancers. The news of possible cancer is traumatic. It
is a dreaded fear that we all live with daily. For this life-
threatening disease for which there is no cure, more information is
better than less. Expert advice is needed to make all-important
decisions. I believe it is reasonable to encourage people to have a
second consultation with a specialist, by requiring insurance plans to
cover second opinions.
Patients often need specialty care. A December 1996 study reported in
the New England Journal of Medicine found that specialty care improves
the outcome of heart attack patients. This should come as no surprise.
Specialists are knowledgeable about their field. A California doctor
pointed out that nonspecialists may order a ``battery of unnecessary
and sometimes invasive and risky examinations'' for patients. Thus,
incentives that discourage the use of specialists or referrals to
specialists, can end up costing the insurance plan more--instead of
saving money.

No Financial Incentives

Finally, our bill prohibits insurance plans from including financial
or other incentives to influence the care a doctor provides, similar to
a law passed by the California legislature last year. Many physicians
have complained that insurance plans include financial bonuses or other
incentives for cutting patient visits or for not referring patients to
specialists. Our bill bans financial incentives linked to how a doctor
provides care. Our intent is to restore medical decisionmaking to
health care.

[[Page S890]]

For example, a California physician wrote me, ``Financial incentives
under managed care plans often remove access to pediatric specialty
care.'' A June 1995 report in the Journal of the National Cancer
Institute cited the suit filed by the husband of a 34-year-old
California woman who died from colon cancer, claiming that HMO
incentives encouraged her physicians not to order additional tests that
could have saved her life.
Our bill tries to restore professional medical decisionmaking to
medical providers, those whom we trust to take care of us. It should
not take an act of Congress to guarantee good health care, but
unfortunately that is where we are today.
I hope my colleagues will join us in enacting this bill, an important
protection for millions of Americans who face the fear and the reality
of cancer every day.
______

By Mr. FORD:
S. 250. A bill to designate the U.S. courthouse located in Paducah,
Kentucky, as the ``Edward Huggins Johnstone United States Courthouse'';
to the Committee on Environment and Public Works.

the edward huggins johnstone u.s. courthouse designation act of 1997

Mr. FORD. Mr. President, I rise today to offer legislation to
designate the United States Courthouse in Paducah, KY as the Edward
Huggins Johnstone United States Courthouse. There is much that I want
to say about Edward Johnstone, a man known as ``Big Ed'' to his
friends, and why this outstanding Kentuckian so richly deserves this
accolade.
Edward Johnstone is a man who has spent his entire life in service to
his country and the people of western Kentucky. Edward Johnstone is a
veteran who fought for his country at the Battle of the Bulge, but
finds nothing remarkable in his decorations of honor--to him they are
reminders of his duty to country and fellow countrymen who never
returned home. Edward Johnstone is a distinguished legal scholar who
earned his law degree from the University of Kentucky and put his
skills to work as a country lawyer in his hometown of Princeton, KY.
Edward Johnstone is a judge who has served 21 years on the bench doling
out words of wisdom and sentences of justice to those who come before
him. Edward Johnstone is a tough, fair, hard-working Federal judge who
puts in a full day's work even though he is a senior judge. Edward
Johnstone is a man who gives me faith in the judicial process and those
chosen to uphold our laws.
I am very proud to introduce legislation on behalf of myself and all
of the western Kentuckians whose lives have been touched by this
extraordinary individual.
Let me end my remarks, Mr. President, by remembering something that
George Washington once said, ``The administration of justice is the
firmest pillar of government.'' As an administrator of justice, Edward
Johnstone is our own marble column in the Western Kentucky community.
Mr. President, I send to the desk a bill designating the courthouse
in Paducah, KY, as the Edward Huggins Johnstone United States
Courthouse, and I ask that it be appropriately referred.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. FORD. 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. 250

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

SECTION 1. DESIGNATION.

The United States courthouse located in Paducah, Kentucky,
shall be known and designated as the ``Edward Huggins
Johnstone United States Courthouse''.

SEC. 2. REFERENCES.

Any reference in a law, map, regulation, document, paper,
or other record of the United States to the United States
courthouse referred to in section 1 shall be deemed to be a
reference to the Edward Huggins Johnstone United States
Courthouse.
______

By Mr. SHELBY (for himself, Mr. Grassley, Mr. Cochran, Mr.
Roberts, Mr. Abraham, and Mr. Hutchinson):
S. 251. A bill to amend the Internal Revenue Code of 1986 to allow
farmers to income average over 2 years; to the Committee on Finance.

farmer's income averaging legislation

Mr. SHELBY. Mr. President, today I am introducing
legislation--along with Senators Grassley, Cochran, Roberts, Abraham,
and Hutchinson--which will restore to American farmers an important
tool in meeting their Federal income tax obligations.
Mr. President, America would not be what it is today without the
dedication, sacrifice, and hard work of the American farmer. The
American farmer is the most efficient farmer in the world. Each farmer
in America provides food and fiber for 94 people in our country and an
additional 35 people abroad. As a result, Americans enjoy the most
affordable, healthy, and stable food supply of any country in the
world.
Yet, despite the successes of the American farmer, they are faced
with unique and difficult barriers, they must overcome, including
unpredictable weather, natural disasters, plauges of insects and
diseases, and excessive Government regulations. All of these result in
substantial income fluctuations for the average farmer.
Wide swings in farmers' income from year to year, result in a tax
burden much higher than individuals with a stable source of income
because surges in income are taxed at a higher rate than is a steady
flow of income. This problem is compounded when a farmers income is
exaggerated by the sale of land or other assets.
Prior to 1986, farmers were allowed to average their income over a 2-
year period in order to give them some sense of regularity and
predictability in their payment of Federal taxes. This provision was
repealed as part of the 1986 Tax Act, which reduced the number of tax
brackets and lowered the top rate of 28 percent. However, since 1986,
Congress has added two new tax brackets, and increased the top rate to
39.6 percent.
This change, along with the move to a more market-oriented farm
program, makes it imperative that Congress restores to farmers the
ability to average their income, and the legislation I am introducing
today will do just that. The Joint Committee on Taxation estimated last
year that this bill would cost about $90 million over 5 years.
Representative Nick Smith has sponsored an identical bill in the
House, and it has the broad support of the farming community. Groups
endorsing this proposal include: Alabama Farmers Federation, American
Farm Bureau Federation, National Association of Wheat Growers, National
Cattlemen's Beef Association, National Farmers Union, National Grain
Sorghum Producers, National Grange, National Pork Producers Council,
and Women in Farm Economics.
Mr. President, the success of our Nation depends in large part on the
success of the American farmer. Until we can enact broad-based tax
reform, we should provide farmers with some sense of regularity and
predictability in meeting their Federal tax obligation. This
legislation will do that, and I hope my colleagues will support
it.
______

By Mr. GREGG:
S. 252. A bill to amend the Internal Revenue Code of 1986 to provide
a reduction in the capital gains tax for assets held more than 2 years,
to impose a surcharge on short-term capital gains, and for other
purposes; to the Committee on Finance.

CAPITAL GAINS LEGISLATION

Mr. GREGG. Mr. President, I introduce a bill that will have a
significant impact on the promotion of long-term investment through a
reduction in the capital gains tax. I believe the Congress has a
responsibility to enact laws promoting long-term capital investment and
savings by all Americans. Part of fulfilling this obligation must
include implementing a plan that would reduce the current capital gains
tax rate on long-term investments.
We must also, however, balance this important economic goal against
the moral issue of adding increasing debt onto our children's
shoulders. This becomes an unavoidable issue in the capital gains
debate because the Joint Committee on Taxation scores capital gains a
big revenue loser. This scoring issue is an unfortunate fact that we in
Congress cannot ignore.

[[Page S891]]

Accordingly, I have developed legislation that would encourage long-
term investment by amending the current capital gains tax using a
sliding scale plan. My bill encourages an individual to hold an asset
over a number of years, thus, allowing a greater tax reduction on
investments, with the maximum benefit being reached after 4 years. It
would reward individuals who look toward contributing to a savings plan
over a number of years, while at the same time making quick-fix
investments less attractive. This sliding scale plan would encourage
investments that benefit long-term savings, such as a child's
education, an individual's retirement, or other non-speculative
holdings.
The theory behind the sliding scale reduction on capital gains hinges
upon an agreed goal: the promotion of savings and long-term investment
through a capital gains cut, while recognizing our current fiscal
realities. The Joint Committee on Taxation estimates this plan would
lose just $7.4 billion in revenue over the 1995-2000 period.
Finally, Mr. President, I ask unanimous consent that a Washington
Post op-ed by Louis Lowenstein, professor of finance at Columbia
University, be included in the Record. Professor Lowenstein's piece
outlines the current fiscal problem this legislation attempts to
address.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

S. 252

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

(a) Short Title.--This Act may be cited as the ``Long-Term
Investment Incentive Act of 1997''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.

SEC. 2. REDUCTION OF TAX ON LONG-TERM CAPITAL GAINS ON ASSETS
HELD MORE THAN 2 YEARS.

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

``SEC. 1202. CAPITAL GAINS DEDUCTION FOR ASSETS HELD BY
NONCORPORATE TAXPAYERS MORE THAN 2 YEARS.

``(a) General Rule.--If a taxpayer other than a corporation
has a net capital gain for any taxable year, there shall be
allowed as a deduction an amount equal to the sum of--
``(1) 20 percent of the qualified 4-year capital gain,
``(2) 10 percent of the qualified 3-year capital gain, plus
``(3) 5 percent of the qualified 2-year capital gain.
``(b) Definitions.--For purposes of this title--
``(1) Qualified 4-year capital gain.--The term `qualified
4-year capital gain' means the lesser of--
``(A) the amount of long-term capital gain which would be
computed for the taxable year if only gain from the sale or
exchange of property held by the taxpayer for more than 4
years were taken into account, or
``(B) the net capital gain.
``(2) Qualified 3-year capital gain.--The term `qualified
3-year capital gain' means the lesser of--
``(A) the amount of long-term capital gain which would be
computed for the taxable year if only gain from the sale or
exchange of property held by the taxpayer for more than 3
years but not more than 4 years were taken into account, or
``(B) the net capital gain, reduced by the qualified 4-year
capital gain.
``(3) Qualified 2-year capital gain.--The term `qualified
2-year capital gain' means the lesser of--
``(A) the amount of long-term capital gain which would be
computed for the taxable year if only gain from the sale or
exchange of property held by the taxpayer for more than 2
years but not more than 3 years were taken into account, or
``(B) the net capital gain, reduced by the qualified 4-year
capital gain and qualified 3-year capital gain.
``(c) Estates and Trusts.--In the case of an estate or
trust, the deduction under subsection (a) shall be computed
by excluding the portion (if any) of the gains for the
taxable year from sales or exchanges of capital assets which,
under sections 652 and 662 (relating to inclusions of amounts
in gross income of beneficiaries of trusts), is includible by
the income beneficiaries as gain derived from the sale or
exchange of capital assets.
``(d) Coordination With Treatment of Capital Gain Under
Limitation on Investment Interest.--For purposes of this
section, the net capital gain for any taxable year shall be
reduced (but not below zero) by the amount which the taxpayer
takes into account as investment income under section
163(d)(4)(B)(iii).
``(e) Treatment of Collectibles.--
``(1) In general.--Solely for purposes of this section, any
gain or loss from the sale or exchange of a collectible shall
be treated as a short-term capital gain or loss (as the case
may be), without regard to the period such asset was held.
The preceding sentence shall apply only to the extent the
gain or loss is taken into account in computing taxable
income.
``(2) Treatment of certain sales of interest in
partnership, etc.--For purposes of paragraph (1), any gain
from the sale or exchange of an interest in a partnership, S
corporation, or trust which is attributable to unrealized
appreciation in the value of collectibles held by such entity
shall be treated as gain from the sale or exchange of a
collectible. Rules similar to the rules of section 751(f)
shall apply for purposes of the preceding sentence.
``(3) Collectible.--For purposes of this subsection, the
term `collectible' means any capital asset which is a
collectible (as defined in section 408(m) without regard to
paragraph (3) thereof).
``(f) Transitional Rule.--
``(1) In general.--Gain may be taken into account under
subsection (b)(1)(A), (b)(2)(A), or (b)(3)(A) only if such
gain is properly taken into account on or after February 1,
1997.
``(2) Special rules for pass-thru entities.--
``(A) In general.--In applying paragraph (1) with respect
to any pass-thru entity, the determination of when gains and
losses are properly taken into account shall be made at the
entity level.
``(B) Pass-thru entity defined.--For purposes of
subparagraph (A), the term `pass-thru entity' means--
``(i) a regulated investment company,
``(ii) a real estate investment trust,
``(iii) an S corporation,
``(iv) a partnership,
``(v) an estate or trust, and
``(vi) a common trust fund.''
(b) Deduction Allowable in Computing Adjusted Gross
Income.--Subsection (a) of section 62 is amended by inserting
after paragraph (16) the following new paragraph:
``(17) Long-term capital gains.--The deduction allowed by
section 1202.''
(c) Maximum Capital Gains Rate.--Clause (i) of section
1(h)(1)(A), as amended by section 3(a), is amended by
striking ``the net capital gain'' and inserting ``the excess
of the net capital gain over the deduction allowed under
section 1202''.
(d) Treatment of Certain Pass-Thru Entities.--
(1) Capital gain dividends of regulated investment
companies.--
(A) Subparagraph (B) of section 852(b)(3) is amended to
read as follows:
``(B) Treatment of capital gain dividends by
shareholders.--A capital gain dividend shall be treated by
the shareholders as gain from the sale or exchange of a
capital asset held for more than 1 year but not more than 2
years; except that--
``(i) the portion of any such dividend designated by the
company as allocable to qualified 4-year capital gain of the
company shall be treated as gain from the sale or exchange of
a capital asset held for more than 4 years,
``(ii) the portion of any such dividend designated by the
company as allocable to qualified 3-year capital gain of the
company shall be treated as gain from the sale or exchange of
a capital asset held for more than 3 years but not more than
4 years, and
``(iii) the portion of any such dividend designated by the
company as allocable to qualified 2-year capital gain of the
company shall be treated as gain from the sale or exchange of
a capital asset held for more than 2 years but not more than
3 years.

Rules similar to the rules of subparagraph (C) shall apply to
any designation under clause (i), (ii), or (iii).''
(B) Clause (i) of section 852(b)(3)(D) is amended by adding
at the end the following new sentence: ``Rules similar to the
rules of subparagraph (B) shall apply in determining
character of the amount to be so included by any such
shareholder.''
(2) Capital gain dividends of real estate investment
trusts.--Subparagraph (B) of section 857(b)(3) is amended to
read as follows:
``(B) Treatment of capital gain dividends by
shareholders.--A capital gain dividend shall be treated by
the shareholders or holders of beneficial interests as gain
from the sale or exchange of a capital asset held for more
than 1 year but not more than 2 years; except that--
``(i) the portion of any such dividend designated by the
real estate investment trust as allocable to qualified 4-year
capital gain of the trust shall be treated as gain from the
sale or exchange of a capital asset held for more than 4
years,
``(ii) the portion of any such dividend designated by the
trust as allocable to qualified 3-year capital gain of the
trust shall be treated as gain from the sale or exchange of a
capital asset held for more than 3 years but not more than 4
years, and
``(iii) the portion of any such dividend designated by the
trust as allocable to qualified

[[Page S892]]

2-year capital gain of the trust shall be treated as gain
from the sale or exchange of a capital asset held for more
than 2 years but not more than 3 years.

Rules similar to the rules of subparagraph (C) shall apply to
any designation under clause (i) or (ii).''
(3) Common trust funds.--Subsection (c) of section 584 is
amended--
(A) by inserting ``and not more than 2 years'' after ``1
year'' each place it appears in paragraph (2),
(B) by striking ``and'' at the end of paragraph (2), and
(C) by redesignating paragraph (3) as paragraph (6) and
inserting after paragraph (2) the following new paragraphs:
``(3) as part of its gains from sales or exchanges of
capital assets held for more than 2 years but less than 3
years, its proportionate share of the gains of the common
trust fund from sales or exchanges of capital assets held for
more than 2 years but not more than 3 years,
``(4) as part of its gains from sales or exchanges of
capital assets held for more than 3 years but less than 4
years, its proportionate share of the gains of the common
trust fund from sales or exchanges of capital assets held for
more than 3 years but less than 4 years,
``(5) as part of its gains from sales or exchanges of
capital assets held more than 4 years, its proportionate
share of the gains of the common trust fund from sales or
exchanges of capital assets held for more than 4 years,
and''.
(e) Technical and Conforming Changes.--
(1) Subparagraph (B) of section 170(e)(1) is amended by
inserting ``(or, in the case of a taxpayer other than a
corporation, the percentage of such gain equal to 100 percent
minus the percentage applicable to such gain under section
1202(a))'' after ``the amount of gain''.
(2) Subparagraph (B) of section 172(d)(2) is amended to
read as follows:
``(B) the deduction under section 1202 and the exclusion
under section 1203 shall not be allowed.''
(3)(A) Section 221 (relating to cross reference) is amended
to read as follows:

``SEC. 221. CROSS REFERENCES.

``(1) For deduction for net capital gains in the case of a
taxpayer other than a corporation, see section 1202.
``(2) For deductions in respect of a decedent, see section
691.''
(B) The table of sections for part VII of subchapter B of
chapter 1 is amended by striking ``reference'' in the item
relating to section 221 and inserting ``references''.
(4) The last sentence of section 453A(c)(3) is amended by
striking all that follows ``long-term capital gain,'' and
inserting ``the maximum rate on net capital gain under
section 1(h) or 1201 or the deduction under section 1202
(whichever is appropriate) shall be taken into account.''
(5) Paragraph (4) of section 642(c) is amended to read as
follows:
``(4) Adjustments.--To the extent that the amount otherwise
allowable as a deduction under this subsection consists of
gain from the sale or exchange of capital assets held for
more than 1 year, proper adjustment shall be made for any
deduction allowable to the estate or trust under section 1202
or any exclusion allowable to the estate or trust under
section 1203(a). In the case of a trust, the deduction
allowed by this subsection shall be subject to section 681
(relating to unrelated business income).''
(6) The last sentence of paragraph (3) of section 643(a) is
amended to read as follows: ``The deduction under section
1202 and the exclusion under section 1203 shall not be taken
into account.''
(7) Subparagraph (C) of section 643(a)(6) is amended by
inserting ``(i)'' before ``there shall'' and by inserting
before the period ``, and (ii) the deduction under section
1202 (relating to capital gains deduction) shall not be taken
into account''.
(8) Paragraph (4) of section 691(c) is amended by striking
``sections 1(h), 1201, and 1211'' and inserting ``sections
1(h), 1201, 1202, and 1211''.
(9) The second sentence of section 871(a)(2) is amended by
inserting ``or 1203'' after ``1202''.
(10) Subsection (d) of section 1044 is amended by striking
``1202'' and inserting ``1203''.
(11) Paragraph (1) of section 1402(i) is amended by
inserting ``, and the deduction provided by section 1202
shall not apply'' before the period at the end thereof.
(f) Clerical Amendment.--The table of sections for part I
of subchapter P of chapter 1 is amended by inserting after
the item relating to section 1201 the following new item:

``Sec. 1202. Capital gains deduction for assets held by noncorporate
taxpayers more than 2 years.''

(g) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to taxable years ending after January 31, 1997.
(2) Contributions.--The amendment made by subsection (e)(1)
shall apply to contributions on or after February 1, 1997.

SEC. 3. SURCHARGE ON CAPITAL GAINS ON ASSETS HELD 1 YEAR OR
LESS.

(a) In General.--Subsection (h) of section 1 (relating to
maximum capital gains rate) is amended to read as follows:
``(h) Maximum Capital Gains Taxes.--
``(1) In general.--If a taxpayer has a net capital gain for
any taxable year, then the tax imposed by this section shall
not exceed the sum of--
``(A) a tax computed at the rates and in the same manner as
if this subsection had not been enacted on the greater of--
``(i) taxable income reduced by the amount of net capital
gain, or
``(ii) the amount of taxable income taxed at a rate below
28 percent, plus
``(B) a tax of 28 percent of the amount of taxable income
in excess of the amount determined under subparagraph (A).

For purposes of the preceding sentence, the net capital gain
for any taxable year shall be reduced (but not below zero) by
the amount which the taxpayer elects to take into account as
investment income for the taxable year under section
163(d)(4)(B)(iii).
``(2) Surcharge on net short-term capital gain.--
``(A) In general.--If a taxpayer has a net short-term
capital gain for any taxable year, the tax imposed by this
section (without regard to this paragraph) shall be increased
by an amount equal to the sum of--
``(i) 5.6 percent of the taxpayer's 6-month short-term
capital gain, plus
``(ii) 2.8 percent of the taxpayer's 12-month short-term
capital gain.
``(B) Maximum rate.--
``(i) In general.--Subparagraph (A) shall not be applied to
the extent it would result in--

``(I) 6-month short-term capital gain being taxed at a rate
greater than 33.6 percent, or
``(II) 12-month short-term capital gain being taxed at a
rate greater than 30.8 percent.

``(ii) Ordering rule.--For purposes of clause (i), the rate
or rates at which 6-month or 12-month short-term capital gain
is being taxed shall be determined as if--

``(I) such gain were taxed after all other taxable income,
and
``(II) 12-month short-term capital gain were taxed after 6-
month short-term capital gain.

``(C) Definitions.--For purposes of this paragraph--
``(i) 6-month short-term capital gain.--The term `6-month
short-term capital gain' means the lesser of--

``(I) the amount of short-term capital gain which would be
computed for the taxable year if only gain from the sale or
exchange of property held by the taxpayer for 6 months or
less were taken into account, or
``(II) net short-term capital gain.

``(ii) 12-month short-term capital gain.--The term `12-
month short-term capital gain' means the lesser of--

``(I) the amount of short-term capital gain which would be
computed for the taxable year if only gain from the sale or
exchange of property held by the taxpayer for more than 6
months but not more than 12 months were taken into account,
or
``(II) net short-term capital gain, reduced by 6-month
short-term capital gain.

For purposes of clause (i)(I) or (ii)(I), gain may be taken
into account only if such gain is properly taken into account
on or after February 1, 1997.''
(b) Effective Date.--The amendment made by this section
shall apply to taxable years ending after January 31, 1997.
____

[From the Washington Post, Apr. 30, 1995]

A Tax Cut That Won't Sell Us Short

by rewarding only long-term investors, we all stand to gain

(By Louis Lowenstein)

The House has passed the Contract With America Tax Relief
Bill of 1995 calling for not one, but two cuts in the capital
gains tax. The first would cut the maximum rate in half, to
just under 20 percent; the second would index the gain to
eliminate the effects of inflation. With the Treasury
Department estimating the 10-year cost at $92 billion, it is
no wonder that critics label this a giveaway to the rich.
Speaker Newt Gingrich and his allies are right about one
thing--there is something wrong with the current capital
gains tax structure. But their remedy doesn't fix the real
problem, which is the refusal of today's investors to focus,
as they once did, more on long-term business concerns than on
the next twitch in interest rates, unemployment data or
market prices. Their solution is not only misguided but a
missed opportunity to correct some real wrongs in the tax
system.
There is a better way: Cut the capital gains tax rate for
people who hold stocks for long periods, and maintain or even
raise the rates for short-term investors. This would reward
productive investment, discourage speculators and avoid a
costly increase in the deficit.
Such a policy has been endorsed in one form or another over
the last half-century by such varied folk as Sen. Nancy
Kassebaum, investment banker Felix Rohatyn, financier Warren
Buffett and economist John Maynard Keynes--as well as by a
1992 Twentieth Century Fund task force on market speculation
and corporate governance, of which I was a member. The
proposal, so remarkably simple, calls for capital gains rates
that would decline dramatically, but only as the holding
period lengthens.
In other words, the capital gains tax benefit would be
restricted to people who meet the traditional notion of
investor. The dictionary defines an investor as ``an
individual or organization who commits capital to become a
partner of a business enterprise.'' As recently as the
beginning of the 1960's, investors still though in terms of
owning a share

[[Page S893]]

of America, as the New York Stock Exchange used to say. They
knew their companies and they held their stocks, on the
average, for seven years. For these investors, the rate could
be cut drastically--even to zero--after, say, 10 or 15 years.
That would help return stock markets to their most useful
function, one in which participation should be encouraged.
Stock markets enable corporations to raise long-term
capital even while investors enjoy a high degree of
liquidity. But those markets are not an end in themselves.
Trading in stocks once they are issued can devolve into a
game of ``musical shares''; the players change places but at
the end of the year nothing much else happened.
And, indeed, the concept of owning a share of American
business has given way to short-term speculation,
particularly by institutional investors. The turnover of
shares of New York Stock Exchange companies, which had been
14 percent, a year in the early `60s, soared to 95 percent by
the late 1980s. In 1987, the total cost of all that
activity--commissions and other trading costs--was about $25
billion, or more than one-sixth of all corporate earnings.
That's a very different kind of market than the market,
say, for wheat, which moves grain from farmers to elevator
operators to millers to bakers to consumers. When
institutions trade the same shares over and over, nothing is
created except profits for the brokers. There is only
duplication and waste, not gain.
While there is good reason to let the capital gains tax
drop as the holding period lengthens, there is absolutely no
reason to subsidize an already wasteful, frenetic trading
game. At present, to qualify for capital gains treatment one
need hold an investment position for just one year. That is
why the tax on restless holders should, at the very least,
not go down. Remember, it is mutual fund managers and other
so-called professionals who are the problem. They spend other
peoples commission dollars on their asset allocation and
other market-timing strategies.
True, speculation fills gaps in trading in the market,
dampening price changes between trades and allowing investors
to accumulate or liquidate positions rapidly. But its social
value is limited. And while most economists rarely see a
market they do not admire, there is no economic reason for
the tax system within which the stock market must operate to
reinforce its worst tendencies. Even economists increasingly
recognize that once the market wheels have been lubricated,
added grease helps only the merchants of grease--the brokers.
Worse yet, a market focused on short-term trading values is
far less likely to serve its fundamental goals--to allocate
capital to its best uses and to encourage shareholders to
monitor the corporate managers' performance. As one fund
manager said, ``It is not our job to be a good citizen at
General Motors.'' But if not him, who?
The more immediate advantages of a steeply graduated
capital gains tax are obvious. It can be formulated to be
revenue-neutral, or nearly so, thus easing the budgetary
pressure. It would obviate the need for inflation-indexing,
for the simple reason that tax would fade rapidly as the
holding period lengthened. And for those who, like this
author and perhaps Gingrich too, dislike the old tax-shelter
programs that enriched parasites at the expense of the
public, a tax along the lines suggested here would discharge
such games. All in all, it is difficult to think of any tax
proposal that would accomplish so much at so little cost. The
same cannot be said of an across-the-board capital gains cut
for the rich to be paid for by the rest of us.
______

By Mr. LUGAR:

S. 253. A bill to establish the negotiating objectives and fast-track
procedures for future trade agreements; to the Committee on Finance.

THE TRADE AGREEMENT IMPLEMENTATION REFORM ACT

Mr. LUGAR. Mr. President, development of overseas markets and
customers is vital to the future of U.S. agriculture. Demand for food
and feed is growing rapidly. U.S. agriculture is efficient and
competitive, however, tariff and nontariff barriers remain high in many
countries.
As incomes rise in developing countries, their demands for our
products will continue to expand. In 1996, agricultural exports reached
a record $59.8 billion. Continued growth is vital. World commodity
markets are often distorted by import barriers, export subsidies and
State trading enterprises. These distortions put American farmers and
agribusiness operators at a disadvantage. We must reduce trade barriers
and allow our industry to supply the world's markets.
Today I will introduce the Trade Agreement Implementation Reform Act.
This bill will grant the President the fast-track authority he needs to
negotiate future trade agreements. It is in the national interest for
the President to have this authority, but is has lapsed due in part to
the way past implementing legislation was handled.
Earlier fast-track authority allowed side-deals, special-interest
accommodations and provisions of questionable merit. As a result,
public confidence in our trade policies eroded. Reforming the fast-
track process and prohibiting these special-interest provisions is one
step in gaining support for future trade agreements.
My bill contains two major changes from previous practice. First,
legislation submitted under the fast-track authority will contain only
provisions absolutely necessary to implement an agreement. Prior law
allowed provisions necessary and appropriate and encouraged deals with
special interests in exchange for support.
Second, although fast-track legislation is not amendable, we should
make one exception. Senators should be able to amend or delete
provisions that merely offset revenue losses from tariff changes. Such
provisions in the Uruguay round legislation included the controversial
Pioneer Preference and pension reform titles. Congress should have the
ability to debate and amend items like these, but be subject to overall
time limits.
The United States must continue to move forward in its effort to find
new markets for our goods and services. We should take advantage of a
favorable trade climate in South America by pursuing an agreement with
Chile. Chile has advanced bilateral trade agreements with Canada and
Mexico and has become an associate member of the Southern Cone Mercosur
trading bloc. Before the United States can move forward, the
administration must have fast-track authority. The President must now
make a case to Congress and the American people that this is a priority
of his administration.
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. 253

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 ``Trade Agreement
Implementation Reform Act''.

SEC. 2. TRADE NEGOTIATING OBJECTIVES.

The overall trade negotiating objectives of the United
States for agreements subject to the provisions of section 3
are--
(1) to obtain more open, equitable, and reciprocal market
access,
(2) to obtain the reduction or elimination of barriers and
other trade-distorting policies and practices,
(3) to further strengthen the system of international
trading disciplines and procedures, and
(4) to foster economic growth and full employment in the
United States and the global economy.

SEC. 3. TRADE AGREEMENT NEGOTIATING AUTHORITY.

(a) Agreements Regarding Tariff Barriers.--
(1) In general.--Whenever the President determines that one
or more existing duties or other import restrictions of any
foreign country or the United States are unduly burdening and
restricting the foreign trade of the United States and that
the purposes, policies, and objectives of this Act will be
promoted thereby, the President--
(A) on or before June 1, 2003, may enter into trade
agreements with foreign countries, and
(B) may, subject to paragraphs (2) through (5), proclaim--
(i) such modification or continuance of any existing duty,
(ii) such continuance of existing duty-free or excise
treatment, or
(iii) such additional duties,

as the President determines to be required or appropriate to
carry out any such trade agreement.
(2) Limitations.--No proclamation may be made under
paragraph (1)(B) that--
(A) reduces any rate of duty (other than a rate of duty
that does not exceed 5 percent ad valorem on the date of
enactment of this Act) to a rate of duty which is less than
50 percent of the rate of such duty that applies on such date
of enactment,
(B) reduces the rate of duty on an article over a period
greater than 10 years after the first reduction that is
proclaimed to carry out a trade agreement with respect to
such article, or
(C) increases any rate of duty above the rate that applied
on the date of enactment of this Act.
(3) Aggregate reduction; exemption from staging.--
(A) Aggregate reduction.--Except as provided in
subparagraph (B), the aggregate amount that the rate of duty
on any article may be reduced under paragraph (2) in any year
shall not exceed an amount that is equal to the greater of 3
percent ad valorem or 10 percent of the total reduction in
the rate of duty for such article required pursuant to a
trade agreement entered into under paragraph (1).

[[Page S894]]

(B) Exemption from staging.--No staging is required under
subparagraph (A) with respect to a duty reduction that is
proclaimed under paragraph (1) for an article of a kind that
is not produced in the United States. The United States
International Trade Commission shall advise the President of
the identity of articles that may be exempted from staging
under this subparagraph.
(4) Rounding.--If the President determines that such action
will simplify the computation of reductions under paragraph
(2) (A) or (B) or paragraph (3), the President may round an
annual reduction by an amount equal to the lesser of--
(A) the difference between the reduction without regard to
this paragraph and the next lower whole number, or
(B) one-half of 1 percent ad valorem.
(5) Additional limitation.--A rate of duty reduction or
increase that may not be proclaimed by reason of paragraph
(2) or (3) may take effect only if a provision authorizing
such reduction or increase is included within an implementing
bill provided for under section 4 of this Act and that bill
is enacted into law.
(b) Agreements Regarding Tariff and Nontariff Barriers.--
(1) In general.--Whenever the President determines that any
duty or other import restriction imposed by any foreign
country or the United States or any other barrier to, or
other distortion of, international trade--
(A) unduly burdens or restricts the foreign trade of the
United States or adversely affects the United States economy,
(B) the imposition of any such barrier or distortion is
likely to result in such a burden, restriction, or effect, or
(C) the reduction or elimination of such barrier or
distortion is likely to result in economic growth or expanded
trade opportunities for the United States,

and that the purposes, policies, and objectives of this Act
will be promoted thereby, the President may, on or before
June 1, 2003, enter into a regional, bilateral, or
multilateral trade agreement described in paragraph (2).
(2) Description of trade agreement.--A trade agreement is
described in this paragraph if it is a regional, bilateral,
or multilateral trade agreement entered into by the President
with a foreign country providing for--
(A) the reduction or elimination of such duty, restriction,
barrier, or other distortion, or
(B) the prohibition of, or limitation on the imposition of,
such barrier or other distortion.
(3) Conditions.--A trade agreement may be entered into
under this subsection only if such agreement makes
substantial progress in meeting the applicable negotiating
objectives described in section 2 and the President satisfies
the conditions set forth in subsections (c) and (d).
(4) Compliance with uruguay round agreements and other
obligations.--In determining whether to enter into
negotiations with a particular country under this subsection,
the President shall take into account whether that country
has implemented its obligations under the Uruguay Round
Agreements and any other trade agreement with respect to
which the United States and such other country are parties.
(5) Limitation.--Notwithstanding any other provision of
law, no trade benefit shall be extended to any country solely
by reason of the extension of any trade benefit to another
country under a trade agreement entered into under paragraph
(1) with such other country.
(c) Notice and Consultation Before Negotiation.--
(1) General rule.--The President, at least 60 calendar days
before initiating negotiations on any agreement that is
subject to the provisions of subsection (b), shall--
(A) provide written notice to Congress of the President's
intent to enter into the negotiations and set forth therein
the date the President intends to initiate such negotiations
and the specific United States objectives for the
negotiations,
(B) before submitting the notice, seek the advice of and
consult with the relevant private sector advisory committees
established under section 135 of the Trade Act of 1974 (19
U.S.C. 2155), regarding the negotiations and the negotiating
objectives the President proposes to establish for the
negotiations, and
(C) before and after submission of the notice, consult with
Congress regarding the negotiations and the negotiating
objectives.
(2) Exception.--Notwithstanding subsection (b)(3) and
section 4(c), the provisions of this subsection shall not
apply to an agreement which results from negotiations that
were commenced before the date of enactment of this Act and
the provisions of this Act regarding implementation shall
apply to such agreement, if with respect to such agreement,
the President provides notice, seeks advice, and consults in
accordance with subparagraphs (A), (B), and (C) of paragraph
(1) as soon as practicable after the date of enactment of
this Act.
(d) Consultation With Congress Before Agreements Entered
Into.--
(1) Consultation.--Before entering into any trade agreement
under subsection (b), the President shall consult with--
(A) the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate,
and
(B) each other committee of the House and the Senate, and
each joint committee of Congress, which has jurisdiction over
legislation involving subject matters which would be affected
by the trade agreement.
(2) Scope.--The consultation described in paragraph (1)
shall include consultation with respect to--
(A) the nature of the agreement,
(B) how and to what extent the agreement will achieve the
applicable negotiating objectives, and
(C) all matters relating to the implementation of the
agreement under section 4.

SEC. 4. IMPLEMENTATION OF TRADE AGREEMENTS.

(a) In General.--
(1) Notification and submission.--Any agreement entered
into under section 3(b) shall enter into force with respect
to the United States if (and only if)--
(A) the President, at least 120 calendar days before the
day on which the President enters into the trade agreement,
notifies the House of Representatives and the Senate of the
President's intention to enter into the agreement, and
promptly thereafter publishes notice of such intention in the
Federal Register;
(B) after entering into the agreement, the President
submits a copy of the final legal text of the agreement,
together with--
(i) a draft of an implementing bill,
(ii) a statement of any administrative action proposed to
implement the trade agreement, and
(iii) the supporting information described in paragraph
(3); and
(C) the implementing bill is enacted into law.
(2) Restrictions on implementing bill.--
(A) In general.--An implementing bill referred to in
paragraph (1) shall contain only necessary provisions.
(B) Necessary provision.--For purposes of this Act, the
term ``necessary provision'' means a provision in an
implementing bill that--
(i)(I) makes progress in meeting the negotiating objectives
contained in section 2 for the trade agreement with respect
to which the implementing bill is submitted, and
(II) is required to put into effect, or sets forth a
procedure to carry out, a substantive provision of the trade
agreement with respect to which the implementing bill is
submitted, or
(ii) is a revenue provision.
(3) Supporting information.--The supporting information
required under paragraph (1)(B)(iii) consists of--
(A) an explanation as to how the implementing bill and
proposed administrative action will change or affect existing
law; and
(B) a statement--
(i) asserting that the agreement makes progress in
achieving the applicable negotiating objectives contained in
section 2, and
(ii) setting forth the reasons of the President regarding,
among other things--

(I) how and to what extent the agreement makes progress in
achieving the applicable negotiating objectives referred to
in clause (i), and why and to what extent the agreement does
not achieve other negotiating objectives,
(II) how the agreement serves the interests of United
States commerce,
(III) why the implementing bill and proposed administrative
action is necessary to carry out the agreement,
(IV) how the provisions of the implementing bill are
necessary to comply with the applicable negotiating
objectives, and
(V) how any revenue provision in the implementing bill is
necessary to comply with the Balanced Budget and Emergency
Deficit Control Act of 1985.

(4) Other considerations.--To ensure that a foreign country
that receives benefits under a trade agreement entered into
under section 3(b) is subject to the obligations imposed by
such agreement, the President shall recommend to Congress in
the implementing bill and statement of administrative action
submitted with respect to such agreement that the benefits
and obligations of such agreement apply solely to the parties
to such agreement, if such application is consistent with the
terms of such agreement. The President may also recommend
with respect to any such agreement that the benefits and
obligations of such agreement not apply uniformly to all
parties to such agreement, if such application is consistent
with the terms of such agreement.
(b) Application of Congressional ``Fast Track'' Procedures
To Implementing Bills.--
(1) In general.--Except as otherwise provided in this
subsection and subsection (c), the provisions of section 151
of the Trade Act of 1974 (19 U.S.C. 2191) (hereafter in this
Act referred to as ``fast track procedures'') apply to
implementing bills submitted with respect to trade agreements
entered into under section 3(b) on or before June 1, 2003 (or
if extended under section 5, June 1, 2005).
(2) Certain points of order and amendments in order.--
(A) In general.--
(i) Points of order.--A point of order may be made by any
Senator against a provision in an implementing bill that is
not a necessary provision (as defined in subsection
(a)(2)(B)). If such point of order is sustained by a majority
of the Members of the Senate duly chosen and sworn, the
provision shall be stricken.
(ii) Amendments in order.--The provisions of section 151(d)
of the Trade Act of 1974 shall not apply to a provision in an
implementing bill that is a revenue provision and an
amendment to a revenue provision shall be

[[Page S895]]

in order if the amendment meets the requirements of paragraph
(4).
(B) Time limit.--Sections 151(f)(2) and 151(g)(2) of such
Act shall be applied by substituting ``25 hours'' for ``20
hours'' each place such term appears and such time limits
shall include all amendments to and points of order made with
respect to an implementing bill.
(C) Rules for debate in the senate.--Debate in the Senate
on any amendment to or point of order made with respect to an
implementing bill under this paragraph shall be limited to
not more than 1 hour, to be equally divided between, and
controlled by the mover and the manager of the implementing
bill, except that in the event the manager of the
implementing bill is in favor of any such amendment, the time
in opposition thereto shall be controlled by the minority
leader or the minority leader's designee. The majority and
minority leader may, from the time under their control on the
passage of an implementing bill, allot additional time to any
Senator during the consideration of any amendment. A motion
in the Senate to further limit debate on an amendment to any
implementing bill is not debatable.
(3) Revenue provision.--For purposes of this Act, the term
``revenue provision'' means a provision in an implementing
bill that--
(A) is not required to put into effect, or does not set
forth a procedure to carry out, a substantive provision of
the trade agreement with respect to which the implementing
bill is submitted,
(B) is not inconsistent with the obligations of the United
States under the trade agreement with respect to which the
implementing bill is submitted, and
(C) either decreases specific budget outlays for the fiscal
years covered by the implementing bill or increases revenues
for such fiscal years in order to comply with the Balanced
Budget and Emergency Deficit Control Act of 1985.
(4) Requirements for amendment.--It shall not be in order
in the House of Representatives or the Senate to consider any
amendment to a revenue provision in an implementing bill that
would have the effect of increasing any specific budget
outlays above the level of such outlays provided in the
implementing bill for the fiscal years covered by the
implementing bill or would have the effect of reducing any
specific revenues below the level of such revenues provided
in the implementing bill for such fiscal years, unless such
amendment makes at least an equivalent reduction in other
specific budget outlays, an equivalent increase in other
specific Federal revenues, or an equivalent combination
thereof for such fiscal years. For purposes of this
paragraph, the levels of budget outlays and Federal revenues
for a fiscal year shall be determined on the basis of
estimates made by the Committee on the Budget of the Senate
or of the House of Representatives, as the case may be.
(5) Difference between the 2 houses.--If the text of
implementing bills described in subsection (b)(1) concerning
any matter is not identical--
(A) the Senate shall vote passage on the implementing bill
introduced in the Senate, and
(B) the text of the implementing bill passed by the Senate
shall, immediately upon its passage (or, if later, upon
receipt of the implementing bill passed by the House), be
substituted for the text of the implementing bill passed by
the House of Representatives, and such implementing bill, as
amended shall be returned with a request for a conference
between the 2 Houses.
(6) Amendment between houses.--Except as provided in
paragraph (7)--
(A) overall debate on all motions necessary to resolve
amendments between the Houses on an implementing bill under
this subsection shall be limited to 2 hours at any stage of
the proceedings; and
(B) debate on any motion, appeal, or point of order under
this subsection which is submitted shall be limited to 30
minutes, and such time shall be equally divided and
controlled by, the majority leader and the minority leader or
their designees.
(7) Procedures relating to conference reports.--
(A) Appointment of conferees.--A request for a conference
shall be accepted and conferees shall be appointed--
(i) in the case of the Senate, by the President pro
tempore, and
(ii) in the case of the House of Representatives, by the
Speaker of the House,
not later than 3 calendar days after such request is made.
(B) General rules for consideration of conference report.--
Consideration in a House of Congress of the conference report
on an implementing bill described in paragraph (5), including
consideration of all amendments in disagreement (and all
amendments thereto), and consideration of all debatable
motions and appeals in connection therewith, shall be limited
to 4 hours, to be equally divided between, and controlled by,
the majority leader and the minority leader or their
designees. Debate on any debatable motion or appeal related
to the conference report shall be limited to 30 minutes, to
be equally divided between, and controlled by, the mover and
the manager of the conference report.
(C) Failure of conference to act.--If the committee on
conference on an implementing bill considered under this
section fails to submit a conference report within 10
calendar days after the conferees have been appointed by each
House, any Member of either House may introduce an
implementing bill containing only the text of the draft
implementing bill of the President on the next day of session
thereafter and the implementing bill shall be treated as a
conference report and considered as provided in subparagraph
(B).
(c) Additional Limitations on ``Fast Track'' Procedures.--
(1) Prenegotiation requirements.--
(A) In general.--The fast track procedures shall not apply
to any implementing bill that contains a provision approving
any trade agreement which is entered into under section 3(b)
with any foreign country if--
(i) the requirements of section 3(c) are not met with
respect to the negotiation of such agreement; or
(ii) both Houses of Congress agree to a resolution
disapproving the negotiation of such agreement before the
later of--

(I) the close of the 60-calendar day period beginning on
the date notice is provided under section 3(c); or
(II) the close of the 15-day period beginning on the date
such notice is provided, computed without regard to the days
on which either House of Congress is not in session because
of an adjournment of more than 3 days to a day certain or an
adjournment of Congress sine die, and any Saturday or Sunday,
not otherwise excluded under this subclause, when either
House of Congress is not in session.

(B) Resolution disapproving negotiations.--A resolution
referred to in subparagraph (A)(ii) is a resolution of either
House of Congress with which the other House of Congress
concurs, the sole matter after the resolving clause of which
is as follows: ``That Congress disapproves the negotiation of
the trade agreement notice of which was provided to Congress
on __ under section 3(c) of the Trade Agreement
Implementation Reform Act.'', with the blank space being
filled with the appropriate date.
(2) Lack of consultations.--
(A) In general.--The fast track procedures shall not apply
to any implementing bill submitted with respect to a trade
agreement entered into under section 3(b) if both Houses of
Congress separately agree to procedural disapproval
resolutions within any 60 calendar day period.
(B) Procedural disapproval resolution.--For purposes of
this paragraph, the term ``procedural disapproval
resolution'' means a resolution of either House of Congress,
the sole matter after the resolving clause of which is as
follows: ``That the President has failed or refused to
consult with Congress on trade negotiations and trade
agreements in accordance with the provisions of the Trade
Agreement Implementation Reform Act and, therefore, the
provisions of section 151 of the Trade Act of 1974 shall not
apply to any implementing bill submitted with respect to any
trade agreement entered into under section 3(b) of the Trade
Agreement Implementation Reform Act, if, during the 60
calendar day period beginning on the date on which this
resolution is agreed to by __, the __ agrees to a procedural
disapproval resolution (within the meaning of section
4(c)(2)(B) of the Trade Agreement Implementation Reform
Act).'', with the first blank space being filled with the
name of the resolving House of Congress and the second blank
space being filled with the name of the other House of
Congress.
(3) Procedures for considering resolutions.--
(A) In general.--Resolutions under paragraph (1) and
procedural disapproval resolutions under paragraph (2)--
(i) in the House of Representatives--

(I) shall be introduced by the chairman or ranking minority
member of the Committee on Ways and Means or the chairman or
ranking minority member of the Committee on Rules,
(II) shall be jointly referred to the Committee on Ways and
Means and the Committee on Rules, and
(III) may not be amended by either Committee; and

(ii) in the Senate shall be original resolutions of the
Committee on Finance.
(B) Application of section 152.--The provisions of section
152 (d) and (e) of the Trade Act of 1974 (19 U.S.C. 2192 (d)
and (e)) (relating to the floor consideration of certain
resolutions in the House and Senate) apply to resolutions
under paragraph (1) and to procedural disapproval resolutions
under paragraph (2).
(C) Special rules relating to house.--It is not in order
for the House of Representatives to consider any resolution
under paragraph (1) or any procedural disapproval resolution
under paragraph (2) that is not reported by the Committee on
Ways and Means and the Committee on Rules.

SEC. 5. EXTENSION OF TRADE AGREEMENTS AUTHORITY AND FAST
TRACK PROCEDURES.

(a) Extension of Fast Track Procedures To Implementing
Bills.--
(1) In general.--The fast track procedures shall, as
modified by this Act, be extended to implementing bills
submitted with respect to trade agreements entered into under
section 3(b) after May 31, 2003, and before June 1, 2005, if
(and only if)--
(A) the President requests such extension under paragraph
(2), and
(B) neither House of Congress adopts an extension
disapproval resolution under paragraph (5) before June 1,
2003.
(2) Report to congress by the president.--If the President
is of the opinion that

[[Page S896]]

the fast track procedures should be extended to implementing
bills described in paragraph (1), the President shall submit
to Congress, not later than March 1, 2003, a written report
that contains a request for such extension, together with--
(A) a description of all trade agreements that have been
negotiated under section 3(b) and the anticipated schedule
for submitting such agreements to Congress for approval,
(B) a description of the progress that has been made in
regional, bilateral, and multilateral negotiations to achieve
the purposes, policies, and objectives of this Act, and a
statement that such progress justifies the continuation of
negotiations, and
(C) a statement of the reasons why the extension is needed
to complete the negotiations.
(3) Report to congress by the advisory committee.--The
President shall promptly inform the Advisory Committee for
Trade Policy and Negotiations established under section 135
of the Trade Act of 1974 (19 U.S.C. 2155) of the President's
decision to submit a report to Congress under paragraph (2).
The Advisory Committee shall submit to Congress as soon as
practicable, but not later than March 1, 2003, a written
report that contains--
(A) its views regarding the progress that has been made in
regional, bilateral, and multilateral negotiations to achieve
the purposes, policies, and objectives of this Act, and
(B) a statement of its views, and the reasons therefor,
regarding whether the extension requested under paragraph (2)
should be approved or disapproved.
(4) Reports may be classified.--The reports submitted to
Congress under paragraphs (2) and (3), or any portion of the
reports, may be classified to the extent the President
determines appropriate.
(5) Extension disapproval resolutions.--
(A) In general.--For purposes of this subsection, the term
``extension disapproval resolution'' means a resolution of
either House of Congress, the sole matter after the resolving
clause of which is as follows: ``That the __ disapproves the
request of the President for the extension, under section
5(a)(1) of the Trade Agreement Implementation Reform Act, of
the provisions of section 151 of the Trade Act of 1974 (as
modified by section 4(b) of the Trade Agreement
Implementation Reform Act) to any implementing bill submitted
with respect to any trade agreement entered into under
section 3(b) of the Trade Agreement Implementation Reform Act
after June 1, 2003, because sufficient tangible progress has
not been made in trade negotiations.'', with the blank space
being filled with the name of the resolving House of
Congress.
(B) Procedure.--Extension disapproval resolutions--
(i) may be introduced in either House of Congress by any
Member of such House; and
(ii) shall be jointly referred, in the House of
Representatives, to the Committee on Ways and Means and the
Committee on Rules.
(C) Application of section 152.--The provisions of sections
152 (d) and (e) of the Trade Act of 1974 (19 U.S.C. 2192 (d)
and (e)) (relating to the floor consideration of certain
resolutions in the House and Senate) apply to extension
disapproval resolutions.
(D) Other requirements.--It is not in order for--
(i) the Senate to consider any extension disapproval
resolution not reported by the Committee on Finance;
(ii) the House of Representatives to consider any extension
disapproval resolution not reported by the Committee on Ways
and Means and the Committee on Rules; or
(iii) either House of Congress to consider an extension
disapproval resolution that is reported to such House after
May 15, 2003.
(b) Rules of House of Representatives and Senate.--
Subsection (a) of this section, and section 4 (b) and (c),
are enacted by Congress--
(1) as an exercise of the rulemaking power of the House of
Representatives and the Senate, respectively, and as such are
deemed a part of the rules of each House, respectively, and
such procedures supersede other rules only to the extent that
they are inconsistent with such other rules; and
(2) with the full recognition of the constitutional right
of either House to change the rules (so far as relating to
the procedures of that House) at any time, in the same
manner, and to the same extent as any other rule of that
House.

SEC. 6. CONFORMING AMENDMENTS.

(a) In General.--Title I of the Trade Act of 1974 (19
U.S.C. 2111 and following) is amended as follows:
(1) Implementing bill.--Section 151(b)(1) (19 U.S.C.
2191(b)(1)) is amended by inserting ``section 4 of the Trade
Agreement Implementation Reform Act,'' after ``the Omnibus
Trade and Competitiveness Act of 1988,''.
(2) Advice from international trade commission.--Section
131 (19 U.S.C. 2151) is amended--
(A) in subsection (a)--
(i) in paragraph (1), by striking ``section 123 of this Act
or section 1102 (a) or (c) of the Omnibus Trade and
Competitiveness Act of 1988,'' and inserting ``section 123 of
this Act, section 1102 (a) or (c) of the Omnibus Trade and
Competitiveness Act of 1988, or section 3 of the Trade
Agreement Implementation Reform Act'', and
(ii) in paragraph (2), by inserting ``or section 3 (a) or
(b) of the Trade Agreement Implementation Reform Act'' after
``1988'',
(B) in subsection (b), by inserting ``of the Omnibus Trade
and Competitiveness Act of 1988 or section 3(a)(3) of the
Trade Agreement Implementation Reform Act'' before the end
period, and
(C) in subsection (c), by striking ``of this Act or section
1102 of the Omnibus Trade and Competitiveness Act of 1988,''
and inserting ``of this Act, section 1102 of the Omnibus
Trade and Competitiveness Act of 1988, or section 3 of the
Trade Agreement Implementation Reform Act''.
(3) Hearings and advice concerning negotiations.--Sections
132, 133(a), and 134(a) (19 U.S.C. 2152, 2153(a), and
2154(a)) are each amended by striking ``or section 1102 of
the Omnibus Trade and Competitiveness Act of 1988,'' each
place it appears and inserting ``, section 1102 of the
Omnibus Trade and Competitiveness Act of 1988, or section 3
of the Trade Agreement Implementation Reform Act,''.
(4) Prerequisites for offers.--Section 134(b) (19 U.S.C.
2154(b)) is amended by inserting ``or section 3 of the Trade
Agreement Implementation Reform Act'' after ``1988''.
(5) Information and advice from private and public
sectors.--Section 135(a)(1)(A) (19 U.S.C. 2155(a)(1)(A)) is
amended by inserting ``or section 3 of the Trade Agreement
Implementation Reform Act'' after ``1988''.
(6) Meeting of advisory committees at conclusion of
negotiations.--Section 135(e) (19 U.S.C. 2155(e)) is
amended--
(A) in paragraph (1), by inserting ``or section 3 of the
Trade Agreement Implementation Reform Act'' after ``1988''
the first two places it appears, and by inserting ``or
section 4(a)(1)(A) of the Trade Agreement Implementation
Reform Act'' after ``1988'' the third place it appears; and
(B) in paragraph (2), by inserting ``or section 2 of the
Trade Agreement Implementation Reform Act'' after ``1988''.
(b) Application of Sections 125, 126, and 127 of the Trade
Act of 1974.--For purposes of applying sections 125, 126, and
127 of the Trade Act of 1974 (19 U.S.C. 2135, 2136, and
2137)--
(1) any trade agreement entered into under section 3 shall
be treated as an agreement entered into under section 101 or
102, as appropriate, of the Trade Act of 1974 (19 U.S.C. 2111
or 2112); and
(2) any proclamation or Executive order issued pursuant to
a trade agreement entered into under section 3 shall be
treated as a proclamation or Executive order issued pursuant
to a trade agreement entered into under section 102 of the
Trade Act of 1974 (19 U.S.C. 2112).

SEC. 7. ADVISORY COMMITTEE REPORTS.

Section 135(e)(1) of the Trade Act of 1974 (19 U.S.C. 2155)
is amended by striking ``the date on which'' and inserting
``45 days after''.
____

Trade Agreement Implementation Reform Act

Sec. 2. Negotiating objectives.--Overall negotiating
objectives for all trade agreements are included in the act.
These objectives do not provide authority to use trade
negotiations to achieve environmental or labor policy goals.
Specific negotiating objectives are to be the subject of
consultations between the President and Congress prior to the
initiation of negotiations. (See sec. 3(c))
Sec. 3(a). General tariff authority.--As in previous trade
acts, authority is delegated to the President to negotiate
and proclaim reciprocal tariff reductions without further
Congressional action. This authority expires on June 1, 2003.
Sec. 3(b). Authority to negotiate tariff and non-tariff
barriers.--The President is given authority to negotiate
bilateral, regional, or multilateral trade agreements,
including reduction or elimination of non-tariff barriers and
subsidies.
Sec. 3(c)&(d). Notice and consultation before
negotiation.--In addition to consulting with Congress before
an agreement is entered into (as the 1988 act requires), this
bill would require the President to notify Congress 60 days
before initiating any trade negotiations and to consult with
Congress and the private sector advisory committees
concerning the specific negotiating objectives. Congress must
also be notified of negotiations commenced before enactment
of this act for the resulting agreement to receive fast track
treatment.
Sec. 4(a). Notification.--In order for a trade agreement to
be considered under fast track procedures, the President must
notify Congress at least 120 days before the agreement is
entered into. Once the agreement is entered into, the
President submits a draft implementing bill and supporting
documentation. Only necessary provisions are permitted in the
implementing bill.
Sec. 4(b). Application of fast track procedures.--Fast
track authority is available for agreements entered into by
June 1, 2003, with the possibility of a two year extension
for the deadline. In contrast to previous acts, the fast
track authority provided for in this bill would permit
amendments to provisions of the implementing bill that are
revenue provisions related to pay/go. If there is no
agreement in conference over the revenue amendments, the
unamended implementing bill submitted by the President would
be voted on.
Sec. 4(c). Disapproval resolution.--Congress may revoke
fast track within the 60 day consultation period prior to
initiation of negotiations. Fast track can also be revoked at
any time during the negotiations for lack of consultations if
disapproval resolutions are passed separately by both Houses
within any 60 day period.

[[Page S897]]

Sec. 5. Extension of fast track procedures.--Fast track
procedures apply to any agreement entered into before June 1,
2003, with the possibility of a two year extension. The
extension will be denied if either House passes a disapproval
resolution.
Sec. 6. Conforming amendments.
Sec. 7. Advisory committee reports.--Private sector
advisory committee reports have to be submitted not more than
45 days after the President notifies Congress of his intent
to enter into an agreement.
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By Mr. KOHL:
S. 254. A bill to amend part V of title 28, United States Code, to
require that the Department of Justice and State attorneys general are
provided notice of a class action certification or settlement, and for
other purposes; to the Committee on the Judiciary.

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