[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.

       ``(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

[[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.

     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. 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.

     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.

  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.
                                 ______
                                 
      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.

                          ____________________