Congressional Record, Volume 143 Issue 27 (Wednesday, March 5, 1997)

[Congressional Record Volume 143, Number 27 (Wednesday, March 5, 1997)]
[Senate]
[Pages S1980-S1997]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mrs. FEINSTEIN (for herself and Mrs. Boxer):
S. 392. A bill to provide an exception to the restrictions on
eligibility for public benefits for certain legal aliens; to the
Committee on Finance.

the elderly and disabled legal immigrant support act of 1997

Mrs. FEINSTEIN. Mr. President, last year we approved the most
comprehensive welfare reform this Nation has ever known. Because the
changes were so comprehensive, this body approved the bill with much
reservation, particularly on the provision for the elderly and disabled
legal immigrants.
Today, I correct one of the major challenges left over from the
welfare reform last year that if uncorrected, will have a devastating
impact on the States and counties by shifting the cost of caring for
the seriously ill and destitute disabled and elderly legal immigrants
who have absolutely no other means of support.
I am here to offer the Elderly and Disabled Legal Immigrant Support
Act with Senator Boxer as the cosponsor in the Senate, and Congressman
Campbell and Congresswoman Lofgren as sponsors in the House of
Representatives.
The Elderly and Disabled Legal Immigrant Support Act of 1997 would
exempt from the current ban on SSI, those elderly, disabled and/or
blind legal immigrants, who came to this country prior to passage of
the welfare bill--August 22, 1996, who can demonstrate that they have
no family and have no other source of support. This legislation
prohibits SSI for all legal immigrants coming to this country following
the date of enactment of the welfare reform bill, August 22, 1996.

This legislation corrects what I believe is a grave mistake in the
Federal welfare reform law--a blanket denial of SSI to all legal
noncitizens, no matter how elderly, disabled, destitute and ill they
may be.
Over 20 California county supervisors, both Republican and Democrat,
have spoken out, in one voice, that the legal immigrant provisions of
the welfare law will be disastrous for California counties and this
legislation is critical for the Counties and for the country.
In California alone, 200,000 to 326,000 people may lose SSI by August
22, 1997.
Los Angeles County estimates that eliminating benefits for 93,000
legal immigrants in its county could cost up to $236 million a year.
San Francisco estimates that 20,000 legal noncitizens may turn to the
county's general assistance program, at a total cost of up to $74
million.
Many top immigrant States and counties will also bear the burden of
caring for the elderly, disabled, and blind legal immigrants who are
banned from SSI.
New York--126,860 legal immigrants may lose their SSI, costing the
State approximately $240 million annually.
Florida--77,920 legal immigrants may lose their SSI, costing the
State approximately $300 million annually.
Texas--59,160 legal immigrants may lose their SSI.
Illinois--25,960 legal immigrants may lose their SSI.
New Jersey--25,500 legal immigrants may lose their SSI.
Massachusetts--25,140 legal immigrants may lose their SSI.
The Republican Governors who supported the welfare reform bill now
realize that the new law, as written, will result in a huge financial
cost-shift to their states.
President Clinton has also recognized that legal immigrants who
become disabled after entry should not be banned from SSI and food
stamps and has allocated $13.7 billion in the 1998 budget for this
population who have nowhere else to turn.
As we speak, 125,000 SSI cancellation notices are going out to
elderly, disabled, and blind legal immigrants every week. Many elderly
and disabled legal immigrants have absolutely no family or friends to
turn to for support and will be destitute. They have no one to turn to,
except county relief programs or, at worst, homeless shelters.
Effective August 22 of this year, all legal immigrants currently
receiving SSI will be cut from the rolls regardless of their
circumstances.
I know that prior to welfare reform, the door was open for sponsors
to bring in their parents and then neglect to support them or, if they
are unable to support them, to know that legal immigrants were eligible
for SSI. The number of noncitizens collecting SSI had increased by 477
percent in the 14 years from 1980 to 1994, while for citizens the
numbers increased by 33 percent during the same period. Clearly, one
can extrapolate from these statistics that legal immigrants were using
SSI at 15 times the rate of citizens.
I hold the sponsors accountable for the support of legal immigrants
they bring into the country who they have pledged to support. But the
Federal welfare reform banning SSI for virtually all legal immigrants--
even those whose sponsors cannot afford to support them, or those
refugees who have no sponsors at all--will create extreme hardship for
those elderly, blind, and disabled legal immigrants who are unable to
support themselves.
Let me tell you the story about a 73-year-old legal immigrant in San
Francisco on SSI. She was welcomed to this county from Vietnam in 1980.
She was a refugee from Communism with no family in the United States.
She speaks no English and she is suffering from kidney failure. She
requires dialysis three times a week. Under this new law, this 73-year-
old woman will lose SSI, her only source of support. Her well-being
will become the responsibility of the county.
I urge my colleagues to seriously consider and support this limited
exemption from the current ban on SSI by allowing those elderly, blind,
or disabled individuals, who were in the country prior to August 22,
1996, and who have no other means of support, to continue on SSI. The
ban on SSI would apply to those coming into the country after August
22, 1996.
Mr. President, I ask for unanimous consent that the text of the bill
and a chart on number of aliens receiving SSI payments by legal status
and State be included in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

S. 392

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

SECTION 1. EXCEPTION TO ELIGIBILITY RESTRICTIONS FOR PUBLIC
BENEFITS FOR CERTAIN LEGAL ALIENS.

(a) In General.--Subtitle A of title V of the Illegal
Immigration Reform and Immigrant Responsibility Act of 1996
(Public Law 104-208; 110 Stat. 3009-1772) is amended by
adding at the end the following:

``SEC. 511. EXCEPTION FOR CERTAIN LEGAL ALIENS.

``(a) In General.--Notwithstanding any other provision of
law, an alien who was lawfully present in the United States
on August 22, 1996, and who lawfully resides in a State, is
age 65 or older, is disabled and/or blind, as determined
under paragraph (2) and/or (3) of section 1614(a) of the
Social Security Act (42 U.S.C. 1382c(a)), whose family is
incapable of support, and who can demonstrate that he or she
has no other sufficient means of support other than that
provided under the program described in subsection (b), shall
be eligible to receive benefits under such program.
``(b) Program Described.--The program described in this
subsection is the program described in section 402(a)(3)(A)
of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C. 1612(a)(3)(A)).''.
(b) Effective Date.--The amendment made by subsection (a)
takes effect as if included in the enactment of subtitle A of
title V of the Illegal Immigration Reform and Immigrant
Responsibility Act of 1996 (Public Law 104-208; 110 Stat.
3009-1772).
(c) Notice and Redetermination.--The Commissioner of Social
Security shall, not later than 30 days after the date of
enactment of this Act, notify an individual described in
section 511(a) of the Illegal Immigration Reform and
Immigrant Responsibility Act of 1996 (as added by this Act)
and who, as of such date, has been redetermined to be
ineligible for the program described in section 511(b) of the
Illegal Immigration Reform and Immigrant Responsibility Act
of 1996 (as so added), that the individual's eligibility for
such program shall be redetermined again, and shall conduct
such redetermination in a timely manner.

[[Page S1981]]

Number of Aliens Receiving SSI Payments by Legal Status and State,
October 1996
------------------------------------------------------------------------
Color of Lawfully
State Total law admitted
------------------------------------------------------------------------
Total............................ 803,030 206,600 596,430
--------------------------------
Alabama................................ 600 110 490
Alaska................................. 820 (\1\) (\1\)
Arizona................................ 7,930 1,450 6,480
Arkansas............................... 380 100 280
California............................. 326,080 86,880 239,200
Colorado............................... 5,660 1,810 3,850
Connecticut............................ 4,870 1,120 3,750
Delaware............................... 400 (\1\) (\1\)
District of Columbia................... 960 150 810
Florida................................ 77,920 17,890 60,030
Georgia................................ 4,860 1,350 3,510
Hawaii................................. 4,440 640 3,800
Idaho.................................. 430 (\1\) (\1\)
Illinois............................... 25,960 7,180 18,820
Indiana................................ 1,150 280 870
Iowa................................... 1,220 500 720
Kansas................................. 1,640 400 1,240
Kentucky............................... 790 390 400
Louisiana.............................. 2,860 490 2,370
Maine.................................. 610 240 370
Maryland............................... 9,040 2,330 6,710
Massachusetts.......................... 25,140 7,630 17,510
Michigan............................... 8,220 1,770 6,450
Minnesota.............................. 7,180 3,340 3,840
Mississippi............................ 510 120 390
Missouri............................... 1,960 860 1,100
Montana................................ 170 (\1\) (\1\)
Nebraska............................... 760 320 440
Nevada................................. 2,710 530 2,180
New Hampshire.......................... 320 90 230
New Jersey............................. 25,500 3,730 21,770
New Mexico............................. 3,500 350 3,150
New York............................... 126,860 35,180 91,680
North Carolina......................... 2,760 790 1,970
North Dakota........................... 200 100 100
Ohio................................... 5,970 2,480 3,490
Oklahoma............................... 1,360 310 1,050
Oregon................................. 4,640 1,940 2,700
Pennsylvania........................... 12,540 5,270 7,270
Rhode Island........................... 3,720 760 2,960
South Carolina......................... 620 100 520
South Dakota........................... 220 (\1\) (\1\)
Tennessee.............................. 1,400 370 1,030
Texas.................................. 59,160 5,930 53,230
Utah................................... 1,550 460 1,090
Vermont................................ 180 (\1\) (\1\)
Virginia............................... 8,000 1,720 6,280
Washington............................. 14,100 6,370 7,730
West Virginia.......................... 210 (\1\) (\1\)
Wisconsin.............................. 4,900 2,250 2,650
Wyoming................................ (\1\) (\1\) (\1\)
------------------------------------------------------------------------
\1\ Relative sampling error too large for presentation of estimates.
Source: SSI 10-Percent Sample File, October 1996.

______
___
By Mr. DODD (for himself and Mr. Lieberman:)
S. 393. A bill to clarify the tax treatment of certain disability
benefits received by former police officers or firefighters; to the
Committee on Finance.

THE POLICE AND FIREFIGHTERS TAX CLARIFICATION ACT

Mr. DODD. Mr. President, today I am introducing legislation
that would provide a measure of tax fairness for more than 1,000 police
officers, firefighters, and their families in my home State of
Connecticut. I am pleased to be joined in this effort by Senator
Lieberman.
This bill clarifies the tax treatment of heart and hypertension
benefits awarded to Connecticut's police officers and firefighters
prior to 1992. The clarification is necessary because of an error made
in the original version of Connecticut's heart and hypertension law.
Under that law, Connecticut intended to treat heart and hypertension
benefits as workmen's compensation for tax purposes. Unfortunately,
because of the language used in the State statute, the heart and
hypertension benefits became taxable under a ruling by the Internal
Revenue Service [IRS] in 1991.
Since the IRS ruling, Connecticut has amended its law. But that
change does not help those police officers, firefighters, and their
families, who received benefits prior to the amendment. These law-
abiding citizens accepted the benefits with the understanding that they
were not taxable. Now, as a result of the problem with the State law,
and through no fault of their own, they have been charged with back
taxes, interest, and penalties by the IRS. This has created serious
financial difficulties for a number of families.
I hope that my colleagues will join with me in remedying this
problem. Across this Nation, our firefighters and police officers work
hard to protect our homes and businesses. They face incredible danger,
and sometimes risk their lives, to help keep our communities safe. The
hazards they face make their jobs particularly stressful. They need the
security provided by heart and hypertension benefits. They should not
have to contend with back taxes and penalties assessed due to an error
in State law.
Under this legislation, which would remove their liability for heart
and hypertension benefits for the years affected by the IRS ruling--
1989-91, we can treat these public servants and their families more
fairly. This bill is narrowly drafted to accomplish that limited
purpose and would not affect the tax treatment of heart and
hypertension benefits awarded after January 1, 1992.
Mr. President, my efforts to pass this legislation date back to the
102d Congress. During that Congress, Senator Lieberman and I worked
with Representatives Barbara Kennelly and Rosa DeLauro and this bill
became a part of the Revenue Act of 1992. Although the Revenue Act was
passed by Congress, it was vetoed by President Bush 1 day after he lost
the election. We tried again during the 103d Congress, but we were
unable to move the bill through the relevant committees. Last year, we
hoped to move the bill as part of a broader tax and pension package,
but that legislation was also stalled.
I urge my colleagues to help pass this legislation quickly this year.
We must provide relief to the Connecticut police officers,
firefighters, and their families, who are facing severe financial
hardship even though they have tried to follow the rules. Through no
fault of their own, they have been hit with significant back taxes and
penalties. We should remedy this problem and help them move on with
their lives.
Mr. President, I ask unanimous consent that the bill be printed in
the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 393

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

SECTION 1. TREATMENT OF CERTAIN DISABILITY BENEFITS RECEIVED
BY FORMER POLICE OFFICERS OR FIREFIGHTERS.

(a) General Rule.--For purposes of determing whether any
amount to which this section applies is excludable from gross
income under section 104(a)(1) of the Internal Revenue Code
of 1986, the following conditions shall be treated as
personal injuries or sickness in the course of employment:
(1) Heart disease.
(2) Hypertension.
(b) Amounts To Which Section Applies.--This section shall
apply to any amount--
(1) which is payable--
(A) to an individual (or to the survivors of an individual)
who was a full-time employee of any police department or fire
department which is organized and operated by a State, by any
political subdivision thereof, or by any agency or
instrumentality of a State or political subdivision thereof,
and
(B) under a State law (as in existence on July 1, 1992)
which irrebuttably presumed that heart disease and
hypertension are work-related illnesses but only for
employees separating from service before such date; and
(2) which is received in calendar year 1989, 1990, or 1191.

For purposes of the preceding sentence, the term ``State''
includes the District of Columbia.
(c) Waiver of Statute of Limitations.--If, on the date of
the enactment of this Act (or at any time within the 1-year
period beginning on such date of enactment) credit or refund
of any overpayment of tax resulting from the provisions of
this section is barred by any law or rule of law, credit or
refund of such overpayment shall, nevertheless, be allowed or
made if claim therefore is filed before the date 1 year after
such date of enactment.
______

By Mr. HATCH (for himself, Mr. Leahy, Mr. Cochran, Mr. Specter,
and Mr. Faircloth) (by request):
S. 394. A bill to partially restore compensation levels to their past
equivalent in terms of real income and establish the procedure for
adjusting future compensation of justices and judges of the United
States; to the Committee on the Judiciary.

federal judicial compensation legislation

Mr. HATCH. Mr. President, at the request of the Judicial
Conference of the United States, I am introducing a bill to increase
the current salaries of Federal judges and to establish a procedure for
future cost-of-living increases in judicial compensation.
This legislation was prepared by the Administrative Office of the
United States Courts. I believe that, out of comity to the judicial
branch, the Senate should have on record the judiciary's specific
proposals with respect to judicial compensation, so that we can give
those suggestions a full and fair hearing. These proposals deserve fair
consideration.
Federal judges have not received a cost-of-living salary adjustment
since January 1994. This bill would amend United States Code title 28,
sections 5, 44(d), 135, and 252, to provide an immediate, one-time 9.6
percent adjustment in the compensation of Justices of the Supreme Court
and Federal circuit court, district court, and international trade
court judges appointed under article III of the Constitution. The bill
would also have the effect of increasing, by the same percentage, the
salaries of Federal court of claims and

[[Page S1982]]

bankruptcy judges and full-time U.S. magistrate judges, since their
salaries are, by statute, fixed based on the salaries of Federal
district court judges.
With respect to future judicial salary adjustments, the bill would
amend section 461 of title 28 to end the current linkage between the
judicial, congressional, and Executive Schedule compensation. Instead,
judicial salaries would be adjusted automatically on an annual basis,
in the same percentage amount as the rate of pay of Federal employees
under the General Schedule.
Finally, the bill would repeal section 140 of Public Law No. 97-92,
thereby removing the current requirement that Congress affirmatively
vote for cost-of-living increases for Federal judges.
If we are to attract and retain the most capable lawyers to serve as
Federal judges, it is vitally important that we ensure that those
responsible for the effective functioning of the judicial branch
receive fair compensation, including reasonable adjustments which allow
judicial salaries to keep pace with increases in the cost of living. As
Chief Justice Rehnquist stated in his ``1996 Year-End Report on the
Federal Judiciary,'' ``We must insure that judges, who make a lifetime
commitment to public service, are able to plan their financial futures
based on reasonable expectations.'' This bill, which I am introducing
at the request of the Judicial Conference, proposes changes viewed by
the Judicial Conference as advancing this objective--an objective with
which I believe most Senators would agree. The bill merits serious
consideration by the Senate.
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. 394

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

SECTION 1. JUDICIAL SALARIES.

(a) Increase in Judicial Salaries.--
(1) In general.--Notwithstanding sections 5, 44(d), 135,
and 252 of title 28, United States Code, the annual salary
rates of the Chief Justice of the United States, Associate
Justices of the Supreme Court of the United States, judges of
the United States Courts of Appeals, judges of the United
States District Courts, and judges of the United States Court
of International Trade, are increased in the amount of 9.6
percent of each applicable rate in effect on the date
immediately preceding the effective date of this subsection
rounded to the nearest multiple of $100 (or if midway between
multiples of $100, to the next higher multiple of $100).
(2) Effective date.--This subsection shall take effect on
the first day of the first applicable pay period beginning on
or after the date of enactment of this Act.
(b) Judicial Cost-of-Living Adjustments.--Section 461(a) of
title 28, United States Code, is amended to read as follows:
``(a) Effective on the same date that the rates of basic
pay under the General Schedule are adjusted pursuant to
section 5303 of title 5, each salary rate which is subject to
adjustment under this section shall be adjusted by the same
percentage amount as provided for under section 5303 of title
5, rounded to the nearest multiple of $100 (or if midway
between multiples of $100, to the next higher multiple of
$100).''.
(c) Automatic Adjustments Without Congressional Action.--
Section 140 of the resolution entitled ``A Joint Resolution
making further continuing appropriations for the fiscal year
1982, and for other purposes,'', approved December 15, 1981
(Public Law 97-92; 95 Stat. 1200; 28 U.S.C. 461 note) is
repealed.
By Mr. BREAUX (for himself and Mr. Bryan):

S. 395. A bill to amend the Internal Revenue Code of 1986 to simplify
the method of payment of taxes on distilled spirits; to the Committee
on Finance.

THE DISTILLED SPIRITS TAX PAYMENT SIMPLIFICATION ACT OF 1997

Mr. BREAUX. Mr. President, today I introduce the ``Distilled Spirits
Tax Payment Simplification Act of 1997,'' a bill more readily known as
All-In-Bond. This bill would streamline the way in which the Government
collects Federal excise tax on distilled spirits by extending the
current system of collection now applicable only to imported products
to domestic products as well.
Today wholesalers purchase foreign-bottled distilled spirits in
bond--tax free--paying the Federal excise tax directly after sale to a
retailer. In contrast, when the wholesaler buys domestically bottled
spirits--nearly 86 percent of total inventory--the price includes the
Federal excise tax, prepaid by the distiller. This means that hundreds
of U.S. family-owned wholesale businesses increase their inventory
carrying costs by 40 percent when buying U.S. products, which often
have to be financed through borrowing.
Under my bill, wholesalers would be allowed to purchase domestically
bottled distilled spirits in bond from distillers just as they are now
permitted to purchase foreign-produced spirits. Products would become
subject to tax on removal from wholesale premises. This legislation is
designed to be revenue neutral and includes the requirement that any
wholesaler electing to purchase spirits in bond must make certain
estimated tax payments to Treasury before the end of the fiscal year.
All-In-Bond is an equitable and sound way to streamline our tax
collection system. I hope my colleagues will join me in cosponsoring
this important legislation.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 395

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 ``Distilled
Spirits Tax Payment Simplification Act of 1997''.
(b) Reference to 1986 Code.--Except as otherwise expressly
provided, whenever 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. TRANSFER OF DISTILLED SPIRITS BETWEEN BONDED
PREMISES.

(a) In General.--Section 5212 is amended to read as
follows:

``SEC. 5212. TRANSFER OF DISTILLED SPIRITS BETWEEN BONDED
PREMISES.

``Distilled spirits on which the internal revenue tax has
not been paid as authorized by law may, under such
regulations as the Secretary shall prescribe, be transferred
in bond between bonded premises in any approved container.
For the purposes of this chapter, except in the case of any
transfer from a premise of a bonded dealer, the removal of
distilled spirits for transfer in bond between bonded
premises shall not be construed to be a withdrawal from
bonded premises.''.
(b) Conforming Amendment.--The first sentence of section
5232(a) (relating to transfer to distilled spirits plant
without payment of tax) is amended to read as follows:
``Distilled spirits imported or brought into the United
States, under such regulations as the Secretary shall
prescribe, may be withdrawn from customs custody and
transferred to the bonded premises of a distilled spirits
plant without payment of the internal revenue tax imposed on
such distilled spirits.''.

SEC. 3. ESTABLISHMENT OF DISTILLED SPIRITS PLANT.

Section 5171 (relating to establishment) is amended--
(1) in subsection (a), by striking ``or processor'' and
inserting ``processor, or bonded dealer'';
(2) in subsection (b), by striking ``or as both'' and
inserting ``as a bonded dealer, or as any combination
thereof'';
(3) in subsection (e)(1), by inserting ``, bonded dealer,''
before ``processor''; and
(4) in subsection (e)(2), by inserting ``bonded dealer,''
before ``or processor''.

SEC. 4. DISTILLED SPIRITS PLANTS.

Section 5178(a) (relating to location, construction, and
arrangement) is amended by adding at the end the following:
``(5) Bonded dealer operations.--Any person establishing a
distilled spirits plant to conduct operations as a bonded
dealer may, as described in the application for
registration--
``(A) store distilled spirits in any approved container on
the bonded premises of such plant, and
``(B) under such regulations as the Secretary shall
prescribe, store taxpaid distilled spirits, beer, and wine,
and such other beverages and items (products) not subject to
tax or regulation under this title on such bonded
premises.''.

SEC. 5. BONDED DEALERS.

(a) Definitions.--Section 5002(a) (relating to definitions)
is amended by adding at the end the following:
``(16) Bonded Dealer.--The term `bonded dealer' means any
person who has elected under section 5011 to be treated as a
bonded dealer.
``(17) Control State Entity.--The term `control State
entity' means a State, a political subdivision of a State, or
any instrumentality of such a State or political subdivision,
in which only the State, political subdivision, or
instrumentality is allowed under applicable law to perform
distilled spirit operations.''.
(b) Election To Be Treated as a Bonded Dealer.--Subpart A
of part I of subchapter A of chapter 51 (relating to
distilled spirits)

[[Page S1983]]

is amended by adding at the end the following:

``SEC. 5011. ELECTION TO BE TREATED AS BONDED DEALER.

``(a) Election.--Any wholesale dealer or any control State
entity may elect, at such time and in such manner as the
Secretary shall prescribe, to be treated as a bonded dealer
if such wholesale dealer or entity sells bottled distilled
spirits exclusively to a wholesale dealer in liquor, to an
independent retail dealer subject to the limitation set forth
in subsection (b), or to another bonded dealer.
``(b) Limitation in Case of Sales to Retail Dealers.--
``(1) By bonded dealer.--Any person, other than a control
State entity, who is a bonded dealer shall not be considered
as selling to an independent retail dealer if--
``(A) the bonded dealer has a greater than 10 percent
ownership interest in, or control of, the retail dealer;
``(B) the retail dealer has a greater than 10 percent
ownership interest in, or control of, the bonded dealer; or
``(C) any person has a greater than 10 percent ownership
interest in, or control of, both the bonded and retail
dealer.

For purposes of this paragraph, ownership interest, not
limited to stock ownership, shall be attributed to other
persons in the manner prescribed by section 318.
``(2) By control state entity.--In the case of any control
State entity, subsection (a) shall be applied by substituting
`retail dealer' for `independent retail dealer'.
``(c) Inventory Owned at Time of Election.--Any bottled
distilled spirits in the inventory of any person electing
under this section to be treated as a bonded dealer shall, to
the extent that the tax under this chapter has been
previously determined and paid at the time the election
becomes effective, not be subject to such additional tax on
such spirits as a result of the election being in effect.
``(d) Revocation of Election.--The election made under this
section may be revoked by the bonded dealer at any time, but
once revoked shall not be made again without the consent of
the Secretary. When the election is revoked, the bonded
dealer shall immediately withdraw the distilled spirits on
determination of tax in accordance with a tax payment
procedure established by the Secretary.
``(e) Equitable Treatment of Bonded Dealers Using LIFO
Inventory.--The Secretary shall provide such rules as may be
necessary to assure that taxpayers using the last-in, first-
out method of inventory valuation do not suffer a recapture
of their LIFO reserve by reason of making the election under
this section or by reason of operating a bonded wine cellar
as permitted by section 5351.
``(f) Approval of Application.--Any person submitting an
application under section 5171(c) and electing under this
section to be treated as a bonded dealer shall be entitled to
approval of such application to the same extent such person
would be entitled to approval of an application for a basic
permit under section 104(a)(2) of the Federal Alcohol
Administration Act (27 U.S.C 204(a)(2)), and shall be
accorded notice and hearing as described in section 104(b) of
such Act (27 U.S.C. 204(b)).''.
(c) Conforming Amendment.--The tables of sections of
subpart A of part I of subchapter A of chapter 51 is amended
by adding at the end the following:

``Sec. 5011. Election to be treated as bonded dealer.''.

SEC. 6. DETERMINATION OF TAX.

The first sentence of section 5006(a)(1) (relating to
requirements) is amended to read as follows: ``Except as
otherwise provided in this section, the tax on distilled
spirits shall be determined when the spirits are transferred
from a distilled spirits plant to a bonded dealer or are
withdrawn from bond.''.

SEC. 7. LOSS OR DESTRUCTION OF DISTILLED SPIRITS.

Section 5008 (relating to abatement, remission, refund, and
allowance for loss or destruction of distilled spirits) is
amended--
(1) in subsections (a)(1)(A) and (a)(2), by inserting
``bonded dealer,'' after ``distilled spirits plant,'' both
places it appears;
(2) in subsection (c)(1), by striking ``of a distilled
spirits plant''; and
(3) in subsection (c)(2), by striking ``distilled spirits
plant'' and inserting ``bonded premises''.

SEC. 8. TIME FOR COLLECTING TAX ON DISTILLED SPIRITS.

(a) In General.--Section 5061(d) (relating to time for
collecting tax on distilled spirits, wines, and beer) is
amended by redesignating paragraph (5) as paragraph (6) and
by inserting after paragraph (4) the following:
``(5) Advanced payment of distilled spirits tax.--
Notwithstanding the preceding provisions of this subsection,
in the case of any tax imposed by section 5001 with respect
to a bonded dealer who has an election in effect on September
20 of any year, any payment of which would, but for this
paragraph, be due in October or November of that year, such
payment shall be made on such September 20. No penalty or
interest shall be imposed for the period from such September
20 until the due date determined without regard to this
paragraph to the extent that tax due exceeds the tax which
would have been due with respect to distilled spirits in the
preceding October and November had the election under section
5011 been in effect.''.
(b) Conforming Amendment.--Section 5061(e)(1) (relating to
payment by electronic fund transfer) is amended by inserting
``or any bonded dealer,'' after ``respectively,''.

SEC. 9. EXEMPTION FROM OCCUPATIONAL TAX NOT APPLICABLE.

Section 5113(a) (relating to sales by proprietors of
controlled premises) is amended by adding at the end the
following: ``This subsection shall not apply to a proprietor
of a distilled spirits plant whose premises are used for
operations of a bonded dealer.''.

SEC. 10. CONFORMING AMENDMENTS.

(1) Section 5003(3) is amended by striking ``certain''.
(2) Section 5214 is amended by redesignating subsection (b)
as subsection (c) and by inserting after subsection (a) the
following:
``(b) Exception.--Paragraphs (1), (2), (3), (5), (10),
(11), and (12) of subsection (a) shall not apply to distilled
spirits withdrawn from premises used for operations as a
bonded dealer.''.
(3) Section 5215 is amended--
(A) in subsection (a), by striking ``the bonded premises''
and all that follows through the period and inserting
``bonded premises.'';
(B) in the heading of subsection (b), by striking ``a
Distilled Spirits Plant'' and inserting ``Bonded Premises'';
and
(C) in subsection (d), by striking ``a distilled spirits
plant'' and inserting ``bonded premises''.
(4) Section 5362(b)(5) is amended by adding at the end the
following: ``The term does not mean premises used for
operations as a bonded dealer.''.
(5) Section 5551(a) is amended by inserting ``bonded
dealer,'' after ``processor'' both places it appears.
(6) Subsections (a)(2) and (b) of section 5601 are each
amended by inserting ``, bonded dealer,'' before ``or
processor'' .
(7) Paragraphs (3), (4), and (5) of section 5601(a) are
each amended by inserting ``bonded dealer,'' before ``or
processor'' .
(8) Section 5602 is amended--
(A) by inserting ``, warehouseman, processor, or bonded
dealer'' after ``distiller''; and
(B) in the heading, by striking ``by distiller''.
(9) Sections 5115, 5180, and 5681 are repealed.
(10) The table of sections for part II of subchapter A of
chapter 51 is amended by striking the item relating to
section 5115.
(11) The table of sections for subchapter B of chapter 51
is amended by striking the item relating to section 5180.
(12) The item relating to section 5602 in the table of
sections for part I of subchapter J of chapter 51 is amended
by striking ``by distiller''.
(13) The table of sections for part IV of subchapter J of
chapter 51 is amended by striking the item relating to
section 5681.

SEC. 11. EFFECTIVE DATE.

(a) In General.--Except as provided in subsection (b), the
amendments made by this Act take effect on the date which is
120 days after the date of enactment of this Act.
(b) Exceptions.--
(1) Establishment of distilled spirits plant.--The
amendments made by section 3 take effect on the date of
enactment of this Act.
(2) Special rule.--Each wholesale dealer who is required to
file an application for registration under section 5171(c) of
the Internal Revenue Code of 1986 whose operations are
required to be covered by a basic permit under sections 103
and 104 of the Federal Alcohol Administration Act (27 U.S.C.
203, 204) and who has received such basic permits as an
importer, wholesaler, or as both, and has obtained a bond
required under subchapter B of chapter 51 of subtitle E of
such Code before the close of the fourth month following the
date of enactment of this Act, shall be qualified to operate
bonded premises until such time as the Secretary of the
Treasury takes final action on the application. Any control
State entity (as defined in section 5002(a)(17) of such Code,
as added by section 5(a)) that has obtained a bond required
under such subchapter shall be qualified to operate bonded
premises until such time as the Secretary of the Treasury
takes final action on the application for registration under
section 5171(c) of such Code.
By Ms. MIKULSKI (for herself and Mr. SARBANES):

S. 396. A bill to amend titles 5 and 37, United States Code, to
provide for the continuance of pay and the authority to make certain
expenditures and obligations during lapses in appropriations; to the
Committee on Governmental Affairs.

THE FEDERAL EMPLOYEE COMPENSATION PROTECTION ACT

Ms. MIKULSKI. Mr. President, today I am introducing an
important piece of legislation called the Federal Employee Compensation
Protection Act.
With the 1995 to 1996 Government shutdown fresh in our minds, I think
it is crucial that we take steps in this Congress to keep faith with
our Federal employees and make sure they are never again sent home
without pay. My bill will keep that faith by protecting Federal
employee pay and benefits during a future Government shutdown. This
bill ensures that Federal employees in Maryland and across the Nation

[[Page S1984]]

will be able to make their mortgage payments, put food on the table,
and provide for their families during a shutdown.
The last shutdown of the Federal Government severely disrupted the
lives of thousands of Federal employees and their families. In my State
of Maryland alone, there are more than 280,000 Federal employees. They
are some of the most dedicated and hard-working people in America
today. These employees have devoted their careers and lives to public
service, and they should not have been used as pawns in a game of
political brinkmanship.
During the last several years, Federal employees have endured their
fair share of hardship. Downsizing, diet COLA's, delayed COLA's, and
attacks on pensions and health benefits have damaged morale at nearly
every Federal agency. These assaults must stop. We cannot continue to
denigrate and downgrade Federal employees and at the same time expect
Government to work more efficiently.
I urge my colleagues to support this legislation and also work to
prevent any future shutdowns of our Government. We have a contract with
our Federal employees, and we should encourage their dedication by
ensuring that the contract is honored and their pay and benefits are
not put in jeopardy.
Mr. SARBANES. Mr. President, I am pleased to join my colleague
from Maryland, Senator Mikulski, in introducing this important
legislation to ensure the protection of Federal employee pay and
benefits in the event of a furlough.
We have a responsibility to the men and women who have dedicated
themselves to public service and I would hope that my colleagues would
join Senator Mikulski and me in our ongoing effort to maintain the
Federal Government's commitment to its dedicated work force.
Federal workers have just experienced the most difficult Congress in
recent history. Federal employees became hostages in the budget battle
which resulted in two successive Government shutdowns. At this time
last year, Federal employees were in a constant state of anxiety--
concerned about the future of their jobs, whether they would be laid
off or have to work without pay, all as their workloads continued to
accumulate. Despite this tremendous pressure and the constant attacks
on their pay and earned benefits, Federal workers continue to provide
consistent, quality service on behalf of all Americans.
As I have stated many times before, Federal employees have already
made significant sacrifices in past years in the form of downsizing
efforts, delayed and reduced cost of living adjustments, and other
reductions in Federal employee pay and benefits. It is, in my view,
critical that we protect Federal employees from the type of senseless
abuse they endured during the Government shutdowns last Congress.
Federal workers should never again find themselves in a situation
where, through no fault of their own, they may have to either work
without pay or be prohibited from coming to work at all.
Mr. President, Federal employees have made a choice to serve their
country and we should respect and reward that choice by supporting
these hardworking, dedicated individuals. Through the legislation
Senator Mikulski and I are reintroducing today, we will continue to
send the message to the Federal work force and to all American citizens
that Congress honors and values the commitment those who work for the
Government have made.
______

By Ms. MIKULSKI (for herself and Mr. Leahy):

S. 397. A bill to amend chapters 83 and 84 of title 5, United States
Code, to extend the civil service retirement provisions of such chapter
which are applicable to law enforcement officers, to inspectors of the
Immigration and Naturalization Service, inspectors and canine
enforcement officers of the U.S. Customs Service, and revenue officers
of the Internal Revenue Service; to the Committee on Governmental
Affairs.

THE HAZARDOUS OCCUPATIONS RETIREMENT BENEFITS ACT OF 1997

Ms. MIKULSKI. Mr. President, today I introduce the Hazardous
Occupations Retirement Benefits Act of 1997.
This legislation will grant an early retirement package for revenue
officers of the Internal Revenue Service, customs inspectors of the
U.S. Customs Service, and immigration inspectors of the Immigration and
Naturalization Service.
Under current law, with the exception of the groups listed in this
legislation, all Federal law enforcement officers and firefighters are
eligible to retire at age 50 with 20 years of Federal service. This
legislation will amend the current law and finally grant the same 20-
year retirement to these members of the Internal Revenue Service,
Customs Service, and Immigration and Naturalization Service. The
employees under this bill have very hazardous, physically taxing
occupations, and it is in the public's interest to tenure a young and
competent work force in these jobs.
The need for a 20-year retirement benefit for inspectors of the
Customs Service is easily apparent. These employees are the country's
first line of defense against terrorism and the smuggling of illegal
drugs at our borders. They have the authority to apprehend those
engaged in such activities and carry a firearm on the job. They are
responsible for the majority of arrests performed by Customs Service
employees. In 1994, inspectors of the Customs Service seized 204,000
pounds of cocaine, 2,600 pounds of heroin, and 559,000 pounds of
marijuana. They are required to undergo the same law enforcement
training as all other law enforcement personnel. These employees face
multiple challenges. They confront leading criminals in the drug war,
organized crime figures, and increasingly sophisticated white-collar
criminals.
Revenue officers struggle with heavy workloads and a high rate of job
stress, resulting in a variety of physical and mental symptoms. Many
IRS employees must employ pseudonyms to hide their identity because of
the great threat to their personal safety. The Internal Revenue Service
has put out a manual for their employees entitled: ``Assaults and
Threats: A Guide to Your Personal Safety'' to help employees respond to
hostile situations. The document advises IRS employees how to handle
on-the-job assaults, abuse, threatening telephone calls, and other
menacing situations.
Mr. President, this legislation is cost effective. Any cost that is
created by this act is more than offset by savings in training costs
and increased revenue collection. A 20-year retirement bill for these
employees will reduce turnover, increase yield, decrease employee
recruitment and development costs, and enhance the retention of a well-
trained and experienced work force.
I urge my colleagues to join me again in this Congress in expressing
support for this bill and finally getting it enacted. This bill will
improve the effectiveness of our inspector and revenue officer work
force to ensure the integrity of our borders and proper collection of
the taxes and duties owed to the Federal Government.
______

By Mrs. MURRAY:
S. 398. A bill to amend title 49, United States Code, to require the
use of child restraint systems approved by the Secretary of
Transportation on commercial aircraft, and for other purposes; to the
Committee on Commerce, Science, and Transportation.

airline children's safety legislation

Mrs. MURRAY. Mr. President I introduce legislation that would
protect our Nation's small children as they travel on aircraft. We
currently have Federal regulations that require the safety of
passengers on commercial flights. However, neither flight attendants
nor an infant's parents can protect unrestrained infants in the event
of an airline accident or severe turbulence. A child on a parent's lap
will likely break free from the adult's arms as a plane takes emergency
action or encounters extreme turbulence.
This child then faces two serious hazards. First, the child may be
injured as they strike the aircraft interior. Second, the parents may
not be able to find the infant after a crash. The United Sioux City,
IA, crash provides one dark example. On impact, no parent was able to
hold on to her-his child. One child was killed when he flew from his
mother's hold. Another child was rescued from an overhead compartment
by a stranger.

[[Page S1985]]

In July 1994, during the fatal crash of a USAir plane in Charlotte,
NC, another unrestrained infant was killed when her mother could not
hold onto her on impact. The available seat next to the mother survived
the crash intact. The National Transportation Safety Board believes
that had the baby been secured in the seat, she would have been alive
today. In fact, in a FAA study on accident survivability, the agency
found that of the last nine infant deaths, five could have survived had
they been in child restraint devices.
Turbulence creates very serious problems for unrestrained infants. In
four separate incidences during the month of June, passengers and
flight attendants were injured when their flights hit sudden and
violent turbulence. In one of these, a flight attendant reported that a
baby seated on a passenger's lap went flying through the air during
turbulence and was caught by another passenger. This measure is
endorsed by the National Transportation Safety Board and the Aviation
Consumer Action Project.
We must protect those unable to protect themselves. Just as we
require seatbelts, motorcycle helmets, and car seats, we must mandate
restraint devices that protect our youngest citizens. I urge my
colleagues to support this legislation that ensures our kids remain
passengers and not victims.
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. 398

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

SECTION 1. CHILD SAFETY RESTRAINT SYSTEMS ON COMMERCIAL
AIRCRAFT.

(a) In General.--Chapter 447 of title 49, United States
Code, is amended by adding at the end the following new
section:

``Sec. 44725. Child safety restraint systems

``(a) In General.--Not later than 90 days after the date of
enactment of this section, the Secretary of Transportation
shall issue regulations requiring the use of child safety
restraint systems that have been approved by the Secretary on
any aircraft operated by an air carrier in providing
interstate air transportation, intrastate air transportation,
or foreign air transportation.
``(b) Age or Weight Limits.--The regulations issued under
this section shall establish age or weight limits for
children who use the child safety restraint systems.''.
(b) Clerical Amendment.--The chapter analysis for chapter
447 of title 49, United States Code, is amended by adding at
the end the following new item:

``44725. Child safety restraint systems.''.

SEC. 2. INTERNATIONAL STANDARD.

It is the sense of Congress that the United States
representative to the International Civil Aviation
Organization should seek an international standard to require
that passengers on a civil aviation aircraft be restrained--
(1) on takeoff and landing; and
(2) when directed by the captain of such aircraft.
By Mr. McCAIN:

S. 399. A bill to amend the Morris K. Udall Scholarship and
Excellence in National Environmental and Native American Public Policy
Act of 1992 to establish the U.S. Institute for Environmental Conflict
Resolution to conduct environmental conflict resolution and training,
and for other purposes; to the Committee on Environment and Public
Works.

THE ENVIRONMENTAL POLICY AND CONFLICT RESOLUTION ACT OF 1997

Mr. McCAIN. Mr. President, I introduce legislation to promote
fair, timely and efficient resolution of our Nation's environmental
disputes.
This bill would establish, within the Morris K. Udall Foundation, the
United States Institute for Environmental Conflict Resolution. The
institute would offer alternative dispute resolution services,
including assessment, mediation, and other related services, to
facilitate parties in resolving environmental disputes without
resorting to protracted and costly litigation in the courts. I ask
unanimous consent that a summary of the legislation be included in the
Record at the conclusion of my statement.
This legislation simply gives the Udall Foundation the means to do
what Congress asked it to do 5 years ago. When the Udall Foundation was
established in 1992, it was charged with the task of establishing a
program for environmental dispute resolution. Since then, the
foundation has sponsored seminars and workshops on conflict resolution.
But it has lacked the funding and explicit direction that would enable
it to run a program that could provide conflict resolution services.
This bill provides both the direction and the authorization for
funding.
It is particularly fitting that an institute devoted to environmental
conflict resolution would operate under the auspices of the Udall
Foundation. Morris K. Udall's career was distinguished by his
integrity, service, and commitment to consensus-building.
I had the distinct pleasure of working with Mo Udall on one of his
greatest legislative achievements--the Arizona Wilderness Act. That act
protects 2.5 million acres in the Arizona wilderness in perpetuity and
was passed thanks, in large part, to Mo Udall's efforts to achieve
consensus within the Arizona delegation.
Using Mo Udall's success in passing the Arizona Wilderness Act as its
model, the U.S. Environmental Conflict Resolution Institute at the
Udall Foundation would seek to promote our nation's environmental
policy objectives by reaching out to achieve consensus rather than
pursuing resolution through adversarial processes.
Mr. President, over 5,000 Federal court decisions on environmental
litigation have been handed down in the past two decades. Today, some
400 to 500 environmental lawsuits are filed each year in Federal
courts. In its 16th annual report, the Council on Environmental Quality
estimated that fully 85 percent of Environmental Protection Agency
regulations are challenged at some time in the courts, either by groups
that find the rules too stringent or by groups that believe them to be
too lax. In short, resorting to the courts is all too common in
disputes over environmental issues.

This bill seeks to move our Nation away from this litigious trend by
providing an alternative conflict resolution process. This process is
intended to preclude the need for lawsuits by engaging the parties in
professionally mediated discussions. It could also be used as a
solution of last resort, if the parties agreed to put aside litigation
already filed in the courts and instead utilize the services of the
institute.
The benefits to be gained by the Federal Government through a
national environmental dispute resolution program include more than
litigation cost savings. Delay associated with litigation can also
prevent the timely enforcement of our environmental laws.
For more than ten years, I have been working to promote safety and
quiet in Grand Canyon National Park. This issue, as well as any other,
exemplifies how alternative dispute resolution could perhaps help us
achieve national environmental policy objectives far better than
litigation.
In 1987, legislation I authored to promote safety and provide for the
substantial restoration of natural quiet in the Grand Canyon was signed
into law. Ten years later, the Federal Aviation Administration [FAA]
this year issued a final rule on overflights over the Grand Canyon.
This rule was scheduled to go into effect on May 1, 1997. However,
despite the substantial time and effort that both the FAA and the
National Park Service have put into this rulemaking, including
consultations with many outside interests, lawsuits have now been filed
challenging the rule and delaying its implementation.
Mr. President, I do not mention this to criticize those who have
exercised their right to file suit in the Grand Canyon overflights
matter. I refer to this situation because it concerns me that
protecting the Grand Canyon could be significantly delayed through
litigation, when the parties might reach a more timely and mutually
acceptable resolution if they were provided an opportunity to work
through their differences in a nonadversarial forum. The institute
created by this legislation would provide an alternative to litigation
in this and similar situations and create an opportunity for more
constructive problem-solving and effective policymaking.
One hundred twenty-six years ago, Abraham Lincoln wisely counseled:

Discourage litigation, persuade your neighbor to compromise
whenever you can. Point out to them how the nominal winner is
often the real loser in fees, expenses, and waste of time.

That advice could not be more sound today as we seek to resolve our
Nation's environmental conflicts and to

[[Page S1986]]

promote timely and effective implementation of laws and regulations to
protect and preserve our natural environment.
I am pleased that the Council on Environmental Quality has registered
their support for the goals and concepts in this bill. In addition, the
Udall Foundation, the Grand Canyon Trust, the National Parks and
Conservation Association, Friends of the Earth, and Trout Unlimited
have given their support to this effort. I ask unanimous consent that
copies of support letters from these groups be included in the Record.
I urge my colleagues to join me and support this legislation that
would bring common sense and efficiency to the resolution of our
Nation's environmental disputes.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Environmental Policy and Conflict Resolution Act of 1997

Purpose: To establish, within the Morris K. Udall
Foundation, the United States Institute for Environmental
Conflict Resolution to assist in implementing national
environmental policy. The Institute would provide alternative
dispute resolution services, including assessment, mediation,
and other services, to facilitate resolving environmental
disputes without litigation.
Bill authorizes use of the Institute by Federal agencies:
Federal agencies could use the Institute's conflict
resolution services for a fee.
Bill creates a revolving fund to:
Fund operations and fully support the Institute through a
one-time $3 million appropriation.
Receive fees from parties using the Institute's services.
Supplement an annual appropriation for a five-year period
beginning in 1998.
The Council on Environmental Quality would:
Receive notification when a federal agency requests to use
the Institute's services.
Concur in any request to use the Institute's services for
interagency dispute resolution.
The Institute would be under the Udall Foundation because:
One purpose for which the Udall Foundation was established
in 1992 was to establish a program for environmental conflict
resolution.
The Udall Foundation has hosted seminars, workshops and
research related to environmental dispute resolution but, has
lacked funding to provide mediation services.
Conflict resolution and consensus building were major
themes of Udall's thirty year public career as a member of
the House of Representatives.
____

S. 399--Section-by-Section Summary

Section 1: Short title--``The Environmental Policy and
Conflict Resolution Act of 1997''.
Section 2: Definition of Terms.
Section 3: Adds the Chair of the Council on Environmental
Quality as an ex officio non-voting member of the Udall
Foundation Board.
Section 4: Bill Purpose: To establish as part of the Udall
Foundation the U.S. Institute for Environmental Conflict
Resolution (Institute) to assist the Federal Government in
implementing national environmental policy.
The Institute would provide assessment, mediation and other
related services to resolve environmental disputes involving
agencies and instrumentalities of the United States.
Section 5: Authorizes the Udall Foundation to establish the
Institute and provide assessment, mediation, and other
alternative dispute resolution services.
Section 6: Revolving Fund:
Creates a Revolving Fund for the Institute to operate. The
revolving fund would be administered by the Udall Foundation
and would be maintained separately from the Trust Fund
established for scholarships awarded by the Udall Foundation.
Section 7: Use of the Institute by a Federal Agency:
Authorizes use of the Institute by a federal agency which
may enter into a contract to expend funds for the use of the
Institute's services. Any funds spent by an agency on the
Institute would go into the Revolving Fund.
Requires concurrence by the Council on Environmental
Quality (CEQ) for two agencies to seek to resolve a dispute
at the Institute. CEQ would be notified of any agency request
to use the Institute's services.
Section 8: Authorization of Appropriations:
Authorizes a one-time appropriation of $3 million to the
Revolving Fund for fiscal year 1998 and $2.1 million in
appropriations over a 5 year period beginning in 1998 to
fully operate the Institute.
The Revolving Fund would be replenished by fees from
parties using the Institute's services.
Section 9: Conforming amendments.
____

Executive Office of the President, Council on
Environmental Quality
Washington, DC, March 5, 1997.
Hon. John McCain,
U.S. Senate,
Washington, DC.
Dear Senator McCain: Thank you for requesting the
Administration's views on your draft legislation entitled the
``Environmental Policy and Conflict Resolution Act of 1997.''
The legislation represents a commendable effort to assist
private entities and government in resolving environmental
and natural resource conflicts by expanding the range of
services available from the Morris K. Udall Foundation to
include resolution of disputes involving federal agencies.
The Administration supports the concepts and goals embodied
in your legislation. However, the Administration needs to
complete its review of the bill language prior to providing a
comprehensive Administration position. We expect to provide
additional comments on the bill in the near future.
As you know, last September, the President awarded the
Medal of Freedom to Congressman Udall. The President's
remarks at the time bear repeating:
``During a remarkable 30-year career, Morris Udall was a
quiet giant of the Congress. Warm, funny, and intelligent, he
was truly a man of the center, who forged consensus by
listening to others and by reasoned argument. His landmark
achievements--such as reforming campaign finance, preserving
our forests, safeguarding the Alaskan wilderness, and
defending the rights of Native Americans--were important
indeed. But he distinguished himself above all as a man to
whom others--leaders--would turn for judgment, skill, and
wisdom. Mo Udall is truly a man for all seasons and a role
model for what is best in American democracy.''
It is entirely fitting to ask the institution established
by Congress in Congressman Udall's name to help with the hard
job of helping people solve their disagreements over the
lands, waters, and resources we all share and must steward
responsibly. This Administration has made every effort to
break down the barriers between government and citizens.
Voluntary mechanisms to enhance communication and
understanding within government and between agencies and the
people they serve can assist meaningfully in this regard.
I appreciate your willingness to incorporate provisions
that recognize the important dispute resolution purposes of
the National Environmental Policy Act and the inter-agency
coordination function of the President's Council on
Environmental Quality.
The Administration would be pleased to work with you as
your legislation proceeds.
Sincerely,
Kathleen A. McGinty,
Chair.
____

National Parks and Conservation Association, Friends of
the Earth,
March 5, 1997.
Hon. John McCain,
U.S. Senate, Russell Office Building, Washington, DC.
Dear Senator McCain: The National Parks and Conservation
Association and Friends of the Earth are pleased to endorse
the concept of a U.S. Institute for Environmental Conflict
Resolution, the subject of legislation you intend to
introduce on March 5.
Resolving environmental disputes before they reach the
litigation stage is a goal we strongly support. Your
legislation would enable federal agencies to solve disputes
among themselves or with other non-federal parties by using
the institute's staff for mediation and other services.
In general, we believe litigation should be the last resort
in enforcing or upholding our environmental laws, provided
that negotiated agreements clearly adhere to statutory
mandates. We also believe negotiated solutions, in general,
allow disputants more creativity and flexibility to solve
problems and issues in cost effective ways.
Many environmental disputes, including those involving our
national parks, could be resolved by good-faith negotiations
led by an honest broker. The unfolding case of buffalo
management in Yellowstone is a case in point. Here, a lawsuit
filed by Montana against two federal agencies has
precipitated the killing of almost one third of Yellowstone's
buffalo herd. A court order is driving the slaughter.
Although this wildlife tragedy is abhorred by all of the
parties involved, collectively they did nothing effective to
prevent it. In retrospect, it is clear that the slaughter
might have been avoided had the parties committed themselves
to good faith negotiations years ago when the issue first
emerged.
Thank you for your leadership on environmental issues
generally and for your constructive approach to conflict
resolution.
Sincerely,
Paul C. Pritchard,
President, National Parks and Conservation Association.
Brent Blackwelder,
President, Friends of the Earth.
____

Trout Unlimited,

Washington, DC, March 5, 1997.
Hon. John McCain,
U.S. Senate, Russell,
Washington, DC.
Dear Senator McCain: On behalf of Trout Unlimited's 95,000
members nationwide, I am

[[Page S1987]]

writing to support the bill that you intend to introduce
today. The bill would amend the Morris K. Udall Scholarship
and Excellence in National Environmental and Native American
Public Policy Act of 1992 by establishing a new environmental
conflict resolution program within the Morris K. Udall
Foundation. We believe the new conflict resolution program
holds great promise for resolving the intractable
environmental disputes that continue to plague federal
natural resources agencies and other interests involved with
federal environmental laws.
The mission of Trout Unlimited is to conserve, protect and
restore North America's trout and salmon resources and the
watersheds on which they depend. Our work often takes us into
difficult environmental conflicts involving many federal
agencies. Over the past two decades, we have been deeply
involved in disputes regarding implementation of the
Endangered Species Act, the Clean Water Act, and the federal
land management laws, in which federal agencies have had very
difficult conflicts. Failure to resolve these conflicts in a
timely fashion has adversely affected trout and salmon
resources. We are particularly hopeful that the new
interagency conflict resolution mechanism proposed by your
bill will yield a new and better way of resolving these
disputes.
We salute your authorship of the bill and look forward to
working with you to get it enacted.
Sincerely,
Steve Moyer,
Director, Government Affairs.
____

Morris K. Udall Foundation,

Tucson, AZ, March 3, 1997.
Hon. John McCain,
U.S. Senate, Senate Office Building, Washington, DC.
Dear Senator McCain: It gives me great pleasure as Chairman
of the Board of Trustees of the Morris K. Udall Scholarship
and Excellence in National Environmental Policy Foundation to
inform you that the trustees unanimously and enthusiastically
endorse your unique concept for the creation of the United
States Institute for Environmental Dispute Resolution as part
of the Udall Foundation.
As you know, federal agencies have been increasingly
involved in environmental disputes as parties to lawsuits
based upon their regulatory actions. Continuing to wage these
conflicts in the costly and time-consuming arena of the
courts drains federal resources and can serve to delay
federal actions to protect the environment. Alternative forms
of environmental conflict resolution for federal agencies are
needed to prevent these and other adverse effects associated
with protracted litigation.
Since it began in May 1995, the Udall Foundation has worked
to create a national environmental conflict resolution
program, as directed in its authorizing legislation. The
Foundation has sponsored workshops and seminars on
environmental conflict resolution and has begun funding
several research projects.
On April 4-5, 1997, the Foundation will host
``Environmental Conflict Resolution in the West'' in Tucson,
Arizona. This will be the largest gathering of its kind.
Several hundred people from around the country, including
professional mediators, facilitators, researchers, and
federal, state and local agency officials are expected to
attend this conference to discuss alternative approaches to
environmental dispute resolution and collaborative problem
solving.
Despite these efforts, the Foundation has lacked the
funding to directly pursue conflict resolution by providing
mediation and other services to resolve environmental
disputes. The legislation you are introducing will finally
enable the Foundation to provide a program to conduct
environmental conflict resolution at the national level.
We believe that your legislation will allow the Foundation,
through the U.S. Institute for Environmental Conflict
Resolution, to make a positive impact on the cost and pace of
environmental dispute resolution for years to come. The
Foundation is prepared to do all it can to establish a
program committed to helping to resolve these conflicts
fairly and as efficiently as possible.
Sincerely,
Terrence L. Bracy,
Chairman.
____

Grand Canyon Trust,

Washington, DC, March 4, 1997.
Hon. John McCain,
U.S. Senate,
Washington, DC.
Dear Senator McCain: On behalf of the Trustees of the Grand
Canyon Trust, a conservation organization dedicated to the
conservation of the Grand Canyon and Colorado Plateau, I am
pleased to endorse and offer our support for your bill
creating the United States Institute for Environmental
Conflict Resolution.
The Trust has long held that many conflicts that arise from
differences between parties regarding environmental policy
and regulation could best be solved through mediation and
alternative dispute resolution rather than in courts of law.
Too often the will of the American public to protect our
natural resources and ecological treasures is lost amid
posturing and polarization by parties embroiled in conflict
over environmental issues. We believe that your legislation
will enable the United States Institute for Environmental
Conflict Resolution to actively mediate and conduct
environmental conflict resolution in a positive, constructive
manner.
The Grand Canyon Trust pledges to work in concert with the
Morris K. Udall Foundation and the United States Institute
for Environmental Conflict Resolution in every possible way
to support and ensure its success. Thank you again for your
vision and leadership on this difficult issue.
Sincerely,
Geoffrey S. Barnard,
President.
____

Morris K. Udall Foundation,

Tucson, AZ, January 17, 1997.
Hon. John McCain,
U.S. Senate,
Washington, DC.
Dear Senator McCain: I am pleased to report that the Board
of Trustees of the Morris K. Udall Foundation has unanimously
endorsed your proposal to create an institution for
environmental conflict resolution within our jurisdiction.
The board reviewed in detail both the concept and the
financials and is in agreement with the draft bill provided
by your staff.
The board expressed tremendous enthusiasm for your concept
and we look foward to helping in any way that you wish.
Attached is the resolution that was passed.
Sincerely,
Terrence L. Bracy,
Chairman.
Enclosure.

Resolution

The Board of Trustees of the Morris K. Udall Scholarship
and Excellence in National Environmental Policy Foundation
commends Arizona Senator John McCain for his originality and
initiative in introducing a bill to establish the United
States Institute for Environmental Conflict Resolution as
part of the Udall Foundation.
The Trustees enthusiastically endorse this unique concept
to contract with other Federal agencies to resolve disputes
or conflicts related to the environment, public lands or
natural resources and congratulate Senator McCain for
recognizing the need for such an entity.
______

By Mr. GRASSLEY:

S. 400. A bill to amend rule 11 of the Federal Rules of Civil
Procedure, relating to representations in court and sanctions for
violating such rule, and for other purposes; to the Committee on the
Judiciary.

THE FRIVOLOUS LAWSUIT PREVENTION ACT OF 1997

Mr. GRASSLEY. Mr. President, I rise today to introduce
important tort reform legislation. Tort reform is needed for many
reasons--one of which is to free our courts of frivolous lawsuits.
Frivolous lawsuits take the courts' time away from trying legitimate
lawsuits, and deprive the truly injured of timely resolution of their
claims.
Mr. President, our courts are supposed to be venues for resolving
disputes. Lawsuits are supposed to be the means by which injured
parties seek relief--they are not intended to be used as weapons to
harass, delay, or increase the cost to the other party. Too often
entire lawsuits, or claims within ongoing lawsuits, are used as
weapons. The bill that I introduce today takes a stab at these
lawsuits. It toughens the penalties for filing frivolous lawsuits and
insures that if someone files a frivolous lawsuit, that someone will
pay.
Our front-line defense against this misuse of the legal system is
rule 11 of the Federal Rules of Civil Procedure. This rule is intended
to deter frivolous lawsuits by sanctioning the offending party.
The power of rule 11 was diluted in 1993. This weakening is
unacceptable to those of us who want to preserve courts as neutral
forums for dispute resolution and who believe that lawsuits are not
weapons of revenge, but a means for an injured party to gain relief.

Senator Brown introduced a bill very similar to this legislation in
the last Congress. The Senate adopted the text of his bill as an
amendment to the Common Sense Product Liability and Legal Reform Act.
His amendment passed by a vote of 56 to 37.
The bill that I am introducing today is similar, but not identical to
Senator Brown's bill. The civil rights community raised some concerns
with his bill, and my version of the legislation is responsive to these
concerns. The provision that was opposed reinstated the rule 11
requirement that allegations contained in motions and other court
papers be well grounded in fact when filed, rather than allowing a
``reasonable opportunity for further investigation or discovery.''
Unlike Senator Brown's bill, my bill does not change this subsection of
rule 11.
My bill does take strong steps to thwart frivolous lawsuits. First,
my bill makes sanctions for the violation of this rule mandatory. One
of the

[[Page S1988]]

most harmful changes that took effect in 1993 was to make sanctions for
proven violations of this rule permissive. This means that if a party
files a lawsuit simply to harass another party, and the court decides
that this is in fact the case, the offending party still might not be
sanctioned. This is unacceptable. The offending party might not be
punished at all, which provides no deterrence for this offending party
or anyone else who wants to misuse the courts. My bill reinstates the
requirement that if there is a violation of this rule, there are
sanctions.
My bill also removes the limitation on sanctions, and allows
sanctions to be paid to the injured party for more than attorneys' fees
and expenses. In addition, this legislation allows the sanctioning of
attorneys for arguing for an extension of current law if their actions
violate this rule. Again, if the rule is violated, there needs to be
sanctions.
Mr. President, this bill will not, by itself, stop the misuse of our
courts. It is, however, a good first step. It is a necessary step. It
is a bill that we must pass to sanction those who use the legal system
to harass and torment others. That is not what the courts were
established to do. We must protect the integrity of the courts and
preserve them for proper use.
______

By Mr. JEFFORDS:
S. 401. A bill to improve the control of outdoor advertising in areas
adjacent to the Interstate System, the National Highway System, and
certain other federally assisted highways, and for other purposes; to
the Committee on Finance.

the scenic highway protection act

Mr. JEFFORDS. Mr. President, today I introduce the Scenic
Highway Protection Act, legislation that will control billboard blight
and put a stop to the policies that have actually encouraged billboard
construction and destroyed rural vistas across America. Every year
hundreds of miles of rural scenery disappear, millions of taxpayer
dollars are spent, and thousands of trees on public lands are
unnecessarily cut. Why? Because billboards continue to proliferate
along our Nation's highways.
During debate on the National Highway System Act in 1995, billboard
proponents pushed an amendment that would have forced States and
localities to allow billboards on Federal aid highways. Fortunately,
this proposal was defeated. My legislation attempts to give States the
necessary tools to regulate and end the growth of billboards and
protects the strict billboard controls enacted in Vermont and many
other States.
In the coming months, Congress will consider reauthorization of the
Nation's transportation law, the Intermodal Surface Transportation and
Efficiency Act. Proponents of billboard proliferation will most likely
try again to override State billboard control laws. This time, we are
prepared to enact legislation that will reduce and control billboards
nationwide. My legislation will send a signal to billboard owners that
America is ready to end uncontrolled billboard blight.
The language in my bill will place a permanent freeze on the number
of new billboards placed along Federal aid highways. for a new
billboard to go up, an old one must come down. The legislation will
also prohibit billboards in unzoned areas, eliminating the ability to
randomly place billboards in rural America. My bill will end the
practice of cutting trees on public lands for the sole purpose of
better billboard visibility and reinstate the requirement that Federal
and State funds be used to remove billboards when communities decide
the sign violates local zoning laws. Finally, the legislation will
place a 15-percent gross revenue tax on all billboards, ending the free
ride for billboards. The money will be used to remove billboards in our
Nation's most scenic areas.
This legislation will move the 1965 Highway Beautification Act closer
to its original intent of preserving the public's investment in our
highways by protecting scenic areas and natural resources. Let us end
the taxpayer subsidized proliferation of billboards.
______

By Mr. GORTON (for himself and Mrs. Murray):

S. 402. A bill to approve a settlement agreement between the Bureau
of Reclamation and the Oroville-Tonasket Irrigation District; to the
Committee on Energy and Natural Resources.

SETTLEMENT AUTHORIZATION LEGISLATION

Mr. GORTON. Mr. President, today I introduce legislation that
will authorize a settlement between the Bureau of Reclamation and the
Oroville-Tonasket Irrigation District in Washington State. I introduced
similar legislation last year. Congressman Doc Hastings has introduced
legislation on this subject in the House of Representatives, and the
House Resources Committee will mark up the legislation today.
This legislation will authorize a carefully negotiated settlement
between the BOR and the Oroville-Tonasket Irrigation District. If
enacted, this legislation will save the BOR, and therefore the Nation's
taxpayers, money that would otherwise be spent fighting with the
irrigation district in court.
Earlier this week the administration sent a letter to me indicating
that it would support the settlement bill, provided that several
changes be made to the legislation. The legislation that I introduce
today includes the changes requested by the administration. At this
time, I ask unanimous consent to include a copy of the administration's
letter of support for the legislation in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

U.S. Department of the Interior,

Bureau of Reclamation,

Washington, DC, March 3, 1997.
Hon. Slade Gorton,
U.S. Senate,
Washington, DC.
Dear Senator Gorton: Thank you for your letter requesting
the Administration's views on H.R. 412.
The Bureau of Reclamation has executed a settlement
agreement with the Oroville-Tonasket Irrigation District
(District) in preference to litigation over construction of
the Oroville-Tonasket (O-T) Unit Extension. The settlement
agreement provides that its terms will not become effective
unless Congress enacts authorizing legislation by April 15,
1997.
While the Administration supports implementing the
settlement agreement, it can only support H.R. 412 if the
amendments shown on the attached page are adopted. These
amendments are needed to clarify that the transfer of title
will not affect the repayment obligation of the Bonneville
Power Administration (BPA) for irrigation assistance, and
that the settlement agreement will not affect the District's
obligation to continue to pay BPA wheeling charges. In
addition, the amendments are needed to deauthorize the
project irrigation works upon transfer of title. The
Administration strongly encourages the adoption of these
amendments, which are consistent with the intent of the
settlement agreement.
Thank you for your interest in the Oroville-Tonasket Claims
Settlement and Conveyance Act. If you have any questions,
please call 208-4501.
Sincerely,
Eluid L. Martinez,
Commissioner.

amendments to H.r. 412

1. At the end of section 5, insert the following new
subsection (c):
``(c) Project Construction Costs.--The transfer of title
authorized by this Act shall not affect the timing or amount
of the obligation of the Bonneville Power Administration for
the repayment of construction costs incurred by the Federal
government under Section 202 of the Act of September 28, 1976
(90 Stat. 1325) that the Secretary of the Interior has
determined to be beyond the ability of the irrigators to pay.
The obligation shall remain charged to and be returned to the
Reclamation Fund as provided for in section 2 of the Act of
June 14, 1966 (80 Stat. 200), as amended by section 6 of the
Act of September 7, 1966 (80 Stat. 707).''
2. At the end of section 6, insert the following new
sentence: ``The rate that the District shall pay the
Secretary for such reserved power shall continue to reflect
full recovery of Bonneville Power Administration transmission
costs.''
3. In Section 11(a), delete the sentence that read: ``After
transfer of title, any future Reclamation benefits received
pursuant to chapter 1093 of the Reclamation Act of June 17,
1902 (32 Stat. 388), and Acts supplementary thereto or
amendatory thereof, other than as provided herein, shall be
subject to approval by Congress.''
4. At the end of Section 11 insert the following new
subsection (c):
``(c) Deauthorization.--Effective upon the transfer of
title to the District under this section, that portion of the
Oroville-Tonasket Unit Extension, Okanogan-Similkameen
Division, Chief Joseph Dam Project, Washington referred to in
Section 7(a) as the Project Irrigation Works is hereby
deauthorized. After transfer of title, the District shall not
be entitled to receive any further Reclamation benefits
pursuant to the Reclamation Act of June 17, 1902, and Acts

[[Page S1989]]

supplementary thereto or amendatory thereof.''
5. Add in the Committee report language:
``It is the understanding of the Committee regarding this
legislation that the amount of Oroville-Tonasket Project
irrigation assistance that the Bonneville Power
Administration will repay is not expected to exceed
$75,000,000, and that repayment is now scheduled to be made
in the year 2042.''
______

By Mr. FEINGOLD:
S. 403. A bill to expand the definition of limited tax benefit for
purposes of the Line Item Veto Act; to the Committee on the Budget and
the Committee on Governmental Affairs, jointly, pursuant to the order
of August 4, 1977, as modified by the order of April 11, 1986, with
instructions that if one committee reports, the other committee have 30
days to report or be discharged.

THE EXPANSION OF LINE-ITEM VETO ACT

Mr. FEINGOLD. Mr. President, today I am introducing legislation to
expand the Line-Item Veto Act to cover one of the largest and fastest
growing areas of the Federal budget, tax expenditures. I am especially
pleased to be joined in offering this legislation by my good friend,
Congressman Tom Barrett of Milwaukee who is spearheading this
legislation in the other body. Both bills expand the Line-Item Veto Act
which took effect this past January and will remain in force for the
next 8 years.
Mr. President, both Congressman Barrett and I supported the new Line-
Item Veto Act that was signed into law last session. Though it isn't
the whole answer to our deficit problem, I very much hope it will be
part of the answer.
However, the new Line-Item Veto Act failed to address one of the
largest and fastest growing areas of Federal spending--the spending
done through the Tax Code, often called tax expenditures.
According to the Senate Budget Committee's most recent committee
print on tax expenditures, prepared by the Congressional Research
Service, we will spend nearly half a trillion dollars on tax
expenditures during the current fiscal year. Citizens for Tax Justice
estimates that over the next 7 years, we will spend $3.7 trillion on
tax expenditures, and sometime in the next 2 to 3 years, the total
amount spent on tax expenditures will actually surpass the total
discretionary budget of the United States.
Mr. President, despite making up a huge and growing portion of the
Federal budget, tax expenditures are beyond the reach of the new
Presidential line-item veto authority. As currently structured, that
authority only extends to so-called limited tax benefits, defined in
part to be a tax expenditure that benefits 100 or fewer taxpayers. As
long as the tax attorneys can find 101st taxpayers who benefit from the
proposed tax expenditure, it is beyond the reach of the new
Presidential authority.
Mr. President, it may not even be necessary for the tax attorneys to
find that 101st taxpayer. If a tax expenditure gives equal treatment to
all persons in the same industry or engaged in the same type of
activity, it is exempt from the new Presidential authority no matter
how narrow the special interest spending.
Further, if all persons owning the same type of property, or issuing
the same type of investment, receive the same treatment from a tax
expenditure, that tax expenditure is similarly outside the scope of the
President's new authority.
Mr. President, there are still more exceptions that make it even
harder for a President to trim unnecessary spending done through the
tax code. For example, if any difference in the treatment of persons by
a new tax expenditure is based solely on the size or form of the
business or association involved, or, in the case of individuals,
general demographic conditions, then the new spending cannot be touched
by the President except as part of a veto of the entire piece of
legislation which contains the new spending.

By contrast, we find none of these elaborate restrictions on the new
line item veto authority for spending done through the appropriations
process or through entitlements. The new Presidential authority is
handcuffed only for spending done through the Tax Code.
Mr. President, this raises several problems.
First, and foremost, it shields an enormous portion of the Federal
budget from this new tool to cut wasteful and unnecessary spending. If
the authority established by the Line-Item Veto Act is to have meaning,
it cannot be preempted from being used to scrutinize this much
spending.
A second problem raised by the inability of the new Presidential
authority to address new tax expenditures is that it creates an
enormous loophole through which questionable spending can escape. We
have already seen discussions of how special interest spending can be
crafted to avoid the new Presidential authority. While the current
Line-Item Veto Act power given the President formally covers
discretionary spending and new entitlement authority, a special
interest intent on enacting its pork barrel spending could readily do
so by avoiding the discretionary or entitlement formats, and instead
transform their pork into a tax expenditure. As we know from the
elaborate limits placed on the President's ability to apply the new
authority to spending through the Tax Code, most special interest pork
that takes the form of a tax break is beyond the reach of the Line-Item
Veto Act.
Mr. President, no matter how powerful this new authority is with
regard to discretionary spending and entitlement authority, it is
virtually useless against tax expenditures, and thus invites special
interests to use this avenue to deliver pork.
A further problem with the lack of adequate Presidential review in
this area is the very real potential for inequities in the
implementation of the new Line-Item Veto Act authority. These
inequities arise in part from the progressive structure of marginal tax
rates--as income rises, higher tax rates are applied. In turn, this
means that many tax expenditures are worth more to those in the higher
income tax brackets than they are to families with lower incomes.
In some instances, tax expenditures provide no benefit at all to
individuals with lower incomes.
This is not the case with entitlement and discretionary spending
programs--both areas covered by the Line-Item Veto Act. The benefits of
those programs often are targeted to those with lower income.
The net effect is that the scope of the current Line-Item Veto Act
covers programs that often benefit those with low and moderate income,
while it is powerless with regard to programs that often benefit
individuals and corporations with higher incomes.
Mr. President, tax expenditures have another feature that makes it
especially important that we extend the new Line-Item Veto Act to cover
them, namely their status as a kind of super entitlement. Once enacted,
a tax expenditure continues to spend money without any additional
authorization or appropriation, and without any regular review. In
fact, while even funding for entitlements like Medicare or Medicaid can
be suspended in rare instances such as a Government shut-down, funding
for a tax expenditure is never interrupted.
Tax expenditures enjoy a status that is far above any other kind of
government spending, and as such, it should receive special scrutiny.
Extending the Line-Item Veto Act to cover them will provide some of
that needed review.
Mr. President, as I have noted, tax expenditures make up a huge
portion of the budget. They will soon exceed the entire Federal
discretionary budget. Citizens for Tax Justice reports that if all
current tax expenditures were suddenly repealed, the deficit could be
eliminated and income tax rates could be reduced across the board by
about 25 percent.
Clearly, tax expenditures have an enormous impact on the deficit, and
we need to pursue two tracks with regard to them. First, we must cut
some of the nearly half a trillion dollars in existing spending done
through the tax code. Any balanced plan to eliminate the deficit over
the next few years must contain cuts to spending in this area.
And second, with so much of our budget already dedicated to this kind
of spending, we must bring tax expenditures under the Line-Item Veto
Act and give the President the authority to act on new spending in this
area as he does in other areas.
Our legislation does just that by eliminating the highly restrictive
language with respect to tax expenditures.

[[Page S1990]]

Mr. President, as with the recently enacted Line-Item Veto Act
itself, this bill to extend that new authority is not the whole answer
to our deficit problems, but it can be part of the answer, and I urge
my colleagues to support this effort to put teeth into the new
Presidential authority with respect to the tax expenditure portion of
the Federal budget.
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. 403

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

SECTION 1. AMENDMENT TO CONGRESSIONAL BUDGET ACT.

Section 1026(9) of the Congressional Budget and Impoundment
Control Act of 1974 (2 U.S.C. 691e(9)) (as added by the Line
Item Veto Act) is amended to read as follows:
``(9) Limited tax benefit.--The term `limited tax benefit'
means any tax provision that has the practical effect of
providing a benefit in the form of different treatment to a
particular taxpayer or a limited class of taxpayers, whether
or not such provision is limited by its terms to a particular
taxpayer or class of taxpayers.''.
______

By Mr. BOND (for himself, Mr. Chafee, Mr. Nickles, Mr. Cochran,
Mr. Gregg and Mr. Smith of New Hampshire):
S. 404. A bill to modify the budget process to provide for separate
budget treatment of the dedicated tax revenues deposited in the Highway
Trust Fund; to the Committee on the Budget and the Committee on
Governmental Affairs, jointly, pursuant to the order of August 4, 1977,
as modified by the order of April 11, 1986, with instructions that if
one committee reports, the other committee have 30 days to report or be
discharged.

HIGHWAY TRUST FUND INTEGRITY ACT OF 1997

Mr. BOND. Mr. President, I rise today to introduce a measure, along
with my dear friend and colleague, the chairman of the Environment and
Public Works Committee, Senator John Chafee, entitled the Highway Trust
Fund Integrity Act of 1997. Our cosponsors are Senators Nickles,
Cochran, and Gregg.
Mr. President, I hope all of us understand that transportation and
highway funding is critical to our individual States and the entire
Nation. Good highways link our communities, towns, and cities with
markets. They link our constituents with their schools, hospitals,
churches, and jobs.
An effective transportation system should move us into the 21st
century. Back in 1956, the Federal Highway Trust Fund was established
as a way to finance the Federal Aid Highway Program. This was to be a
dedicated trust fund, supported by direct user fees and taxes. It was
called a trust fund because once the money went in, we were supposed to
be able to trust that that money would come back out for use on our
roads, highways, and bridges.
However, the 1990 Budget Act eliminated the linkage between the
revenues raised by the user taxes and the spending from the
transportation fund. We know now that what we promised ourselves and
our constituents, that the highway trust fund user taxes would be
deposited and the trust fund would be used for highways, has not been
observed. We see now an illogical process that allows highway trust
fund dollars not to be spent in order to permit spending more in other
categories. I believe that is wrong. My constituents are telling me
this is wrong and they have challenged me to find a solution. I believe
we have come up with that solution.
Let me explain, briefly, Mr. President, what the bill is: First, it
is a budget bill, not a tax bill or an ISTEA highway authorization
bill. This bill would ensure that the highway trust fund dollars are
spent for the purposes for which they were intended and that it would
be deficit neutral. The bill would reestablish the link between the
highway trust fund taxes and highway spending by transferring the taxes
and the spending to a new budget category--a revenue constrained fund--
that is part of the unified budget. This new category would have its
own budget rules to ensure that highway programs were fully funded and
deficit neutral. This bill would restore the trust to the trust fund
because highway spending would equal the highway trust fund taxes
collected the prior year. It is consistent with achieving a balanced
budget because it comes with its own built-in cap--the revenue received
from the highway trust fund. It does not take the highway trust fund
off-budget, but it also does not attempt to spend the balances that
have accumulated or the interest on those balances. We do not attempt
to resolve the arguments of the past. Instead we have focused on
developing a workable process for the future.

I do not believe that the status quo is sustainable, primarily for
two reasons.
First, our country has tremendous infrastructure needs. Take my State
of Missouri alone. A recent report by the Road Information Program
stated that Missouri has the seventh highest percentage of structurally
deficient or functionally obsolete bridges in the country, and that
more than half of its major roads are in poor or mediocre condition and
in need of improvement. My State has the third highest percentage of
urban freeway congestion in the Nation, and highway fatalities in
Missouri have increased by 17 percent since 1993. These statistics will
continue to grow as vehicle travel continues to grow and the
infrastructure crumbles.
Second, I know that my constituents, and I would say the American
public, will not continue to support a process that sentences
transportation spending to compete with other discretionary programs
despite its unique dedicated funding source.
Mr. President, I do not want to take much more time, but there is one
more issue I would like to address. Senator Chafee and I have focused
on the highway account of the highway trust fund. The bill we are
introducing today does not address the mass transit account of the
highway trust fund. It is not included due to some concern transit
advocates have expressed--not in regards to the budget process being
proposed, but over the level of funding that transit receives. I
believe it is important that a workable solution be found for transit
and I am committed to working with the Banking Committee, which has
jurisdiction for the transit programs, and transit advocates in
developing a proposal.
I want to thank my dear friend Senator Chafee for his leadership in
the area of transportation. We will have ample opportunity to continue
our work together as the reauthorization of ISTEA progresses. Senator
Chafee has heard me 100 times stress the need for a formula change so I
will not get into that one today. I do however want to thank him and
his staff for their help on this legislation.
Mr. President, let me close by saying that this bill is the basis for
a transportation funding policy for the future--a starting point for a
fairer, more forward-looking transportation funding policy. I hope my
colleagues will join us and cosponsor this important bill.
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:

Summary of Highway Trust Fund Integrity Act of 1997

general

Keeps the Highway Trust Fund on-budget, as part of the
unified Federal budget.
Reestablishes the linkage between Highway Trust Fund taxes
and spending that was lost when the Budget Enforcement Act of
1990 split the Federal budget process into two categories.
Consistent with achieving a balanced Federal budget by
2002.
Increases funding to meet our nation's substantial
transportation needs.
Creates a new budget category that reflects the unique,
revenue-constrained nature of the HTF. This new category,
called a Revenue Constrained Fund (RCF) would have its own
budget rules to ensure that transportation programs are
fully-funded but deficit neutral.

revenue constrained funds (rcf)

The new RCF budget category would be a separate category,
and would not be a subset of either the mandatory budget
category or discretionary spending category.
Under the RCF proposal, the spending from Revenue
Constrained Funds would be equal to the amount of tax
receipts collected for the prior year. Spending would be
limited to tax receipts in the prior year to ensure that
Highway Trust Fund spending would never exceed actual
receipts.

example of problem under current federal budget process

One would expect that increased Highway Trust Fund taxes
would make room in the

[[Page S1991]]

budget for increased transportation spending. Unfortunately,
this is not the case.
Under the current rules, gas tax increases do make room in
the budget for additional spending, but not for increased
transportation spending. Under the current rules, the only
way to fund the highway trust fund program at the level of
Highway Trust Fund tax receipts is by cutting other
discretionary programs. We must reform the Federal budget
process to correct this illogical outcome.

Mr. CHAFEE. Mr. President, I want to congratulate the Senator from
Missouri for his prime work on this piece of legislation. The money
that goes into the highway trust fund this year will go out for
transportation purposes next year, and I believe that is the right way
to do things. It has varied from some of the other proposals that have
been put in which provide that the accumulated interest of the
accumulated principle of the fund be spent. We don't do that. We
provide that what came in last year through taxes will go out the
following year for transportation purposes.
Mr. President, today I join as a cosponsor of the Highway Trust Fund
Integrity Act of 1997. This legislation, sponsored by my colleague from
Missouri, Senator Bond, and cosponsored by Senators Nickles, Cochran
and Gregg, reestablishes the link between highway trust fund taxes and
transportation spending.
I believe that our proposal represents a reasonable and responsible
solution to a problem that faces the Congress as it considers the
reauthorization of the Intermodal Surface Transportation Efficiency
Act.
I hope that this bill will serve as a starting point for further
discussions with my colleagues, especially my colleagues from the
Budget and Appropriations committees. I recognize that proposals that
modify the budget process are by their nature, controversial, and upset
the status quo. However, I think change is necessary and the status quo
is no longer an acceptable outcome.

The Problem

As most of you are aware, the Budget Enforcement Act of 1990 split
the Federal Budget process into two categories, one for receipts and
mandatory spending and the other for discretionary spending. highway
trust fund taxes, like other revenues, are in the mandatory category,
but almost all highway spending falls within the discretionary
category. Each budget category has its own rules, procedures, and
incentives. Because the highway trust fund is split between these two
categories, different parts of the highway trust fund are subject to
different budget rules, and the link between the highway trust fund
taxes and transportation spending is severed.
Let me give an example of the problem the current situation causes.
One would expect that increased highway trust fund taxes would make
room in the budget for increased transportation spending.
Unfortunately, this is not the case. Under the current rules, gas tax
increases do make room in the budget for additional spending, but not
for increased transportation spending. Under the current law, the only
way to fund transportation programs at the level of highway trust fund
tax receipts is by cutting other discretionary programs, such as law
enforcement and education. We must reform the Federal budget process to
correct this illogical outcome.

The Solution

Our proposal reestablishes the connection between highway trust fund
taxes and transportation spending by putting the highway trust fund
taxes and spending in the same budget category. ``The Highway Trust
Fund Integrity Act of 1997" transfers all of the highway trust fund
receipts and outlays into a new budget category that reflects the
unique, revenue-constrained nature of the highway trust fund. This new
category, called the revenue constrained fund, would have its own
budget rules to ensure that transportation programs are fully-funded
but deficit neutral.

Under this proposal, spending from the highway trust fund would be
equal to the highway trust fund tax receipts collected for the prior
year. Spending would be limited to tax receipts in the prior year to
guarantee that highway trust fund spending would never exceed actual
receipts. If tax receipts into the highway trust fund are less than
expected, transportation spending would be constrained, making the
trust fund deficit-neutral.
This bill does not create a new entitlement program. highway trust
fund spending would be strictly limited by the amount of taxes
deposited in the prior year thereby ensuring that the highway trust
fund will be deficit neutral. Other entitlement programs do not have
this guarantee.

Trust Fund Balances

One of the questions that has been raised regarding our proposal is
how it treats the balances that now exist in the highway trust fund.
Our proposal does not specifically address the status of the balances
that now exist in the highway trust fund. In developing this proposal,
we have attempted to focus on establishing a workable process for the
future that reestablishes the connection between the highway trust fund
taxes and transportation spending. We think we can develop a broad
consensus on a proposal to spend the taxes deposited into the highway
trust fund going forward. Such a broad consensus is not possible
regarding the balances that now exist in the highway trust fund. There
is significant disagreement about the validity of spending those
balances, and our bill does not attempt to resolve this disagreement.

Congressional Jurisdiction

Another question that has been raised about our proposal is how this
proposal would change the jurisdiction of the various committees in the
Congress over the highway trust fund. Our bill does not change the
jurisdiction among Congressional committees. It is our intention that
all of the committees involved in setting transportation policy would
continue to provide policy input and oversight for those areas
currently under their jurisdiction.
The tax committees would continue to play their role in setting tax
rates of the highway trust fund; the authorizing committees would
continue to play their role, including determining the program
structure and distribution formulas for the formula grant programs, and
the appropriations committees would continue to provide oversight and
make decisions about the programs under their control.
Under our proposal, the total amount of highway trust fund spending
would be determined by the American people who pay the taxes deposited
into the trust fund. Neither the authorizing committees nor the
appropriations committees would determine the total level of spending.

Transit

In developing this legislation, we have focused on the programs and
spending of the Highway Account of the highway trust tund. The highway
account programs are under the jurisdiction of the Senate Committee on
Environment and Public Works, the committee for which I serve as
chairman. The bill we introduce today only addresses the highway
account of the trust fund; it does not address the Mass Transit
Account.
However, as part of the ISTEA reauthorization, I believe a similar
proposal should be developed for the transit account of the highway
tust Fund. Senator Bond and I plan to work with transit advocates and
members of the Banking Committee, which has jurisdiction over transit
programs, to craft such a proposal.
The Highway Trust Fund Integrity Act of 1997 is a forward looking
bill. It is consistent with achieving a balanced Federal budget by
2002. It does not take the highway trust fund off-budget, but it does
address concerns that the bond between transportation taxes and
transportation spending has been broken.
I urge my colleagues to cosponsor this important bill.
______

By Mr. HATCH (for himself, Mr. Baucus, Mr. D'Amato, Mr. Abraham,
Mr. Bingaman, Mrs. Boxer, Mr. Dorgan, Ms. Moseley-Braun, Mrs.
Murray, Mr. DeWine, Mr. Conrad, Mr. Rockefeller, and Mrs.
Feinstein):
S. 405. A bill to amend the Internal Revenue Code of 1986 to
permanently extend the research credit and to allow greater opportunity
to elect the alternative incremental credit; to the Committee on
Finance.

the research and experimentation credit permanent extension act of 1997

Mr. HATCH. Mr. President, today I am proud to introduce a bill to
make

[[Page S1992]]

the current tax credit for increasing research activities permanent
with my friend and colleague Max Baucus. We are also joined by Senators
D'Amato, Abraham, Boxer, Bingaman, Moseley-Braun, Dorgan, Murray,
DeWine, Conrad, Rockefeller. Companion legislation will be introduced
today by Representatives Nancy Johnson and Robert Matsui in the House.
The Small Business Job Protection Act of 1996 temporarily extended this
tax credit until May 31, 1997, when it is set to expire.
As the United States is shifting from an industrial based economy to
an information and technology based economy, conducting research for
tomorrow's products and methods is increasing in importance. In 1981,
the Reagan administration and the Congress recognized this need, and
the credit for increasing research and experimentation [R&E] activities
was first enacted. Unfortunately, the credit has been victim to
repeated short term extensions that included a break in the
availability of the credit.
Mr. President, this nation is the world's undisputed leader in
technological innovation. American know-how has given our Nation
benefits undreamed of a few years ago. Research and development by U.S.
companies has led the way in delivering these benefits, which enhance
U.S. competitiveness as well as the quality of life for everyone. And,
as the pace of change in our world quickens, the role of research has
taken on increased importance. Today, the credit is needed more than
ever to keep up with our changing world.
The R&E credit has played a key role in placing the United States
ahead of its competition in developing and marketing new products.
Studies of the credit indicate that the marginal effect of $1 of the
R&E credit stimulates approximately $1 of additional private research
and development spending over the short-run, and as much as $2 of extra
investment in research over the long-run.
Mr. President, the benefits of the R&E credit, though certainly very
significant, have been limited by the fact that the credit has been
temporary. In many fields, particularly pharmaceuticals and
biotechnology, there are relatively long periods of development. The
more uncertain the long-term future of the R&E credit is, the smaller
the potential of the credit to stimulate increased research. This only
makes sense, Mr. President. U.S. companies are managed by prudent
business men and women. They evaluate their research and development
investments by comparing the present value of the expected cash flow
from the research over the life of the investment with the initial cash
outlay. These estimates take into account the potential availability of
tax credits. However, because of the uncertainty of a tax credit that
has been allowed to continually expire, many decision makers do not
count on the R&E credit as being available in the long-run. This, of
course, means that fewer research projects will meet the threshold of
viability and results in fewer dollars being spent on research in this
country.

In the business community, the development of new products,
technologies, drugs, and ideas can result in either success or failure.
Investments carry a risk. If a project has a high risk of failure, the
R&E tax credit will help ease the cost of taking the chance to find the
cure for killer diseases such as cancer, to build the next microchip,
or the next generation of heart monitoring equipment that can save
lives. If the project becomes a success, resulting in a new drug that
can cure a disease or a new breakthrough technology, then what happens?
Additional investment is made, workers are hired, new jobs are created
and many Americans benefit from the initial research and
experimentation. In this way, all Americans can benefit from the R&E
tax credit.
Mr. President, a small investment in R&E today produces dividends and
rewards tomorrow. This tax credit is a credit for investment, for
economic growth, and for creating new jobs. What if we don't act? As
the Peat Marwick study confirms, the benefits of the R&E tax credit
reach into the future. Failure to extend the credit beyond May 31,
1997, will weaken our Nation's ability to stay competitive in the
future.
It is important to note that while U.S. investment in research and
development has generally grown since 1970, our international
competitors have not stood still. Other nations, such as Japan and
Germany are constantly knocking at the door trying to build the better
car, the faster computer, or a more effective drug. Uncertainty, about
the future of the credit will make firms hesitant to make long-term
commitments and investments in the critical long-term research projects
that really are the source of the breakthrough drugs and the new
technologies. In fact, United States non-defense R&D, as a percentage
of gross domestic product [GDP], has been relatively flat since 1985,
while Japan's and Germany's have grown.
Unlike a few years ago, it is now not always necessary for U.S. firms
to perform their research activities within the boundaries of the
United States. As more nations have joined the United States as high
tech manufacturing centers, with educated work forces, multinational
companies have found that moving manufacturing functions overseas is
sometimes necessary to stay competitive. The same is often true with
basic research activities. In fact, some of our major trading partners
now provide generous tax incentives for research and development
conducted in those nations. These incentives are more attractive than
the R&E credit the United States provides, particularly when the
temporary nature of our credit is considered. Therefore, Mr. President,
we are at risk of having some of the R&D spending in the United States
transferred overseas if we do not keep competitive.
President Clinton, when campaigning for the Presidency in 1992,
recognized the importance of stimulating private R&D investment and
called for a permanent R&E credit. The 1993 tax bill had a 3-year
extension. Last year, we extended the credit for only 1 year because of
revenue constraints in the small business bill. The President's fiscal
year 1998 budget contains another 1-year extension. These proposals for
extensions are well and good, Mr. President, but they do nothing to
give stability to risky, long-term research and experimentation
investments. The certainty of the availability of the tax credit is now
almost as important as the credit itself. It might well make the
difference between a decision to undertake an expensive multiyear
research project and a decision to forego such research.

I hope this year we can put our support behind investment in research
and make this credit permanent.
Mr. President, my home State of Utah is home to a large number of
innovative companies who invest a high percentage of their revenue in
research and development activities. For example, between Salt Lake
City and Provo lies the world's biggest stretch of software and
computer engineering firms. This area, which was named ``Software
Valley'' by Business Week, is second only to California's Silicon
Valley as a thriving high technology commercial area.
In addition, Utah is home to about 700 biotechnology and biomedical
firms that employ nearly 9,000 workers. These companies were conceived
in research and development and will not survive, much less grow,
without continuously conducting R&D activities.
In all, Mr. President, there are approximately 80,000 employees
working in Utah's 1,400 plus and growing technology based companies.
Research and development is the lifeblood of these firms, and hundreds
of thousands more throughout the Nation that are like them. A permanent
and effective tax incentive to increase research is essential to the
long-term health of these businesses.
I am aware, Mr. President, that not every company that incurs R&D
expenditures in the United States can take advantage of the R&E credit.
As the credit matures and business cycles change, the current credit
can be out of reach for some companies. Thus, as part of the latest
extension of the credit Congress enacted an elective alternative credit
to broaden the reach of this incentive. However, Congress should
continue to examine ways to improve it and to make the credit more
effective in delivering incentives to increase R&D activity.
In the meantime, however, it is important that this Congress send a
strong signal that the current credit

[[Page S1993]]

should not be allowed to expire. I urge my colleagues to show their
support for the concept of a permanent R&E credit by cosponsoring this
legislation and support the kind of research activities that will
maintain American leadership in the technological developments that
will lead us into the next century.
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. 405

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

SECTION 1. MODIFICATIONS TO RESEARCH CREDIT.

(a) Credit Made Permanent.--
(1) In general.--Section 41 of the Internal Revenue Code of
1986 (relating to credit for increasing research activities)
is amended by striking subsection (h).
(2) Conforming amendment.--Paragraph (1) of section 45C(b)
of such Code is amended by striking subparagraph (D).
(b) Opportunity To Elect Alternative Incremental Credit.--
Subparagraph (B) of section 41(c)(4) of the Internal Revenue
Code of 1986 (relating to election) is amended to read as
follows:
``(B) Election.--An election under this paragraph shall
apply to the taxable year for which made and all succeeding
taxable years unless revoked with the consent of the
Secretary.''
(c) Effective Dates.--
(1) Extension.--The amendments made by subsection (a) shall
apply to amounts paid or incurred after May 31, 1997.
(2) Election.--The amendment made by subsection (b) shall
apply to taxable years beginning after June 30, 1996.

Mr. BAUCUS. Mr. President, it is with great pleasure that I
join with my colleague from Utah, Senator Hatch, and my other
colleagues Senators Abraham, Boxer, Bingaman, Conrad, D'Amato, DeWine,
Dorgan, Moseley-Braun, Murray, and Rockefeller to introduce this bill,
which is so critical to the ability of American businesses to
effectively compete in the global marketplace. Companion legislation
has been introduced in the House by Representatives Nancy Johnson and
Robert Matsui.
Our Nation is the world's undisputed leader in technological
innovation, a position that would not be possible, absent U.S.
companies' commitment to research and development. Investment in
research is an investment in our Nation's economic future, and it is
appropriate that both the public and private sector share the costs
involved, as we share in the benefits. The credit provided through the
Tax Code for research expenses provided a modest but crucial incentive
for companies to conduct their research in the United States, thus
creating high-skilled, high-paying jobs to U.S. workers.
The R&E credit has played a key role in placing the United States
ahead of its competition in developing and marketing new products.
Every dollar that the Federal Government spends on the R&E credit is
matched by another dollar of spending on research over the short run by
private companies, and $2 of spending over the long run. Our global
competitors are well aware of the importance of providing incentives
for research, and many provide more generous tax treatment for research
and experimentation expenses than does the United States. As a result,
while spending on nondefense R&D in the United States as a percentage
of GDP has remained relatively flat since 1985, Japan's and Germany's
has grown.
The benefits of the credit, though certainly significant, have been
limited over the years by the fact that the credit has been temporary.
In addition to the numerous times that the credit has been allowed to
lapse, last year, for the first time, when Congress extended the credit
it left a gap of an entire year during which the credit was not
available. This unprecedented lapse sent a troubling signal to the U.S.
companies and universities that have come to rely on the Government's
longstanding commitment to the credit.
Much research and development takes years to mature. The more
uncertain the long-term future of the credit is, the smaller its
potential to stimulate increased research. If companies evaluating
research projects cannot rely on the seamless continuation of the
credit, they are less likely to invest on research in this country,
less likely to put money into cutting-edge technological innovation
that is critical to keeping us in the forefront of global competition.
Our country is locked in a fierce battle for high-paying
technological jobs in the global economy. As more nations succeed in
creating educationally advanced work forces and join the United States
as high-technology manufacturing centers, they become more attractive
to companies trying to penetrate foreign markets. Multinational
companies sometimes find that moving both manufacturing and basic
research activities overseas is necessary if they are to remain
competitive. The uncertainty of the R&E credit factors into their
economic calculations, and makes keeping these jobs in the United
States more difficult.
Although the R&E credit is not exclusively used by high-technology
firms, they are certainly key beneficiaries of the credit. In my own
State of Montana, 12 of every 1,000 private sector workers were
employed by high-technology firms in 1995, the most recent year for
which statistics are available. Almost 400 establishments provided
high-technology services, at an average wage of $34,500 per year. These
jobs paid 77 percent more than the average private sector wage in
Montana of $19,500 per year. Many of these jobs would never have been
created without the assistance of the R&E credit. Making the credit
permanent would most certainly provide the incentive needed to create
many more in the future.
I urge my colleagues to support this legislation, and look forward to
working with them and with the administration to make the research and
experimentation tax credit permanent.
______

By Mr. HATCH (for himself, Mr. Baucus, Mr. Allard, Mr. Bond, Mr.
Lieberman, and Mr. Burns):
S. 406. A bill to amend the Internal Revenue Code of 1986 to provide
clarification for the deductibility of expenses incurred by a taxpayer
in connection with the business use of the home; to the Committee on
Finance.

the home office deduction act of 1997

Mr. HATCH. Mr. President, today I am proud to introduce the Home
Office Deduction Act of 1997. I am joined today by my friends and
colleagues, Senators Baucus, Allard, Bond, Lieberman, and Burns. This
bill will clarify the definition of what is a ``principal place of
business'' for purposes of section 280A of the Internal Revenue Code,
which allows a deduction for an office in the home.
This bill is designed to reverse the 1993 Supreme Court decision in
Commissioner versus Soliman. When this decision was handed down, it
effectively closed the door to legitimate home office deductions for
hundreds of thousands of taxpayers. Moreover, the decision unfairly
penalizes many small businesses simply because they operate from a home
rather than from a store front, office building, or industrial park.
Mr. President, until the Soliman decision, small business owners and
professionals who dedicate a space in their homes to use for business
activities were generally allowed to deduct the expenses of the home
office if they met the following conditions: First, the space in the
home was used solely and exclusively on a regular basis as an office;
and second, the deduction claimed was not greater than the income
earned by the business. Through the Soliman case, the Supreme Court has
narrowed significantly the availability of this deduction by requiring
that the home office be the principal business location of the
taxpayer. This requirement that the home office be the principal
business location has proven to be impossible to meet for many
taxpayers with legitimate home office expenses.
For example, under the Soliman decision, a self-employed plumber who
generates business income by performing services in the homes of his
customers would be denied a deduction for a home office. This is
because, under the rules, his home office is not considered his
principal place of business because the business income is generated in
the homes of the customers and not in his home office. This is the case
even though the home office is where he receives telephone messages,
keeps his business records, plans his advertising, stores his tools and
supplies, and fills out Federal tax forms. In fact, having a full-time
employee in the office who keeps the books and sets up appointments
would still not result in a home office deduction for the plumber.

[[Page S1994]]

This is preposterous, Mr. President, and we need to correct it. My
bill would rectify this result by allowing the home office to qualify
as the principal place of business if the essential administrative or
management activities of the business are performed there.

The truly ironic effect of the Supreme Court's decision is that a
taxpayer who rents office space outside of the home is allowed a full
deduction, but one who tries to economize by working at home is
penalized. This makes no sense to me.
The Home Office Deduction Act of 1997 is designed to restore the
deduction for home office expenses to pre-Soliman law. Rather than
requiring taxpayers to meet the new criteria set out by the Court, the
bill allows a home office to meet the definition of a ``principal place
of business'' if it is the location where the essential administrative
or management activities are conducted on a regular and systematic
basis by the taxpayer. To avoid possible abuses, the bill requires that
the taxpayer have no other location for the performance of these
essential administrative or management activities.
Mr. President, today's job market is rapidly changing. New
technologies have been developed and continually improved that allow
instant communication around the once expansive globe. There is even
talk of virtual offices, which are equipped only with a telephone and a
hookup for a portable computer. These mobile communications have
revolutionized the definition of the traditional office. No longer is
there a need to establish a business downtown. Employees are
telecommuting by facsmile, modem, and telephone. Today, both a husband
and a wife could work without leaving their home and the attention of
their children. In this new age, redefining the deduction for home
office expenses is vital. Our tax policy should not discriminate
against home businesses simply because a taxpayer makes the choice,
often based on economic or family considerations, to operate out of the
home.
In most cases, start-up businesses are very short on cash. Yet, for
many, ultimate success depends on the ability to hold out for just a
few more months. In these situations, even a relatively small tax
deduction for the expenses of the home office can make a critical
difference. It is important to note that some of America's fastest
growing and most dynamic companies originated in the spare bedroom or
the garage of the founder. Our tax policies should support those who
dare to take risks. Many of tomorrow's jobs will come from
entrepreneurs who are struggling to survive in a home-based business.
Mr. President, the home office deduction is targeted at these small
business men and women, entrepreneurs, and independent contractors who
have no other place besides the home to perform the essential
administrative or management activities of the business. The Soliman
decision drastically reduced the effectiveness and fairness of this
deduction and must be reversed.
This legislation can also have an important effect on rural areas,
such as in my home State of Utah. Many small business owners and
professionals in the rural areas of Utah must spend a great deal of
time on the road, meeting clients, customers, or patients. It is likely
that many of my rural constituents will be unable to meet the
requirements for the home office deduction under the Soliman decision.
Mr. President, we must help these taxpayers, not hurt them, in their
efforts to contribute to the economy and support their families.

The Home Office Deduction Act of 1997 not only has strong bipartisan
support in the Congress, but also has the support of the following
organizations: The Alliance of Independent Store Owners and
Professionals, the American Animal Hospital Association, the American
Small Business Association, the American Society of Media
Photographers, the American Society of Travel Agents, Americans for
Financial Security, the Bureau of Wholesale Sales Representatives,
Communicating for Agriculture, the Home Office & Business Opportunities
Association of California, the Illinois Women's Economic Development
Summit, the Manufacturers Agents National Association, the National
Association for the Cottage Industry, the National Association of the
Self-Employed, the National Association of Women Business Owners, the
National Electrical Manufacturers Representatives Association, the
National Federation of Independent Businesses, National Small Business
United, the National Society of Public Accountants, the Promotional
Products Association International, the Small Business Legislative
Council.
I urge my colleagues in the Senate to join us as cosponsors of this
important legislation.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 406

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 ``Home Office Deduction Act of
1997''.

SEC. 2. CLARIFICATION OF DEFINITION OF PRINCIPAL PLACE OF
BUSINESS.

Section 280A(f) of the Internal Revenue Code of 1986 is
amended--
(1) by redesignating paragraphs (2), (3), and (4) as
paragraphs (3), (4), and (5), respectively; and
(2) by inserting after paragraph (1) the following:
``(2) Principal place of business.--For purposes of
subsection (c), a home office shall in any case qualify as
the principal place of business if--
``(A) the office is the location where the taxpayer's
essential administrative or management activities are
conducted on a regular and systematic (and not incidental)
basis by the taxpayer, and
``(B) the office is necessary because the taxpayer has no
other location for the performance of the essential
administrative or management activities of the business.''

SEC. 3. EFFECTIVE DATE.

The amendments made by this Act shall apply to taxable
years beginning after the December 31, 1996.

Mr. BAUCUS. Mr. President, it is with great pleasure that I
join with my colleague from Utah, Senator Hatch, to introduce this
important bill today. The Home Office Deduction Act of 1997 will
correct a problem that has unfairly hurt thousands of small businesses
in this country.
In 1993, the Supreme Court, in its Commissioner versus Soliman
decision, substantially narrowed the availability of the home office
deduction. Until the Soliman decision, small business owners and
professionals who dedicated a space in their homes for business
activities were generally allowed to deduct the expenses of the home
office if the space was used solely and exclusively and on a regular
basis as an office, and the deduction was not greater than the income
earned by the business.
In the Soliman case, the Supreme Court limited the credit to only
those persons who met with customers in the home office, or who
conducted the primary business function in the home. This principal
business location requirement has proven to be impossible to meet for
many taxpayers with legitimate home office expenses.
the ironic effect of the Supreme Court's decision is that a taxpayer
who operates from a store front, an office building, or an office park
is allowed a full deduction, but one who chooses to work at home is
penalized. This ruling denies the home office deduction to self-
employed plumbers, home-care nurses, and other self-employed business
people who try to economize by working from their homes but cannot meet
with customers there due to the nature of their businesses.
Our bill is designed to restore the home office deduction to
thousands of American men and women who work at home. Rather than
requiring taxpayer to meet the new criteria set out by the Court, the
bill allows a home office to meet the definition of a principal place
of business if it is the sole location where essential administrative
or management activities are conducted on a regular and systematic
basis by the taxpayer. To avoid possible abuses, the bill requires that
the taxpayer have no other location for the performance of these
activities.
The job market in the United States is constantly changing. New
technologies are helping to make the work-at-home option a practical
reality, bringing all the benefits to society that home-based
businesses can provide. Mothers and fathers, whether single or married,
are more often choosing to work at home to be with their children.
Having a parent at home who can help

[[Page S1995]]

supervise children while earning a living can have a tremendous
positive effect on the well-being of our families and of society.
Restoration of the home office deduction was one of the most
important recommendations to come out of the June 1995 White House
Conference on Small Business. Some of America's fastest growing and
most dynamic companies originated in the spare bedroom or the garage of
the founder. To foster continued economic growth and to encourage
Americans to start their own business ventures, we need to pass
legislation that will put home-based businesses on an equal footing
with other enterprises.
I urge my colleagues and the administration to support this
legislation, and look forward to seeing it enacted in the 105th
Congress.
______

By Mr. McCAIN (for himself and Mr. Burns):
S. 407. A bill to amend the Communications Act of 1934 to clarify the
authority of the Federal Communications Commission to authorize foreign
investment in United States broadcast and common carrier radio
licenses; to the Committee on Commerce, Science, and Transportation.

the international telecommunications investment clarification act

Mr. McCAIN. Mr. President. I introduce legislation designed to
clarify the authority of the FCC to authorize foreign investment in
United States broadcast and common carrier radio licenses. Joining me
today, is Chairman Burns of the Subcommittee on Communications.
Mr. President, American companies and consumers worldwide will
benefit tremendously from the passage of this legislation. No one can
deny that U.S. telecommunications services providers ability to compete
in the global market is hampered by the restrictions that we place upon
foreign companies seeking to do business here. The problem is quite
simple: the more restrictive the foreign ownership rules are here in
the U.S., the more oppressive are the regulations that are placed on
United States companies in other countries. The solution is just as
simple: the greater the willingness by the United States to permit
foreign ownership of U.S. companies, the greater the success of the
U.S. companies wishing to maximize their ownership opportunities
overseas.
This bill accomplishes just that by amending section 310(b) to:
First, remove the statutory limitation on foreign indirect investment
in U.S. corporations holding common carrier or aeronautical radio
licenses (but not broadcast licenses); second, allow foreign direct
investment greater than 20 percent in U.S. corporations holding common
carrier or aeronautical radio licenses, if the FCC finds it in the
public interest; third, explicitly prohibit any corporation with more
than 20 percent foreign government ownership from holding common
carrier, aeronautical or broadcast licenses.
It is clear that lowering barriers to foreign ownership in this
country will result in greater opportunities for U.S. service providers
overseas. The ripple effect on the U.S. telecommunications industry as
a whole would increase the benefits across the board from consumers to
manufacturers to service providers. The only way for the United States
to effectively lead the world in establishing an expansive global
marketplace is to set the standard in this country by which U.S.
companies want to be measured overseas. Liberalizing foreign ownership
restrictions under 310(b) would send that message to our foreign
partners loud and clear.
That is why I am introducing this bill, and I encourage my colleagues
to join me and support the legislation.
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. 407

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 ``International
Telecommunications Investment Clarification Act''.

SEC. 2. FOREIGN OWNERSHIP.

Section 310(b) of the Communications Act of 1934 (47 U.S.C.
310(b)) is amended to read as follows:
``(b)(1) No broadcast or common carrier or aeronautical en
route or aeronautical fixed radio station license shall be
granted to or held by--
``(A) any alien or the representative of any alien;
``(B) any corporation organized under the laws of any
foreign government; or
``(C) any corporation of which more than one-fifth of the
capital stock is owned of record or voted by a foreign
government or representative thereof.
``(2) No common carrier or aeronautical en route or
aeronautical fixed ratio station license shall be granted to
or held by any corporation of which more than one-fifth of
the capital stock is owned of record or voted by aliens or
their representatives or by any corporation organized under
the laws of a foreign country, if the Commission finds that
the public interest will be served by the refusal or
revocation of such license.
``(3) No broadcast radio station license shall be granted
to or held by--
``(A) any corporation of which more than one-fifth of the
capital stock is owned of record or voted by aliens or their
representatives or by any corporation organized under the
laws of a foreign country; or
``(B) any corporation directly or indirectly controlled by
any other corporation of which more than one-fourth of the
capital stock is owned of record or voted by aliens, their
representatives, or by a foreign government or representative
thereof, or by any corportation organized under the laws of a
foreign country, if the Commission finds that the public
interest will be served by the refusal or revocation of such
license.''.

SEC. 3. SUBMARINE CABLE AMENDMENT.

Section 2 of the Act of May 27, 1921, entitled ``An Act
relating to the landing and operation of submarine cables in
the United States'' (47 U.S.C. 35), is amended by inserting
before the period at the end thereof the following: ``: And
provided further, That the Federal Communications Commission
shall not deny any license to land or operate such a cable
solely on the grounds that such license will be issued to a
corporation that is directly or indirectly owned by aliens,
their representatives, or by any corporation organized under
the laws of a foreign government''.

SEC. 4. EFFECTIVE DATE; REGULATIONS.

(a) Effective Date.--This Act and the amendments made by
this Act are effective upon enactment.
(b) Regulations.--Within 60 days after the date of
enactment of this Act, the Federal Communications Commission
shall take all actions necessary to implement this Act,
including amending its rules and regulations, but the
Commission shall not, after such effective date, take any
action to enforce any rule, regulation, or policy that is
inconsistent with the amendments made by this Act.
____

International Telecommunications Investment Bill--Section-by-Section
Summary

A Bill to amend the Communications Act of 1934 to clarify
the authority of the FCC to authorize foreign investment in
United States broadcast and common carrier radio licenses.
Section 1. Short Title. This Act may be cited as the
``International Telecommunications Investment Clarification
Act''.
Section 2. Amendments to the Communications Act of 1934.
Section 310(b) is amended to: (a) remove the statutory
limitation on foreign indirect investment in U.S.
corporations holding common carrier or aeronautical radio
licenses (but not broadcast licenses); (b) allow foreign
direct investment greater than 20% in U.S. corporations
holding common carrier or aeronautical radio licenses, if the
FCC finds it in the public interest; (c) explicitly prohibit
any corporation with more than 20% foreign government
ownership from holding common carrier, aeronautical or
broadcast licenses.
Section 3. Amendment to the Submarine Cable Act. Clarify
that the Submarine Cable Landing License may not be denied to
an applicant solely on the basis of foreign investment or
ownership.
Section 4. Effective Date. Effective upon enactment. Allow
the FCC 90 days to amend its rules.
______

By Mrs. BOXER (for herself and Mr. Bingaman):
S. 408. A bill to establish sources of funding for certain
transportation infrastructure projects in the vicinity of the border
between the United States and Mexico that are necessary to accommodate
increased traffic resulting from the implementation of the North
American Free Trade Agreement, including construction of new Federal
border crossing facilities, and for other purposes; to the Committee on
Energy and Natural Resources.

the border infrastructure, safety and congestion relief act of 1997

Mrs. BOXER. Mr. President, today, Senator Bingaman and I are
introducing the Border Infrastructure, Safety and Congestion Relief Act
of 1997, legislation to authorize assistance for States along the U.S.-
Mexico border which must cope with the increased demands on roads and
other public infrastructure that result from expanded international
trade. Our bill is also

[[Page S1996]]

being introduced in the House of Representatives by my good friend,
Representative Bob Filner.
Last week, in a hearing before the Environment and Public Works
Committee on ISTEA, Transportation Secretary Rodney Slater noted that
since the passage of NAFTA, ``we have seen a tremendous growth in
trade. To make the most of these opportunities, we are proposing a new
program to help improve our border crossings and major trade
corridors--programs that will facilitate our domestic and international
trade * * *.''
Secretary Slater is right: NAFTA has greatly increased trade across
our borders. If we all work together to fix our border crossings,
increased trade offers great opportunities for the entire nation. If we
do not, then NAFTA will act as an unfunded mandate that forces
California and other border States to support other States' trade
routes.
The Administration is proposing a border crossing and trade corridors
grant program to improve traffic efficiency at border crossings, to be
funded at $45 million a year. All border States north and south would
be eligible.
As I told Secretary Slater at last week's hearing, I believe that the
proposal, while a good step forward, is too limited for our border
needs. Forty-five million across 14 States is simply not enough to
address these crucial infrastructure problems.
The Administration also wants to establish a new innovative financing
program that would provide loans and credit assistance for large
projects in the national interest--another good proposal, but one
which, in my opinion, does not go far enough.
The Boxer-Bingaman-Filner bill provides a two-stage system for
Federal assistance to fund the States' top-priority border
infrastructure projects:
First, it authorizes appropriation of $125 million each year in 1998
through 2001--a total of $500 million--for a border infrastructure fund
to provide Federal grants to border States and local governments in
order to pay for new or upgraded connections to the regional and
national road network. The bill also allows up to $10 million to be
transferred from the fund to Federal law enforcement agencies to use
for their own infrastructure improvements, such as border patrol roads
and lighting.

Second, our bill would authorize appropriations of $100 million to
provide a Federal guarantee for loans made by border State
infrastructure banks [SIBS] or border authorities for high cost
projects such as toll roads that bring in revenue to the States.
Federal guarantees will support up to $1 billion in State loans.
For California, this could mean up to $50 million in Federal
guarantees, leveraging up to $500 million in loans. California is one
of 10 States designated last year by the Secretary of Transportation to
participate in this innovative new method of financing transportation
projects.
Third, the bill authorizes Federal loan guarantees for border
railroads, which could modernize and complete the San Diego and Arizona
Eastern railway. This section would provide $10 million a year for 4
years for a total of $40 million in Federal funds to help railroads
obtain low-interest private loans they might otherwise not get.
Finally, our bill requires the Secretary of Transportation to submit
an annual report to Congress on the volume of commercial traffic that
is crossing the United States-Mexico border, and the level of
international commercial vehicle safety violations. This report will
help us gauge the effectiveness of the Federal response to trade
demands on infrastructure in the border region.
Mr. President, since the entire Nation benefits from international
trade, I believe the Federal Government has a responsibility to help
pay for the improvements in roads and other infrastructure that make
that trade possible. Our bill will ensure that we begin to meet that
Federal responsibility.
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. 408

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 ``Border Infrastructure Safety
and Congestion Relief Act of 1997''.

SEC. 2. FINDINGS.

Congress finds that--
(1) because of the North American Free Trade Agreement, all
4 States along the United States-Mexico border will require
significant investments in highway infrastructure capacity
and motor carrier safety enforcement at a time when border
States face extreme difficulty in meeting current highway
funding needs;
(2) the full benefits of increased international trade can
be realized only if delays at the borders are significantly
reduced; and
(3) Federal receipts from United States customs duties and
fees are estimated to increase by an average of $800,000,000
annually in fiscal years 1998 through 2001, and these monies
are an appropriate source of funding for programs designed to
address the infrastructure needs of border States.

SEC. 3. DEFINITIONS.

In this Act:
(1) Border region.--The term ``border region'' means the
region located within 60 miles of the United States border
with Mexico.
(2) Border state.--The term ``border State'' means
California, Arizona, New Mexico, and Texas.
(3) Fund.--The term ``Fund'' means the Border
Transportation Infrastructure Fund established by section
4(g).
(4) NAFTA.--The term ``NAFTA'' means the North American
Free Trade Agreement.
(5) Secretary.--The term ``Secretary'' means the Secretary
of Transportation.

SEC. 4. DIRECT FEDERAL ASSISTANCE FOR BORDER CONSTRUCTION AND
CONGESTION RELIEF.

(a) In General.--Using amounts in the Fund, the Secretary
shall make grants under this section to border States that
submit an application that demonstrates need, due to
increased traffic resulting from the implementation of NAFTA,
for assistance in carrying out transportation projects that
are necessary to relieve traffic congestion or improve
enforcement of motor carrier safety laws.
(b) Grants for Connectors to Federal Border Crossing
Facilities.--The Secretary shall make grants to border States
for the purposes of connecting, through construction or
reconstruction, the National Highway System designated under
section 103(b) of title 23, United States Code, with Federal
border crossing facilities located in the United States in
the border region.
(c) Grants for Weigh-in-Motion Devices in Mexico.--The
Secretary shall make grants to assist border States in the
purchase, installation, and maintenance of weigh-in-motion
devices and associated electronic equipment that are to be
located in Mexico if real time data from the devices is
provided to the nearest United States port of entry and to
State commercial vehicle enforcement facilities that serve
the port of entry.
(d) Grants for Commercial Vehicle Enforcement Facilities.--
The Secretary shall make grants to border States to
construct, operate, and maintain commercial vehicle
enforcement facilities located in the border region.
(e) Limitations on Expenditures of Funds.--
(1) Cost sharing.--A grant under this section shall be used
to pay the Federal share of the cost of a project. The
Federal share shall be 80 percent.
(2) Allocation among states.--
(A) In general.--For each of fiscal years 1998 through
2001, the Secretary shall allocate amounts remaining in the
Fund, after any transfers under section 5, among border
States in accordance with an equitable formula established by
the Secretary in accordance with subparagraphs (B) and (C).
(B) Considerations.--Subject to subparagraph (C), in
establishing the formula, the Secretary shall consider--
(i) the annual volume of international commercial vehicle
traffic at the ports of entry of each border State as
compared to the annual volume of international commercial
vehicle traffic at the ports of entry of all border States,
based on the data provided in the most recent report
submitted under section 8;
(ii) the percentage by which international commercial
vehicle traffic in each border State has grown during the
period beginning on the date of enactment of the North
American Free Trade Agreement Implementation Act (Public Law
103-182) as compared to that percentage for each other border
State; and
(iii) the extent of border transportation improvements
carried out by each border State during the period beginning
on the date of enactment of the North American Free Trade
Agreement Implementation Act (Public Law 103-182).
(C) Minimum allocation.--Each border State shall receive
not less than 5 percent of the amounts made available to
carry out this section during the period of authorization
under subsection (i).
(f) Eligibility for Reimbursement for Previously Commenced
Projects.--The Secretary shall make a grant under this
section to a border State that reimburses the border State
for a project for which construction commenced after January
1, 1994, if the project is otherwise eligible for assistance
under this section.
(g) Border Transportation Infrastructure Fund.--
(1) Establishment.--There is established in the Treasury of
the United States the Border Transportation Infrastructure
Fund to

[[Page S1997]]

be used in carrying out this section, consisting of such
amounts as are appropriated to the Fund under subsection (i).
(2) Expenditures from fund.--
(A) In general.--Subject to subparagraph (B), upon request
by the Secretary, the Secretary of the Treasury shall
transfer from the Fund to the Secretary such amounts as the
Secretary determines are necessary to make grants under this
section and transfers under section 5.
(B) Administrative expenses.--An amount not exceeding 1
percent of the amounts in the Fund shall be available for
each fiscal year to pay the administrative expenses necessary
to carry out this section.
(h) Applicability of Title 23.--Title 23, United States
Code, shall apply to grants made under this section.
(i) Authorization of Appropriations.--There is authorized
to be appropriated to the Fund to carry out this section and
section 5 $125,000,000 for each of fiscal years 1998 through
2001. The appropriated amounts shall remain available for
obligation until the end of the third fiscal year following
the fiscal year for which the amounts are appropriated.

SEC. 5. CONSTRUCTION OF TRANSPORTATION INFRASTRUCTURE FOR LAW
ENFORCEMENT PURPOSES.

At the request of the Attorney General, the Secretary may
transfer, during the period consisting of fiscal years 1998
through 2001, up to $10,000,000 of the amounts from the Fund
to the Attorney General for the construction of
transportation infrastructure necessary for law enforcement
in border States.

SEC. 6. BORDER INFRASTRUCTURE INNOVATIVE FINANCING.

(a) Purposes.--The purposes of this section are--
(1) to encourage the establishment and operation of State
infrastructure banks in accordance with section 350 of the
National Highway System Designation Act of 1995 (109 Stat.
618; 23 U.S.C. 101 note); and
(2) to advance transportation infrastructure projects
supporting international trade and commerce.
(b) Federal Line of Credit.--Section 350 of the National
Highway System Designation Act of 1995 (109 Stat. 618; 23
U.S.C. 101 note) is amended--
(1) by redesignating subsection (l) as subsection (m); and
(2) by inserting after subsection (k) the following:
``(l) Federal Line of Credit.--
``(1) Definitions.--In this subsection, the terms `border
region' and `border State' have the meanings given the terms
in section 3 of the Border Infrastructure Safety and
Congestion Relief Act of 1997.
``(2) Authorization of appropriations.--There is authorized
to be appropriated from the general fund of the Treasury
$100,000,000 to be used by the Secretary to make lines of
credit available to--
``(A) border States that have established infrastructure
banks under this section; and
``(B) the State of New Mexico which has established a
border authority that has bonding capacity.
``(3) Amount.--The line of credit available to each
participating border State shall be equal to the product of--
``(A) the amount appropriated under paragraph (2); and
``(B) the quotient obtained by dividing--
``(i) the contributions of the State to the Highway Trust
Fund during the latest fiscal year for which data are
available; by
``(ii) the total contributions of all participating border
States to the Highway Trust Fund during that fiscal year.
``(4) Use of line of credit.--The line of credit under this
subsection shall be available to provide Federal support in
accordance with this subsection to--
``(A) a State infrastructure bank engaged in providing
credit enhancement to creditworthy eligible public and
private multimodal projects that support international trade
and commerce in the border region; and
``(B) the New Mexico Border Authority;

(each referred to in this subsection as a `border
infrastructure bank').
``(5) Limitations.--
``(A) In general.--A line of credit under this subsection
may be drawn on only--
``(i) with respect to a completed project described in
paragraph (4) that is receiving credit enhancement through a
border infrastructure bank;
``(ii) when the cash balance available in the border
infrastructure bank is insufficient to pay a claim for
payment relating to the project; and
``(iii) when all subsequent revenues of the project have
been pledged to the border infrastructure bank.
``(B) Third party creditor rights.--No third party creditor
of a public or private entity carrying out a project eligible
for assistance from a border infrastructure bank shall have
any right against the Federal Government with respect to a
line of credit under this subsection, including any guarantee
that the proceeds of a line of credit will be available for
the payment of any particular cost of the public or private
entity that may be financed under this subsection.
``(6) Interest rate and repayment period.--Any draw on a
line of credit under this subsection shall--
``(A) accrue, beginning on the date the draw is made,
interest at a rate equal to the current (as of the date the
draw is made) market yield on outstanding, marketable
obligations of the United States with maturities of 30 years;
and
``(B) shall be repaid within a period of not more than 30
years.
``(7) Relationship to state apportionment.--Funds made
available to States to carry out this subsection shall be in
addition to funds apportioned to States under section 104 of
title 23, United States Code.''.

SEC. 7. RAILROAD REHABILITATION AND IMPROVEMENT PROGRAM.

(a) Purpose.--The purpose of this section is to provide
assistance for freight rail projects in border States that
benefit international trade and relieve highways of increased
traffic resulting from NAFTA.
(b) Issuance of Obligations.--The Secretary shall issue to
the Secretary of the Treasury notes or other obligations
pursuant to section 512 of the Railroad Revitalization and
Regulatory Reform Act of 1976 (45 U.S.C. 832), in such
amounts, and at such times, as may be necessary to--
(1) pay any amounts required pursuant to the guarantee of
the principal amount of an obligation under section 511 of
that Act (45 U.S.C. 831) for any eligible freight rail
project described in subsection (c) during the period that
the guaranteed obligation is outstanding; and
(2) during the period referred to in paragraph (1), meet
the applicable requirements of this section and sections 511
and 513 of that Act (45 U.S.C. 832 and 833).
(c) Eligibility.--Assistance provided under this section
shall be limited to those freight rail projects located in
the United States that provide intermodal connections that
enhance cross-border traffic in the border region.
(d) Limitation.--Notwithstanding any other provision of
law, the aggregate unpaid principal amounts of obligations
that may be guaranteed by the Secretary under this section
may not exceed $100,000,000 during any of fiscal years 1998
through 2001.
(e) Authorization of Appropriations.--There is authorized
to be appropriated to make loan guarantees under this section
$10,000,000 for each of fiscal years 1998 through 2001.

SEC. 8. REPORT.

(a) In General.--The Secretary shall annually submit to
Congress and the Governor of each border State a report
concerning--
(1) the volume and nature of international commercial
vehicle traffic crossing the border between the United States
and Mexico; and
(2)(A) the number of international commercial vehicle
inspections conducted by each border State at each United
States port of entry; and
(B) the rate of out-of-service violations of international
commercial vehicles found through the inspections.
(b) Information Provided by United States Customs
Service.--For the purpose of preparing each report under
subsection (a)(1), the Commissioner of Customs shall provide
to the Secretary such information described in subsection
(a)(1) as the Commissioner has available.

SEC. 9. SENSE OF THE COMMITTEE ON ENVIRONMENT AND PUBLIC
WORKS.

It is the sense of the Committee on Environment and Public
Works of the Senate that the programs authorized under this
Act should be fully financed in a budget neutral manner by
offsetting receipts derived from customs duties and
fees.

____________________