[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.

                          ____________________