[Congressional Record Volume 143, Number 37 (Thursday, March 20, 1997)]
[Senate]
[Pages S2654-S2706]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    THE FIREFIGHER PAY FAIRNESS ACT

  Mr. SARBANES. Mr. President, today I am introducing legislation to 
improve the pay system used for Federal firefighters. This bill has 
three broad purposes: First, to improve pay equality with municipal and 
other public section firefighters; second, to enhance recruitment and 
retention of firefighters in order to maintain the highest quality 
Federal fire service; and third, to encourage Federal firefighters to 
pursue career advancement and training opportunities.
  Fire protection is clearly a major concern at Federal facilities and 
on Federal lands throughout the Nation. From fighting wildland fires in 
our national parks and forests to protecting military families from 
fires in their base housing, Federal firefighters play a vital role in 
preserving lives and property. One only needs to recall the terrible 
tragedies in Colorado two summers ago to understand the vital 
importance of our Federal firefighters.
  The Department of Agriculture, the Coast Guard, the Department of 
Commerce, the Department of Defense, the General Services 
Administration, the Department of the Interior, and the Department of 
Veterans Affairs are among the Federal agencies which rely on Federal 
fire fighters to protect their vast holdings of land and structures. 
Just like their municipal counterparts, these firefighters are the 
first line of defense against threats to life and property.
  Mr. President, the current system used to pay our Federal 
firefighters is at best confusing and at worst unfair. These men and 
women work longer hours than any other public sector firefighters--yet 
are paid substantially less. The current pay system, which consists of 
three tiers, is overly complex and, more importantly, is hurting 
Federal efforts to attract and retain top-quality employees.
  Currently, most Federal firefighters work an average 72-hour week 
under exceptionally demanding conditions. The typical workweek consists 
of a one-day-off schedule which results in three 24-hours shifts during 
the remainder of each week. Despite this unusual schedule, firefighters 
are paid under a modified version of the same General Schedule pay 
system used for full-time, 40-hour-per-week Federal workers.
  The result of the pay modification is that Federal firefighters make 
less per hour than any other Federal employee at their same grade 
level. For example: a firefighter who is a GS-5, Step 5 makes $7.21 per 
hour while other employees at the same grade and step earn $10.34 per 
hour. Some have tried to justify this by noting that part of a 
firefighter's day is downtime. However, I must note that all 
firefighters have substantial duties beyond those at the site of a 
fire. Adding to this discrepancy is the fact that the average municipal 
firefighter makes $12.87 per hour.
  Mr. President, this has caused the Federal fire service to become a 
training ground for young men and women who then leave for higher pay 
elsewhere in the public sector. Continually training new employees is, 
as my colleagues know, very expensive for any employer.
  The Office of Personnel Management is well aware of these problems. 
In fact, section 102 of the Federal Employees Pay Comparability Act of 
1990 [FEPCA], title V of Public Law 101-509, authorizes the 
establishment of special pay systems for certain Federal occupations. 
The origin of this provision was a recognition that the current pay 
classification system did not account for the unique and distinctive 
employment conditions of Federal protective occupations including the 
Federal fire service.
  In May 1991, I wrote to OPM urging the establishment of a separate 
pay scale for firefighters under the authority provided for in FEPCA. 
Subsequently, OPM established an Advisory Committee on Law Enforcement 
and Protective Occupations consisting of agency personnel and 
representatives from Federal fire and law enforcement organizations. 
Beginning in August of 1991, representatives from the Federal fire 
community began working with OPM and other administration officials to 
identify and address the problems of paying Federal firefighters under 
the General Schedule. The committee completed its work in June of 1992 
and in December of that year issued a staff report setting forth 
recommendations to correct the most serious problems with the current 
pay system.

  Mr. President, I regret that since the release of the OPM 
recommendations, there has been no effort to implement any of the 
proposals of the advisory task force. In fact, OPM has communicated 
quite clearly that it has no plans to pursue any solution to the 
serious pay deficiencies that have been so widely identified and 
acknowledged.

[[Page S2655]]

  It would not be necessary to introduce this legislation today had OPM 
taken the corrective action that, in my view, is so clearly warranted. 
However, I have determined that legislation appears to be the only 
vehicle to achieve the necessary changes in the pay system for Federal 
firefighters.
  Mr. President, the Firefighter Pay Fairness Act would improve Federal 
firefighter pay in several important and straightforward ways. Perhaps 
most importantly, the bill draws from existing provisions in title V to 
calculate a true hourly rate for firefighters. This would alleviate the 
current problem of firefighters being paid considerably less than other 
General Schedule employees at the same GS level. It would also account 
for the varying length in the tour of duty for Federal firefighters 
stationed at different locations.
  In addition, the bill would use this hourly rate to ensure that 
firefighters receive true time and one-half overtime for hours worked 
over 106 in a bi-weekly pay period. This is designed to correct the 
problem, under the current system, where the overtime rate is 
calculated based on an hourly rate considerably less than base pay.
  The Firefighter Pay Fairness Act would also extend these pay 
provisions to so-called wildland firefighters when they are engaged in 
firefighting duties. Currently, wildland firefighters are often not 
compensated for all the time spent responding to a fire event. This 
legislation would ensure that these protectors of our parks and forests 
would be paid fairly for ensuring the safety of these invaluable 
national resources.
  It also ensures that firefighters promoted to supervisory positions 
would be paid at a rate of pay at least equal to what they received 
before the promotion. This would address a situation, under the current 
pay system, which discourages employees from accepting promotions 
because of the significant loss of pay which often accompanies a move 
to a supervisory position.
  Similarly, the bill would encourage employees to get the necessary 
training in hazardous materials, emergency medicine, and other critical 
areas by ensuring they do not receive a pay cut while engaged in these 
training activities.
  Mr. President, this legislation is based upon a bill I authorized in 
the 103d Congress. A bipartisan group of more than 150 Members 
cosponsored the measure in the Senate and the House last year. The 
legislation I am introducing today reflects several modifications that 
were suggested to the bill following substantial discussions with 
various Members. However, it is identical to the so-called compromise 
measure that has been discussed with the authorizing as well as the 
appropriations committees in previous years and received widespread 
support.
  To reduce initial costs and allow oversight of the effectiveness of 
the legislation, the bill I am introducing today would implement the 
new pay system and other provisions beginning October 1, 1997. However, 
the new rate of pay would be phased in over a 4-year period ending 
October 1, 2002.
  Mr. President, I consulted many of the affected groups in developing 
my legislation. I am very pleased that this bill has been endorsed by 
the American Federation of Government Employees, the International 
Association of Fire Chiefs, the International Association of Fire 
Fighters, the National Association of Government Employees, and the 
National Federation of Federal Employees.
  As I have said before, Mr. President, fairness is the key word. There 
is no reason why Federal firefighters should be paid dramatically less 
that their municipal counterparts. As a cochairman of the Congressional 
Fire Services Caucus, I want to urge all members of the caucus and, 
indeed, all Members of the Senate to join in cosponsoring this 
important piece of legislation.
                                 ______
                                 
      By Mr. KYL (for himself and Mr. Gorton):
  S. 493. A bill to amend section 1029 of title 18, United States Code, 
with respect to cellular telephone cloning paraphernalia; to the 
Committee on the Judiciary.


                 the cellular telephone protection act

  Mr. KYL. Mr. President, I rise to introduce the Cellular Telephone 
Protection Act, which would improve the ability of law enforcement to 
investigate and prosecute individuals engaged in the activity of 
cloning cellular phones. Law enforcement officials and wireless 
carriers support the bill as an important tool to stem this kind of 
telecommunications fraud.
  Cell phones are manufactured with an embedded electronic serial 
number [ESN], which is transmitted to gain access to the 
telecommunications network. Those involved in cloning cell phones sit 
in parked cars outside of airports or along busy roadways to harvest 
ESN's from legitimate cell phone users and, in a process known as 
cloning, use software and equipment to insert the stolen numbers into 
other cell phones, the clones. A single ESN can be implanted into 
several cloned phones. The cloned phones charge to the account of the 
lawful, unsuspecting user. Cellular phone carriers must absorb these 
losses, which, according to the Cellular Telecommunication Industry 
Association, amounted to about $650 million in 1995, up from $480 
million in 1994. The cellular industry is expanding by about 40 percent 
a year; efforts to combat fraud are imperative to ensure the integrity 
of our communications network.
  Cloning is more than an inconvenience to the 36 million Americans who 
currently use cellular phone services, and an expense to wireless 
communication companies who pay for the fraudulent calls. According to 
the Secret Service, which is the primary Federal agency responsible for 
investigating telecommunications fraud, cloning abets organized 
criminal enterprises that use cellular telephones as their preferred 
method of communication. Cloned phones are extremely popular among drug 
traffickers and gang members, who oftentimes employ several cloned 
phones to evade detection by law enforcement. When not selling cloned 
phones to drug dealers and ruthless street gangs, cloners set up 
corner-side calling shops where individuals pay a nominal fee to call 
anywhere in the world on a replicated phone, or simply purchase the 
illegal phone for a flat amount.
  The cellular telephone protection bill clarifies that there is no 
lawful purpose to posses, produce or sell hardware, known as copycat 
boxes, or software used for cloning a cellular phone or its ESN. Such 
equipment and software are easy to obtainn--advertisements hawking 
cloning equipment appear in computer magazines and on the Internet. 
There is no legitimate purpose for cloning software and equipment, save 
for law enforcement and telecommunication service providers using it to 
improve fraud detection. The bill strikes at the heart of the cloning 
paraphernalia market by eliminating the requirement for prosecutors to 
prove that the person selling copycat boxes or cloning software 
programs intended to defraud. The bill retains an exception for law 
enforcement to possess otherwise unlawful cloning software, and adds a 
similar exception for telecommunications service providers.
  Moreover, the Cellular Phone Protection Act expands the definition of 
``scanning receivers,'' equipment which, unlike cloning software and 
devices, does have legitimate uses if not used to scan frequencies 
assigned to wireless communications. The bill clarifies that the 
definition of scanning receivers encompasses devices that can be used 
to intercept ESN's even if they are not capable of receiving the voice 
channel. As mentioned above, criminals harvest ESN's by employing 
scanners near busy thoroughfares. The revised definition of scanning 
receiver will ensure that these devices are unlawful when used with an 
intent to defraud just like scanners that intercept voice.

  Finally, the bill increases penalties for those engaged in cloning. A 
new paradigm is needed for penalizing cloning offenses. Currently, 
penalties for cloning crimes are based on the monetary loss a carrier 
suffers, not the potential loss. First-time offenders oftentimes do not 
face any jail time, which makes these cases unattractive for 
prosecution. Carriers and law enforcement are forced to choose between 
keeping the cloner on the telecommunications network to rack up high 
losses to ensure jail time, or stemming the losses sooner only to have 
the cloner back on the streets in days. The penalty scheme should be 
revised to

[[Page S2656]]

track another indicator of cloning fraud--the number of electronic 
serial numbers stolen.
  Cloning offenses are serious crimes, and the penalties should reflect 
this. We know that cloned phones are used to facilitate other crimes--
particularly drug trafficking. Additionally, cloning offenses are 
serious economic crimes in themselves that threaten the integrity of 
the public communications network. In August, two individuals in New 
York were arrested for allegedly possessing 80,000 electronic serial 
numbers. Each of the 80,000 ESN's could be implanted into several 
cloned phones. I look forward to working with the U.S. Sentencing 
Commission to achieve a more appropriate sentencing structure for 
cloning fraud.
  The cellular phone protection initiative will help to reduce 
telecommunications fraud. In the process, other criminal activity will 
be made more difficult to conduct--cloned phones, now a staple of 
criminal syndicates, would not be so readily available. I urge my 
colleagues to support this 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. 493

       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 ``Cellular Telephone 
     Protection Act''.

     SEC. 2. FRAUD AND RELATED ACTIVITY IN CONNECTION WITH 
                   COUNTERFEIT ACCESS DEVICES.

       (a) Unlawful Acts.--Section 1029(a) of title 18, United 
     States Code, is amended--
       (1) in paragraph (7), by striking ``use of'' and inserting 
     ``access to'';
       (2) by redesignating paragraph (9) as paragraph (10); and
       (3) by striking paragraph (8) and inserting the following:
       ``(8) knowingly and with intent to defraud uses, produces, 
     traffics in, has control or custody of, or possesses a 
     scanning receiver;
       ``(9) knowingly uses, produces, traffics in, has control or 
     custody of, or possesses hardware or software that may be 
     used for--
       ``(A) modifying or copying an electronic serial number; or
       ``(B) altering or modifying a telecommunications instrument 
     so that the instrument may be used to obtain unauthorized 
     access to telecommunications services; or''.
       (b) Penalties.--Section 1029(c) of title 18, United States 
     Code, is amended to read as follows:
       ``(c) Penalties.--The punishment for an offense under 
     subsection (a) or (b)(1) is--
       ``(1) in the case of an offense that does not occur after a 
     conviction for another offense under subsection (a) or 
     (b)(1), or an attempt to commit an offense punishable under 
     subsection (a) or (b)(1), a fine under this title or twice 
     the value obtained by the offense, whichever is greater, 
     imprisonment for not more than 15 years, or both; and
       ``(2) in the case of an offense that occurs after a 
     conviction for another offense under subsection (a) or 
     (b)(1), or an attempt to commit an offense punishable under 
     subsection (a) or (b)(1), a fine under this title or twice 
     the value obtained by the offense, whichever is greater, 
     imprisonment for not more than 20 years, or both.''.
       (c) Definition of Scanning Receiver.--Section 1029(e)(8) of 
     title 18, United States Code, is amended by inserting before 
     the period at the end the following: ``or any electronic 
     serial number, mobile identification number, personal 
     identification number, or other identifier of any 
     telecommunications service, equipment, or instrument''.
       (d) Exception for Certain Telecommunications Services 
     Providers.--Section 1029 of title 18, United States Code, is 
     amended by adding at the end the following:
       ``(g) Exception for Certain Telecommunications Services 
     Providers.--
       ``(1) Definitions.--In this subsection, the term 
     `telecommunications carrier' has the same meaning as in 
     section 3 of the Communications Act of 1934 (47 U.S.C. 153).
       ``(2) Permissible activities.--This section does not 
     prohibit any telecommunications carrier, or an officer, 
     agent, or employee of, or a person under contract with a 
     telecommunications carrier, engaged in protecting any 
     property or legal right of the telecommunications carrier, 
     from sending through the mail, sending or carrying in 
     interstate or foreign commerce, having control or custody of, 
     or possessing, manufacturing, assembling, or producing any 
     otherwise unlawful--
       ``(A) device-making equipment, scanning receiver, or access 
     device; or
       ``(B) hardware or software used for--
       ``(i) modifying or altering an electronic serial number; or
       ``(ii) altering or modifying a telecommunications 
     instrument so that the instrument may be used to obtain 
     unauthorized access to telecommunications services.''.
                                 ______
                                 
      By Mr. KYL (for himself, Mr. Abraham, and Mr. Reid):
  S. 494. A bill to combat the overutilization of prison health care 
services and control rising prisoner health care costs; to the 
Committee on the Judiciary.


              The Federal Prison Health Care Copayment Act

  Mr. KYL. Mr. President. I introduce the Federal Prisoner Health Care 
Copayment Act, which would require Federal prisoners to pay a nominal 
fee when they initiate a visit for medical attention. The fee would be 
deposited in the Federal Crime Victims' Fund. Each time a prisoner pays 
to heal himself, he will be paying to heal a victim.
  Most working, law-abiding Americans are required to pay a copayment 
fee when they seek medical care. It is time to impose this requirement 
on Federal prisoners.
  To date, at least 20 States--including my home State of Arizona--have 
implemented statewide prisoner health care copayment programs. In 
addition to Arizona, the following States have enacted this reform: 
California, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, 
Louisiana, Oklahoma, Maryland, Minnesota, Mississippi, Nevada, Hew 
Hampshire, New Jersey, Utah, Virginia, Tennessee, and Wisconsin. 
Several other States are expected to soon institute a copayment system, 
including, Alaska, Connecticut, Maine, Montana, Michigan, North 
Carolina, Oregon, South Carolina, Washington, and Wyoming.
  Moreover, according to the National Sheriffs' Association, at least 
25 States--some of which have not adopted medical copayment reform on a 
statewide basis--have jail systems that impose a copayment.
  In June, the National Commission on Correctional Health Care held a 
conference that examined the statewide fee-for-service programs. At the 
conference, Dr. Ron Waldron of the Federal Bureau of Prisons provided a 
survey of some of the States that have adopted inmate medical copayment 
programs and concluded that ``Inmate user fees programs appear to 
reduce utilization, and do generate modest revenues.''
  Dr. Waldron reported that prison copayment laws resulted in the 
reduction of medical utilization of: between 16 and 29 percent in 
Florida; between 30 and 50 percent in Kansas; 40 percent in Maryland; 
50 percent in Nevada; and between 10 and 18 percent in Oklahoma. Terry 
Stewart, director of the Arizona Department of Corrections, notes that, 
``Over the life of the [Arizona copayment] program, there has been an 
overall reduction of about 31 percent in the number of requests for 
health care services. This strongly suggests that inmates are being 
more discreet about, and giving more considered thought to, their need 
for medical attention.'' I will have his letter placed in the 
Congressional Record.
  Reducing frivolous medical visits saves taxpayers money. A December 
28, 1996, New York Post editorial, ``Toward Healthier Prison Budgets,'' 
which I will also include in the Record, reported that the copayment 
law in New Jersey allowed the State to cut its prison health care 
budget by $17 million.
  As to generating revenue, Dr. Waldron reported that California 
collects about $60,000 per month in prisoner-copayment fees. In my home 
State of Arizona, the State has collected about $400,000 since the 
inception of the program in October 1994.
  Not only are inmate copayment plans working well on the statewide 
level, they are achieving success in jail systems across the United 
States. In the January-February edition of Sheriff, the National 
Sheriffs' Association President reported that copayment plans--which, 
as mentioned above, are operational in jail systems in at least 25 
States--have: First, discouraged overuse of service; and second, freed 
health care staff to provide better care to inmates who truly need 
medical attention. Yavapai County sheriff, G.C. ``Buck'' Buchanan, in a 
letter that I will include in the Record, writes: ``Prior to the 
institution of [copayment reform], many inmates in custody were taking 
advantage of the health care which, or course, must be provided to 
them. This could be construed as frivolous requests if you will, and 
took up the valuable time of our health care providers * * *. Since 
this policy has been in effect, we have realized a reduction in inmate 
requests for medical services between 45 to 50 percent.''

[[Page S2657]]

  The success of the prison and jail fee-for-service initiatives should 
come as no surprise. Common sense says that inmates will be less likely 
to seek unnecessary medical attention if they are required to pick up 
part of the tab.
  I believe that Congress should follow the lead of the States and 
provide the Federal Bureau of Prisons with the authority to charge 
Federal inmates a nominal fee for elective health care visits. The 
Federal system is particularly ripe for reform. According to the 1996 
Corrections Yearbook, the system spends more per inmate on health care 
than any State except Vermont. Federal inmate health care totaled $327 
million in fiscal year 1996, up from $138 million in fiscal year 1990. 
Average cost per inmate has increased over 60 percent during this 
period, from $2,204 to $3,549.
  The Prisoner Health Care Copayment Act provides that the Director of 
the Bureau of Prisons shall assess and collect a fee of not less than 
$3 and not more than $5 for each qualified health care visit. The term 
``qualified health care visit'' does not include any health care visit 
that is: Conducted during the intake process; an annual examination; 
initiated by the health care staff of the Bureau of Prisons; the direct 
result of a referral made by a prison official; or an emergency visit. 
Prisoners who are pregnant or determined to be seriously mentally ill 
are exempted from the copayment requirement altogether. No prisoner 
shall be denied treatment on the basis of insolvency.
  The act also gives the Director of the Bureau of Prisons the 
authority to set by regulation a reasonable fee, not to exceed $5, for 
prescriptions, emergency visits, and juvenile visits. And the 
legislation permits the Director to charge an inmate's account for 
medical treatment for injuries an inmate inflicts on himself or others.
  As I mentioned above, all fees will be deposited in the Federal Crime 
Victims' Fund.
  Before I conclude, I would like to thank the Arizona Department of 
Corrections for its assistance in helping me draft this reform. 
Additionally, I appreciate the assistance that Sheriff Buchanan and his 
office provided me.
  I look forward to working with the Department of Justice, the Bureau 
of Prisons, and my colleagues on both sides of the aisle, to implement 
a fee-for-medical-services program--a sensible and overdue reform--for 
Federal prisoners.
  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. 494

       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 ``Federal Prisoner Health Care 
     Copayment Act''.

     SEC. 2. PRISONER COPAYMENTS FOR HEALTH CARE SERVICES.

       (a) In General.--Chapter 303 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 4048. Prisoner copayments for health care services

       ``(a) Definitions.--In this section--
       ``(1) the term `account' means the trust fund account (or 
     institutional equivalent) of a prisoner;
       ``(2) the term `Director' means the Director of the Bureau 
     of Prisons;
       ``(3) the term `health care provider' means any person and 
     who is licensed or certified under State law to provide 
     health care services who is operating within the scope of 
     such license;
       ``(4) the term `health care visit' means any visit by a 
     prisoner to an institutional or noninstitutional health care 
     provider, if the visit is made at the request of the 
     prisoner;
       ``(5) the term `prisoner' means any person subject to 
     incarceration, detention, or admission to any facility who is 
     accused of, convicted of, sentenced for, or adjudicated 
     delinquent for, violations of criminal law or the terms and 
     conditions of parole, probation, pretrial release, or 
     diversionary program; and
       ``(6) the term `qualified health care visit' means any 
     health care visit except a health care visit
       ``(A) that--
       ``(i) is conducted during the incarceration intake process;
       ``(ii) is an annual examination;
       ``(iii) is determined by the health care provider to be an 
     emergency visit;
       ``(iv) is an immunization;
       ``(v) is initiated by the health care staff of the Bureau 
     of Prisons; or
       ``(vi) is the direct result of a referral made by a prison 
     official; or
       ``(B) by a prisoner who is--
       ``(i) less than 18 years of age;
       ``(ii) pregnant; or
       ``(iii) determined by the appropriate official of the 
     Bureau of Prisons to be seriously mentally ill, or 
     permanently disabled.
       ``(b) Copayments For Health Care Services.--The Director 
     shall assess and collect a fee in accordance with this 
     section--
       ``(1) in an amount equal to not less than $3 and not more 
     than $5, for each qualified health care visit;
       ``(2) in an amount not to exceed $5, which shall be 
     established by the Director by regulation, for--
       ``(A) each prescription medication provided to the prisoner 
     by a health care provider; and
       ``(B) each health care visit described in subparagraph 
     (A)(iii) or (B)(i) of subsection (a)(6); and
       ``(3) in an amount established by the Director by 
     regulation, for each health care visit occurring as a result 
     of an injury inflicted on a prisoner by another prisoner.
       ``(c) Responsibility for Payment.--Each fee assessed under 
     subsection (b) shall be collected by the Director from the 
     account of--
       ``(1) the prisoner making the health care visit or 
     receiving the prescription medication; or
       ``(2) in the case of a health care visit described in 
     subsection (b)(3), the prisoner who is determined by the 
     Director to have inflicted the injury.
       ``(d) Timing.--Each fee assessed under this section shall 
     be collected from the appropriate account under subsection 
     (c)--
       ``(1) on the date on which the qualified health care visit 
     occurs; or
       ``(2) in the case of a prisoner whose account balance is 
     determined by the Director to be insufficient for collection 
     of the fee in accordance with paragraph (1), in accordance 
     with an installment payment plan, which shall be established 
     by the Director by regulation.
       ``(e) No Refusal of Treatment for Financial Reasons.--
     Nothing in this section shall be construed to permit any 
     refusal of treatment to a prisoner on the basis that--
       ``(1) account of the prisoner is insolvent; or
       ``(2) the prisoner is otherwise unable to pay a fee 
     assessed under this section in accordance with subsection 
     (d)(1).
       ``(f) Use of Amounts.--Any amounts collected by the 
     Director under this section shall be deposited in the Crime 
     Victims' Fund established under section 1402 of the Victims 
     of Crime Act of 1984 (42 U.S.C. 10601).
       ``(g) Reports to Congress.--Not later than 1 year after the 
     date of enactment of the Federal Prisoner Health Care 
     Copayment Act and annually thereafter, the Director shall 
     submit to Congress a report, which shall include--
       ``(1) a description of the amounts collected under this 
     section during the preceding 12-month period; and
       ``(2) an analysis of the effects of the implementation of 
     this section, if any, on the nature and extent of health care 
     visits by prisoners.''.
       (b) Clerical Amendment.--The chapter analysis for chapter 
     303 of title 18, United States Code, is amended by adding at 
     the end the following:

       ``4048. Prisoner copayments for health care services.''.
                                                                    ____



                            Arizona Department of Corrections,

                                       Phoenix, AZ, March 7, 1997.
     Hon. Jon Kyl,
     U.S. Senate, Senate Hart Office Building, Washington, DC.
     Re: Inmate Health Care--Fee for Service
       Dear Senator Kyl: On October 15, 1994, the Arizona 
     Department of Corrections began its fee for service program 
     for inmate health care. The program was intended to reduce 
     inmate abuse of the health care delivery system, to place on 
     the inmate some responsibility for his/her own health care, 
     and to offset the increasing costs of inmate health care. 
     This program has proven itself effective in accomplishing the 
     purposes intended.
       There has been a noticeable decrease in the number of 
     requests for health care services. For example, upon 
     implementation of the program, and depending upon the 
     facility, we experienced an initial reduction of between 40% 
     and 60% in the number health care requests. Over the life of 
     the program, there has been an overall reduction of about 31% 
     in the number of requests for health care services. This 
     strongly suggests that inmates are being more discreet about, 
     and giving more considered thought to, their need for medical 
     attention.
       The program has also proven a great benefit to Arizona's 
     taxpayers. From October 15, 1994 through December 31, 1996, 
     the Arizona Department of Corrections has collected 
     $392,843.59 for health care services provided to its inmates. 
     This money is returned to Arizona's general fund, where it 
     can be utilized to fund other State programs. This means that 
     fewer taxpayer dollars are required to fund State programs.
       In light of the results achieved by this program in 
     Arizona, I highly recommend that similar programs be adopted 
     by prison and jail systems nationwide, and I support and 
     greatly appreciate your efforts to this end.
           Sincerely,
                                                 Terry L. Stewart,
                                                         Director.

[[Page S2658]]

     
                                                                    ____
                              Yavapai County Sheriff's Office,

                                      Prescott, AZ, March 4, 1997.
     Senator Jon Kyl,
     2240 Rayburn House Office Building, Washington, DC.
       Dear Senator Kyl: As you have requested, a copy of the 
     current Yavapai County Sheriff's Office Detention Services 
     Procedure Manual with respect to Inmate Health Care Co-
     Payment policy, has been attached. This policy is sanctioned 
     under Arizona Revised Statute 31-151 and has been in 
     existence since November 1995.
       Prior to the institution of this policy, many inmates in 
     custody were taking advantage of the health care which, of 
     course, must be provided to them. This could be construed as 
     frivolous requests if you will, and took up the valuable time 
     of our health care providers. Time was not being utilized to 
     full potential including any request for psychological 
     analysis and treatment.
       Since this policy has been in effect, we have realized a 
     reduction in inmate requests for medical services between 45% 
     to 50%. Consequently, when an inmate is given the choice of 
     how to best spend his money, the preference is not for 
     unnecessary medical care. Those in custody have nothing 
     better to do than take advantage of the system for just a 
     change in the daily routine. This has ceased. There is no 
     denial of medical services, it just becomes a matter of 
     priority for the inmate.
       Over the past eleven months, in the special account in 
     which the co-payment fee is retained, approximately $3500.00 
     has been placed into deposit. Although this is not a large 
     amount of revenue, the savings which have been noticed are 
     that of a reduction in staff time and an increase in the 
     quality of care the physician provides for this service 
     delivery. One could only imagine the magnitude of budget 
     savings if a program such as this were initiated on the 
     federal inmate population.
       In Yavapai County this policy has proven to be a success 
     and it is through this success that you have my full support 
     in this proposed legislation.
       In matters of mutual concern I remain,
                                           G.C. ``Buck'' Buchanan,
     Yavapai County Sheriff.
                                                                    ____


                [From the New York Post, Dec. 28, 1996]

                    Toward Healthier Prison Budgets

       Since April, New Jersey has experienced a 60 percent drop 
     in the number of prison inmates seeking medical attention. 
     Have prisoners suddenly begun pursuing a healthier lifestyle? 
     Perhaps--but we prefer to think it has something to do with 
     the fact that inmates must now ante up $5 every time they 
     demand to see a doctor.
       New Jersey prison officials are extremely pleased with the 
     new system. The fee deters prisoners with vague or minor 
     complaints or whose primary motivation appears to be simply, 
     to get out of their cells for a few hours.
       Result: The state has been able to cut its prison health-
     care budget by $17 million. Fewer inmates being escorted to 
     and from the infirmary also enhances security within prison 
     walls.
       Predictably, the American Civil Liberties Union (ACLU) 
     isn't pleased. It claims the $5 fee--equal to about two days' 
     prison wages--is preventing some chronically ill inmates from 
     seeking proper care. Naturally, a lawsuit has been filed. In 
     May, a judge ruled in favor of the prison system (the 
     decision is being appealed).
       Charging prisoners a fee for medical services, however, is 
     nothing new, nor is it unique to New Jersey. Prisons and 
     jails in at least 18 states now charge for health care, up 
     from just nine in 1995. New Jersey has allowed such fees 
     since 1995. In fact, the Bergen County jail charges inmates 
     $10 per doctor visit.
       State prison officials dismiss the ACLU's concerns as 
     ``highly speculative.'' Inmates diagnosed with chronic 
     illnesses, the officials point out, are not charged for all 
     visits. One diabetic inmate, interviewed by The New York 
     Times, complained that the fee was a ``burden'' because it 
     meant he could no longer buy ``toothpaste and stuff.'' He 
     admitted, however, that he'd had to pay only ``three or four 
     times'' since April 1.
       This isn't exactly Black Hole of Calcutta stuff. New Jersey 
     appears to be making good use of a sound prison-management 
     technique.
                                 ______
                                 
      By Mr. KYL (for himself, Mr. Lott, Mr. Nickles, Mr. Mack, Mr. 
        Coverdell, Mr. Helms, Mr. Shelby, and Mrs. Hutchison):
  S. 495. A bill to provide criminal and civil penalties for the 
unlawful acquisition, transfer, or use of any chemical weapon or 
biological weapon, and to reduce the threat of acts of terrorism or 
armed aggression involving the use of any such weapon against the 
United States, its citizens, or Armed Forces, or those of any allied 
country, and for other purposes.


    the chemical and biological weapons threat reduction act of 1997

  Mr. KYL. 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. 495

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Chemical 
     and Biological Weapons Threat Reduction Act of 1997''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Policy.
Sec. 4. Definitions.

TITLE I--PENALTIES FOR UNLAWFUL ACTIVITIES WITHIN THE UNITED STATES OR 
                   BY UNITED STATES NATIONALS ABROAD

                     Subtitle A--Criminal Penalties

Sec. 101. Criminal provisions.

                      Subtitle B--Civil Penalties

Sec. 111. Designation of lead agency.
Sec. 112. Prohibitions on chemical and biological weapons-related 
              activities.
Sec. 113. Civil penalties.
Sec. 114. Regulatory authority; application of other laws.

                      Subtitle C--Other Penalties

Sec. 121. Revocations of export privileges.
Sec. 122. Suspension of patent rights.

       TITLE II--FOREIGN RELATIONS AND DEFENSE-RELATED PROVISIONS

Sec. 201. Sanctions for use of chemical or biological weapons.
Sec. 202. Continuation and enhancement of multilateral control regimes.
Sec. 203. Criteria for United States assistance to Russia.
Sec. 204. Report on the state of chemical and biological weapons 
              proliferation.
Sec. 205. International conference to strengthen the 1925 Geneva 
              Protocol.
Sec. 206. Restriction on use of funds for the Organization for the 
              Prohibition of Chemical Weapons.
Sec. 207. Enhancements to robust chemical and biological defenses.
Sec. 208. Negative security assurances.
Sec. 209. Riot control agents.

     SEC. 2. FINDINGS.

       The Congress finds that--
       (1) the United States eliminated its stockpile of 
     biological weapons pursuant to the 1972 Biological Weapons 
     Convention and has pledged to destroy its entire inventory of 
     chemical weapons by 2004, independent of the Chemical Weapons 
     Convention entering into force;
       (2) the use of chemical or biological weapons in 
     contravention of international law is abhorrent and should 
     trigger immediate and effective sanctions;
       (3) United Nations Security Council Resolution 620, adopted 
     on August 26, 1988, states the intention of the Security 
     Council to consider immediately ``appropriate and effective'' 
     sanctions against any nation using chemical and biological 
     weapons in violation of international law;
       (4) the General Agreement on Tariffs and Trade recognizes 
     that national security concerns may serve as legitimate 
     grounds for limiting trade; title XXI of the General 
     Agreement on Tariffs and Trade states that ``nothing in this 
     Agreement shall be construed . . . to prevent any contracting 
     party from taking any action which it considers necessary for 
     the protection of its essential security interests. . .'';
       (5) on September 30, 1993, the President declared by 
     Executive Order No. 12868 a national emergency to deal with 
     ``the unusual and extraordinary threat to the national 
     security, foreign policy, and economy of the United States'' 
     posed by the proliferation of nuclear, biological and 
     chemical weapons, and of the means for delivering such 
     weapons;
       (6) Russia has not implemented the 1990 United States-
     Russian Bilateral Agreement on Destruction and Non-Production 
     of Chemical Weapons and on Measures to Facilitate the 
     Multilateral Convention on Banning Chemical Weapons, known as 
     the ``BDA'', nor has the United States and Russia resolved, 
     to the satisfaction of the United States, the outstanding 
     compliance issues under the Memorandum of Understanding 
     Between the United States of America and the Government of 
     the Union of Soviet Socialist Republics Regarding a Bilateral 
     Verification Experiment and Data Exchange Related To 
     Prohibition on Chemical Weapons, known as the ``1989 Wyoming 
     MOU'';
       (7) the Intelligence Community has stated that a number of 
     countries, among them China, Egypt, Iran, Iraq, Libya, North 
     Korea, Syria, and Russia, possess chemical and biological 
     weapons and the means to deliver them;
       (8) four countries in the Middle East--Iran, Iraq, Libya, 
     and Syria--have, as a national policy, supported 
     international terrorism;
       (9) chemical and biological weapons have been used by 
     states in the past for intimidation and military aggression, 
     most recently during the Iran-Iraq war and by Iraq against 
     its Kurdish minority;
       (10) the grave new threat of chemical and biological 
     terrorism has been demonstrated by the 1995 nerve gas attack 
     on the Tokyo subway by the Japanese cult Aum Shinrikyo;
       (11) the urgent need to improve domestic preparedness to 
     protect against chemical and

[[Page S2659]]

     biological threats was underscored by enactment of the 1997 
     Defense Against Weapons of Mass Destruction Act;
       (12) the Department of Defense, in light of growing 
     chemical and biological threats in regions of key concern, 
     including Northeast Asia, and the Middle East, has stated 
     that United States forces must be properly trained and 
     equipped for all missions, including those in which opponents 
     might threaten use of chemical or biological weapons; and
       (13) Australia Group controls on the exports of chemical 
     and biological agents, and related equipment, and the Missile 
     Technology Control Regime, together provide an indispensable 
     foundation for international and national efforts to curb the 
     spread of chemical and biological weapons, and their delivery 
     means.

     SEC. 3. POLICY.

       It should be the policy of the United States to take all 
     appropriate measures to--
       (1) prevent and deter the threat or use of chemical and 
     biological weapons against the citizens, Armed Forces, and 
     territory of the United States and its allies, and to protect 
     against, and manage the consequences of, such use should it 
     occur;
       (2) discourage the proliferation of chemical and biological 
     weapons, their means of delivery, and related equipment, 
     material, and technology;
       (3) prohibit within the United States the development, 
     production, acquisition, stockpiling, and transfer to third 
     parties of chemical or biological weapons, their precursors 
     and related technology; and
       (4) impose unilateral sanctions, and seek immediately 
     international sanctions, against any nation using chemical 
     and biological weapons in violation of international law.

     SEC. 4. DEFINITIONS.

       In this Act:
       (1) Australia group.--The term ``Australia Group'' refers 
     to the informal forum of countries, formed in 1984 and 
     chaired by Australia, whose goal is to discourage and impede 
     chemical and biological weapons proliferation by harmonizing 
     national export controls on precursor chemicals for chemical 
     weapons, biological weapons pathogens, and dual-use 
     equipment, sharing information on target countries, and 
     seeking other ways to curb the use of chemical weapons and 
     biological weapons.
       (2) Biological weapon.--The term ``biological weapon'' 
     means the following, together or separately:
       (A) Any micro-organism (including bacteria, viruses, fungi, 
     rickettsiae or protozoa), pathogen, or infectious substance, 
     or any naturally occurring, bio-engineered or synthesized 
     component of any such micro-organism, pathogen, or infectious 
     substance, whatever its origin or method of production, 
     capable of causing--
       (i) death, disease, or other biological malfunction in a 
     human, an animal, a plant, or another living organism;
       (ii) deterioration of food, water, equipment, supplies, or 
     materials of any kind; or
       (iii) deleterious alteration of the environment.
       (B) Any munition or device specifically designed to cause 
     death or other harm through the toxic properties of those 
     biological weapons specified in subparagraph (A), which would 
     be released as a result of the employment of such munition or 
     device.
       (C) Any equipment specifically designed for use directly in 
     connection with the employment of munitions or devices 
     specified in this section.
       (D) Any living organism specifically designed to carry a 
     biological weapon specified in subparagraph (A) to a host.
       (3) Chemical weapon.--The term ``chemical weapon'' means 
     the following, together or separately:
       (A) Any of the following chemical agents: tabun, Sarin, 
     Soman, GF, VX, sulfur mustard, nitrogen mustard, phosgene 
     oxime, lewisite, phenyldichloroarsine, ethyldi- chloroarsine, 
     methyldichloroarsine, phosgene, diphosgene, hydrogen cyanide, 
     cyanogen chloride, and arsine.
       (B) Any of the 54 chemicals other than a riot control agent 
     that is controlled by the Australia Group as of the date of 
     the enactment of this Act.
       (C) Any munition or device specifically designed to cause 
     death or other harm through the toxic properties of a 
     chemical weapon specified in subparagraph (A) or (B), which 
     would be released as a result of the employment of such 
     munition or device.
       (D) Any equipment specifically designed for use directly in 
     connection with the employment of munitions or devices 
     specified in this section.
       (4) Knowingly.--The term ``knowingly'' is used within the 
     meaning of ``knows'' as that term is defined in section 104 
     of the Foreign Corrupt Practices Act of 1977 (15 U.S.C. 78dd-
     2) and includes situations in which a person has reason to 
     know.
       (5) National of the united states.--The term ``national of 
     the United States'' has the same meaning given such term in 
     section 101(a)(22) of the Immigration and Nationality Act (8 
     U.S.C. 1101(a)(22)).
       (6) Person.--The term ``person'' means any individual, 
     corporation, partnership, firm, association, or other legal 
     entity.
       (7) Purpose not prohibited under this act.--The term 
     ``purpose not prohibited under this Act'' means--
       (A) any industrial, agricultural, research, medical, 
     pharmaceutical, or other peaceful purpose;
       (B) any protective purpose, namely any purpose directly 
     related to protection against a chemical or biological 
     weapon;
       (C) any military purpose that is not connected with the use 
     of a chemical or biological weapon or that is not dependent 
     on the use of the toxic properties of the chemical or 
     biological weapon to cause death or other harm; or
       (D) any law enforcement purpose, including any domestic 
     riot control purpose.
       (8) Riot control agent.--The term ``riot control agent'' 
     means any substance, including diphenylchloroarsine, 
     diphenyl- cyanoarsine, adamsite, chloroacetophenone, 
     chloropicrin, bromobenzyl cyanide, 0-chlorobenzylidene 
     malononitrile, or 3-Quinuclidinyl benzilate, that is designed 
     or used to produce rapidly in humans any nonlethal sensory 
     irritation or disabling physical effect that disappears 
     within a short time following termination of exposure.
       (9) United states.--The term ``United States'' means the 
     several States of the United States, the District of 
     Columbia, and the commonwealths, territories, and possessions 
     of the United States and includes all places under the 
     jurisdiction or control of the United States, including--
       (A) any of the places within the provisions of section 
     101(41) of the Federal Aviation Act of 1958, as amended (49 
     U.S.C. App. sec. 1301(41));
       (B) any public aircraft or civil aircraft of the United 
     States, as such terms are defined in sections 101 (36) and 
     (18) of the Federal Aviation Act of 1958, as amended (49 
     U.S.C. App. secs. 1301(36) and 1301(18)); and
       (C) any vessel of the United States, as such term is 
     defined in section 3(b) of the Maritime Drug Enforcement Act, 
     as amended (46 U.S.C., App. sec. 1903(b)).
TITLE I--PENALTIES FOR UNLAWFUL ACTIVITIES WITHIN THE UNITED STATES OR 
                   BY UNITED STATES NATIONALS ABROAD
                     Subtitle A--Criminal Penalties

     SEC. 101. CRIMINAL PROVISIONS.

       (a) In General.--Part I of title 18, United States Code, is 
     amended by inserting after chapter 11A the following new 
     chapter:

             ``CHAPTER 11B--CHEMICAL AND BIOLOGICAL WEAPONS

``Sec.
``229. Penalties and prohibitions with respect to chemical and 
              biological weapons.
``229A. Seizure, forfeiture, and destruction.
``229B. Other prohibitions.
``229C. Injunctions.
``229D. Requests for military assistance to enforce prohibition in 
              certain emergencies.
``229E. Definitions.

     ``Sec. 229. Penalties and prohibitions with respect to 
       chemical and biological weapons

       ``(a) In General.--Except as provided in subsection (c), 
     whoever knowingly develops, produces, otherwise acquires, 
     receives from any person located outside the territory of the 
     United States, stockpiles, retains, directly or indirectly 
     transfers, uses, owns, or possesses any chemical weapon or 
     any biological weapon, or knowingly assists, encourages or 
     induces, in any way, any person to do so, or attempt or 
     conspire to do so, shall be fined under this title or 
     imprisoned for life or any term of years or both, unless--
       ``(1) the chemical weapon or biological weapon is intended 
     for a purpose not prohibited under this Act;
       ``(2) the types and quantities of chemical weapons or 
     biological weapons are strictly limited to those that can be 
     justified for such purposes; and
       ``(3) the amount of such chemical weapons or biological 
     weapons per person at any given time does not exceed a 
     quantity that under the circumstances is inconsistent with 
     the purposes not prohibited under this Act.
       ``(b) Death Penalty.--Any person who knowingly uses 
     chemical or biological weapons in violation of subsection (a) 
     and by whose action the death of another person is the result 
     shall be punished by death or imprisoned for life.
       ``(c) Exclusion.--
       ``(1) In general.--Subsection (a) does not apply to the 
     retention, ownership, or possession of a chemical weapon or a 
     biological weapon by an agency of the United States or a 
     person described in paragraph (2) pending destruction of the 
     weapon.
       ``(2) Covered persons.--A person referred to in paragraph 
     (1) is a member of the Armed Forces of the United States or 
     any other person if the person is authorized by the head of 
     an agency of the United States to retain, own, or possess the 
     chemical or biological weapon.
       ``(d) Jurisdiction.--Conduct prohibited by subsection (a) 
     is within the jurisdiction of the United States if the 
     prohibited conduct--
       ``(1) takes place in the United States; or
       ``(2) takes place outside of the United States and is 
     committed by a national of the United States.
       ``(e) Reimbursement of Costs.--The court shall order any 
     person convicted of an offense under this section to 
     reimburse the United States for any expenses incurred by the 
     United States incident to the seizure, storage, handling, 
     transportation, and destruction or other disposition of any 
     property that was seized in connection with an investigation 
     of the commission of the offense by that person. A person 
     ordered to reimburse the United States for expenses

[[Page S2660]]

     under this subsection shall be jointly and severally liable 
     for such expenses with each other person, if any, who is 
     ordered under this subsection to reimburse the United States 
     for the same expenses.

     ``Sec. 229A. Seizure, forfeiture, and destruction

       ``(a) Seizure.--
       ``(1) Seizures on warrants.--The Attorney General may 
     request the issuance, in the same manner as provided for a 
     search warrant, of a warrant authorizing the seizure of any 
     chemical weapon or any biological weapon that is of a type or 
     quantity that, under the circumstances, is inconsistent with 
     the purposes not prohibited under this Act.
       ``(2) Warrantless seizures.--In exigent circumstances, 
     seizure and destruction of any such chemical weapon or 
     biological weapon described in paragraph (1) may be made by 
     the Attorney General upon probable cause without the 
     necessity for a warrant.
       ``(b) Procedure for Forfeiture and Destruction.--
       ``(1) In general.--Except as provided in subsection (a)(2), 
     property seized pursuant to subsection (a) shall be forfeited 
     to the United States after notice to potential claimants and 
     an opportunity for a hearing.
       ``(2) Burden of persuasion.--At such a hearing, the United 
     States shall bear the burden of persuasion by a preponderance 
     of the evidence.
       ``(3) Procedures.--The provisions of chapter 46 of this 
     title relating to civil forfeitures shall apply to a seizure 
     or forfeiture under this section except to the extent (if 
     any) that such provisions are inconsistent with this section.
       ``(4) Destruction or other disposition.--The Attorney 
     General shall provide for the destruction or other 
     appropriate disposition of any chemical or biological weapon 
     seized and forfeited pursuant to this section.
       ``(c) Other Seizure, Forfeiture, and Destruction.--
       ``(1) Seizures on warrant.--The Attorney General may 
     request the issuance, in the same manner as provided for a 
     search warrant, of a warrant authorizing the seizure of any 
     chemical weapon or biological weapon that exists by reason of 
     conduct prohibited under section 229 of this title.
       ``(2) Warrantless seizures.--In exigent circumstances, 
     seizure and destruction of any such chemical weapon or 
     biological weapon described in paragraph (1) may be made by 
     the Attorney General upon probable cause without the 
     necessity for a warrant.
       ``(3) Forfeiture and destruction.--Property seized pursuant 
     to this subsection shall be summarily forfeited (within the 
     meaning of section 609(b) of the Tariff Act of 1930) to the 
     United States and destroyed.
       ``(d) Assistance.--The Attorney General may request the 
     head of any agency of the United States to assist in the 
     handling, storage, transportation, or destruction of property 
     seized under this section.
       ``(e) Owner or Possessor Liability.--The owner or possessor 
     of any property seized under this section shall be jointly 
     and severally liable to the United States in an action for 
     money damages for any expenses incurred by the United States 
     incident to the seizure, including any expenses relating to 
     the handling, storage, transportation, destruction or other 
     disposition of the seized property.

     ``Sec. 229B. Other prohibitions

       ``(a) In General.--Whoever knowingly uses riot control 
     agents as an act of terrorism, or knowingly assists any 
     person to do so, shall be fined under this title or 
     imprisoned for a term of not more than 10 years, or both.
       ``(b) Jurisdiction.--Conduct prohibited by this section is 
     within the jurisdiction of the United States if the 
     prohibited conduct--
       ``(1) takes place in the United States; or
       ``(2) takes place outside of the United States and is 
     committed by a national of the United States.

     ``Sec. 229C. Injunctions

       ``The United States may obtain in a civil action an 
     injunction against--
       ``(1) the conduct prohibited under section 229 of this 
     title; or
       ``(2) the preparation or solicitation to engage in conduct 
     prohibited under section 229 of this title.

     ``Sec. 229D. Requests for military assistance to enforce 
       prohibition in certain emergencies

       ``The Attorney General may request the Secretary of Defense 
     to provide assistance under section 382 of title 10 in 
     support of Department of Justice activities relating to the 
     enforcement of section 229 of this title in an emergency 
     situation involving a biological weapon or chemical weapon. 
     The authority to make such a request may be exercised by 
     another official of the Department of Justice in accordance 
     with section 382(f)(2) of title 10.

     ``Sec. 229E. Definitions

       ``In this chapter:
       ``(1) Australia group.--The term `Australia Group' refers 
     to the informal forum of countries, formed in 1984 and 
     chaired by Australia, whose goal is to discourage and impede 
     chemical and biological weapons proliferation by harmonizing 
     national export controls on precursor chemicals for chemical 
     weapons, biological weapons pathogens, and dual-use 
     equipment, sharing information on target countries, and 
     seeking other ways to curb the use of chemical and biological 
     weapons.
       ``(2) Biological weapon.--The term `biological weapon' 
     means the following, together or separately:
       ``(A) Any micro-organism (including bacteria, viruses, 
     fungi, rickettsiae or protozoa), pathogen, or infectious 
     substance, or any naturally occurring, bio-engineered or 
     synthesized component of any such micro-organism, pathogen, 
     or infectious substance, whatever its origin or method of 
     production, capable of causing--
       ``(i) death, disease, or other biological malfunction in a 
     human, an animal, a plant, or another living organism;
       ``(ii) deterioration of food, water, equipment, supplies, 
     or materials of any kind; or
       ``(iii) deleterious alteration of the environment.
       ``(B) Any munition or device specifically designed to cause 
     death or other harm through the toxic properties of those 
     biological weapons specified in subparagraph (A), which would 
     be released as a result of the employment of such munition or 
     device.
       ``(C) Any equipment specifically designed for use directly 
     in connection with the employment of munitions or devices 
     specified in this section.
       ``(D) Any living organism specifically designed to carry a 
     biological weapon specified in subparagraph (A) to a host.
       ``(3) Chemical weapon.--The term `chemical weapon' means 
     the following, together or separately:
       ``(A) Any of the following chemical agents: tabun, Sarin, 
     Soman, GF, VX, sulfur mustard, nitrogen mustard, phosgene 
     oxime, lewisite, phenyldichloroarsine, ethyldichloroarsine, 
     methyldichloroarsine, phosgene, diphosgene, hydrogen cyanide, 
     cyanogen chloride, and arsine.
       ``(B) Any of the 54 chemicals, other than a riot control 
     agent, controlled by the Australia Group as of the date of 
     the enactment of this Act.
       ``(C) Any munition or device specifically designed to cause 
     death or other harm through the toxic properties of a 
     chemical weapon specified in subparagraph (A) or (B), which 
     would be released as a result of the employment of such 
     munition or device.
       ``(D) Any equipment specifically designed for use directly 
     in connection with the employment of munitions or devices 
     specified in this section.
       ``(4) Knowingly.--The term `knowingly' is used within the 
     meaning of `knows' as that term is defined in section 104 of 
     the Foreign Corrupt Practices Act of 1977 (15 U.S.C. 78dd-2) 
     and includes situations in which a person has reason to know.
       ``(5) National of the united states.--The term `national of 
     the United States' has the same meaning given such term in 
     section 101(a)(22) of the Immigration and Nationality Act (8 
     U.S.C. 1101(a)(22)).
       ``(6) Person.--The term `person' means any individual, 
     corporation, partnership, firm, association, or other legal 
     entity.
       ``(7) Purpose not prohibited under the act.--The term 
     `purpose not prohibited under this Act' means--
       ``(A) any industrial, agricultural, research, medical, 
     pharmaceutical, or other peaceful purpose;
       ``(B) any protective purpose, namely any purpose directly 
     related to protection against a chemical or biological 
     weapon;
       ``(C) any military purpose that is not connected with the 
     use of a chemical or biological weapon or that is not 
     dependent on the use of the toxic properties of the chemical 
     or biological weapon to cause death or other harm; or
       ``(D) any law enforcement purpose, including any domestic 
     riot control purpose.
       ``(8) Riot control agent.--The term `riot control agent' 
     means any substance, including diphenylchloroarsine, 
     diphenylcyanoarsine, adamsite, chloroacetophenone, 
     chloropicrin, bromobenzyl cyanide, 0-chlorobenzylidene 
     malononitrile, or 3-Quinuclidinyl benzilate that is designed 
     or used to produce rapidly in humans any nonlethal sensory 
     irritation or disabling physical effect that disappears 
     within a short time following termination of exposure.
       ``(9) Terrorism.--The term `terrorism' means activities 
     that--
       ``(A) involve violent acts or acts dangerous to human life 
     that are a violation of the criminal laws of the United 
     States or of any State, or that would be a criminal violation 
     if committed within the jurisdiction of the United States or 
     of any State; and
       ``(B) appear to be intended--
       ``(i) to intimidate or coerce a civilian population;
       ``(ii) to influence the policy of a government by 
     intimidation or coercion; or
       ``(iii) to affect the conduct of a government by 
     assassination or kidnapping.
       ``(10) United states.--The term `United States' means the 
     several States of the United States, the District of 
     Columbia, and the commonwealths, territories, and possessions 
     of the United States and includes all places under the 
     jurisdiction or control of the United States, including--
       ``(A) any of the places within the provisions of section 
     40102(41) of title 49, United States Code;
       ``(B) any civil aircraft or public aircraft of the United 
     States, as such terms are defined in paragraphs (16) and 
     (37), respectively, of section 40102 of title 49, United 
     States Code; and
       ``(C) any vessel of the United States, as such term is 
     defined in section 3(b) of the Maritime Drug Law Enforcement 
     Act (46 U.S.C. App. 1903(b)).''.
       (b) Conforming Amendment.--The table of chapters for part I 
     of title 18, United States Code, is amended--

[[Page S2661]]

       (1) by striking the item relating to chapter 10; and
       (2) by inserting after the item for chapter 11A the 
     following new item:

``11B. Chemical and Biological Weapons.......................229''.....

       (c) Repeals.--The following provisions of law are repealed:
       (1) Chapter 10 of title 18, United States Code, relating to 
     biological weapons.
       (2) Section 2332c of title 18, United States Code, relating 
     to chemical weapons.
       (3) In the table of sections for chapter 113B of title 18, 
     United States Code, the item relating to section 2332c.
                      Subtitle B--Civil Penalties

     SEC. 111. DESIGNATION OF LEAD AGENCY.

       The President shall designate the Federal Bureau of 
     Investigation as the agency primarily responsible for 
     implementing the provisions of this subtitle (in this 
     subtitle referred to as the ``Lead Agency'').

     SEC. 112. PROHIBITIONS ON CHEMICAL AND BIOLOGICAL WEAPONS-
                   RELATED ACTIVITIES.

       (a) Chemical and Biological Weapons Activities.--Except as 
     provided in subsection (b), it shall be unlawful for any 
     person located in the United States, or any national of the 
     United States located outside the United States, to develop, 
     produce, otherwise acquire, receive from any person located 
     outside the territory of the United States, stockpile, 
     retain, directly or indirectly transfer, use, own, or possess 
     any chemical weapon or any biological weapon, or to assist, 
     encourage or induce, in any way, any person to do so, or 
     attempt or conspire to do so, unless--
       (1) the chemical weapon or biological weapon is intended 
     for a purpose not prohibited under this Act;
       (2) the types and quantities of the chemical weapon or 
     biological weapon are strictly limited to those that can be 
     justified for such purpose; and
       (3) the amount of the chemical weapon or biological weapon 
     per person at any given time does not exceed a quantity that 
     under the circumstances is inconsistent with the purposes not 
     prohibited under this Act.
       (b) Exclusion.--
       (1) In general.--Subsection (a) does not apply to the 
     retention, ownership, or possession of a chemical weapon or a 
     biological weapon by an agency of the United States or a 
     person described in paragraph (2) pending destruction of the 
     weapon.
       (2) Covered persons.--A person referred to in paragraph (1) 
     is a member of the Armed Forces of the United States or any 
     other person if the person is authorized by the head of an 
     agency of the United States to retain, own, or possess the 
     chemical weapon.
       (c) Jurisdiction.--Conduct prohibited by subsection (a) is 
     within the jurisdiction of the United States if the 
     prohibited conduct--
       (1) takes place in the United States; or
       (2) takes place outside of the United States and is 
     committed by a national of the United States.

     SEC. 113. CIVIL PENALTIES.

       (a) Penalty Amount.--Any person that is determined, in 
     accordance with subsection (b), to have violated section 
     112(a) of this Act shall be required by order to pay a civil 
     penalty in an amount not to exceed $100,000 for each such 
     violation.
       (b) Hearing.--
       (1) In general.--Before imposing an order described in 
     subsection (a) against a person under this subsection for a 
     violation of section 112(a), the head of the Lead Agency 
     shall provide the person or entity with notice and, upon 
     request made within 15 days of the date of the notice, a 
     hearing respecting the violation.
       (2) Conduct of hearing.--Any hearing so requested shall be 
     conducted before an administrative law judge. The hearing 
     shall be conducted in accordance with the requirements of 
     section 554 of title 5, United States Code. If no hearing is 
     so requested, the Attorney General's imposition of the order 
     shall constitute a final and unappealable order.
       (3) Issuance of orders.--If the administrative law judge 
     determines, upon the preponderance of the evidence received, 
     that a person named in the complaint has violated section 
     102, the administrative law judge shall state his findings of 
     fact and issue and cause to be served on such person an order 
     described in subsection (a).
       (4) Factors for determination of penalty amounts.--In 
     determining the amount of any civil penalty, the 
     administrative law judge shall take into account the nature, 
     circumstances, extent, and gravity of the violation or 
     violations and, with respect to the violator, the ability to 
     pay, effect on ability to continue to do business, any 
     history of prior such violations, the degree of culpability, 
     the existence of an internal compliance program, and such 
     other matters as justice may require.
       (c) Administrative Appellate Review.--The decision and 
     order of an administrative law judge shall become the final 
     agency decision and order of the head of the Lead Agency 
     unless, within 30 days, the head of the Lead Agency modifies 
     or vacates the decision and order, with or without 
     conditions, in which case the decision and order of the head 
     of the Lead Agency shall become a final order under this 
     subsection. The head of the Lead Agency may not delegate his 
     authority under this paragraph.
       (d) Offsets.--The amount of the civil penalty under a final 
     order of the Lead Agency may be deducted from any sums owed 
     by the United States to the person.
       (e) Judicial Review.--A person adversely affected by a 
     final order respecting an assessment may, within 30 days 
     after the date the final order is issued, file a petition in 
     the Court of Appeals for the appropriate circuit for review 
     of the order.
       (f) Enforcement of Orders.--If a person fails to comply 
     with a final order issued under this subsection against the 
     person and if the person does not file a petition for 
     judicial review under subsection (e), the Attorney General 
     shall file a suit to seek compliance with the order in any 
     appropriate district court of the United States, plus 
     interest at currently prevailing rates calculated from the 
     date of expiration of the 30-day period referred to in 
     subsection (e) or the date of such final judgment, as the 
     case may be. In any such suit, the validity and 
     appropriateness of the final order shall not be subject to 
     review.

     SEC. 114. REGULATORY AUTHORITY; APPLICATION OF OTHER LAWS.

       (a) Regulations.--The Lead Agency may issue such 
     regulations as are necessary to implement and enforce this 
     subtitle and to amend or revise such regulations as necessary 
     if such Executive orders, directives, or regulations do not 
     require any person to submit information or data on any plant 
     site, plant, chemical weapon, or biological weapon that such 
     person produces, processes, or consumes for purposes not 
     prohibited by this Act.
       (b) Enforcement.--The Lead Agency may designate its 
     officers or employees to conduct investigations pursuant to 
     this Act. In conducting such investigations, those officers 
     or employees may, to the extent necessary or appropriate for 
     the enforcement of this subtitle, or for the imposition of 
     any penalty or liability arising under this subtitle, 
     exercise such authorities as are conferred upon them by other 
     laws of the United States.
                      Subtitle C--Other Penalties

     SEC. 121. REVOCATIONS OF EXPORT PRIVILEGES.

       (a) In General.--If the President determines, after notice 
     and an opportunity for a hearing in accordance with section 
     554 of title 5, United States Code, that any person within 
     the United States, or any national of the United States 
     located outside the United States, has committed any 
     violation of section 112, the President may issue an order 
     for the suspension or revocation of the authority of the 
     person to export from the United States any goods or 
     technology (as such terms are defined in section 16 of the 
     Export Administration Act of 1979 (50 U.S.C. app. 2415)).
       (b) Repeal.--Section 11C of the Export Administration Act 
     of 1979 (50 U.S.C. app. 2410c), relating to chemical and 
     biological weapons proliferation sanctions, is repealed.

     SEC. 122. SUSPENSION OF PATENT RIGHTS.

       (a) Suspension.--The term of any patent granted pursuant to 
     title 35, United States Code, held by any person, including 
     any subsidiary of such person, who knowingly violates any 
     provision of section 112 of this Act shall be suspended for a 
     period of three years.
       (b) Effect on Patent Rights.--
       (1) Prohibition.--No rights under title 35, United States 
     Code, shall be derived from any patent described in 
     subsection (a) during the period of any such suspension.
       (2) No extension of patent term.--Any suspension of patent 
     rights imposed pursuant to the provisions of this section 
     shall not extend the term of any such patent.
       (c) Procedures.--
       (1) Determination by the commissioner.--Within 30 days 
     after the date of enactment of this Act, the Commissioner of 
     Patents, after a determination has been made regarding which 
     person or persons have violated section 112 of this Act, 
     shall recommend the suspension of the appropriate patents.
       (2) Notices of violations.--The Commissioner shall notify 
     the holder of such patent within 30 days after the date of 
     such determination and shall publish in the Federal Register 
     a notice of such determination, together with the factual and 
     legal basis for such determination.
       (3) Hearings.--Any interested person may request, within 
     the 60-day period beginning on the date of publication of a 
     determination, that the Commissioner making the determination 
     hold a hearing on such determination. Such a hearing shall be 
     an informal hearing which is not subject to section 554, 556, 
     or 557 of title 5, United States Code. If such a request is 
     made within such period, the Commissioner shall hold such 
     hearing not later than 30 days after the date of the request, 
     or at the request of the person making the request, not later 
     than 60 days after such date. The Commissioner who is holding 
     the hearing shall provide notice of the hearing to the person 
     involved and to any interested person and provide the owner 
     of record of the patent and any interested person an 
     opportunity to participate in the hearing.
       (4) Final determinations.--Within 30 days after the 
     completion of the hearing, the Commissioner shall affirm or 
     revise the determination that was the subject of the hearing 
     and shall publish such affirmation or revision in the Federal 
     Register.
       (d) Fees.--The Commissioner may establish such fees as are 
     appropriate to cover the costs of carrying out his duties and 
     functions under this section.
       (e) Certificate of Suspension.--The Commissioner shall make 
     the determination that a patent is suspended and that the 
     requirements of subsection (c) have been complied

[[Page S2662]]

     with. If the Commissioner determines that the patent is 
     suspended, the Commissioner shall issue to the owner of 
     record of the patent a certificate of suspension, under seal, 
     stating the length of the suspension, and identifying the 
     product and the statute under which regulatory review 
     occurred. Such certificate shall be recorded in the official 
     file of the patent and shall be considered as part of the 
     original patent. The Commissioner shall publish in the 
     Official Gazette of the Patent and Trademark Office a notice 
     of such suspension.
       TITLE II--FOREIGN RELATIONS AND DEFENSE-RELATED PROVISIONS

     SEC. 201. SANCTIONS FOR USE OF CHEMICAL OR BIOLOGICAL 
                   WEAPONS.

       (a) In General.--The Arms Export Control Act (22 U.S.C. 
     2751 et seq.) is amended by striking chapter 8 and inserting 
     the following:

  ``CHAPTER 8--SANCTIONS AGAINST USE OF CHEMICAL OR BIOLOGICAL WEAPONS

     ``SEC. 81. PURPOSE.

       ``The purpose of this chapter is--
       ``(1) to provide for the imposition of sanctions against 
     any foreign government--
       ``(A) that uses chemical or biological weapons in violation 
     of international law; or
       ``(B) that has used chemical or biological weapons against 
     its own nationals; and
       ``(2) to ensure that the victims of the use of chemical or 
     biological weapons shall be compensated and awarded punitive 
     damages, as may be determined by courts in the United States.

     ``SEC. 82. PRESIDENTIAL DETERMINATION.

       ``(a) Bilateral Sanctions.--Except as provided in 
     subsections (c) and (d), the President shall, after the 
     consultation with Congress, impose the sanctions described in 
     subsections (a) and (b) of section 83 if the President 
     determines that any foreign government--
       ``(1) has used a chemical weapon or biological weapon in 
     violation of international law; or
       ``(2) has used a chemical weapon or biological weapon 
     against its own nationals.
       ``(b) Multilateral Sanctions.--The sanctions imposed 
     pursuant to subsection (a) are in addition to any 
     multilateral sanction or measure that may be otherwise 
     agreed.
       ``(c) Presidential Waiver.--The President may waive the 
     application of any of the sanctions imposed pursuant to 
     subsection (a) if the President determines and certifies in 
     writing to the Speaker of the House of Representatives and 
     the Committee on Foreign Relations of the Senate that 
     implementing such measures would have a substantial negative 
     impact upon the supreme national interests of the United 
     States.
       ``(d) Sanctions Not Applied to Certain Existing 
     Contracts.--A sanction described in section 83 shall not 
     apply to any activity pursuant to a contract or international 
     agreement entered into before the date of the Presidential 
     determination under subsection (a) if the President 
     determines that performance of the activity would reduce the 
     potential for the use of a chemical weapon or biological 
     weapon by the sanctioned country.

     ``SEC. 83. MANDATORY SANCTIONS.

       ``(a) Minimum Number of Sanctions.--After consultation with 
     Congress and making a determination under section 82 with 
     respect to the actions of a foreign government, the President 
     shall impose not less than 5 of the following sanctions 
     against that government for a period of three years:
       ``(1) Foreign assistance.--The United States Government 
     shall terminate assistance under the Foreign Assistance Act 
     of 1961, except for urgent humanitarian assistance and food 
     or other agricultural commodities or products.
       ``(2) Arms sales.--The United States Government shall not 
     sell any item on the United States Munitions List and shall 
     terminate sales to that country under this Act of any defense 
     articles, defense services, or design and construction 
     services. Licenses shall not be issued for the export to the 
     sanctioned country of any item on the United States Munitions 
     List, or for commercial satellites.
       ``(3) Arms sale financing.--The United States Government 
     shall terminate all foreign military financing under this 
     Act.
       ``(4) Denial of united states government credit or other 
     financial assistance.--The United States Government shall 
     deny any credit, credit guarantees, or other financial 
     assistance by any department, agency, or instrumentality of 
     the United States Government, including the Export-Import 
     Bank of the United States.
       ``(5) Export controls.--The authorities of section 6 of the 
     Export Administration Act of 1979 shall be used to prohibit 
     the export of any goods or technology on that part of the 
     control list established under section 5(c)(1) of that Act, 
     and all other goods and technology under this Act (excluding 
     food and other agricultural commodities and products) as the 
     President may determine to be appropriate.
       ``(6) Import restrictions.--The President shall issue an 
     order imposing restrictions on the importation into the 
     United States of any service, good, or commodity that is the 
     growth, product, or manufacture of that country.
       ``(7) Multilateral bank assistance.--The United States 
     shall oppose, in accordance with section 701 of the 
     International Financial Institutions Act, the extension of 
     any loan or financial or technical assistance by 
     international financial institutions.
       ``(8) Bank loans.--The United States Government shall 
     prohibit any United States bank from making any loan or 
     providing any credit, including to any agency or 
     instrumentality of the government, except for loans or 
     credits for the purpose of purchasing food or other 
     agricultural commodities or products.
       ``(9) Aviation rights.--
       ``(A) In general.--
       ``(i) Notification.--The President is authorized to notify 
     the government of a country with respect to which the 
     President has made a determination pursuant to section 82(a) 
     of his intention to suspend the authority of foreign air 
     carriers owned or controlled by the government of that 
     country to engage in foreign air transportation to or from 
     the United States.
       ``(ii) Suspension of aviation rights.--Within 10 days after 
     the date of notification of a government under subclause (I), 
     the Secretary of Transportation shall take all steps 
     necessary to suspend at the earliest possible date the 
     authority of any foreign air carrier owned or controlled, 
     directly or indirectly, by that government to engage in 
     foreign air transportation to or from the United States, 
     notwithstanding any agreement relating to air services.
       ``(B) Termination of air service agreements.--
       ``(i) In general.--The President may direct the Secretary 
     of State to terminate any air service agreement between the 
     United States and a country with respect to which the 
     President has made a determination pursuant to section 82(a), 
     in accordance with the provisions of that agreement.
       ``(ii) Termination of aviation rights.--Upon termination of 
     an agreement under this clause, the Secretary of 
     Transportation shall take such steps as may be necessary to 
     revoke at the earliest possible date the right of any foreign 
     air carrier owned, or controlled, directly or indirectly, by 
     the government of that country to engage in foreign air 
     transportation to or from the United States.
       ``(C) Exception.--The Secretary of Transportation may 
     provide for such exceptions from the sanction contained in 
     subparagraph (A) as the Secretary considers necessary to 
     provide for emergencies in which the safety of an aircraft or 
     its crew or passengers is threatened.
       ``(D) Definitions.--For purposes of this paragraph, the 
     terms `aircraft', `air transportation', and `foreign air 
     carrier' have the meanings given those terms in section 40102 
     of title 49, United States Code.
       ``(10) Diplomatic relations.--The President shall use his 
     constitutional authorities to downgrade or suspend diplomatic 
     privileges between the United States and that country.
       ``(b) Blocking of Assets.--Upon making a determination 
     under section 82, the President shall take all steps 
     necessary to block any transactions in any property subject 
     to the jurisdiction of the United States in which the foreign 
     country or any national thereof has any interest whatsoever, 
     for the purpose of compensating the victims of the chemical 
     or biological weapons use and for punitive damages as may be 
     assessed.
       ``(c) Statutory Construction.--Nothing in this section 
     limits the authority of the President to impose a sanction 
     that is not specified in this section.

     ``SEC. 84. REMOVAL OF SANCTIONS.

       ``(a) Certification Requirement.--The President shall 
     remove the sanctions imposed with respect to a foreign 
     government pursuant to this section if the President 
     determines and so certifies to the Congress, after the end of 
     the three-year period beginning on the date on which 
     sanctions were initially imposed on that country pursuant to 
     section 82, that--
       ``(1) the government of that country has provided reliable 
     assurances that it will not use any chemical weapon or 
     biological weapon in violation of international law and will 
     not use any chemical weapon or biological weapon against its 
     own nationals;
       ``(2) the government of the country is willing to accept 
     onsite inspections or other reliable measures to verify that 
     the government is not making preparations to use any chemical 
     weapon or biological weapon in violation of international law 
     or to use any chemical weapon or biological weapon against 
     its own nationals; and
       ``(3) the government of the country is making restitution 
     to those affected by any use of any chemical weapon or 
     biological weapon in violation of international law or 
     against its own nationals.
       ``(b) Reasons for Determination.--The certification made 
     under this subsection shall set forth the reasons supporting 
     such determination in each particular case.
       ``(c) Effective Date.--The certification made under this 
     subsection shall take effect on the date on which the 
     certification is received by the Congress.

     ``SEC. 85. NOTIFICATIONS AND REPORTS OF CHEMICAL OR 
                   BIOLOGICAL WEAPONS USE AND APPLICATION OF 
                   SANCTIONS.

       ``(a) Notification.--Not later than 30 days after 
     persuasive information becomes available to the executive 
     branch of Government indicating the substantial possibility 
     of the use of chemical or biological weapons by any person or 
     government, the President shall so notify in writing 
     Congress.
       ``(b) Report.--Not later than 60 days after making a 
     notification under subsection (a), the President shall submit 
     a report to Congress that contains--
       ``(1) an assessment by the President in both classified and 
     unclassified form of the

[[Page S2663]]

     circumstances of the suspected use of chemical or biological 
     weapons, including any determination by the President made 
     under section 82 with respect to a foreign government; and
       ``(2) a description of the actions the President intends to 
     take pursuant to the assessment, including the imposition of 
     any sanctions or other measures pursuant to section 82.
       ``(c) Progress Report.--Not later than 60 days after 
     submission of a report under subsection (b), the President 
     shall submit a progress report to Congress describing actions 
     undertaken by the President under this chapter, including the 
     imposition of unilateral and multilateral sanctions and other 
     punitive measures, in response to the use of any chemical 
     weapon or biological weapon described in the report.
       ``(d) Recipients of Notifications and Reports.--Any 
     notification or report required by this section shall be 
     submitted to the following:
       ``(1) The Majority Leader of the Senate and the Speaker of 
     the House of Representatives.
       ``(2) The Committee on Foreign Relations and the Select 
     Committee on Intelligence of the Senate.
       ``(3) The Committee on International Relations and the 
     Permanent Select Committee on Intelligence of the House of 
     Representatives.

     ``SEC. 86. DEFINITIONS.

       ``In this chapter:
       ``(1) Biological weapon.--The term `biological weapon' 
     means the following, together or separately:
       ``(A) Any micro-organism (including bacteria, viruses, 
     fungi, rickettsiae or protozoa), pathogen, or infectious 
     substance, or any naturally occurring, bio-engineered or 
     synthesized component of any such micro-organism, pathogen, 
     or infectious substance, whatever its origin or method of 
     production, capable of causing--
       ``(i) death, disease, or other biological malfunction in a 
     human, an animal, a plant, or another living organism;
       ``(ii) deterioration of food, water, equipment, supplies, 
     or materials of any kind; or
       ``(iii) deleterious alteration of the environment.
       ``(B) Any munition or device specifically designed to cause 
     death or other harm through the toxic properties of those 
     biological weapons specified in subparagraph (A), which would 
     be released as a result of the employment of such munition or 
     device.
       ``(C) Any equipment specifically designed for use directly 
     in connection with the employment of munitions or devices 
     specified in this section.
       ``(D) Any living organism specifically designed to carry a 
     biological weapon specified in subparagraph (A) to a host.
       ``(2) Chemical weapon.--The term `chemical weapon' means 
     the following, together or separately:
       ``(A) Any of the following chemical agents: tabun, Sarin, 
     Soman, GF, VX, sulfur mustard, nitrogen mustard, phosgene 
     oxime, lewisite, phenyldichloroarsine, ethyldichloroarsine, 
     methyldichloroarsine, phosgene, diphosgene, hydrogen cyanide, 
     cyanogen chloride, and arsine.
       ``(B) Any of the 54 chemicals, other than a riot control 
     agent, controlled by the Australia Group as of the date of 
     the enactment of this Act.
       ``(C) Any munition or device specifically designed to cause 
     death or other harm through the toxic properties of a 
     chemical weapon specified in subparagraph (A) or (B), which 
     would be released as a result of the employment of such 
     munition or device.
       ``(D) Any equipment specifically designed for use directly 
     in connection with the employment of munitions or devices 
     specified in this section.
       ``(3) Person.--The term `person' means any individual, 
     corporation, partnership, firm, association, or other legal 
     entity.''.
       (b) Repeal.--Sections 306 through 308 of the Act of 
     December 4, 1991 (Public Law 102-182) are repealed.

     SEC. 202. CONTINUATION AND ENHANCEMENT OF MULTILATERAL 
                   CONTROL REGIMES.

       (a) Sense of Congress.--It is the sense of Congress that 
     any collapse of the informal forum of states known as the 
     ``Australia Group'', either through changes in membership or 
     lack of compliance with common export controls, or any 
     substantial weakening of common Australia Group export 
     controls and nonproliferation measures in force as of the 
     date of enactment of this Act, would seriously undermine 
     international and national efforts to curb the spread of 
     chemical and biological weapons and related equipment.
       (b) Policy.--It shall be the policy of the United States--
       (1) to continue close cooperation with other countries in 
     the Australia Group in support of its current efforts and in 
     devising additional means to monitor and control the supply 
     of chemicals and biological agents applicable to weapons 
     production;
       (2) to maintain an equivalent or more comprehensive level 
     of control over the export of toxic chemicals and their 
     precursors, dual-use processing equipment, human, animal and 
     plant pathogens and toxins with potential biological weapons 
     application, and dual-use biological equipment, as that 
     afforded by the Australia Group as of the date of enactment 
     of this Act;
       (3) to block any effort by any Australia Group member to 
     achieve Australia Group consensus on any action that would 
     substantially weaken existing common Australia Group export 
     controls and nonproliferation measures or otherwise undermine 
     the effectiveness of the Australia Group; and
       (4) to work closely with other countries also capable of 
     supplying equipment, materials, and technology with 
     particular applicability to the production of chemical or 
     biological weapons in order to devise and harmonize the most 
     effective national controls possible on the transfer of such 
     materials, equipment, and technology.
       (c) Certification.--Not later than 180 days after the date 
     of the enactment of this Act, and annually thereafter, the 
     President shall determine and certify to Congress whether--
       (1) the Australia Group continues to maintain an equivalent 
     or more comprehensive level of control over the export of 
     toxic chemicals and their precursors, dual-use processing 
     equipment, human, animal, and plant pathogens and toxins with 
     potential biological weapons application, and dual-use 
     biological equipment, as that afforded by the Australia Group 
     as of the date of the last certification under this 
     subsection, or, in the case of the first certification, the 
     level of control maintained as of the date of enactment of 
     this Act; and
       (2) the Australia Group remains a viable mechanism for 
     curtailing the spread of chemical and biological weapons-
     related materials and technology, and whether the 
     effectiveness of the Australia Group has been undermined by 
     changes in membership, lack of compliance with common export 
     controls, or any weakening of common controls and measures 
     that are in effect as of the date of enactment of this Act.
       (d) Consultations.--
       (1) In general.--The President shall consult periodically, 
     but not less frequently than twice a year, with the Committee 
     on Foreign Relations of the Senate and the Committee on 
     International Relations of the House of Representatives, on 
     Australia Group export controls and nonproliferation 
     measures.
       (2) Resulting from presidential certification.--If the 
     President certifies that either of the conditions in 
     subsection (c) are not met, the President shall consult 
     within 60 days of such certification with the Committee on 
     Foreign Relations of the Senate and the Committee on 
     International Relations of the House of Representatives on 
     steps the United States should take to maintain effective 
     international controls on chemical and biological weapons-
     related materials and technology.

     SEC. 203. CRITERIA FOR UNITED STATES ASSISTANCE TO RUSSIA.

       (a) In General.--Notwithstanding any other provision of 
     law, United States assistance described in subsection (b) may 
     not be provided to Russia unless the President determines and 
     certifies to Congress not later than 180 days after the date 
     of the enactment of this Act, and on an annual basis 
     thereafter, that--
       (1) Russia is making reasonable progress in the 
     implementation of the Bilateral Destruction Agreement;
       (2) the United States and Russia have resolved, to the 
     satisfaction of the United States, outstanding compliance 
     issues under the Wyoming Memorandum of Understanding and the 
     Bilateral Destruction Agreement;
       (3) Russia has fully and accurately declared all 
     information regarding its unitary and binary chemical 
     weapons, chemical weapons production facilities, other 
     facilities associated with the development of chemical 
     weapons, and riot control agents; and
       (4) Russia is in compliance with its obligations under the 
     Biological Weapons Convention.
       (b) United States Assistance Covered.--United States 
     assistance described in this subsection is United States 
     assistance provided only for the purposes of--
       (1) facilitating the transport, storage, safeguarding, and 
     elimination of any chemical weapon or biological weapon or 
     its delivery vehicle;
       (2) preventing the proliferation of any chemical weapon or 
     biological weapon, any component or technology of such a 
     weapon, or any technology or expertise related to such a 
     weapon;
       (3) planning, designing, or construction of any destruction 
     facility for a chemical weapon or biological weapon; or
       (4) supporting any international science and technology 
     center.
       (c) Definitions.--
       (1) Bilateral destruction agreement.--The term ``Bilateral 
     Destruction Agreement'' means Agreement Between the United 
     States of America and the Union of Soviet Socialist Republics 
     on Destruction and Nonproduction of Chemical Weapons and on 
     Measures to Facilitate the Multilateral Convention on Banning 
     Chemical Weapons, signed on June 1, 1990.
       (2) Biological weapons convention.--The term ``Biological 
     Weapons Convention'' means the Convention on the Prohibition 
     of the Development, Production and Stockpiling of 
     Bacteriological (Biological) and Toxin Weapons and on Their 
     Destruction, done at Washington, London, and Moscow on April 
     10, 1972.
       (3) Wyoming memorandum of understanding.--The term 
     ``Wyoming Memorandum of Understanding'' means the Memorandum 
     of Understanding Between the Government of the United States 
     of America and the Government of the Union of Soviet 
     Socialist Republics Regarding a Bilateral Verification 
     Experiment and Data Exchange Related to

[[Page S2664]]

     Prohibition on Chemical Weapons, signed at Jackson Hole, 
     Wyoming, on September 23, 1989.
       (4) United states assistance.--The term ``United States 
     assistance'' has the meaning given the term in section 
     481(e)(4) of the Foreign Assistance Act of 1961 (22 U.S.C. 
     2291(e)(4)).

     SEC. 204. REPORT ON THE STATE OF CHEMICAL AND BIOLOGICAL 
                   WEAPONS PROLIFERATION.

       Not later than 180 days after the date of enactment of this 
     Act, and every year thereafter, the President shall submit to 
     the Speaker of the House of Representatives and the Committee 
     on Foreign Relations and the Select Committee on Intelligence 
     of the Senate a report containing the following:
       (1) Proliferation by foreign countries.--A description of 
     any efforts by China, Egypt, India, Iran, Iraq, Libya, North 
     Korea, Pakistan, Russia, and Syria, and any country that has, 
     during the five years prior to submission of the report, used 
     any chemical weapon or biological weapon or attempted to 
     acquire the material and technology to produce and deliver 
     chemical or biological agents, together with an assessment of 
     the present and future capability of the country to produce 
     and deliver such agents.
       (2) Foreign persons assisting in proliferation.--An 
     identification of--
       (A) those persons that in the past have assisted the 
     government of any country described in paragraph (1) in that 
     effort; and
       (B) those persons that continue to assist the government of 
     the country described in paragraph (1) in that effort as of 
     the date of the report.
       (3) Third country assistance in proliferation.--An 
     assessment of whether and to what degree other countries have 
     assisted any government or country described in paragraph (1) 
     in its effort to acquire the material and technology 
     described in that paragraph.
       (4) Intelligence information on third country assistance.--
     A description of any confirmed or credible intelligence or 
     other information that any country has assisted the 
     government of any country described in paragraph (1) in that 
     effort, either directly or by facilitating the activities of 
     the persons identified in subparagraph (A) or (B) of 
     paragraph (3) or had knowledge of the activities of the 
     persons identified in subparagraph (A) or (B) of paragraph 
     (3), but took no action to halt or discourage such 
     activities.
       (5) Intelligence information on subnational groups.--A 
     description of any confirmed or credible intelligence or 
     other information of the development, production, 
     stockpiling, or use, of any chemical weapon or biological 
     weapon by subnational groups, including any terrorist or 
     paramilitary organization.
       (6) Funding priorities for detection and monitoring 
     capabilities.--An identification of the priorities of the 
     executive branch of Government for the development of new 
     resources relating to detection and monitoring capabilities 
     with respect to chemical weapons and biological weapons.

     SEC. 205. INTERNATIONAL CONFERENCE TO STRENGTHEN THE 1925 
                   GENEVA PROTOCOL.

       (a) Definition.--In this section, the term ``1925 Geneva 
     Protocol'' means the Protocol for the Prohibition of the Use 
     in War of Asphyxiating, Poisonous or Other Gases, and of 
     Bacteriological Methods of Warfare, done at Geneva June 17, 
     1925 (26 UST 71; TIAS 8061).
       (b) Policy.--It shall be the policy of the United States--
       (1) to work to obtain multilateral agreement to effective, 
     international enforcement mechanisms to existing 
     international agreements that prohibit the use of chemical 
     and biological weapons, to which the United States is a state 
     party; and
       (2) pursuant to paragraph (1), to work to obtain 
     multilateral agreement regarding the collective imposition of 
     sanctions and other measures described in chapter 8 of the 
     Arms Export Control Act, as amended by this Act.
       (c) Responsibility.--The Secretary of State shall, as a 
     priority matter, take steps necessary to achieve United 
     States objectives, as set forth in this section.
       (d) Sense of the Senate.--The Senate urges and directs the 
     Secretary of State to work to convene an international 
     negotiating forum for the purpose of concluding an 
     international agreement on enforcement of the 1925 Geneva 
     Protocol.
       (e) Allocation of Funds.--Of the amount authorized to be 
     appropriated to the Department of State for fiscal year 1998 
     under the appropriations account entitled ``International 
     Conferences and Contingencies'', $5,000,000 shall be 
     available only for payment of salaries and expenses in 
     connection with efforts of the Secretary of State to conclude 
     an international agreement described in subsection (d).

     SEC. 206. RESTRICTION ON USE OF FUNDS FOR THE ORGANIZATION 
                   FOR THE PROHIBITION OF CHEMICAL WEAPONS.

       None of the funds appropriated pursuant to any provision of 
     law, including previously appropriated funds, may be 
     available to make any voluntary or assessed contribution to 
     the Organization for the Prohibition of Chemical Weapons, or 
     to reimburse any account for the transfer of in-kind items to 
     the Organization, unless or until the Convention on the 
     Prohibition of Development, Production, Stockpiling and Use 
     of Chemical Weapons and on Their Destruction, opened for 
     signature at Paris January 13, 1993, enters into force for 
     the United States.

     SEC. 207. ENHANCEMENTS TO ROBUST CHEMICAL AND BIOLOGICAL 
                   DEFENSES.

       (a) Sense of Congress.--It is the sense of Congress that--
       (1) the threats posed by chemical and biological weapons to 
     United States Armed Forces deployed in regions of concern 
     will continue to grow and will undermine United States 
     strategies for the projection of United States military power 
     and the forward deployment of United States Armed Forces;
       (2) the use of chemical or biological weapons will be a 
     likely condition of future conflicts in regions of concern;
       (3) it is essential for the United States and key regional 
     allies of the United States to preserve and further develop 
     robust chemical and biological defenses;
       (4) the United States Armed Forces, both active and 
     nonactive duty, are inadequately equipped, organized, 
     trained, and exercised for operations in chemically and 
     biologically contaminated environments;
       (5) the lack of readiness stems from a deemphasis by the 
     executive branch of Government and the United States Armed 
     Forces on chemical and biological defense;
       (6) the armed forces of key regional allies and likely 
     coalition partners, as well as civilians necessary to support 
     United States military operations, are inadequately prepared 
     and equipped to carry out essential missions in chemically 
     and biologically contaminated environments;
       (7) congressional direction contained in the 1997 Defense 
     Against Weapons of Mass Destruction Act is intended to lead 
     to enhanced domestic preparedness to protect against the use 
     of chemical and biological weapons; and
       (8) the United States Armed Forces should place increased 
     emphasis on potential threats to deployed United States Armed 
     Forces and, in particular, should make countering the use of 
     chemical and biological weapons an organizing principle for 
     United States defense strategy and for the development of 
     force structure, doctrine, planning, training, and exercising 
     policies of the United States Armed Forces.
       (b) Defense Readiness Training.--The Secretary of Defense 
     shall take those actions that are necessary to ensure that 
     the United States Armed Forces are capable of carrying out 
     required military missions in United States regional 
     contingency plans despite the threat or use of chemical or 
     biological weapons. In particular, the Secretary of Defense 
     shall ensure that the United States Armed Forces are 
     effectively equipped, organized, trained, and exercised 
     (including at the large unit and theater level) to conduct 
     operations in chemically and biologically contaminated 
     environments that are critical to the success of United 
     States military plans in regional conflicts, including--
       (1) deployment, logistics, and reinforcement operations at 
     key ports and airfields;
       (2) sustained combat aircraft sortie generation at critical 
     regional airbases; and
       (3) ground force maneuvers of large units and divisions.
       (c) Discussions With Allied Countries on Readiness.--
       (1) High-priority joint responsibility of secretaries of 
     defense and state.--The Secretary of Defense and the 
     Secretary of State shall give a high priority to discussions 
     with key regional allies and likely regional coalition 
     partners, including those countries where the United States 
     currently deploys forces, where United States forces would 
     likely operate during regional conflicts, or which would 
     provide civilians necessary to support United States military 
     operations, to determine what steps are necessary to ensure 
     that allied and coalition forces and other critical civilians 
     are adequately equipped and prepared to operate in chemically 
     and biologically contaminated environments.
       (2) Report.--Not later than one year after the date of the 
     enactment of this Act, the Secretary of Defense and the 
     Secretary of State shall jointly submit to the Committee on 
     Foreign Relations and the Committee on Armed Services of the 
     Senate and to the Speaker of the House of Representatives a 
     report describing--
       (A) the results of the discussions held under paragraph (1) 
     and plans for future discussions;
       (B) the measures agreed to improve the preparedness of 
     foreign armed forces and civilians; and
       (C) any proposals for increased military assistance, 
     including assistance provided through--
       (i) the sale of defense articles and defense services under 
     the Arms Export Control Act;
       (ii) the Foreign Military Financing program under section 
     23 of that Act; and
       (iii) chapter 5 of part II of the Foreign Assistance Act of 
     1961 (relating to international military education and 
     training).
       (d) United States Army Chemical School.--
       (1) Command of school.--The Secretary of Defense shall take 
     those actions that are necessary to ensure that the United 
     States Army Chemical School remains under the oversight of a 
     general officer of the United States Army.
       (2) Sense of congress.--It is the sense of Congress that--
       (A) the transfer, consolidation, and reorganization of the 
     United States Army Chemical School should not disrupt or 
     diminish the training and readiness of the United States 
     Armed Forces to fight in a chemical-biological warfare 
     environment; and
       (B) the Army should continue to operate the Chemical 
     Defense Training Facility at

[[Page S2665]]

     Fort McClellan until such time as the replacement facility at 
     Fort Leonard Wood is functional.
       (e) Report.--
       (1) In general.--Not later than 180 days after the date of 
     enactment of this Act, and on January 1 every year 
     thereafter, the President shall submit a report to the 
     Committee on Foreign Relations, the Committee on Armed 
     Services, and the Committee on Appropriations of the Senate 
     and the Committee on International Relations, the Committee 
     on National Security, and the Committee on Appropriations of 
     the House of Representatives, and the Speaker of the House of 
     Representatives on previous, current, and planned chemical 
     and biological weapons defense activities of the United 
     States Armed Forces.
       (2) Content of report.--Each report required by paragraph 
     (1) shall include the following information for the previous 
     fiscal year and for the next three fiscal years:
       (A) Enhancement of defense and readiness.--Proposed 
     solutions to each of the deficiencies in chemical and 
     biological warfare defenses identified in the March 1996 
     General Accounting Office Report, titled ``Chemical and 
     Biological Defense: Emphasis Remains Insufficient to Resolve 
     Continuing Problems'', and steps being taken pursuant to 
     subsection (b) to ensure that the United States Armed Forces 
     are capable of conducting required military operations to 
     ensure the success of United States regional contingency 
     plans despite the threat or use of chemical or biological 
     weapons.
       (B) Priorities.--An identification of priorities of the 
     executive branch of Government in the development of both 
     active and passive defenses against the use of chemical and 
     biological weapons.
       (C) RDT&E and procurement of defenses.--A detailed summary 
     of all budget activities associated with the research, 
     development, testing, and evaluation, and procurement of 
     chemical and biological defenses, set forth by fiscal year, 
     program, department, and agency.
       (D) Vaccine production and stocks.--A detailed assessment 
     of current and projected vaccine production capabilities and 
     vaccine stocks, including progress in researching and 
     developing a multivalent vaccine.
       (E) Decontamination of infrastructure and installations.--A 
     detailed assessment of procedures and capabilities necessary 
     to protect and decontaminate infrastructure and installations 
     that support the ability of the United States to project 
     power through the use of its Armed Forces, including progress 
     in developing a nonaqueous chemical decontamination 
     capability.
       (F) Protective gear.--A description of the progress made in 
     procuring lightweight personal protective gear and steps 
     being taken to ensure that programmed procurement quantities 
     are sufficient to replace expiring battledress overgarments 
     and chemical protective overgarments to maintain required 
     wartime inventory levels.
       (G) Detection and identification capabilities.--A 
     description of the progress made in developing long-range 
     standoff detection and identification capabilities and other 
     battlefield surveillance capabilities for biological and 
     chemical weapons, including progress on developing a 
     multichemical agent detector, unmanned aerial vehicles, and 
     unmanned ground sensors.
       (H) Theater missile defenses.--A description of the 
     progress made in developing and deploying layered theater 
     missile defenses for deployed United States Armed Forces 
     which will provide greater geographic coverage against 
     current and expected ballistic missile threats and will 
     assist the mitigation of chemical and biological 
     contamination through higher altitude intercepts and boost-
     phase intercepts.
       (I) Training and readiness.--An assessment of the training 
     and readiness of the United States Armed Forces to operate in 
     chemically and biologically contaminated environments and 
     actions taken to sustain training and readiness, including at 
     national combat training centers.
       (J) Military exercises.--A description of the progress made 
     in incorporating consideration about the threat or use of 
     chemical and biological weapons into service and joint 
     exercises as well as simulations, models, and wargames, 
     together with the conclusions drawn from these efforts about 
     the United States capability to carry out required missions, 
     including with coalition partners, in military contingencies.
       (K) Military doctrine.--A description of the progress made 
     in developing and implementing service and joint doctrine for 
     combat and noncombat operations involving adversaries armed 
     with chemical or biological weapons, including efforts to 
     update the range of service and joint doctrine to better 
     address the wide range of military activities, including 
     deployment, reinforcement, and logistics operations in 
     support of combat operations, and for the conduct of such 
     operations in concert with coalition forces.
       (L) Defense of civilian population.--A description of the 
     progress made in resolving issues relating to the protection 
     of United States population centers from chemical and 
     biological attack and from the consequences of such an 
     attack, including plans for inoculation of populations, 
     consequence management, and progress made in developing and 
     deploying effective cruise missile defenses and a national 
     ballistic missile defense.

     SEC. 208. NEGATIVE SECURITY ASSURANCES.

       (a) Sense of Congress.--It is the sense of Congress that in 
     order to achieve an effective deterrence against attacks of 
     the United States and United States Armed Forces by chemical 
     weapons, the President should reevaluate the extension of 
     negative security assurances by the United States to 
     nonnuclear-weapon states in the context of the Treaty on the 
     Non-Proliferation of Nuclear Weapons.
       (b) Report.--Not later than 180 days after the date of the 
     enactment of this Act, the President shall submit to the 
     Committee on Armed Services and the Committee on Foreign 
     Relations of the Senate and to the Speaker of the House of 
     Representatives a report, both in classified and unclassified 
     forms, setting forth--
       (1) the findings of a detailed review of United States 
     policy on negative security assurances as a deterrence 
     strategy; and
       (2) a determination by the President of the appropriate 
     range of nuclear and conventional responses to the use of 
     chemical or biological weapons against the United States 
     Armed Forces, United States citizens, allies, and third 
     parties.
       (c) Definitions.--In this section:
       (1) Negative security assurances.--The term ``negative 
     security assurances'' means the assurances provided by the 
     United States to nonnuclear-weapon states in the context of 
     the Treaty on the Non-Proliferation of Nuclear Weapons (21 
     UST 483) that the United States will forswear the use of 
     certain weapons unless the United States is attacked by that 
     nonnuclear-weapon state in alliance with a nuclear-weapon 
     state.
       (2) Nonnuclear-weapon states.--The term ``nonnuclear-weapon 
     states'' means states that are not nuclear-weapon states (as 
     defined in Article IX(3) of the Treaty on the Non-
     Proliferation of Nuclear Weapons, done at Washington, London, 
     and Moscow July 1, 1968 (21 UST 483).

     SEC. 209. RIOT CONTROL AGENTS.

       (a) Prohibition.--The President shall not issue any order 
     or directive that diminishes, abridges, or alters the right 
     of the United States to use riot control agents--
       (1) in any circumstance not involving international armed 
     conflict; or
       (2) in a defensive military mode to save lives in an 
     international armed conflict, as provided for in Executive 
     Order No. 11850 of April 9, 1975.
       (b) Circumstances Not Involving International Armed 
     Conflict.--The use of riot control agents under subsection 
     (a)(1) includes the use of such agents in--
       (1) peacekeeping or peace support operations;
       (2) humanitarian or disaster relief operations;
       (3) noncombatant evacuation operations;
       (4) counterterrorist operations and the rescue of hostages; 
     and
       (5) law enforcement operations and other internal 
     conflicts.
       (c) Defensive Military Mode.--The use of riot control 
     agents under subsection (a)(2) may include the use of such 
     agents--
       (1) in areas under direct and distinct United States 
     military control, including the use of such agents for the 
     purposes of controlling rioting or escaping enemy prisoners 
     of war;
       (2) to protect personnel or material from civil 
     disturbances, terrorists, and paramilitary organizations;
       (3) to minimize casualties during rescue missions of downed 
     air crews and passengers, prisoners of war, or hostages;
       (4) in situations where combatants and noncombatants are 
     intermingled; and
       (5) in support of base defense, rear area operations, 
     noncombatant evacuation operations, and operations to protect 
     or recover nuclear weapons.
       (d) Sense of Congress.--It is the sense of Congress that 
     international law permits the United States to use 
     herbicides, under regulations applicable to their domestic 
     use, for control of vegetation within United States bases and 
     installations or around their immediate defensive perimeters.
       (e) Authority of the President.--The President shall take 
     all necessary measures, and prescribe such rules and 
     regulations as may be necessary, to ensure that the policy 
     contained in this section is observed by the Armed Forces of 
     the United States.
                                 ______
                                 
      By Mr. CHAFEE (for himself, Mr. Graham, and Mr. Jeffords):
  S. 496. A bill to amend the Internal Revenue Code of 1986 to provide 
a credit against income tax to individuals who rehabilitate historic 
homes or who are the first purchasers of rehabilitated historic homes 
for use as a principal residence; to the Committee on Finance.


               the historic homeownership assistance act

  Mr. CHAFEE. Mr. President, all across America, in the small towns and 
great cities of this country, our heritage as a nation--the physical 
evidence of our past--is at risk. In virtually every corner of this 
land, homes in which grandparents and parents grew up, communities and 
neighborhoods that nurtured vibrant families, schools that were good 
places to learn and churches and synagogues that were filled on days of 
prayer, have suffered the ravages of abandonment and decay.
  In the decade from 1980 to 1990, Chicago lost 41,000 housing units 
through abandonment, Philadelphia 10,000, and

[[Page S2666]]

St. Louis 7,000. The story in our older small communities has been the 
same, and the trend continues. It is important to understand that it is 
not just buildings that we are losing. It is the sense of our past, the 
vitality of our communities, and the shared values of those precious 
places.
  We need not stand hopelessly by as passive witnesses to the loss of 
these irreplaceable historic resources. We can act, and to that end I 
am introducing today the Historic Homeownership Assistance Act along 
with my distinguished colleagues, Senator Graham of Florida and Senator 
Jeffords.
  This legislation is patterned after the existing historic 
rehabilitation investment tax credit. That legislation has been 
enormously successful in stimulating private investment in the 
rehabilitation of buildings of historic importance all across the 
country. Through its use we have been able to save and reuse a rich and 
diverse array of historic buildings: landmarks such as Union Station 
right here in Washington, DC, the Fox River Mills, a mixed use project 
that was once a derelict paper mill in Appleton, WI, and the Rosa True 
School, an eight-unit low- and moderate-income rental project in a 
historic school building in Portland, ME.
  In my own State of Rhode Island, Federal tax incentives stimulated 
the rehabilitation and commercial reuse of more than 300 historic 
properties. The properties saved include the Hotel Manisses on Block 
Island, the former Valley Falls Mills complex in Central Falls, and the 
Honan Block in Woonsocket.
  The legislation that I am introducing builds on the familiar 
structure of the existing tax credit, but with a different focus and 
a more modest scope and cost. It is designed to empower the one major 
constituency that has been barred from using the existing credit--
homeowners. Only those persons who rehabilitate or purchase a newly 
rehabilitated home and occupy it as their principal residence would be 
entitled to this new credit. There would be no passive losses, no tax 
shelters and no syndications under this bill.

  Like the existing investment credit, the bill would provide a credit 
to homeowners equal to 20 percent of the qualified rehabilitation 
expenditures made on an eligible building which is used as a principal 
residence by the owner. Eligible buildings are those individually 
listed on the National Register of Historic Places or on a nationally 
certified State or local historic register, or are contributing 
buildings in national, State or local historic districts. As is the 
case with the existing credit, the rehabilitation work would have to be 
performed in compliance with the Secretary of the Interior's Standards 
for Rehabilitation, although the bill clarifies that such Standards 
should be interpreted in a manner that takes into consideration 
economic and technical feasibility.
  The bill allows lower-income homebuyers, who may not have sufficient 
Federal income tax liability to use a tax credit, to convert the credit 
to mortgage assistance. The legislation would permit such persons to 
receive an Historic Rehabilitation Mortgage Credit Certificate which 
they can use with their bank to obtain a lower interest rate on their 
mortgage or to lower the amount of their downpayment.
  The credit would be available to condominiums and co-ops, as well as 
single-family buildings. If a building is rehabilitated by a developer 
for resale, the credit would pass through to the homeowner.
  One goal of the bill is to provide incentives for middle- and upper-
income families to return to older towns and cities. Therefore, the 
bill does not limit the tax benefits on the basis of income. However, 
it does impose a cap of $50,000 on the amount of credit which may be 
taken for a principal residence.
  The Historic Homeownership Assistance Act will make ownership of a 
rehabilitated older home more affordable for homebuyers of modest 
incomes. It will encourage more affluent families to claim a stake in 
older towns and neighborhoods. It affords fiscally stressed cities and 
towns a way to put abandoned buildings back on the tax rolls, while 
strengthening their income and sales tax bases. It offers developers, 
realtors and homebuilders a new realm of economic opportunity in 
revitalizing decaying buildings.
  In addition to preserving our heritage, extending this credit will 
provide an important supplemental benefit--it will boost the economy. 
Every dollar of Federal investment in historic rehabilitation leverages 
many more from the private sector. Rhode Island, for example, has used 
the credit to leverage 252 million dollars in private investment. This 
investment has created more than 10,000 jobs and 187 million dollars in 
wages.
  The American dream of owning one's own home is a powerful force. This 
bill can help it come true for those who are prepared to make a 
personnel commitment to join in the rescue of our priceless heritage. 
By their actions they can help to revitalize decaying resources of 
historic importance, create jobs and stimulate economic development, 
and restore to our older towns and cities a lost sense of purpose and 
community.
  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. 496

       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 ``Historic Homeownership 
     Assistance Act''.

     SEC. 2. HISTORIC HOMEOWNERSHIP REHABILITATION CREDIT.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     nonrefundable personal credits) is amended by inserting after 
     section 23 the following new section:

     ``SEC. 24. HISTORIC HOMEOWNERSHIP REHABILITATION CREDIT.

       ``(a) General Rule.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     chapter for the taxable year an amount equal to 20 percent of 
     the qualified rehabilitation expenditures made by the 
     taxpayer with respect to a qualified historic home.
       ``(b) Dollar Limitation.--
       ``(1) In general.--The credit allowed by subsection (a) 
     with respect to any residence of a taxpayer shall not exceed 
     $50,000 ($25,000 in the case of a married individual filing a 
     separate return).
       ``(2) Carryforward of credit unused by reason of limitation 
     based on tax liability.--If the credit allowable under 
     subsection (a) for any taxable year exceeds the limitation 
     imposed by section 26(a) for such taxable year reduced by the 
     sum of the credits allowable under this subpart (other than 
     this section), such excess shall be carried to the succeeding 
     taxable year and added to the credit allowable under 
     subsection (a) for such succeeding taxable year.
       ``(c) Qualified Rehabilitation Expenditure.--For purposes 
     of this section:
       ``(1) In general.--The term `qualified rehabilitation 
     expenditure' means any amount properly chargeable to capital 
     account--
       ``(A) in connection with the certified rehabilitation of a 
     qualified historic home, and
       ``(B) for property for which depreciation would be 
     allowable under section 168 if the qualified historic home 
     were used in a trade or business.
       ``(2) Certain expenditures not included.--
       ``(A) Exterior.--Such term shall not include any 
     expenditure in connection with the rehabilitation of a 
     building unless at least 5 percent of the total expenditures 
     made in the rehabilitation process are allocable to the 
     rehabilitation of the exterior of such building.
       ``(B) Other rules to apply.--Rules similar to the rules of 
     clauses (ii) and (iii) of section 47(c)(2)(B) shall apply.
       ``(3) Mixed use or multifamily building.--If only a portion 
     of a building is used as the principal residence of the 
     taxpayer, only qualified rehabilitation expenditures which 
     are properly allocable to such portion shall be taken into 
     account under this section.
       ``(d) Certified Rehabilitation.--For purposes of this 
     section:
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the term `certified rehabilitation' has the 
     meaning given such term by section 47(c)(2)(C).
       ``(2) Factors to be considered in the case of targeted area 
     residences, etc.--
       ``(A) In general.--For purposes of applying section 
     47(c)(2)(C) under this section with respect to the 
     rehabilitation of a building to which this paragraph applies, 
     consideration shall be given to--
       ``(i) the feasibility of preserving existing architectural 
     and design elements of the interior of such building,
       ``(ii) the risk of further deterioration or demolition of 
     such building in the event that certification is denied 
     because of the failure to preserve such interior elements, 
     and
       ``(iii) the effects of such deterioration or demolition on 
     neighboring historic properties.
       ``(B) Buildings to which this paragraph applies.--This 
     paragraph shall apply with respect to any building--

[[Page S2667]]

       ``(i) any part of which is a targeted area residence within 
     the meaning of section 143(j)(1), or
       ``(ii) which is located within an enterprise or empowerment 
     zone,

     but shall not apply with respect to any building which is 
     listed in the National Register.
       ``(3) Approved state program.--The term `certified 
     rehabilitation' includes a certification made by--
       ``(A) a State Historic Preservation Officer who administers 
     a State Historic Preservation Program approved by the 
     Secretary of the Interior pursuant to section 101(b)(1) of 
     the National Historic Preservation Act, or
       ``(B) a local government, certified pursuant to section 
     101(c)(1) of the National Historic Preservation Act and 
     authorized by a State Historic Preservation Officer, or the 
     Secretary of the Interior where there is no approved State 
     program),

     subject to such terms and conditions as may be specified by 
     the Secretary of the Interior for the rehabilitation of 
     buildings within the jurisdiction of such officer (or local 
     government) for purposes of this section.
       ``(e) Definitions and Special Rules.--For purposes of this 
     section:
       ``(1) Qualified historic home.--The term `qualified 
     historic home' means a certified historic structure--
       ``(A) which has been substantially rehabilitated, and
       ``(B) which (or any portion of which)--
       ``(i) is owned by the taxpayer, and
       ``(ii) is used (or will, within a reasonable period, be 
     used) by such taxpayer as his principal residence.
       ``(2) Substantially rehabilitated.--The term `substantially 
     rehabilitated' has the meaning given such term by section 
     47(c)(1)(C); except that, in the case of any building 
     described in subsection (d)(2), clause (i)(I) thereof shall 
     not apply.
       ``(3) Principal residence.--The term `principal residence' 
     has the same meaning as when used in section 1034.
       ``(4) Certified historic structure.--
       ``(A) In general.--The term `certified historic structure' 
     has the meaning given such term by section 47(c)(3).
       ``(B) Certain structures included.--Such term includes any 
     building (and its structural components) which is designated 
     as being of historic significance under a statute of a State 
     or local government, if such statute is certified by the 
     Secretary of the Interior to the Secretary as containing 
     criteria which will substantially achieve the purpose of 
     preserving and rehabilitating buildings of historic 
     significance.
       ``(5) Enterprise or empowerment zone.--The term `enterprise 
     or empowerment zone' means any area designated under section 
     1391 as an enterprise community or an empowerment zone.
       ``(6) Rehabilitation not complete before certification.--A 
     rehabilitation shall not be treated as complete before the 
     date of the certification referred to in subsection (d).
       ``(7) Lessees.--A taxpayer who leases his principal 
     residence shall, for purposes of this section, be treated as 
     the owner thereof if the remaining term of the lease (as of 
     the date determined under regulations prescribed by the 
     Secretary) is not less than such minimum period as the 
     regulations require.
       ``(8) Tenant-stockholder in cooperative housing 
     corporation.--If the taxpayer holds stock as a tenant-
     stockholder (as defined in section 216) in a cooperative 
     housing corporation (as defined in such section), such 
     stockholder shall be treated as owning the house or apartment 
     which the taxpayer is entitled to occupy as such stockholder.
       ``(f) When Expenditures Taken Into Account.--In the case of 
     a building other than a building to which subsection (g) 
     applies, qualified rehabilitation expenditures shall be 
     treated for purposes of this section as made--
       ``(1) on the date the rehabilitation is completed, or
       ``(2) to the extent provided by the Secretary by 
     regulation, when such expenditures are properly chargeable to 
     capital account.

     Regulations under paragraph (2) shall include a rule similar 
     to the rule under section 50(a)(2) (relating to recapture if 
     property ceases to qualify for progress expenditures).
       ``(g) Allowance of Credit for Purchase of Rehabilitated 
     Historic Home.--
       ``(1) In general.--In the case of a qualified purchased 
     historic home, the taxpayer shall be treated as having made 
     (on the date of purchase) the qualified rehabilitation 
     expenditures made by the seller of such home.
       ``(2) Qualified purchased historic home.--For purposes of 
     this subsection, the term `qualified purchased historic home' 
     means any substantially rehabilitated certified historic 
     structure purchased by the taxpayer if--
       ``(A) the taxpayer is the first purchaser of such structure 
     after the date rehabilitation is completed, and the purchase 
     occurs within 5 years after such date,
       ``(B) the structure (or a portion thereof) will, within a 
     reasonable period, be the principal residence of the 
     taxpayer,
       ``(C) no credit was allowed to the seller under this 
     section or section 47 with respect to such rehabilitation, 
     and
       ``(D) the taxpayer is furnished with such information as 
     the Secretary determines is necessary to determine the credit 
     under this subsection.
       ``(h) Historic Rehabilitation Mortgage Credit 
     Certificate.--
       ``(1) In general.--The taxpayer may elect, in lieu of the 
     credit otherwise allowable under this section, to receive a 
     historic rehabilitation mortgage credit certificate. An 
     election under this paragraph shall be made--
       ``(A) in the case of a building to which subsection (g) 
     applies, at the time of purchase, or
       ``(B) in any other case, at the time rehabilitation is 
     completed.
       ``(2) Historic rehabilitation mortgage credit 
     certificate.--For purposes of this subsection, the term 
     `historic rehabilitation mortgage credit certificate' means a 
     certificate--
       ``(A) issued to the taxpayer, in accordance with procedures 
     prescribed by the Secretary, with respect to a certified 
     rehabilitation,
       ``(B) the face amount of which shall be equal to the credit 
     which would (but for this subsection) be allowable under 
     subsection (a) to the taxpayer with respect to such 
     rehabilitation,
       ``(C) which may only be transferred by the taxpayer to a 
     lending institution in connection with a loan--
       ``(i) that is secured by the building with respect to which 
     the credit relates, and
       ``(ii) the proceeds of which may not be used for any 
     purpose other than the acquisition or rehabilitation of such 
     building, and
       ``(D) in exchange for which such lending institution 
     provides the taxpayer--
       ``(i) a reduction in the rate of interest on the loan which 
     results in interest payment reductions which are 
     substantially equivalent on a present value basis to the face 
     amount of such certificate, or
       ``(ii) if the taxpayer so elects with respect to a 
     specified amount of the face amount of such a certificate 
     relating to a building--

       ``(I) which is a targeted area residence within the meaning 
     of section 143(j)(1), or
       ``(II) which is located in an enterprise or empowerment 
     zone,

     a payment which is substantially equivalent to such specified 
     amount to be used to reduce the taxpayer's cost of purchasing 
     the building (and only the remainder of such face amount 
     shall be taken into account under clause (i)).
       ``(3) Use of certificate by lender.--The amount of the 
     credit specified in the certificate shall be allowed to the 
     lender only to offset the regular tax (as defined in section 
     55(c)) of such lender. The lender may carry forward all 
     unused amounts under this subsection until exhausted.
       ``(i) Recapture.--
       ``(1) In general.--If, before the end of the 5-year period 
     beginning on the date on which the rehabilitation of the 
     building is completed (or, if subsection (g) applies, the 
     date of purchase of such building by the taxpayer)--
       ``(A) the taxpayer disposes of such taxpayer's interest in 
     such building, or
       ``(B) such building ceases to be used as the principal 
     residence of the taxpayer,

     the taxpayer's tax imposed by this chapter for the taxable 
     year in which such disposition or cessation occurs shall be 
     increased by the recapture percentage of the credit allowed 
     under this section for all prior taxable years with respect 
     to such rehabilitation.
       ``(2) Recapture percentage.--For purposes of paragraph (1), 
     the recapture percentage shall be determined in accordance 
     with the table under section 50(a)(1)(B), deeming such table 
     to be amended--
       ``(A) by striking `If the property ceases to be investment 
     credit property within--' and inserting `If the disposition 
     or cessation occurs within--', and
       ``(B) in clause (i) by striking `One full year after placed 
     in service' and inserting `One full year after the taxpayer 
     becomes entitled to the credit'.
       ``(j) Basis Adjustments.--For purposes of this subtitle, if 
     a credit is allowed under this section for any expenditure 
     with respect to any property (including any purchase under 
     subsection (g) and any transfer under subsection (h)), the 
     increase in the basis of such property which would (but for 
     this subsection) result from such expenditure shall be 
     reduced by the amount of the credit so allowed.
       ``(k) Processing Fees.--Any State may impose a fee for the 
     processing of applications for the certification of any 
     rehabilitation under this section provided that the amount of 
     such fee is used only to defray expenses associated with the 
     processing of such applications.
       ``(l) Denial of Double Benefit.--No credit shall be allowed 
     under this section for any amount for which credit is allowed 
     under section 47.
       ``(m) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out the purposes 
     of this section, including regulations where less than all of 
     a building is used as a principal residence and where more 
     than 1 taxpayer use the same dwelling unit as their principal 
     residence.''
       (b) Conforming Amendment.--Subsection (a) of section 1016 
     of such Code is amended by striking ``and'' at the end of 
     paragraph (25), by striking the period at the end of 
     paragraph (26) and inserting ``, and'', and by adding at the 
     end the following new item:
       ``(27) to the extent provided in section 24(j).''
       (c) Clerical Amendment.--The table of sections for subpart 
     A of part IV of subchapter A of chapter 1 of such Code is

[[Page S2668]]

     amended by inserting after the item relating to section 23 
     the following new item:

``Sec. 24. Historic homeownership rehabilitation credit.''
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to rehabilitations the physical work 
     on which begins after the date of enactment of this Act.
                                                                    ____


          Summary of the Historic Homeownership Assistance Act

       Purpose. To provide homeownership incentives and 
     opportunities through the rehabilitation of older buildings 
     in historic districts. To stimulate the revival of decaying 
     neighborhoods and communities, and the preservation of 
     historic buildings and districts through homeownership.
       Rate of Credit: Eligible Buildings. The existing Historic 
     Rehabilitation Tax Credit, which provides a credit of 20 
     percent of qualified rehabilitation expenditures to investors 
     in commercial and rental buildings, is extended to homeowners 
     who rehabilitate or purchase a newly-rehabilitated eligible 
     home and occupy it as a principal residence. In the case of 
     buildings rehabilitated by developers and sold to homeowners, 
     the credit is passed through to the home purchaser. Eligible 
     buildings are those listed individually on the National 
     Register of Historic Places or on a nationally certified 
     state or local register, and contributing buildings in 
     national, state or local historic districts.
       Both single-family and multifamily residences, through 
     condominiums and cooperatives, qualify for the credit. In the 
     case of buildings where one section of the structure is 
     slated for residential use and another for commercial use, 
     such as in two- or three-story buildings in downtown areas, 
     purchasers could utilize the historic homeowner tax credit 
     against the rehabilitation expenditures of the residential 
     portion, and the existing commercial rehabilitation tax 
     credit for the remaining portion.
       Maximum Credit: Minimum Expenditures. The amount of the 
     homeownership credit is limited to $50,000 for each principal 
     residence. The amount of qualified rehabilitation 
     expenditures must exceed the greater of $5,000 or the 
     adjusted tax basis of the building (excluding the land) 
     within a 24-month period. For buildings in census tracts 
     targeted as distressed for Mortgage Revenue Bond purposes and 
     those in Enterprise and Empowerment Zones, the minimum 
     expenditure is $5,000. At least five percent of the qualified 
     rehabilitation expenditures must be spent on the exterior of 
     the building.
       Pass-Through of Credit: Carry-Forward: Recapture. In the 
     event that the rehabilitation is performed by a developer, 
     the credit accrues to the homeowner. The credit cannot be 
     used to offset the developer's tax liability, but instead 
     must be passed through to the home purchaser. The entire 
     amount of the credit is available to reduce federal income 
     tax liability, subject to Alternative Minimum Tax 
     limitations. The credit is available in the year in which the 
     expenditures are made by the taxpayer or a rehabilitated 
     property is purchased by the homeowner. Any unused credit 
     would be carried forward until fully exhausted. In the event 
     the taxpayer fails to maintain the home as a principal 
     residence for five years, the credit is subject to recapture.
       No ``Passive Loss''; No Income Limit. The credit is not 
     subject to the ``passive loss'' limitations. Further, since 
     the legislation is intended to promote economic diversity 
     among residents and increase local property, income and sales 
     tax revenues, taxpayers are eligible for the credit without 
     regard to income.
       Standards for Historic Rehabilitation. To qualify for the 
     credit, the rehabilitation must be performed in accordance 
     with the Secretary of the Interior's Standards for 
     Rehabilitation, which guide eligibility of expenditures under 
     the existing commercial rehabilitation tax credit. The intent 
     of the Standards is to assist the long-term preservation of a 
     property's significance through the preservation of historic 
     materials and features. The Standards are to be applied to 
     specific rehabilitation projects in a reasonable manner, 
     taking into consideration economic and technical feasibility. 
     The proposed legislation clarifies this directive.
       State-Level Certifications. As under the existing 
     commercial rehabilitation tax credit program, State Historic 
     Preservation Officers and Certified Local Governments are 
     given the authority to certify the rehabilitation of 
     buildings within their respective jurisdictions. States are 
     given the authority to levy fees for processing applications 
     for certification of the rehabilitation expenditures, 
     provided that the proceeds of such fees are used solely to 
     defray expenses associated with processing the application.
       Historic Rehabilitation Mortgage Credit Certificates. Lower 
     income taxpayers may not have sufficient income tax liability 
     to take full use of the credit. The legislation permits 
     anyone eligible for the income tax credit to convert it into 
     a mortgage credit certificate which could be used either to 
     reduce the interest rate on a home mortgage loan or to lower 
     the down payment required to purchase the property.
       Under this option, the taxpayer transfers the certificate 
     to the mortgage lender in exchange for a reduced interest 
     rate on a home mortgage loan. The mortgage lender then uses 
     the credit to reduce its federal income tax liability, 
     subject to Alternative Minimum Tax limitations. The credit 
     claimed by the mortgage lender is not subject to recapture.
       In many distressed neighborhoods, the cost of 
     rehabilitating a home and bringing it to market significantly 
     exceeds the value at which the property is appraised by the 
     mortgage lender. This gap imposes a significant burden on a 
     potential homeowner because the required downpayment exceeds 
     his or her means. The legislation permits the mortgage credit 
     certificate to be used to reduce the buyer's downpayment, 
     rather than to reduce the interest rate, in order to close 
     this gap. This provision is limited to historic districts 
     which qualify as targeted under the existing Mortgage Revenue 
     Bond program or are located in enterprise or empowerment 
     zones.
       Although the right to receive an Historic Rehabilitation 
     Mortgage Credit Certificate is available to all persons 
     entitled to the tax credit, the certificate may not be used 
     by a person who would be precluded from using the income tax 
     credit because of the Alternative Minimum Tax limitation.

  Mr. GRAHAM. Mr. President, today I join my colleague Senator Chafee 
in support of the Historic Homeownership Assistance Act. This bill 
would spur growth and preservation of historic neighborhoods across the 
country by providing a limited tax credit for qualified rehabilitation 
expenditures to historic homes.
  An understanding of the history of the United States serves as one of 
the cornerstones supporting this great nation. We find American history 
reflected not only in books, films, and stories, but also in physical 
structures, including schools, churches, county courthouses, mills, 
factories, and personal residences.
  The bill that Senator Chafee and I are cosponsoring focuses on the 
preservation of historic residences. The bill will assist Americans who 
want to safeguard, maintain, and reside in these homes which chronicle 
America's past.
  The Historic Homeownership Assistance Act will stimulate 
rehabilitation of historic homes while contributing to the 
revitalization of urban communities. The Federal tax credit provided in 
the legislation is modeled after the existing Federal commercial 
historic rehabilitation tax credit. Since 1981, this commercial tax 
credit has facilitated the preservation of many historic structures 
across this great land. For example in the last two decades, in my home 
State of Florida, $238 million in private capital was invested in over 
325 historic rehabilitation projects. These investments helped preserve 
Ybor City in Tampa and the Springfield Historic District in 
Jacksonville.
  The tax credit, however, has never applied to personal residences. It 
is time to provide an incentive to individuals to restore and preserve 
homes in America's historic communities.
  The Historic Homeownership Assistance Act targets Americans at all 
economic levels. The bill provides lower income Americans with the 
option to elect a Mortgage Credit Certificate in lieu of the tax 
credit. This certificate allows Americans who cannot take advantage of 
the tax credit to reduce the interest rate on their mortgage that 
secures the purchase and rehabilitation of a historic home.
  For example, if a lower-income family were to purchase a $35,000 home 
which included $25,000 worth of qualified rehabilitation expenditures, 
it would be entitled to a $5,000 Historic Rehabilitation Mortgage 
Credit Certificate which could be used to reduce interest payments on 
the mortgage. This provision would enable families to obtain a home and 
preserve historic neighborhoods when they would be unable to do so 
otherwise.
  Mr. President, the time has come for Congress to get serious about 
urban renewal. For too long, we have sat on the sidelines watching idly 
as our citizens slowly abandoned entire homes and neighborhoods in 
urban settings, leaving cities like Miami in Florida and others around 
the nation in financial jeopardy. For example, according to U.S. Census 
data, in the decade from 1980 to 1990, Chicago lost 41,000 housing 
units, Philadelphia 10,000, and St. Louis 7,000. The erosion of a sense 
of community and culture once shared by our urban neighborhoods and 
towns further magnifies the loss.
  By addressing years of neglect and a general decline in investment in 
our older neighborhoods, this bill will empower families and 
individuals with the financial incentives needed to revitalize historic 
housing in our urban communities.
  Recognizing that the States can best administer laws affecting unique 
communities, the act gives power to the

[[Page S2669]]

Secretary of the Interior to work with states to implement a number of 
the provisions.
  The Historic Homeownership Assistance Act does not, however, reflect 
an untried proposal. In addition to the existing commercial historic 
rehabilitation credit, the proposed bill incorporates features from 
several state tax incentives for the preservation of historic homes. 
Colorado, Maryland, New Mexico, Rhode Island, Wisconsin, and Utah have 
pioneered their own successful versions of a historic preservation tax 
incentive for homeownership.
  At the Federal level, this legislation would promote historic home 
preservation nationwide, allowing future generations of Americans to 
visit and reside in homes that tell the unique history of our 
communities. The Historic Homeownership Assistance Act will offer 
enormous potential for saving historic homes and bringing entire 
neighborhoods back to life.
  I urge my colleagues to support this bill for the preservation of 
history.
                                 ______
                                 
      By Mr. COVERDELL (for himself and Mr. Faircloth):
  S. 497. A bill to amend the National Labor Relations Act and the 
Railway Labor Act to repeal the provisions of the Acts that require 
employees to pay union dues or fees as a condition of employment; to 
the Committee on Labor and Human Resources.


                 the national right to work act of 1997

  Mr. COVERDELL. Mr. President, I am pleased to introduce the 
Coverdell-Faircloth National Right to Work Act of 1997. As many of you 
know, my esteemed colleague from North Carolina, Senator Lauch 
Faircloth, introduced this language last Congress and I commend Senator 
Faircloth for his outstanding leadership on this issue.
  This bill does not add a single word to Federal law. Rather, it would 
repeal those sections of the National Labor Relations Act and Railway 
Labor Act that authorize the imposition of forced-dues contracts on 
working Americans. I believe that every worker must have the right to 
join or support a labor union. This bill protects that right. But no 
worker should ever be forced to join a union.
  I am happy to say that my own state, Georgia, is among one of the 21 
states that is a ``Right to Work'' state and has been since 1947. 
According to U.S. News and World Report, 7 of the strongest 10 State 
economies in the nation have Right to Work laws. Workers who have the 
freedom to choose whether or not to join a union have a higher standard 
of living than their counterparts in non-Right to Work States. 
According to Dr. James Bennett, an economist with the highly respected 
economics department at George Mason University, on average, urban 
families in Right to Work States have approximately $2,852 more annual 
purchasing power than urban families in non-Right to Work States when 
the lower taxes, housing and food costs of Right to Work States are 
taken into consideration.
  According to a poll by the respected Marketing Research Institute, 77 
percent of Americans support Right to Work, and over 50 percent of 
union households believe workers should have the right to choose 
whether or not to join or pay dues to a labor union. That should be no 
surprise. Because what this is all about is freedom. And right to work 
expands every working American's personal freedom.
  Mr. President, I urge my colleagues to support this legislation that 
expands the freedom of hard working Americans and gives them the 
freedom to choose whether to accept or reject union representation and 
union dues without facing coercion, violence, and work-place harassment 
by union officials.
  Mr. FAIRCLOTH. Mr. President, today I join with my good friend, 
Senator Coverdell to introduce the National Right to Work Act of 1997. 
This is the same legislation that I introduced during the 104th 
Congress, and I am delighted to have Senator Coverdell as a partner in 
this effort during the 105th Congress.
  As I have said before, and continue to believe strongly, compulsory 
unionism violates the fundamental principle of individual liberty--the 
very principle upon which this Nation was founded. Compulsory unionism 
basically says that workers cannot and should not decide for themselves 
what is in their best interest. I can think of nothing more offensive 
to the core American principles of liberty and freedom.
  The National Right to Work Act will address this most fundamental 
problem of federal labor policy: does America believe that working men 
and women should be forced, as a condition of employment, to pay dues 
or fees to a labor union? I believe, as does my colleague, Senator 
Coverdell and many others, that no one should be forced to pay union 
dues just to get or keep a job.
  The National Right to Work Act would not change a single word of 
Federal law. Rather, the measure would repeal those sections of the 
National Labor Relations Act and Railway Labor Act that authorize the 
imposition of forced-dues contracts on working Americans. I believe 
that every worker must have the right to join or support a labor union. 
This bill protects that right. However, no worker should be forced to 
join a union.
  In 1965, Senator Everett Dirksen said of compulsory unionism, ``Is 
there a more fundamental right than to make a living for one's family 
without being compelled to join a labor organization?'' I could not 
agree more.
  Mr. President, again let me say that I am pleased to introduce today 
with Senator Coverdell the National Right to Work Act of 1977.
                                 ______
                                 
      By Mr. CHAFEE (for himself and Mr. Moynihan):
  S. 498. A bill to amend the Internal Revenue Code of 1986 to allow an 
employee to elect to receive taxable cash compensation on lieu of 
nontaxable parking benefits, and for other purposes; to the Committee 
on Finance.


                    the commuter choice act of 1997

  Mr. CHAFEE. Mr. President, one of the greatest challenges facing 
metropolitan areas in our Nation is finding a way to reduce traffic 
congestion. Commuters in cities across the country spend countless 
hours on the road traveling to and from work. This traffic places 
tremendous pressure on our highway infrastructure and causes monumental 
environmental problems. More than 100 cities fail to meet today's clean 
air standards. The best way to clean up our air is to reduce the number 
of automobiles which are driven on a daily basis.
  Unfortunately, our current tax laws actually encourage commuters to 
travel to work in single occupant automobiles. Today, employers can 
provide parking to their employees as a tax-free fringe benefit. As 
part of the Energy Policy Act of 1992, the value of parking that 
qualifies for this benefit is limited to $170 per month. By comparison, 
tax-free transit or van-pool benefits are limited to only $65 per 
month.
  There is another aspect of this benefit that makes the tax-free 
parking an even greater incentive for employees to drive to work. The 
fringe benefit must be offered by employers on a take-it-or-leave-it 
basis. In other words, the employee has the option of accepting the 
employer-paid parking or nothing at all. The tax-exempt status of the 
employer-provided parking is lost if employees are offered a choice 
between the parking fringe benefit and taxable salary.
  Let me illustrate the problem this creates. Suppose an employer has 
two employees, Sally and Jim. Under current law, the employer can pay 
for a parking space at a garage next door. This fringe benefit will not 
be taxable to Sally and Jim so long as the cost does not exceed $170 
per month. But, let's assume that Sally would prefer to receive cash 
instead of a parking space, because she can commute to work with her 
husband or take public transportation. The way the law is currently 
written, Sally's employer cannot offer her cash instead of the parking 
fringe benefit, because it would cause Jim's parking fringe benefit to 
become taxable.
  The Commuter Choice Act of 1997, which I am introducing today along 
with my colleague Senator Moynihan, corrects this bias in the Tax Code 
by allowing employers to offer their employees the choice of tax-free 
parking or taxable cash compensation. This proposal is completely 
voluntary. Employers are not required to offer cash in lieu of parking. 
Furthermore, it has absolutely no affect on employees wishing to 
continue receiving tax-free parking. That fringe benefit would remain 
exempt from income and payroll taxes. However, my proposal would

[[Page S2670]]

allow employees not interested in the parking fringe benefit to opt 
instead for taxable cash compensation.

  Intuitively, I believe Voluntary Cash Out will have positive revenue 
consequences for the Federal Government. Some individuals who currently 
receive tax-free parking will instead opt for taxable cash 
compensation. For example, trading in a parking space in many cities 
could be worth almost $2,000 in pretax salary annually, a powerful 
incentive to consider alternative ways of getting to work. An 
overwhelming majority of employees receive tax-free parking from their 
employers--95 percent who drive to work, according to the National 
Personal Transportation Survey. So, even if only a small portion of 
this population chooses the taxable cash it should lead to a 
substantial revenue windfall.
  In 1992, the State of California enacted legislation that required 
employers with 50 or more employees to offer cash in lieu of parking if 
the employer subsidized commuter parking. A recent study of eight 
employers who complied with this law provides some evidence of how 
businesses and their employees might react to Commuter Choice. For the 
nearly 1,700 employees of the eight firms, the solo driver share fell 
from 76 to 63 percent; to carpool share increased from 14 to 23 
percent. More importantly, because many employees voluntarily chose 
taxable cash over tax-exempt parking, State and Federal income tax 
revenues increased by $56 per employee per year.
  Finally, employer interest in programs like Commuter Choice will 
increase as pressure builds to reduce traffic congestion and air 
pollution in our Nation's cities. Many urban areas that are in 
nonattainment for national air quality standards have incorporated 
employee commute option programs as part of their State implementation 
plans. These programs are hampered, however, by the current tax rules, 
which prohibit employees from trading in tax-free parking for cash and 
utilizing alternative commute options. The Commuter Choice Act removes 
that prohibition.
  I encourage my colleagues to cosponsor this legislation, which offers 
greater flexibility to employers and employees, and which will have a 
substantial positive effect on our air quality.
  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. 498

       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 ``Commuter Choice Act of 
     1997''.

     SEC. 2. ELECTION TO RECEIVE TAXABLE CASH COMPENSATION IN LIEU 
                   OF NONTAXABLE PARKING BENEFITS.

       (a) In General.--Section 132(f)(4) of the Internal Revenue 
     Code of 1986 (relating to benefits not in lieu of 
     compensation) is amended by adding at the end the following 
     new sentence: ``This paragraph shall not apply to any 
     qualified parking provided in lieu of compensation which 
     otherwise would have been includible in gross income of the 
     employee.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to qualified parking provided after December 31, 
     1997.
                                 ______
                                 
      By Mr. CHAFEE (for himself, Mr. Baucus, and Mr. Gregg):
  S. 499. A bill to amend the Internal Revenue Code of 1986 to provide 
an election to exclude from the gross estate of a decedent the value of 
certain land subject to a qualified conservation easement, and to make 
technical changes to alternative valuation rules; to the Committee on 
Finance.


           the american farm and ranch protection act of 1997

  Mr. CHAFEE. Mr. President, a serious environmental problem facing the 
country today is the loss of open space to development. All across the 
country, farms, ranches, forests, and wetlands are forced to give way 
to the pressures for new office buildings, shopping malls, and housing 
developments.
  America is losing over 4 square miles of land to development every 
day. In Rhode Island, over 11 thousand acres of farmland have been lost 
to development since 1974. In many instances, this is simply the 
natural outgrowth of urbanization of our society. Other times it is the 
direct result of improper planning at the State and local levels.
  But frequently, the pressure comes from the need to raise funds to 
pay estate taxes. For those families where undeveloped land represents 
a significant portion of the estate's total value, the need to pay the 
tax creates powerful pressure to develop or sell off part or all of the 
land or to liquidate the timber resources of the land. Because land is 
appraised by the Internal Revenue Service according to its highest and 
best use, and such use is often its development value, the effect of 
the tax is to make retention of undeveloped land impossible.
  In addition, our current estate tax policy results in complicated 
valuation disputes between the donor's estate and the Internal Revenue 
Service. In many cases, the additional costs incurred as a result of 
these disagreements cause a potential donor of a conservation easement 
to decide not to make the contribution.
  These open spaces improve the quality of life for Americans 
throughout this great Nation and provide important habitat for fish and 
wildlife. The question is how do we conserve our most valuable resource 
during this time of significant budget constraints.
  Mr. President, I think we need to restructure the Nation's estate tax 
laws to remove the disincentive for private property owners to conserve 
environmentally significant land. The American Farm and Ranch 
Protection Act, which I am introducing today along with Senators Baucus 
and Gregg, will help to achieve this goal by providing an exemption 
from the estate tax for the value of land that is subject to a 
qualified, permanent conservation easement.
  This bill is similar to legislation that we introduced during the 
104th Congress and was included in the Balanced Budget Act of 1995. It 
excludes land subject to a conservation easement from the estate and 
gift taxes. Development rights retained by the family--most frequently 
the ability to use the property for a commercial purpose--remain 
subject to the estate tax.
  In order to target the incentives under this bill to those areas that 
are truly at risk for development, the bill is limited to land that 
falls within a 50-mile radius of a metropolitan area, a national park 
or a national wilderness area, or an urban national forest.
  Conservation easements, which are entirely voluntary, are agreements 
negotiated by landowners in which a restriction upon the future use of 
land is imposed in order to conserve those aspects of the land that are 
publicly significant. To qualify for the estate tax exemption under 
this bill, such easements must be perpetual and must be made to 
preserve open space, to protect the natural habitat of fish, wildlife, 
or plants, to meet a governmental conservation policy, or to preserve a 
historically important land area.
  I urge my colleagues to join me in this effort to save 
environmentally sensitive open spaces.
  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. 499

       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 ``American Farm and Ranch 
     Protection Act of 1997''.

     SEC. 2. TREATMENT OF LAND SUBJECT TO A QUALIFIED CONSERVATION 
                   EASEMENT.

       (a) Estate Tax With Respect to Land Subject to a Qualified 
     Conservation Easement.--Section 2031 of the Internal Revenue 
     Code of 1986 (relating to the definition of gross estate) is 
     amended by redesignating subsection (c) as subsection (d) and 
     by inserting after subsection (b) the following new 
     subsection:
       ``(c) Estate Tax With Respect to Land Subject to a 
     Qualified Conservation Easement.--
       ``(1) In general.--If the executor makes the election 
     described in paragraph (4), then, except as otherwise 
     provided in this subsection, there shall be excluded from the 
     gross estate the value of land subject to a qualified 
     conservation easement.
       ``(2) Treatment of certain indebtedness.--
       ``(A) In general.--The exclusion provided in paragraph (1) 
     shall not apply to the extent that the land is debt-financed 
     property.
       ``(B) Definitions.--For purposes of this paragraph--
       ``(i) Debt-financed property.--The term `debt-financed 
     property' means any property

[[Page S2671]]

     with respect to which there is an acquisition indebtedness 
     (as defined in clause (ii)) on the date of the decedent's 
     death.
       ``(ii) Acquisition indebtedness.--The term `acquisition 
     indebtedness' means, with respect to debt-financed property, 
     the unpaid amount of--

       ``(I) the indebtedness incurred by the donor in acquiring 
     such property,
       ``(II) the indebtedness incurred before the acquisition of 
     such property if such indebtedness would not have been 
     incurred but for such acquisition.
       ``(III) the indebtedness incurred after the acquisition of 
     such property if such indebtedness would not have been 
     incurred but for such acquisition and the incurrence of such 
     indebtedness was reasonably foreseeable at the time of such 
     acquisition, except that indebtedness incurred after the 
     acquisition of such property is not acquisition indebtedness 
     if incurred to carry on activities directly related to 
     farming, ranching, forestry, horticulture, or viticulture, 
     and
       ``(IV) the extension, renewal, or refinancing of an 
     acquisition indebtedness.

       ``(3) Treatment of retained development right.--
       ``(A) In general.--Paragraph (1) shall not apply to the 
     value of any development right retained by the donor in the 
     conveyance of a qualified conservation easement.
       ``(B) Termination of retained development right.--If every 
     person in being who has an interest (whether or not in 
     possession) in such land shall execute an agreement to 
     extinguish permanently some or all of any development rights 
     (as defined in subparagraph (D)) retained by the donor on or 
     before the date for filing the return of the tax imposed by 
     section 2001, then any tax imposed by section 2001 shall be 
     reduced accordingly. Such agreement shall be filed with the 
     return of the tax imposed by section 2001. The agreement 
     shall be in such form as the Secretary shall prescribe.
       ``(C) Additional tax.--Failure to implement the agreement 
     described in subparagraph (B) within 2 years of the 
     decedent's death shall result in the imposition of an 
     additional tax in the amount of tax which would have been due 
     on the retained development rights subject to such agreement. 
     Such additional tax shall be due and payable on the last day 
     of the 6th month following the end of the 2-year period.
       ``(D) Development right defined.--For purposes of this 
     paragraph, the term `development right' means the right to 
     establish or use any structure and the land immediately 
     surrounding it for sale (other than the sale of the structure 
     as part of a sale of the entire tract of land subject to the 
     qualified conservation easement), or other commercial purpose 
     which is not subordinate to and directly supportive of the 
     activity of farming, forestry, ranching, horticulture, or 
     viticulture conducted on land subject to the qualified 
     conservation easement in which such right is retained.
       ``(4) Election.--The election under this subsection shall 
     be made on the return of the tax imposed by section 2001. 
     Such an election, once made, shall be irrevocable.
       ``(5) Calculation of estate tax due.--An executor making 
     the election described in paragraph (4) shall, for purposes 
     of calculating the amount of tax imposed by section 2001, 
     include the value of any development right (as defined in 
     paragraph (3)) retained by the donor in the conveyance of 
     such qualified conservation easement. The computation of tax 
     on any retained development right prescribed in this 
     paragraph shall be done in such manner and on such forms as 
     the Secretary shall prescribe.
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Land subject to a qualified conservation easement.--
     The term `land subject to a qualified conservation easement' 
     means land--
       ``(i) which is located in or within 50 miles of an area 
     which, on the date of the decedent's death--

       ``(I) is a metropolitan area (as defined by the Office of 
     Management and Budget),
       ``(II) is a National Park or wilderness area designated as 
     part of the National Wilderness Preservation System (unless 
     it is determined by the Secretary that land in or within 50 
     miles of such a park or wilderness area is not under 
     significant development pressure), or
       ``(III) is an Urban National Forest (as designated by the 
     Forest Service),

       ``(ii) which was owned by the decedent or a member of the 
     decedent's family at all times during the 3-year period 
     ending on the date of the decedent's death, and
       ``(iii) with respect to which a qualified conservation 
     easement is or has been made by the decedent or a member of 
     the decedent's family.
       ``(B) Qualified conservation easement.--The term `qualified 
     conservation easement' means a qualified conservation 
     contribution (as defined in section 170(h)(1)) of a qualified 
     real property interest (as defined in section 170(h)(2)(C)), 
     except that for this purpose the term `qualified real 
     property interest' shall not include any structure or 
     building constituting `a certified historic structure' as 
     defined in section 170(h)(4)(B), and the restriction on the 
     use of such interest described in section 170(h)(2)(C) shall 
     include a prohibition on commercial recreational activity, 
     except that the leasing of fishing and hunting rights shall 
     not be considered commercial recreational activity when such 
     leasing is subordinate to the activities of farming, 
     ranching, forestry, horticulture or viticulture.
       ``(C) Member of family.--The term `member of the decedent's 
     family' means any member of the family (as defined in section 
     2032A(e)(2)) of the decedent.''
       ``(7) Application of this section to interests in 
     partnerships, corporations, and trusts.--The Secretary shall 
     prescribe regulations applying this section to an interest in 
     a partnership, corporation, or trust which, with respect to 
     the decedent, is an interest in a closely held business 
     (within the meaning of paragraph (1) of section 6166(b)).''
       (b) Carryover Basis.--Section 1014(a) of such Code 
     (relating to basis of property acquired from a decedent) is 
     amended by striking the period at the end of paragraph (3) 
     and inserting ``, or'' and by adding after paragraph (3) the 
     following new paragraph:
       ``(4) to the extent of the applicability of the exclusion 
     described in section 2031(c), the basis in the hands of the 
     decedent.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     1996.

     SEC. 3. GIFT TAX ON LAND SUBJECT TO A QUALIFIED CONSERVATION 
                   EASEMENT.

       (a) Gift Tax With Respect to Land Subject to a Qualified 
     Conservation Easement.--Section 2503 of the Internal Revenue 
     Code of 1986 (relating to taxable gifts) is amended by adding 
     at the end the following new subsection:
       ``(h) Gift Tax With Respect to Land Subject to a Qualified 
     Conservation Easement.--The transfer by gift of land subject 
     to a qualified conservation easement shall not be treated as 
     a transfer of property by gift for purposes of this chapter. 
     For purposes of this subsection, the term `land subject to a 
     qualified conservation easement' has the meaning given to 
     such term by section 2031(c); except that references to the 
     decedent shall be treated as references to the donor and 
     references to the date of the decedent's death shall be 
     treated as references to the date of the transfer by the 
     donor.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to gifts made after December 31, 1996.

     SEC. 4. QUALIFIED CONSERVATION CONTRIBUTION IS NOT A 
                   DISPOSITION.

       (a) Qualified Conservation Contribution Is Not a 
     Disposition.--Subsection (c) of section 2032A of the Internal 
     Revenue Code of 1986 (relating to alternative valuation 
     method) is amended by adding at the end the following new 
     paragraphs:
       ``(8) Qualified conservation contribution is not a 
     disposition.--A qualified conservation contribution (as 
     defined in section 170(h)) by gift or otherwise shall not be 
     deemed a disposition under subsection (c)(1)(A).
       ``(9) Exception for real property is land subject to a 
     qualified conservation easement.--If qualified real property 
     is land subject to a qualified conservation easement (as 
     defined in section 2031(c)), the preceding paragraphs of this 
     subsection shall not apply.''
       (b) Land Subject to a Qualified Conservation Easement Is 
     Not Disqualified.--Subsection (b) of section 2032A of such 
     Code (relating to alternative valuation method) is amended by 
     adding at the end the following paragraph:
       ``(E) If property is otherwise qualified real property, the 
     fact that it is land subject to a qualified conservation 
     easement (as defined in section 2031(c)) shall not disqualify 
     it under this section.''
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to contributions made, and easements 
     granted, after December 31, 1996.

     SEC. 5. QUALIFIED CONSERVATION CONTRIBUTION WHERE SURFACE AND 
                   MINERAL RIGHTS ARE SEPARATED.

       (a) In General.--Section 170(h)(5)(B)(ii) of the Internal 
     Revenue Code of 1986 (relating to special rule) is amended to 
     read as follows:
       ``(ii) Special rule.--With respect to any contribution of 
     property in which the ownership of the surface estate and 
     mineral interests has been and remains separated, 
     subparagraph (A) shall be treated as met if the probability 
     of surface mining occurring on such property is so remote as 
     to be negligible.''
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to contributions made after December 
     31, 1992, in taxable years ending after such date.
                                                                    ____


     Summary of the American Farm and Ranch Protection Act of 1997

       The American Farm and Ranch Protection Act protects family 
     lands and encourages the voluntary conservation of farmland, 
     ranches, forest land, wetlands, wildlife habitat, open space 
     and other environmentally sensitive property. It enables 
     farmers and ranchers to continue to own and work their land 
     by eliminating the estate and gift tax burden that threatens 
     the current generation of owners. The bill does this in the 
     following ways:
       By excluding from estate and gift taxes the value of land 
     on which a qualified conservation easement has been granted 
     if the land is located in or within a 50-mile radius of a 
     metropolitan area, a National Park, or a wilderness area that 
     is part of the National Wilderness Area System, or an Urban 
     National Forest; and,
       By clarifying that land subject to a qualified conservation 
     easement can also qualify for special use valuation under 
     Code section 2032A.

[[Page S2672]]

       The bill also contains a number of safeguards to ensure 
     that the benefits of the exclusion are not abused. These 
     safeguards include the following:
       The easement must be perpetual and meet the requirements of 
     Code Section 170(h), governing deductions for charitable 
     contributions of easements;
       Easements retaining the right to develop the property for 
     commercial recreational use would not be eligible, while 
     other retained development rights would be taxed;
       Land excluded from the estate tax would receive a 
     carryover, rather than stepped-up, basis for purposes of 
     calculating gain on a subsequent sale;
       The land must have been owned by the decedent or a member 
     of the decedent's family for at least three years immediately 
     prior to the decedent's death; and,
       The easement must have been donated by the decedent or a 
     member of the decedent's family.
       Under Section 170(h) easements will qualify only if they 
     are made to a federal, state or local governmental unit or 
     certain non-profit groups. In addition, they must be made: To 
     preserve land areas for outdoor recreation by the general 
     public; to protect the natural habitat of fish, wildlife, or 
     plants; or, to preserve open space (including farmland and 
     forest land).
       The bill is effective for decedents dying, or gifts made, 
     after December 31, 1996.

  Mr. BAUCUS. Mr. President, I am very pleased to join my colleague 
Senator Chafee in introducing the American Farm and Ranch Protection 
Act today. This bill represents a bipartisan effort to help protect the 
open lands of our great country.
  Montana is know as Big Sky country for a reason, our expansive open 
areas dedicated to farming, ranching, and forestry rather than building 
and development. Our open lands represent a way of life in Montana, 
they are part of our environmental and cultural heritage. And they are 
rapidly disappearing as ranches and farms make way for houses and 
building complexes.
  America is losing over 4 square miles of land to development every 
day. In Montana alone, since 1987 over 560,000 acres of farmland have 
been taken out of farm use. Since 1974 the number of acres of land 
taken our of farm use exceeds 2.5 million.
  Frequently, the pressure to abandon the farm use of land comes from 
the need to raise funds to pay estate taxes. For those families where 
undeveloped land represents a significant portion of the estate's total 
value, often the heirs must develop or sell off part or all of the land 
merely in order to pay the tax. Because land is typically appraised by 
the Internal Revenue Service according to its highest and best use, 
which usually assumes development on the property, retention of 
undeveloped land is very difficult.
  I have attempted to resolve this problem through changes in the 
estate tax itself by my sponsorship of the bipartisan Estate Tax Relief 
for the American Family Act of 1997. That bill will make it easier for 
all family-owned businesses, including farms and ranches, to be passed 
on to succeeding generations. At the same time, however, I believe it 
is important to provide an incentive for the permanent preservation of 
environmentally significant land, so that our legacy to our children 
will include Montana's open lands. The American Farm and Ranch 
Protection Act, which Senator Chafee and I are introducing today, will 
help to achieve this goal by providing an exemption from the estate tax 
for the value of land that is subject to a qualified, permanent 
conservation easement.
  Conservation easements, which are entirely voluntary, are agreements 
negotiated by landowners in which a restriction upon the future use of 
land is imposed in order to conserve those aspects of the land that are 
publicly significant. To qualify for the estate tax exemption under 
this bill, the easements must be perpetual and must be made to preserve 
open space, to protect the natural habitat of fish, wildlife or plants, 
to meet a government conservation policy, or to preserve a important 
historical heritage area.
  Title 5 of this bill represents an effort to clarify an area of the 
law that is of particular importance in Montana. Under current law, 
when mineral rights have been severed from the surface rights in a 
piece of property, and a qualified conservation easement is created by 
the owner of the surface rights for the benefit of a nonprofit entity, 
that owner is unable to take a charitable deduction unless two 
conditions are met: the probability of surface mining occurring on the 
property must be so remote as to be negligible, and the severance of 
the mineral rights must have occurred before June 13, 1976. In Montana, 
severance of mineral rights for many properties occurred many 
generations earlier, and they have often been disbursed to farflung 
relatives in very small portions. So the probability that mining will 
occur is, indeed, very remote. The Internal Revenue Service, however, 
has asserted that some uncertainty exists about the congressional 
intent behind the term ``ownership of the surface estate and mineral 
interest first separated after June 12, 1976.''
  I was the original authority of the language in question, and I have 
communicated with the IRS regarding my intention when the language was 
drafted. However, IRS has been unwilling to issue a favorable letter 
ruling which would clarify this issue, and as a consequence, it is 
impossible for many Western landowners to make voluntary charitable 
contributions of conservation easements in order to protect important 
Western land. In light of the confusion that this date has caused, and 
because it has no policy justification, our legislation would eliminate 
the 1976 date from the statute.
  I believe this bill can be an important tool for America's farm and 
ranch families to utilize in preserving their homesteads. At the same 
time, it makes a significant contribution to the larger public good of 
conserving America's increasingly threatened rural lands. I urge my 
colleagues to join on the bill as cosponsors, and encourage the 
administration to support the legislation.
                                 ______
                                 
      By Mrs. BOXER (for herself and Mrs. Feinstein):
  S. 500. A bill to authorize emergency appropriations for cleanup and 
repair of damages to facilities of Yosemite National Park and other 
California national parks caused by heavy rains and flooding in 
December 1996 and January 1997, and for other purposes; to the 
Committee on Energy and Natural Resources.


        THE YOSEMITE EMERGENCY RESTORATION AND CONSTRUCTION ACT

  Mrs. BOXER. Mr. President, I am today introducing a bill that will 
authorize emergency appropriations for cleanup and repair of damages to 
facilities of Yosemite National Park and other National Park Service 
areas in California caused by heavy rains and flooding in December 1996 
and January 1997.
  I expect most of the issues regarding emergency cleanup and repair 
due to floods in California to be addressed through the appropriations 
process. I do not therefore expect this bill to be taken up by the 
appropriate Senate committee and passed by the Senate. The primary 
purpose of introducing this bill is to set a benchmark for recovery and 
cleanup efforts at Yosemite National Park.
  My bill takes several steps beyond the bill that was introduced last 
month by Congressman Doolittle and Radanovich:
  First, it authorizes emergency funding. Second, it authorizes a 
specific amount--$200 million in emergency funds in fiscal year 1997. 
Third, it specifies that funds shall only be spent in a manner that is 
consistent with the Yosemite general management plan, the concession 
services plan, and when adopted, the Yosemite Valley housing plan, and 
the valley implementation plan. Fourth, it specifies that funds spent 
on repair and rebuilding of concessions facilities shall be recovered 
by the Secretary of the Interior to the greatest extent practicable 
according to the Department of the Interior's contract with the 
concessioner. Fifth, it authorizes emergency grants to satellite 
communities around Yosemite to provide mass transit visitor 
transportation into the park during repair and restoration activities 
on access roads. Sixth, it authorizes emergency appropriations for 
other California parks that suffered flood damage including Redwood 
National Park, Sequoia-Kings Canyon National Park, and others. Seventh, 
it authorizes $7 million to be appropriated in fiscal year 1998 and 
such sums as may be necessary for each fiscal year thereafter for a 
mass transit system for Yosemite.
  Mr. President, the primary goal of the emergency restoration and 
construction activities authorized in this bill is to reopen Yosemite 
National

[[Page S2673]]

Park and restore services to Park visitors as quickly and safely as 
possible.
  The importance of emergency funding for Yosemite cannot be 
overstated. It is a unique national treasure, recognized all over the 
world for its spectacular natural beauty. Over 1.4 million people visit 
the park every year including tens of thousands of international 
visitors who travel to California for the sole purpose of staying in 
the park to experience nature. John Muir--one of our nation's founding 
leaders of environmental conservation--first encountered the majestic 
Yosemite Valley in 1864 and immediately realized the importance of 
preserving its natural wonders. Muir's foresight and passion resulted 
in the establishment of Yosemite National Park in October 1890. At its 
onset, the park included 60,000 acres miles of scenic wild lands. 
Today, some 106 years later, the park embraces over 761,236 acres of 
granite peaks, broad meadows, glacially carved domes, giant sequoias, 
secluded tarns, and breathtaking waterfalls.

  This winter, tropical storms with heavy rain caused serious flooding 
in the park. Yosemite's major rivers and tributaries flooded many park 
areas and caused severe damage to infrastructure. Over 350 damage 
assessments have been completed by engineers, architects, resource 
specialists, and other technical experts. Their first damage assessment 
report shows serious damage to the four main routes leading into the 
park, major electrical and sewer systems, 224 units of employee 
housing, over 500 guest lodging units, over 350 campsites, 17 
restoration projects, and over 10 archeological sites.
  According to the National Park Service, full recovery will take 
years. We now begin the recovery period during which, interim solutions 
will be put in place such as temporary housing and lodging while 
permanent construction is being completed.
  The Yosemite Emergency Restoration and Reconstruction Act would 
authorize $200 million in emergency funds to be appropriated to the 
Secretary of Interior for cleanup and repair of flood damages to the 
facilities of Yosemite National Park caused by heavy rains and flooding 
in December 1996 and January 1997, and other national parks in the 
State of California. The funds are authorized to remain available until 
expended.
  The authorization requires that any emergency funds spent at Yosemite 
be consistent with the Yosemite General Management Plan, the Concession 
Services Plan, and when adopted, the Yosemite Valley Housing Plan, and 
the Valley Implementation Plan.
  Funds are authorized to be spent on repair, restoration, and 
relocation, where appropriate, of infrastructure vital to Yosemite 
National Park operations, including but not limited to roads, trails, 
utilities, buildings, grounds--including campgrounds--natural 
resources, cultural resources, and lost and damaged property, both 
within the park boundaries and at the El Portal administrative site 
servicing the park.
  Also, funds are authorized to repair and relocation of park employee 
housing and the Resource Management Office; repair, maintenance, and 
opening of Tioga Pass Road within the boundaries of the park; and 
repair and expeditious opening of highways 120, 140, and 41 within the 
boundaries of the park.
  The bill requires that funds spent on repair and relocation of 
concession-operated rental cabins, motel rooms, rental structures, and 
concession employee housing and facilities be recovered by the 
Department of the Interior to the greatest extent practicable, within 
the provisions of the concession contract between the Department of the 
Interior and the Yosemite Concession Services.
  Mr. President, a key aspect to the bill is the authorization of $2.5 
million in emergency grants to satellite communities around Yosemite 
National Park for the purpose of providing mass transit visitor 
transportation into the park during repair and restoration activities 
on access roads to the park.
  Other California parks suffered flood damage. My bill would authorize 
emergency funds for Redwood National Park, Sequoia-Kings Canyon 
National Park, Lassen Volcanic National Park, Whiskeytown National 
Recreation Area, Devils Postpile National Monument, and Lava Beds 
National Monument.
  Last, Mr. President, my bill authorizes $7 million to be appropriated 
in fiscal year 1998 and such sums as may be necessary for each fiscal 
year thereafter to the Secretary of Interior for the purpose of helping 
establish a mass transit system for Yosemite National Park--
specifically for the purchase of electric buses and alternative-fueled 
buses.
  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. 500

       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 ``Yosemite Emergency 
     Restoration and Construction Act of 1997''.

     SEC. 2. AUTHORIZATION OF EMERGENCY APPROPRIATIONS FOR CLEANUP 
                   AND REPAIR OF YOSEMITE NATIONAL PARK.

       (a) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $200,000,000 for 
     fiscal year 1997, to remain available until expended.
       (b) Use of Funds.--
       (1) In general.--The Secretary of the Interior (referred to 
     in this Act as the ``Secretary'') shall use amounts made 
     available under subsection (a) for cleanup and repair of 
     flood damage to the facilities of Yosemite National Park and 
     other national parks in the State of California caused by 
     heavy rains and flooding in December 1996 and January 1997.
       (2) Included activities.--Activities by the Secretary under 
     paragraph (1) shall include--
       (A) repair, restoration, and, if appropriate, relocation of 
     infrastructure vital to operations at Yosemite National Park, 
     including roads, trails, utilities, buildings, grounds 
     (including campgrounds), natural resources, cultural 
     resources, and lost and damaged property in the park and at 
     the El Portal administrative site servicing the park;
       (B) repair and, if appropriate, relocation of Yosemite 
     National Park employee housing and the Resource Management 
     Office;
       (C) repair and, if appropriate, relocation of concession-
     operated rental cabins, motel rooms, rental structures, and 
     concession employee housing and facilities;
       (D) repair, maintenance, and opening of Tioga Pass Road in 
     Yosemite National Park;
       (E) repair and expeditious opening of Highways 120, 140, 
     and 41 in Yosemite National Park;
       (F) any other repair and restoration that is necessary for 
     the expeditious and complete opening of Yosemite National 
     Park;
       (G) making emergency grants to satellite communities around 
     Yosemite National Park to provide mass transit visitor 
     transportation into the park during repair and restoration 
     activities on access roads to the park; and
       (H) repair and restoration of damage caused by heavy rains 
     and flooding in December 1996 and January 1997 at Redwood 
     National Park, Sequoia-Kings Canyon National Park, Lassen 
     Volcanic National Park, Whiskeytown National Recreation Area, 
     Devils Postpile National Monument, and Lava Beds National 
     Monument.

     SEC. 3. EMERGENCY FUNDING FOR YOSEMITE SATELLITE COMMUNITIES.

       Of any amounts made available under section 2(a), the 
     Secretary shall make available not less than $2,500,000 to 
     make grants described in section 2(b)(2)(G).

     SEC. 4. CAPITAL RECOVERY FROM CONCESSIONAIRES.

       To the extent practicable under the concession contract 
     between the Secretary and Yosemite Concession Services, the 
     Secretary shall recover from Yosemite Concession Services any 
     amount used under section 2(b)(2)(C).

     SEC. 5. AUTHORIZATION OF APPROPRIATIONS FOR MASS TRANSIT 
                   SYSTEM FOR YOSEMITE NATIONAL PARK.

       (a) Authorization.--There are authorized to be appropriated 
     to carry out this section $7,000,000 for fiscal year 1998 and 
     such sums as are necessary for each fiscal year thereafter.
       (b) Use of Funds.--
       (1) In general.--The Secretary shall use amounts made 
     available under subsection (a) to establish a mass transit 
     system at Yosemite National Park.
       (2) Included activities.--Activities by the Secretary under 
     paragraph (1) shall include--
       (A) using not more than $1,500,000 for the purchase of 
     electric buses; and
       (B) using not more than $5,500,000 for the purchase of 
     alternative-fueled buses.

     SEC. 6. CONSISTENCY WITH PLANS.

       Activities at Yosemite National Park by the Secretary under 
     this Act shall be consistent with the Yosemite General 
     Management Plan, the Concession Services Plan, the Yosemite 
     Valley Housing Plan, and the Valley Implementation Plan.
                                 ______
                                 
      By Mr. MACK (for himself, Mr. Shelby, Mr. Cochran, Mr. D'Amato, 
        and Mr. Hagel):

[[Page S2674]]

  S. 501. A bill to amend the Internal Revenue Code of 1986 to provide 
all taxpayers with a 50-percent deduction for capital gains, to 
increase the exclusion for gain on qualified small business stock, to 
index the basis of certain capital assets, to allow the capital loss 
deduction for losses on the sale or exchange of an individual's 
principal residence, and for other purposes; to the Committee on 
Finance.


             the return capital to the american people act

  Mr. MACK. Mr. President, today I am introducing legislation, along 
with Senator Shelby, which provides real cuts in the capital gains rate 
and indexes capital gains to account for inflation. As we work to 
achieve a balanced budget, it is our belief that a real reduction in 
the capital gains rate is essential to ensure greater growth, 
innovation, and prosperity. Accordingly, the legislation we have 
proposed offers the best elements of existing capital gains proposals.
  Perhaps most importantly, this proposal ensures that homeowners, 
family farms, and small businesses are not penalized for inflationary--
phantom--gains by providing for the indexation of capital gains. The 
importance of indexation is made clear in the accompanying report 
recently prepared by the Joint Economic Committee.
  Additionally, our bill will offer a 50-percent rate reduction for 
individuals and corporations, and allow the deduction for a loss on the 
sale of a principal residence.
  Finally, this legislation encourages investment in small businesses 
by increasing the exclusion from gains for small business stock from 50 
to 75 percent; reducing the requirement for holding stock from 5 to 3 
years; increasing the eligibility size to $100 million, and providing a 
60-day grace period for the rollover of stock between small businesses.
  Again, I want to restate the importance of a reduced capital gains 
rate, which benefits all Americans by stimulating economic growth and 
prosperity and leading to innovation in biomedical research and other 
life-enhancing technologies. I look forward to my colleagues joining me 
in this effort to ensure that a real capital gains rate reduction is 
included in any balanced budget package the Congress puts together in 
the coming months.
  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:

                         Indexing Capital Gains

                       (Prepared by Robert Stein)

       The case for cutting the capital gains tax is simple and 
     straightforward: It is a win-win situation for all involved--
     for taxpayers, workers and government revenue.
       Everyone who invests would get more bang for their buck. 
     This includes people who start small businesses, workers who 
     have pension money in stocks and those who save for life's 
     goals, like a downpayment on a home, a college education or 
     retirement. More than 40% percent of families own stocks, 
     either directly or indirectly, including more than 25% of the 
     families making between $10,000 and $25,000 per year.\1\ And 
     contrary to conventional wisdom, cutting the capital gains 
     tax will increase government revenue, making it easier to 
     balance the budget.
---------------------------------------------------------------------------
     \1\ Footnotes at end of article.
---------------------------------------------------------------------------
       One way to cut the capital gains tax is to limit the tax to 
     real increases in the prices of assets, over and above 
     inflation. This is called indexing. Without indexing, 
     effective tax rates can be much higher than the government's 
     official rate. Consider a couple that buys $10,000 worth of 
     stocks in 1966, to help pay for their retirement. In 1996, 
     they would have about $79,000 worth of stocks.\2\ Cashing-in 
     these stocks could require a tax of about $19,000.\3\ But 
     much of their gain--the difference between their initial 
     investment and the $79,000 they end up with--was due to 
     inflation, not real increases in purchasing power. In fact, 
     the couple only had about $30,000 in real gains, over and 
     above inflation.\4\ And a tax of $19,000 or $30,000 in gains 
     is an effective tax rate of 63%.
       Chart 1 shows a history of the difference between the top 
     official tax rate on capital gains and the top effective tax 
     rate, taking inflation into account.\5\ As Chart 1 shows, the 
     effective tax rate on capital gains can greatly exceed the 
     official rate, even going well above 100%. In fact, if an 
     investor sells an asset that increased in price, but which 
     didn't keep pace with inflation, she would have to pay taxes 
     without enjoying any real gain at all! It doesn't take much 
     of an imagination to see how the fear of such taxes could 
     deter investment.
       (Chart not reproductible in Record.)
       Would cutting taxes on capital gains reduce government 
     revenue, making it tougher to balance the budget? Certainly 
     not. In fact, cutting the effective tax rate on capital gains 
     should boost revenue. As the following table shows, 
     government revenue from the capital gains tax has grown much 
     more quickly when the effective tax rate has been low or 
     falling than when it's been high or rising.

                  FIVE PHASES OF THE CAPITAL GAINS TAX                  
------------------------------------------------------------------------
                                                               Capital  
                                                                gains   
           Years                Effective tax rates (in      revenue \6\
                                        percent)               (percent 
                                                              per year) 
------------------------------------------------------------------------
1954-1967.................  Low (30 to 40).................          +10
1968-1980.................  Rising/Very High (37 to 126)...           +2
1981-1986.................  Falling (97 to 39).............       \7\+10
1987-1991.................  Rising (39 to 61)..............        \8\-5
1992-1994.................  Falling (61 to 50).............          +10
------------------------------------------------------------------------

       Put simply, reducing the effective tax rate on capital 
     gains would kill two birds with one stone: It would both ease 
     the tax burden and make it easier to balance the budget. Case 
     in point: The last time the government cut the official tax 
     rate on capital gains, revenue from the capital gains tax 
     rose from $22 billion to $36 billion in only five years.\9\


                         Questions and Answers

       Q: Wouldn't indexation complicate the tax code, as 
     taxpayers would have to keep track of not only the cost of 
     their assets but also the inflation adjustment for each?
       A: No. People would have the option of indexing, but could 
     still use the non-indexed cost of their assets when figuring 
     out the amount of their gains. This would mostly happen when 
     inflation was low and the asset wasn't held very long.
       Q: If we index capital gains for inflation, don't we have 
     to index debts too? And since it's too difficult to index 
     debts for tax purposes, shouldn't we leave the system the way 
     it is?
       A: No. This argument confuses key differences between 
     equity and debt. Theoretically, the tax code could let 
     lenders index their interest income, so they only have to pay 
     taxes on the interest they earn over and above inflation. But 
     for every $1 that lenders reduce their taxable income, 
     borrowers would have to reduce the amount of interest they 
     deduct. Overall, debt transactions would still feel the same 
     tax bite. Only the distribution of the taxes would change: 
     Lenders would pay less; borrowers would pay more. But lenders 
     and borrowers already apportion the tax burden between 
     themselves. It's factored into the interest rate. This 
     interest rate also reflects the inflation the two parties 
     expect, as well as the risk that inflation will differ in 
     either party's favor.
       By contrast, bargaining over tax costs doesn't happen with 
     equity. Unlike with debts, nobody deducts capital gains as a 
     cost. Indexing gains would not simply shift the tax burden 
     from one party to another. It would reduce the total tax 
     burden placed on investments in equity, to reflect the 
     erosion of capital gains by inflation.


                                endnotes

     \1\ Family Finances in the U.S.: Recent Evidence from the 
     Survey of Consumer Finances, Federal Reserve Bulletin, 
     January 1997. Indirect stock ownership includes owned through 
     mutual funds or retirement accounts.
     \2\ Between 1966 and 1996 the Standard and Poor's 500 stock 
     index rose from 85.26 to 670.81.
     \3\ Twenty-eight percent of the capital gain.
     \4\ The consumer price index for urban worker rose from 32.5 
     in 1966 to 157 in 1996. This makes the real basis about 
     $48,000 in 1996.
     \5\ To calculate the effective capital gains tax rate I 
     assumed people hold their assets for five years and use the 
     consumer price index for urban workers as my price index. To 
     avoid a result where people get taxed on zero or negative 
     real gains (which implies a tax rate of infinity!) I assume 
     people earned a 5% real return per year. This method has the 
     added benefit of giving us a view of the expected capital 
     gain tax rate, as almost all people invest with the 
     expectation that they will get a positive return. The 
     expected tax rate should drive investment decisions more than 
     any other tax rate.
     \6\ Changes in real revenue, with nominal revenue figures 
     adjusted by the consumer price index for urban workers.
     \7\ This annual rate of changes does not include the huge 
     increase in government revenue in 1986, as people cashed in 
     their gains to avoid an oncoming tax hike in 1987. In other 
     words, as favorable as the data in the table looks for 
     keeping capital gains taxes low, it could have made the table 
     even more favorable, if 1986 were used as the end point. 
     Instead, the increase in gains during this era of lower taxes 
     is cut off in 1985, at a much lower point than the 1986 
     point.
     \8\ This calculation does not use the 1986 peak as the 
     starting point. It uses 1985. Had it used 1986 as the 
     starting point the data would have been even more favorable 
     for keeping capital gains tax low.
     \9\ From 1980, the year before the tax cut, to 1985, the year 
     before the huge surge in revenue that anticipated the hike in 
     rates in 1986. Money figures are in constant 1994 dollars.
                                 ______
                                 
      By Mr. GRASSLEY:
  S. 502. A bill to amend title XIX of the Social Security Act to 
provide post-eligibility treatment of certain payments received under a 
Department of Veterans Affairs pension or compensation program; to the 
Committee on Finance.


                    state veterans' home legislation

  Mr. GRASSLEY. Mr. President, today I am introducing legislation 
which, when enacted, will modify the treatment of certain veterans 
benefits received by veterans who reside in State veterans homes and 
whose care

[[Page S2675]]

and treatment is paid for by the Medicaid program. I am joined in 
introducing this bill by Senator Graham.
  Veterans residing in State veterans homes, who are eligible for aid 
and attendance [AA] and unusual medical expense [UME] benefits, 
veterans benefits provided under title 38 of the United States Code, 
who are also eligible for Medicaid, are the only veterans in nursing 
homes who receive, and who are able to keep, the entire AA and UME 
benefit amounts. This can be as much as $1,000 per month.
  Other veterans, who reside in other types of nursing homes are 
receiving Medicaid, and who are also eligible for AA/UME can receive 
only 90 per month from the VA.
  Yet, other veterans who reside in State veterans homes but who are 
not eligible for the AA/UME benefits must contribute all but $90 of 
their income to the cost of their care.
  So, even though veterans residing in State veterans homes who are 
eligible for AA and UME benefits and who qualify for Medicaid have all 
of their treatment and living expense paid by the State Medicaid 
program, they nevertheless may keep as much as $1,000 per month of the 
AA and UME benefits.
  It might be useful for me to review how this state of affairs came to 
be.
  In 1990, legislation was enacted, Public Law 101-508, November 5, 
1990, which modified title 38, the veterans benefits title of the 
United States Code, to stipulate that veterans with no dependents, on 
title XIX, residing in nursing homes, and eligible for AA and UME, 
could receive only a $90 per month personal expense allowance from the 
VA, rather than the full UME and AA amounts.
  State veterans homes were subsequently exempted from the definition 
of nursing homes which had been contained in those earlier provisions 
of Public Law 101-508 by legislation enacted in 1991, Public Law 102-
40, May 7, 1991.
  The result was that veterans on title XIX and residing in State 
nursing homes continued to receive UME and AA. Until recently, the 
State veterans homes followed a policy of requiring that all but $90 
per month of these allowances be used to defray the cost of care in the 
Home.
  Then, a series of Federal court decisions held that neither UME nor 
AA could be considered income. The court decisions appeared to focus on 
the definition of income used in pre- and post-eligibility income 
determinations for Medicaid. The court decisions essentially held that 
UME and AA payments to veterans did not constitute income for the 
purpose of post-eligibility income determination. The reasoning was 
that, since these monies typically were used by veterans to defray the 
cost of certain series they were receiving, the payments constituted a 
``wash'' for purposes of income gain by the veterans.
  However, the frame of reference for the courts' decisions was not a 
nursing home environment in which a veteran receiving Medicaid benefits 
might find himself or herself. In other words, the UME and AA payment 
received by a veteran on Medicaid are provided to a veteran for 
services for which the State is already paying through the Medicaid 
program. The veteran is not paying for these services with their own 
income. So, as a consequence of the court decisions, these payments to 
the veteran in State veterans homes represent a net gain in income to 
the veteran; they are not paid out by the veteran to defray the cost of 
services the veteran is receiving.
  VA does not pay AA or UME to veterans who are also on title XIX and 
residing in non-State veterans home nursing homes. Those veterans get 
only a $90 per month personal allowance.
  And non-Medicaid eligible veterans who reside in State veterans homes 
must pay for services with their own funds. If they get UME and AA 
payments, the State veterans homes will take all but $90 of those sums 
to help defray the cost of the nursing home care.
  Although the written record does not document this, I believe that 
the purpose of exempting the State veterans homes was to allow the 
Homes to continue to collect all but $90 of the UME and AA paid to the 
eligible veteran so as to enable State veterans homes to provide 
service to more veterans than they otherwise would be able to provide.
  In any case, it seems highly unlikely that the purpose of exempting 
State veterans homes would have been to allow these veterans, and only 
these among similarly situated veterans, to retain the entire UME and 
A&A amounts.
  The legislation I am introducing today modifies section 1902(r)(1) of 
the Social Security Act to stipulate that, for purposes of the post-
eligibility treatment of income of individuals who are 
institutionalized, and on title 19, the payments received under a 
Department of Veterans Affairs pension or compensation program, 
including aid and attendance and unusual medical expense payments, may 
be taken into account.
                                 ______
                                 
      By Mr. NICKLES:
  S. 503. A bill to prevent the transmission of the human 
immunodeficiency virus (commonly known as HIV), and for other purposes; 
to the Committee on Labor and Human Resources.


                     the hiv prevention act of 1997

  Mr. NICKLES. Mr. President, I rise today to introduce the HIV 
Prevention Act of 1997. This legislation appropriately refocuses public 
health efforts on HIV prevention by using proven public health 
techniques designed for communicable diseases. The public health 
initiatives in this bill, which result in early detection of HIV 
infection, are now more important than ever in light of the tremendous 
advances that medical science has made.
  This bill will balance the needs of HIV-infected patients with the 
prevention needs of those who are uninfected. The HIV Prevention Act of 
1997 establishes a confidential, national HIV reporting effort as 
already exists for end stage HIV and AIDS; requires partner 
notification; mandates testing for indicted sexual offenders; protects 
health care patients and professionals from inadvertent exposure to 
HIV; provides access to insurance-required HIV test results; and allows 
adoptive parents to learn the HIV status of a child. In addition, this 
legislation includes Sense of the Senate language which expresses that 
the States should criminalize the intentional transmission of HIV; and 
also expresses the Sense of the Senate that strict confidentiality must 
be observed at all times in carrying out all of the provisions of the 
act.
  The Senate is on record supporting the provisions of this bill in a 
1990 amendment which was adopted by voice vote. The primary sponsors of 
the amendment were Senators Kennedy and Mikulski. During debate on the 
amendment, Senator Kennedy argued, ``In a case in which there is a 
clear and present danger, there is a duty to warn.'' That is the 
purpose of the HIV Prevention Act of 1997. The best ways to warn for 
the prevention of further spread of HIV and AIDS are reporting and 
partner notification, methods which are currently in use and proven to 
be effective.
  This bill has received overwhelming support from groups including the 
Independent Women's Forum, Americans for a Sound AIDS/HIV Policy, the 
Family Research Council, Women Against Violence, the Christian 
Coalition, and the American Medical Association. I quote from a letter 
written by the AMA in support of this legislation:
  ``These public health initiatives which result in early detection of 
HIV infection are now more important because of the tremendous advances 
that medical science has made. Early intervention combined with 
effective treatments will enable those with HIV and AIDS to live 
longer, healthier lives.''
  The HIV Prevention Act adds HIV to 52 other notifiable contagious 
diseases such as gonorrhea, hepatitis A, B, and C, syphilis, 
tuberculosis, and AIDS that must be reported to the Centers for Disease 
Control. In terms of partner notification, 26 states, including, I 
might add, Oklahoma, already require notification. It is time that 
these policies that are already in practice in some states are applied 
around the country in order to track and prevent further spread of HIV.
  Mr. President, this legislation will greatly increase public health 
HIV prevention efforts that until now have focused only on AIDS. The 
HIV Prevention Act of 1997 is a sensible, common sense approach toward 
containing the spread of AIDS. By using proven, public health 
techniques and sound medical practices, this bill will curtail the

[[Page S2676]]

spread of HIV. I thank the chair and encourage my colleagues to support 
this commonsense 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. 503

       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 ``HIV Prevention Act of 
     1997''.

     SEC. 2. FINDINGS.

       The Congress finds as follows:
       (1) The States should recognize that the terms ``acquired 
     immune deficiency syndrome'' and ``AIDS'' are obsolete. In 
     the case of individuals who are infected with the human 
     immunodeficiency virus (commonly known as HIV), the more 
     important medical fact for the individuals and for the 
     protection of the public health is the fact of infection, and 
     not just the later development of AIDS (the stage at which 
     the infection causes symptoms). The term ``HIV disease'', 
     meaning infection with HIV regardless of whether the 
     infection has progressed to AIDS, more correctly defines the 
     medical condition.
       (2) The medical, public health, political, and community 
     leadership must focus on the full course of HIV disease 
     rather than concentrating on later stages of the disease. 
     Continual focus on AIDS rather than the entire spectrum of 
     HIV disease has left our Nation unable to deal adequately 
     with the epidemic. Federal and State data collection efforts 
     should focus on obtaining data as early as possible after 
     infection occurs, while continuing to collect data on the 
     symptomatic stage of the disease.
       (3) Recent medical breakthroughs may enable doctors to 
     treat HIV disease as a chronic disease rather than as a 
     terminal disease. Early intervention in the progression of 
     the infection is imperative to prolonging and improving the 
     lives of individuals with the disease.
       (4) The Centers for Disease Control and Prevention has 
     recommended partner notification as a primary prevention 
     service. The health needs of the general public, and the care 
     and protection of those who do not have the disease, should 
     be balanced with the needs of individuals with the disease in 
     a manner that allows for the infected individuals to receive 
     optimal medical care and for public health services to 
     protect the uninfected.
       (5) Individuals with HIV disease have an obligation to 
     protect others from being exposed to HIV by avoiding 
     behaviors that place others at risk of becoming infected. The 
     States should have in effect laws providing that 
     intentionally infecting others with HIV is a felony.

     SEC. 3. PREVENTION OF TRANSMISSION OF HIV.

       (a) Requirements for States.--A State shall demonstrate to 
     the satisfaction of the Secretary that the law or regulations 
     of the State are in accordance with the following:
       (1) Reporting of cases.--The State requires that, in the 
     case of a health professional or other entity that provides 
     for the performance of a test for HIV on an individual, the 
     entity confidentially report positive test results to the 
     State public health officer, together with any additional 
     necessary information, in order to carry out the following 
     purposes:
       (A) The performance of statistical and epidemiological 
     analyses of the incidence in the State of cases of such 
     disease.
       (B) The performance of statistical and epidemiological 
     analyses of the demographic characteristics of the population 
     of individuals in the State who have the disease.
       (C) The assessment of the adequacy of preventive services 
     in the State with respect to the disease.
       (D) The performance of the functions required in paragraph 
     (2).
       (2) Functions.--The functions described in this paragraph 
     are the following:
       (A) Partner notification.--
       (i) In general.--The State requires that the public health 
     officer of the State carry out a program of partner 
     notification to inform individuals that the individuals may 
     have been exposed to HIV.
       (ii) Definition.--For purposes of this paragraph, the term 
     ``partner'' includes--

       (I) the sexual partners of individuals with HIV disease;
       (II) the partners of such individuals in the sharing of 
     hypodermic needles for the intravenous injection of drugs; 
     and
       (III) the partners of such individuals in the sharing of 
     any drug-related paraphernalia determined by the Secretary to 
     place such partners at risk of HIV infection.

       (B) Collection of information.--The State requires that any 
     information collected for purposes of partner notification be 
     sufficient for the following purposes:
       (i) To provide the partners of the individual with HIV 
     disease with an appropriate opportunity to learn that the 
     partners have been exposed to HIV.
       (ii) To provide the partners with counseling and testing 
     for HIV disease.
       (iii) To provide the individual who has the disease with 
     information regarding therapeutic measures for preventing and 
     treating the deterioration of the immune system and 
     conditions arising from the disease, and to provide the 
     individual with other preventive information.
       (iv) With respect to an individual who undergoes testing 
     for HIV disease but does not seek the results of the testing, 
     and who has positive test results for the disease, to recall 
     and provide the individual with counseling, therapeutic 
     information, and other information regarding preventative 
     health services appropriate for the individual.
       (C) Cooperation in national program.--The State cooperates 
     with the Director of the Centers for Disease Control and 
     Prevention in carrying out a national program of partner 
     notification, including the sharing of information between 
     the public health officers of the States.
       (3) Testing of certain indicted individual.--With respect 
     to a defendant against whom an information or indictment is 
     presented for a crime in which by force or threat of force 
     the perpetrator compels the victim to engage in sexual 
     activity, the State requires the following:
       (A) In general.--That the defendant be tested for HIV 
     disease if--
       (i) the nature of the alleged crime is such that the sexual 
     activity would have placed the victim at risk of becoming 
     infected with HIV; or
       (ii) the victim requests that the defendant be so tested.
       (B) Timing.--That if the conditions specified in 
     subparagraph (A) are met, the defendant undergo the test not 
     later than 48 hours after the date on which the information 
     or indictment is presented, and that as soon thereafter as is 
     practicable the results of the test be made available to--
       (i) the victim;
       (ii) the defendant (or if the defendant is a minor, to the 
     legal guardian of the defendant);
       (iii) the attorneys of the victim;
       (iv) the attorneys of the defendant;
       (v) the prosecuting attorneys;
       (vi) the judge presiding at the trial, if any; and
       (vii) the principal public health official for the local 
     governmental jurisdiction in which the crime is alleged to 
     have occurred.
       (C) Follow-up testing.--That if the defendant has been 
     tested pursuant to subparagraph (B), the defendant, upon 
     request of the victim, undergo such follow-up tests for HIV 
     as may be medically appropriate, and that as soon as is 
     practicable after each such test the results of the test be 
     made available in accordance with subparagraph (B) (except 
     that this subparagraph applies only to the extent that the 
     individual involved continues to be a defendant in the 
     judicial proceedings involved, or is convicted in the 
     proceedings).
       (D) Consideration of results.--That, if the results of a 
     test conducted pursuant to subparagraph (B) or (C) indicate 
     that the defendant has HIV disease, such fact may, as 
     relevant, be considered in the judicial proceedings conducted 
     with respect to the alleged crime.
       (4) Testing of certain individuals.--
       (A) Patients.--With respect to a patient who is to undergo 
     a medical procedure that would place the health professionals 
     involved at risk of becoming infected with HIV, the State--
       (i) authorizes such health professionals in their 
     discretion to provide that the procedure will not be 
     performed unless the patient undergoes a test for HIV disease 
     and the health professionals are notified of the results of 
     the test; and
       (ii) requires that, if such test is performed and the 
     patient has positive test results, the patient be informed of 
     the results.
       (B) Funeral-related services.--The State authorizes 
     funeral-services practitioners in their discretion to provide 
     that funeral procedures will not be performed unless the body 
     involved undergoes a test for HIV disease and the 
     practitioners are notified of the results of the test.
       (5) Informing of funeral-service practitioners.--The State 
     requires that, if a health care entity (including a hospital) 
     transfers a body to a funeral-services practitioner and such 
     entity knows that the body is infected with HIV, the entity 
     notify the funeral-services practitioner of such fact.
       (6) Health insurance issuers.--
       (A) In general.--The State requires that, if a health 
     insurance issuer requires an applicant for such insurance to 
     be tested for HIV disease as a condition of issuing such 
     insurance, the applicant be afforded an opportunity by the 
     health insurance issuer to be informed, upon request, of the 
     HIV status of the applicant.
       (B) Definition.--For purposes of this paragraph, the term 
     ``health insurance issuer'' means an insurance company, 
     insurance service, or insurance organization (including a 
     health maintenance organization) which is licensed to engage 
     in the business of insurance in the State and which is 
     subject to State law which regulates insurance.
       (C) Rule of construction.--This paragraph may not be 
     construed as affecting the provisions of section 514 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1154) with respect to group health plans.
       (7) Adoption.--The State requires that, if an adoption 
     agency is giving significant consideration to approving an 
     individual as an adoptive parent of a child and the agency 
     knows whether the child has HIV disease,

[[Page S2677]]

     such prospective adoptive parent be afforded an opportunity 
     by the agency to be informed, upon request, of the HIV status 
     of the child.
       (b) Sense of Congress Regarding Health Professionals With 
     HIV Disease.--It is the sense of Congress that, with respect 
     to health professionals who have HIV disease--
       (1) the health professionals should notify their patients 
     that the health professionals have the disease in medical 
     circumstances that place the patients at risk of being 
     infected with HIV by the health professionals; and
       (2) the States should encourage the medical profession to 
     develop guidelines to assist the health professionals in so 
     notifying patients.
       (c) Applicability of Requirements.--
       (1) In general.--Except as provided in paragraph (2), this 
     section shall apply to States upon the expiration of the 120-
     day period beginning on the date of the enactment of this 
     Act.
       (2) Delayed applicability for certain states.--In the case 
     of the State involved, if the Secretary determines that a 
     requirement established by subsection (a) cannot be 
     implemented in the State without the enactment of State 
     legislation, then such requirement applies to the State on 
     and after the first day of the first calendar quarter that 
     begins after the close of the first regular session of the 
     State legislature that begins after the date of the enactment 
     of this Act. For purposes of the preceding sentence, in the 
     case of a State that has a 2-year legislative session, each 
     year of such session is deemed to be a separate regular 
     session of the State legislature.
       (d) Definitions.--In this section:
       (1) HIV.--The term ``HIV'' means the human immunodeficiency 
     virus.
       (2) HIV disease.--The term ``HIV disease'' means infection 
     with HIV and includes any condition arising from such 
     infection.
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (e) Rule of Construction.--Part D of title XXVI of the 
     Public Health Service Act (42 U.S.C. 300ff-71 et seq.) is 
     amended by inserting after section 2675 the following 
     section:

     ``SEC. 2675A. RULE OF CONSTRUCTION.

       ``With respect to an entity that is an applicant for or a 
     recipient of financial assistance under this title, 
     compliance by the entity with any State law or regulation 
     that is consistent with section 3 of the HIV Prevention Act 
     of 1997 may not be considered to constitute a violation of 
     any condition under this title for the receipt of such 
     assistance.''.

     SEC. 4. SENSE OF CONGRESS REGARDING INTENTIONAL TRANSMISSION 
                   OF HIV.

       It is the sense of Congress that the States should have in 
     effect laws providing that, in the case of an individual who 
     knows that he or she has HIV disease, it is a felony for the 
     individual to infect another with HIV if the individual 
     engages in the behaviors involved with the intent of so 
     infecting the other individual.

     SEC. 5. SENSE OF CONGRESS REGARDING CONFIDENTIALITY.

       It is the sense of the Congress that strict confidentiality 
     should be maintained in carrying out the provisions of 
     section 3 of the this Act.
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself, Mrs. Boxer and Ms. Snowe):
  S. 504. A bill to amend title 18, United States Code, to prohibit the 
sale of personal information about children without their parent's 
consent, and for other purposes; to the Committee on the Judiciary.


 THE CHILDREN'S PRIVACY PROTECITON AND PARENTAL EMPOWERMENT ACT OF 1997

  Mrs. FEINSTEIN. Mr. President, I rise to urge my colleagues to 
support this simple but strong legislation to protect our children.
  This bill, sponsored by myself, Senator Boxer, and Senator Snowe, 
would provide three simple protections:
  First, the bill would prohibit list brokers from selling personal 
information about children under 16 to anyone, without first getting 
the parent's consent.
  All kinds of information about our children--more facts than most of 
us might think or hope for--is rapidly becoming available through these 
list brokers. It is only a matter of time before this information 
begins to fall into the wrong hands.
  Last year, a reporter in Los Angeles was easily able to purchase 
parents' names, birth months and addresses for 5,500 children aged 1-12 
in a particular neighborhood. The reporter used the name of a 
fictitious company, gave a non-working telephone number, had no credit 
card or check, and identified herself as Richard Allen Davis, the 
notorious murderer of Polly Klaas. When ordering the list, the company 
representative simply told her ``Oh, you have a famous name,'' and sent 
her the information C.O.D. This is simply unacceptable.
  Second, the bill would give parents the authority to demand 
information from the list brokers who traffic in the personal data of 
their children--brokers will be required to provide parents with a list 
of all those to whom they sold information about the child, and must 
also tell the parent precisely what kind of information was sold.
  If this personal information is out there, and brokers are buying and 
selling it back and forth, it is only reasonable that we allow parents 
to find out what information has been sold and to whom that information 
has been given.
  Finally, this bill would prohibit list brokers from using prison 
labor to input personal information. This seems like common sense to 
most of us, but unfortunately the use of prison labor is not currently 
prohibited.
  Last year when I introduced this bill, I spoke of the plight of 
Beverly Dennis, an Ohio grandmother who filled out a detailed marketing 
questionnaire about her buying habits for a mail in survey. She filled 
out the questionnaire when she was told that she might receive free 
product samples and helpful information. Rather than receiving product 
information, however, she soon began to receive sexually explicit, 
fact-specific letters from a convicted rapist serving time.
  The rapist, writing from his prison cell, had learned the very 
private, intimate details about her life because he was keypunching her 
personal questionnaire data into a computer for a subcontractor. Ms. 
Dennis received letters with elaborate sexual fantasies, weaved around 
personal facts provided by her in the questionnaire. This bill would 
have prevented the situation from ever occurring.
  Finally, Mr. President, this year I have included in the bill 
exemptions for sales to law enforcement organizations, the Center for 
Missing and Exploited Children, and to accredited colleges and 
universities. We received a great deal of input since we introduced the 
bill last June, and I believe we have addressed most of the concerns 
about our bill with these exemptions.
  Schools will be able to get information about prospective students, 
law enforcement will be able to get the lists to help them find missing 
kids, and the Center for Missing and Exploited Children will be able to 
do likewise.
  This bill is really very simple. Some marketing companies may be 
unhappy that the government is trying to legislate how they do 
business, but we have to weigh the safety and well-being of our 
children against the small inconvenience of requiring parental consent 
in these cases. Given the rapidly changing nature of the marketing 
business and the ways in which child molesters and other criminals 
operate, this bill is an important step in protecting our kids from 
those who would do them harm.
  Mr. President, I ask unanimous consent that the text of this bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 504

       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 ``Children's Privacy 
     Protection and Parental Empowerment Act of 1997''.

     SEC. 2. PROHIBITION OF CERTAIN ACTIVITIES RELATING TO 
                   PERSONAL INFORMATION ABOUT CHILDREN.

       (a) In General.--Chapter 89 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 1822. Sale of personal information about children

       ``(a) Prohibition.--Whoever, in or affecting interstate or 
     foreign commerce--
       ``(1) being a list broker, knowingly--
       ``(A) sells, purchases, or receives remuneration for 
     providing personal information about a child knowing that 
     such information pertains to a child without the consent of a 
     parent of that child;
       ``(B) conditions any sale or service to a child or to that 
     child's parent on the granting of such a consent; or
       ``(C) fails to comply with the request of a parent--
       ``(i) to disclose the source of personal information about 
     that parent's child;
       ``(ii) to disclose all information that has been sold or 
     otherwise disclosed by that list broker about that child; or
       ``(iii) to disclose the identity of all persons to whom the 
     list broker has sold or otherwise disclosed personal 
     information about that child;
       ``(2) being a person who, using any personal information 
     about a child in the course of commerce that was obtained for 
     commercial

[[Page S2678]]

     purposes, has directly contacted that child or a parent of 
     that child to offer a commercial product or service to that 
     child, knowingly fails to comply with the request of a 
     parent--
       ``(A) to disclose to the parent the source of personal 
     information about that parent's child;
       ``(B) to disclose all information that has been sold or 
     otherwise disclosed by that person about that child; or
       ``(C) to disclose the identity of all persons to whom such 
     a person has sold or otherwise disclosed personal information 
     about that child;
       ``(3) knowingly uses prison inmate labor, or any worker who 
     is registered pursuant to title XVII of the Violent Crime 
     Control and Law Enforcement Act of 1994, for data processing 
     of personal information about children; or
       ``(4) knowingly distributes or receives any personal 
     information about a child, knowing or having reason to 
     believe that the information will be used to abuse the child 
     or physically to harm the child;
     shall be fined under this title, imprisoned not more than 1 
     year, or both.
       ``(b) Civil Actions.--A child or the parent of that child 
     with respect to whom a violation of this section occurs may 
     in a civil action obtain appropriate relief, including 
     monetary damages of not less than $1,000. The court shall 
     award a prevailing plaintiff in a civil action under this 
     subsection a reasonable attorney's fee as a part of the 
     costs.
       ``(c) Limitation.--Nothing in this section shall be 
     construed to affect the sale of lists to--
       ``(1) any Federal, State, or local government agency or law 
     enforcement organization;
       ``(2) the National Center for Missing and Exploited 
     Children; or
       ``(3) any institution of higher education (as that term is 
     defined in section 1201(a) of the Higher Education Act of 
     1965 (20 U.S.C. 1141(a)).
       ``(d) Definitions.--In this section--
       ``(1) the term `child' means a person who has not attained 
     the age of 16 years;
       ``(2) the term `parent' includes a legal guardian;
       ``(3) the term `personal information' means information 
     (including name, address, telephone number, social security 
     number, and physical description) about an individual 
     identified as a child, that would suffice to physically 
     locate and contact that individual; and
       ``(4) the term `list broker' means a person who, in the 
     course of business, provides mailing lists, computerized or 
     telephone reference services, or the like containing personal 
     information of children.''.
       (b) Clerical Amendment.--The analysis for chapter 89 of 
     title 18, United States Code, is amended by adding at the end 
     the following:

``1822. Sale of personal information about children.''.

                                 ______
                                 
      By Mr. HATCH (for himself, Mr. Leahy, Mr. D'amato, Mr. Thompson, 
        Mr. Abraham, and Mrs. Feinstein):
  S. 505. A bill to amend the provisions of title 17, United States 
Code, with respect to the duration of copyright, and for other 
purposes; to the Committee on the Judiciary.


                THE COPYRIGHT TERM EXTENSION ACT OF 1997

                                 ______
                                 
      By Mr. HATCH:
  S. 506. A bill to clarify certain copyright provisions, and for other 
purposes; to the Committee on the Judiciary.


                THE COPYRIGHT CLARIFICATIONS ACT OF 1997

                                 ______
                                 
      By Mr. HATCH:
  S. 507. A bill to establish the United States Patent and Trademark 
Organization as a Government corporation, to amend the provisions of 
title 35, United States Code, relating to procedures for patent 
applications, commercial use of patents, reexamination reform, and for 
other purposes; to the Committee on the Judiciary.


                     THE OMNIBUS PATENT ACT OF 1997

  Mr. HATCH. Mr. President, intellectual property is vitally important 
to sustaining the high level of creativity that America enjoys, which 
not only adds to the fund of human knowledge and the progress of 
science and technology, but also results in the more tangible benefits 
of a strong economy and a favorable balance of trade.
  For example, in 1994, copyright-related industries contributed more 
than $385 billion to the American economy, or more than 5 percent of 
the total gross domestic product. This represents more than $50 billion 
in foreign sales, which exceeds every other leading industry sector 
except automotive and agriculture in contributions to a favorable trade 
balance. From 1977 to 1994, these same industries grew at a rate that 
was twice the rate of growth of the national economy, and the rate of 
job growth in these industries since 1987 has outpaced that of the 
overall economy by more than 100 percent.
  Mr. President, this is impressive to say the least. And these figures 
don't begin to take into account the contributions of other 
intellectual property sectors, including trade in patented technologies 
and the economic value of famous marks. Clearly intellectual property 
has become one of our Nation's most valuable resources.
  As you know, the Judiciary Committee, is charged with monitoring the 
effectiveness of our intellectual property laws and with proposing to 
the Senate changes that are called for to meet new challenges. Because 
of the digital age and the global economy, we've had our hands full. 
Let me just go through a few highlights.
  In the 104th Congress, we passed the Digital Performance Right in 
Sound Recordings Act, which, as its name signifies, adjusts the 
existing performance right in the Copyright Act to the demands of the 
new digital media. I also introduced, with Senator Leahy, the National 
Information Infrastructure (NII) Copyright Protection Act of 1995 to 
begin to lay down the rules of the road for the information highway. 
The Committee held two hearings on this bill, but not enough time was 
left in the 104th to complete our deliberations.

  In response to the challenges of the global economy, I introduced the 
Copyright Term Extension Act of 1995, along with Senator Thompson and 
Senator Feinstein, to give U.S. copyright owners parity of term in the 
European Union. The EU has issued a directive to increase the minimum 
basic copyright term from life-plus-50 years to life-plus-70. If we do 
not follow suit, U.S. works in potentially all EU countries will 
receive 20 years less protection than the works of the nationals of the 
host country.
  The Copyright Term Extension Act was approved by the Judiciary 
Committee. I am confident that the bill would have been approved by the 
Senate as well with little or no opposition, but unfortunately this 
important legislation was held hostage by advocates of music licensing 
reform--a totally unrelated issue.
  In patents, too, we were very active. The Biotechnology Process 
Patents Act was passed. Also, I introduced the Omnibus Patent Act of 
1996, which remade the Patent and Trademark Office into a government 
corporation. The corporate form would allow the Patent and Trademark 
Office to escape the micromanagement that it currently endures from the 
Commerce Department, although my bill preserved a policy link with the 
Department. The bill also made several very important substantive 
changes to the Patent Act.
  After some tough negotiations, the Clinton administration ended up 
supporting the final version of the bill. The Judiciary Committee had a 
hearing on the bill, but Committee action was held hostage to yet 
another, totally unrelated issue--judicial nominations.
  In addition to improving the efficiency of the patent and trademark 
systems, I have worked tirelessly for a number of years to rectify the 
injustice of making American inventors bear a heavier burden in deficit 
reduction than the ordinary citizen through the withholding of patent 
surcharge funds. Again last year I led an ultimately unsuccessful 
effort to ease this tax on American ingenuity.

  Now no one has demonstrated more zeal for a balanced budget than I 
have. As you know, Mr. President, I was on the Senate floor for 3 weeks 
trying to get this body to discipline itself through the Balanced 
Budget Amendment. But I do not believe that inventors ought to pay a 
surcharge on their patent applications only to see that surcharge used 
for the general revenue rather than to improve the service they receive 
from the PTO. The PTO, after all, is a self-sustaining agency, not 
receiving a penny from taxpayer dollars. What they charge, they ought 
to keep. I am currently looking at a legislative solution to this 
problem.
  I have also been looking into the special patent restoration rules 
that apply to pharmaceutical products. In 1984, Congress enacted the 
Drug Price Competition and Patent Term Restoration Act. Essentially, 
this law--commonly known as, I am proud to say, the Hatch-Waxman Act--
allowed generic drug manufacturers to rely on the costly safety and 
efficacy data of pioneer

[[Page S2679]]

drug manufacturers and provided for partial patent restoration for 
pioneer products to offset a portion of the patent term lost due to FDA 
regulatory review.
  I know that many are interested in revisiting particular provisions 
of the Hatch-Waxman Act now that we have had a decade-plus experience 
under the new system. In my view, to be successful, any Hatch-Waxman 
reform must be balanced in a manner that the American public, generic 
drug firms, and the R&D manufacturers are all able to realize benefits. 
Toward this end, my staff and I have been meeting with representatives 
of both segments of the pharmaceutical industry to identify areas of 
concern.
  It is my hope that these discussions will result in proposals to 
create new incentives in our intellectual property protection system 
and efficiency in our regulatory processes that will increase the long-
term strength of both segments of the industry. Our bottom line goal is 
clear: We want a climate that produces both innovative new medicines 
and lower-cost generic copies of off-patent products.

  I do not guarantee success in this endeavor, I can only commit that I 
will listen to all parties involved and see if we can work together to 
forge a compromise on Hatch-Waxman reform. I would like to do it if we 
can, but I will not support any approach that is not balanced.
  Let me just add that my willingness to work with all parties should 
not be construed as giving a veto to any particular party. Ultimately, 
the test I use will be: Will the American public be better off if a 
particular legislative proposal is adopted? If, and only if, this test 
can be met, will I ask others in this body to join me in moving 
legislation.
  Mr. President, let me now turn to trademark legislation, an area in 
which we have had a lot of success. Both the Federal Trademark Dilution 
Act and the Anticounterfeiting Consumer Protection Act became law in 
the 104th Congress. The Federal Trademark Dilution Act was significant 
in that it established the first-ever Federal anti-dilution statute to 
provide nationwide protection against the whittling away of famous 
marks. The Anticounterfeiting Consumer Protection Act brought our 
Nation's anticounterfeiting laws up to speed with the quickly evolving 
counterfeiting trade by providing stiffer civil and criminal penalties 
and increasing the tools available to law enforcement to give them the 
upper hand in this fight.
  As you can see though, Mr. President, we have a lot of unfinished 
business, so today I'm introducing two bills from the last Congress, 
the Omnibus Patent Act, and the Copyright Term Extension Act. In 
addition, I'm introducing the Copyright Clarification Act, which is a 
series of truly technical amendments to the Copyright Act. I am pleased 
that Senator Leahy, the distinguished ranking member of the Judiciary 
Committee, Senator D'Amato, the distinguished junior Senator from New 
York, Senator Abraham, the distinguished junior Senator from Michigan, 
and Senator Feinstein, the distinguished senior Senator from 
California, are joining me as cosponsors of the Copyright Term 
Extension Act of 1997.
  Of course, Mr. President, these three bills do not comprise my entire 
intellectual property agenda. For example, at my request, the Copyright 
Office is taking a look at sui generis protection of databases and at 
amendments to the Satellite Home Viewer Act. The Copyright Office may 
very well have recommendations for legislation in this area, and I may 
introduce such legislation before the end of this session. However, 
because the three bills I am introducing today have widespread support 
and have been thoroughly discussed in the last Congress, it is 
appropriate that they be the first to be considered--old business 
before new business.


                     The Omnibus Patent Act of 1997

  Mr. President, the Omnibus Patent Act of 1997 is identical to the 
latest version of a bill I introduced last Congress, S. 1961, except 
for a few technical changes. Last Congress, S. 1961 gained bipartisan 
support in the Senate, its counterpart, H.R. 3460 gained bipartisan 
support in the House, and the Clinton administration also supported 
this bill. Further, a large, broad coalition of representatives of the 
patent industry were strongly supportive of the bill. Additionally, the 
National Treasury Employees Union and the AFL-CIO both supported the 
provisions that affect their membership. I am fully confident that this 
far-reaching, bipartisan support will continue this Congress.
  I have no doubt that had a vote been taken on S. 1961, it would have 
passed the Senate by an overwhelming vote. Unfortunately, we did not 
take up S. 1961 until later in the 104th Congress, and time ran out 
before we were able to reach a vote on this important measure.
  In order to be certain that such a problem is not repeated, I am 
beginning this process early in the 105th Congress. The House is 
already acting to move through this important and needed measure 
without delay. The House counterpart to my bill, H.R. 400, was 
introduced by Congressman Coble, the chairman of the House Judiciary 
Subcommittee on Courts and Intellectual Property. Chairman Coble has 
held a hearing on H.R. 400, and the bill was subsequently favorably 
reported by the subcommittee and the full House Judiciary Committee. I 
look forward to the consideration of H.R. 400 by the full House of 
Representatives.

  During the last Congress this bill was the subject of multiple 
hearings in both Houses of Congress. But, this is a new Congress, so I 
would like to review, once again, the purposes and goals of the Omnibus 
Patent Act of 1997.
  The purposes of this bill are: (1) to provide for more efficient 
administration of the patent and trademark systems; (2) to discourage 
``gaming'' the patent system while ensuring against loss of patent term 
and theft of American inventiveness; (3) to protect the rights of prior 
users of inventions which are later patented by another; (4) to 
increase the reliability of patents by allowing third parties more 
meaningful participation in the reexamination process; (5) to make 
certain that American provisional applications are given the same 
weight as other countries' provisional applications in other countries' 
courts; (6) to close a loophole in the plant patent provisions of the 
Patent Act; and (7) to allow for the filing of patent and trademark 
documents by electronic medium.


             The United States Patent and Trademark Office

  The United States leads the world in innovation. That leadership is a 
direct result of our long-standing commitment to strong patent 
protection. The strong protection of patents and trademarks are of 
vital importance not only to continued progress in science, but also to 
the economy. A vast array of industries depend on patents. From the 
chemical, electrical, biotechnological, and manufacturing industries to 
computer software and hardware. And trademark is important to all 
businesses, period.
  I believe that we must not only keep our intellectual property laws 
current and strong, but we must do everything we can to make sure that 
the offices responsible for the administration of those laws are 
properly equipped and able to do their job as efficiently as possible.
  Thus, the first provision of this bill makes the Patent and Trademark 
Office a government corporation, called the U.S. Patent and Trademark 
Organization. Basically, the effect of this provision is to separate 
the administration of the patent and trademark systems from 
micromanagement by the Department of Commerce, while maintaining a 
policy link to that Department. The current PTO has been hampered by 
burdensome red tape regarding personnel matters, and the office has 
also been held back from reaching its full potential by the repeated 
siphoning off of its user fees for other, unrelated expenditures.
  The government corporation proposal was the subject of much 
discussion last Congress. The Administration, various union 
representatives, representatives of the users of the Patent and 
Trademark Office, and, of course, the officers of the PTO itself were 
all involved in helping me to craft this consensus legislation. I am 
confident that the product of these negotiations will enhance the 
efficiency of the USPTO while protecting the interests of the Commerce 
Department and the employees of the USPTO.

[[Page S2680]]

  The structure of the USPTO under my bill vests primary responsibility 
for patent and trademark policy in the head of the USPTO, the Director, 
and primary responsibility for administration of the patent and 
trademark systems in the respective Commissioners of Patents and 
Trademarks. The corporate form of the USPTO inoculates the Patent and 
Trademark Offices as much as possible from the bureaucratic sclerosis 
that infects many federal agencies. Further, by subdividing the 
organization into separate patent and trademark offices, the bill will 
help raise the prominence of trademarks, an important part of 
intellectual property but long seen as the poor step-child of the more 
prominent patent field.
  The parties interested in patents and trademarks support having close 
access to the President by having the chief intellectual policy advisor 
directly linked to a cabinet officer. The Secretary of Commerce is a 
logical choice. As a result, while this bill would make the day-to-day 
functioning of the USPTO independent of the Commerce Department, the 
policy portion of the new organization will still be under the policy 
direction of the Secretary of Commerce. Further, as a government 
corporation, as opposed to a private corporation, the USPTO will remain 
subject to congressional oversight.

  Mr. President, although the creation of the USPTO may be the most 
dramatic part of this bill, it also contains several important changes 
to substantive patent law that will, taken as a whole, dramatically 
improve our patent system.
  With the adoption of the GATT provisions in 1994, the United States 
changed the manner in which it calculated the duration of patent terms. 
Under the old rule, patents lasted for seventeen years after the grant 
of the patent. The new rule under the legislation implementing GATT is 
that these patents last for twenty years from the time the patent 
application is filed.
  In addition to harmonizing American patent terms with those of our 
major trading partners, this change solved the problem of ``submarine 
patents''. A submarine patent is not a military secret. Rather, it is a 
colloquial way to describe a legal but unscrupulous strategy to game 
the system and unfairly extend a patent term.
  Submarine patenting is when an applicant purposefully delays the 
final granting of his patent by filing a series of amendments and 
delaying motions. Since, under the old system, the term did not start 
until the patent was granted, no patent term was lost. And since patent 
applications are secret in the United States until a patent is actually 
granted, no one knows that the patent application is pending. Thus, 
competitors continued to spend precious research and development 
dollars on technology that has already been developed.
  When a competitor finally did develop the same technology, the 
submarine applicant sprang his trap. He would cease delaying his 
application and it would finally be approved. Then, he sued his 
competitor for infringing on his patent. Thus, he maximized his own 
patent term while tricking his competitors into wasting their money.
  Mr. President, submarine patents are terribly inefficient. Because of 
them, the availability of new technology is delayed and instead of 
moving to new and better research, companies are fooled into throwing 
away time and money on technology that already exists.

  By adopting GATT, and changing the manner in which we calculate the 
patent term to twenty years from filing, we eliminated the submarine 
problem. Under the current rule, if an applicant delays his own 
application, it simply shortens the time he will have after the actual 
granting of the patent. Thus, we have eliminated this unscrupulous, 
inefficient practice by removing its benefits.
  Unfortunately, the change in term calculation potentially creates a 
new problem. Under the current law, if the Patent Office takes a long 
time to approve a patent, the delay comes out of the patent term, thus 
punishing the patent holder for the PTO's delay. This is not right.
  The question we face now, Mr. President, is how to fix this new 
problem. Some have suggested combining the old seventeen years from 
granting system with the new twenty years from filing and giving the 
patent holder whichever is longer. But that approach leads to 
uncertainty in the length of a patent term and even worse, resurrects 
the submarine patent problem by giving benefits to an applicant who 
purposefully delays his own application. I believe that Titles II and 
III of the Omnibus Patent Act of 1997 solve the administrative delay 
dilemma without recreating old problems.


                           Early Publication

  Title II of the bill provides for the early publication of patent 
applications. It would require the Patent Office to publish pending 
applications eighteen months after the application was filed. An 
exception to this rule is made for applications filed only in the 
United States. Those applications will be published 18 months after 
filing or 3 months after the office issues its first response on the 
application, whichever is later. By publishing early, competitors are 
put on notice that someone has already beaten them to the invention, 
thus allowing them to stop spending money researching that same art.

  The claims that early publication will allow foreign competitors to 
steal American technology are simply not true. To start with, between 
75 and 80 percent of patent applications filed in the United States are 
also filed abroad where 18 month publication is already the rule. 
Further, I have provided in my bill for delayed publication of 
applications only submitted in the United States to protect them from 
competitors. Additionally, once an application is published, Title II 
grants the applicant ``provisional rights,'' that is, legal protection 
for his invention. Thus, while it is true that someone could break the 
law and steal the invention, that is true under current law and will 
always be true, and it will subject them to liability for their illegal 
actions.


                        Patent Term Restoration

  Title III deals directly with the administrative delay problem by 
restoring to the patent holder any part of the term that is lost due to 
undue administrative delay. To prevent any possible confusion over what 
undue delay means, the bill sets specific deadlines for the Patent 
Office to act. The office has fourteen months to issue a first office 
action and four months to respond to subsequent applicant filings. Any 
delay beyond those deadlines is considered undue delay and will be 
restored to the patent term. Thus, Title III solves the administrative 
delay problem in a clear, predictable, and objective manner.


                     Prior Domestic Commercial Use

  Title IV deals with people who independently invent new art, and use 
it in commercial sale, but who never patent their invention. 
Specifically, this title provides rights to a person who has 
commercially sold an invention more than 1 year before another person 
files an application for a patent on the same subject matter. Anyone in 
this situation will be permitted to continue to sell his product 
without being required to pay a royalty to the patent holder. This 
basic fairness measure is aimed at protecting the innocent inventor who 
chooses to use trade secret protection instead of pursuing a patent and 
who has expended enough time and money to begin commercial sale of the 
invention. It also serves as an incentive for those who wish to seek a 
patent to seek it quickly, thus reducing the time during which others 
may acquire prior user rights. The incentives of this title will 
improve the efficiency of our patent system by protecting ongoing 
business concerns and encouraging swift prosecution of patent 
applications.


                      Patent Reexamination Reform

  Title V provides for a greater role for third parties in patent re-
examination proceedings. Nothing is more basic to an effective system 
of patent protection than a reliable examination process. Without the 
high level of faith that the PTO has earned, respect for existing 
patents would fall away and innovation would be discouraged for fear of 
a lack of protection for new inventions.
  In the information age, however, it is increasingly difficult for the 
PTO to keep track of all the prior art that exists. The examiners do 
the best job they can, but inevitably someone misses something and 
grants a patent that should not be granted. This is the problem that 
title V addresses.
  Title V amends the existing reexamination process to allow third-
parties

[[Page S2681]]

to raise a challenge to an existing patent and to participate in the 
reexamination process in a meaningful way. Thus, the expertise of the 
patent examiner is supplemented by the knowledge and resources of 
third-parties who may have information not known to the patent 
examiner. Through this joint effort, we maximize the flow of 
information, increase the reliability of patents, and thereby increase 
the strength of the American patent system.
  There are also safeguards to prevent this process from being abused 
by those who merely seek to harass a patent-holder. First, if a third-
party requestor loses an appeal of his reexamination request, he may 
not subsequently raise any issue he could have raised during the 
examination proceeding in any forum. Second, a party that loses a civil 
action where that party failed to show the invalidity of the patent, 
the party may not subsequently seek a reexamination of such patent on 
any grounds that could have been raised in the civil action. Third, the 
burden of reexamination on the patent-holder is minimized by the fact 
that a reexamination is not like a court review, and that the patent 
holder need not submit any documentation in order to prevail.


                  Provisional Applications for Patents

  Title VI is comprised of miscellaneous provisions. First, it fixes a 
matter of a rather technical nature. Some foreign courts have 
interpreted American provisional applications in a way that would not 
preserve their filing priority. This title amends section 115 of Title 
35 of the U.S. Code to clarify that if a provisional application is 
converted into a non-provisional application within 12 months of 
filing, that it stands as a full patent application, with the date of 
filing of the provisional application as the date of priority. If no 
request is made within 12 months, the provisional application is 
considered abandoned. This clarification will make certain that 
American provisional applications are given the same weight as other 
countries' provisional applications in other countries' courts.


                             Plant Patents

  Title VI also makes two corrections to the plant patent statute. 
First, the ban on tuber propagated plants is removed. This depression-
era ban was included for fear of limiting the food supply. Obviously, 
this is no longer a concern. Second, the plant patent statute is 
amended to provide protection to parts of plants, as well as the whole 
plant. This closes a loophole that foreign growers have used to import 
the fruit or flowers of patented plants without paying a royalty 
because the entire plant was not being sold.


                           Electronic Filing

  Lastly, this title also allows for the filing of patent and trademark 
documents by electronic medium. It is high time that the government 
office that is, by definition, always on the cutting edge of 
technology, be permitting to enter the age of computers.
  Mr. President, this bill is an important, and necessary measure that 
enjoys overwhelming support. I am confident that it will be enacted 
into law this Congress.


                The Copyright Term Extension Act of 1997

  Mr. President, the purpose of the Copyright Term Extension Act of 
1997 is to ensure adequate copyright protection for American works 
abroad by extending the U.S. term of copyright protection for an 
additional 20 years. It also includes a provision reversing the Ninth 
Circuit decision in La Cienega Music Co. v. ZZ Top that calls into 
question the copyrights of thousands of musical works first distributed 
on sound recordings.
  Except for the La Cienega provision, the substance of this bill is 
identical to S. 483, the Copyright Term Extension Act, which was passed 
by the Judiciary Committee on May 23, 1996, with overwhelming 
bipartisan support. This legislation also has the strong support of the 
Administration, as expressed by both the Commissioner of Patents and 
Trademarks, Bruce Lehman, and the Register of Copyrights, Marybeth 
Peters, in their testimony before the Judiciary Committee in the last 
Congress.
  Twenty years ago, Mr. President, Congress fundamentally altered the 
way in which the U.S. calculates its term of copyright protection by 
abandoning a fixed-year term of protection and adopting a basic term of 
protection based on the life of the author. In adopting the life-plus-
50 term, Congress cited three primary justifications for the change. 1) 
the need to conform the U.S. copyright term with the prevailing 
worldwide standard; 2) the insufficiency of the U.S. copyright term to 
provide a fair economic return for authors and their dependents; and, 
3) the failure of the U.S. copyright term to keep pace with the 
substantially increased commercial life of copyrighted works resulting 
from the rapid growth in communications media.
  Developments over the past 20 years have led to a widespread 
reconsideration of the adequacy of the life-plus-50-year term based on 
these same reasons. Among the main developments is the effect of 
demographic trends, such as increasing longevity and the trend toward 
rearing children later in life, on the effectiveness of the life-plus-
50 term to provide adequate protection for American creators and their 
heirs. In addition, unprecedented growth in technology over the last 20 
years, including the advent of digital media and the development of the 
National Information Infrastructure and the Internet, have dramatically 
enhanced the marketable lives of creative works. Most importantly, 
though, is the growing international movement toward the adoption the 
longer term of life-plus-70.
  Thirty-five years ago, the Permanent Committee of the Berne Union 
began to reexamine the sufficiency of the life-plus-50-year term. Since 
then, a growing consensus of the inadequacy of the life-plus-50 term to 
protect creators in an increasingly competitive global marketplace has 
led to actions by several nations to increase the duration of 
copyright. Of particular importance is the 1993 directive issued by the 
European Union, which requires its member countries to implement a term 
of protection equal to the life of the author plus 70 years by July 1, 
1995.
  According to the Copyright Office, Belgium, Denmark, Finland, 
Germany, Greece, Ireland, Spain, and Sweden have all notified their 
laws to the European Commission and the Commission has found them to be 
in compliance with the EU Directive. Luxembourg, The Netherlands, 
Portugal, the United Kingdom, and Austria have each notified their 
implementing laws to the Commission and are awaiting certification. 
Other countries are currently in the process of bringing their laws 
into compliance. And, as the Register of Copyrights has stated, those 
countries that are seeking to join the European Union, including 
Poland, Hungary, Turkey, the Czech Republic, and Bulgaria, are likely 
to amend their copyright laws to conform with the life-plus-70 
standard.
  The reason this is of such importance to the United States is that 
the EU Directive also mandates the application of what is referred to 
as the rule of the shorter term. This rule may also be applied by 
adherents to the Berne Convention and the Universal Copyright 
Convention. In short, this rule permits those countries with longer 
copyright terms to limit protection of foreign works to the shorter 
term of protection granted in the country of origin. Thus, in those 
countries that adopt the longer term of life-plus-70, American works 
will forfeit 20 years of available protection and be protected instead 
for only the duration of the life-plus-50 term afforded under U.S. law.
  Mr. President, I've already cited some statistics about the 
importance of copyright to our national economy. The fact is that 
America exports more copyrighted intellectual property than any country 
in the world, a huge percentage of it to nations of the European Union. 
In fact, intellectual property is our third largest export. And, 
according to 1994 estimates, copyright industries account for some 5.7 
percent of the total gross domestic product. Furthermore, copyright 
industries are creating American jobs at twice the rate of other 
industries, with the number of U.S. workers employed by core copyright 
industries more than doubling between 1977 and 1994. Today, these 
industries contribute more to the economy and employ more workers than 
any single manufacturing sector, accounting for nearly 5 percent of the 
total U.S. workforce. In fact, in 1994, the core copyright industries 
employed more workers than the four leading noncopyright manufacturing 
sectors combined.
  Clearly, Mr. President, America stands to lose a significant part of 
its

[[Page S2682]]

international trading advantage if our copyright laws do not keep pace 
with emerging international standards. Given the mandated application 
of the rule of the shorter term under the EU Directive, American works 
will fall into the public domain 20 years before those of our European 
trading partners, undercutting our international trading position and 
depriving copyright owners of two decades of income they might 
otherwise have. Similar consequences will follow in those nations 
outside the EU that choose to exercise the rule of the shorter term 
under the Berne Convention and the Universal Copyright Convention.
  Mr. President, adoption of the Copyright Term Extension Act will 
ensure fair compensation for the American creators whose efforts fuel 
the intellectual property sector of our economy by allowing American 
copyright owners to benefit to the fullest extent from foreign uses and 
will, at the same time, ensure that our trading partners do not get a 
free ride from their use of our intellectual property. And, as stated 
very simply by the Register of Copyrights in her testimony before the 
Judiciary Committee in the last Congress: ``[i]t does appear that at 
some point in the future the standard will be life plus 70. The 
question is at what point does the United States move to this term * * 
*. As a leading creator and exporter of copyrighted works, the United 
States should not wait until it is forced to increase the term, rather 
it should set an example for other countries.''

  Mr. President, this bill is of crucial importance to our Nation's 
copyright owners and to our economy. It is also a balanced approach. It 
contains a provision, allowing the actual creators of copyrighted works 
in certain circumstances to bargain for the extra 20 years, except in 
the case of works made for hire. The libraries and archives, too, will 
be pleased to see that the bill provides them with additional latitude 
to reproduce and distribute material during the extension term, and it 
does not extend the copyright term for certain works that were 
unpublished at the time of the effective date of the 1976 act. This 
latter provision means that libraries and archives will be able to go 
forward with their plans to publish those unpublished works in 2003, 
the year after the current guaranteed term for unpublished works 
expires.


                          La Cienega v. ZZ Top

  Mr. President, the Copyright Term Extension Act of 1997 also includes 
a provision to overturn the decision in La Cienega Music Co. v. ZZ Top, 
53 F.3d 950 (9th Cir. 1995), cert denied, 116 S. Ct. 331 (1995). In 
general, La Cienega held that distributing a sound recording to the 
public--for example by sale--is a ``publication'' of the music recorded 
on it under the 1909 Copyright Act. Under the 1909 act, publication 
without copyright notice caused loss of copyright protection. Almost 
all music that was first published on recordings did not contain 
copyright notice, because publishers believed that it was not 
technically a publication. The Copyright Office also considered these 
musical compositions to be unpublished. The effect of La Cienega, 
however, is that virtually all music before 1978 that was first 
distributed to the public on recordings has no copyright protection--at 
least in the 9th Circuit.
  By contrast, the Second Circuit in Rosette v. Rainbo Record 
Manufacturing Corp., 546 F.2d 461 (2d Cir. 1975), aff'd per curiam, 546 
F.2d 461 (2d Cir. 1976) has held the opposite--that public distribution 
of recordings was not a publication of the music contained on them. As 
I have noted, Rosette comports with the nearly universal understanding 
of the music and sound recording industries and of the Copyright 
Office.
  Since the Supreme Court has denied cert in La Cienega, whether one 
has copyright in thousands of musical compositions depends on whether 
the case is brought in the Second or Ninth Circuits. This situation is 
intolerable. Overturning the La Cienega decision will restore national 
uniformity on this important issue by confirming the wisdom of the 
custom and usage of the affected industries and of the Copyright Office 
for nearly 100 years. My bill, however, also contains a provision to 
ensure that Congress' affirmation of this view will not retroactively 
upset the disposition of previously adjudicated or pending cases.


                The Copyright Clarification Act of 1997

  Finally, Mr. President, I am introducing the Copyright Clarification 
Act of 1997 to make a series of truly technical amendments to the 
Copyright Act. The need for these technical corrections was brought to 
my attention in the last Congress by the Register of Copyrights, Ms. 
Marybeth Peters. This bill was passed by the House of Representatives 
in similar form in the 104th Congress. Unfortunately time ran short on 
our efforts to enact the same bill in the Senate. The version I am 
introducing today is identical to H.R. 672, which passed the House 
under suspension of the rules just yesterday. I hope the Senate will 
follow suit and act expeditiously to make these important technical 
amendments.


                               Conclusion

  Mr. President, each of the three bills I am introducing today is 
tremendously important. For the information of my colleagues I am 
submitting a brief summary of the Omnibus Patent Act of 1997, a 
section-by-section analysis of the Copyright Term Extension Act of 
1997, and a summary of provisions of the Copyright Clarification Act of 
1997. I ask unanimous consent that they be printed in the Record, along 
with the text of the Copyright Term Extension Act of 1997 and the text 
of the Copyright Clarification Act of 1997.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 505

       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 ``Copyright Term Extension Act 
     of 1997''.

     SEC. 2. DURATION OF COPYRIGHT PROVISIONS.

       (a) Preemption With Respect to Other Laws.--Section 301(c) 
     of title 17, United States Code, is amended by striking 
     ``February 15, 2047'' each place it appears and inserting 
     ``February 15, 2067''.
       (b) Duration of Copyright: Works Created on or After 
     January 1, 1978.--Section 302 of title 17, United States 
     Code, is amended--
       (1) in subsection (a) by striking ``fifty'' and inserting 
     ``70'';
       (2) in subsection (b) by striking ``fifty'' and inserting 
     ``70'';
       (3) in subsection (c) in the first sentence--
       (A) by striking ``seventy-five'' and inserting ``95''; and
       (B) by striking ``one hundred'' and inserting ``120''; and
       (4) in subsection (e) in the first sentence--
       (A) by striking ``seventy-five'' and inserting ``95'';
       (B) by striking ``one hundred'' and inserting ``120''; and
       (C) by striking ``fifty'' each place it appears and 
     inserting ``70''.
       (c) Duration of Copyright: Works Created but Not Published 
     or Copyrighted Before January 1, 1978.--Section 303 of title 
     17, United States Code, is amended in the second sentence by 
     striking ``December 31, 2027'' and inserting ``December 31, 
     2047''.
       (d) Duration of Copyright: Subsisting Copyrights.--
       (1) In general.--Section 304 of title 17, United States 
     Code, is amended--
       (A) in subsection (a)--
       (i) in paragraph (1)--

       (I) in subparagraph (B) by striking ``47'' and inserting 
     ``67''; and
       (II) in subparagraph (C) by striking ``47'' and inserting 
     ``67'';

       (ii) in paragraph (2)--

       (I) in subparagraph (A) by striking ``47'' and inserting 
     ``67''; and
       (II) in subparagraph (B) by striking ``47'' and inserting 
     ``67''; and

       (iii) in paragraph (3)--

       (I) in subparagraph (A)(i) by striking ``47'' and inserting 
     ``67''; and
       (II) in subparagraph (B) by striking ``47'' and inserting 
     ``67'';

       (B) by amending subsection (b) to read as follows:
       ``(b) Copyrights in Their Renewal Term at the Time of the 
     Effective Date of the Copyright Term Extension Act of 1997.--
     Any copyright still in its renewal term at the time that the 
     Copyright Term Extension Act of 1997 becomes effective shall 
     have a copyright term of 95 years from the date copyright was 
     originally secured.'';
       (C) in subsection (c)(4)(A) in the first sentence by 
     inserting ``or, in the case of a termination under subsection 
     (d), within the five-year period specified by subsection 
     (d)(2),'' after ``specified by clause (3) of this 
     subsection,''; and
       (D) by adding at the end the following new subsection:
       ``(d) Termination Rights Provided in Subsection (c) Which 
     Have Expired on or Before the Effective Date of the Copyright 
     Term Extension Act of 1997.--In the case of any copyright 
     other than a work made for hire, subsisting in its renewal 
     term on the effective date of the Copyright Term Extension 
     Act of 1997 for which the termination right provided in 
     subsection (c) has expired by such date, where the author or 
     owner of

[[Page S2683]]

     the termination right has not previously exercised such 
     termination right, the exclusive or nonexclusive grant of a 
     transfer or license of the renewal copyright or any right 
     under it, executed before January 1, 1978, by any of the 
     persons designated in subsection (a)(1)(C) of this section, 
     other than by will, is subject to termination under the 
     following conditions:
       ``(1) The conditions specified in subsection (c) (1), (2), 
     (4), (5), and (6) of this section apply to terminations of 
     the last 20 years of copyright term as provided by the 
     amendments made by the Copyright Term Extension Act of 1997.
       ``(2) Termination of the grant may be effected at any time 
     during a period of 5 years beginning at the end of 75 years 
     from the date copyright was originally secured.''.
       (2) Copyright renewal act of 1992.--Section 102 of the 
     Copyright Renewal Act of 1992 (Public Law 102-307; 106 Stat. 
     266; 17 U.S.C. 304 note) is amended--
       (A) in subsection (c)--
       (i) by striking ``47'' and inserting ``67'';
       (ii) by striking ``(as amended by subsection (a) of this 
     section)''; and
       (iii) by striking ``effective date of this section'' each 
     place it appears and inserting ``effective date of the 
     Copyright Term Extension Act of 1997''; and
       (B) in subsection (g)(2) in the second sentence by 
     inserting before the period the following: ``, except each 
     reference to forty-seven years in such provisions shall be 
     deemed to be 67 years''.

     SEC. 3. REPRODUCTION BY LIBRARIES AND ARCHIVES.

       Section 108 of title 17, United States Code, is amended--
       (1) by redesignating subsection (h) as subsection (i); and
       (2) by inserting after subsection (g) the following:
       ``(h)(1) For purposes of this section, during the last 20 
     years of any term of copyright of a published work, a library 
     or archives, including a nonprofit educational institution 
     that functions as such, may reproduce, distribute, display, 
     or perform in facsimile or digital form a copy or phonorecord 
     of such work, or portions thereof, for purposes of 
     preservation, scholarship, or research, if such library or 
     archives has first determined, on the basis of a reasonable 
     investigation, that none of the conditions set forth in 
     subparagraphs (A), (B), and (C) of paragraph (2) apply.
       ``(2) No reproduction, distribution, display, or 
     performance is authorized under this subsection if--
       ``(A) the work is subject to normal commercial 
     exploitation;
       ``(B) a copy or phonorecord of the work can be obtained at 
     a reasonable price; or
       ``(C) the copyright owner or its agent provides notice 
     pursuant to regulations promulgated by the Register of 
     Copyrights that either of the conditions set forth in 
     subparagraphs (A) and (B) applies.
       ``(3) The exemption provided in this subsection does not 
     apply to any subsequent uses by users other than such library 
     or archives.''.

     SEC. 4. DISTRIBUTION OF PHONORECORDS.

       Section 303 of title 17, United States Code, is amended--
       (1) in the first sentence by striking ``Copyright'' and 
     inserting ``(a) Copyright''; and
       (2) by adding at the end the following:
       ``(b) The distribution before January 1, 1978, of 
     phonorecords shall not constitute publication of the musical 
     work embodied therein for purposes of the Copyright Act of 
     1909.''.

     SEC. 5. EFFECTIVE DATES.

       (a) In General.--Except as provided in subsection (b), this 
     Act and the amendments made by this Act shall take effect on 
     the date of the enactment of this Act.
       (b) Distribution of Phonorecords.--The amendment made by 
     section 4 shall not be a basis to reopen an action nor to 
     commence a subsequent action for copyright infringement if an 
     action in which such claim was raised was dismissed by final 
     judgment before the date of enactment of this Act. The 
     amendment made by section 4 shall not apply to any action 
     pending on the date of enactment in any court in which a 
     party, prior to the date of enactment, sought dismissal of, 
     judgment on, or declaratory relief regarding a claim of 
     infringement by arguing that the adverse party had no valid 
     copyright in a musical work by virtue of the distribution of 
     phonorecords embodying it.
                                                                    ____


 The Copyright Term Extension Act of 1997 (S. 505)--Section-by-Section 
                                Analysis


                         section 1. short title

       The proposed legislation is entitled the Copyright Term 
     Extension Act of 1997.


              section 2. duration of copyright provisions

          Section 2(a)--Preemption with Respect to Other Laws

       This subsection amends Sec. 301(c) of the Copyright Act to 
     extend for an additional 20 years the application of common 
     law and state statutory protection for sound recordings fixed 
     before February 15, 1972. Under Sec. 301, the federal law 
     generally preempts all state and common law protection of 
     copyright with several exceptions, including one for sound 
     recordings fixed before February 15, 1972 (the effective date 
     of the statute extending federal copyright protection to 
     sound recordings). Because federal copyright protection 
     applies only to sound recordings fixed on or after that date, 
     federal preemption of state statutory and common law 
     protection of sound recordings fixed before February 15, 
     1972, would result in all of these works falling into the 
     public domain. The Sec. 301 exception was enacted to ensure a 
     75-year minimum term of copyright protection for these works. 
     By delaying the date of federal Copyright Act preemption of 
     state statutory and common law protection of pre-February 15, 
     1972, sound recordings until February 15, 2067, this 
     subsection extends the minimum term of protection for these 
     works by 20 years.

Section 2(b)--Duration of Copyright: Works Created on or After January 
                                1, 1978

       This subsection amends Sec. 302 of the Copyright Act to 
     extend the U.S. term of copyright protection by 20 years for 
     all works created on or after January 1, 1978. For works in 
     general, which currently enjoy protection for the life of the 
     author plus 50 additional years under Sec. 301(a), this 
     section creates a term equal to the life of the author plus 
     70 years. Likewise, for joint works under Sec. 302(b), this 
     section extends the current term of protection to the life of 
     the last surviving author plus 70 years. For anonymous works, 
     pseudonymous works, and works made for hire, which are 
     protected the shorter of 75 years from publication or 100 
     years from creation under Sec. 302(c), this subsection 
     extends the term to the shorter of 95 years from publication 
     or 120 years from the date the work is created.
       This subsection also amends Sec. 302(e) of the Copyright 
     Act to extend by 20 years the various dates relating to the 
     presumptive death of the author as a complete defense against 
     copyright infringement. Whereas current copyright protection 
     is generally tied to the life of the author, it is sometimes 
     not possible to ascertain whether the author of a work is 
     still living, or even to identify the year of death if the 
     author is deceased. Sec. 302(e) provides a complete defense 
     against copyright infringement when the work is used more 
     than 75 years after publication or 100 years after creation, 
     whichever is less, provided the user obtains a certificate 
     from the Copyright Office indicating that it has no record to 
     indicate whether that person is living or died less than 50 
     years before. This subsection would extend protection of such 
     works for an additional 20 years--95 years from publication 
     and 120 years from creation--as well as base the presumptive 
     death of the author on certification by the Copyright Office 
     that is has no record to indicate whether the person is 
     living or died less than 70 years before, which is 20 years 
     longer than the 50 years currently provided for in 
     Sec. 302(e).

Section 2(c)--Duration of Copyright: Works Created But Not Published or 
                   Copyrighted Before January 1, 1978

       This subsection amends Sec. 303 of the Copyright Act to 
     extend the minimum term of copyright protection by 20 years 
     for works created but not copyrighted before January 1, 1978, 
     provided they are published prior to December 31, 2002. Prior 
     to 1978, unpublished works enjoyed perpetual copyright 
     protection. Beginning in 1978, however, copyright protection 
     for unpublished works was limited to the life of the author 
     plus 50 years, or 100 years from creation for anonymous 
     works, pseudonymous works, and works made for hire. Under 
     Sec. 303, however, works created but not published before 
     January 1, 1978, are guaranteed protection until at least 
     December 31, 2002. Works subsequently published before that 
     date are guaranteed further protection until December 31, 
     2027. This subsection provides an additional 20 years of 
     protection for these subsequently published works by ensuring 
     that copyright protection will not expire before December 31, 
     1047.

 Section 2(d)(1)(A)--Duration of Copyright: Copyrights in Their First 
                        Term on January 1, 1978

       This subsection amends Sec. 304(a) of the Copyright Act to 
     extend the term of protection for works in their first term 
     on January 1, 1978, by extending the renewal term from 47 
     years to 67 years. The effect of this amendment is to provide 
     a composite term of protection of 95 years from the date of 
     publication.

 Section 2(d)(1)(B)--Duration of Copyright: Copyright in Their Renewal 
         Term or Registered for Renewal Before January 1, 1978

       This subsection amends Sec. 304(b) of the Copyright Act to 
     extend the copyright term of pre-1978 works currently in 
     their renewal term from 75 years to 95 years. As amended, 
     this section clarifies that the extension applies only to 
     works that are currently under copyright protection and is 
     not intended to restore copyright protection to works already 
     in the public domain.

    Section 2(d)(1)(C) & (D)--Termination of Transfers and Licenses

       These subsections amend Sec. 340(c) of the Copyright Act 
     and create a new subsection (d) to provide a revived power of 
     termination for individual authors whose right to terminate 
     prior transfers and licenses of copyright under Sec. 304(c) 
     has expired, provided the author has not previously exercised 
     that right. Under Sec. 304(c), an author may terminate a 
     prior transfer or license of copyright for any work, other 
     than a work made for hire, by serving advance written notice 
     upon the grantee or the grantee's successor at least 2, but 
     not more than 10, years prior to the effective date of the 
     termination. Such termination may be effected at any time 
     within 5 years beginning at the end of 56 years from the date 
     of publication. The purpose of this termination provision 
     was to afford the individual creator the opportunity to 
     bargain for the benefit of the 19-year extension provided 
     by the 1976 Copyright Act.

[[Page S2684]]

       For most individual creators, the existing power of 
     termination under Sec. 304(c) will allow them to terminate 
     prior transfers and to bargain for the benefit of both the 
     extension under the 1976 Copyright Act and the extension 
     under the Copyright Term Extension Act of 1997. For a much 
     smaller group of individuals, the five-year window in which 
     to terminate prior transfers under Sec. 304(c) has already 
     expired. Thus, these creators are denied the opportunity to 
     reap the benefits of the extended term, while the current 
     copyright owners are given a 20-year windfall. This 
     subsection amends the existing termination provisions under 
     Sec. 304(c) of Copyright Act to create a revived window, 
     beginning at the end of the current 75-year copyright term, 
     in which individual creators or their heirs who did not 
     terminate previous transfers or grants prior to the 
     expiration of their right of termination under Sec. 304(c) 
     may bargain for the benefit of the extended term.

            Section 2(d)(2)--Copyright Renewal Act revisions

       This subsection makes corresponding amendments to Sec. 102 
     of the Copyright Renewal Act of 1992 (P.L. 102-307, 106 Stat. 
     266) to reflect the changes made by the Copyright Term 
     Extension Act.

   Section 3--Clarification of Library Exemption of Exclusive Rights

       This subsection amends Sec. 108 of the Copyright Act, 
     governing limited exemptions from copyright infringement for 
     libraries and archives, including nonprofit educational 
     institutions that function as such, by redesignating 
     subsection (h) as subsection (i) and inserting a new 
     subsection (h). The new subsection (h)(1) will allow 
     libraries, archives, and nonprofit educational institutions 
     to reproduce and distribute copies of works for preservation, 
     scholarship, or research during the last 20 years of 
     copyright, if the works are not being commercially exploited 
     and cannot be obtained at a reasonable price. The new 
     subsection (h)(2) provides that the limited exemption does 
     not apply where the copyright owner provides notice to the 
     Copyright Office that the conditions regarding commercial 
     exploitation and reasonable availability have not been met. 
     The new subsection (h)(3) provides that the exemption does 
     not apply to subsequent users other than the libraries or 
     archives.


                section 4. distribution of phonorecords

       Section 4 affirms the longstanding view that the public 
     distribution of phonorecords prior to 1978, did not 
     constitute publication of the musical composition embodied 
     therein under the 1909 Copyright Act. This section overturns 
     the decision in LaCienega Music Co. v. Z.Z. Top., 53 F.3d 950 
     (9th Cir. 1995), cert. denied, 116 S.Ct. 331 (1995), which 
     held that the sale of records constituted ``publication'' of 
     the musical composition under the 1909 Act, and implicitly 
     ruled that unless such a copy contained a copyright notice, 
     the composition entered the public domain immediately upon 
     the first sale. The result of such a view is that potentially 
     thousands of musical compositions will be stripped of their 
     presumed copyright protection as unpublished works under the 
     1909 Act. Section 13 adopts the view of the Second Circuit 
     that the pre-1978 sale or distribution of recordings to the 
     public did not constitute a publication for copyright 
     purposes. Rosette v. Rainbo Record Mfg. Corp., 354 F.Supp. 
     1183 (S.D.N.Y.), aff'd per curiam, 546 F.2d 461 (2d. Cir. 
     1976). This same view is adopted by the Copyright Office, 
     which for years has refused to accept registrations for such 
     phonorecords as published works.


                       section 5. effective date

       Subsection (a) provides that this Act and the amendments 
     made thereby shall be effective on the date of enactment. 
     Subsection (b) provides, however, that the overturning of the 
     LaCienega decision will not retroactively upset the 
     disposition of previously adjudicated or pending cases.

  Mr. LEAHY. Mr. President, I am glad to be working with Senator Hatch 
as original cosponsors of this, the Copyright Term Extension Act of 
1997. We worked together on this matter last Congress to craft a bill 
that was reported by the Judiciary Committee to the Senate by a vote of 
15 to 3.
  I raised a number of questions and concerns during our Judiciary 
Committee hearing on this issue back in September 1995. I spoke of a 
letter I had received from Prof. Karen Burke Lefevre of Vermont and the 
Rensselaer Polytechnic Institute. She expressed reservations, as a 
researcher and author, that Congress not extend the term for 
unpublished works beyond the term set by the 1976 Act. This category of 
materials is set to have its copyrights expire in 2002. They include 
anonymous works and unpublished works of interest to scholars. In 
section 2(c) of the bill we introduce today, we accommodate these 
interests and preserve the public availability of these materials in 
2003, if they remain unpublished on December 31, 2002.
  I want to thank Marybeth Peters, our Register of Copyrights, for 
supporting this improvement in the bill, and Senator Hatch for working 
with me on it.
  I am concerned about libraries, educational institutions and 
nonprofits being able to access materials and provide access in turn 
for research, archival, preservation and other purposes. We have also 
made progress in this area as reflected in section 3 of the bill. 
Copyright industry and library representatives have narrowed their 
differences. I ask for their continued help in crafting the best 
balance possible to create public access for noncommercial purposes 
during the extension period without undercutting the value of 
copyrights.
  At our hearing I also raised the notion of a new right of termination 
for works where the period of termination in current law has already 
passed and the 20-year extension inures to the benefit of a copyright 
transferee. This bill creates such a right of termination in section 
2(d) of the bill.
  At our hearing, I was still considering whether there was sufficient 
justification for extending the copyright term for an additional 20 
years. At that time we were considering the European Union Directive to 
its member countries to provide copyright protection for a term of life 
plus 70 years by July 1, 1995. While many of our trading partners had 
not extended their terms by July 1995, they have acted to do so in the 
past 2 years.
  I received a letter from Bruce A. Lehman, the Assistant Secretary of 
Commerce and Commissioner of Patents and Trademarks, in which he 
reported that Austria, Germany, Greece, France, Denmark, Belgium, 
Ireland, Spain, Italy and the United Kingdom had complied with the EU 
Directive on Copyright Term. Sweden, Portugal, Finland and the 
Netherlands were reported to have legislation to do so pending, as 
well. With so many of our trading partners moving to the longer term 
but preparing to recognize American works for only the shorter term, I 
believe it is time for us to act.
  This bill also now includes a revised version of legislation that 
passed the House last Congress but was stalled in the Senate to clarify 
the Copyright Act of 1909 with regard to whether the distribution of 
phonorecords may be held to be a divesting publication of the copyright 
in the musical composition embodied therein. The revision is intended 
to clarify the law while not affecting cases in which parties have 
litigated or are litigating this issue.
  Finally, I feel strongly that the extension of the copyright term 
should include public benefit, such as the creation of new works or 
benefit to public arts. Senator Dodd, Senator Kennedy, and I have been 
concerned about finding an appropriate way to benefit the public from 
this extension and continue to do so. Along these lines, the Copyright 
Office is examining how the extension in this bill will benefit 
copyright industries, authors and the public.
  Given the changes made to meet the concerns that I raised with an 
earlier bill and in light of the international developments that are 
disadvantaging American copyrighted works, I cosponsored the Committee 
substitute at our Judiciary Committee executive business session last 
Congress and pressed for its consideration by the Senate. 
Unfortunately, this bill was not considered by the Senate during the 
104th Congress.
  Accordingly, I join with Senator Hatch to reintroduce this copyright 
term extension legislation this Congress and look forward to working 
with him to see to its enactment, without further delay.
  Mrs. FEINSTEIN. Mr. President, I want to express my support for the 
Copyright Term Extension Act of 1997. I believe that extending the 
basic term of copyright protection by 20 years is a step in the right 
direction.
  Perhaps the most compelling reason for this legislation is the need 
for greater international reciprocity in honoring copyright terms. The 
European Union has formally adopted a life plus 70 copyright term, and 
countries currently awaiting admission to the Union will adopt this 
standard in the future. Several countries outside of the European Union 
also have turned to the life plus 70 term, and many expect it to become 
the international standard.
  By extending to life plus 70 years, Congress will help ensure that 
American creators receive comparable protection in other countries. If 
we do not act, other nations will not be required

[[Page S2685]]

to provide American authors and artists with any more protection than 
we offer them at home.
  And, before the United States is the world's leader in the production 
of intellectual property, and because the State of California is home 
to many of the leading copyright industries, this issue is of great 
importance to me. We could be the net losers if we do not move toward 
greater harmonization.
  Intellectual property--the collective creative output of America's 
makers of movies, music, art, and other works--is an enormous asset to 
the Nation's economy and balance of trade.
  The International Intellectual Property Alliance estimates that 
copyright-related industries contributed more than $385 billion to the 
U.S. economy in 1994, with more than $50 billion in foreign sales.
  Many other countries have preferred to appropriate and re-sell 
American films, music, and computer programs--some of the great exports 
of my State of California--rather than license American works.
  The United States suffers greatly from illegal duplication of our 
work. Why, then, should we sit back and allow European companies to 
legally profit from the use of our works, without paying us in return?
  As Prof. Arthur Miller of Harvard Law School aptly, albeit bluntly, 
put it: ``Unless Congress matches the copyright extension adopted by 
the European Union, we will lost 20 years of valuable protection 
against rip-off artists.'' Since America is the world's principal 
exporter of popular culture, extension of the basic copyright term is 
an important step in the right direction.
  Reciprocity in copyright protection becomes even more necessary in 
today's global information society, where computer networks span the 
continents, and intellectual property is shuttled around the world in 
seconds.
  The world has changed dramatically since 1976, when Congress 
established the present copyright terms. Many copyrighted works have a 
much longer commercial life than they used to have.
  Videocassettes, cable television, and new satellite delivery systems 
have extended the commercial life of movies and television series. New 
technologies not only have extended but also have expanded the market 
for creative content. Cable television, which promises hundreds of 
different channels, has vastly expanded this market. Networked 
computers add to the demand for content. Interactive television 
promises to do the same.
  The Copyright Term Extension Act will go far to address the global 
developments I have mentioned.
  After introduction, I recommend that my colleagues and I further 
develop the language of the act to ensure that all contributors to the 
creative process receive benefits from the extended copyright term.
  I urge my colleagues to support this bill.

                                 S. 506

       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 ``Copyright Clarifications Act 
     of 1997''.

     SEC. 2. SATELLITE HOME VIEWER ACT OF 1994.

       The Satellite Home Viewer Act of 1994 (Public Law 103-369) 
     is amended as follows:
       (1) Section 2(3)(A) is amended to read as follows:
       ``(A) in clause (i) by striking `12 cents' and inserting 
     `17.5 cents per subscriber in the case of superstations that 
     as retransmitted by the satellite carrier include any program 
     which, if delivered by any cable system in the United States, 
     would be subject to the syndicated exclusivity rules of the 
     Federal Communications Commission, and 14 cents per 
     subscriber in the case of superstations that are syndex-proof 
     as defined in section 258.2 of title 37, Code of Federal 
     Regulations'; and''.
       (2) Section 2(4) is amended to read as follows:
       ``(4) Subsection (c) is amended--
       ``(A) in paragraph (1)--
       ``(i) by striking `until December 31, 1992,';
       ``(ii) by striking `(2), (3) or (4)' and inserting `(2) or 
     (3)'; and
       ``(iii) by striking the second sentence;
       ``(B) in paragraph (2)--
       ``(i) in subparagraph (A) by striking `July 1, 1991' and 
     inserting `July 1, 1996'; and
       ``(ii) in subparagraph (D) by striking `December 31, 1994' 
     and inserting `December 31, 1999, or in accordance with the 
     terms of the agreement, whichever is later'; and
       ``(C) in paragraph (3)--
       ``(i) in subparagraph (A) by striking `December 31, 1991' 
     and inserting `January 1, 1997';
       ``(ii) by amending subparagraph (B) to read as follows:
       `(B) Establishment of royalty fees.--In determining royalty 
     fees under this paragraph, the copyright arbitration royalty 
     panel appointed under chapter 8 shall establish fees for the 
     retransmission of network stations and superstations that 
     most clearly represent the fair market value of secondary 
     transmissions. In determining the fair market value, the 
     panel shall base its decision on economic, competitive, and 
     programming information presented by the parties, including--
       `(i) the competitive environment in which such programming 
     is distributed, the cost of similar signals in similar 
     private and compulsory license marketplaces, and any special 
     features and conditions of the retransmission marketplace;
       `(ii) the economic impact of such fees on copyright owners 
     and satellite carriers; and
       `(iii) the impact on the continued availability of 
     secondary transmissions to the public.'; and
       ``(iii) in subparagraph (C), by inserting `or July 1, 1997, 
     whichever is later' after `section 802(g)'.''.
       (3) Section 2(5)(A) is amended to read as follows:
       ``(A) in paragraph (5)(C) by striking `the date of the 
     enactment of the Satellite Home Viewer Act of 1988' and 
     inserting `November 16, 1988'; and''.

     SEC. 3. COPYRIGHT IN RESTORED WORKS.

       Section 104A of title 17, United States Code, is amended as 
     follows:
       (1) Subsection (d)(3)(A) is amended to read as follows:
       ``(3) Existing derivative works.--(A) In the case of a 
     derivative work that is based upon a restored work and is 
     created--
       ``(i) before the date of the enactment of the Uruguay Round 
     Agreements Act, if the source country of the restored work is 
     an eligible country on such date, or
       ``(ii) before the date on which the source country of the 
     restored work becomes an eligible country, if that country is 
     not an eligible country on such date of enactment,

     a reliance party may continue to exploit that derivative work 
     for the duration of the restored copyright if the reliance 
     party pays to the owner of the restored copyright reasonable 
     compensation for conduct which would be subject to a remedy 
     for infringement but for the provisions of this paragraph.''.
       (2) Subsection (e)(1)(B)(ii) is amended by striking the 
     last sentence.
       (3) Subsection (h)(2) is amended to read as follows:
       ``(2) The `date of restoration' of a restored copyright 
     is--
       ``(A) January 1, 1996, if the source country of the 
     restored work is a nation adhering to the Berne Convention or 
     a WTO member country on such date; or
       ``(B) the date of adherence or proclamation, in the case of 
     any other source country of the restored work.''.
       (4) Subsection (h)(3) is amended to read as follows:
       ``(3) The term `eligible country' means a nation, other 
     than the United States, that--
       ``(A) becomes a WTO member country after the date of the 
     enactment of the Uruguay Round Agreements Act;
       ``(B) on such date of enactment is, or after such date of 
     enactment becomes, a member of the Berne Convention; or
       ``(C) after such date of enactment becomes subject to a 
     proclamation under subsection (g).

     For purposes of this paragraph, a nation that is a member of 
     the Berne Convention on the date of the enactment of the 
     Uruguay Round Agreements Act shall be construed to become an 
     eligible country on such date of enactment.''.

     SEC. 4. LICENSES FOR NONEXEMPT SUBSCRIPTION TRANSMISSIONS.

       Section 114(f) of title 17, United States Code, is 
     amended--
       (1) in paragraph (1), by inserting ``, or, if a copyright 
     arbitration royalty panel is convened, ending 30 days after 
     the Librarian issues and publishes in the Federal Register an 
     order adopting the determination of the copyright arbitration 
     royalty panel or an order setting the terms and rates (if the 
     Librarian rejects the panel's determination)'' after 
     ``December 31, 2000''; and
       (2) in paragraph (2), by striking ``and publish in the 
     Federal Register''.

     SEC. 5. ROYALTY PAYABLE UNDER COMPULSORY LICENSE.

       Section 115(c)(3)(D) of title 17, United States Code, is 
     amended by striking ``and publish in the Federal Register''.

     SEC. 6. NEGOTIATED LICENSE FOR JUKEBOXES.

       Section 116 of title 17, United States Code, is amended--
       (1) by amending subsection (b)(2) to read as follows:
       ``(2) Arbitration.--Parties not subject to such a 
     negotiation may determine, by arbitration in accordance with 
     the provisions of chapter 8, the terms and rates and the 
     division of fees described in paragraph (1).''; and
       (2) by adding at the end the following new subsection:
       ``(d) Definitions.--As used in this section, the following 
     terms mean the following:
       ``(1) A `coin-operated phonorecord player' is a machine or 
     device that--
       ``(A) is employed solely for the performance of nondramatic 
     musical works by means of phonorecords upon being activated

[[Page S2686]]

     by the insertion of coins, currency, tokens, or other 
     monetary units or their equivalent;
       ``(B) is located in an establishment making no direct or 
     indirect charge for admission;
       ``(C) is accompanied by a list which is comprised of the 
     titles of all the musical works available for performance on 
     it, and is affixed to the phonorecord player or posted in the 
     establishment in a prominent position where it can be readily 
     examined by the public; and
       ``(D) affords a choice of works available for performance 
     and permits the choice to be made by the patrons of the 
     establishment in which it is located.
       ``(2) An `operator' is any person who, alone or jointly 
     with others--
       ``(A) owns a coin-operated phonorecord player;
       ``(B) has the power to make a coin-operated phonorecord 
     player available for placement in an establishment for 
     purposes of public performance; or
       ``(C) has the power to exercise primary control over the 
     selection of the musical works made available for public 
     performance on a coin-operated phonorecord player.''.

     SEC. 7. REGISTRATION AND INFRINGEMENT ACTIONS.

       Section 411(b)(1) of title 17, United States Code, is 
     amended to read as follows:
       ``(1) serves notice upon the infringer, not less than 48 
     hours before such fixation, identifying the work and the 
     specific time and source of its first transmission, and 
     declaring an intention to secure copyright in the work; 
     and''.

     SEC. 8. COPYRIGHT OFFICE FEES.

       (a) Fee Increases.--Section 708(b) of title 17, United 
     States Code, is amended to read as follows:
       ``(b) In calendar year 1997 and in any subsequent calendar 
     year, the Register of Copyrights, by regulation, may increase 
     the fees specified in subsection (a) in the following manner:
       ``(1) The Register shall conduct a study of the costs 
     incurred by the Copyright Office for the registration of 
     claims, the recordation of documents, and the provision of 
     services. The study shall also consider the timing of any 
     increase in fees and the authority to use such fees 
     consistent with the budget.
       ``(2) The Register may, on the basis of the study under 
     paragraph (1), and subject to paragraph (5), increase fees to 
     not more than that necessary to cover the reasonable costs 
     incurred by the Copyright Office for the services described 
     in paragraph (1), plus a reasonable inflation adjustment to 
     account for any estimated increase in costs.
       ``(3) Any newly established fee under paragraph (2) shall 
     be rounded off to the nearest dollar, or for a fee less than 
     $12, rounded off to the nearest 50 cents.
       ``(4) The fees established under this subsection shall be 
     fair and equitable and give due consideration to the 
     objectives of the copyright system.
       ``(5) If the Register determines under paragraph (2) that 
     fees should be increased, the Register shall prepare a 
     proposed fee schedule and submit the schedule with the 
     accompanying economic analysis to the Congress. The fees 
     proposed by the Register may be instituted after the end of 
     120 days after the schedule is submitted to the Congress 
     unless, within that 120-day period, a law is enacted stating 
     in substance that the Congress does not approve the 
     schedule.''.
       (b) Deposit of Fees.--Section 708(d) of such title is 
     amended to read as follows:
       ``(d)(1) Except as provided in paragraph (2), all fees 
     received under this section shall be deposited by the 
     Register of Copyrights in the Treasury of the United States 
     and shall be credited to the appropriations for necessary 
     expenses of the Copyright Office. Such fees that are 
     collected shall remain available until expended. The Register 
     may, in accordance with regulations that he or she shall 
     prescribe, refund any sum paid by mistake or in excess of the 
     fee required by this section.
       ``(2) In the case of fees deposited against future 
     services, the Register of Copyrights shall request the 
     Secretary of the Treasury to invest in interest-bearing 
     securities in the United States Treasury any portion of the 
     fees that, as determined by the Register, is not required to 
     meet current deposit account demands. Funds from such portion 
     of fees shall be invested in securities that permit funds to 
     be available to the Copyright Office at all times if they are 
     determined to be necessary to meet current deposit account 
     demands. Such investments shall be in public debt securities 
     with maturities suitable to the needs of the Copyright 
     Office, as determined by the Register of Copyrights, and 
     bearing interest at rates determined by the Secretary of the 
     Treasury, taking into consideration current market yields on 
     outstanding marketable obligations of the United States of 
     comparable maturities.
       ``(3) The income on such investments shall be deposited in 
     the Treasury of the United States and shall be credited to 
     the appropriations for necessary expenses of the Copyright 
     Office.''.

     SEC. 9. COPYRIGHT ARBITRATION ROYALTY PANELS.

       (a) Establishment and Purpose.--Section 801 of title 17, 
     United States Code, is amended--
       (1) in subsection (b)(1) by striking ``and 116'' in the 
     first sentence and inserting ``116, and 119'';
       (2) in subsection (c) by inserting after ``panel'' at the 
     end of the sentence the following:

     ``, including--
       ``(1) authorizing the distribution of those royalty fees 
     collected under sections 111, 119, and 1005 that the 
     Librarian has found are not subject to controversy; and
       ``(2) accepting or rejecting royalty claims filed under 
     sections 111, 119, and 1007 on the basis of timeliness or the 
     failure to establish the basis for a claim''; and
       (3) by amending subsection (d) to read as follows:
       ``(d) Support and Reimbursement of Arbitration Panels.--The 
     Librarian of Congress, upon the recommendation of the 
     Register of Copyrights, shall provide the copyright 
     arbitration royalty panels with the necessary administrative 
     services related to proceedings under this chapter, and shall 
     reimburse the arbitrators presiding in distribution 
     proceedings at such intervals and in such manner as the 
     Librarian shall provide by regulation. Each such arbitrator 
     is an independent contractor acting on behalf of the United 
     States, and shall be hired pursuant to a signed agreement 
     between the Library of Congress and the arbitrator. Payments 
     to the arbitrators shall be considered costs incurred by the 
     Library of Congress and the Copyright Office for purposes of 
     section 802(h)(1).''.
       (b) Proceedings.--Section 802 of title 17, United States 
     Code, is amended--
       (1) in subsection (c) by striking the last sentence; and
       (2) in subsection (h) by amending paragraph (1) to read as 
     follows:
       ``(1) Deduction of costs of library of congress and 
     copyright office from royalty fees.--The Librarian of 
     Congress and the Register of Copyrights may, to the extent 
     not otherwise provided under this title, deduct from royalty 
     fees deposited or collected under this title the reasonable 
     costs incurred by the Library of Congress and the Copyright 
     Office under this chapter. Such deduction may be made before 
     the fees are distributed to any copyright claimants. In 
     addition, all funds made available by an appropriations Act 
     as offsetting collections and available for deductions under 
     this subsection shall remain available until expended. In 
     ratemaking proceedings, the Librarian of Congress and the 
     Copyright Office may assess their reasonable costs directly 
     to the parties to the most recent relevant arbitration 
     proceeding, 50 percent of the costs to the parties who would 
     receive royalties from the royalty rate adopted in the 
     proceeding and 50 percent of the costs to the parties who 
     would pay the royalty rate so adopted.''.

     SEC. 10. DIGITAL AUDIO RECORDING DEVICES AND MEDIA.

       Section 1007(b) of title 17, United States Code, is amended 
     by striking ``Within 30 days after'' in the first sentence 
     and inserting ``After''.

     SEC. 11. CONFORMING AMENDMENT.

       Section 4 of the Digital Performance Right in Sound 
     Recordings Act of 1995 (Public Law 104-39) is amended by 
     redesignating paragraph (5) as paragraph (4).

     SEC. 12. MISCELLANEOUS TECHNICAL AMENDMENTS.

       (a) Amendments to Title 17, United States Code.--Title 17, 
     United States Code, is amended as follows:
       (1) The table of chapters at the beginning of title 17, 
     United States Code, is amended--
       (A) in the item relating to chapter 6, by striking 
     ``Requirement'' and inserting ``Requirements'';
       (B) in the item relating to chapter 8, by striking 
     ``Royalty Tribunal'' and inserting ``Arbitration Royalty 
     Panels'';
       (C) in the item relating to chapter 9, by striking 
     ``semiconductor chip products'' and inserting ``Semiconductor 
     Chip Products''; and
       (D) by inserting after the item relating to chapter 9 the 
     following:

``10. Digital Audio Recording Devices and Media.............1001''.....

       (2) The item relating to section 117 in the table of 
     sections at the beginning of chapter 1 is amended to read as 
     follows:

``117. Limitations on exclusive rights: Computer programs.''.

       (3) Section 101 is amended in the definition of to perform 
     or display a work ``publicly'' by striking ``processs'' and 
     inserting ``process''.
       (4) Section 108(e) is amended by striking ``pair'' and 
     inserting ``fair''.
       (5) Section 109(a)(2)(B) is amended by striking 
     ``Copyright'' and inserting ``Copyrights''.
       (6) Section 110 is amended--
       (A) in paragraph (8) by striking the period at the end and 
     inserting a semicolon;
       (B) in paragraph (9) by striking the period at the end and 
     inserting ``; and''; and
       (C) in paragraph (10) by striking ``4 above'' and inserting 
     ``(4)''.
       (7) Section 115(c)(3)(E) is amended--
       (A) in clause (i) by striking ``section 106(1) and (3)'' 
     each place it appears and inserting ``paragraphs (1) and (3) 
     of section 106''; and
       (B) in clause (ii)(II) by striking ``sections 106(1) and 
     106(3)'' and inserting ``paragraphs (1) and (3) of section 
     106''.
       (8) Section 119(c)(1) is amended by striking ``unless 
     until'' and inserting ``unless''.
       (9) Section 304(c) is amended in the matter preceding 
     paragraph (1) by striking ``the subsection (a)(1)(C)'' and 
     inserting ``subsection (a)(1)(C)''.
       (10) Section 405(b) is amended by striking ``condition or'' 
     and inserting ``condition for''.
       (11) Section 407(d)(2) is amended by striking ``cost of'' 
     and inserting ``cost to''.

[[Page S2687]]

       (12) The item relating to section 504 in the table of 
     sections at the beginning of chapter 5 is amended by striking 
     ``Damage'' and inserting ``Damages''.
       (13) Section 504(c)(2) is amended by striking ``court it'' 
     and inserting ``court in''.
       (14) Section 509(b) is amended by striking ``merchandise; 
     and baggage'' and inserting ``merchandise, and baggage''.
       (15) Section 601(a) is amended by striking ``nondramtic'' 
     and inserting ``nondramatic''.
       (16) Section 601(b)(1) is amended by striking 
     ``subsustantial'' and inserting ``substantial''.
       (17) The item relating to section 710 in the table of 
     sections at the beginning of chapter 7 is amended by striking 
     ``Reproductions'' and inserting ``Reproduction''.
       (18) The item relating to section 801 in the table of 
     sections at the beginning of chapter 8 is amended by striking 
     ``establishment'' and inserting ``Establishment''.
       (19) Section 801(b) is amended--
       (A) by striking ``shal be--'' and inserting ``shall be as 
     follows:'';
       (B) in paragraph (1) by striking ``to make'' and inserting 
     ``To make'';
       (C) in paragraph (2)--
       (i) by striking ``to make'' and inserting ``To make''; and
       (ii) in subparagraph (D) by striking ``adjustment; and'' 
     and inserting ``adjustment.''; and
       (D) in paragraph (3) by striking ``to distribute'' and 
     inserting ``To distribute''.
       (20) Section 803(b) is amended in the second sentence by 
     striking ``subsection subsection'' and inserting 
     ``subsection''.
       (21) The item relating to section 903 in the table of 
     sections at the beginning of chapter 9 is amended to read as 
     follows:

``903. Ownership, transfer, licensure, and recordation.''.

       (22) Section 909(b)(1) is amended--
       (A) by striking ``force'' and inserting ``work''; and
       (B) by striking ``sumbol'' and inserting ``symbol''.
       (23) Section 910(a) is amended in the second sentence by 
     striking ``as used'' and inserting ``As used''.
       (24) Section 1006(b)(1) is amended by striking ``Federation 
     Television'' and inserting ``Federation of Television''.
       (25) Section 1007 is amended--
       (A) in subsection (a)(1) by striking ``The calendar year in 
     which this chapter takes effect'' and inserting ``calendar 
     year 1992''; and
       (B) in subsection (b) by striking ``the year in which this 
     section takes effect'' and inserting ``1992''.
       (b) Related Provisions.--
       (1) Section 1(a)(1) of the Act entitled ``An Act to amend 
     chapter 9 of title 17, United States Code, regarding 
     protection extended to semiconductor chip products of foreign 
     entities'', approved November 9, 1987 (17 U.S.C. 914 note), 
     is amended by striking ``orginating'' and inserting 
     ``originating''.
       (2) Section 2319(b)(1) of title 18, United States Code, is 
     amended by striking ``last 10'' and inserting ``least 10''.

     SEC. 13. EFFECTIVE DATES.

       (a) In General.--Except as provided in subsections (b) and 
     (c), the amendments made by this title shall take effect on 
     the date of the enactment of this Act.
       (b) Satellite Home Viewer Act of 1994.--The amendments made 
     by section 2 shall be effective as if enacted as part of the 
     Satellite Home Viewer Act of 1994 (Public Law 103-369).
       (c) Technical Amendment.--The amendment made by section 
     12(b)(1) shall be effective as if enacted on November 9, 
     1987.
                                                                    ____


  Summary of Provisions--Copyright Clarification Act of 1997 (S. 506)

       The Copyright Clarification Act is intended to make several 
     technical, yet important, changes to Copyright law, as 
     suggested by the U.S. Copyright Office. The following is a 
     brief summary of its provisions.
       Satellite Home Viewer Act Technical Amendments. Section 2 
     makes technical corrections to the Satellite Home Viewer Act 
     of 1994 (SHVA), as recommended by the Copyright Office. 
     First, the bill corrects the dollar figures specified in the 
     Act for royalties to be paid by satellite carriers--the 1994 
     SHVA amendments mistakenly reversed the rates set by 
     arbitration in 1992 for signals subject to FCC syndicated 
     exclusivity blackout rules vs. those that are not subject to 
     such rules. Second, the bill corrects errors in section 
     numbers and references resulting from the failure of the 1994 
     SHVA amendments to account for changes made to Title 17 by 
     the Copyright Royalty Tribunal Act of 1993. Third, the bill 
     replaces references to ``the effective date of the Satellite 
     Home Viewer Act of 1988'' with the actual calendar date so as 
     to avoid confusion caused by the two Acts bearing the same 
     name.
       Copyright Restoration. Section 3 clarifies ambiguities and 
     corrects drafting errors in the Copyright Restoration Act, 
     which was enacted as part of the 1994 Uruguay Round 
     Agreements Act to restore copyright protection in the U.S. 
     for certain works from WTO member countries that had fallen 
     into the public domain. First, the bill corrects a drafting 
     error that precludes U.S. creators of derivative works from 
     continuing to exploit those works if copyright protection in 
     the underlying foreign work is restored under GATT. Second, 
     the bill eliminates a duplicative reporting requirement. 
     Third, the bill clarifies Congress' intent that the effective 
     date of restoration is January 1, 1996 (not 1995 as 
     interpreted by some commentators). Fourth, the bill clarifies 
     the definition of ``eligible country'' as it pertains to 
     limited rights of continued exploitation for those who rely 
     on public domain works that were restored under GATT. An 
     ambiguous reference in the original bill left open the 
     possible interpretation that a party would not qualify as a 
     ``reliance party'' where reliance had not predated adherence 
     to the Berne Convention for the country of origin--a date 
     that goes as far back as 1886 for many countries.
       Digital Performance Right in Sound Recordings. Section 4 
     ensures that the effective rates under the 1995 digital 
     performance rights bill will not lapse. That bill requires 
     new rates to be established during 2000, and the 1996 rates 
     are to expire at the end of 2000. In the case where the 
     copyright arbitration royalty panel (CARP) does not complete 
     its work by the end of the year, or where the Librarian of 
     Congress does not complete its review of the CARP's report by 
     the end of the year, this section provides that the 1996 
     rates will continue beyond the December 31, 2000, expiration 
     date until 30 days after the Librarian publishes a decision 
     to adopt or reject the CARP's rate adjustment. This section 
     (as well as provisions in Section 5) also eliminates 
     authorization for a CARP to publish its report in the Federal 
     Register since only federal agencies are permitted to do so. 
     Instead, CARP decisions will be published by the Librarian. 
     Section 11 corrects a numbering mistake in the 1995 Digital 
     Performance Right bill.
       Negotiated Jukebox License. Section 6 restores the 
     definitions of a ``jukebox'' and a ``jukebox operator'' to 
     Sec. 116A of Title 17. These definitions were mistakenly 
     eliminated from the old Sec. 116 jukebox compulsory license 
     when that section was replaced by the current Sec. 116A 
     negotiated jukebox license in the 1988 Berne Convention 
     implementing legislation. This section also clarifies that 
     all jukebox negotiated licenses that require arbitration are 
     CARP proceedings.
       Advance Notice of Intent to Copyright Live Performances. 
     Section 7 changes the current 10-days advanced notice 
     requirement for a copyright owner who intends to copyright 
     the fixation of a live performance to a 48-hours advanced 
     notice requirement. The current provision has proven 
     unworkable for sporting events, in particular, where the 
     teams and times of the event may not be known 10 days in 
     advance.
       Copyright Office Fees. Section 8 responds to ambiguities in 
     the Copyright Fees and Technical Amendments Act of 1989. That 
     bill allows the Copyright Office to increase fees in 1995, 
     and every fifth year thereafter to reflect changes in the 
     Consumer Price Index (CPI). The Copyright Office did not 
     raise its fees in 1995, because it determined that the costs 
     associated with the increase would be greater than the 
     resulting revenue. Uncertainty has arisen as to whether the 
     failure to increase fees in 1995 precludes the Copyright 
     Office from increasing its fees again until 2000 and whether 
     the increase in the CPI to be used in calculating the fee 
     increase is the increase since the last fee settlement (1990) 
     or only that since 1995. The bill clarifies that the 
     Copyright Office may increase its fees in any given year, 
     provided it has not done so within the last five years, and 
     that the fees may be increased up to the amount required to 
     cover the reasonable costs incurred by the Copyright Office 
     plus a reasonable inflation adjustment to account for future 
     increases in costs. The bill also allows the Register of 
     Copyrights to invest funds from the prepaid fees in interest 
     bearing securities in the U.S. Treasury and to use the income 
     from those investments for Copyright Office expenses. It is 
     expected that the proceeds will be used for the development 
     of the Copyright Office's new electronic registration, 
     recordation, and deposit system.
       Copyright Arbitration Royalty Panels (CARPs). Section 9 
     clarifies administrative issues regarding the operation of 
     the CARPs. First, it gives the Librarian of Congress express 
     authority to pay panel members directly in ratemaking and 
     distribution proceedings and clarifies that these arbitrators 
     are independent contractors acting on behalf of the U.S. 
     (thus subject to laws governing the conduct of government 
     employees). Second, it clarifies that copyright owners and 
     users are responsible for equal shares of the costs of 
     ratemaking proceedings. Third, it clarifies by way of example 
     the procedural and evidentiary rulings the Librarian of 
     Congress can issue with respect to CARP proceedings. Fourth, 
     it clarifies that the 1997 ratemaking proceeding for the 
     satellite carrier compulsory license is a CARP proceeding.
       Digital Audio Recording Devices. Section 10 provides added 
     flexibility for the Librarian of Congress in setting the 
     negotiation period for the distribution of digital audio 
     recording technology (DART) royalties, with the intention of 
     promoting settlements and timely distribution of royalties. 
     The current March 30 annual deadline for determining whether 
     there exist controversies among claimants has proven 
     unworkable and is eliminated by this section.
       Miscellaneous Technical Amendments. Section 12 makes 
     various technical corrections, such as spelling, grammatical, 
     capitalization, and other corrections, to title 17.
                                                                    ____


                                 S. 507

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

[[Page S2688]]

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Omnibus Patent Act of 
     1997''.

     SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.
Sec. 2. Table of contents.

        TITLE I--UNITED STATES PATENT AND TRADEMARK ORGANIZATION

Sec. 101. Short title.

  Subtitle A--Establishment of the United States Patent and Trademark 
                              Organization

Sec. 111. Establishment of the United States Patent and Trademark 
              Organization as a Government corporation.
Sec. 112. Powers and duties.
Sec. 113. Organization and management.
Sec. 114. United States Patent Office.
Sec. 115. United States Trademark Office.
Sec. 116. Suits by and against the Organization.
Sec. 117. Funding.
Sec. 118. Transfers.

            Subtitle B--Effective Date; Technical Amendments

Sec. 131. Effective date.
Sec. 132. Technical and conforming amendments.

                  Subtitle C--Miscellaneous Provisions

Sec. 141. References.
Sec. 142. Exercise of authorities.
Sec. 143. Savings provisions.
Sec. 144. Transfer of assets.
Sec. 145. Delegation and assignment.
Sec. 146. Authority of Director of the Office of Management and Budget 
              with respect to functions transferred.
Sec. 147. Certain vesting of functions considered transfers.
Sec. 148. Availability of existing funds.
Sec. 149. Definitions.

           TITLE II--EARLY PUBLICATION OF PATENT APPLICATIONS

Sec. 201. Short title.
Sec. 202. Early publication.
Sec. 203. Time for claiming benefit of earlier filing date.
Sec. 204. Provisional rights.
Sec. 205. Prior art effect of published applications.
Sec. 206. Cost recovery for publication.
Sec. 207. Conforming changes.
Sec. 208. Last day of pendency of provisional application.
Sec. 209. Effective date.

                   TITLE III--PATENT TERM RESTORATION

Sec. 301. Patent term extension authority.
Sec. 302. Effective date.

                TITLE IV--PRIOR DOMESTIC COMMERCIAL USE

Sec. 401. Short title.
Sec. 402. Defense to patent infringement based on prior domestic 
              commercial use.
Sec. 403. Effective date and applicability.

                  TITLE V--PATENT REEXAMINATION REFORM

Sec. 501. Short title.
Sec. 502. Definitions.
Sec. 503. Reexamination procedures.
Sec. 504. Conforming amendments.
Sec. 505. Effective date.

               TITLE VI--MISCELLANEOUS PATENT PROVISIONS

Sec. 601. Provisional applications.
Sec. 602. International applications.
Sec. 603. Plant patents.
Sec. 604. Electronic filing.
        TITLE I--UNITED STATES PATENT AND TRADEMARK ORGANIZATION

     SEC. 101. SHORT TITLE.

       This title may be cited as the ``United States Patent and 
     Trademark Organization Act of 1997''.
  Subtitle A--Establishment of the United States Patent and Trademark 
                              Organization

     SEC. 111. ESTABLISHMENT OF THE UNITED STATES PATENT AND 
                   TRADEMARK ORGANIZATION AS A GOVERNMENT 
                   CORPORATION.

       (a) Establishment.--The United States Patent and Trademark 
     Organization is established as a wholly owned Government 
     corporation subject to chapter 91 of title 31, separate from 
     any department, and shall be an agency of the United States 
     under the policy direction of the Secretary of Commerce.
       (b) Offices.--The United States Patent and Trademark 
     Organization shall maintain its principal office in the 
     District of Columbia, or the metropolitan area thereof, for 
     the service of process and papers and for the purpose of 
     carrying out its powers, duties, and obligations under this 
     title. The United States Patent and Trademark Organization 
     shall be deemed, for purposes of venue in civil actions, to 
     be a resident of the district in which its principal office 
     is located except where jurisdiction is otherwise provided by 
     law. The United States Patent and Trademark Organization may 
     establish satellite offices in such places as it considers 
     necessary and appropriate in the conduct of its business.
       (c) Reference.--For purposes of this title, a reference to 
     the ``Organization'' shall be a reference to the United 
     States Patent and Trademark Organization, unless the context 
     provides otherwise.

     SEC. 112. POWERS AND DUTIES.

       (a) In General.--The United States Patent and Trademark 
     Organization, under the policy direction of the Secretary of 
     Commerce, shall be responsible for--
       (1) the granting and issuing of patents and the 
     registration of trademarks;
       (2) conducting studies, programs, or exchanges of items or 
     services regarding domestic and international patent and 
     trademark law, the administration of the Organization, or any 
     other function vested in the Organization by law, including 
     programs to recognize, identify, assess, and forecast the 
     technology of patented inventions and their utility to 
     industry;
       (3)(A) authorizing or conducting studies and programs 
     cooperatively with foreign patent and trademark offices and 
     international organizations, in connection with the granting 
     and issuing of patents and the registration of trademarks; 
     and
       (B) with the concurrence of the Secretary of State, 
     authorizing the transfer of not to exceed $100,000 in any 
     year to the Department of State for the purpose of making 
     special payments to international intergovernmental 
     organizations for studies and programs for advancing 
     international cooperation concerning patents, trademarks, and 
     related matters; and
       (4) disseminating to the public information with respect to 
     patents and trademarks.
       (b) Special Payments.--The special payments under 
     subsection (a)(3)(B) may be in addition to any other payments 
     or contributions to international organizations and shall not 
     be subject to any limitations imposed by law on the amounts 
     of such other payments or contributions by the United States 
     Government.
       (c) Specific Powers.--The Organization--
       (1) shall have perpetual succession;
       (2) shall adopt and use a corporate seal, which shall be 
     judicially noticed and with which letters patent, 
     certificates of trademark registrations, and papers issued by 
     the Organization shall be authenticated;
       (3) may sue and be sued in its corporate name and be 
     represented by its own attorneys in all judicial and 
     administrative proceedings, subject to the provisions of 
     section 116;
       (4) may indemnify the Director of the United States Patent 
     and Trademark Organization, the Commissioner of Patents, the 
     Commissioner of Trademarks, and other officers, attorneys, 
     agents, and employees (including members of the Management 
     Advisory Boards of the Patent Office and the Trademark 
     Office) of the Organization for liabilities and expenses 
     incurred within the scope of their employment;
       (5) may adopt, amend, and repeal bylaws, rules, 
     regulations, and determinations, which--
       (A) shall govern the manner in which its business will be 
     conducted and the powers granted to it by law will be 
     exercised; and
       (B) shall be made after notice and opportunity for full 
     participation by interested public and private parties;
       (6) may acquire, construct, purchase, lease, hold, manage, 
     operate, improve, alter, and renovate any real, personal, or 
     mixed property, or any interest therein, as it considers 
     necessary to carry out its functions;
       (7)(A) may make such purchases, contracts for the 
     construction, maintenance, or management and operation of 
     facilities, and contracts for supplies or services, without 
     regard to the provisions of the Federal Property and 
     Administrative Services Act of 1949 (40 U.S.C. 471 et seq.), 
     the Public Buildings Act (40 U.S.C. 601 et seq.), and the 
     Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11301 
     et seq.); and
       (B) may enter into and perform such purchases and contracts 
     for printing services, including the process of composition, 
     platemaking, presswork, silk screen processes, binding, 
     microform, and the products of such processes, as it 
     considers necessary to carry out the functions of the 
     Organization, without regard to sections 501 through 517 and 
     1101 through 1123 of title 44, United States Code;
       (8) may use, with their consent, services, equipment, 
     personnel, and facilities of other departments, agencies, and 
     instrumentalities of the Federal Government, on a 
     reimbursable basis, and cooperate with such other 
     departments, agencies, and instrumentalities in the 
     establishment and use of services, equipment, and facilities 
     of the Organization;
       (9) may obtain from the Administrator of General Services 
     such services as the Administrator is authorized to provide 
     to other agencies of the United States, on the same basis as 
     those services are provided to other agencies of the United 
     States;
       (10) may use, with the consent of the United States and the 
     agency, government, or international organization concerned, 
     the services, records, facilities, or personnel of any State 
     or local government agency or instrumentality or foreign 
     government or international organization to perform functions 
     on its behalf;
       (11) may determine the character of, and the necessity for, 
     its obligations and expenditures and the manner in which they 
     shall be incurred, allowed, and paid, subject to the 
     provisions of title 35, United States Code and the Act of 
     July 5, 1946 (commonly referred to as the Trademark Act of 
     1946);
       (12) may retain and use all of its revenues and receipts, 
     including revenues from the sale, lease, or disposal of any 
     real, personal, or mixed property, or any interest therein, 
     of the Organization, including for research and development 
     and capital investment, subject to the provisions of section 
     10101 of the Omnibus Budget Reconciliation Act of 1990 (35 
     U.S.C. 41 note);
       (13) shall have the priority of the United States with 
     respect to the payment of debts

[[Page S2689]]

     from bankrupt, insolvent, and decedents' estates;
       (14) may accept monetary gifts or donations of services, or 
     of real, personal, or mixed property, in order to carry out 
     the functions of the Organization;
       (15) may execute, in accordance with its bylaws, rules, and 
     regulations, all instruments necessary and appropriate in the 
     exercise of any of its powers; and
       (16) may provide for liability insurance and insurance 
     against any loss in connection with its property, other 
     assets, or operations either by contract or by self-
     insurance.
       (d) Construction.--Nothing in this section shall be 
     construed to nullify, void, cancel, or interrupt any pending 
     request-for-proposal let or contract issued by the General 
     Services Administration for the specific purpose of 
     relocating or leasing space to the United States Patent and 
     Trademark Organization.

     SEC. 113. ORGANIZATION AND MANAGEMENT.

       (a) Offices.--The United States Patent and Trademark 
     Organization shall consist of--
       (1) the Office of the Director;
       (2) the United States Patent Office; and
       (3) the United States Trademark Office.
       (b) Director.--
       (1) In general.--The management of the United States Patent 
     and Trademark Organization shall be vested in a Director of 
     the United States Patent and Trademark Organization 
     (hereafter in this title referred to as the ``Director'', 
     unless the context provides otherwise), who shall be a 
     citizen of the United States and who shall be appointed by 
     the President, by and with the advice and consent of the 
     Senate. The Director shall be a person who, by reason of 
     professional background and experience in patent or trademark 
     law, is especially qualified to manage the Organization.
       (2) Duties.--(A) The Director shall--
       (i) be responsible for the Management and direction of the 
     Organization and shall perform this duty in a fair, 
     impartial, and equitable manner; and
       (ii) strive to meet the goals set forth in the performance 
     agreement described under paragraph (4).
       (B) The Director shall advise the President, through and 
     under the policy direction of the Secretary of Commerce, of 
     all activities of the Organization undertaken in response to 
     obligations of the United States under treaties and executive 
     agreements, or which relate to cooperative programs with 
     those authorities of foreign governments that are responsible 
     for granting patents or registering trademarks. The Director 
     shall also recommend to the President, through and under the 
     policy direction of the Secretary of Commerce, changes in law 
     or policy which may improve the ability of United States 
     citizens to secure and enforce patent and trademark rights in 
     the United States or in foreign countries.
       (C)(i) At the direction of the President, the Director may 
     represent the United States in international negotiations on 
     matters of patents or trademarks, or may designate an officer 
     or officers of the Organization to participate in such 
     negotiations.
       (ii) Nothing in this subparagraph shall be construed to 
     alter any statutory responsibility of the Secretary of State 
     or the United States Trade Representative.
       (D) The Director, in consultation with the Director of the 
     Office of Personnel Management, shall maintain a program for 
     identifying national security positions and providing for 
     appropriate security clearances.
       (E) The Director may perform such personnel, procurement, 
     and other functions, with respect to the United States Patent 
     Office and the United States Trademark Office, where a 
     centralized administration of such functions would improve 
     the efficiency of the Offices, as determined by agreement of 
     the Director, the Commissioner of Patents, and the 
     Commissioner of Trademarks.
       (F) Except as otherwise provided in this title, the 
     Director shall ensure that--
       (i) the United States Patent Office and the United States 
     Trademark Office, respectively, shall--
       (I) prepare all appropriation requests under section 1108 
     of title 31, United States Code, for each office for 
     submission by the Director;
       (II) adjust fees to provide sufficient revenues to cover 
     the expenses of such office; and
       (III) expend funds derived from such fees for only the 
     functions of such office; and
       (ii) each such office is not involved in the management of 
     any other office.
       (3) Oath.--The Director shall, before taking office, take 
     an oath to discharge faithfully the duties of the 
     Organization.
       (4) Compensation.--The Director shall receive compensation 
     at the rate of pay in effect for level III of the Executive 
     Schedule under section 5314 of title 5, United States Code 
     and, in addition, may receive as a bonus, an amount which 
     would raise total compensation to the equivalent of the level 
     of the rate of pay in effect for level II of the Executive 
     Schedule under section 5313 of title 5, based upon an 
     evaluation by the Secretary of Commerce of the Director's 
     performance as defined in an annual performance agreement 
     between the Director and the Secretary. The annual 
     performance agreement shall incorporate measurable goals as 
     delineated in an annual performance plan agreed to by the 
     Director and the Secretary.
       (5) Removal.--The Director shall serve at the pleasure of 
     the President.
       (6) Designee of director.--The Director shall designate an 
     officer of the Organization who shall be vested with the 
     authority to act in the capacity of the Director in the event 
     of the absence or incapacity of the Director.
       (c) Officers and Employees of the Organization.--
       (1) Commissioners of patents and trademarks.--The Director 
     shall appoint a Commissioner of Patents and a Commissioner of 
     Trademarks under section 3 of title 35, United States Code 
     and section 53 of the Act of July 5, 1946 (commonly referred 
     to as the Trademark Act of 1946), respectively, as amended by 
     this Act.
       (2) Other officers and employees.--The Director shall--
       (A) appoint officers, employees (including attorneys), and 
     agents of the Organization as the Director considers 
     necessary to carry out its functions;
       (B) fix the compensation of such officers and employees, 
     except as provided in subsection (e); and
       (C) define the authority and duties of such officers and 
     employees and delegate to them such of the powers vested in 
     the Organization as the Director may determine.
       (3) Personnel limitations.--The Organization shall not be 
     subject to any administratively or statutorily imposed 
     limitation on positions or personnel, and no positions or 
     personnel of the Organization shall be taken into account for 
     purposes of applying any such limitation.
       (d) Limits on Compensation.--Except as otherwise provided 
     by law, the annual rate of basic pay of an officer or 
     employee of the Organization may not be fixed at a rate that 
     exceeds, and total compensation payable to any such officer 
     or employee for any year may not exceed, the annual rate of 
     basic pay in effect for level II of the Executive Schedule 
     under section 5313 of title 5, United States Code. The 
     Director shall prescribe such regulations as may be necessary 
     to carry out this subsection.
       (e) Inapplicability of Title 5, United States Code, 
     Generally.--Except as otherwise provided in this section, 
     officers and employees of the Organization shall not be 
     subject to the provisions of title 5, United States Code, 
     relating to Federal employees.
       (f) Continued Applicability of Certain Provision of Title 
     5, United States Code.--
       (1) In general.--The following provisions of title 5, 
     United States Code, shall apply to the Organization and its 
     officers and employees:
       (A) Section 3110 (relating to employment of relatives; 
     restrictions).
       (B) Subchapter II of chapter 55 (relating to withholding 
     pay).
       (C) Subchapters II and III of chapter 73 (relating to 
     employment limitations and political activities, 
     respectively).
       (D) Chapter 71 (relating to labor-management relations), 
     subject to paragraph (2) and subsection (g).
       (E) Section 3303 (relating to political recommendations).
       (F) Subchapter II of chapter 61 (relating to flexible and 
     compressed work schedules).
       (G) Section 21302(b)(8) (relating to whistleblower 
     protection) and whistleblower related provisions of chapter 
     12 (covering the role of the Office of Special Counsel).
       (2) Compensation subject to collective bargaining.--
       (A) In general.--Notwithstanding any other provision of 
     law, for purposes of applying chapter 71 of title 5, United 
     States Code, pursuant to paragraph (1)(D), basic pay and 
     other forms of compensation shall be considered to be among 
     the matters as to which the duty to bargain in good faith 
     extends under such chapter.
       (B) Exceptions.--The duty to bargain in good faith shall 
     not, by reason of subparagraph (A), be considered to extend 
     to any benefit under title 5, United States Code, which is 
     afforded by paragraph (1), (2), (3), or (4) of subsection 
     (g).
       (C) Limitations apply.--Nothing in this subsection shall be 
     considered to allow any limitation under subsection (d) to be 
     exceeded.
       (g) Provisions of Title 5, United States Code, that 
     Continue to Apply, Subject to Certain Requirements.--
       (1) Retirement.--(A) The provisions of subchapter III of 
     chapter 83 and chapter 84 of title 5, United States Code, 
     shall apply to the Organization and its officers and 
     employees, subject to subparagraph (B).
       (B)(i) The amount required of the Organization under the 
     second sentence of section 8334(a)(1) of title 5, United 
     States Code, with respect to any particular individual shall, 
     instead of the amount which would otherwise apply, be equal 
     to the normal-cost percentage (determined with respect to 
     officers and employees of the Organization using dynamic 
     assumptions, as defined by section 8401(9) of such title) of 
     the individual's basic pay, minus the amount required to be 
     withheld from such pay under such section 8334(a)(1).
       (ii) The amount required of the Organization under section 
     8334(k)(1)(B) of title 5, United States Code, with respect to 
     any particular individual shall be equal to an amount 
     computed in a manner similar to that specified in clause (i), 
     as determined in accordance with clause (iii).
       (iii) Any regulations necessary to carry out this 
     subparagraph shall be prescribed by the Office of Personnel 
     Management.
       (C) The United States Patent and Trademark Organization may 
     supplement the benefits provided under the preceding 
     provisions of this paragraph.

[[Page S2690]]

       (2) Health benefits.--(A) The provisions of chapter 89 of 
     title 5, United States Code, shall apply to the Organization 
     and its officers and employees, subject to subparagraph (B).
       (B)(i) With respect to any individual who becomes an 
     officer or employee of the Organization pursuant to 
     subsection (i), the eligibility of such individual to 
     participate in such program as an annuitant (or of any other 
     person to participate in such program as an annuitant based 
     on the death of such individual) shall be determined 
     disregarding the requirements of section 8905(b) of title 5, 
     United States Code. The preceding sentence shall not apply if 
     the individual ceases to be an officer or employee of the 
     Organization for any period of time after becoming an officer 
     or employee of the Organization pursuant to subsection (i) 
     and before separation.
       (ii) The Government contributions authorized by section 
     8906 of title 5, United States Code, for health benefits for 
     anyone participating in the health benefits program pursuant 
     to this subparagraph shall be made by the Organization in the 
     same manner as provided under section 8906(g)(2) of such 
     title with respect to the United States Postal Service for 
     individuals associated therewith.
       (iii) For purposes of this subparagraph, the term 
     ``annuitant'' has the meaning given such term by section 
     8901(3) of title 5, United States Code.
       (C) The Organization may supplement the benefits provided 
     under the preceding provisions of this paragraph.
       (3) Life insurance.--(A) The provisions of chapter 87 of 
     title 5, United States Code, shall apply to the Organization 
     and its officers and employees, subject to subparagraph (B).
       (B)(i) Eligibility for life insurance coverage after 
     retirement or while in receipt of compensation under 
     subchapter I of chapter 81 of title 5, United States Code, 
     shall be determined, in the case of any individual who 
     becomes an officer or employee of the Organization pursuant 
     to subsection (i), without regard to the requirements of 
     section 8706(b) (1) or (2) of such title, but subject to the 
     condition specified in the last sentence of paragraph 
     (2)(B)(i) of this subsection.
       (ii) Government contributions under section 8708(d) of such 
     title on behalf of any such individual shall be made by the 
     Organization in the same manner as provided under paragraph 
     (3) thereof with respect to the United States Postal Service 
     for individuals associated therewith.
       (C) The Organization may supplement the benefits provided 
     under the preceding provisions of this paragraph.
       (4) Employees' compensation fund.--(A) Officers and 
     employees of the Organization shall not become ineligible to 
     participate in the program under chapter 81 of title 5, 
     United States Code, relating to compensation for work 
     injuries, by reason of subsection (e).
       (B) The Organization shall remain responsible for 
     reimbursing the Employees' Compensation Fund, pursuant to 
     section 8147 of title 5, United States Code, for compensation 
     paid or payable after the effective date of this title in 
     accordance with chapter 81 of title 5, United States Code, 
     with regard to any injury, disability, or death due to events 
     arising before such date, whether or not a claim has been 
     filed or is final on such date.
       (h) Labor-Management Relations.--
       (1) Labor relations and employee relations programs.--The 
     Organization shall develop hiring practices, labor relations 
     and employee relations programs with the objective of 
     improving productivity and efficiency, incorporating the 
     following principles:
       (A) Such programs shall be consistent with the merit 
     principles in section 2301(b) of title 5, United States Code.
       (B) Such programs shall provide veterans preference 
     protections equivalent to those established by sections 2108, 
     3308 through 3318, 3320, 3502, and 3504 of title 5, United 
     States Code.
       (C)(i) The right to work shall not be subject to undue 
     restraint or coercion. The right to work shall not be 
     infringed or restricted in any way based on membership in, 
     affiliation with, or financial support of a labor 
     organization.
       (ii) No person shall be required, as a condition of 
     employment or continuation of employment--
       (I) to resign or refrain from voluntary membership in, 
     voluntary affiliation with, or voluntary financial support of 
     a labor organization;
       (II) to become or remain a member of a labor organization;
       (III) to pay any dues, fees, assessments, or other charges 
     of any kind or amount to a labor organization;
       (IV) to pay to any charity or other third party, in lieu of 
     such payments, any amount equivalent to or a pro rata portion 
     of dues, fees, assessments, or other charges regularly 
     required of members of a labor organization; or
       (V) to be recommended, approved, referred, or cleared by or 
     through a labor organization.
       (iii) This subparagraph shall not apply to a person 
     described in section 7103(a)(2)(v) of title 5, United States 
     Code, or a ``supervisor'', ``management official'', or 
     ``confidential employee'' as those terms are defined in 
     7103(a) (10), (11), and (13) of such title.
       (iv) Any labor organization recognized by the Organization 
     as the exclusive representative of a unit of employees of the 
     Organization shall represent the interests of all employees 
     in that unit without discrimination and without regard to 
     labor organization membership.
       (2) Adoption of existing labor agreements.--The 
     Organization shall adopt all labor agreements which are in 
     effect, as of the day before the effective date of this 
     title, with respect to such Organization (as then in effect).
       (i) Carryover of Personnel.--
       (1) From pto.--Effective as of the effective date of this 
     title, all officers and employees of the Patent and Trademark 
     Office on the day before such effective date shall become 
     officers and employees of the Organization, without a break 
     in service.
       (2) Other personnel.--(A) Any individual who, on the day 
     before the effective date of this title, is an officer or 
     employee of the Department of Commerce (other than an officer 
     or employee under paragraph (1)) shall be transferred to the 
     Organization if--
       (i) such individual serves in a position for which a major 
     function is the performance of work reimbursed by the Patent 
     and Trademark Office, as determined by the Secretary of 
     Commerce;
       (ii) such individual serves in a position that performed 
     work in support of the Patent and Trademark Office during at 
     least half of the incumbent's work time, as determined by the 
     Secretary of Commerce; or
       (iii) such transfer would be in the interest of the 
     Organization, as determined by the Secretary of Commerce in 
     consultation with the Director.
       (B) Any transfer under this paragraph shall be effective as 
     of the same effective date as referred to in paragraph (1), 
     and shall be made without a break in service.
       (3) Accumulated leave.--The amount of sick and annual leave 
     and compensatory time accumulated under title 5, United 
     States Code, before the effective date described in paragraph 
     (1), by any individual who becomes an officer or employee of 
     the Organization under this subsection, are obligations of 
     the Organization.
       (4) Termination rights.--Any employee referred to in 
     paragraph (1) or (2) of this subsection whose employment with 
     the Organization is terminated during the 1-year period 
     beginning on the effective date of this title shall be 
     entitled to rights and benefits, to be afforded by the 
     Organization, similar to those such employee would have had 
     under Federal law if termination had occurred immediately 
     before such date. An employee who would have been entitled to 
     appeal any such termination to the Merit Systems Protection 
     Board, if such termination had occurred immediately before 
     such effective date, may appeal any such termination 
     occurring within such 1-year period to the Board under such 
     procedures as it may prescribe.
       (5) Transition provisions.--(A)(i) On or after the 
     effective date of this title, the President shall appoint a 
     Director of the United States Patent and Trademark 
     Organization who shall serve until the earlier of--
       (I) the date on which a Director qualifies under subsection 
     (a); or
       (II) the date occurring 1 year after the effective date of 
     this title.
       (ii) The President shall not make more than 1 appointment 
     under this subparagraph.
       (B) The individual serving as the Assistant Commissioner of 
     Patents on the day before the effective date of this title 
     shall serve as the Commissioner of Patents until the date on 
     which a Commissioner of Patents is appointed under section 3 
     of title 35, United States Code, as amended by this Act.
       (C) The individual serving as the Assistant Commissioner of 
     Trademarks on the day before the effective date of this title 
     shall serve as the Commissioner of Trademarks until the date 
     on which a Commissioner of Trademarks is appointed under 
     section 53 of the Act of July 5, 1946 (commonly referred to 
     as the Trademark Act of 1946), as amended by this Act.
       (j) Competitive Status.--For purposes of appointment to a 
     position in the competitive service for which an officer or 
     employee of the Organization is qualified, such officer or 
     employee shall not forfeit any competitive status, acquired 
     by such officer or employee before the effective date of this 
     title, by reason of becoming an officer or employee of the 
     Organization under subsection (i).
       (k) Savings Provisions.--Compensation, benefits, and other 
     terms and conditions of employment in effect immediately 
     before the effective date of this title, whether provided by 
     statute or by rules and regulations of the former Patent and 
     Trademark Office or the executive branch of the Government of 
     the United States, shall continue to apply to officers and 
     employees of the Organization, until changed in accordance 
     with this section (whether by action of the Director or 
     otherwise).
       (l) Removal of Quasi-Judicial Examiners.--The Organization 
     may remove a patent examiner or examiner-in-chief, or a 
     trademark examiner or member of a Trademark Trial and Appeal 
     Board only for such cause as will promote the efficiency of 
     the Organization.

     SEC. 114. UNITED STATES PATENT OFFICE.

       (a) Establishment of the Patent Office as a Separate 
     Administrative Unit.--Section 1 of title 35, United States 
     Code, is amended to read as follows:

     ``Sec. 1. Establishment

       ``(a) Establishment.--The United States Patent Office is 
     established as a separate administrative unit of the United 
     States Patent and Trademark Organization, where

[[Page S2691]]

     records, books, drawings, specifications, and other papers 
     and things pertaining to patents shall be kept and preserved, 
     except as otherwise provided by law.
       ``(b) Reference.--For purposes of this title, the United 
     States Patent Office shall also be referred to as the 
     `Office' and the `Patent Office'.''.
       (b) Powers and Duties.--Section 2 of title 35, United 
     States Code, is amended to read as follows:

     ``Sec. 2. Powers and duties

       ``The United States Patent Office, under the policy 
     direction of the Secretary of Commerce through the Director 
     of the United States Patent and Trademark Organization, shall 
     be responsible for--
       ``(1) granting and issuing patents;
       ``(2) conducting studies, programs, or exchanges of items 
     or services regarding domestic and international patent law, 
     the administration of the Organization, or any other function 
     vested in the Organization by law, including programs to 
     recognize, identify, assess, and forecast the technology of 
     patented inventions and their utility to industry;
       ``(3) authorizing or conducting studies and programs 
     cooperatively with foreign patent offices and international 
     organizations, in connection with the granting and issuing of 
     patents; and
       ``(4) disseminating to the public information with respect 
     to patents.
       (c) Organization and Management.--Section 3 of title 35, 
     United States Code, is amended to read as follows:

     ``Sec. 3. Officers and employees

       ``(a) Commissioner.--
       ``(1) In general.--The management of the United States 
     Patent Office shall be vested in a Commissioner of Patents, 
     who shall be a citizen of the United States and who shall be 
     appointed by the Director of the United States Patent and 
     Trademark Organization and shall serve at the pleasure of the 
     Director of the United States Patent and Trademark 
     Organization. The Commissioner of Patents shall be a person 
     who, by reason of professional background and experience in 
     patent law, is especially qualified to manage the Office.
       ``(2) Duties.--
       ``(A) In general.--The Commissioner shall be responsible 
     for all aspects of the management, administration, and 
     operation of the Office, including the granting and issuing 
     of patents, and shall perform these duties in a fair, 
     impartial, and equitable manner.
       ``(B) Advising the director of the united states patent and 
     trademark organization.--The Commissioner of Patents shall 
     advise the Director of the United States Patent and Trademark 
     Organization of all activities of the Office undertaken in 
     response to obligations of the United States under treaties 
     and executive agreements, or which relate to cooperative 
     programs with those authorities of foreign governments that 
     are responsible for granting patents. The Commissioner of 
     Patents shall advise the Director of the United States Patent 
     and Trademark Organization on matters of patent law and shall 
     recommend to the Director of the United States Patent and 
     Trademark Organization changes in law or policy which may 
     improve the ability of United States citizens to secure and 
     enforce patent rights in the United States or in foreign 
     countries.
       ``(C) Regulations.--The Commissioner may establish 
     regulations, not inconsistent with law, for the conduct of 
     proceedings in the Patent Office. The Director of the United 
     States Patent and Trademark Organization shall determine 
     whether such regulations are consistent with the policy 
     direction of the Secretary of Commerce.
       ``(D) Consultation with the management advisory board.--(i) 
     The Commissioner shall consult with the Management Advisory 
     Board established in section 5--
       ``(I) on a regular basis on matters relating to the 
     operation of the Office; and
       ``(II) before submitting budgetary proposals to the 
     Director of the United States Patent and Trademark 
     Organization for submission to the Office of Management and 
     Budget or changing or proposing to change patent user fees or 
     patent regulations.
       ``(ii) The Director of the United States Patent and 
     Trademark Organization shall determine whether such fees or 
     regulations are consistent with the policy direction of the 
     Secretary of Commerce.
       ``(3) Oath.--The Commissioner shall, before taking office, 
     take an oath to discharge faithfully the duties of the 
     Office.
       ``(4) Compensation.--
       ``(A) In general.--The Commissioner shall receive 
     compensation at the rate of pay in effect for level IV of the 
     Executive Schedule under section 5315 of title 5.
       ``(B) Bonus.--In addition to compensation under 
     subparagraph (A), the Commissioner may, at the discretion of 
     the Director of the United States Patent and Trademark 
     Organization, receive as a bonus, an amount which would raise 
     total compensation to the equivalent of the rate of pay in 
     effect for level III of the Executive Schedule under section 
     5314 of title 5.
       ``(b) Officers and Employees.--The Commissioner shall 
     appoint a Deputy Commissioner of Patents who shall be vested 
     with the authority to act in the capacity of the Commissioner 
     in the event of the absence or incapacity of the 
     Commissioner. In the event of a vacancy in the office of 
     Commissioner, the Deputy Commissioner shall fill the office 
     of Commissioner until a new Commissioner is appointed and 
     takes office. Other officers, attorneys, employees, and 
     agents shall be selected and appointed by the Commissioner, 
     and shall be vested with such powers and duties as the 
     Commissioner may determine.''.
       (d) Management Advisory Board.--Chapter 1 of part I of 
     title 35, United States Code, is amended by inserting after 
     section 4 the following:

     ``Sec. 5. Patent Office Management Advisory Board

       ``(a) Establishment of Management Advisory Board.--
       ``(1) Appointment.--The United States Patent Office shall 
     have a Management Advisory Board (hereafter in this title 
     referred to as the `Advisory Board') of 5 members, who shall 
     be appointed by the President and shall serve at the pleasure 
     of the President. Not more than 3 of the 5 members shall be 
     members of the same political party.
       ``(2) Chair.--The President shall designate a Chair of the 
     Advisory Board, whose term as chair shall be for 3 years.
       ``(3) Timing of appointments.--Initial appointments to the 
     Advisory Board shall be made within 3 months after the 
     effective date of the United States Patent and Trademark 
     Organization Act of 1997. Vacancies shall be filled in the 
     manner in which the original appointment was made under this 
     subsection within 3 months after they occur.
       ``(b) Basis for Appointments.--Members of the Advisory 
     Board shall be citizens of the United States who shall be 
     chosen so as to represent the interests of diverse users of 
     the United States Patent Office, and shall include 
     individuals with substantial background and achievement in 
     corporate finance and management.
       ``(c) Meetings.--The Advisory Board shall meet at the call 
     of the Chair to consider an agenda set by the Chair.
       ``(d) Duties.--The Advisory Board shall--
       ``(1) review the policies, goals, performance, budget, and 
     user fees of the United States Patent Office, and advise the 
     Commissioner on these matters;
       ``(2) within 60 days after the end of each fiscal year--
       ``(A) prepare an annual report on the matters referred to 
     in paragraph (1);
       ``(B) transmit the report to the Director of the United 
     States Patent and Trademark Organization, the President, and 
     the Committees on the Judiciary of the Senate and the House 
     of Representatives; and
       ``(C) publish the report in the Patent Office Official 
     Gazette.
       ``(f) Compensation.--Each member of the Advisory Board 
     shall be compensated for each day (including travel time) 
     during which such member is attending meetings or conferences 
     of the Advisory Board or otherwise engaged in the business of 
     the Advisory Board, at the rate which is the daily equivalent 
     of the annual rate of basic pay in effect for level III of 
     the Executive Schedule under section 5314 of title 5, and 
     while away from such member's home or regular place of 
     business such member may be allowed travel expenses, 
     including per diem in lieu of subsistence, as authorized by 
     section 5703 of title 5.
       ``(g) Access to Information.--Members of the Advisory Board 
     shall be provided access to records and information in the 
     United States Patent Office, except for personnel or other 
     privileged information and information concerning patent 
     applications required to be kept in confidence by section 
     122.''.
       (e) Conforming Amendments.--Section 6 of title 35, United 
     States Code, and the item relating to such section in the 
     table of contents for chapter 1 of title 35, United States 
     Code, are repealed.
       (f) Board of Patent Appeals and Interferences.--Section 7 
     of title 35, United States Code, is amended to read as 
     follows:

     ``Sec. 7. Board of Patent Appeals and Interferences

       ``(a) Establishment and Composition.--There shall be in the 
     United States Patent Office a Board of Patent Appeals and 
     Interferences. The Commissioner, the Deputy Commissioner, and 
     the examiners-in-chief shall constitute the Board. The 
     examiners-in-chief shall be persons of competent legal 
     knowledge and scientific ability.
       ``(b) Duties.--
       ``(1) In general.--The Board of Patent Appeals and 
     Interferences shall, on written appeal of an applicant, a 
     patent owner, or a third-party requester in a reexamination 
     proceeding--
       ``(A) review adverse decisions of examiners--
       ``(i) upon applications for patents; and
       ``(ii) in reexamination proceedings; and
       ``(B) determine priority and patentability of invention in 
     interferences declared under section 135(a).
       ``(2) Hearings.--Each appeal and interference shall be 
     heard by at least 3 members of the Board, who shall be 
     designated by the Deputy Commissioner. Only the Board of 
     Patent Appeals and Interferences may grant rehearings.''.
       (g) Annual Report of Commissioner.--Section 14 of title 35, 
     United States Code, is amended to read as follows:

     ``Sec. 14. Annual report to Congress

       ``The Commissioner shall report to the Director of the 
     United States Patent and Trademark Organization such 
     information as the Director is required to submit to Congress 
     annually under chapter 91 of title 31, including--
       ``(1) the total of the moneys received and expended by the 
     Office;
       ``(2) the purposes for which the moneys were spent;

[[Page S2692]]

       ``(3) the quality and quantity of the work of the Office; 
     and
       ``(4) other information relating to the Office.''.
       (h) Practice Before Patent Office.--
       (1) In general.--Section 31 of title 35, United States 
     Code, is amended to read as follows:

     ``Sec. 31. Regulations for agents and attorneys

       ``The Commissioner may prescribe regulations governing the 
     recognition and conduct of agents, attorneys, or other 
     persons representing applicants or other parties before the 
     Office. The regulations may require such persons, before 
     being recognized as representatives of applicants or other 
     persons, to show that they are of good moral character and 
     reputation and are possessed of the necessary qualifications 
     to render to applicants or other persons valuable service, 
     advice, and assistance in the presentation or prosecution of 
     their applications or other business before the Office.''.
       (2) Designation of attorney to conduct hearing.--Section 32 
     of title 35, United States Code, is amended in the first 
     sentence by striking ``Patent and Trademark Office'' and 
     inserting ``Patent Office'' and by inserting before the last 
     sentence the following: ``The Commissioner shall have the 
     discretion to designate any attorney who is an officer or 
     employee of the United States Patent Office to conduct the 
     hearing required by this section.''.
       (i) Funding.--
       (1) Adjustment of fees.--Section 41(f) of title 35, United 
     States Code, is amended to read as follows:
       ``(f) The Commissioner, after consulting with the Patent 
     Office Management Advisory Board pursuant to section 
     3(a)(2)(C) of this title and after notice and opportunity for 
     full participation by interested public and private parties, 
     may, by regulation, adjust the fees established in this 
     section. The Director of the United States Patent and 
     Trademark Organization shall determine whether such fees are 
     consistent with the policy direction of the Secretary of 
     Commerce.''.
       (2) Patent office funding.--Section 42 of title 35, United 
     States Code, is amended to read as follows:

     ``Sec. 42. Patent Office funding

       ``(a) Fees Payable to the Office.--All fees for services 
     performed by or materials furnished by the United States 
     Patent Office shall be payable to the Office.
       ``(b) Use of Moneys.--Moneys from fees shall be available 
     to the United States Patent Office to carry out, to the 
     extent provided in appropriations Acts, the functions of the 
     Office. Moneys of the Office not otherwise used to carry out 
     the functions of the Office shall be kept in cash on hand or 
     on deposit, or invested in obligations of the United States 
     or guaranteed by the United States, or in obligations or 
     other instruments which are lawful investments for fiduciary, 
     trust, or public funds. Fees available to the Commissioner 
     under this title shall be used only for the processing of 
     patent applications and for other services and materials 
     relating to patents.
       ``(c) Contribution to the Office of the Director of the 
     United States Patent and Trademark Organization.--The Patent 
     Office shall contribute 50 percent of the annual budget of 
     the Office of the Director of the United States Patent and 
     Trademark Organization.''.

     SEC. 115. UNITED STATES TRADEMARK OFFICE.

       (a) Establishment of the United States Trademark Office as 
     a Separate Administrative Unit.--The Act of July 5, 1946 
     (commonly referred to as the Trademark Act of 1946) is 
     amended--
       (1) by redesignating titles X and XI as titles XI and XII, 
     respectively;
       (2) by redesignating sections 45, 46, 47, 48, 49, 50, and 
     51 as sections 61, 71, 72, 73, 74, 75, and 76, respectively; 
     and
       (3) by inserting after title IX the following new title:
               ``TITLE X--UNITED STATES TRADEMARK OFFICE

     ``SEC. 51. ESTABLISHMENT.

       ``(a) Establishment.--The United States Trademark Office is 
     established as a separate administrative unit of the United 
     States Patent and Trademark Organization.
       ``(b) Reference.--For purposes of this chapter, the United 
     States Trademark Office shall also be referred to as the 
     `Office' and the `Trademark Office'.

     ``SEC. 52. POWERS AND DUTIES.

       ``The United States Trademark Office, under the policy 
     direction of the Secretary of Commerce through the Director 
     of the United States Patent and Trademark Organization, shall 
     be responsible for--
       ``(1) the registration of trademarks;
       ``(2) conducting studies, programs, or exchanges of items 
     or services regarding domestic and international trademark 
     law or the administration of the Office;
       ``(3) authorizing or conducting studies and programs 
     cooperatively with foreign trademark offices and 
     international organizations, in connection with the 
     registration of trademarks; and
       ``(4) disseminating to the public information with respect 
     to trademarks.

     ``SEC. 53. OFFICERS AND EMPLOYEES.

       ``(a) Commissioner.--
       ``(1) In general.--The management of the United States 
     Trademark Office shall be vested in a Commissioner of 
     Trademarks, who shall be a citizen of the United States and 
     who shall be appointed by the Director of the United States 
     Patent and Trademark Organization and shall serve at the 
     pleasure of the Director of the United States Patent and 
     Trademark Organization. The Commissioner of Trademarks shall 
     be a person who, by reason of professional background and 
     experience in trademark law, is especially qualified to 
     manage the Office.
       ``(2) Duties.--
       ``(A) In general.--The Commissioner shall be responsible 
     for all aspects of the management, administration, and 
     operation of the Office, including the registration of 
     trademarks, and shall perform these duties in a fair, 
     impartial, and equitable manner.
       ``(B) Advising the director of the united states patent and 
     trademark organization.--The Commissioner of Trademarks shall 
     advise the Director of the United States Patent and Trademark 
     Organization of all activities of the Office undertaken in 
     response to obligations of the United States under treaties 
     and executive agreements, or which relate to cooperative 
     programs with those authorities of foreign governments that 
     are responsible for registering trademarks. The Commissioner 
     of Trademarks shall advise the Director of the United States 
     Patent and Trademark Organization on matters of trademark law 
     and shall recommend to the Director of the United States 
     Patent and Trademark Organization changes in law or policy 
     which may improve the ability of United States citizens to 
     secure and enforce trademark rights in the United States or 
     in foreign countries.
       ``(C) Regulations.--The Commissioner may establish 
     regulations, not inconsistent with law, for the conduct of 
     proceedings in the Trademark Office. The Director of the 
     United States Patent and Trademark Organization shall 
     determine whether such regulations are consistent with the 
     policy direction of the Secretary of Commerce.
       ``(D) Consultation with the management advisory board.--(i) 
     The Commissioner shall consult with the Trademark Office 
     Management Advisory Board established under section 54--
       ``(I) on a regular basis on matters relating to the 
     operation of the Office; and
       ``(II) before submitting budgetary proposals to the 
     Director of the United States Patent and Trademark 
     Organization for submission to the Office of Management and 
     Budget or changing or proposing to change trademark user fees 
     or trademark regulations.
       ``(ii) The Director of the United States Patent and 
     Trademark Organization shall determine whether such fees or 
     regulations are consistent with the policy direction of the 
     Secretary of Commerce.
       ``(E) Publications.--(i) The Commissioner may print, or 
     cause to be printed, the following:
       ``(I) Certificates of trademark registrations, including 
     statements and drawings, together with copies of the same.
       ``(II) The Official Gazette of the United States Trademark 
     Office.
       ``(III) Annual indexes of trademarks and registrants.
       ``(IV) Annual volumes of decisions in trademark cases.
       ``(V) Pamphlet copies of laws and rules relating to 
     trademarks and circulars or other publications relating to 
     the business of the Office.
       ``(ii) The Commissioner may exchange any of the 
     publications specified under clause (i) for publications 
     desirable for the use of the Trademark Office.
       ``(3) Oath.--The Commissioner shall, before taking office, 
     take an oath to discharge faithfully the duties of the 
     Office.
       ``(4) Compensation.--
       ``(A) In general.--The Commissioner shall receive 
     compensation at the rate of pay in effect for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code.
       ``(B) Bonus.--In addition to compensation under 
     subparagraph (A), the Commissioner may, at the discretion of 
     the Director of the United States Patent and Trademark 
     Organization, receive as a bonus, an amount which would raise 
     total compensation to the equivalent of the rate of pay in 
     effect for level III of the Executive Schedule under section 
     5314 of title 5.
       ``(b) Officers and Employees.--The Commissioner shall 
     appoint a Deputy Commissioner of Trademarks who shall be 
     vested with the authority to act in the capacity of the 
     Commissioner in the event of the absence or incapacity of the 
     Commissioner. In the event of a vacancy in the office of 
     Commissioner, the Deputy Commissioner shall fill the office 
     of Commissioner until a new Commissioner is appointed and 
     takes office. Other officers, attorneys, employees, and 
     agents shall be selected and appointed by the Commissioner, 
     and shall be vested with such powers and duties as the 
     Commissioner may determine.

     ``SEC. 54. TRADEMARK OFFICE MANAGEMENT ADVISORY BOARD.

       ``(a) Establishment of Management Advisory Board.--
       ``(1) Appointment.--The United States Trademark Office 
     shall have a Management Advisory Board (hereafter in this 
     title referred to as the `Advisory Board') of 5 members, who 
     shall be appointed by the President and shall serve at the 
     pleasure of the President. Not more than 3 of the 5 members 
     shall be members of the same political party.
       ``(2) Chair.--The President shall designate a Chair of the 
     Advisory Board, whose term as chair shall be for 3 years.
       ``(3) Timing of appointments.--Initial appointments to the 
     Advisory Board shall be

[[Page S2693]]

     made within 3 months after the effective date of the United 
     States Patent and Trademark Organization Act of 1997. 
     Vacancies shall be filled in the manner in which the original 
     appointment was made under this section within 3 months after 
     they occur.
       ``(b) Basis for Appointments.--Members of the Advisory 
     Board shall be citizens of the United States who shall be 
     chosen so as to represent the interests of diverse users of 
     the United States Trademark Office, and shall include 
     individuals with substantial background and achievement in 
     corporate finance and management.
       ``(c) Meetings.--The Advisory Board shall meet at the call 
     of the Chair to consider an agenda set by the Chair.
       ``(d) Duties.--The Advisory Board shall--
       ``(1) review the policies, goals, performance, budget, and 
     user fees of the United States Trademark Office, and advise 
     the Commissioner on these matters; and
       ``(2) within 60 days after the end of each fiscal year--
       ``(A) prepare an annual report on the matters referred to 
     under paragraph (1);
       ``(B) transmit the report to the Director of the United 
     States Patent and Trademark Organization, the President, and 
     the Committees on the Judiciary of the Senate and the House 
     of Representatives; and
       ``(C) publish the report in the Trademark Office Official 
     Gazette.
       ``(f) Compensation.--Each member of the Advisory Board 
     shall be compensated for each day (including travel time) 
     during which such member is attending meetings or conferences 
     of the Advisory Board or otherwise engaged in the business of 
     the Advisory Board, at the rate which is the daily equivalent 
     of the annual rate of basic pay in effect for level III of 
     the Executive Schedule under section 5314 of title 5, United 
     States Code, and while away from such member's home or 
     regular place of business such member may be allowed travel 
     expenses, including per diem in lieu of subsistence, as 
     authorized by section 5703 of title 5, United States Code.
       ``(g) Access to Information.--Members of the Advisory Board 
     shall be provided access to records and information in the 
     United States Trademark Office, except for personnel or other 
     privileged information.

     ``SEC. 55. ANNUAL REPORT TO CONGRESS.

       ``The Commissioner shall report to the Director of the 
     United States Patent and Trademark Organization such 
     information as the Director is required to report to Congress 
     annually under chapter 91 of title 5, including--
       ``(1) the moneys received and expended by the Office;
       ``(2) the purposes for which the moneys were spent;
       ``(3) the quality and quantity of the work of the Office; 
     and
       ``(4) other information relating to the Office.

     ``SEC. 56. TRADEMARK OFFICE FUNDING.

       ``(a) Fees Payable to the Office.--All fees for services 
     performed by or materials furnished by the United States 
     Trademark Office shall be payable to the Office.
       ``(b) Use of Moneys.--Moneys from fees shall be available 
     to the United States Trademark Office to carry out, to the 
     extent provided in appropriations Acts, the functions of the 
     Office. Moneys of the Office not otherwise used to carry out 
     the functions of the Office shall be kept in cash on hand or 
     on deposit, or invested in obligations of the United States 
     or guaranteed by the United States, or in obligations or 
     other instruments which are lawful investments for fiduciary, 
     trust, or public funds. Fees available to the Commissioner 
     under this chapter shall be used only for the registration of 
     trademarks and for other services and materials relating to 
     trademarks.
       ``(c) Contribution to the Office of the Director of the 
     United States Patent and Trademark Organization.--The 
     Trademark Office shall contribute 50 percent of the annual 
     budget of the Office of the Director of the United States 
     Patent and Trademark Organization.''.
       (b) Trademark Trial and Appeal Board.--Section 17 of the 
     Act of July 5, 1946 (commonly referred to as the Trademark 
     Act of 1946) (15 U.S.C. 1067) is amended to read as follows:
       ``Sec. 17. (a) In every case of interference, opposition to 
     registration, application to register as a lawful concurrent 
     user, or application to cancel the registration of a mark, 
     the Commissioner shall give notice to all parties and shall 
     direct a Trademark Trial and Appeal Board to determine and 
     decide the respective rights of registration.
       ``(b) The Trademark Trial and Appeal Board shall include 
     the Commissioner of Trademarks, the Deputy Commissioner of 
     Trademarks, and members competent in trademark law who are 
     appointed by the Commissioner.''.
       (c) Determination of Fees.--Section 31(a) of the Act of 
     July 5, 1946 (commonly referred to as the Trademark Act of 
     1946) (15 U.S.C. 1067(a)) is amended by striking the second 
     and third sentences and inserting the following: ``Fees 
     established under this subsection may be adjusted by the 
     Commissioner, after consulting with the Trademark Office 
     Management Advisory Board in accordance with section 
     53(a)(2)(C) of this Act and after notice and opportunity for 
     full participation by interested public and private parties. 
     The Director of the United States Patent and Trademark 
     Organization shall determine whether such fees are consistent 
     with the policy direction of the Secretary of Commerce.''.

     SEC. 116. SUITS BY AND AGAINST THE ORGANIZATION.

       (a) Actions Under United States Law.--Any civil action or 
     proceeding to which the United States Patent and Trademark 
     Organization is a party is deemed to arise under the laws of 
     the United States. The Federal courts shall have exclusive 
     jurisdiction over all civil actions by or against the 
     Organization.
       (b) Representation by the Department of Justice.--The 
     United States Patent and Trademark Organization shall be 
     deemed an agency of the United States for purposes of section 
     516 of title 28, United States Code.
       (c) Prohibition on Attachment, Liens, or Similar Process.--
     No attachment, garnishment, lien, or similar process, 
     intermediate or final, in law or equity, may be issued 
     against property of the Organization.

     SEC. 117. FUNDING.

       (a) In General.--The activities of the United States Patent 
     and Trademark Organization and each office of the 
     Organization shall be funded entirely through fees payable to 
     the United States Patent Office (under section 42 of title 
     35, United States Code) and the United States Trademark 
     Office (under section 56 of the Act of July 5, 1946 (commonly 
     known as the Trademark Act of 1946)), and surcharges 
     appropriated by Congress, to the extent provided in 
     appropriations Acts and subject to the provisions of 
     subsection (b).
       (b) Borrowing Authority.--
       (1) In general.--The United States Patent and Trademark 
     Organization is authorized to issue from time to time for 
     purchase by the Secretary of the Treasury its debentures, 
     bonds, notes, and other evidences of indebtedness (hereafter 
     in this subsection referred to as ``obligations'') to assist 
     in financing the activities of the United States Patent 
     Office and the United States Trademark Office. Borrowing 
     under this section shall be subject to prior approval in 
     appropriations Acts. Such borrowing shall not exceed amounts 
     approved in appropriations Acts.
       (2) Borrowing authority.--Any borrowing under this 
     subsection shall be repaid only from fees paid to the Office 
     for which such obligations were issued and surcharges 
     appropriated by Congress. Such obligations shall be 
     redeemable at the option of the United States Patent and 
     Trademark Organization before maturity in the manner 
     stipulated in such obligations and shall have such maturity 
     as is determined by the United States Patent and Trademark 
     Organization with the approval of the Secretary of the 
     Treasury. Each such obligation issued to the Treasury shall 
     bear interest at a rate not less than the current yield on 
     outstanding marketable obligations of the United States of 
     comparable maturity during the month preceding the issuance 
     of the obligation as determined by the Secretary of the 
     Treasury.
       (3) Purchase of obligations.--The Secretary of the Treasury 
     shall purchase any obligations of the United States Patent 
     and Trademark Organization issued under this subsection and 
     for such purpose the Secretary of the Treasury is authorized 
     to use as a public-debt transaction the proceeds of any 
     securities issued under chapter 31 of title 31, United States 
     Code, and the purposes for which securities may be issued 
     under that chapter are extended to include such purpose.
       (4) Treatment.--Payment under this subsection of the 
     purchase price of such obligations of the United States 
     Patent and Trademark Organization shall be treated as public 
     debt transactions of the United States.

     SEC. 118. TRANSFERS.

       (a) Transfer of Functions.--Except as relates to the 
     direction of patent and trademark policy, there are 
     transferred to, and vested in, the United States Patent and 
     Trademark Organization all functions, powers, and duties 
     vested by law in the Secretary of Commerce or the Department 
     of Commerce or in the officers or components in the 
     Department of Commerce with respect to the authority to grant 
     patents and register trademarks, and in the Patent and 
     Trademark Office, as in effect on the day before the 
     effective date of this title, and in the officers and 
     components of such office.
       (b) Transfer of Funds and Property.--The Secretary of 
     Commerce shall transfer to the United States Patent and 
     Trademark Organization, on the effective date of this title, 
     so much of the assets, liabilities, contracts, property, 
     records, and unexpended and unobligated balances of 
     appropriations, authorizations, allocations, and other funds 
     employed, held, used, arising from, available to, or to be 
     made available to the Department of Commerce, including funds 
     set aside for accounts receivable which are related to 
     functions, powers, and duties which are vested in the United 
     States Patent and Trademark Office by this title.
            Subtitle B--Effective Date; Technical Amendments

     SEC. 131. EFFECTIVE DATE.

       This title and the amendments made by this title shall take 
     effect 4 months after the date of the enactment of this Act.

     SEC. 132. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Amendments to Title 35.--
       (1) Table of parts.--The item relating to part I in the 
     table of parts for title 35, United States Code, is amended 
     to read as follows:
``I. United States Patent Office..............................1.''.....


[[Page S2694]]


       (2) Heading.--The heading for part I of title 35, United 
     States Code, is amended to read as follows:

                ``PART I--UNITED STATES PATENT OFFICE''.

       (3) Table of chapters.--The table of chapters for part I of 
     title 35, United States Code, is amended by amending the item 
     relating to chapter 1 to read as follows:
``1. Establishment, Officers and Employees, Functions..........1''.....

       (4) Table of sections.--The table of sections for chapter 1 
     of title 35, United States Code, is amended to read as 
     follows:

     ``CHAPTER 1--ESTABLISHMENT, OFFICERS AND EMPLOYEES, FUNCTIONS

``Sec.
``1. Establishment.
``2. Powers and duties.
``3. Officers and employees.
``4. Restrictions on officers and employees as to interest in patents.
``5. Patent Office Management Advisory Board.
``6. Duties of Commissioner.
``7. Board of Patent Appeals and Interferences.
``8. Library.
``9. Classification of patents.
``10. Certified copies of records.
``11. Publications.
``12. Exchange of copies of patents with foreign countries.
``13. Copies of patents for public libraries.
``14. Annual report to Congress.''.

       (5) Commissioner of patents and trademarks.--(A) Section 
     41(h)(1) of title 35, United States Code, is amended by 
     striking ``Commissioner of Patents and Trademarks'' and 
     inserting ``Commissioner''.
       (B) Section 155 of title 35, United States Code, is amended 
     by striking ``Commissioner of Patents and Trademarks'' and 
     inserting ``Commissioner''.
       (C) Section 155A(c) of title 35, United States Code, is 
     amended by striking ``Commissioner of Patents'' and inserting 
     ``Commissioner''.
       (6) Patent and trademark office.--The provisions of title 
     35, United States Code, are amended by striking ``Patent and 
     Trademark Office'' each place it appears and inserting 
     ``Patent Office''.
       (b) Amendments to the Trademark Act of 1946.--
       (1) References.--All amendments in this subsection refer to 
     the Act of July 5, 1946 (commonly referred to as the 
     Trademark Act of 1946).
       (2) Amendments relating to commissioner.--Section 61 (as 
     redesignated by section 115(a)(2) of this Act) is amended by 
     striking the undesignated paragraph relating to the 
     definition of the term ``Commissioner'' and inserting the 
     following:
       ``The term `Commissioner' means the Commissioner of 
     Trademarks.''.
       (3) Amendments relating to patent and trademark office.--
     (A) Section 1(a)(1) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (B) Section 1(a)(2) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (C) Section 1(b)(1) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (D) Section 1(b)(2) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (E) Section 1(d)(1) is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (F) Section 1(e) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (G) Section 2(d) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (H) Section 7(a) is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (I) Section 7(d) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (J) Section 7(e) is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (K) Section 7(f) is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (L) Section 7(g) is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (M) Section 8(a) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (N) Section 8(b) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (O) Section 10 is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (P) Section 12(a) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (Q) Section 13(a) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (R) Section 13(b)(1) is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (S) Section 15(2) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (T) Section 17 is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (U) Section 21(a)(2) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (V) Section 21(a)(3) is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (W) Section 21(a)(4) is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (X) Section 21(b)(3) is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (Y) Section 21(b)(4) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (Z) Section 24 is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (AA) Section 29 is amended by striking ``Patent and 
     Trademark Office'' each place such term appears and inserting 
     ``Trademark Office''.
       (BB) Section 30 is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (CC) Section 31(a) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (DD) Section 34(a) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (EE) Section 34(d)(1)(B)(i) is amended by striking ``Patent 
     and Trademark Office'' and inserting ``Trademark Office''.
       (FF) Section 35(a) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (GG) Section 36 is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (HH) Section 37 is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (II) Section 38 is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (JJ) Section 39(b) is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (KK) Section 41 is amended by striking ``Patent and 
     Trademark Office'' and inserting ``Trademark Office''.
       (LL) Section 61 (as redesignated under section 115(a)(2) of 
     this Act) is amended in the undesignated paragraph relating 
     to the definition of ``registered mark''--
       (i) by striking ``Patent and Trade Mark Office'' and 
     inserting ``Trademark Office; and
       (ii) by striking ``Patent and Trade Office'' and inserting 
     ``Trademark Office''.
       (MM) Section 72(a) (as redesignated under section 115(a)(2) 
     of this Act) is amended by striking ``Patent and Trademark 
     Office'' and inserting ``Trademark Office''.
       (NN) Section 75 (as redesignated under section 115(a)(2) of 
     this Act) is amended by striking ``Patent and Trademark 
     Office'' and inserting ``Trademark Office''.
       (c) Amendments to Title 5.--Section 5316 of title 5, United 
     States Code, is amended--
       (1) by striking ``Commissioner of Patents, Department of 
     Commerce.''; and
       (2) by striking:
       ``Deputy Commissioner of Patents and Trademarks.
       ``Assistant Commissioner for Patents.
       ``Assistant Commissioner for Trademarks.''.
       (d) Amendment to Title 31.--Section 9101(3) of title 31, 
     United States Code, is amended by adding at the end the 
     following:
       ``(O) the United States Patent and Trademark 
     Organization.''.
       (e) Amendments to Inspector General Act of 1978.--Section 
     11 of the Inspector General Act of 1978 (5 U.S.C. App.) is 
     amended--
       (1) in paragraph (1) by striking ``or the Commissioner of 
     Social Security, Social Security Administration;'' and 
     inserting ``the Commissioner of Social Security, Social 
     Security Administration; or the Director of the United States 
     Patent and Trademark Organization, United States Patent and 
     Trademark Organization;''; and
       (2) in paragraph (2) by striking ``or the Veterans' 
     Administration, or the Social Security Administration;'' and 
     inserting ``the Veterans' Administration, the Social Security 
     Administration, or the United States Patent and Trademark 
     Organization;''.
                  Subtitle C--Miscellaneous Provisions

     SEC. 141. REFERENCES.

       Any reference in any other Federal law, Executive order, 
     rule, regulation, or delegation of authority, or any document 
     of or pertaining to a department, agency, or office from 
     which a function is transferred by this title--
       (1) to the head of such department, agency, or office is 
     deemed to refer to the head of the department, agency, or 
     office to which such function is transferred; or
       (2) to such department, agency, or office is deemed to 
     refer to the department, agency, or office to which such 
     function is transferred.

     SEC. 142. EXERCISE OF AUTHORITIES.

       Except as otherwise provided by law, a Federal official to 
     whom a function is transferred by this title may, for 
     purposes of performing the function, exercise all authorities 
     under any other provision of law that were available with 
     respect to the performance of

[[Page S2695]]

     that function to the official responsible for the performance 
     of the function immediately before the effective date of the 
     transfer of the function under this title.

     SEC. 143. SAVINGS PROVISIONS.

       (a) Legal Documents.--All orders, determinations, rules, 
     regulations, permits, grants, loans, contracts, agreements, 
     certificates, licenses, and privileges that--
       (1) have been issued, made, granted, or allowed to become 
     effective by the President, the Secretary of Commerce, any 
     officer or employee of any office transferred by this title, 
     or any other Government official, or by a court of competent 
     jurisdiction, in the performance of any function that is 
     transferred by this title, and
       (2) are in effect on the effective date of such transfer 
     (or become effective after such date pursuant to their terms 
     as in effect on such effective date), shall continue in 
     effect according to their terms until modified, terminated, 
     superseded, set aside, or revoked in accordance with law by 
     the President, any other authorized official, a court of 
     competent jurisdiction, or operation of law.
       (b) Proceedings.--This title shall not affect any 
     proceedings or any application for any benefits, service, 
     license, permit, certificate, or financial assistance pending 
     on the effective date of this title before an office 
     transferred by this title, but such proceedings and 
     applications shall be continued. Orders shall be issued in 
     such proceedings, appeals shall be taken therefrom, and 
     payments shall be made pursuant to such orders, as if this 
     title had not been enacted, and orders issued in any such 
     proceeding shall continue in effect until modified, 
     terminated, superseded, or revoked by a duly authorized 
     official, by a court of competent jurisdiction, or by 
     operation of law. Nothing in this subsection shall be 
     considered to prohibit the discontinuance or modification of 
     any such proceeding under the same terms and conditions and 
     to the same extent that such proceeding could have been 
     discontinued or modified if this title had not been enacted.
       (c) Suits.--This title shall not affect suits commenced 
     before the effective date of this title, and in all such 
     suits, proceedings shall be had, appeals taken, and judgments 
     rendered in the same manner and with the same effect as if 
     this title had not been enacted.
       (d) Nonabatement of Actions.--No suit, action, or other 
     proceeding commenced by or against the Department of Commerce 
     or the Secretary of Commerce, or by or against any individual 
     in the official capacity of such individual as an officer or 
     employee of an office transferred by this title, shall abate 
     by reason of the enactment of this title.
       (e) Continuance of Suits.--If any Government officer in the 
     official capacity of such officer is party to a suit with 
     respect to a function of the officer, and under this title 
     such function is transferred to any other officer or office, 
     then such suit shall be continued with the other officer or 
     the head of such other office, as applicable, substituted or 
     added as a party.
       (f) Administrative Procedure and Judicial Review.--Except 
     as otherwise provided by this title, any statutory 
     requirements relating to notice, hearings, action upon the 
     record, or administrative or judicial review that apply to 
     any function transferred by this title shall apply to the 
     exercise of such function by the head of the Federal agency, 
     and other officers of the agency, to which such function is 
     transferred by this title.

     SEC. 144. TRANSFER OF ASSETS.

       Except as otherwise provided in this title, so much of the 
     personnel, property, records, and unexpended balances of 
     appropriations, allocations, and other funds employed, used, 
     held, available, or to be made available in connection with a 
     function transferred to an official or agency by this title 
     shall be available to the official or the head of that 
     agency, respectively, at such time or times as the Director 
     of the Office of Management and Budget directs for use in 
     connection with the functions transferred.

     SEC. 145. DELEGATION AND ASSIGNMENT.

       (a) In General.--Except as otherwise expressly prohibited 
     by law or otherwise provided in this title, an official to 
     whom functions are transferred under this title (including 
     the head of any office to which functions are transferred 
     under this title) may--
       (1) delegate any of the functions so transferred to such 
     officers and employees of the office of the official as the 
     official may designate; and
       (2) authorize successive redelegations of such functions as 
     may be necessary or appropriate.
       (b) Responsibility for Administration.--No delegation of 
     functions under this section or under any other provision of 
     this title shall relieve the official to whom a function is 
     transferred under this title of responsibility for the 
     administration of the function.

     SEC. 146. AUTHORITY OF DIRECTOR OF THE OFFICE OF MANAGEMENT 
                   AND BUDGET WITH RESPECT TO FUNCTIONS 
                   TRANSFERRED.

       (a) Determinations.--If necessary, the Director of the 
     Office of Management and Budget shall make any determination 
     of the functions that are transferred under this title.
       (b) Incidental Transfers.--The Director of the Office of 
     Management and Budget, at such time or times as the Director 
     shall provide, may make such determinations as may be 
     necessary with regard to the functions transferred by this 
     title, and to make such additional incidental dispositions of 
     personnel, assets, liabilities, grants, contracts, property, 
     records, and unexpended balances of appropriations, 
     authorizations, allocations, and other funds held, used, 
     arising from, available to, or to be made available in 
     connection with such functions, as may be necessary to carry 
     out the provisions of this title.
       (c) Termination of Affairs.--The Director shall provide for 
     the termination of the affairs of all entities terminated by 
     this title and for such further measures and dispositions as 
     may be necessary to effectuate the purposes of this title.

     SEC. 147. CERTAIN VESTING OF FUNCTIONS CONSIDERED TRANSFERS.

       For purposes of this title, the vesting of a function in a 
     department, agency, or office pursuant to reestablishment of 
     an office shall be considered to be the transfer of the 
     function.

     SEC. 148. AVAILABILITY OF EXISTING FUNDS.

       Existing appropriations and funds available for the 
     performance of functions, programs, and activities terminated 
     pursuant to this title shall remain available, for the 
     duration of their period of availability, for necessary 
     expenses in connection with the termination and resolution of 
     such functions, programs, and activities.

     SEC. 149. DEFINITIONS.

       For purposes of this title--
       (1) the term ``function'' includes any duty, obligation, 
     power, authority, responsibility, right, privilege, activity, 
     or program; and
       (2) the term ``office'' includes any office, 
     administration, agency, bureau, institute, council, unit, 
     organizational entity, or component thereof.
           TITLE II--EARLY PUBLICATION OF PATENT APPLICATIONS

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Patent Application 
     Publication Act of 1997''.

     SEC. 202. EARLY PUBLICATION.

       Section 122 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 122. Confidential status of applications; publication 
       of patent applications

       ``(a) Confidentiality.--Except as provided in subsection 
     (b), applications for patents shall be kept in confidence by 
     the Patent Office and no information concerning the same 
     given without authority of the applicant or owner unless 
     necessary to carry out the provisions of an Act of Congress 
     or in such special circumstances as may be determined by the 
     Commissioner.
       ``(b) Publication.--
       ``(1) In general.--(A) Subject to paragraph (2), each 
     application for patent, except applications for design 
     patents filed under chapter 16 of this title and provisional 
     applications filed under section 111(b) of this title, shall 
     be published, in accordance with procedures determined by the 
     Commissioner, as soon as possible after the expiration of a 
     period of 18 months from the earliest filing date for which a 
     benefit is sought under this title. At the request of the 
     applicant, an application may be published earlier than the 
     end of such 18-month period.
       ``(B) No information concerning published patent 
     applications shall be made available to the public except as 
     the Commissioner determines.
       ``(C) Notwithstanding any other provision of law, a 
     determination by the Commissioner to release or not to 
     release information concerning a published patent application 
     shall be final and nonreviewable.
       ``(2) Exceptions.--(A) An application that is no longer 
     pending shall not be published.
       ``(B) An application that is subject to a secrecy order 
     pursuant to section 181 of this title shall not be published.
       ``(C)(i) Upon the request of the applicant at the time of 
     filing, the application shall not be published in accordance 
     with paragraph (1) until 3 months after the Commissioner 
     makes a notification to the applicant under section 132 of 
     this title.
       ``(ii) Applications filed pursuant to section 363 of this 
     title, applications asserting priority under section 119 or 
     365(a) of this title, and applications asserting the benefit 
     of an earlier application under section 120, 121, or 365(c) 
     of this title shall not be eligible for a request pursuant to 
     this subparagraph.
       ``(iii) In a request under this subparagraph, the applicant 
     shall certify that the invention disclosed in the application 
     was not and will not be the subject of an application filed 
     in a foreign country.
       ``(iv) The Commissioner may establish appropriate 
     procedures and fees for making a request under this 
     subparagraph.
       ``(c) Pre-Issuance Opposition.--The provisions of this 
     section shall not operate to create any new opportunity for 
     pre-issuance opposition. The Commissioner may establish 
     appropriate procedures to ensure that this section does not 
     create any new opportunity for pre-issuance opposition that 
     did not exist prior to the adoption of this section.''.

     SEC. 203. TIME FOR CLAIMING BENEFIT OF EARLIER FILING DATE.

       (a) In a Foreign Country.--Section 119(b) of title 35, 
     United States Code, is amended to read as follows:
       ``(b)(1) No application for patent shall be entitled to 
     this right of priority unless a claim, identifying the 
     foreign application by specifying its application number, 
     country, and the day, month, and year of its filing, is filed 
     in the Patent Office at such time during the pendency of the 
     application as required by the Commissioner.
       ``(2) The Commissioner may consider the failure of the 
     applicant to file a timely claim for priority as a waiver of 
     any such claim,

[[Page S2696]]

     and may require the payment of a surcharge as a condition of 
     accepting an untimely claim during the pendency of the 
     application.
       ``(3) The Commissioner may require a certified copy of the 
     original foreign application, specification, and drawings 
     upon which it is based, a translation if not in the English 
     language, and such other information as the Commissioner 
     considers necessary. Any such certification shall be made by 
     the foreign intellectual property authority in which the 
     foreign application was filed and show the date of the 
     application and of the filing of the specification and other 
     papers.''.
       (b) In the United States.--Section 120 of title 35, United 
     States Code, is amended by adding at the end the following: 
     ``The Commissioner may determine the time period during the 
     pendency of the application within which an amendment 
     containing the specific reference to the earlier filed 
     application is submitted. The Commissioner may consider the 
     failure to submit such an amendment within that time period 
     as a waiver of any benefit under this section. The 
     Commissioner may establish procedures, including the payment 
     of a surcharge, to accept unavoidably late submissions of 
     amendments under this section.''.

     SEC. 204. PROVISIONAL RIGHTS.

       Section 154 of title 35, United States Code, is amended--
       (1) in the section caption by inserting ``; provisional 
     rights'' after ``patent''; and
       (2) by adding at the end the following new subsection:
       ``(d) Provisional Rights.--
       ``(1) In general.--In addition to other rights provided by 
     this section, a patent shall include the right to obtain a 
     reasonable royalty from any person who, during the period 
     beginning on the date of publication of the application for 
     such patent pursuant to section 122(b) of this title, or in 
     the case of an international application filed under the 
     treaty defined in section 351(a) of this title designating 
     the United States under Article 21(2)(a) of such treaty, the 
     date of publication of the application, and ending on the 
     date the patent is issued--
       ``(A)(i) makes, uses, offers for sale, or sells in the 
     United States the invention as claimed in the published 
     patent application or imports such an invention into the 
     United States; or
       ``(ii) if the invention as claimed in the published patent 
     application is a process, uses, offers for sale, or sells in 
     the United States or imports into the United States products 
     made by that process as claimed in the published patent 
     application; and
       ``(B) had actual notice of the published patent 
     application, and where the right arising under this paragraph 
     is based upon an international application designating the 
     United States that is published in a language other than 
     English, a translation of the international application into 
     the English language.
       ``(2) Right based on substantially identical inventions.--
     The right under paragraph (1) to obtain a reasonable royalty 
     shall not be available under this subsection unless the 
     invention as claimed in the patent is substantially identical 
     to the invention as claimed in the published patent 
     application.
       ``(3) Time limitation on obtaining a reasonable royalty.--
     The right under paragraph (1) to obtain a reasonable royalty 
     shall be available only in an action brought not later than 6 
     years after the patent is issued. The right under paragraph 
     (1) to obtain a reasonable royalty shall not be affected by 
     the duration of the period described in paragraph (1).
       ``(4) Requirements for international applications.--
       ``(A) Effective date.--The right under paragraph (1) to 
     obtain a reasonable royalty based upon the publication under 
     the treaty of an international application designating the 
     United States shall commence from the date that the Patent 
     Office receives a copy of the publication under the treaty 
     defined in section 351(a) of this title of the international 
     application, or, if the publication under the treaty of the 
     international application is in a language other than 
     English, from the date that the Patent Office receives a 
     translation of the international application in the English 
     language.
       ``(B) Copies.--The Commissioner may require the applicant 
     to provide a copy of the international application and a 
     translation thereof.''.

     SEC. 205. PRIOR ART EFFECT OF PUBLISHED APPLICATIONS.

       Section 102(e) of title 35, United States Code, is amended 
     to read as follows:
       ``(e) the invention was described in--
       ``(1)(A) an application for patent, published pursuant to 
     section 122(b) of this title, by another filed in the United 
     States before the invention by the applicant for patent, 
     except that an international application filed under the 
     treaty defined in section 351(a) of this title shall have the 
     effect under this subsection of a national application 
     published under section 122(b) of this title only if the 
     international application designating the United States was 
     published under Article 21(2)(a) of such treaty in the 
     English language, or
       ``(B) a patent granted on an application for patent by 
     another filed in the United States before the invention by 
     the applicant for patent, or''.

     SEC. 206. COST RECOVERY FOR PUBLICATION.

       The Commissioner shall recover the cost of early 
     publication required by the amendment made by section 202 by 
     adjusting the filing, issue, and maintenance fees under title 
     35, United States Code, by charging a separate publication 
     fee, or by any combination of these methods.

     SEC. 207. CONFORMING CHANGES.

       The following provisions of title 35, United States Code, 
     are amended:
       (1) Section 11 is amended in paragraph 1 of subsection (a) 
     by inserting ``and published applications for patents'' after 
     ``Patents''.
       (2) Section 12 is amended--
       (A) in the section caption by inserting ``and 
     applications'' after ``patents''; and
       (B) by inserting ``and published applications for patents'' 
     after ``patents''.
       (3) Section 13 is amended--
       (A) in the section caption by inserting ``and 
     applications'' after ``patents''; and
       (B) by inserting ``and published applications for patents'' 
     after ``patents''.
       (4) The items relating to sections 12 and 13 in the table 
     of sections for chapter 1 are each amended by inserting ``and 
     applications'' after ``patents''.
       (5) The item relating to section 122 in the table of 
     sections for chapter 11 is amended by inserting ``; 
     publication of patent applications'' after ``applications''.
       (6) The item relating to section 154 in the table of 
     sections for chapter 14 is amended by inserting ``; 
     provisional rights'' after ``patent''.
       (7) Section 181 is amended--
       (A) in the first undesignated paragraph--
       (i) by inserting ``by the publication of an application 
     or'' after ``disclosure''; and
       (ii) ``the publication of the application or'' after 
     ``withhold'';
       (B) in the second undesignated paragraph by inserting ``by 
     the publication of an application or'' after ``disclosure of 
     an invention'';
       (C) in the third undesignated paragraph--
       (i) by inserting ``by the publication of the application 
     or'' after ``disclosure of the invention''; and
       (ii) ``the publication of the application or'' after 
     ``withhold''; and
       (D) in the fourth undesignated paragraph by inserting ``the 
     publication of an application or'' after ``and'' in the first 
     sentence.
       (8) Section 252 is amended in the first undesignated 
     paragraph by inserting ``substantially'' before ``identical'' 
     each place it appears.
       (9) Section 284 is amended by adding at the end of the 
     second undesignated paragraph the following: ``Increased 
     damages under this paragraph shall not apply to provisional 
     rights under section 154(d) of this title.''.
       (10) Section 374 is amended to read as follows:

     ``Sec. 374. Publication of international application: Effect

       ``The publication under the treaty, defined in section 
     351(a) of this title, of an international application 
     designating the United States shall confer the same rights 
     and shall have the same effect under this title as an 
     application for patent published under section 122(b), except 
     as provided in sections 102(e) and 154(d) of this title.''.

     SEC. 208. LAST DAY OF PENDENCY OF PROVISIONAL APPLICATION.

       Section 119(e) of title 35, United States Code, is amended 
     by adding at the end the following:
       ``(3) If the day that is 12 months after the filing date of 
     a provisional application falls on a Saturday, Sunday, or 
     legal holiday as defined in rule 6(a) of the Federal Rules of 
     Civil Procedure, the period of pendency of the provisional 
     application shall be extended to the next succeeding business 
     day.''.

     SEC. 209. EFFECTIVE DATE.

       (a) Sections 202 Through 207.--Sections 202 through 207, 
     and the amendments made by such sections, shall take effect 
     on April 1, 1998, and shall apply to all applications filed 
     under section 111 of title 35, United States Code, on or 
     after that date, and all applications complying with section 
     371 of title 35, United States Code, that resulted from 
     international applications filed on or after that date. The 
     amendment made by section 204 shall also apply to 
     international applications designating the United States that 
     are filed on or after April 1, 1998.
       (b) Section 208.--The amendments made by section 208 shall 
     take effect on the date of the enactment of this Act and, 
     except for a design patent application filed under chapter 16 
     of title 35, United States Code, shall apply to any 
     application filed on or after June 8, 1995.
                   TITLE III--PATENT TERM RESTORATION

     SEC. 301. PATENT TERM EXTENSION AUTHORITY.

       Section 154(b) of title 35, United States Code, is amended 
     to read as follows:
       ``(b) Term Extension.--
       ``(1) Basis for patent term extension.--
       ``(A) Delay.--Subject to the limitations under paragraph 
     (2), if the issue of an original patent is delayed due to--
       ``(i) a proceeding under section 135(a) of this title;
       ``(ii) the imposition of an order pursuant to section 181 
     of this title;
       ``(iii) appellate review by the Board of Patent Appeals and 
     Interferences or by a Federal court where the patent was 
     issued pursuant to a decision in the review reversing an 
     adverse determination of patentability; or
       ``(iv) an unusual administrative delay by the Patent Office 
     in issuing the patent,
     the term of the patent shall be extended for the period of 
     delay.
       ``(B) Administrative delay.--For purposes of subparagraph 
     (A)(iv), an unusual administrative delay by the Patent Office 
     is the failure to--

[[Page S2697]]

       ``(i) make a notification of the rejection of any claim for 
     a patent or any objection or argument under section 132 of 
     this title or give or mail a written notice of allowance 
     under section 151 of this title not later than 14 months 
     after the date on which the application was filed;
       ``(ii) respond to a reply under section 132 of this title 
     or to an appeal taken under section 134 of this title not 
     later than 4 months after the date on which the reply was 
     filed or the appeal was taken;
       ``(iii) act on an application not later than 4 months after 
     the date of a decision by the Board of Patent Appeals and 
     Interferences under section 134 or 135 of this title or a 
     decision by a Federal court under section 141, 145, or 146 of 
     this title where allowable claims remain in an application; 
     or
       ``(iv) issue a patent not later than 4 months after the 
     date on which the issue fee was paid under section 151 of 
     this title and all outstanding requirements were satisfied.
       ``(2) Limitations.--
       ``(A) In general.--The total duration of any extensions 
     granted pursuant to either subclause (iii) or (iv) of 
     paragraph (1)(A) or both such subclauses shall not exceed 10 
     years. To the extent that periods of delay attributable to 
     grounds specified in paragraph (1) overlap, the period of any 
     extension granted under this subsection shall not exceed the 
     actual number of days the issuance of the patent was delayed.
       ``(B) Reduction of extension.--The period of extension of 
     the term of a patent under this subsection shall be reduced 
     by a period equal to the time in which the applicant failed 
     to engage in reasonable efforts to conclude prosecution of 
     the application. The Commissioner shall prescribe regulations 
     establishing the circumstances that constitute a failure of 
     an applicant to engage in reasonable efforts to conclude 
     processing or examination of an application.
       ``(C) Disclaimed term.--No patent the term of which has 
     been disclaimed beyond a specified date may be extended under 
     this section beyond the expiration date specified in the 
     disclaimer.
       ``(3) Procedures.--The Commissioner shall prescribe 
     regulations establishing procedures for the notification of 
     patent term extensions under this subsection and procedures 
     for contesting patent term extensions under this 
     subsection.''.

     SEC. 302. EFFECTIVE DATE.

       The amendments made by section 301 shall take effect on the 
     date of the enactment of this Act and, except for a design 
     patent application filed under chapter 16 of title 35, United 
     States Code, shall apply to any application filed on or after 
     June 8, 1995.
                TITLE IV--PRIOR DOMESTIC COMMERCIAL USE

     SEC. 401. SHORT TITLE.

       This title may be cited as the ``Prior Domestic Commercial 
     Use Act of 1997''.

     SEC. 402. DEFENSE TO PATENT INFRINGEMENT BASED ON PRIOR 
                   DOMESTIC COMMERCIAL USE.

       (a) Defense.--Chapter 28 of title 35, United States Code, 
     is amended by adding at the end the following new section:

     ``Sec. 273. Prior domestic commercial use; defense to 
       infringement

       ``(a) Definitions.--For purposes of this section--
       ``(1) the terms `commercially used', `commercially use', 
     and `commercial use' mean the use in the United States in 
     commerce or the use in the design, testing, or production in 
     the United States of a product or service which is used in 
     commerce, whether or not the subject matter at issue is 
     accessible to or otherwise known to the public;
       ``(2) the terms `used in commerce', and `use in commerce' 
     mean that there has been an actual sale or other commercial 
     transfer of the subject matter at issue or that there has 
     been an actual sale or other commercial transfer of a product 
     or service resulting from the use of the subject matter at 
     issue; and
       ``(3) the `effective filing date' of a patent is the 
     earlier of the actual filing date of the application for the 
     patent or the filing date of any earlier United States, 
     foreign, or international application to which the subject 
     matter at issue is entitled under section 119, 120, or 365 of 
     this title.
       ``(b) Defense to Infringement.--
       ``(1) In general.--A person shall not be liable as an 
     infringer under section 271 of this title with respect to any 
     subject matter that would otherwise infringe one or more 
     claims in the patent being asserted against such person, if 
     such person had, acting in good faith, commercially used the 
     subject matter before the effective filing date of such 
     patent.
       ``(2) Exhaustion of right.--The sale or other disposition 
     of the subject matter of a patent by a person entitled to 
     assert a defense under this section with respect to that 
     subject matter shall exhaust the patent owner's rights under 
     the patent to the extent such rights would have been 
     exhausted had such sale or other disposition been made by the 
     patent owner.
       ``(c) Limitations and Qualifications of Defense.--The 
     defense to infringement under this section is subject to the 
     following:
       ``(1) Derivation.--A person may not assert the defense 
     under this section if the subject matter on which the defense 
     is based was derived from the patentee or persons in privity 
     with the patentee.
       ``(2) Not a general license.--The defense asserted by a 
     person under this section is not a general license under all 
     claims of the patent at issue, but extends only to the 
     subject matter claimed in the patent with respect to which 
     the person can assert a defense under this chapter, except 
     that the defense shall also extend to variations in the 
     quantity or volume of use of the claimed subject matter, and 
     to improvements in the claimed subject matter that do not 
     infringe additional specifically claimed subject matter of 
     the patent.
       ``(3) Effective and serious preparation.--With respect to 
     subject matter that cannot be commercialized without a 
     significant investment of time, money, and effort, a person 
     shall be deemed to have commercially used the subject matter 
     if--
       ``(A) before the effective filing date of the patent, the 
     person reduced the subject matter to practice in the United 
     States, completed a significant portion of the total 
     investment necessary to commercially use the subject matter, 
     and made a commercial transaction in the United States in 
     connection with the preparation to use the subject matter; 
     and
       ``(B) thereafter the person diligently completed the 
     remainder of the activities and investments necessary to 
     commercially use the subject matter, and promptly began 
     commercial use of the subject matter, even if such activities 
     were conducted after the effective filing date of the patent.
       ``(4) Burden of proof.--A person asserting the defense 
     under this section shall have the burden of establishing the 
     defense.
       ``(5) Abandonment of use.--A person who has abandoned 
     commercial use of subject matter may not rely on activities 
     performed before the date of such abandonment in establishing 
     a defense under subsection (b) with respect to actions taken 
     after the date of such abandonment.
       ``(6) Personal defense.--The defense under this section may 
     only be asserted by the person who performed the acts 
     necessary to establish the defense and, except for any 
     transfer to the patent owner, the right to assert the defense 
     shall not be licensed or assigned or transferred to another 
     person except in connection with the good faith assignment or 
     transfer of the entire enterprise or line of business to 
     which the defense relates.
       ``(7) One-year limitation.--A person may not assert a 
     defense under this section unless the subject matter on which 
     the defense is based had been commercially used or reduced to 
     practice more than one year prior to the effective filing 
     date of the patent by the person asserting the defense or 
     someone in privity with that person.
       ``(d) Unsuccessful Assertion of Defense.--If the defense 
     under this section is pleaded by a person who is found to 
     infringe the patent and who subsequently fails to demonstrate 
     a reasonable basis for asserting the defense, the court shall 
     find the case exceptional for the purpose of awarding 
     attorney's fees under section 285 of this title.
       ``(e) Invalidity.--A patent shall not be deemed to be 
     invalid under section 102 or 103 of this title solely because 
     a defense is established under this section.''.
       (b) Conforming Amendment.--The table of sections at the 
     beginning of chapter 28 of title 35, United States Code, is 
     amended by adding at the end the following new item:

``Sec. 273. Prior domestic commercial use; defense to infringement.''.

     SEC. 403. EFFECTIVE DATE AND APPLICABILITY.

       This title and the amendments made by this title shall take 
     effect on the date of the enactment of this Act, but shall 
     not apply to any action for infringement that is pending on 
     such date of enactment or with respect to any subject matter 
     for which an adjudication of infringement, including a 
     consent judgment, has been made before such date of 
     enactment.
                  TITLE V--PATENT REEXAMINATION REFORM

     SEC. 501. SHORT TITLE.

       This title may be cited as the ``Patent Reexamination 
     Reform Act of 1997''.

     SEC. 502. DEFINITIONS.

       Section 100 of title 35, United States Code, is amended by 
     adding at the end the following new subsection:
       ``(e) The term `third-party requester' means a person 
     requesting reexamination under section 302 of this title who 
     is not the patent owner.''.

     SEC. 503. REEXAMINATION PROCEDURES.

       (a) Request for Reexamination.--Section 302 of title 35, 
     United States Code, is amended to read as follows:

     ``Sec. 302. Request for reexamination

       ``(a) In General.--Any person at any time may file a 
     request for reexamination by the Office of a patent on the 
     basis of any prior art cited under the provisions of section 
     301 of this title or on the basis of the requirements of 
     section 112 of this title except for the requirement to set 
     forth the best mode of carrying out the invention.
       ``(b) Requirements.--The request shall--
       ``(1) be in writing, include the identity of the real party 
     in interest, and be accompanied by payment of a reexamination 
     fee established by the Commissioner of Patents pursuant to 
     the provisions of section 41 of this title; and
       ``(2) set forth the pertinency and manner of applying cited 
     prior art to every claim for which reexamination is requested 
     or the manner in which the patent specification or claims 
     fail to comply with the requirements of section 112 of this 
     title.

[[Page S2698]]

       ``(c) Copy.--Unless the requesting person is the owner of 
     the patent, the Commissioner promptly shall send a copy of 
     the request to the owner of record of the patent.''.
       (b) Determination of Issue by Commissioner.--Section 303 of 
     title 35, United States Code, is amended to read as follows:

     ``Sec. 303. Determination of issue by Commissioner

       ``(a) Reexamination.--Not later than 3 months after the 
     filing of a request for reexamination under the provisions of 
     section 302 of this title, the Commissioner shall determine 
     whether a substantial new question of patentability affecting 
     any claim of the patent concerned is raised by the request, 
     with or without consideration of other patents or printed 
     publications. On the Commissioner's initiative, and any time, 
     the Commissioner may determine whether a substantial new 
     question of patentability is raised by patents and 
     publications or by the failure of the patent specification or 
     claims to comply with the requirements of section 112 of this 
     title except for the best mode requirement described in 
     section 302.
       ``(b) Record.--A record of the Commissioner's determination 
     under subsection (a) shall be placed in the official file of 
     the patent, and a copy shall be promptly given or mailed to 
     the owner of record of the patent and to the third-party 
     requester, if any.
       ``(c) Final Decision.--A determination by the Commissioner 
     pursuant to subsection (a) shall be final and nonappealable. 
     Upon a determination that no substantial new question of 
     patentability has been raised, the Commissioner may refund a 
     portion of the reexamination fee required under section 302 
     of this title.''.
       (c) Reexamination Order by Commissioner.--Section 304 of 
     title 35, United States Code, is amended to read as follows:

     ``Sec. 304. Reexamination order by Commissioner

       ``If, in a determination made under the provisions of 
     section 303(a) of this title, the Commissioner finds that a 
     substantial new question of patentability affecting a claim 
     of a patent is raised, the determination shall include an 
     order for reexamination of the patent for resolution of the 
     question. The order may be accompanied by the initial action 
     of the Patent Office on the merits of the reexamination 
     conducted in accordance with section 305 of this title.''.
       (d) Conduct of Reexamination Proceedings.--Section 305 of 
     title 35, United States Code, is amended to read as follows:

     ``Sec. 305. Conduct of reexamination proceedings

       ``(a) In General.--Subject to subsection (b), reexamination 
     shall be conducted according to the procedures established 
     for initial examination under the provisions of sections 132 
     and 133 of this title. In any reexamination proceeding under 
     this chapter, the patent owner shall be permitted to propose 
     any amendment to the patent and a new claim or claims, except 
     that no proposed amended or new claim enlarging the scope of 
     the claims of the patent shall be permitted.
       ``(b) Response.--(1) This subsection shall apply to any 
     reexamination proceeding in which the order for reexamination 
     is based upon a request by a third-party requester.
       ``(2) With the exception of the reexamination request, any 
     document filed by either the patent owner or the third-party 
     requester shall be served on the other party.
       ``(3) If the patent owner files a response to any Patent 
     Office action on the merits, the third-party requester shall 
     have 1 opportunity to file written comments within a 
     reasonable period not less than 1 month after the date of 
     service of the patent owner's response. Written comments 
     provided under this paragraph shall be limited to issues 
     covered by the Patent Office action or the patent owner's 
     response.
       ``(c) Special Dispatch.--Unless otherwise provided by the 
     Commissioner for good cause, all reexamination proceedings 
     under this section, including any appeal to the Board of 
     Patent Appeals and Interferences, shall be conducted with 
     special dispatch within the Office.''.
       (e) Appeal.--Section 306 of title 35, United States Code, 
     is amended to read as follows:

     ``Sec. 306. Appeal

       ``(a) Patent Owner.--The patent owner involved in a 
     reexamination proceeding under this chapter--
       ``(1) may appeal under the provisions of section 134 of 
     this title, and may appeal under the provisions of sections 
     141 through 144 of this title, with respect to any decision 
     adverse to the patentability of any original or proposed 
     amended or new claim of the patent, and
       ``(2) may be a party to any appeal taken by a third-party 
     requester pursuant to subsection (b) of this section.
       ``(b) Third-Party Requester.--A third-party requester may--
       ``(1) appeal under the provisions of section 134 of this 
     title, and may appeal under the provisions of sections 141 
     through 144 of this title, with respect to any final decision 
     favorable to the patentability of any original or proposed 
     amended or new claim of the patent; or
       ``(2) be a party to any appeal taken by the patent owner, 
     subject to subsection (c) of this section.
       ``(c) Participation as Party.--
       ``(1) In general.--A third-party requester who, under the 
     provisions of sections 141 through 144 of this title, files a 
     notice of appeal or who participates as a party to an appeal 
     by the patent owner is estopped from asserting at a later 
     time, in any forum, the invalidity of any claim determined to 
     be patentable on appeal on any ground which the third-party 
     requester raised or could have raised during the 
     reexamination proceedings.
       ``(2) Election to participate.--A third-party requester is 
     deemed not to have participated as a party to an appeal by 
     the patent owner unless, not later than 20 days after the 
     patent owner has filed notice of appeal, the third-party 
     requester files notice with the Commissioner electing to 
     participate.''.
       (f) Reexamination Prohibited.--
       (1) In general.--Chapter 30 of title 35, United States 
     Code, is amended by adding at the end the following new 
     section:

     ``Sec. 308. Reexamination prohibited

       ``(a) Order for Reexamination.--Notwithstanding any 
     provision of this chapter, once an order for reexamination of 
     a patent has been issued under section 304 of this title, 
     neither the patent owner nor the third-party requester, if 
     any, nor privies of either, may file a subsequent request for 
     reexamination of the patent until a reexamination certificate 
     is issued and published under section 307 of this title, 
     unless authorized by the Commissioner.
       ``(b) Final Decision.--Once a final decision has been 
     entered against a party in a civil action arising in whole or 
     in part under section 1338 of title 28 that the party has not 
     sustained its burden of proving the invalidity of any patent 
     claim in suit, then neither that party nor its privies may 
     thereafter request reexamination of any such patent claim on 
     the basis of issues which that party or its privies raised or 
     could have raised in such civil action, and a reexamination 
     requested by that party or its privies on the basis of such 
     issues may not thereafter be maintained by the Office, 
     notwithstanding any other provision of this chapter.''.
       (2) Technical and conforming amendment.--The table of 
     sections for chapter 30 of title 35, United States Code, is 
     amended by adding at the end the following:
``308. Reexamination prohibited.''.

     SEC. 504. CONFORMING AMENDMENTS.

       (a) Patent Fees; Patent Search Systems.--Section 41(a)(7) 
     of title 35, United States Code, is amended to read as 
     follows:
       ``(7) On filing each petition for the revival of an 
     unintentionally abandoned application for a patent, for the 
     unintentionally delayed payment of the fee for issuing each 
     patent, or for an unintentionally delayed response by the 
     patent owner in a reexamination proceeding, $1,250, unless 
     the petition is filed under sections 133 or 151 of this 
     title, in which case the fee shall be $110.''.
       (b) Appeal to the Board of Patent Appeals and 
     Interferences.--Section 134 of title 35, United States Code, 
     is amended to read as follows:

     ``Sec. 134. Appeal to the Board of Patent Appeals and 
       Interferences

       ``(a) Patent Applicant.--An applicant for a patent, any of 
     whose claims has been twice rejected, may appeal from the 
     decision of the primary examiner to the Board of Patent 
     Appeals and Interferences, having once paid the fee for such 
     appeal.
       ``(b) Patent Owner.--A patent owner in a reexamination 
     proceeding may appeal from the final rejection of any claim 
     by the primary examiner to the Board of Patent Appeals and 
     Interferences, having once paid the fee for such appeal.
       ``(c) Third-Party.--A third-party requester may appeal to 
     the Board of Patent Appeals and Interferences from the final 
     decision of the primary examiner favorable to the 
     patentability of any original or proposed amended or new 
     claim of a patent, having once paid the fee for such 
     appeal.''.
       (d) Appeal to Court of Appeals for the Federal Circuit.--
     Section 141 of title 35, United States Code, is amended by 
     amending the first sentence to read as follows: ``An 
     applicant, a patent owner, or a third-party requester, 
     dissatisfied with the final decision in an appeal to the 
     Board of Patent Appeals and Interferences under section 134 
     of this title, may appeal the decision to the United States 
     Court of Appeals for the Federal Circuit.''.
       (e) Proceedings on Appeal.--Section 143 of title 35, United 
     States Code, is amended by amending the third sentence to 
     read as follows: ``In ex parte and reexamination cases, the 
     Commissioner shall submit to the court in writing the grounds 
     for the decision of the Patent Office, addressing all the 
     issues involved in the appeal.''.
       (f) Civil Action To Obtain Patent.--Section 145 of title 
     35, United States Code, is amended in the first sentence by 
     inserting ``(a)'' after ``section 134''.

     SEC. 505. EFFECTIVE DATE.

       This title and the amendments made by this title shall take 
     effect on the date that is 6 months after the date of the 
     enactment of this Act and shall apply to all reexamination 
     requests filed on or after such date.
               TITLE VI--MISCELLANEOUS PATENT PROVISIONS

     SEC. 601. PROVISIONAL APPLICATIONS.

       (a) Abandonment.--Section 111(b)(5) of title 35, United 
     States Code, is amended to read as follows:
       ``(5) Abandonment.--Notwithstanding the absence of a claim, 
     upon timely request and as prescribed by the Commissioner, a 
     provisional application may be treated as an application 
     filed under subsection (a). If no such request is made, the 
     provisional application shall be regarded as abandoned 12 
     months after the filing date of such application and shall 
     not be subject to revival thereafter.''.

[[Page S2699]]

       (b) Effective Date.--The amendments made by subsection (a) 
     apply to a provisional application filed on or after June 8, 
     1995.

     SEC. 602. INTERNATIONAL APPLICATIONS.

       Section 119 of title 35, United States Code, is amended as 
     follows:
       (1) In subsection (a), insert ``or in a WTO member 
     country'' after ``or to citizens of the United States,''.
       (2) At the end of section 119 add the following new 
     subsections:
       ``(f) Applications for plant breeder's rights filed in a 
     WTO member country (or in a foreign UPOV Contracting Party) 
     shall have the same effect for the purpose of the right of 
     priority under subsections (a) through (c) of this section as 
     applications for patents, subject to the same conditions and 
     requirements of this section as apply to applications for 
     patents.
       ``(g) As used in this section--
       ``(1) the term `WTO member country' has the same meaning as 
     the term is defined in section 104(b)(2) of this title; and
       ``(2) the term `UPOV Contracting Party' means a member of 
     the International Convention for the Protection of New 
     Varieties of Plants.''.

     SEC. 603. PLANT PATENTS.

       (a) Tuber Propagated Plants.--Section 161 of title 35, 
     United States Code, is amended by striking ``a tuber 
     propagated plant or''.
       (b) Rights in Plant Patents.--The text of section 163 of 
     title 35, United States Code, is amended to read as follows: 
     ``In the case of a plant patent, the grant to the patentee, 
     such patentee's heirs or assigns, shall have the right to 
     exclude others from asexually reproducing the plant, and from 
     using, offering for sale, or selling the plant so reproduced, 
     or any of its parts, throughout the United States, or from 
     importing the plant so reproduced, or any parts thereof, into 
     the United States.''.
       (c) Effective Date.--The amendments by subsection (a) shall 
     apply on the date of enactment of this Act. The amendments 
     made by subsection (b) shall apply to any plant patent issued 
     on or after the date of enactment of this Act.

     SEC. 604. ELECTRONIC FILING.

       Section 22 of title 35, United States Code, is amended by 
     striking ``printed or typewritten'' and inserting ``printed, 
     typewritten, or on an electronic medium'' .
                                                                    ____


                  Omnibus Patent Act of 1997--Summary


      title i--the united states patent and trademark organization

       This title establishes the United States Patent and 
     Trademark Organization (USPTO) as a wholly owned government 
     corporation connected for policy-making purposes to the 
     Department of Commerce. Like the existing U.S. Patent and 
     Trademark Office, the USPTO is charged with patent and 
     trademark policy formulation and the administration of the 
     patent and trademark systems. But unlike the present 
     structure, the USPTO will be freed from a heavy-handed 
     federal bureaucracy, which inhibits the ability of the Patent 
     and Trademark Office to meet the demands of those who fully 
     sustain its operation through user fees. Heightened 
     efficiency is also achieved by separating the policymaking 
     functions from the day-to-day operating functions.
       The USPTO is headed by a Director of the U.S. Patent and 
     Trademark Office, who is charged with advising the President 
     through the Secretary of Commerce regarding patent and 
     trademark policy. He or she is appointed by the President 
     with Senate confirmation, and he or she serves at the 
     pleasure of the President.
       The USPTO has two autonomous subdivisions: the Patent 
     Office and the Trademark Office. Each office is responsible 
     for the administration of its own system. Each office 
     controls its own budget and its management structure and 
     procedures. Each office must generate its own revenue in 
     order to be self-sustaining and to provide for the Office of 
     the Director. The Patent Office and the Trademark Office are 
     headed by the Commissioner of Patents and the Commissioner of 
     Trademarks, respectively. The two Commissioners are appointed 
     by the Director and serve at his or her pleasure.


                      title ii--early publication

       Title II of the bill provides for the early publication of 
     patent applications. It would require the Patent Office to 
     publish pending applications eighteen months after the 
     application was filed. An exception of this rule is made for 
     applications filed only in the United States. Those 
     applications will be published eighteen months after filing 
     or three months after the office issues its first response on 
     the application, whichever is later. Additionally, once an 
     application is published, Title II grants the applicant 
     ``provisional rights,'' that is, legal protection for his or 
     her invention.


                   title iii--patent term restoration

       Title III deals with the problem of administrative delay in 
     the patent examination process by restoring to the patent 
     holder any part of the term that is lost due to undue 
     administrative delay. Title III gives clear deadlines in 
     which the Patent Office must act. The office has 
     fourteen months to issue a first office action and four 
     months to respond to subsequent applicant filings. Any 
     delay beyond those deadlines is considered undue delay and 
     will be restored to the patent term.


                Title IV--Prior domestic Commercial Use

       This title provides rights to a person who has commercially 
     sold an invention more than one year before the effective 
     filing date of a patent application by another person. Anyone 
     in this situation will be permitted to continue to sell his 
     or her product without being forced to pay a royalty to the 
     patent holder.


                 Title V--Patent Re-examination Reform

       Title V provides for a greater role for third parties in 
     patent re-examination proceedings by allowing third-parties 
     to raise a challenge to an existing patent and to participate 
     in the reexamination process in a meaningful way.


                        Title VI--Miscellaneous

     Provisional Applications for Patents
       This title amends section 115 of Title 35 of the U.S. Code 
     to clarify that if a provisional application is converted 
     into a non-provisional application within twelve months of 
     filing, that it stands as a full patent application, with the 
     date of filing of the provisional application as the date of 
     priority. If no request is made within twelve months, the 
     provisional application is considered abandoned. This 
     clarification will make certain that American provisional 
     applications are given the same weight as other countries' 
     provisional applications in other countries' courts.
     Plant Patents
       Title VI also makes two corrections to the plant patent 
     statute. First, the ban on tuber propagated plants is 
     removed. This depression-era ban was included for fear of 
     limiting the food supply. This is no longer a concern. 
     Second, the plant patent statute is amended to include parts 
     of plants. This closes a loophole that foreign growers have 
     used to import the fruit or flowers of patented plants 
     without paying a royalty because the entire plant was not 
     being sold.
     Electronic Filing
       Lastly, this title also allows for the filing of patent and 
     trademark documents by electronic medium.
                                 ______
                                 
      By Mrs. FEINSTEIN:
  S. 508. A bill to provide Mai Hoa ``Jasmin'' Salehi permanent 
residency; to the Committee on the Judiciary.


                       private relief legislation

  Mrs. FEINSTEIN. Mr. President, this bill grants permanent residency 
status to Jasmin Salehi, a California constituent who is currently 
assisting the LA district attorney with the prosecution of her 
husband's murderer.
  Mai Hoa Jasmin Salehi is a Korean immigrant who was denied permanent 
residency after her husband was violently murdered at a Denny's in 
Reseda, CA, where he worked as manager. Local INS officials in Los 
Angeles denied Jasmin's application because the law requires legal 
immigrants be married for 2 years before they become eligible for 
permanent resident status. Jasmin and Cyrus Salehi were newlyweds who 
had been married only 11 months before the murder.
  I have previously sought administrative relief for Jasmin by asking 
the INS if any humanitarian exemptions could be made in Jasmin's case, 
but the local INS officials in Los Angeles has told my staff that there 
is nothing they can do.
  Jasmin met and married Cyrus Salehi, an American citizen, in March 
1995 and has completed all the paperwork necessary to obtain her green 
card. But now, Jasmin has been told that she can stay in the United 
States as long as the district attorney needs her to prosecute her 
husband's murderer. Despite here assistance in the prosecution, Jasmin 
would be deported once the investigation and subsequent trial are 
completed.
  Jasmin has done everything right in order to become a permanent 
resident of this country--except for the tragedy of her husband's 
murder 13 months before she could become a permanent resident. I hope 
you support this bill so that we can help Jasmin begin to rebuild her 
life in the United States.
  Mr. President, I ask for unanimous consent that the attached news 
article and the bill be entered into the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 508

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,
       I. Permanent Residence:
       Notwithstanding any other provision of law, for purposes of 
     the Immigration and Nationality Act (8 U.S.C. 1101 et seq.), 
     Mai Hoa ``Jasmin'' Salehi, shall be held and considered to 
     have been lawfully admitted to the United States for 
     permanent residence as of the date of the enactment of this 
     Act upon payment of the required visa fees.

[[Page S2700]]

     
                                                                    ____
                   [From the Los Angeles Daily News]

                       Widow's Troubles Multiply

                        (By Jeannette DeSantis)

       Things have gotten worse instead of better for Jasmin 
     Salehi.
       Alone in a new apartment, half of her belongings still 
     packed in moving boxes, Salehi, 32, surveys her new residence 
     and wonders how it came to this.
       When the Korean widow first came to the United States more 
     than a year ago, her life was filled with promise. A loving 
     husband with a steady income, friends and a comfortable home 
     in Sherman Oaks were more that she could ask for.
       Then life handed her more.
       Her husband of 11 months, Cyrus Salehi, was slain earlier 
     this year. Soon after, the Immigration and Naturalization 
     Service notified Salehi she would be deported because she had 
     not been married to a U.S. citizen long enough to get her 
     green card.
       And recently, she was evicted from the only home she has 
     known since arriving in the United States.
       ``All these things happened at one time,'' Salehi said. 
     ``It is really hard for me, and I get depresses . . . 
     especially during the holidays.''
       In the midst of her first holiday season as a widow, Salehi 
     can only dream of her husband, Cyrus Salehi, killed in 
     February after two robbers shot him during a holdup at the 
     Reseda Denny's restaurant he owned.
       ``There are lots of memories of my husband . . . and our 
     Christmases together,'' she said. ``Now, every Christmas will 
     be a Christmas without him.''
       But it won't be a holiday season without friends.
       Francine and Ralph Myers, who informally adopted Salehi 
     since Cyrus's death, met her through a victim support group. 
     The Myers, whose son was slain, know well how those first 
     holiday seasons can affect a victim of crime.
       ``It can be a real tough time,'' Francine Myers said. ``It 
     is different for everyone. Jasmin doesn't want to decorate. I 
     remember (after my son died) I would try to change every 
     tradition we had and make new ones.''
       Myers said Salehi is a survivor, who stood up to the INS 
     and was allowed to stay in the country until her husband's 
     accused killer stands trial. Meanwhile, she has not let her 
     own grief stop her from helping others.
       ``Although she needs help, she unselfishly helps others,'' 
     Myers said, adding that Salehi has accompanied her to the 
     trial of the person accused of murdering her own son. ``That 
     says something about her.''
       Salehi contends that she is only returning the support the 
     Myers have given her. ``She is a victim too, and all that 
     time she is there for me,'' Salehi said.
       Shellie Samuels, the deputy district attorney handling the 
     Cyrus Salehi murder case, said that although all victims of 
     crime are traumatized by a loved one's death, Salehi's ordeal 
     has been especially nightmarish.
       ``Besides the emotional trauma she has gone through, the 
     U.S. has not done right by her,'' Samuels said. ``Her 
     American citizen husband gets killed and they treat her like 
     an illegal immigrant.''
       Cyrus and Jasmin Salehi filed the paperwork for Salehi to 
     receive a green card in early 1995, soon after their March 
     nuptials.
       But Salehi was deemed ineligible for residence status 
     because her husband was killed before they had been married 
     two years--an INS time requirement for a spouse sponsorship.
       The INS has only offered Salehi a temporary reprieve, 
     allowing her to stay in the country for her husband's murder 
     trial.
       As for Salehi, she fears if she is sent back to Korea, she 
     will be a stranger in her own country, a place where stigmas 
     are attached to orphans and widows, of which she is both.
       Born Mai Hoa Joo in Seoul, Korea, in 1964, Salehi's parents 
     died within months of each other when she was 14. A college 
     graduate, Salehi visited the United States several times 
     before she immigrated.
       During a 1993 visit, Salehi met her husband at a Denny's 
     restaurant in Los Angeles. They continued their relationship 
     even as Salehi returned to Korea.
       Once married, Salehi received a work permit after she 
     applied for a green card and began working at a clothing 
     manufacturer in downtown Los Angeles, where she still puts in 
     10-hour days on a regular basis.
       But her salary as a production manager was not enough to 
     cover the mortgage payment on the small house the couple 
     owned, even though she has inherited part ownership of the 
     Denny's restaurant where her husband was killed.
       ``She has run into a lot of roadblocks, but she is a 
     survivor,'' said Francine Myers. ``She will do all right as 
     long as she feels like she has the support behind her.''
                                 ______
                                 
      By Mr. BURNS:
  S. 509 A bill to provide for the return of certain program and 
activity fund rejected by States to the Treasury to reduce the Federal 
deficit, and for other purposes; 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 
thirty days to report or be discharged.


                 the fair and responsible fund use act

  Mr. BURNS. Mr. President, I rise to introduce the Fair and 
Responsible Fund Use Act. It is a bill that will provide for the return 
of funds, rejected by a State, to the Treasury. These funds will then 
be used specifically to reduce the Federal deficit.
  Sometimes the Federal Government makes available to Montana, and 
other States, funds which are inconsistent with State priorities. 
Usually this money comes with strings attached. In other words, the 
Federal Government wants us to take X action to get Y dollars. 
Sometimes, out of fiscal conservatism, or philosophical differences, 
States will return that money to the Treasury. But what has been the 
reward for an individual State's refusal to grab the Federal carrot 
that has been dangled in front of it? That money is returned to the 
program for use by other States.
  That's just not right. California or New York should not be the 
beneficiaries of Montana's restraint and good judgment. The good people 
of Montana have asked me to take action to stop this from happening and 
that's why I am introducing this bill today. The Fair and Responsible 
Fund Use Act will require that we take those funds returned by the 
States and use them to pay down our national deficit.
  Montana and 48 other States are required by law to balance their 
budgets. While we came one vote short of making that the standard for 
this Nation, most of us here in Washington are still determine to 
balance our books. If a State has the courage and willingness to do 
without a quick Federal buck, then it's only right that the American 
people, as a whole, should benefit from that action.
  Whatever the States send back may seem like small potatoes to some 
people, but as the late Senator Everett Dirksen once said, ``A billion 
here, and a billion there, and pretty soon you're talking about real 
money.''
  We face the very real danger of being crushed by our national 
deficit. Some of our mindless spending in the past years has left us 
with a debt of 5.34 trillion dollars-- ``trillion'' with a capital 
``T.'' And it's only going to get worse if we don't do something to 
help out.
  This bill makes good common sense. We all must work together in order 
to pay off the huge national deficit and this is one step in the right 
direction. I urge my colleagues to support this legislation.
                                 ______
                                 
      By Mr. MOYNIHAN:
  S. 510. A bill to authorize the Architect of the Capitol to develop 
and implement a plan to improve the Capitol grounds through the 
elimination and modification of space allocated for parking; to the 
Committee on Rules and Administration.


        The Arc of Park Capitol Grounds Improvement Act of 1997

  Mr. MOYNIHAN. Mr. President, nearly 100 years ago, in March of 1901, 
the Senate Committee on the District of Columbia was directed by Senate 
Resolution to ``report to the Senate plans for the development and 
improvement of the entire park system of the District of Columbia * * * 
(F)or the purpose of preparing such plans the committee * * * may 
secure the services of such experts as may be necessary for a proper 
consideration of the subject.''
  And secure ``such experts'' the committee assuredly did. The 
Committee formed what came to be known as the McMillan Commission, 
named for committee chairman Senator James McMillan of Michigan. The 
Commission's membership was a ``who's who'' of late 19th and 20th-
century architecture, landscape design, and art: Daniel Burnham, 
Frederick Law Olmsted Jr., Charles F. McKim, and Augustus St. Gaudens. 
The Commission traveled that summer to Rome, Venice, Vienna, Budapest, 
Paris, and London, studying the landscapes, architecture, and public 
spaces of the grandest cities in the world. The McMillan Commission 
returned and fashioned the city of Washington as we now know it.
  We are particularly indebted today for the Commission's preservation 
of the Mall. When the members left for Europe, the Congress had just 
given the Pennsylvania Railroad a 400-foot wide swath of the Mall for a 
new station and trackage. It is hard to imagine our city without the 
uninterrupted stretch of greenery from the Capitol to the Washington 
Monument, but such would have been the result. Fortunately, when in 
London, Daniel

[[Page S2701]]

Burnham was able to convince Pennsylvania Railroad president Alexander 
Cassatt that a site on Massachusetts Avenue would provide a much 
grander entrance to the city. President Cassatt assented and Daniel 
Burnham gave us Union Station.
  But the focus of the Commission's work was the District's park 
system. The Commission noted in its report:

       Aside from the pleasure and the positive benefits to health 
     that the people derive from public parks, in a capital city 
     like Washington there is a distinct use of public spaces 
     as the indispensable means of giving dignity to Government 
     buildings and of making suitable connections between the 
     great departments * * * [V]istas and axes; sites for 
     monuments and museums; parks and pleasure gardens; 
     fountains and canals; in a word all that goes to make a 
     city a magnificent and consistent work of art were 
     regarded as essential in the plans made by L'Enfant under 
     the direction of the first President and his Secretary of 
     State.

  Washington and Jefferson might be disappointed at the affliction now 
imposed on much of the Capitol Grounds by the automobile.
  Despite the ready and convenient availability of the city's Metrorail 
system, an extraordinary number of Capitol Hill employees drive to 
work. No doubt many must. But must we provide free parking? If there is 
one lesson learned from the Intermodal Surface Transportation 
Efficiency Act of 1991, it is that free goods are always wasted. Free 
parking is a powerful incentive to drive to work when the alternative 
is to pay for public transportation. As we have created parking spaces 
around the Capitol, such as the scar of angle-parked cars at the foot 
of Pennsylvania Avenue made available ``temporarily'' during 
construction of the Thurgood Marshall Federal Judiciary Building, 
demand has simply risen to meet the available supply. The result--the 
Pennsylvania Avenue spaces have become permanent and a portion of the 
Nation's main street remains an aesthetic disaster.
  Today, I am reintroducing legislation to complete the beautification 
of the Capitol Grounds, as envisioned by the illustrious McMillan 
Commission in 1901, through the elimination of most surface parking and 
restoration of the sites as public parks. The Arc of Park Capitol 
Grounds Improvement Act of 1997 would require the Architect of the 
Capitol to develop and implement a comprehensive plan to improve the 
Capitol Grounds through the creation of an ``arc of park,'' sweeping 
from Second Street, NE to the Capitol Reflecting Pool and back to First 
Street, SE, with the Capitol Building as its approximate center. 
Delaware Avenue between Columbus Circle and Constitution Avenue would 
be closed to traffic and rebuilt as a grand pedestrian walkway from 
Union Station to the Capitol. The angled parking would be eliminated on 
Pennsylvania Avenue between First and Third Streets, NW, and the 
Pennsylvania Avenue tree line would be continued onto the Capitol 
Grounds.
  There is, of course, the matter of parking. This legislation 
authorizes the Architect of the Capitol to construct underground 
parking facilities, as needed. These facilities, which will undoubtedly 
be expensive, will be financed simply by charging for the parking. A 
legitimate user fee. In the matter of parking, this legislation is an 
appropriate companion to a bill that my colleague from Rhode Island, 
Senator Chafee, and I introduced earlier today, which will enable 
employers to provide their employees with cash compensation in lieu of 
a parking space. This bill, which was also included in the 
Administration's ISTEA reauthorization proposal, will expand employee 
options for commuting and reduce auto use.

                                 ______
                                 
      By Mr. CHAFEE (for himself, Mr. Rockefeller, Mr. Jeffords, Mr. 
        DeWine, Mr. Dodd, Ms. Moseley-Braun, Mr. Kerry, Mr. Kerrey, and 
        Mr. Kennedy):
  S. 511. A bill to require that the health and safety of a child be 
considered in any foster care or adoption placement, to eliminate 
barriers to the termination of parental rights in appropriate cases, to 
promote the adoption of children with special needs, and for other 
purposes; to the Committee on Finance.


             THE SAFE ADOPTIONS AND FAMILY ENVIRONMENTS ACT

  Mr. CHAFEE. Mr. President, today I am pleased to introduce 
legislation to make some critical reforms to the child welfare system. 
The goals of the legislation are twofold: to ensure that abused and 
neglected children are in safe settings, and to move children more 
rapidly out of the foster care system and into permanent placements.
  While the goal of reunifying children with their biological families 
is laudable, we should not be encouraging States to return abused or 
neglected children to homes that are clearly unsafe; regrettably, this 
is occurring under current law.
  Our legislation would clarify the primacy of safety and health in 
decisions made about children who have been abused and neglected. The 
legislation would also push States to identify and enact State laws to 
address those circumstances in which the rights of the biological 
parent should be terminated expeditiously (for example, when the parent 
has been found guilty of felony assault, chronic sexual abuse, or the 
murder of a sibling).
  The legislation also would provide incentives to move children into 
permanent placements, either by returning them home when reunification 
is the goal or by removing barriers to adoption.
  I would like to thank those who have worked so hard to develop this 
legislation. In particular, Senator Rockefeller, the lead Democratic 
cosponsor, with whom I have worked for many years on childrens' issues. 
I also want to thank Senator DeWine, who, as a former prosecutor, 
brings a good deal of legal expertise and personal experience to this 
issue. We are also grateful for all Senator Jeffords has done in the 
past to lay the groundwork for this important legislation.
  My sincere thanks also goes out to the many child advocacy 
organizations which were so helpful in the development of this 
legislation.
  Finally, it is encouraging that similar legislation has been 
introduced in the House by Representatives Camp and Kennelly. While 
there are minor differences between our bills, the overall goals of 
both bills are the same. In that regard, I look forward to working with 
our House counterparts toward the enactment this year of child welfare 
reform legislation this year.
  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. 511

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Safe 
     Adoptions and Family Environments Act''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

TITLE I--REQUIRING CONSIDERATION OF THE HEALTH AND SAFETY OF A CHILD IN 
                  FOSTER CARE AND ADOPTION PLACEMENTS

Sec. 101. Improving foster care protection requirements.
Sec. 102. Clarifying State plan requirements.
Sec. 103. Including safety in case plan and case review system 
              requirements.
Sec. 104. Multidisciplinary/multiagency child death review teams.

TITLE II--ENHANCING PUBLIC AGENCY AND COMMUNITY ACCOUNTABILITY FOR THE 
                     HEALTH AND SAFETY OF CHILDREN

Sec. 201. Knowledge development and collaboration to prevent and treat 
              substance abuse problems among families known to child 
              protective service agencies.
Sec. 202. Priority in providing substance abuse treatment.
Sec. 203. Foster care payments for children with parents in residential 
              facilities.
Sec. 204. Reimbursement for staff training.
Sec. 205. Criminal records checks for prospective foster and adoptive 
              parents and group care staff.
Sec. 206. Development of State guidelines to ensure safe, quality care 
              to children in out-of-home placements.

  TITLE III--INCENTIVES FOR PROVIDING PERMANENT FAMILIES FOR CHILDREN

Sec. 301. Reasonable efforts for adoption or location of a permanent 
              home.
Sec. 302. Permanency planning hearings.
Sec. 303. Promotion of adoption of children with special needs.
Sec. 304. One-year reimbursement for reunification services.
Sec. 305. Adoptions across State and county jurisdictions.

[[Page S2702]]

   TITLE IV--PROMOTION OF INNOVATION IN ENSURING SAFE AND PERMANENT 
                                FAMILIES

Sec. 401. Innovation grants to reduce backlogs of children awaiting 
              adoption and for other purposes.
Sec. 402. Expansion of child welfare demonstration projects.

                         TITLE V--MISCELLANEOUS

Sec. 501. Effective date.
TITLE I--REQUIRING CONSIDERATION OF THE HEALTH AND SAFETY OF A CHILD IN 
                  FOSTER CARE AND ADOPTION PLACEMENTS

     SEC. 101. IMPROVING FOSTER CARE PROTECTION REQUIREMENTS.

       (a) In General.--Paragraph (9)(B) of section 422(b) of the 
     Social Security Act (42 U.S.C. 622(b)), as added by section 
     202(a)(3) of the Social Security Act Amendments of 1994 
     (Public Law 103-432; 108 Stat. 4453), is amended--
       (1) in clause (iii)(I), by inserting ``safe and'' after 
     ``where''; and
       (2) in clause (iv), by inserting ``safely'' after 
     ``remain''.
       (b) Conforming and Technical Amendments.--Title IV of the 
     Social Security Act (42 U.S.C. 620-635) is amended--
       (1) in section 422(b)--
       (A) by striking the period at the end of paragraph (9) (as 
     added by section 554(3) of the Improving America's Schools 
     Act of 1994 (Public Law 103-382; 108 Stat. 4057)) and 
     inserting a semicolon;
       (B) by redesignating paragraph (10) as paragraph (11); and
       (C) by redesignating paragraph (9), as added by section 
     202(a)(3) of the Social Security Act Amendments of 1994 
     (Public Law 103-432, 108 Stat. 4453), as paragraph (10); and
       (2) in sections 424(b), 425(a), and 472(d), by striking 
     ``422(b)(9)'' each place it appears and inserting 
     ``422(b)(10)''.

     SEC. 102. CLARIFYING STATE PLAN REQUIREMENTS.

       (a) In General.--Section 471 of the Social Security Act (42 
     U.S.C. 671) is amended--
       (1) in subsection (a), by striking paragraph (15) and 
     inserting the following:
       ``(15) provides that, in each case--
       ``(A) in determining reasonable efforts, as described in 
     this section, the child's health and safety shall be the 
     paramount concern; and
       ``(B) reasonable efforts will be made--
       ``(i) prior to the placement of a child in foster care, to 
     prevent or eliminate the need for removing the child from the 
     child's home when the child can be cared for at home without 
     endangering the child's health or safety; and
       ``(ii) to make it possible for the child to return to the 
     child's home, except--

       ``(I) if the State through legislation has specified the 
     cases in which the State is not required to make efforts at 
     reunification because of circumstances that endanger the 
     child's health or safety, which shall include cases such as 
     those described in subsection (c); or
       ``(II) if a court determines that returning the child to 
     the child's home, would endanger the child's health or 
     safety;''; and

       (2) by adding at the end the following:
       ``(c) For purposes of subsection (a)(15)(B)(ii)(I), the 
     cases described in this subsection are as follows:
       ``(1) A case involving a child with a parent who has been 
     found by a court of competent jurisdiction--
       ``(A) to have committed murder (as defined in section 
     1111(a) of title 18, United States Code) of another child of 
     such parent;
       ``(B) to have committed voluntary manslaughter (as defined 
     in section 1112(a) of title 18, United States Code) of 
     another child of such parent;
       ``(C) to have aided or abetted, attempted, conspired, or 
     solicited to commit murder or voluntary manslaughter of 
     another child of such parent;
       ``(D) to have committed a felony assault that results in 
     serious bodily injury to the child or to another child of 
     such parent; or
       ``(E) to have abandoned, tortured, chronically abused, or 
     sexually abused the child.''.
       (b) State Legislation Required.--Section 471 of the Social 
     Security Act (42 U.S.C. 671), as amended by subsection (a), 
     is amended by adding at the end the following:
       ``(d) Not later than October 3, 1999, a State, in order to 
     be eligible for payments under this part, shall have and 
     enforce State laws that specify--
       ``(1) the cases, such as those described in subsection (c), 
     in which the State is not required to make efforts at 
     reunification of the child with the child's parent; and
       ``(2) the cases, such as those described in subsection (c), 
     in which there are grounds for expedited termination of 
     parental rights without efforts first being required to 
     reunify the child with the child's parent because of the 
     circumstances that endanger the child's health or safety.''.
       (c) Redesignation of Paragraph.--Section 471(a) of the 
     Social Security Act (42 U.S.C. 671(a)) is amended--
       (1) by striking ``and'' at the end of paragraph (17);
       (2) by striking the period at the end of paragraph (18) (as 
     added by section 1808(a) of the Small Business Job Protection 
     Act of 1996 (Public Law 104-188; 110 Stat. 1903)) and 
     inserting ``; and''; and
       (3) by redesignating paragraph (18) (as added by section 
     505(3) of the Personal Responsibility and Work Opportunity 
     Reconciliation Act of 1996 (Public Law 104-193; 110 Stat. 
     2278)) as paragraph (19).

     SEC. 103. INCLUDING SAFETY IN CASE PLAN AND CASE REVIEW 
                   SYSTEM REQUIREMENTS.

       Section 475 of the Social Security Act is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (A), by inserting ``safety and'' after 
     ``discussion of the''; and
       (B) in subparagraph (B)--
       (i) by inserting ``safe and'' after ``child receives''; and
       (ii) by inserting ``safe'' after ``return of the child to 
     his own''; and
       (2) in paragraph (5)--
       (A) in subparagraph (A), in the matter preceding clause 
     (i), by inserting ``a safe setting that is'' after 
     ``placement in''; and
       (B) in subparagraph (B)--
       (i) by inserting ``the safety of the child,'' after 
     ``determine''; and
       (ii) by inserting ``and safely maintained in'' after 
     ``returned to''.

     SEC. 104. MULTIDISCIPLINARY/MULTIAGENCY CHILD DEATH REVIEW 
                   TEAMS.

       (a) State Child Death Review Teams.--Section 471(a) of the 
     Social Security Act (42 U.S.C. 671(a)), as amended by section 
     102(b), is amended by adding at the end the following:
       ``(e)(1) Not later than 5 years after the date of enactment 
     of the Safe Adoptions and Family Environments Act, a State, 
     in order to be eligible for payments under this part, shall 
     submit to the Secretary a certification that the State has 
     established and is maintaining, a State child death review 
     team, and if necessary in order to cover all counties in the 
     State, child death review teams on the regional or local 
     level, that shall review child deaths, including deaths in 
     which--
       ``(A) there has been a prior report of child abuse or 
     neglect or there is reason to suspect that the child death 
     was caused by, or related to, child abuse or neglect;
       ``(B) the child who died was a ward of the State or was 
     otherwise known to the State or local child welfare agency;
       ``(C) the child death was a suicide; or
       ``(D) the cause of the child death was otherwise 
     unexplained or unexpected.
       ``(2) A child death review team established in accordance 
     with this subsection should have a membership that, as 
     defined by the Secretary, will present a range of viewpoints 
     that are independent from any specific agency, and shall 
     include representatives from, at a minimum, specific fields 
     of expertise, such as law enforcement, health, mental health, 
     and substance abuse, and from the community.
       ``(3) A State child death review team shall--
       ``(A) provide support to a regional or local child death 
     review team;
       ``(B) make public an annual summary of case findings;
       ``(C) provide recommendations for systemwide improvements 
     in services to prevent fatal abuse and neglect; and
       ``(D) if the State child death review team covers all 
     counties in the State on its own, carry out the duties of a 
     regional or local child death review team described in 
     paragraph (4).
       ``(4) A regional or local child death review team shall--
       ``(A) conduct individual case reviews;
       ``(B) assist with regional or local management of child 
     death cases; and
       ``(C) suggest followup procedures and systems 
     improvements.''.
       (b) Federal Child Death Review Team.--Section 471(a) of the 
     Social Security Act (42 U.S.C. 671(a)), as amended by 
     subsection (a), is amended by adding at the end the 
     following:
       ``(f)(1) The Secretary shall establish a Federal child 
     death review team that shall consist of at least the 
     following:
       ``(A) Representatives of the following Federal agencies who 
     have expertise in the prevention or treatment of child abuse 
     and neglect:
       ``(i) Department of Health and Human Services.
       ``(ii) Department of Justice.
       ``(iii) Bureau of Indian Affairs.
       ``(iv) Department of Defense.
       ``(v) Bureau of the Census.
       ``(B) Representatives of national child-serving 
     organizations who have expertise in the prevention or 
     treatment of child abuse and neglect and that, at a minimum, 
     represent the health, child welfare, social services, and law 
     enforcement fields.
       ``(2) The Federal child death review team established under 
     this subsection shall--
       ``(A) review reports of child deaths on military 
     installations and other Federal lands, and coordinate with 
     Indian tribal organizations in the review of child deaths on 
     Indian reservations;
       ``(B) conduct ongoing reviews of the status of State child 
     death review teams and regional or local child death review 
     teams, and of the management of interstate child death cases;
       ``(C) provide guidance and technical assistance to States 
     and localities seeking to initiate or improve child death 
     review teams and to prevent child fatalities;
       ``(D) review and analyze relevant aggregate data from State 
     child death review teams and from regional or local child 
     death review teams, in order to identify and track national 
     trends in child fatalities; and
       ``(E) develop recommendations on related policy and 
     procedural issues for Congress, relevant Federal agencies, 
     and States and localities for the purpose of preventing child 
     fatalities.''.

[[Page S2703]]

TITLE II--ENHANCING PUBLIC AGENCY AND COMMUNITY ACCOUNTABILITY FOR THE 
                     HEALTH AND SAFETY OF CHILDREN

     SEC. 201. KNOWLEDGE DEVELOPMENT AND COLLABORATION TO PREVENT 
                   AND TREAT SUBSTANCE ABUSE PROBLEMS AMONG 
                   FAMILIES KNOWN TO CHILD PROTECTIVE SERVICE 
                   AGENCIES.

       (a) Sources of Federal Support for Substance Abuse 
     Prevention and Treatment for Parents and Children.--Not later 
     than 12 months after the date of enactment of this Act, the 
     Secretary of Health and Human Services, acting through the 
     Administrator of the Administration for Children, Youth and 
     Families, and the Director of the Center for Substance Abuse 
     Prevention and the Director of the Center for Substance Abuse 
     Treatment, shall prepare and provide to State child welfare 
     agencies and substance abuse prevention and treatment 
     agencies an inventory of all Federal programs that may 
     provide funds for substance abuse prevention and treatment 
     services for families receiving services directly or through 
     grants or contracts from public child welfare agencies. An 
     inventory prepared under this subsection shall include with 
     respect to each Federal program listed, the amount of Federal 
     funds that are available for that program and the relevant 
     eligibility requirements. The Secretary shall biennially 
     update the inventory required under this subsection.
       (b) Collaboration Between Federally Supported Substance 
     Abuse and Child Protection Agencies.--
       (1) Substance abuse prevention and treatment block grant.--
     Section 1932(a) of the Public Health Service Act (42 U.S.C. 
     300x-32(a)) is amended--
       (A) in paragraph (6)(B), by striking ``and'' at the end;
       (B) by redesignating paragraph (7) as paragraph (8); and
       (C) by inserting after paragraph (6) the following:
       ``(7) the application contains an assurance that the State 
     will collect information and prepare the report required 
     under section 201(b)(3) of the Safe Adoptions and Family 
     Environments Act; and''.
       (2) Social security act.--Title IV of the Social Security 
     Act is amended--
       (A) in section 422(b), as amended by section 101(b) of this 
     Act--
       (i) in paragraph (10), by striking ``and'' at the end;
       (ii) in paragraph (11), by striking the period and 
     inserting ``; and''; and
       (iii) by adding at the end the following:
       ``(12) provide that the State shall collect information and 
     prepare the report required under section 201(b)(3) of the 
     Safe Adoptions and Family Environments Act.''; and
       (B) in section 432(a)--
       (i) in paragraph (7)(B), by striking ``and'' at the end;
       (ii) in paragraph (8), by striking the period and inserting 
     ``; and''; and
       (iii) by adding at the end the following:
       ``(9) provides that the State shall collect information and 
     prepare the report required under section 201(b)(3) of the 
     Safe Adoptions and Family Environments Act.''.
       (3) Report on joint activities.--
       (A) In general.--In order to be eligible to receive a grant 
     under subpart 2 of part B of title XIX of the Public Health 
     Service Act (42 U.S.C. 300x-21 et seq.) and under subparts 1 
     and 2 of part B of title IV of the Social Security Act (42 
     U.S.C. 620 et seq.), the State substance abuse prevention and 
     treatment agency responsible for administering a grant under 
     subpart 2 of part B of title XIX of the Public Health Service 
     Act (42 U.S.C. 300x-21 et seq.), and the State child welfare 
     agency responsible for administering the State plans under 
     subparts 1 and 2 of part B of title IV of the Social Security 
     Act (42 U.S.C. 620 et seq.) shall, not later than 12 months 
     after the date of enactment of this Act, jointly prepare a 
     report containing the information described in subparagraph 
     (B) on the joint prevention and treatment activities 
     conducted by such agencies, and shall submit the report to 
     the Secretary of Health and Human Services who shall forward 
     such report to the Administrator of the Administration for 
     Children, Youth and Families, the Director of the Center for 
     Substance Abuse Prevention, and the Director of the Center 
     for Substance Abuse Treatment.
       (B) Required information.--The information described in 
     this subparagraph shall, to the maximum extent practicable, 
     include--
       (i) a description of the characteristics of the parents of 
     children, including the aggregate numbers, who are reported 
     to State or local child welfare agencies because of 
     allegations of child abuse or neglect and have substance 
     abuse treatment needs, and the nature of those needs;
       (ii) a description of the characteristics of the children 
     of parents who are receiving substance abuse treatment from 
     services administered by the State substance abuse prevention 
     and treatment and medicaid agencies, including the aggregate 
     number and whether they are in their parents' custody;
       (iii) a description of the barriers that prevent the 
     substance abuse treatment needs of clients of child welfare 
     agencies from being treated appropriately;
       (iv) a description of the manner in which the State child 
     welfare and substance abuse prevention and treatment agencies 
     are collaborating--

       (I) to assess the substance abuse treatment needs of 
     families who are known to child welfare agencies;
       (II) to remove barriers that prevent the State from meeting 
     the needs of families with substance abuse problems;
       (III) to expand substance abuse prevention, including early 
     intervention, and treatment for children and parents who are 
     known to child welfare agencies; and
       (IV) to provide for the joint funding of substance abuse 
     treatment and prevention activities, the joint training of 
     staff, and the joint consultations between staff of the 2 
     State agencies;

       (v) a description of the information available on the 
     treatment and cost-effectiveness of, and the annual 
     expenditures for, substance abuse treatment services provided 
     to families who are known to child welfare agencies;
       (vi) available data on the number of parents and children 
     served by both the State child welfare and the substance 
     abuse prevention and treatment agencies and the number of the 
     parents ordered by a court to seek such services; and
       (vii) any other information determined appropriate by the 
     Secretary of Health and Human Services.
       (c) Report to Congress.--Not later than 18 months after the 
     date of enactment of this Act, the Secretary of Health and 
     Human Services, acting through the Administrator of the 
     Administration for Children, Youth and Families, the Director 
     of the Center for Substance Abuse Prevention, and the 
     Director of the Center for Substance Abuse Treatment, shall, 
     using the information reported to the Secretary jointly by 
     State child welfare and substance abuse prevention and 
     treatment agencies, prepare and submit to the appropriate 
     committees of Congress a report containing--
       (1) a description of the extent to which clients of child 
     welfare agencies have substance abuse treatment needs, the 
     nature of those needs, and the extent to which those needs 
     are being met;
       (2) a description of the barriers that prevent the 
     substance abuse treatment needs of clients of child welfare 
     agencies from being treated appropriately;
       (3) a description of the collaborative activities of State 
     child welfare and substance abuse prevention and treatment 
     agencies to jointly assess clients' needs, fund substance 
     abuse prevention and treatment, train and consult with staff, 
     and evaluate the effectiveness of programs serving clients in 
     both agencies' caseloads;
       (4) a summary of the available data on the treatment and 
     cost-effectiveness of substance abuse treatment services for 
     clients of child welfare agencies; and
       (5) recommendations, including recommendations for Federal 
     legislation, for addressing the needs and barriers, as 
     described in paragraphs (1) and (2), and for promoting 
     further collaboration of the State child welfare and 
     substance abuse prevention and treatment agencies in meeting 
     the substance abuse treatment needs of families.

     SEC. 202. PRIORITY IN PROVIDING SUBSTANCE ABUSE TREATMENT.

       Section 1927 of the Public Health Service Act (42 U.S.C. 
     300x-27) is amended--
       (1) in the heading, by inserting ``and caretaker parents'' 
     after ``women''; and
       (2) in subsection (a)--
       (A) in paragraph (1)--
       (i) by inserting ``and all caretaker parents who are 
     referred for treatment by the State or local child welfare 
     agency'' after ``referred for''; and
       (ii) by striking ``is given'' and inserting ``are given''; 
     and
       (B) in paragraph (2)--
       (i) by striking ``such women'' and inserting ``such 
     pregnant women and caretaker parents''; and
       (ii) by striking ``the women'' and inserting ``the pregnant 
     women and caretaker parents''.

     SEC. 203. FOSTER CARE PAYMENTS FOR CHILDREN WITH PARENTS IN 
                   RESIDENTIAL FACILITIES.

       Section 472(b) of the Social Security Act (42 U.S.C. 
     672(b)) is amended--
       (1) in paragraph (1), by striking ``or'' at the end;
       (2) in paragraph (2), by striking the period and inserting 
     ``, or''; and
       (3) by adding at the end the following:
       ``(3) placed with the child's parent in a residential 
     program that provides treatment and other necessary services 
     for parents and children, including parenting services, 
     when--
       ``(A) the parent is attempting to overcome--
       ``(i) a substance abuse problem and is complying with an 
     approved treatment plan;
       ``(ii) being a victim of domestic violence;
       ``(iii) homelessness; or
       ``(iv) special needs resulting from being a teenage parent;
       ``(B) the safety of the child can be assured;
       ``(C) the range of services provided by the program is 
     designed to appropriately address the needs of the parent and 
     child;
       ``(D) the goal of the case plan for the child is to try to 
     reunify the child with the family within a specified period 
     of time; and
       ``(E) the parent described in subparagraph (A)(i) has not 
     previously been treated in a residential program serving 
     parents and their children together.''.

     SEC. 204. REIMBURSEMENT FOR STAFF TRAINING.

       (a) Training of Personnel.--Section 474(a) of the Social 
     Security Act (42 U.S.C. 674(a)) is amended--
       (1) in paragraph (3)(A)--

[[Page S2704]]

       (A) by striking ``75'' and inserting ``subject to 
     subsection (e), 75'';
       (B) by inserting ``, and training directed at staff 
     maintenance and retention'' after ``enrolled in such 
     institutions''; and
       (C) by striking ``of personnel'' and all that follows and 
     inserting the following: ``of--
       ``(i) personnel employed or preparing for employment by the 
     State agency or by the local agency administering the State 
     plan in the political subdivision; and
       ``(ii) personnel employed by courts and State or local law 
     enforcement agencies, and by State, local, or private 
     nonprofit substance abuse prevention and treatment agencies, 
     mental health providers, domestic violence prevention and 
     treatment agencies, health agencies, child care agencies, 
     schools, and child welfare, family service, and community 
     service agencies that are collaborating with the State or 
     local agency administering the State plan in the political 
     subdivision to keep children safe, support families, and 
     provide permanent families for children, including adoptive 
     families;'';
       (2) in paragraph (3)(B), by striking ``75'' and inserting 
     ``subject to subsection (e), 75''; and
       (3) by adding at the end, the following flush sentence:

     ``Amounts under subparagraphs (A) and (B) of paragraph (3) 
     shall be paid without regard to the primary provider of the 
     training, and shall be determined without regard to the 
     proportion of children on whose behalf foster care 
     maintenance payments or adoption assistance payments are 
     being made under the State plan under this part.''.
       (b) Requirements for Receipt of Training Funds.--Section 
     474 of the Social Security Act (42 U.S.C. 674) is amended by 
     adding at the end the following:
       ``(e) Requirements for Reimbursement of Training 
     Expenditures.--
       ``(1) Cross-agency training expenditures.--
       ``(A) Guidelines for qualified expenditures.--The Secretary 
     shall issue guidelines describing the types of training 
     expenditures that shall qualify for reimbursement under 
     subsection (a)(3)(A)(ii). The guidelines issued under the 
     authority of this subparagraph shall emphasize reimbursement 
     of training expenditures to treat and prevent child abuse and 
     neglect, keep children safe, support families, and provide 
     permanent families for children, including adoptive families.
       ``(B) Documentation.--A State may not receive reimbursement 
     for training expenditures incurred under subsection 
     (a)(3)(A)(ii) unless the State submits to the Secretary, in 
     such form and manner as the Secretary may specify, 
     documentation evidencing that the expenditures conform with 
     the guidelines issued under subparagraph (A).
       ``(2) Maintenance of effort.--With respect to a fiscal 
     year, a State may not receive funds under subparagraph (A) or 
     (B) of subsection (a)(3) if the total State expenditures for 
     the previous fiscal year for training under such 
     subparagraphs are less than the total State expenditures 
     under such subparagraphs for fiscal year 1996.''.

     SEC. 205. CRIMINAL RECORDS CHECKS FOR PROSPECTIVE FOSTER AND 
                   ADOPTIVE PARENTS AND GROUP CARE STAFF.

       Section 471(a) of the Social Security Act (42 U.S.C. 
     671(a)), as amended by section 102(c), is amended--
       (1) in paragraph (18), by striking ``and'' at the end;
       (2) in paragraph (19), by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(20) provides procedures for criminal records checks and 
     checks of a State's child abuse registry for any prospective 
     foster parent or adoptive parent, and any employee of a 
     child-care institution before the foster parent or adoptive 
     parent, or the child-care institution may be finally approved 
     for placement of a child on whose behalf foster care 
     maintenance payments or adoption assistance payments are to 
     be made under the State plan under this part, including 
     procedures requiring that--
       ``(A) in any case in which a criminal record check reveals 
     a criminal conviction for child abuse or neglect, or spousal 
     abuse, a criminal conviction for crimes against children, or 
     a criminal conviction for a crime involving violence, 
     including rape, sexual or other assault, or homicide, 
     approval shall not be granted; and
       ``(B) in any case in which a criminal record check reveals 
     a criminal conviction for a felony or misdemeanor not 
     involving violence, or a check of any State child abuse 
     registry indicates that a substantiated report of abuse or 
     neglect exists, final approval may be granted only after 
     consideration of the nature of the offense or incident, the 
     length of time that has elapsed since the commission of the 
     offense or the occurrence of the incident, the individual's 
     life experiences during the period since the commission of 
     the offense or the occurrence of the incident, and any risk 
     to the child.''.

     SEC. 206. DEVELOPMENT OF STATE GUIDELINES TO ENSURE SAFE, 
                   QUALITY CARE TO CHILDREN IN OUT-OF-HOME 
                   PLACEMENTS.

       Section 471(a) of the Social Security Act (42 U.S.C. 
     671(a)), as amended by section 205, is amended--
       (1) in paragraph (19), by striking ``and'' at the end;
       (2) in paragraph (20), by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(21) provides that the State shall--
       ``(A) develop and implement State guidelines to ensure 
     safe, quality care for children residing in out-of-home care 
     settings, such as guidelines issued by a nationally 
     recognized accrediting body, including the Council on 
     Accreditation for Services for Families and Children and the 
     Joint Commission on the Accreditation of Health Care 
     Organizations;
       ``(B) assist public provider agencies and private provider 
     agencies that contract and subcontract with the State to meet 
     over a time period determined by the State the quality 
     guidelines established under subparagraph (A);
       ``(C) clearly articulate the guidelines against which an 
     agency's performance will be judged and the conditions under 
     which the guidelines established under subparagraph (A) will 
     be applied;
       ``(D) regularly monitor progress made by the public and 
     private agencies located in the State in meeting the 
     guidelines established under subparagraph (A); and
       ``(E) judge agency compliance with the guidelines 
     established under subparagraph (A) through measuring 
     improvement in child and family outcomes, and through such 
     other measures as the State may determine appropriate to 
     judge such compliance.''.
  TITLE III--INCENTIVES FOR PROVIDING PERMANENT FAMILIES FOR CHILDREN

     SEC. 301. REASONABLE EFFORTS FOR ADOPTION OR LOCATION OF A 
                   PERMANENT HOME.

       (a) State Plan.--Section 471(a) of the Social Security Act 
     (42 U.S.C. 671(a)), as amended by section 206, is amended--
       (1) in paragraph (20), by striking ``and'' at the end;
       (2) in paragraph (21), by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(22) provides that, in any case in which the State's goal 
     for the child is adoption or placement in another permanent 
     home, reasonable efforts will be made to place the child in a 
     timely manner with an adoptive family, legal guardian, or in 
     another planned permanent living arrangement and to complete 
     whatever steps are necessary to finalize the adoption or 
     legal guardianship.''.
       (b) Case Plan and Case Review System.--Section 475 of the 
     Social Security Act (42 U.S.C. 675) is amended--
       (1) in paragraph (1)--
       (A) in the last sentence--
       (i) by striking ``the case plan must also include''; and
       (ii) by redesignating such sentence as subparagraph (D) and 
     indenting appropriately; and
       (B) by adding at the end, the following:
       ``(E) In the case of a child with respect to whom the 
     State's goal is adoption or placement in another permanent 
     home, documentation of the steps taken by the agency to find 
     an adoptive family or other permanent living arrangement for 
     the child, to place the child with an adoptive family, legal 
     guardian, or in another planned permanent living arrangement, 
     and to finalize the adoption or legal guardianship. At a 
     minimum, such documentation shall include child specific 
     recruitment efforts such as the use of State, regional, and 
     national adoption exchanges including electronic exchange 
     systems.''; and
       (2) in paragraph (5)(B), by inserting ``(including the 
     requirement specified in paragraph (1)(E))'' after ``case 
     plan''.

     SEC. 302. PERMANENCY PLANNING HEARINGS.

       Section 475(5)(C) of the Social Security Act (42 U.S.C. 
     675(5)(C)) is amended--
       (1) by striking ``dispositional'' and inserting 
     ``permanency planning'';
       (2) by striking ``no later than'' and all that follows 
     through ``12 months'' and inserting ``not later than 12 
     months after the original placement (and not less frequently 
     than every 6 months''; and
       (3) by striking ``future status of'' and all that follows 
     through ``long term basis)'' and inserting ``permanency plans 
     for the child (including whether and, if applicable, when, 
     the child will be returned to the parent, referred for 
     termination of parental rights, placed for adoption, or 
     referred for legal guardianship, or other planned permanent 
     living arrangement)''.

     SEC. 303. PROMOTION OF ADOPTION OF CHILDREN WITH SPECIAL 
                   NEEDS.

       (a) In General.--Section 473(a) of the Social Security Act 
     (42 U.S.C. 673(a)) is amended by striking paragraph (2) and 
     inserting the following:
       ``(2)(A) For purposes of paragraph (1)(B)(ii), a child 
     meets the requirements of this paragraph if such child--
       ``(i) prior to termination of parental rights and the 
     initiation of adoption proceedings was in the care of a 
     public or licensed nonprofit private child care agency or 
     Indian tribal organization either pursuant to a voluntary 
     placement agreement (provided the child was in care for not 
     more than 180 days) or as a result of a judicial 
     determination to the effect that continuation in the home 
     would be contrary to the welfare of such child, or was 
     residing in a foster family home or child care institution 
     with the child's minor parent (either pursuant to such a 
     voluntary placement agreement or as a result of such a 
     judicial determination); and
       ``(ii) has been determined by the State pursuant to 
     subsection (c) to be a child with special needs.
       ``(B) Notwithstanding any other provision of law, and 
     except as provided in paragraph (7), a child who is not a 
     citizen or resident of

[[Page S2705]]

     the United States and who meets the requirements of 
     subparagraph (A) and is otherwise determined to be eligible 
     for the receipt of adoption assistance payments, shall be 
     eligible for adoption assistance payments under this part.
       ``(C) A child who meets the requirements of subparagraph 
     (A) and who is otherwise determined to be eligible for the 
     receipt of adoption assistance payments shall continue to be 
     eligible for such payments in the event that the child's 
     adoptive parent dies or the child's adoption is dissolved, 
     and the child is placed with another family for adoption.''.
       (b) Exception.--Section 473(a) of the Social Security Act 
     (42 U.S.C. 673(a)) is amended by adding at the end the 
     following:
       ``(7)(A) Notwithstanding any other provision of this 
     subsection, no payment may be made to parents with respect to 
     any child that--
       ``(i) would be considered a child with special needs under 
     subsection (c);
       ``(ii) is not a citizen or resident of the United States; 
     and
       ``(iii) the parents adopted outside of the United States or 
     the parents brought into the United States for the purpose of 
     adopting such child.
       ``(B) Subparagraph (A) shall not be construed as 
     prohibiting payments under this part for a child described in 
     subparagraph (A) that is placed in foster care subsequent to 
     the failure, as determined by the State, of the initial 
     adoption of such child by the parents described in such 
     subparagraph.''.

     SEC. 304. ONE-YEAR REIMBURSEMENT FOR REUNIFICATION SERVICES.

       Section 475(4) of the Social Security Act (42 U.S.C. 
     675(4)) is amended by adding at the end the following:
       ``(C)(i) In the case of a child that is removed from the 
     child's home and placed in a foster family home or a child 
     care institution, the foster care maintenance payments made 
     with respect to such child may include payments to the State 
     for reimbursement of expenditures for reunification services, 
     but only during the 1-year period that begins on the date 
     that the child is removed from the child's home.
       ``(ii) For purposes of clause (i), the term `reunification 
     services' includes services and activities provided to a 
     child described in clause (i) and the parents or primary 
     caregiver of such a child, in order to facilitate the 
     reunification of the child safely and appropriately within a 
     timely fashion, and may only include individual, group, and 
     family counseling, inpatient, residential, or outpatient 
     substance abuse treatment services, mental health services, 
     assistance to address domestic violence, and transportation 
     to or from such services.''.

     SEC. 305. ADOPTIONS ACROSS STATE AND COUNTY JURISDICTIONS.

       (a) Study of Interjurisdictional Adoption Issues.--The 
     Secretary of Health and Human Services (in this section 
     referred to as the ``Secretary'') shall appoint an advisory 
     panel that shall--
       (1) study and consider how to improve procedures and 
     policies to facilitate the timely and permanent adoptions of 
     children across State and county jurisdictions;
       (2) examine, at a minimum, interjurisdictional adoption 
     issues--
       (A) concerning the recruitment of prospective adoptive 
     families from other States and counties;
       (B) concerning the procedures to grant reciprocity to 
     prospective adoptive family home studies from other States 
     and counties;
       (C) arising from a review of the comity and full faith and 
     credit provided to adoption decrees and termination of 
     parental rights orders from other States; and
       (D) concerning the procedures related to the administration 
     and implementation of the Interstate Compact on the Placement 
     of Children; and
       (3) not later than 12 months after the final appointment to 
     the advisory panel, submit to the Secretary the report 
     described in subsection (c).
       (b) Composition of Advisory Panel.--The advisory panel 
     required under subsection (a) shall, at a minimum, be 
     comprised of representatives of the following:
       (1) Adoptive parent organizations.
       (2) Public and private child welfare agencies that place 
     children for adoption.
       (3) Family court judges' organizations.
       (4) Adoption attorneys.
       (5) The Association of the Administrators of the Interstate 
     Compact on the Placement of Children and the Association of 
     the Administrators of the Interstate Compact on Adoption and 
     Medical Assistance.
       (6) Any other organizations that advocate for adopted 
     children or children awaiting adoption.
       (c) Contents of Report.--The report required under 
     subsection (a)(3) shall include the results of the study 
     conducted under paragraphs (1) and (2) of subsection (a) and 
     recommendations on how to improve procedures to facilitate 
     the interjurisdictional adoption of children, including 
     interstate and intercounty adoptions, so that children will 
     be assured timely and permanent placements.
       (d) Congress.--The Secretary shall submit a copy of the 
     report required under subsection (a)(3) to the appropriate 
     committees of Congress, and, if relevant, make 
     recommendations for proposed legislation.
   TITLE IV--PROMOTION OF INNOVATION IN ENSURING SAFE AND PERMANENT 
                                FAMILIES

     SEC. 401. INNOVATION GRANTS TO REDUCE BACKLOGS OF CHILDREN 
                   AWAITING ADOPTION AND FOR OTHER PURPOSES.

       (a) In General.--Section 474(a) of the Social Security Act 
     (42 U.S.C. 674) is amended--
       (1) in paragraph (4), by striking the period and inserting 
     ``; plus''; and
       (2) by inserting after paragraph (4), the following:
       ``(5) an amount equal to the State's innovation grant 
     award, if an award for the State has been approved by the 
     Secretary pursuant to section 478.''.
       (b) Innovation Grants.--Part E of title IV of the Social 
     Security Act (42 U.S.C. 670 et seq.) is amended by inserting 
     after section 477, the following:

     ``SEC. 478. INNOVATION GRANTS.

       ``(a) Payments.--
       ``(1) In general.--A State that has an application 
     described in paragraph (3) approved by the Secretary, shall 
     be entitled to receive payments, in an amount determined by 
     the Secretary, under section 474(a)(5) for not more than 5 
     years for the purpose of carrying out the innovation projects 
     described in paragraph (2).
       ``(2) Innovation projects described.--The innovation 
     projects described in this paragraph are projects that are 
     designed to achieve 1 or more of the following goals:
       ``(A) Reducing a backlog of children in long-term foster 
     care or awaiting adoption placement.
       ``(B) Ensuring, not later than 1 year after a child enters 
     foster care, a permanent placement for the child.
       ``(C) Identifying and addressing barriers that result in 
     delays to permanent placements for children in foster care, 
     including inadequate representation of child welfare agencies 
     in termination of parental rights and adoption proceedings, 
     and other barriers to termination of parental rights.
       ``(D) Implementing or expanding community-based permanency 
     initiatives, particularly in communities where families 
     reflect the ethnic and racial diversity of children in the 
     State for whom foster and adoptive homes are needed.
       ``(E) Developing and implementing community-based child 
     protection activities that involve partnerships among State 
     and local governments, multiple child-serving agencies, the 
     schools, and community leaders in an attempt to keep children 
     free from abuse and neglect.
       ``(F) Establishing new partnerships with businesses and 
     religious organizations to promote safety and permanence for 
     children.
       ``(G) Assisting in the development and implementation of 
     the State guidelines described in section 471(a)(21).
       ``(H) Developing new staffing approaches to allow the 
     resources of several States to be used to conduct 
     recruitment, placement, adoption, and post-adoption services 
     on a regional basis.
       ``(I) Any other goal that the Secretary specifies by 
     regulation.
       ``(3) Application.--
       ``(A) In general.--An application for a grant under this 
     section may be submitted for fiscal year 1998 or 1999 and 
     shall contain--
       ``(i) a plan, in such form and manner as the Secretary may 
     prescribe, for an innovation project described in paragraph 
     (2) that will be implemented by the State for a period of not 
     more than 5 consecutive fiscal years, beginning with fiscal 
     year 1998 or 1999, as applicable;
       ``(ii) an assurance that no waivers from provisions in law, 
     as in effect at the time of the submission of the 
     application, are required to implement the innovation 
     project; and
       ``(iii) such other information as the Secretary may require 
     by regulation.
       ``(4) Duration.--An innovation project approved under this 
     section shall be conducted for not more than 5 consecutive 
     fiscal years, except that the Secretary may terminate a 
     project before the end of the period originally approved if 
     the Secretary determines that the State conducting the 
     project is not in compliance with the terms of the plan and 
     application approved by the Secretary under this section.
       ``(5) Amounts.--With respect to a fiscal year, the 
     Secretary shall award State grants under this section, in an 
     aggregate amount not to exceed $50,000,000 for that fiscal 
     year. A State shall not receive a grant under this section 
     unless, for each year for which a grant is awarded, the State 
     agrees to match the grant with $1 for every $3 received.
       ``(6) Nonsupplanting.--Any amounts payable to a State under 
     paragraph (5) of section 474(a) shall be in addition to the 
     amounts payable under paragraphs (1), (2), (3), and (4) of 
     that section, and shall supplement but not replace any other 
     funds that may be available for the same purpose in the 
     localities involved.
       ``(7) Evaluations and reports.--
       ``(A) State evaluations.--Each State administering an 
     innovation project under this section shall--
       ``(i) provide for ongoing and retrospective evaluation of 
     the project, meeting such conditions and standards as the 
     Secretary may require; and
       ``(ii) submit to the Secretary such reports, at such times, 
     in such format, and containing such information as the 
     Secretary may require.
       ``(B) Reports to congress.--The Secretary shall, on the 
     basis of reports received from States administering projects 
     under this section, submit interim reports, and, not later 
     than 6 months after the conclusion of all projects 
     administered under this section, a

[[Page S2706]]

     final report to Congress. A report submitted under this 
     subparagraph shall contain an assessment of the effectiveness 
     of the State projects administered under this section and any 
     recommendations for legislative action that the Secretary 
     considers appropriate.
       ``(8) Regulations.--Not later than 60 days after the date 
     of enactment of this section, the Secretary shall promulgate 
     final regulations for implementing this section.''.

     SEC. 402. EXPANSION OF CHILD WELFARE DEMONSTRATION PROJECTS.

       Section 1130(a) of the Social Security Act (42 U.S.C. 
     1320a-9(a)) is amended by striking ``10'' and inserting 
     ``15''.
                         TITLE V--MISCELLANEOUS

     SEC. 501. EFFECTIVE DATE.

       This Act and the amendments made be this Act take effect on 
     October 1, 1997.

  Mr. ROCKEFELLER. Mr. President, children who are at risk of abuse and 
neglect are among the most vulnerable group in our society, and we have 
a compelling obligation to do a better job in protecting such children. 
I am proud to join Senator Chafee and others in a bipartisan effort to 
improve our federal child welfare programs.
  Almost a decade ago, I had the opportunity and privilege to serve as 
the Chairman of the bipartisan National Commission on Children. Our 
diverse group spent several years traveling the country to meet with 
families, officials and advocates to delve into the needs of children 
and families. We issued a unanimous report in 1991 with a comprehensive 
strategy to help children and strengthen families. One of the chapters 
of our report was directed toward helping children at risk of abuse and 
neglect. Since the Children's Commission, I have been working to 
convert our bipartisan recommendations into policy and programs.
  The Children's Commission basic recommendations called for a more 
comprehensive strategy for child protective services. The panel noted 
the need for a range of services so that children and families could 
get what was needed on a case-by-case basis. Our report call for 
intensive family preservation services when appropriate. If children 
must be removed from their homes, reunification services need to be 
available to prepare children and parents for a safe return. There 
should be better training for foster parents and child welfare staff. 
Adoption can be the best option for some children so adoption 
procedures should be streamlined.
  The SAFE Act--Safe Adoptions and Family Environments--follows through 
on the Children's Commission recommendations. Our bill stresses that a 
child's safety and a child's health must be a primary concern by 
clarifying current law known as ``reasonable efforts.'' It is designed 
to encourage states to move children into stable, permanent placements 
quickly. For some children, this will be adoption. For others, 
appropriate intervention and support services can enable children to 
return home safely. This bill will direct states to establish a 
permanency planning hearing for a child in foster care within 12 
months, instead of the current 18 months which will cut by one-third 
the amount of time a child is without a plan for a stable home. Our 
bill also offers states incentives to reduce the backlog of children 
waiting for adoption.
  I have fought for children and family programs throughout my career, 
and will continue to do so. Last Congress, I argued strongly that there 
is a fundamental difference between welfare reform and child welfare 
and foster care. I opposed a block grant approach to foster care 
because abused children should not be placed at further risk or face 
time-limits. Ultimately, I voted for the block grant of welfare reform.
  While I opposed attempts to convert child welfare and foster care 
into a block grant last year, I acknowledged the problems in the system 
and pledged to work on ways to strengthen and improve programs for 
abused and neglected children outside the context of welfare reform. 
Today, we are delivering on that commitment and working in a bipartisan 
manner to encourage reform.
  Reform is desperately needed. Reports indicate that more than 1 
million American children suffered some type of abuse and neglect. Over 
450,000 children are in foster care in our country. In my home state of 
West Virginia, referrals to Child Protective Services are expected to 
increase from 12,500 reports in 1991 to 17,000 this year. Foster care 
placements in West Virginia has jumped to 3,113 children in January 
1997, up from 2,900 children in January 1996.
  Clearly, we must work together with the states to address the 
complicated needs of abused and neglected children.
  While our legislation may seem technical in nature, its goals are 
focused on protecting children and ensuring that every child moves 
swiftly into a safe, permanent placement where they can grow up healthy 
and secure. To achieve such basic goals, we need to invest in a range 
of services--from prevention of abuse, family reunification, and 
adoptions.
  Protecting children and helping families should be a bipartisan, 
community based effort. We must forge partnerships with states and 
advocates. This legislation reflects this spirit and commitment.
                                 ______
                                 
      By Mr. KENNEDY (for himself, Mr. Dodd, Mr. Robb, Ms. Mosley-
        Braun, Mr. Lautenberg, Mr. Kerry, Ms. Snowe, Mrs. Murray, Mr. 
        Feingold, Mr. Harkin, Mr. Chafee, Mr. Jeffords, Mr. Akaka, Mr. 
        Bingaman, and Mrs. Feinstein):
  S.J. Res. 24. A joint resolution proposing an amendment to the 
Constitution of the United States relative to equal rights for women 
and men; to the Committee on the Judiciary.


                       the equal rights amendment

  Mr. KENNEDY. Mr. President, it is an honor to introduce the equal 
rights amendment on behalf of myself and 14 other Senators. Two days 
before the 25th anniversary of the first congressional approval of the 
equal rights amendment, we reaffirm our strong commitment to making the 
ERA part of the Constitution of the United States. We intend to do all 
we can to see that it becomes part of the Constitution, which is where 
it belongs.
  In a sense, action now is more important than ever. Women have 
achieved a great deal during the last two decades. But the statutory 
route has not been as successful as we had hoped. Too many women and 
girls still face unfair and discriminatory barriers in their education, 
careers, sports, and other goals. The glass ceiling, the locked door, 
the sticky floor, the wage gap, and the occupation gap are very real 
problems.
  Women still earn only 76 cents for each dollar earned by men. After a 
full day's work, no woman should be forced to take home only three-
quarters of a pay-check.
  The vast majority of women are still clustered in a narrow range of 
traditionally low-paying occupations. Too many women continue to be 
victims of sexual harassment.
  We must do more, much more, to guarantee fair treatment in the 
workplace and in all aspects of society. Existing laws against sex 
discrimination in all its ugly forms can't get the job done. The need 
for a constitutional guarantee of equal rights for women is compelling.
  Susan B. Anthony said it best over a century ago. When the 
Constitution says, ``We the People,'' it should mean all the people. 
Those words speak to us across the years. And in 1997, we intend to see 
that ``all'' means ``all''--and making ERA part of the Constitution is 
the right way to do it.
  Mr. President, I ask unanimous consent that the text of the joint 
resolution be printed in the Record.
  There being no objection, the joint resolution was ordered to be 
printed in the Record, as follows:

                              S.J. Res. 24

       Resolved by the Senate and House of Representatives of the 
     United States of America in Congress assembled (two-thirds of 
     each House concurring therein), That the following article is 
     proposed as an amendment to the Constitution of the United 
     States, which shall be valid to all intents and purposes as 
     part of the Constitution when ratified by the legislatures of 
     three-fourths of the several States:

                              ``Article --

       ``Section 1. Equality of rights under the law shall not be 
     denied or abridged by the United States or by any State on 
     account of sex.
       ``Section 2. The Congress shall have the power to enforce, 
     by appropriate legislation, the provisions of this article.
       ``Section 3. This amendment shall take effect two years 
     after the date of ratification.''.

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