[Congressional Record Volume 143, Number 58 (Wednesday, May 7, 1997)]
[Senate]
[Pages S4106-S4115]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. HAGEL:
  S. 709. A bill to protect private property rights guaranteed by the 
fifth amendment to the Constitution by requiring Federal agencies to 
prepare private property taking impact analyses and by allowing 
expanded access to Federal courts; to the Committee on Governmental 
Affairs.


               THE PRIVATE PROPERTY FAIRNESS ACT OF 1997

  Mr. HAGEL. Mr. President, I rise today to introduce the Private 
Property Fairness Act of 1997. This bill will

[[Page S4107]]

help ensure that when the Government issues regulations for the benefit 
of the public as a whole, it does not saddle just a few landowners with 
the whole cost of compliance. This bill will help enforce the U.S. 
Constitution's guarantee that the Federal Government cannot take 
private property without paying just compensation to the owner.
  The dramatic growth in Federal regulation in recent decades has 
focused attention on a very murky area of property law, a regulatory 
area in which the law of takings is not yet settled to the satisfaction 
of most Americans.
  The bottom line is that the law in this area is unfair. For example, 
if the Government condemns part of a farm to build a highway, it has to 
pay the farmer for the value of his land. But if the Government 
requires that same farmer stop growing crops on that same land in order 
to protect endangered species or conserve wetlands, the farmer gets no 
compensation. In both situations the Government has acted to benefit 
the general public and, in the process, has imposed a cost on the 
farmer. In both cases, the land is taken out of production and the 
farmer loses income. But only in the highway example is the farmer 
compensated for his loss. In the regulatory example, the farmer, or any 
other landowner, has to absorb all of the cost himself. This is not 
fair.
  The legislation I am introducing today is an important step toward 
providing relief from these so-called regulatory takings. I know my 
distinguished colleague, Senator Hatch, intends to introduce an omnibus 
private property rights bill, and I look forward to working with him. 
My bill is a narrowly tailored approach that will make a real 
difference for property owners across America. It protects private 
property rights in two ways. First, it puts in place procedures that 
will stop or minimize takings by the Federal Government before they 
occur. The Government would have to jump a much higher hurdle before it 
can restrict the use of someone's privately owned property. For the 
first time, the Federal Government will have to determine in advance 
how its actions will impact the property owner, not just the wetland or 
the endangered species. This bill also would require the Federal 
Government to look for options other than restricting the use of 
private property to achieve its goal.
  Second, if heavy Government regulations diminish the value of private 
property, this bill would allow the landowners to plead their case in a 
Federal district court, instead of forcing them into the U.S. Court of 
Federal Claims. This means, for example, that Nebraskans can have their 
case heard in a Nebraska courthouse; they won't have to travel to 
Washington, DC, at their own expense to seek relief. This bill makes 
the process easier, less costly, and more accessible and accountable so 
all citizens can fully protect their property rights.
  For too long, Federal regulators have made private property owners 
bear the burdens and the costs of Government land use decisions. The 
result has been that real people suffer.
  Joe Jeffrey is a farmer in Lexington, NE. Like most Americans, he is 
proud of his land. He believed his property was his to use and control 
as he saw fit.
  Then he met the U.S. Fish and Wildlife Service and the Army Corps of 
Engineers.
  In 1987, the long arm of the Federal bureaucracy reached onto Mr. 
Jeffrey's property in the form of wetlands regulations. Mr. Jeffrey was 
notified that he had to destroy two dikes on his land because they were 
constructed without the proper permits. Nearly 2 years later, the corps 
partially changed its mind and allowed Mr. Jeffrey to reconstruct one 
of the dikes because the corps lacked authority to make him destroy it 
in the first place.
  Then floods damaged part of Mr. Jeffrey's irrigated pastureland and 
changed the normal water channel. Mr. Jeffrey set out to return the 
channel to its original course by moving sand that the flood had 
shifted. But the Government said ``no.'' The corps told him he had to 
give public notice before he could repair his own property.
  Then came the Endangered Species Act.
  Neither least terns nor piping plovers--both federally protected 
endangered species--have ever nested on Mr. Jeffrey's property. But 
that didn't stop the regulators. The U.S. Fish and Wildlife Service 
wanted to designate Mr. Jeffrey's property as ``critical habitat'' for 
these protected species.
  The bureaucrats could not even agree among themselves on what they 
wanted done. The Nebraska Department of Environmental Control wanted 
the area re-vegetated. But the U.S. Fish and Wildlife Service wanted 
the area kept free of vegetation. Mr. Jeffrey was caught in the middle.
  This is a real regulatory horror story. And there's more.
  Today--10 years after his regulatory struggle began--Mr. Jeffrey is 
faced with eroded pastureland that cannot be irrigated and cannot be 
repaired without significant personal expense. The value of Mr. 
Jeffrey's land has been diminished by the Government's regulatory 
intrusion--but he has not been compensated. In fact, he has had to 
spend money from his own pocket to comply with the regulations. The 
Fish and Wildlife Service asked Mr. Jeffrey to modify his center pivot 
irrigation system to negotiate around the eroded area--at a personal 
cost of $20,000. And the issue is still not resolved.
  Mr. President, we do not need more stories like Joe Jeffrey's in 
America. Our Constitution guarantees our people's rights. Congress must 
act to uphold those rights and guarantee them in practice, not just in 
theory. Government regulation has gone too far. We must make it 
accountable to the people. Government should be accountable to the 
people, not the people accountable to the Government.
  What this issue comes down to is fairness. It is simply not fair and 
it is not right for the Federal Government to have the ability to 
restrict the use of privately owned property without compensating the 
owner. It violates the principles this country was founded on. This 
legislation puts some justice back into the system. It reins in 
regulatory agencies and gives the private property owner a voice in the 
process. It makes it easier for citizens to appeal any restrictions 
imposed on their land or property. It is the right thing to do. It is 
the just and fair thing to do.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 709

       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 ``Private Property Rights Act 
     of 1997''.

     SEC. 2. FINDINGS.

       The Congress finds that--
       (1) the ownership of private property plays an important 
     role in the economic and social well-being of the Nation;
       (2) the protection of private property from a taking by the 
     Government without just compensation is an integral 
     protection for private citizens incorporated into the United 
     States Constitution by the fifth amendment and made 
     applicable to the States by the fourteenth amendment;
       (3) Federal agency actions that restrict the use of private 
     property and result in a significant diminution in value of 
     such property constitute a taking of that property and should 
     be properly compensated;
       (4) Federal agencies should consider the impact of agency 
     actions, including regulations, on the use and ownership of 
     private property; and
       (5) owners of private property that is taken by a Federal 
     agency action should be permitted to seek relief in Federal 
     district court.

     SEC. 3. STATEMENT OF POLICY.

       The policy of the Federal Government is to protect the 
     health, safety, and general welfare of the public in a manner 
     that, to the extent practicable, avoids takings of private 
     property.

     SEC. 4. DEFINITIONS.

       For purposes of this Act--
       (1) the term ``agency'' means a department, agency, 
     independent agency, or instrumentality of the United States, 
     including any military department, Government corporation, 
     Government-controlled corporation, or other establishment in 
     the executive branch of the United States Government;
       (2) the term ``agency action'' means any action, inaction, 
     or decision taken by an agency and includes such an action, 
     inaction, or decision taken by, or pursuant to--
       (A) a statute, rule, regulation, order, guideline, or 
     policy; or
       (B) the issuance, denial, or suspension of any permit, 
     license, or authorization;
       (3) the term ``owner'' means the person with title, 
     possession, or other property rights in property affected by 
     any taking of such property; and
       (4) the term ``taking of private property'' means any 
     action whereby private property is taken in such a way as to 
     require compensation under the fifth amendment to the United 
     States Constitution.

[[Page S4108]]

     SEC. 5. REQUIREMENT FOR PRIVATE PROPERTY TAKING IMPACT 
                   ANALYSIS.

       (a) In General.--To the fullest extent possible--
       (1) the policies, regulations, and public laws of the 
     United States shall be interpreted and administered in 
     accordance with the policies under this Act; and
       (2) subject to subsection (b), each agency shall complete a 
     private property taking impact analysis before taking any 
     agency action (including the promulgation of a regulation) 
     which is likely to result in a taking of private property.
       (b) Nonapplication.--Subsection (a)(2) shall not apply to--
       (1) an action in which the power of eminent domain is 
     formally exercised;
       (2) an action taken--
       (A) with respect to property held in trust by the United 
     States; or
       (B) in preparation for, or in connection with, treaty 
     negotiations with foreign nations;
       (3) a law enforcement action, including seizure, for a 
     violation of law, of property for forfeiture or as evidence 
     in a criminal proceeding;
       (4) a communication between an agency and a State or local 
     land-use planning agency concerning a planned or proposed 
     State or local activity that regulates private property, 
     regardless of whether the communication is initiated by an 
     agency or is undertaken in response to an invitation by the 
     State or local authority;
       (5) the placement of a military facility or a military 
     activity involving the use of solely Federal property;
       (6) any military or foreign affairs function (including a 
     procurement function under a military or foreign affairs 
     function), but not including the civil works program of the 
     Army Corps of Engineers; and
       (7) any case in which there is an immediate threat to 
     health or safety that constitutes an emergency requiring 
     immediate response or the issuance of a regulation under 
     section 553(b)(B) of title 5, United States Code, if the 
     taking impact analysis is completed after the emergency 
     action is carried out or the regulation is published.
       (c) Content of Analysis.--A private property taking impact 
     analysis shall be a written statement that includes--
       (1) the specific purpose of the agency action;
       (2) an assessment of the likelihood that a taking of 
     private property will occur under such agency action;
       (3) an evaluation of whether such agency action is likely 
     to require compensation to private property owners;
       (4) alternatives to the agency action that would--
       (A) achieve the intended purposes of the agency action; and
       (B) lessen the likelihood that a taking of private property 
     will occur; and
       (5) an estimate of the potential liability of the Federal 
     Government if the Government is required to compensate a 
     private property owner as a result of the agency action.
       (d) Submission to OMB.--Each agency shall provide the 
     analysis required under this section as part of any 
     submission otherwise required to be made to the Office of 
     Management and Budget relating to an agency action.
       (e) Public Availability of Analysis.--An agency shall--
       (1) make each private property taking impact analysis 
     available to the public; and
       (2) to the greatest extent practicable, transmit a copy of 
     such analysis to the owner and any other person with a 
     property right or interest in the affected property.

     SEC. 6. ALTERNATIVES TO TAKING OF PRIVATE PROPERTY.

       Before taking any final agency action, the agency shall 
     fully consider alternatives described in section 5(c)(4) and 
     shall, to the maximum extent practicable, alter the action to 
     avoid or minimize the taking of private property.

     SEC. 7. CIVIL ACTION.

       (a) Standing.--If an agency action results in the taking of 
     private property, the owner of such property may obtain 
     appropriate relief in a civil action against the agency that 
     has caused the taking to occur.
       (b) Jurisdiction.--Notwithstanding sections 1346 or 1491 of 
     title 28, United States Code--
       (1) a civil action against the agency may be brought in 
     either the United States District Court in which the property 
     at issue is located or in the United States Court of Federal 
     Claims, regardless of the amount in controversy; and
       (2) if property is located in more than 1 judicial 
     district, the claim for relief may be brought in any district 
     in which any part of the property is located.

     SEC. 8. GUIDANCE AND REPORTING REQUIREMENTS.

       (a) Guidance.--The Attorney General shall provide legal 
     guidance in a timely manner, in response to a request by an 
     agency, to assist the agency in complying with this Act.
       (b) Reports.--
       (1) In general.--Not later than 1 year after the date of 
     enactment of this Act and at the end of each 1-year period 
     thereafter, each agency shall submit a report to the Director 
     of the Office of Management and Budget and the Attorney 
     General that identifies--
       (A) each agency action that has resulted in the preparation 
     of a taking impact analysis;
       (B) the filing of a taking claim; and
       (C) any award of compensation pursuant to the just 
     compensation clause of the fifth amendment to the 
     Constitution.
       (2) Publication of reports.--The Director of the Office of 
     Management and Budget and the Attorney General shall publish 
     in the Federal Register, on an annual basis, a compilation of 
     the reports of all agencies made under this paragraph.

     SEC. 9. PRESUMPTIONS IN PROCEEDINGS.

       For the purpose of any agency action or administrative or 
     judicial proceeding, there shall be a rebuttable presumption 
     that the costs, values, and estimates in any private property 
     takings impact analysis shall be outdated and inaccurate, 
     if--
       (1) such analysis was completed 5 years or more before the 
     date of such action or proceeding; and
       (2) such costs, values, or estimates have not been modified 
     within the 5-year period preceding the date of such action or 
     proceeding.

     SEC. 10. RULES OF CONSTRUCTION.

       Nothing in this Act shall be construed to--
       (1) limit any right or remedy, constitute a condition 
     precedent or a requirement to exhaust administrative 
     remedies, or bar any claim of any person relating to such 
     person's property under any other law, including claims made 
     under this Act, section 1346 or 1402 of title 28, United 
     States Code, or chapter 91 of title 28, United States Code; 
     or
       (2) constitute a conclusive determination of--
       (A) the value of any property for purposes of an appraisal 
     for the acquisition of property, or for the determination of 
     damages; or
       (B) any other material issue.

     SEC. 11. EFFECTIVE DATE.

       This Act shall take effect 120 days after the date of 
     enactment of this Act.
                                 ______
                                 
      By Mr. BREAUX (for himself, Mr. Bryan, Mr. D'Amato, and Mr. 
        Frist):
  S. 711. A bill to amend the Internal Revenue Code of 1986 to simplify 
the method of payment of taxes on distilled spirits; to the Committee 
on Finance.


      the distilled spirits tax payment simplification act of 1997

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

                                 S. 711

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

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Distilled 
     Spirits Tax Payment Simplification Act of 1997''.
       (b) Reference to 1986 Code.--Except as otherwise expressly 
     provided, whenever an amendment or repeal is expressed in 
     terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Internal Revenue Code of 
     1986.

     SEC. 2. TRANSFER OF DISTILLED SPIRITS BETWEEN BONDED 
                   PREMISES.

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

[[Page S4109]]

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

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

     SEC. 3. ESTABLISHMENT OF DISTILLED SPIRITS PLANT.

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

     SEC. 4. DISTILLED SPIRITS PLANTS.

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

     SEC. 5. BONDED DEALERS.

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

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

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

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

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

     SEC. 6. DETERMINATION OF TAX.

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

     SEC. 7. LOSS OR DESTRUCTION OF DISTILLED SPIRITS.

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

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

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

     SEC. 9. EXEMPTION FROM OCCUPATIONAL TAX NOT APPLICABLE.

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

     SEC. 10. CONFORMING AMENDMENTS.

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

[[Page S4110]]

       (10) The table of sections for part II of subchapter A of 
     chapter 51 is amended by striking the item relating to 
     section 5115.
       (11) The table of sections for subchapter B of chapter 51 
     is amended by striking the item relating to section 5180.
       (12) The item relating to section 5602 in the table of 
     sections for part I of subchapter J of chapter 51 is amended 
     by striking ``by distiller''.
       (13) The table of sections for part IV of subchapter J of 
     chapter 51 is amended by striking the item relating to 
     section 5681.

     SEC. 11. REGISTRATION FEES.

       (a) General Rule.--The Director of the Bureau of Alcohol, 
     Tobacco, and Firearms shall, in accordance with this section, 
     assess and collect registration fees solely to defray a 
     portion of any net increased costs of regulatory activities 
     of the Government resulting from enactment of this Act.
       (b) Persons Subject to Fee.--Fees shall be paid in a manner 
     prescribed by the Director by the bonded dealer.
       (c) Amount and Timing of Fees.--Fees shall be paid annually 
     and shall not exceed $1,000 per bonded premise.
       (d) Deposit and Credit.--The moneys received during any 
     fiscal year from fees described in subsection (a) shall be 
     deposited as an offsetting collection in, and credited to, 
     the account providing appropriations to conduct the 
     regulatory activities of the Government resulting from 
     enactment of this Act.
       (e) Limitation.--The aggregate amount of fees assessed and 
     collected under this section may not exceed in any fiscal 
     year the aggregate amount of any net increased costs of 
     regulatory activity referred to in subsection (a).

     SEC. 12. COOPERATIVE AGREEMENTS.

       (a) Study.--The Secretary of the Treasury shall study and 
     report to Congress concerning possible administrative 
     efficiencies which could inure to the benefit of the Federal 
     Government of cooperative agreements with States regarding 
     the collection of distilled spirits excise taxes. Such study 
     shall include, but not be limited to, possible benefits of 
     the standardization of forms and collection procedures and 
     shall be submitted 1 year after the date of enactment of this 
     Act.
       (b) Cooperative Agreement.--The Secretary of the Treasury 
     is authorized to enter into such cooperative agreements with 
     States which the Secretary deems will increase the efficient 
     collection of distilled spirits excise taxes.

     SEC. 13. EFFECTIVE DATE.

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

  S. 712. A bill to provide for a system to classify information in the 
interests of national security and a system to declassify such 
information; to the Committee on Governmental Affairs.


                   THE GOVERNMENT SECRECY ACT OF 1997

  Mr. MOYNIHAN. Mr. President, I am pleased to join with my colleague 
from North Carolina, Senator Helms, in introducing the Government 
Secrecy Act of 1997. Congressmen Larry Combest of Texas and Lee 
Hamilton of Indiana are introducing companion legislation in the House 
of Representatives this afternoon. The four of us, along with eight 
other distinguished individuals, served for the past 2 years on the 
Commission on Protecting and Reducing Government Secrecy.
  Earlier today, the four of us testified together at a hearing of the 
Committee on Governmental Affairs called by Chairman Thompson to review 
the Commission's report, issued in March. The legislation that we 
introduce today is intended to implement one of the core 
recommendations of that Commission: The need for a statute establishing 
the principles to govern the classification and declassification of 
information. The remarks that follow track my testimony before the 
Governmental Affairs Committee this morning.
  We begin by defining our subject. ``Secrecy is a form of government 
regulation.'' It can be understood in terms of a now considerable 
literature concerning how organizations function. Begin with the German 
scholar Max Weber, writing eight decades ago in his chapter 
``Bureaucracy'' in ``Wirtschaft und Gesellschaft'' (Economy and 
Society):

       Every bureaucracy seeks to increase the superiority of the 
     professionally informed by keeping their knowledge and 
     intentions secret. Bureaucratic administration always tends 
     to be an administration of ``secret sessions''; in so far as 
     it can, it hides its knowledge and action from criticism. The 
     pure interest of the bureaucracy in power, however, is 
     efficacious far beyond those areas where purely functional 
     interests make for secrecy. The concept of the ``official 
     secret'' is the specific invention of bureaucracy, and 
     nothing is so fanatically defended by the bureaucracy as this 
     attitude, which cannot be substantially defended beyond these 
     specifically qualified areas.

  Normal regulation concerns how citizens are to behave. As the 
administrative state developed in the United States, beginning with the 
Progressive Era at the turn of the century and expanding greatly under 
the New Deal, legal scholars began to ask just what these new rules 
were. Were they laws? If not, then what? In 1938, Roscoe Pound, 
chairman of the American Bar Association's Special Committee on 
Administrative Law and former Dean of the Harvard Law School, attacked 
those ``who would turn the administration of justice over to 
administrative absolutism . . . a Marxian idea,'' and inveighed against 
those ``progressives, liberals, or radicals who desire to invest the 
National Government with totalitarian powers in the teeth of 
constitutional democracy . . .''
  We managed to get a handle on that system, in no small measure 
through the efforts of Erwin Griswold, also a dean of the Harvard Law 
School, and others who decried the fact that administrative regulations 
equivalent to law had become increasingly important to everyday life 
and yet were not available to the public. One year after Professor 
Griswold published a seminal article calling for the publication of 
such rules and regulations, Congress enacted the Federal Register Act 
of 1935. Eleven years later, in 1946, working from the recommendations 
made in 1941 by the Attorney General's Committee on Administrative 
Procedure, chaired by Dean Acheson, Congress enacted the Administrative 
Procedure Act.
  Thus, today our system of public regulation is public indeed. 
Regulations are both widely accessible and subject to the APA's set of 
procedural requirements--bringing a degree of order and accountability 
to this regime.
  Secrecy, by contrast, concerns what citizens may know, but the 
citizen does not know what may not be known. Our Commission states:

       Americans are familiar with the tendency to overregulate in 
     other areas. What is different with secrecy is that the 
     public cannot know the extent or the content of the 
     regulation.

Thus, secrecy is the ultimate mode of regulation; the citizen does not 
even know that he or she is being regulated. It is a parallel 
regulatory regime with a far greater potential for damage if it 
malfunctions.
  Flowing from this understanding of secrecy as regulation is the 
recognition that, to paraphrase Justice Potter Stewart's opinion in the 
Pentagon Papers case, when everything is secret, nothing is secret. We 
state:

       The best way to ensure that secrecy is respected, and that 
     the most important secrets remain secret, is for secrecy 
     to be returned to its limited but necessary role. Secrets 
     can be protected more effectively if secrecy is reduced 
     overall.

  It is time to reexamine the foundations of that secrecy system. The 
Information Security Oversight Office report to Congress last week 
estimated the direct costs of secrecy at $5.2 billion in 1996 alone. 
The same Office reports that in 1995 we had 21,871 original new top 
secret designations and another 374,244 derivative top secret 
designations. Meaning that, in a single year, roughly 400,000 new 
secrets were created at the Top Secret level alone--the disclosure of 
any one of which would cause exceptionally grave damage to the national 
security.
  It is also time to examine the appropriateness of security 
arrangements

[[Page S4111]]

put in place during an earlier age, when the perceived threats were so 
different from those of today. In 1957, the only previous commission 
established by the Congress to examine the secrecy system--the 
Commission on Government Security--issued a report that, for any number 
of reasons--in particular the fact that its core recommendation that 
amounted to prior restraint of the press--did nothing to change the 
prevailing mode. Although the Commission did understand classification 
as a cost; its report ``stresses the dangers to national security that 
arise out of overclassification of information which retards scientific 
and technological progress, and thus tend to deprive the country of the 
lead time that results from the free exchange of ideas and 
information.''
  When the Commission on Government Security presented its report to 
President Eisenhower and the Congress, we still were consumed with 
concerns about a Federal Government infiltrated by ideological enemies 
of the United States. Today, the public and its representatives have 
few such concerns; indeed, today it is the U.S. Government that 
increasingly is the object of what Edward Shils in 1956, in ``The 
Torment of Secrecy,'' termed the ``phantasies of apocalyptic 
visionaries.''
  We are not proposing putting an end to secrecy. It is at times 
terribly necessary and used for the most legitimate reasons. But 
secrecy need not remain the only norm: We must develop a competing 
culture of openness, fully consistent with our interests in protecting 
national security, but in which power is no longer derived primarily 
from one's ability to withhold information.
  I am struck in this regard by a most remarkable letter that I 
received on March 25 from George F. Kennan, professor emeritus at the 
Institute for Advanced Study in Princeton, NJ, in response to our 
Commission report. As lucid and thoughtful as ever at age 93, Professor 
Kennan builds a compelling case for the proposition that much of our 
secrecy system arose out of our efforts to penetrate the obsessively 
secretive Soviet Communist regime of the Stalin era. And that the 
system we put in place remains largely intact today, even as that 
adversary has disappeared. Professor Kennan writes:

       It is my conviction, based on some 70 years of experience, 
     first as a government official and then in the past 45 years 
     as an historian, that the need by our government for secret 
     intelligence about affairs elsewhere in the world has been 
     vastly over-rated. I would say that something upwards of 95% 
     of what we need to know about foreign countries could be very 
     well obtained by the careful and competent study of perfectly 
     legitimate sources of information open and available to us in 
     the rich library and archival holdings of this country.

  I ask unanimous that the full text of Professor Kennan's letter be 
inserted in the Record.
  I should note further that Professor Kennan's conclusion about the 
share of information available from open sources also has been reached 
by other notable observers of the secrecy system--the estimable George 
P. Shultz among them.
  Developing a culture of openness within the Federal Government 
requires that secrecy be defined in statute. A statute will not put an 
end to overclassification and needless classification, but it will help 
by ensuring that the present regulatory regime cannot simply continue 
to flourish without any restraint. Classification should proceed 
according to law; classifiers should know that they are acting lawfully 
and properly. We need to balance the possibility of harm to national 
security against the public's right to know what the Government is 
doing, or not doing. We should establish by statute that secrecy 
belongs in the realm of national security and must serve that interest 
alone. It should not be employed as a badge of office or a status 
symbol.
  Thus we propose this statute, the Government Secrecy Act of 1997. As 
noted, Representatives Combest and Hamilton are cosponsoring a 
companion measure in the House of Representatives. This legislation--
defining the principles and standards to govern classification and 
declassification, and establishing within an existing agency a National 
Declassification Center to coordinate responsibility for declassifying 
historical documents--is drawn directly from the Commission's 
recommendation for such a statute, as set out in the summary and in 
chapter I of our report.
  I look forward to reviewing the legislation, as well as the other 
findings and recommendations of the Commission, with Members of this 
body, as well as our colleagues in the House of Representatives, 
executive branch officials, and interested persons outside of 
Government, in the weeks ahead.
  I send the bill to the desk and ask unanimous consent that it be 
printed in the Record and be referred to the appropriate committee.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 712

       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 ``Government Secrecy Act of 
     1997''.

     SEC. 2. PURPOSE.

       It is the purpose of this Act to promote the effective 
     protection of classified information and the disclosure of 
     information where there is not a well-founded basis for 
     protection or where the costs of maintaining a secret 
     outweigh the benefits.

     SEC. 3. FINDINGS.

       The Congress makes the following findings:
       (1) The system for classifying and declassifying national 
     security information has been based in regulation, not in 
     statute, and has been governed by six successive Executive 
     orders since 1951.
       (2) The Commission on Protecting and Reducing Government 
     Secrecy, established under Public Law 103-236, issued its 
     report on March 4, 1997 (S. Doc. 105-2), in which it 
     recommended reducing the volume of information classified and 
     strengthening the protection of classified information.
       (3) The absence of a statutory framework has resulted in 
     unstable and inconsistent classification and declassification 
     policies, excessive costs, and inadequate implementation.
       (4) The implementation of Executive orders will be even 
     more costly as more documents are prepared and used on 
     electronic systems.
       (5) United States taxpayers incur substantial costs as 
     several million documents are classified each year. According 
     to figures submitted to the Information Security Oversight 
     Office and the Congress, the executive branch and private 
     industry together spent more than $5.2 billion in 1996 to 
     protect classified information.
       (6) A statutory foundation for the classification and 
     declassification of information is likely to result in a more 
     stable and cost-effective set of policies and a more 
     consistent application of rules and procedures.
       (7) Enactment of a statute would create an opportunity for 
     greater oversight by the Congress of executive branch 
     classification and declassification activities, without 
     impairing the responsibility of executive branch officials 
     for the day-to-day administration of the system.

     SEC. 4. CLASSIFICATION AND DECLASSIFICATION OF INFORMATION.

       (a) Classification For National Security Reasons.--The 
     President may, in accordance with this Act, protect from 
     unauthorized disclosure information in the possession and 
     control of the executive branch when there is a demonstrable 
     need to do so in order to protect the national security of 
     the United States. The President shall ensure that the amount 
     of information classified is the minimum necessary to protect 
     the national security.
       (b) Procedures for Classification and Declassification.--
       (1) In general.--The President shall, to the extent 
     necessary, establish categories of information that may be 
     classified and procedures for classifying information under 
     subsection (a). The President shall, concurrently with the 
     establishment of such categories and procedures, establish, 
     and allocate resources for the implementation of, procedures 
     for declassifying information previously classified.
       (2) Publication of categories and procedures.--
       (A) The President shall publish notice in the Federal 
     Register of any categories and procedures proposed to be 
     established under paragraph (1) with respect to both the 
     classification and declassification of information, and shall 
     provide an opportunity for interested agencies and other 
     interested persons to submit comments thereon. The President 
     shall take into account such comments before establishing the 
     categories and procedures, which shall also be published in 
     the Federal Register.
       (B) The procedures set forth in subparagraph (A) shall 
     apply to any modifications in categories or procedures 
     established under paragraph (1).
       (3) Agency standards and procedures.--The head of each 
     agency shall establish standards and procedures for 
     classifying and declassifying information created by that 
     agency on the basis of the categories and procedures 
     established by the President under paragraph (1). Each agency 
     head, in establishing and modifying standards and procedures 
     under this paragraph, shall follow the procedures required of 
     the President in paragraph (2) for establishing and modifying

[[Page S4112]]

     categories and procedures under that paragraph.
       (c) Considerations in Determining Classification and 
     Declassification.--
       (1) In general.--In determining whether information should 
     be classified or declassified, the agency official making the 
     determination shall weigh the benefit from public disclosure 
     of the information against the need for initial or continued 
     protection of the information under the classification 
     system. If there is significant doubt as to whether 
     information requires such protection, it shall not be 
     classified.
       (2) Written justification.--
       (A) Original classification.--The agency official who makes 
     the decision to classify information shall identify himself 
     or herself and shall provide in writing a detailed 
     justification for that decision.
       (B) Derivative classification.--In any case in which an 
     agency official classifies a document on the basis of 
     information previously classified that is included or 
     referenced in the document, that agency official shall 
     identify himself or herself in that document.
       (d) Standards for Declassification.--
       (1) Initial classification period.--Information may not 
     remain classified under this Act for longer than a 10-year 
     period unless the head of the agency that created the 
     information certifies to the President at the end of such 
     period that the information requires continued protection, 
     based on a current assessment of the risks of disclosing the 
     information, carried out in accordance with subsection 
     (c)(1).
       (2) Additional classification period.--Information not 
     declassified prior to or at the end of the 10-year period 
     referred to in paragraph (1) may not remain classified for 
     more than a 30-year period unless the head of the agency that 
     created the information certifies to the President at the end 
     of such 30-year period that continued protection of the 
     information from unauthorized disclosure is essential to the 
     national security of the United States or that demonstrable 
     harm to an individual will result from release of the 
     information.
       (3) Declassification schedules.--All classified information 
     shall be subject to regular review pursuant to schedules each 
     agency head shall establish and publish in the Federal 
     Register. Each agency shall follow the schedule established 
     by the agency head in declassifying information created by 
     that agency.
       (4) Assessment of existing classified information.--Each 
     agency official responsible for information which, before the 
     effective date of this Act--
       (A) was determined to be kept protected from unauthorized 
     disclosure in the interest of national security, and
       (B) had been kept so protected for longer than the 10-year 
     period referred to in paragraph (1),
     shall, to the extent feasible, give priority to making 
     decisions with respect to declassifying that information as 
     soon as is practicable.
       (e) Reports to Congress.--Not later than December 31 of 
     each year, the head of each agency that is responsible for 
     the classification and declassification of information shall 
     submit to the Congress a report that describes the 
     application of the classification and declassification 
     standards and procedures of that agency during the preceding 
     fiscal year.
       (f) Amendment to Freedom of Information Act.--Section 
     552(b)(1) of title 5, United States Code, is amended to read 
     as follows:
       ``(1)(A) specifically authorized to be classified under the 
     Government Secrecy Act of 1997, or specifically authorized, 
     before the effective date of that Act, under criteria 
     established by an Executive order to be kept secret in the 
     interest of national security (as defined by section 7(6) of 
     the Government Secrecy Act of 1997), and (B) are in fact 
     properly classified pursuant to that Act or Executive 
     order;''.

     SEC. 5. NATIONAL DECLASSIFICATION CENTER.

       (a) Establishment.--The President shall establish, within 
     an existing agency, a National Declassification Center, the 
     functions of which shall be--
       (1) to coordinate and oversee the declassification policies 
     and practices of the Federal Government; and
       (2) to provide technical assistance to agencies in 
     implementing such policies and practices, in accordance with 
     this section.
       (b) Functions.--
       (1) Declassification of information.--The Center shall, at 
     the request of any agency and on a reimbursable basis, 
     declassify information within the possession of that agency 
     pursuant to the guidance of that agency on the basis of the 
     declassification standards and procedures established by that 
     agency under section 4, or if another agency created the 
     information, pursuant to the guidance of that other agency on 
     the basis of the declassification standards and procedures 
     established by that agency under section 4. In carrying out 
     this paragraph, the Center may use the services of officers 
     or employees or the resources of another agency, with the 
     consent of the head of that agency.
       (2) Coordination of policies.--The Center shall coordinate 
     implementation by agencies of the declassification policies 
     and procedures established by the President under section 4 
     and shall ensure that declassification of information occurs 
     in an efficient, cost-effective, and consistent manner among 
     all agencies that create or otherwise are in possession of 
     classified information.
       (3) Disputes.--If disputes arise among agencies regarding 
     whether information should or should not be classified, or 
     between the Center and any agency regarding the Center's 
     functions under this section, the heads of the agencies 
     concerned or of the Center may refer the matter to the 
     President for resolution of the dispute.
       (c) National Declassification Advisory Committee.--
       (1) In general.--There is established a 12-member National 
     Declassification Advisory Committee. 4 members of the 
     Advisory Committee shall be appointed by the President and 2 
     members each shall be appointed by the majority and minority 
     leaders of the Senate, the Speaker of the House of 
     Representatives, and the minority leader of the House of 
     Representatives.
       (2) Membership.--The members of the Advisory Committee 
     shall be appointed from among distinguished historians, 
     political scientists, archivists, other social scientists, 
     and other members of the public who have a demonstrable 
     expertise in declassification and the management of 
     Government records. No officer or employee of the United 
     States Government shall be appointed to the Advisory 
     Committee.
       (3) Duties.--The Advisory Committee shall provide advice to 
     the Center and make recommendations concerning 
     declassification priorities and activities.
       (d) Annual Reports.--The Center shall submit to the 
     President and the Congress, not later than December 31 of 
     each year, a report on its activities during the preceding 
     fiscal year, and on the implementation of agency 
     declassification practices and its efforts to coordinate 
     those practices.

     SEC. 6. INFORMATION TO THE CONGRESS.

       Nothing in this Act shall be construed to authorize the 
     withholding of information from the Congress.

     SEC. 7. DEFINITIONS.

       As used in this Act--
       (1) the term ``Advisory Committee'' means the National 
     Declassification Advisory Committee established under section 
     5(c);
       (2) the term ``agency'' means any executive agency as 
     defined in section 105 of title 5, United States Code, any 
     military department as defined in section 102 of such title, 
     and any other entity in the executive branch of the 
     Government that comes into the possession of classified 
     information;
       (3) the term ``Center'' means the National Declassification 
     Center established under section 5(a);
       (4) the terms ``classify'', ``classified'', and 
     ``classification'' refer to the process by which information 
     is determined to require protection from unauthorized 
     disclosure pursuant to this Act in order to protect the 
     national security of the United States;
       (5) the terms ``declassify'', ``declassified'', and 
     ``declassification'' refer to the process by which 
     information that has been classified is determined to no 
     longer require protection from unauthorized disclosure 
     pursuant to this Act; and
       (6) the term ``national security of the United States'' 
     means the national defense or foreign relations of the United 
     States.

     SEC. 8. EFFECTIVE DATE.

       This Act shall take effect 180 days after the date of the 
     enactment of this Act.
                                                                    ____

                                     Institute for Advanced Study,


                                 School of Historical Studies,

                                    Princeton, NJ, March 25, 1997.
     Senator Daniel P. Moynihan,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator: Thank you for your note of the 7th, and for 
     the copy of your recent talk at Georgetown, which I have read 
     with deep appreciation.
       There are several points you touched on in that talk which, 
     were we sitting at leisure around a fireside, I would like to 
     pursue. I cannot treat them all here. But there is one matter 
     on which you did not specifically mention but which lies 
     close to the subject you had in mind, and on which I am moved 
     to say a word. It is a matter on which I have long looked 
     for, but never found, a suitable chance to comment publicly.
       It is my conviction, based on some 70 years of experience, 
     first as a government official and then in the past 45 years 
     as an historian, that the need by our government for secret 
     intelligence about affairs elsewhere in the world has been 
     vastly over-rated. I would say that something upwards of 95% 
     of what we need to know about foreign countries could be very 
     well obtained by the careful and competent study of perfectly 
     legitimate sources of information open and available to us in 
     the rich library an archival holdings of this country. Much 
     of the remainder, if it could not be found here (and there is 
     very little of it that could not) could easily be non-
     secretively elicited from similar sources abroad.
       In Russia, in Stalin's time and partly thereafter, the 
     almost psychotic preoccupation of the Communist regime with 
     secrecy appeared to many, not unnaturally, to place a special 
     premium on efforts to penetrate that curtain by secretive 
     methods of our own. This led, of course, to the creation here 
     of a vast bureaucracy dedicated to this particular purpose; 
     and this latter, after the fashion of all great bureaucratic 
     structures, has endured to this day, long after most of the 
     reasons for it have disappeared. Even in the Soviet time, 
     much of it was superfluous. A lot of what we went to such 
     elaborate and dangerous means to obtain secretly would have 
     been here for the having, given the requisite quiet and 
     scholarly analysis of what already lay before us.

[[Page S4113]]

       The attempt to elicit information by secret means has 
     another very serious negative effect that is seldom noted. 
     The development of clandestine sources of information in 
     another country involves, of course, the placing and the 
     exploitation of secret agents on the territory of that 
     country. This naturally incites the mounting of a substantial 
     effort of counterintelligence on the part of the respective 
     country's government. This, in turn, causes us to respond 
     with an equally vigorous effort of counterintelligence in 
     order to maintain the integrity of our espionage effort. 
     But for a variety of reasons, this competition in 
     counterintelligence efforts tends to grow into dimensions 
     that wholly overshadow the original effort of positive 
     intelligence procurement that gave rise to it in the first 
     place. It takes on aspects which cause it to be viewed as 
     a game, played in its own rights. Unfortunately, it is a 
     game requiring such lurid and dramatic character that it 
     dominates the attention both of those that practice it, 
     and of those in the press and the media who exploit it. 
     Such is the fascination it exerts that it tends wholly to 
     obscure, even for the general public the original reasons 
     for it. It would be interesting to know what proportion of 
     the energies and expenses and bureaucratic involvement of 
     the C.I.A. is addressed to this consuming competition, and 
     whether one ever stacks this up against the value of its 
     almost forgotten original purposes. Do people ever 
     reflect, one wonders, that the best way to protect against 
     the penetration of one's secrets by others is to have the 
     minimum of secrets to conceal?
       One more point. At the bottom of the whole great effort of 
     secret military intelligence, which has played so nefarious a 
     part in the entire history of great-power relationships in 
     this passing century, there has usually lain the assumption 
     by each party that if it did not engage to the limit in that 
     exercise the other party, working in secret, might develop a 
     weapon so devastating that with it he could confront all 
     others with the demand that they submit to his will ``or 
     else''.
       But this sort of anxiety is now greatly outdated. The 
     nuclear competition has taught us that the more terrible the 
     weapons available, the more suicidal becomes any conceivable 
     actual use of them. With the recognition of the implications 
     of this simple fact would go a large part of the motivation 
     for our frantic efforts of secret intelligence. In this 
     respect, too, this is really a new age. It is time we 
     recognized it and drew the inescapable conclusions.
       There may still be areas, very small areas really, in which 
     there is a real need to penetrate someone else's curtain of 
     secrecy. All right. But then please, without the erection of 
     false pretenses and elaborate efforts to deceive--and 
     without, to the extent possible--the attempt to maintain 
     ``spies'' on the adversary's territory. We easily become 
     ourselves, the sufferers from these methods of deception. For 
     they inculcate in their authors, as well as their intended 
     victims, unlimited cynicism, causing them to lose all 
     realistic understanding of the interrelationship, in what 
     they are doing, of ends and means.
       Forgive me for burdening you with this outburst. I am not 
     unloading upon my friends, in private letters, thoughts I 
     should probably have brought forward publicly long ago. I 
     have to consider that this is the only way I can put some of 
     these thoughts into words before, in the case of a person 93 
     years of age, it becomes too late.
       Warm and admiring greetings.
           Very sincerely,
                                                    George Kennan.

  Mr. HELMS. I am pleased to join Senator Moynihan today in introducing 
a bill that would for the first time place in statute the Government 
system for the classification of information. To date this has been 
accomplished solely through Executive order.
  The statute is based on the recommendations contained in the report 
of the Commission to Protect and Reduce Government Secrecy chaired by 
my colleague Pat Moynihan, the senior Senator from New York. The 
Secrecy Commission achieved a unified report of recommendations--a feat 
that should not be underrated, especially in Washington.
  The Commission, by law, had the twin goals of studying how to protect 
important Government secrets and simultaneously reducing the amount of 
classified documents and materials. All Commissioners began their 
deliberations with the premise that Government secrecy is a form of 
regulation that, like all regulations, should be used sparingly, and 
certainly never for the goal of keeping the truth from the American 
people. Commissioners also began the process recognizing that over-
classification can actually weaken the protections of those secrets 
that truly are in our national interest.
  All the same I am obliged to begin with a reiteration of the 
obvious--that the protection of true national security information 
remains vital to the well-being and security of the United States. The 
end of the cold war notwithstanding, the United States continues to 
face serious and long-term threats from a variety of fronts. While 
Communist and anti-American regimes, such as North Korea, Cuba, Iran, 
and Iraq, continue to wage a war of espionage against the United 
States, new threats have arisen as well.
  Most alarming, perhaps, is the growing trend of espionage conducted 
not by our enemies but by American allies. Such espionage is on the 
rise especially against U.S. economic secrets. According to a February 
1996 report by GAO, classified military information and sensitive 
military technologies are high priority targets for the intelligence 
agencies of U.S. allies.
  At first blush, a push to reduce Government secrecy may seem at odds 
with these increasing threats. I am convinced it is not. The sheer 
volume of government secrets--and their cost to the taxpayers and U.S. 
business--is staggering. In 1996 the taxpayers spent more than $5.2 
billion to protect classified information. We know all too well from 
our own experiences that when everything is secret nothing is secret.
  Secrecy all too often then becomes a political tool used by executive 
branch agencies to shield information which may be politically 
sensitive or policies which may be unpopular with the American public. 
Worse yet, information may be classified to hide from public view 
illegal or unethical activity. On numerous occasions I, and other 
Members of Congress, have found the executive branch to be reluctant to 
share certain information, the nature of which is not truly a national 
secret, but which would be potentially politically embarrassing to 
officials in the executive branch or which would make known an illegal 
or indefensible policy.

  I have also found that one of the largest impediments to openness is 
the perverse incentives of the Government bureaucracy itself in favor 
of classification, and the lack of accountability for those who do the 
actual classification. I strongly endorse the Commission's 
recommendation of adding individual accountability to the process by 
requiring original and derivative classifiers to actually identify 
themselves and include within the documents a justification of the 
decision to classify.
  The only way to change a bureaucracy is to reverse the incentive to 
classify. A good example of how to change this lack of bureaucratic 
accountability is a provision contained in H.R. 3121--legislation which 
we approved in the Foreign Relations Committee last year that was 
signed into law. Previously, details on U.S. commercial arms sales to 
foreign governments were not made available to the public unless a 
citizen requested that the State Department make it public. The 
incentive therefore was to keep the information closely regulated. H.R. 
3121 provides that all arm sales will be made public unless the 
President determines that the release of the information is contrary to 
U.S. national security interest. Although this may appear to be a small 
nuance, the bureaucratic incentive is changed enormously to favor 
openness. Shifting the burden in this way can introduce more openness 
into the system and force the bureaucracy to identify true national 
security threats.
  I am convinced, however, that the single most important 
recommendation of our Commission that Congress should focus on is the 
concept of creating a life cycle for secrets. This means that all 
information, classified and unclassified alike, has a life span in 
which decisions must be made regarding creation, management, and use. 
This kind of rationalization would shift the burden to favor openness 
and reduce some of the costs associated with declassification.
  I would add a note of caution to the Commission's work on 
declassification, however. In the course of the 2 years of its work, 
the Commission became very interested in the declassification of 
existing documents and materials. In a perfect world, if information 
remains relevant to true U.S. national interests it should remain 
classified indefinitely. Information that does not compromise U.S. 
interests and sources should be made public. We all realize, however, 
that this is a tremendously costly venture. In fact, the Commission was 
unable to come up with solid data on the true cost of declassification.
  In this era when Congress has finally begun to grasp the essential 
need to reduce Government spending and balance the budget, the issue of 
balancing costs

[[Page S4114]]

and benefits is an essential one. The financial costs to the American 
taxpayers must be balanced against the necessity of the 
declassification. The real lesson to take from the work of this 
Commission is the need to redress for the future the problems of over 
classification and a systematic process for declassification, so that 
the costs and timeliness of declassification does not pose the same 
economic and regulatory burdens on future generations. At the same 
time, it may be too costly to declassify all of the countless 
classified documents now in existence.
  With this caveat in mind, I hope the Congress will focus on bringing 
government-wide rationalization to the classification process. It is an 
area where tough congressional oversight is long overdue.
                                 ______
                                 
      By Mr. AKAKA (for himself, Mr. Daschle, Mr. Inouye, Mr. Hollings, 
        Mr. Wellstone and Mr. Jeffords):

  S. 714. A bill to make permanent the Native American Veteran Housing 
Loan Pilot Program of the Department of Veterans Affairs; to the 
Committee on Veterans' Affairs.


  REAUTHORIZATION OF THE NATIVE AMERICAN VETERAN HOUSING LOAN PROGRAM 
                              LEGISLATION

  Mr. AKAKA. Mr. President, I rise to introduce a measure which 
permanently authorizes the Native American Veteran Housing Loan 
Program. I am pleased that Senators Daschle, Inouye, Hollings, 
Wellstone, and Jeffords have joined me in cosponsoring this important 
measure.
  In 1992, I authored a bill that established a 5-year pilot program of 
direct home loans to assist native american veterans who reside on 
trust lands. This pilot program, administered by the Department of 
Veterans Affairs [VA], provides direct loans to native American 
veterans to build or purchase homes on trust lands. Previously, native 
American veterans who reside on trust lands were unable to qualify for 
VA home loan benefits. This disgraceful treatment of native American 
veterans was finally corrected when Congress established the native 
American Direct Home Loan Program.
  Despite the complexities of creating a program that addresses the 
needs of hundreds of different tribal entities, VA has successfully 
entered into agreements to provide direct VA loans to members of 46 
tribes and Pacific Island groups, and negotiations continue with other 
tribes. Since the program's inception, 127 native American veterans 
have been able to achieve home ownership, and none of the loans 
approved by the VA have been foreclosed.
  Unfortunately, the authority to issue new loans under this remarkably 
successful program will cease on September 30, 1997. This would be 
tragic and devastating to a number of native American veterans who want 
to participate in this program. Although VA has proposed a 2-year 
extension for the program, it fails to address the basic reason this 
program exists--equity. Native American veterans who reside on trust 
lands should be afforded the same benefits available to other veterans. 
Without this program, home loan benefits to native Americans living on 
trust lands will cease. This is the only program available for native 
American veterans who live on trust lands to finance a home for 
themselves and their families. There are no alternatives available.
  Permanent authorization of this program will ensure that native 
American veterans are provided equal access to services and benefits 
available to other veterans. I urge my colleagues to support this 
important legislation.
  I ask unanimous consent that a copy 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. 714

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

     SECTION 1. PERMANENT AUTHORITY FOR NATIVE AMERICAN VETERAN 
                   HOUSING LOAN PROGRAM.

       (a) Permanent Authority.--Section 3761 of title 38, United 
     States Code, is amended by striking out subsection (c).
       (b) Conforming Amendments.--(1) Section 3761(a) of such 
     title is amended--
       (A) by striking out ``shall establish and implement a pilot 
     program'' and inserting in lieu thereof ``shall carry out a 
     pilot program''; and
       (B) by striking out ``shall establish and implement the 
     pilot program'' and inserting in lieu thereof ``shall carry 
     out the pilot program''.
       (2) Sections 3761(b) and 3762(i) of such title are each 
     amended by striking out ``pilot program'' and inserting in 
     lieu thereof ``program''.
       (3) Section 3762 of such title is amended--
       (A) in subsection (b)(1)(E), by striking out ``pilot 
     program established under this subchapter is implemented'' 
     and inserting in lieu thereof ``program under this subchapter 
     is carried out''; and
       (B) in subsection (c)(1)(B), by striking out the second 
     sentence.
       (4)(A) The subchapter heading for subchapter V of chapter 
     37 of such title is amended by striking out ``PILOT''.
       (B) The section heading for section 3761 of such title is 
     amended to read as follows:

     ``Sec. 3761. Native American Veteran Housing Loan Program''.

       (C) The table of sections at the beginning of chapter 37 of 
     such title is amended--
       (i) in the item relating to subchapter V, by striking out 
     ``PILOT''; and
       (ii) by striking out the item relating to section 3761 and 
     inserting in lieu thereof the following new item:
``3761. Native American Veteran Housing Loan Program.''.
                                 ______
                                 
      By Mr. CRAIG (for himself, Mr. Baucus, Mr. Burns, Mr. Gorton, Mr. 
        Kempthorne, and Mr. Enzi):
  S. 716. A bill to establish a Joint United States-Canada Commission 
on Cattle and Beef to identify, and recommend means of resolving 
national, regional, and provincial trade-distorting differences between 
the countries with respect to the production, processing, and sale of 
cattle and beef, and for other purposes; to the Committee on Finance.


          legislation to establish cattle and beef commission

  Mr. CRAIG. Mr. President, I rise to introduce a bill of critical 
importance to our Nation's cattle industry. The joint United States-
Canada Commission on Cattle and Beef is designed to resolve some of the 
existing differences in trade practices between the two countries.
  I want to thank a number of my colleagues who are joining me as 
original cosponsors of this legislation. The cosponsors of this bill 
include Senator Baucus, Senator Burns, Senator Gorton, Senator 
Kempthorne, and Senator Enzi.
  As a former rancher, I have a firsthand understanding of the 
challenges that face the cattle industry. The prolonged down cycle is 
especially troubling because it affects the livelihoods of thousands of 
ranching families in Idaho and across the country.
  These beef producers are the largest sector of Idaho and American 
agriculture. Over 1 million families raise over 100 million head of 
beef cattle every year. This contributes over $36 billion to local 
economies. Even with the extended cycle of low prices, direct cash 
receipts from the Idaho cattle industry were almost $620 million in 
1995. These totals only represent direct sales; they do not capture the 
multiplier effect that cattle ranches have in their local economies 
from expenditures on labor, feed, fuel, property taxes, and other 
inputs.
  Over the years, cattle operations have provided a decent living and 
good way of life in exchange for long days, hard work, and dedication. 
While the investment continues to be high, the returns have been low in 
recent years.
  The problems facing the cattle industry in recent years are complex. 
The nature of the market dictates that stable consumption combined with 
increased productivity and growing herd size yield lower prices to 
producers. This, combined with high feed prices and limited export 
opportunities, has caused a near crisis.
  Many Idahoans have contacted me on a number of cattle industry 
issues. Some suggest the Federal Government intervene in the market to 
help producers. However, many others have expressed fear that Federal 
intervention, if experience is any indication, will only complicate 
matters and may also create a number of unintended results. I tend to 
agree with the latter. Time and again, I have seen lawmakers and 
bureaucrats in Washington, DC, albeit well intentioned, take a 
difficult situation and make it worse. This does not mean that I 
believe Government has no role to play. I have supported and will 
continue to support Government involvement in areas like trade, where 
individual producers cannot help themselves.
  This bill recognizes a number of barriers to international trade that 
adversely affect American beef producers.

[[Page S4115]]

The bill is meant to elevate the importance of all trade issues and 
specifically address some of the pending cattle trade issues between 
the United States and Canada.
  The United States-Canada Commission on Cattle and Beef is a measure 
designed to provide immediate, short-term solutions to some of the 
serious trade problems facing the cattle industry. Specific cattle 
issues that could be resolved with further discussion include animal 
health requirements and the availability of feed grains. The bill 
creates a commission composed of three people from each country along 
with a number of other nonvoting advisors. Within 30 days of passage, 
the Commission must be in place and within 6 months must issue a 
preliminary report on how to resolve the existing differences between 
United States and Canadian trade.

  I know that a number of my colleagues have legislation pending in 
regards to the cattle market. I would comment that I see this bill as a 
starting point, not an ending point for cattle industry issues and I 
urge my colleagues to support this legislation.
  Mr. President, I ask unanimous consent that the text of my bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 716

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

     SECTION 1. JOINT UNITED STATES-CANADA COMMISSION ON CATTLE 
                   AND BEEF.

       (a) Establishment.--There is established a Joint United 
     States-Canada Commission on Cattle and Beef to identify, and 
     recommend means of resolving, national, regional, and 
     provincial trade-distorting differences between the United 
     States and Canada with respect to the production, processing, 
     and sale of cattle and beef, with particular emphasis on--
       (1) animal health requirements;
       (2) transportation differences;
       (3) the availability of feed grains; and
       (4) Other market-distorting direct and indirect subsidies.
       (b) Composition.--
       (1) In general.--The Commission shall be composed of--
       (A) 3 members representing the United States, including--
       (i) 1 member appointed by the Majority Leader of the 
     Senate;
       (ii) 1 member appointed by the Speaker of the House of 
     Representatives; and
       (iii) 1 member appointed by the Secretary of Agriculture;
       (B) 3 members representing Canada, appointed by the 
     Government of Canada; and
       (C) nonvoting members appointed by the Commission to serve 
     as advisers to the Commission, including university faculty, 
     State veterinarians, trade experts, and other members.
       (2) Appointment.--Members of the Commission shall be 
     appointed not later than 30 days after the date of enactment 
     of this Act.
       (c) Report.--Not later than 180 days after the first 
     meeting of the Commission, the Commission shall submit a 
     report to Congress and the Government of Canada that 
     identifies, and recommends means of resolving, differences 
     between the United States and Canada with respect to the 
     production, processing, and sale of cattle and beef.
                                 ______
                                 
      By Mr. JEFFORDS (for himself, Mr. Harkin, Mr. Lott, Mr. Kennedy, 
        Mr. Coats, Mr. Dodd, Mr. Gregg, Ms. Mikulski, Mr. Frist, Mr. 
        DeWine, Mr. Enzi, Mr. Hutchinson, Mrs. Murray, Ms. Collins, Mr. 
        Warner, Mr. McConnell, and Mr. Reed):
  S. 717. A bill to amend the Individuals with Disabilities Education 
Act, to reauthorize and make improvements to that Act, and for other 
purposes; to the Committee on Labor and Human Resources.


   THE INDIVIDUALS WITH DISABILITIES EDUCATION ACT AMENDMENTS OF 1997

  Mr. JEFFORDS. Mr. President, today along with 16 of my colleagues, I 
am introducing the Individuals with Disabilities Education Act 
Amendments of 1997. This legislation is the product of 4 months of 
intensive discussion among members of the committee, the House 
Committee on Education and the Workforce, and officials from the U.S. 
Department of Education.
  The process followed in developing this legislation was unprecedented 
and demonstrates the high priority all involved place on the importance 
of the education of children with disabilities, their parents, and 
their educators.
  Many people and organizations have helped us to develop this 
legislation. I would like to name just a few.
  First and foremost, I wish to thank the Majority Leader Trent Lott 
for his unwavering support, and, in particular for the assistance of 
his Chief of Staff, Dave Hoppe. It is my firm belief that without their 
commitment to the process that we could not have produced this bill.
  I would also like to thank my colleagues Senators Kennedy, Coats, 
Harkin, and Gregg, and especially, Chairman Goodling, Mr. Clay and our 
other colleagues in the House, and Secretary Riley, and Assistant 
Secretary Heumann.
  I also wish to especially thank Senator Frist, who set the direction 
and standard that led us in our efforts to reauthorize IDEA in the last 
Congress.
  I introduce this bill in a much different climate than the one in 
which Congress first addressed the issue. In 1975, responding to 
numerous Federal court cases, Congress passed Public Law 94-142 which 
guaranteed all children with disabilities a ``free and appropriate 
public education,'' and promised that the Federal Government would 
contribute 40 percent of the costs of special education. It is 22 years 
later and today we are on the threshold of honoring that commitment.
  Our efforts in drafting this legislation are driven by a common 
belief that education is our No. 1 national priority, and that meeting 
the needs of our children includes meeting the needs our 5.1 million 
children with disabilities. In this bill we address several important 
issues: How to increase the flow of Federal dollars to local school 
districts; how to expand opportunities for children with disabilities 
to participate and succeed in the classroom along with their 
nondisabled peers; and how to ensure the appropriate participation of 
children with disabilities in State and district-wide assessments of 
student progress.
  I hope all of my colleagues will support this legislation when it is 
considered. It's importance has been demonstrated by the collaborative 
process in which it was developed, and the valuable group of Americans 
it is intended to serve.
  Thank you, Mr. President.

                          ____________________