[Congressional Record Volume 143, Number 76 (Thursday, June 5, 1997)]
[Senate]
[Pages S5342-S5368]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. JEFFORDS:
  S. 830. A bill to amend the Federal Food, Drug, and Cosmetic Act and 
the Public Health Service Act to improve the regulation of food, drugs, 
devices, and biological products, and for other purposes; to the 
Committee on Labor and Human Resources.


 the food and drug administration modernization and accountability act 
                                of 1997

  Mr. JEFFORDS. Mr. President, today I am introducing legislation to 
modernize the Food and Drug Administration [FDA] and reauthorize the 
Prescription Drug User Fee Act for 5 years. This legislation comes as 
result of over 3 years of consideration by the Congress on steps that 
could be taken by the agency that would contribute to its mandate to 
protect the American public while ensuring that life-saving products 
could be made more readily available.
  FDA acknowledges that its mandate also requires it to regulate over 
one-third of our Nation's products. Within its purview the FDA 
regulates virtually all of the food and all of the cosmetics, medical 
devices, and drugs made available to our citizens. I believe, and 
several members of the Labor Committee share my belief, that in an 
organization the size of FDA there is always room for improvement and 
modernization. Our objective, which this legislation achieves, was 
identify areas where improvements could be made that will strengthen 
the agency's ability to approve safe and effective products more 
expeditiously.
  Last year, both the House and the Senate held numerous and extensive 
hearings on countless proposals for modernizing and reforming the FDA. 
The Senate Labor and Human Resources Committee successfully reported a 
bipartisan bill that sought to accomplish many of those reforms. But 
last year, acrimonious issues remained, time ran out and the bill did 
not receive floor consideration. This year I have resolved to move 
forward. I have been committed to addressing last year's most 
controversial issues. I believe that the legislation I am introducing 
today addresses virtually all of objections raised last year both in 
process and in content. This is a better bill and I believe that upon 
examination, my colleagues will agree that it accomplishes its goal.
  I want to comment a moment on the open, consensus-building process we 
followed in developing this legislation. The Labor Committee held two 
hearings. During the first the committee received testimony from the 
principal FDA Deputy Commissioner, Dr. Michael Friedman, and all of the 
FDA Center Directors. The second hearing included representatives from 
patient and consumer coalitions and from the food, drug, and medical 
device sectors regulated by the FDA. Committee members learned from the 
agency of the administrative reforms and the progress it has already 
undertaken, areas that remain a challenge, and those areas that require 
legislative authority to change. The committee listened to consumers' 
concerns with provisions that were considered last year that they felt 
would weaken the FDA's ability to protect the public health. Finally, 
the committee learned of the ongoing and needless delays and 
frustrations facing health care and consumer product sectors of our 
economy in working with the FDA. The committee learned of the 
frustrated attempts to work through the bureaucratic labyrinth of 
needless regulatory delays. Delays that prohibited people from getting 
access to vitally needed, life saving medical treatments, drugs, and 
devices.
  Since the finish of the committee's hearings we have engaged in an 
open, collaborative process that has given voice to each party wishing 
to be heard. For many of these meetings it is worth noting that the 
agency was a full, cooperating participant and we would not have been 
able to make the progress made without FDA's collaboration. Several 
meetings, essentially roundtable discussions, have occurred with 
bipartisan committee staff, the FDA, and each of the several sectors 
regulated by the agency. These meetings have given all the participants 
an opportunity to discuss problems and potential solutions and have 
been the basis for the consensus bill I am introducing today. Finally, 
committee staff have had numerous meetings to discuss key provisions in 
the bill with a wide range of consumer groups including, among others, 
the Patient Coalition, Public Citizen, the Centers for Science in the 
Public Interest, the Pediatric AIDS Foundation, and the National 
Organization for Rare Diseases. It should be clear that no person or 
group was excluded from this deliberative process.
  Let me turn to the content of this measure and the steps we have 
taken to respond to the controversies raised last year. Five key 
objections were raised against the FDA reform bill that had been 
reported on a strong bipartisan vote from the Labor and Human Resources 
Committee during the last Congress. In that vein, we have sought to and 
have accomplished addressing each of the substantive concerns raised by 
the minority.
  Last year's measure was criticized by some for the number of 
mandatory, but shortened, product review time frames that critics said 
would overburden the FDA and for the hammers that would have required 
FDA to contract out some product reviews or to give priority to 
products approved abroad. Today's legislation eliminates most of the 
mandatory time frames and retains only those necessary to ensure 
collaborative, more efficient reviews or to facilitate quick reviews of 
low risk products. The contracting out and European review hammers that 
would have forced FDA actions have been eliminated.
  Last year's provision allowing for third party, outside expert review 
were criticized for turning central regulatory authority decisions over 
to private industry, creating conflicts of interest, and depriving FDA 
of resources and expertise. Today's legislation adopts FDA's current 
system for accrediting and selecting third-party review organizations. 
The bill expands FDA's current pilot third-party review program beyond 
just the lowest risk devices and FDA retains final approval for all 
devices. Devices that are life-

[[Page S5343]]

supporting, life-sustaining, or implantable are excluded from third-
party review. FDA may allow third-party review for higher risk devices 
at its sole discretion. This approval will allow FDA to retain, 
augment, and focus its expertise, at its discretion, on critical areas 
of its expanding workload.
  Last year's bill would have required FDA to contract out review of 
food additive petitions, medical devices, and drugs. Critics argued 
these changes would weaken consumer protections. We have modified these 
provisions to give FDA express authority to contract out when deemed by 
FDA to be more efficient or to add needed expertise.
  Thsi year the collaborative effort has continued. During our meetings 
FDA identified a number of enforcement powers that the agency believes 
will enhance its ability to protect the public health. We have included 
a number of FDA's specific requests. Many patient and consumer groups 
raised concerns about insufficient safeguards related to the fast-track 
drug approval process and the provision improving accelerated access to 
investigational products and we have adopted several of their key 
concerns.
  I would close by saying that this measure embodies a reasonable, 
moderate approach to balancing the agency's mandate to regulate over 
one-third of our Nation's economy and provide for the public health and 
safety with the compelling need to provide new, improved, safe, and 
effective products to the American public. It is a good bill and I look 
forward to working with my colleagues to improve it even further.
                                 ______
                                 
      By Mr. SHELBY (for himself, Mr. Bond, Mr. Hagel, Mr. Hutchinson, 
        and Mr. Coverdell):
  S. 831. A bill to amend chapter 8 of title 5, United States Code, to 
provide for congressional review of any rule promulgated by the 
Internal Revenue Service that increases Federal revenue, and for other 
purposes; to the Committee on Governmental Affairs.


                     the stealth tax prevention act

  Mr. SHELBY. Mr. President, I rise today to introduce the Stealth Tax 
Prevention Act. Perhaps the most important power given to the Congress 
in the Constitution of the United States is bestowed in article I, 
section 8--the power to tax. This authority is vested in Congress 
because, as elected representatives, Congress remains accountable to 
the public when they lay and collect taxes.
  Last year, Mr. President, Congress passed the Congressional Review 
Act of 1996, which provides that when a major agency rule takes effect, 
Congress has 60 days to review it. During this time period, Congress 
has the option to pass a disapproval resolution. If no such resolution 
is passed, the rule then goes into effect.
  The Internal Revenue Service, as the President here knows, has 
enormous power to affect the lives and the livelihoods of American 
taxpayers through their authority to interpret the Tax Code. The 
Stealth Tax Prevention Act that I am introducing today, along with 
Senator Bond and Senator Hagel, will expand the definition of a major 
rule to include, Mr. President, any IRS regulation which increases 
Federal revenue. Why? Because we desperately need this today.
  For example, if the Office of Management and Budget finds that the 
implementation and enforcement of a rule has resulted in an increase of 
Federal revenues over current practices or revenues anticipated from 
the rule on the date of the enactment of the statute under which the 
rule is promulgated. Therefore, the Stealth Tax Prevention Act will 
allow Congress to review the regulation and take appropriate measures 
to avoid raising taxes on hard-working Americans, in most cases, small 
businesses.
  Mr. President, the Founding Fathers' intent, as you know, was to put 
the power to lay and collect taxes in the hands of elected Members of 
Congress, not in the hands of bureaucrats who are shielded from public 
accountability. It is appropriate, I believe, that the IRS's breach of 
authority is addressed, in light of the fact that we are celebrating 
this week Small Business Week.
  The discretionary authority of the Internal Revenue Service exposes 
small businesses, farmers, and others to the arbitrary whims of 
bureaucrats, thus creating an uncertain and, under certain cases, 
hostile environment in which to conduct day-to-day activities. Most of 
these people do not have lobbyists that work for them, other than their 
elected Representatives, the way it should be. The Stealth Tax 
Prevention Act will be particularly helpful in lowering the tax burden 
on small business which suffers disproportionately, Mr. President, from 
IRS regulations. This burden discourages the startup of new firms and 
ultimately the creation of new jobs in the economy, which has really 
made America great today.
  Americans pay Federal income taxes. They, Mr. President, as you well 
know, pay State income taxes. They pay property taxes. On the way to 
work in the morning they pay a gasoline tax when they fill up their 
car, and a sales tax when they buy a cup of coffee.
  Mr. President, average Americans in small businesses are saddled with 
the highest tax burden in our country's history.
  Allowing bureaucrats to increase taxes even further, at their own 
discretion through interpretation of the Tax Code is intolerable. The 
Stealth Tax Prevention Act will leave tax policy where it belongs, to 
elected Members of the Congress, not unelected and unaccountable IRS 
bureaucrats.
  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. 831

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

     SECTION 1. CONGRESSIONAL REVIEW OF INTERNAL REVENUE SERVICE 
                   RULES THAT INCREASE REVENUE.

       (a) Short Title.--This Act may be cited as the ``Stealth 
     Tax Prevention Act''.
       (b) In General.--Section 804(2) of title 5, United States 
     Code, is amended to read as follows:
       ``(2) The term `major rule'--
       ``(A) means any rule that--
       ``(i) the Administrator of the Office of Information and 
     Regulatory Affairs of the Office of Management and Budget 
     finds has resulted in or is likely to result in--
       ``(I) an annual effect on the economy of $100,000,000 or 
     more;
       ``(II) a major increase in costs or prices for consumers, 
     individual industries, Federal, State, or local government 
     agencies, or geographic regions; or
       ``(III) significant adverse effects on competition, 
     employment, investment, productivity, innovation, or on the 
     ability of United States-based enterprises to compete with 
     foreign-based enterprises in domestic and export markets; or
       ``(ii)(I) is promulgated by the Internal Revenue Service; 
     and
       ``(II) the Administrator of the Office of Information and 
     Regulatory Affairs of the Office of Management and Budget 
     finds that the implementation and enforcement of the rule has 
     resulted in or is likely to result in any net increase in 
     Federal revenues over current practices in tax collection or 
     revenues anticipated from the rule on the date of the 
     enactment of the statute under which the rule is promulgated; 
     and
       ``(B) does not include any rule promulgated under the 
     Telecommunications Act of 1996 and the amendments made by 
     that Act.''.

  Mr. BOND. Mr. President, I rise today to join my distinguished 
colleague from Alabama, Senator Shelby, in introducing legislation to 
ensure that the Treasury Department's Internal Revenue Service does not 
usurp the power to tax--a power solely vested in Congress by the U.S. 
Constitution. The Stealth Tax Prevention Act will ensure that the duly 
elected representatives of the people, who are accountable to the 
electorate for our actions, will have discretion to exercise the power 
to tax. This legislation is intended to curb the ability of the 
Treasury Department to bypass Congress by proposing a tax increase 
without the authorization or consent of Congress.
  The Stealth Tax Prevention Act builds on legislation passed 
unanimously by the Senate just over 1 year ago. As chairman of the 
Committee on Small Business, I authored the Small Business Regulatory 
Enforcement Fairness Act--better known as the Red Tape Reduction Act--
to ensure that small businesses are treated fairly in agency rulemaking 
and enforcement activities. Subtitle E of the Red Tape Reduction Act 
provides that a final rule issued by a Federal agency and deemed a 
major rule by the Office of Information and Regulatory Affairs of the 
Office of Management and Budget

[[Page S5344]]

cannot go into effect for at least 60 days. This delay is to provide 
Congress with a window during which it can review the rule and its 
impact, allowing time for Congress to consider whether a resolution of 
disapproval should be enacted to strike down the regulation. To become 
effective, the resolution must pass both the House and Senate and be 
signed into law by the President or enacted as the result of a veto 
override.
  The bill Senator Shelby and I introduce today amends this law to 
provide that any rule issued by the Treasury Department's Internal 
Revenue Service that will result in a tax increase--any increase--will 
be deemed a major rule by OIRA and, consequently, not go into effect 
for at least 60 days. This procedural safeguard will ensure that the 
Department of the Treasury and its Internal Revenue Service cannot make 
an end-run around Congress, as it is currently attempting with the 
stealth tax it proposed on January 13.
  As my colleagues are aware, the IRS has issued a proposal that is 
tantamount to a tax increase on businesses structured as limited 
liability companies. The IRS proposal disqualifies a taxpayer from 
being considered as a limited partner if he or she ``participates in 
the partnership's trade or business for more than 500 hours during a 
taxable year'' or is involved in a ``service'' partnership, such as 
lawyers, accountants, engineers, architects, and health-care providers.
  The IRS alleges that its proposal merely interprets section 
1402(a)(13) of the Tax Code, providing clarification, when in actuality 
it is a tax increase by regulatory fiat. Under the IRS proposal, 
disqualification as a limited partner will result in a tax increase on 
income from both capital investments as well as earnings of the 
partnership. The effect will be to add the self-employment tax--12.4 
percent for social security and 2.9 percent for Medicare--to income 
from investments as well as earnings for limited partners that under 
current rules can exclude such income from the self-employment tax.

  Under the bill introduced today, the tax increase proposed by the 
Internal Revenue Service of the Treasury Department, if later issued as 
a final rule, could not go into effect for at least 60 days following 
its publication in the Federal Register. This window, which coincides 
with issuance of a report by the Comptroller General, would allow 
Congress the opportunity to review the rule and vote on a resolution to 
disapprove the tax increase before it is applied to a single taxpayer.
  The Stealth Tax Prevention Act strengthens the Red Tape Reduction Act 
and the vital procedural safeguards it provides to ensure that small 
businesses are not burdened unnecessarily by new Federal regulations. 
Congress enacted the 1966 provisions to strengthen the effectiveness of 
the Regulatory Flexibility Act, a law which had been ignored too often 
by Government agencies, especially the Internal Revenue Service. Three 
of the top recommendations of the 1995 White House Conference on Small 
Business sought reforms to the way Government regulations are developed 
and enforced, and the Red Tape Reduction Act passed the Senate without 
a single dissenting vote on its way to being signed into law last year. 
Despite the inclusion of language in the 1996 amendments that expressly 
addresses coverage of IRS interpretative rules, we find ourselves faced 
again with an IRS proposal that was not issued in compliance with the 
Regulatory Flexibility Act.
  As 18 of my Senate colleagues and I advised Secretary Rubin in an 
April letter, the proposed IRS regulation on limited partner taxation 
is precisely the type of rule for which a regulatory flexibility 
analysis should be done. Although, on its face, the rulemaking seeks 
merely to define a limited partner or to eliminate uncertainty in 
determining net earnings from self-employment, the real effect of the 
rule would be to raise taxes by executive fiat and expand substantially 
the spirit and letter of the underlying statute. The rule also seeks to 
impose on small businesses a burdensome new recordkeeping and 
collection of information requirement that would affect millions of 
limited partners and members of limited liability companies. The 
Treasury's IRS proposes this stealth tax increase with the knowledge 
that Congress declined to adopt a similar tax increase in the Health 
Security Act proposed in 1994--a provision that the Congressional Joint 
Committee on Taxation estimated in 1994 would have resulted in a tax 
increase of approximately $500 million per year.
  The Stealth Tax Prevention Act would remove any incentive for the 
Treasury Department to underestimate the cost imposed by an IRS 
proposed or final rule in an effort to skirt the administration's 
regulatory review process or its obligations under the Regulatory 
Flexibility Act. By amending the definition of major rule under the 
Congressional Review Act, which is subtitle E of the Red Tape Reduction 
Act, we ensure that an IRS rule that imposes a tax increase will be a 
major rule, whether or not it has an estimated annual effect on the 
economy of $100,000,000. Our amendment does not change the trigger for 
a regulatory flexibility analysis, which still will be required if a 
proposed rule would have a significant economic impact on a substantial 
number of small entities. We believe the heightened scrutiny of IRS 
regulations called for by this legislation will provide an additional 
incentive for the Treasury Department's Internal Revenue Service to 
meet all of its procedural obligations under the Regulatory Flexibility 
Act and the Red Tape Reduction Act.
  I urge my colleagues to join Senator Shelby and me in supporting this 
important legislation to ensure that the IRS not usurp the proper role 
of Congress--nor skirt its obligations to identify the impact of its 
proposed and final rules. Rules such as that currently proposed by the 
IRS should be carefully scrutinized by Congress. When the Department of 
the Treasury issues a final IRS rule that increases taxes, Congress 
should have the ability to exercise its discretion to enact a 
resolution of disapproval before the rule is applicable to a single 
taxpayer. The Stealth Tax Prevention Act Senator Shelby and I introduce 
today provides that opportunity.
                                 ______
                                 
      By Mr. KOHL (for himself, Mr. Kerrey, Mr. Harkin, Mr. Hatch, Mr. 
        Hagel, and Mr. Grassley):
  S. 832. A bill to amend the Internal Revenue Code of 1986 to increase 
the deductibility of business meal expenses for individuals who are 
subject to Federal limitations on hours of service; to the Committee on 
Finance.


            The Business Meal Deduction Fairness Act of 1997

  Mr. KOHL. Mr. President, as my colleagues know, I am one of this 
body's strongest advocates for deficit reduction. I attribute much of 
my deep commitment to this goal to my days in business. As a 
businessman, I learned that you must balance your books and live within 
your means. I also learned that you must treat people fairly and admit 
when you have made a mistake. I have come to the floor to acknowledge 
that a mistake has been made, and must be corrected.
  In August 1993 we passed the omnibus budget reconciliation bill. I am 
proud to say that this legislation has helped to produce falling 
deficits and sustained economic growth. However, in our efforts to get 
our fiscal house in order we unfairly penalized a group of hard 
working, middle-class Americans: transportation workers. It is for this 
reason that I rise today, to reintroduce the business meal deduction 
fairness bill. This measure would increase the deductibility of 
business meals, from 50 to 80 percent, for individuals who are required 
to eat away from home due to the nature of their work.
  In the 1993 reconciliation bill was a provision which lowered the 
deductible portion of business meals and entertainment expenses from 80 
to 50 percent. The change was aimed at the so-called three martini 
lunches and extravagant entertainment expenses of Wall Street 
financiers and Hollywood movie moguls. Unfortunately, the change also 
hit the average truck driver who eats chicken fried steak, hot roast 
beef sandwiches, and meatloaf in truck stops. And while those who 
entertain for business purposes can change their practices based on the 
tax law change, long-haul transportation workers often have no choice 
but to eat on the road.
  For these workers, the 1993 decrease in the meal deduction has 
translated into an undeserved decrease in take home pay. For example, 
when the allowable deduction was dropped in 1993,

[[Page S5345]]

it increased taxes on an average truck driver $700 to $2,000 per year. 
This is a huge increase for a truck driver who normally earns $27,000 
to $35,000 per year.
  Our legislation would increase the take-home pay of hard working, 
middle-class Americans who were inadvertently hurt by changes in the 
tax law in 1993. Workers who, due to regulations limiting travel hours, 
must eat out. They have no control over the length of their trips, the 
amount of time they must rest during a delivery, or, in many cases, the 
places they can stop and eat. This legislation is straight forward. It 
would simply restore the business meal expense deduction to 80 per cent 
for individuals subject to the Department of Transportation's hours-of-
service limitations.
  I will be the first to admit that the budget deficit is the No. 1 
economic problem facing this country. Since being elected to the 
Senate, I have fought to eliminate this destructive drain on our 
ability to grow and compete in the world economy, but I have fought to 
do so in a fair manner. The 1993 reconciliation bill closed a loophole 
and unintentionally trapped some very hard working Americans. We need 
to acknowledge that a mistake was made and take the opportunity of a 
tax bill moving this year to fix that mistake. Therefore my colleagues, 
Senators Kerrey, Harkin, Hatch, Hagel, Grassley and I are requesting 
the support and assistance of this entire body to ensure that the 
business meal deduction fairness bill becomes law. Mr. President, I ask 
unanimous consent that a copy of my legislation be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 832

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

     SECTION 1. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES 
                   FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS 
                   ON HOURS OF SERVICE.

       (a) In General.--Section 274(n) of the Internal Revenue 
     Code of 1986 (relating to only 50 percent of meal and 
     entertainment expenses allowed as deduction) is amended by 
     adding at the end the following new paragraph:
       ``(3) Special rule for individuals subject to federal 
     limitations on hours of service.--In the case of any expenses 
     for food or beverages consumed by an individual during, or 
     incident to, any period of duty which is subject to the hours 
     of service limitations of the Department of Transportation, 
     paragraph (1) shall be applied by substituting `80 percent' 
     for `50 percent'.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1997.
                                 ______
                                 
      By Mr. LAUTENBERG (for himself, Mr. DeWine, Mr. Glenn, and Mr. 
        Hatch):
  S. 833. A bill to designate the Federal building courthouse at Public 
Square and Superior Avenue in Cleveland, Ohio, as the ``Howard M. 
Metzenbaum United States Courthouse''; to the Committee on Environment 
and Public Works.


 the howard m. metzenbaum united states courthouse designation act of 
                                  1997

  Mr. LAUTENBERG. Mr. President, I rise today to congratulate my dear 
friend and former colleague, Howard Metzenbaum, on the occasion of his 
80th birthday. In his honor, I am introducing a bill that would 
designate the Federal Building Courthouse in Cleveland, OH, as the 
``Howard M. Metzenbaum United States Courthouse.'' I am joined by 
Ohio's two Senators, Senator Glenn and Senator DeWine.
  Mr. President, I propose naming a courthouse after Howard because a 
courthouse is a symbol of justice where all people can come and be 
treated equally under the law. Howard Metzenbaum deserves this honor 
because he was a dedicated public servant, who served his home State of 
Ohio for 18 years in the U.S. Senate. Howard's sense of fairness and 
equality for all Americans led one of his former colleagues to suggest 
that Howard would have made an exceptional U.S. Supreme Court Justice 
when he retired from the Senate in 1994.
  Mr. President, naming a courthouse after Howard is only a small 
gesture in attempting to remember a man so committed to justice and 
fairness. Howard's contributions to the Senate are extraordinary, so we 
should commemorate his unique contribution by celebrating his 80th 
year, his 18 years in the United States Senate, and also the special 
character he brought to our body.
  I pay tribute today to a man who always stood up for what he believed 
was right, fighting hard to preserve opportunity for those yet to come. 
As a Senator, Howard had a broad range of interests and he pursued them 
with dogged perseverance, sincerity, and clarity.
  Howard and I worked on many issues together during our time in the 
Senate. Individual rights and environmental preservation were major 
concerns. He poured his energy into clean air protection, nuclear 
regulation, cleaning up superfund sites, and recycling. Howard provided 
strong leadership on antitrust issues as Chairman of the Subcommittee 
on Antitrust, Monopolies and Business Rights on the Judiciary 
Committee.
  He was a persistent gun control advocate, taking the lead on many 
antigun initiatives in the Senate. He was one of the lead sponsors of 
the Brady bill handgun purchase waiting period, as well as the bans on 
assault weapons and plastic explosives.
  But Howard's true passions lay with America's underprivileged and 
needy communities, which never had a bolder champion. His work on 
behalf of the poor, the disabled, and the elderly reflect his 
remarkable compassion for those members of society who face challenges 
that many of us cannot fully appreciate. He tirelessly defended their 
interests and fought for their protection. He was dedicated to 
eradicating discrimination, ensuring adequate health care to those in 
need, and boosting public education. It has been said many times, but 
for good reason, that Howard brought not only his conscience to the 
Senate, but also the courage to act on his convictions.
  Howard remains a good friend to me, but he was also a mentor and a 
teacher during his years in the Senate. He gave me good advice and 
plenty of it. And, I might add, he continues to do so today, which I 
welcome. But more than that, his dedication to the office of United 
States Senator is an example by which to live. He stood tall for the 
little people.
  Some will affectionately remember Howard as determined, 
argumentative, and even ``irascible.'' I cannot deny that those words 
come to my mind every now and then, when describing Howard. He was 
always at his best then, and for good reason. I heard it said by one 
Senator, and not a good friend: ``If there wasn't a Metzenbaum here, 
we'd have to invent one to keep us alert.''
  I have missed working with Howard Metzenbaum in this great 
institution, a place that has been truly enhanced by his presence. I 
salute him on celebrating his 80th year.
  I ask unanimous consent that the text of the bill appear at the 
appropriate place in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 833

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

     SECTION 1. DESIGNATION OF HOWARD M. METZENBAUM UNITED STATES 
                   COURTHOUSE.

       The Federal building courthouse at Public Square and 
     Superior Avenue in Cleveland, Ohio, shall be known and 
     designated as the ``Howard M. Metzenbaum United States 
     Courthouse''.

     SEC. 2. REFERENCES.

       Any reference in a law, map, regulation, document, paper, 
     or other record of the United States to the Federal building 
     courthouse referred to in section 1 shall be deemed to be a 
     reference to the ``Howard M. Metzenbaum United States 
     Courthouse''.
                                 ______
                                 
      By Mr. HARKIN (for himself and Mr. Reed):
  S. 834. A bill to amend the Public Health Service Act to ensure 
adequate research and education regarding the drug DES; to the 
Committee on Labor and Human Resources.


           the DES Research and Education Amendments of 1997

  Mr. HARKIN. Mr. President, today I am pleased to be joined by my 
distinguished colleague from Rhode Island, Senator Reed, in introducing 
an important women's health initiative. The DES Research and Education 
Amendments of 1997 would extend and expand our effort to assist the 
over 5 million Americans who have been exposed to

[[Page S5346]]

the drug, DES. Representative Louise Slaughter, a long-time leader on 
this issue, is introducing companion legislation today in the other 
body.
  Between 1938 and 1971, some 5 million American women were given the 
synthetic drug, diethylstilbestrol, commonly known as DES. Women were 
given the drug during pregnancy in the mistaken belief it would help 
prevent miscarriage. The drug was pulled from the market based on 
studies that found that it was ineffective and might result in damage 
to children born to the women who had been given it.
  Since the 1970's, studies have shown that DES does damage the 
reproductive systems of those exposed in utero and increases these 
individuals' risk for cancer, infertility, and a wide range of other 
serious reproductive tract disorders. The women exposed in utero to DES 
are five times more likely to have an ectopic pregnancy and three times 
more likely to miscarry when they in turn try to have children. Studies 
also show that one of every thousand women exposed to DES in utero will 
develop clear cell cancer. Women who took DES have also been found to 
face a higher risk for breast cancer.
  In 1992, while there had been a number of research studies on DES 
exposure and its effects, much more research was necessary. That year, 
President Bush signed legislation introduced by myself and 
Representative Slaughter, that mandated a significant increase in DES 
research supported by the National Institutes of Health [NIH]. Our 
legislation also required NIH to support long-term studies of Americans 
impacted by this drug. Those studies are now underway and must be 
continued. The legislation we are introducing today will ensure that 
this critical medical research continues. In addition, there is now 
preliminary evidence that the grandkids of women who took DES may also 
be at higher risk for certain health problems, and this legislation 
would help ensure that further research into this is supported.
  Another major problem in this area is that millions of Americans 
don't know the risks they face because of their exposure to DES. Many 
health professionals who see these people also lack sufficient 
information about DES exposure and the appropriate steps that should be 
taken to identify and assist their patients. As a result, many people 
do not seek or get the appropriate preventive care or take appropriate 
preventive measures to reduce their risks of adverse affects. For 
example, women exposed to DES in utero and therefore at higher risk of 
miscarriage may be able to reduce their risks with appropriate 
precautionary steps.
  In an initial attempt to address this need for better information, 
our 1992 legislation required NIH to test ways to educate the public 
and health professionals about how to deal with DES exposure. The 
legislation we are introducing today would give people across the 
Nation access to the information developed through these pilot programs 
by requiring a national consumer and health professional education 
effort.
  Mr. President, we took a very important step in 1992 to begin to 
address the significant problem presented by DES exposure. And we did 
it with strong bipartisan cooperation between a Democratic Congress and 
a Republican President. That legislation expires this year. We need to 
make sure that the progress we've made is continued. The 5 million 
Americans whose health is at risk are depending on us to work together 
to make sure that happens. I urge my colleagues to join me in support 
of that effort. I ask unanimous consent that a copy of the legislation 
be included in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 834

       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 ``DES Research and Education 
     Amendments of 1997''.

     SEC. 2. FINDINGS.

       With respect to diethylstilbestrol (a drug commonly known 
     as DES), the Congress finds as follows:
       (1) DES was widely prescribed to American women from 1938 
     to 1971 in the mistaken belief it would prevent miscarriage. 
     Approximately 5,000,000 pregnant women took the drug, 
     resulting in DES exposure for approximately 5,000,000 
     daughters and sons.
       (2) Studies conducted since the 1970s have shown that DES 
     damages the reproductive systems of those exposed in utero 
     and increases the risk for cancer, infertility, and a wide 
     range of other serious reproductive tract disorders. These 
     disorders include a five-fold increased risk for ectopic 
     pregnancy for DES daughters and a three-fold increase in risk 
     for miscarriage and preterm labor. Studies have indicated 
     that exposure to DES may increase the risk for autoimmune 
     disorders and diseases.
       (3) An estimated 1 in 1,000 women exposed to DES in utero 
     will develop clear cell cancer of the vagina or cervix. While 
     survival rates for clear cell cancer are over 80 percent when 
     it is detected early, there is still no effective treatment 
     for recurrences of this cancer.
       (4) Studies also indicate a higher incidence of breast 
     cancer among mothers who took DES during pregnancy.
       (5) While research on DES and its effects has produced 
     important advances to date, much more remains to be learned.
       (6) Preliminary research results indicate that DES exposure 
     may have a genetic impact on the third generation--the 
     children of parents exposed to DES in utero--and that 
     estrogen replacement therapy may not be advisable for DES-
     exposed women.
       (7) All DES-exposed individuals have special screening and 
     health care needs, especially during gynecological exams and 
     pregnancy for DES daughters, who should receive high risk 
     care.
       (8) Many Americans remain unaware of their DES exposure or 
     ignorant about proper health care and screening. There 
     remains a great need for a national education effort to 
     inform both the public and health care providers about the 
     health effects and proper health care practices for DES-
     exposed individuals.

     SEC. 3. REVISION AND EXTENSION OF PROGRAM FOR RESEARCH AND 
                   AUTHORIZATION OF NEW NATIONAL PROGRAM OF 
                   EDUCATION REGARDING DRUG DES.

       (a) Permanent Extension of General Program.--Section 
     403A(e) of the Public Health Service Act (42 U.S.C. 283a(e)) 
     is amended by striking ``for each of the fiscal years 1993 
     through 1996'' and inserting ``for fiscal year 1997 and each 
     subsequent fiscal year''.
       (b) National Program for Education of Health Professionals 
     and Public.--From amounts appropriated for carrying out 
     section 403A of the Public Health Service Act (42 U.S.C. 
     283a), the Secretary of Health and Human Services, acting 
     through the heads of the appropriate agencies of the Public 
     Health Service, shall carry out a national program for the 
     education of health professionals and the public with respect 
     to the drug diethylstilbestrol (commonly known as DES). To 
     the extent appropriate, such national program shall use 
     methodologies developed through the education demonstration 
     program carried out under such section 403A. In developing 
     and carrying out the national program, the Secretary shall 
     consult closely with representatives of nonprofit private 
     entities that represent individuals who have been exposed to 
     DES and that have expertise in community-based information 
     campaigns for the public and for health care providers. The 
     implementation of the national program shall begin during 
     fiscal year 1998.
                                 ______
                                 
      By Mr. ABRAHAM (for himself, Mr. McConnell, Mr. Coverdell, Mr. 
        Santorum, Mr. McCain and Mr. Ashcroft):
  S. 836. A bill to offer small businesses certain protections from 
litigation excesses; to the Committee on the Judiciary.


        The Small Business Lawsuit Abuse Protection Act of 1997

  Mr. ABRAHAM. Mr. President, I rise today to introduce the Small 
Business Lawsuit Abuse Protection Act of 1997. This bill will provide 
targeted relief from litigation excesses to small businesses.
  Small businesses in Michigan and across the Nation have faced 
increasingly burdensome litigation and desperately need relief from 
unwarranted and costly lawsuits. While other sectors of our society and 
our economy also need relief from litigation excesses, small businesses 
by their very nature are particularly vulnerable to lawsuit abuses and 
especially unable to bear the high costs of unjustified and unfair 
litigation against them.
  As this week is Small Business Week, it provides a fine opportunity 
for us to focus on relieving the burdens faced by small businesses. 
Small businesses represent the engine of our growing economy and 
provide countless benefits to communities across America. The Research 
Institute for Small and Emerging Business, for example, has estimated 
that there are over 20 million small businesses in America and that 
small businesses generate 50 percent of the country's private sector 
output.
  When I was in Michigan last week over the Memorial Day recess, I 
heard story after story from small businesses about the constraints, 
limitations, and

[[Page S5347]]

fear imposed on them by the threat of abusive and unwarranted 
litigation. I also heard about the high costs that they must pay for 
liability insurance. Those represent costs that could be going to 
expand small businesses, to provide more jobs, or to offer more 
benefits. According to a recent Gallup survey, one out of every five 
small businesses decides not to hire more employees, expand its 
business, introduce a new product, or improve an existing one out of 
fear of lawsuits.
  Before the Memorial Day recess, Congress passed the Volunteer 
Protection Act, which--if signed by the President--will provide 
specific protections from abusive litigation to volunteers. The Senate 
passed that legislation by an overwhelming margin of 99 to 1. That 
legislation provides a model for further targeted reforms for sectors 
that are particularly hard hit and in need of immediate relief.
  Small businesses have carried an often unbearable load from 
unwarranted and unjustified lawsuits. Data from San Diego's superior 
court published by the Washington Legal Foundation revealed that 
punitive damages were requested in 41 percent of suits against small 
businesses. It is unfathomable that such a large proportion of our 
small businesses are engaging in the sort of egregious misconduct that 
would warrant a claim of punitive damages. Unfortunately, those sort of 
findings are not unusual. The National Federation of Independent 
Business has reported that 34 percent of Texas small business owners 
have been sued or threatened with court action seeking punitive 
damages. Those figures are outrageously high and simply cannot have 
anything to do with actual wrongdoing.
  We know of far too many examples of expensive and ridiculous legal 
threats faced by our small businesses that they must defend every day. 
In a case reported by the American Consulting Engineers Council, a 
drunk driver had an accident after speeding and bypassing detour signs. 
Eight hours after the crash, the driver had a blood alcohol level of 
0.09. The driver sued the engineering firm that designed the road, the 
contractor, the subcontractor, and the State highway department. Five 
years later, and after expending exorbitant amounts on legal fees, the 
defendants settled the case for $35,000. The engineering firm--a small 
15 person firm--was swamped with over $200,000 in legal costs. That 
represents an intolerable amount for a small business to have to pay in 
defending a questionable and unwarranted lawsuit.
  There are more examples. In an Ann Landers column from October 1995, 
a case was reported that involved a minister and his wife who sued a 
guide dog school for $160,000 after a blind man who was learning to use 
a seeing-eye dog stepped on the woman's toes in a shopping mall. The 
guide dog school, Southeastern Guide Dogs, Inc., which provided the 
instructor supervising the man, was the only school of its kind in the 
Southeast. It trains seeing-eye dogs at no cost to the visually 
impaired. The couple filed their lawsuit 13 months after the so-called 
accident, in which witnesses reported that the woman did not move out 
of the blind man's way because she wanted to see if the dog would walk 
around her.
  The experiences of a small business in Michigan, the Michigan Furnace 
Co., is likewise alarming. The plawsuit in the history of her company 
has been a nuisance lawsuit. She indicates that if the money the 
company spends on liability insurance and legal fees was distributed 
among the employees, it would amount to a $10,000 annual raise per 
employee.
  These costs are stifling our small businesses and the people who work 
there. The straightforward provisions of the Small Business Lawsuit 
Abuse Protection Act will provide small businesses with relief by 
discouraging abusive litigation. The bill contains essentially two 
principal reforms.
  First, the bill limits punitive damages that may be awarded against a 
small business. In most civil lawsuits against small businesses, 
punitive damages would be available against the small business only if 
the claimant proves by clear and convincing evidence that the harm was 
caused by the small business through at least a conscious, flagrant 
indifference to the rights and safety of the claimant. Punitive damages 
would also be limited in amount. Punitive damages would be limited to 
the lesser of $250,000 or two times the compensatory damages awarded 
for the harm. That formulation is exactly the same formulation that 
appears in the small business protection provision that was included in 
the product liability conference report that passed in the 104th 
Congress.
  Second, joint and several liability reforms for small businesses are 
included under the exact same formulation that was used both in the 
Volunteer Protection Act passed this Congress and in the product 
liability conference report passed last Congress. Joint and several 
liability would be limited so that a small business would be liable for 
noneconomic damages only in proportion to the small business's 
responsibility for causing the harm. If a small business is responsible 
for 100% of an accident, then it will be liable for 100% of noneconomic 
damages. But if it is only 70%, 25%, 10%, or any other amount 
responsible, then the small business will be liable only for that same 
percent of noneconomic damages.

  Of course, small businesses would still be jointly and severally 
liable for economic damages, and any other defendants in the action 
that were not small businesses could be held jointly and severally 
liable for all damages. This should provide some protection to small 
businesses so that they will not be sought out as ``deep pocket'' 
defendants by trial lawyers who would otherwise try to get them on the 
hook for harms that they have not caused. The fact is that many small 
businesses simply do not have deep pockets, and they frequently need 
all of their resources just to stay in business, take care of their 
employees, and make ends meet.
  The other provisions in the bill specify the situations in which 
those reforms apply. The bill defines small business as any business 
having fewer than 25 employees. That is the same definition of small 
business that was included in the Product Liability Conference Report. 
Like the Volunteer Protection Act, this bill covers all civil lawsuits 
with the exception of suits involving certain types of egregious 
conduct. The limitations on liability included in the bill would not 
apply to any misconduct that constitutes a crime of violence, act of 
international terrorism, hate crime, sexual offense, or civil rights 
law violation, or which occurred while the defendant was under the 
influence of intoxicating alcohol or any drug.
  Also like the Volunteer Protection Act, the bill includes a State 
opt-out. A State would be able to opt out of the provisions of the bill 
provided the State enacts a law indicating its election to do so and 
containing no other provisions. I do not expect that any State will 
opt-out of these provisions, but I feel it is important to include one 
out of respect for principles of federalism.
  I am pleased to have Senators McConnell, Coverdell, Santorum and 
McCain as original cosponsors of the legislation and very much 
appreciate their support for our small businesses and for meaningful 
litigation reforms. The bill is also supported by the National 
Federation of Independent Business and by the National Restaurant 
Association. I ask unanimous consent that letters from those two 
organizations be inserted in the Record.
  Finally, I ask unanimous consent that a section-by-section analysis 
of the bill be printed in the Record, as well as the full text of the 
bill, and I encourage my colleagues to support this simple and much-
needed legislation.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 836

       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 ``Small Business Lawsuit Abuse 
     Protection Act of 1997''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) the United States civil justice system is inefficient, 
     unpredictable, unfair, costly, and impedes competitiveness in 
     the marketplace for goods, services, business, and employees;
       (2) the defects in the civil justice system have a direct 
     and undesirable effect on interstate commerce by decreasing 
     the availability of goods and services in commerce;
       (3) there is a need to restore rationality, certainty, and 
     fairness to the legal system;
       (4) the spiralling costs of litigation and the magnitude 
     and unpredictability of punitive

[[Page S5348]]

     damage awards and noneconomic damage awards have continued 
     unabated for at least the past 30 years;
       (5) the Supreme Court of the United States has recognized 
     that a punitive damage award can be unconstitutional if the 
     award is grossly excessive in relation to the legitimate 
     interest of the government in the punishment and deterrence 
     of unlawful conduct;
       (6) just as punitive damage awards can be grossly 
     excessive, so can it be grossly excessive in some 
     circumstances for a party to be held responsible under the 
     doctrine of joint and several liability for damages that 
     party did not cause;
       (7) as a result of joint and several liability, entities 
     including small businesses are often brought into litigation 
     despite the fact that their conduct may have little or 
     nothing to do with the accident or transaction giving rise to 
     the lawsuit, and may therefore face increased and unjust 
     costs due to the possibility or result of unfair and 
     disproportionate damage awards;
       (8) the costs imposed by the civil justice system on small 
     businesses are particularly acute, since small businesses 
     often lack the resources to bear those costs and to challenge 
     unwarranted lawsuits;
       (9) due to high liability costs and unwarranted litigation 
     costs, small businesses face higher costs in purchasing 
     insurance through interstate insurance markets to cover their 
     activities;
       (10) liability reform for small businesses will promote the 
     free flow of goods and services, lessen burdens on interstate 
     commerce, and decrease litigiousness; and
       (11) legislation to address these concerns is an 
     appropriate exercise of Congress powers under Article I, 
     section 8, clauses 3, 9, and 18 of the Constitution, and the 
     fourteenth amendment to the Constitution.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Act of international terrorism.--The term ``act of 
     international terrorism'' has the same meaning as in section 
     2331 of title 18, United States Code).
       (2) Crime of violence.--The term ``crime of violence'' has 
     the same meaning as in section 16 of title 18, United States 
     Code.
       (3) Drug.--The term ``drug'' means any controlled substance 
     (as that term is defined in section 102 of the Controlled 
     Substances Act (21 U.S.C. 802(b)) that was not legally 
     prescribed for use by the defendant or that was taken by the 
     defendant other than in accordance with the terms of a 
     lawfully issued prescription.
       (4) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from harm (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities) to the extent recovery for such loss is 
     allowed under applicable State law.
       (5) Harm.--The term ``harm'' includes physical, 
     nonphysical, economic, and noneconomic losses.
       (6) Hate crime.--The term ``hate crime'' means a crime 
     described in section 1(b) of the Hate Crime Statistics Act 
     (28 U.S.C. 534 note)).
       (7) Noneconomic losses.--The term ``noneconomic losses'' 
     means losses for physical and emotional pain, suffering, 
     inconvenience, physical impairment, mental anguish, 
     disfigurement, loss of enjoyment of life, loss of society and 
     companionship, loss of consortium (other than loss of 
     domestic service), injury to reputation, and all other 
     nonpecuniary losses of any kind or nature.
       (8) Small business.--
       (A) In general.--The term ``small business'' means any 
     unincorporated business, or any partnership, corporation, 
     association, unit of local government, or organization that 
     has less than 25 full-time employees.
       (B) Calculation of number of employees.--For purposes of 
     subparagraph (A), the number of employees of a subsidiary of 
     a wholly-owned corporation includes the employees of--
       (i) a parent corporation; and
       (ii) any other subsidiary corporation of that parent 
     corporation.
       (10) State.--The term ``State'' means each of the several 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Virgin Islands, Guam, American Samoa, the Northern 
     Mariana Islands, any other territory or possession of the 
     United States, or any political subdivision of any such 
     State, territory, or possession.

     SEC. 4. LIMITATION ON PUNITIVE DAMAGES FOR SMALL BUSINESSES.

       (a) General Rule.--Except as provided in section 6, in any 
     civil action against a small business, punitive damages may, 
     to the extent permitted by applicable State law, be awarded 
     against the small business only if the claimant establishes 
     by clear and convincing evidence that conduct carried out by 
     that defendant through willful misconduct or with a 
     conscious, flagrant indifference to the rights or safety of 
     others was the proximate cause of the harm that is the 
     subject of the action.
       (b) Limitation on Amount.--In any civil action against a 
     small business, punitive damages shall not exceed the lesser 
     of--
       (1) two times the total amount awarded to the claimant for 
     economic and noneconomic losses; or
       (2) $250,000.
       (c) Application by Court.--This section shall be applied by 
     the court and shall not be disclosed to the jury.

     SEC. 5. LIMITATION ON SEVERAL LIABILITY FOR NONECONOMIC LOSS 
                   FOR SMALL BUSINESSES.

       (a) General Rule.--Except as provided in section 6, in any 
     civil action against a small business, the liability of each 
     defendant that is a small business, or the agent of a small 
     business, for noneconomic loss shall be determined in 
     accordance with subsection (b).
       (b) Amount of Liability.--
       (1) In General.--In any civil action described in 
     subsection (a)--
       (A) each defendant described in that subsection shall be 
     liable only for the amount of noneconomic loss allocated to 
     that defendant in direct proportion to the percentage of 
     responsibility of that defendant (determined in accordance 
     with paragraph (2)) for the harm to the claimant with respect 
     to which the defendant is liable; and
       (B) the court shall render a separate judgment against each 
     defendant described in that subsection in an amount 
     determined pursuant to subparagraph (A).
       (2) Percentage of responsibility.--For purposes of 
     determining the amount of noneconomic loss allocated to a 
     defendant under this section, the trier of fact shall 
     determine the percentage of responsibility of each person 
     responsible for the harm to the claimant, regardless of 
     whether or not the person is a party to the action.

     SEC. 6. EXCEPTIONS TO LIMITATIONS ON LIABILITY.

       The limitations on liability under sections 4 and 5 do not 
     apply to any misconduct of a defendant--
       (1) that constitutes--
       (A) a crime of violence;
       (B) an act of international terrorism; or
       (C) a hate crime;
       (2) that involves--
       (A) a sexual offense, as defined by applicable State law; 
     or
       (B) a violation of a Federal or State civil rights law; or
       (3) if the defendant was under the influence (as determined 
     pursuant to applicable State law) of intoxicating alcohol or 
     a drug at the time of the misconduct, and the fact that the 
     defendant was under the influence was the cause of any harm 
     alleged by the plaintiff in the subject action.

     SEC. 7. PREEMPTION AND ELECTION OF STATE NONAPPLICABILITY.

       (a) Preemption.--Subject to subsection (b), this Act 
     preempts the laws of any State to the extent that State laws 
     are inconsistent with this Act, except that this Act shall 
     not preempt any State law that provides additional 
     protections from liability for small businesses.
       (b) Election of State Regarding Nonapplicability.--This Act 
     does not apply to any action in a State court against a small 
     business in which all parties are citizens of the State, if 
     the State enacts a statute--
       (1) citing the authority of this subsection;
       (2) declaring the election of such State that this Act does 
     not apply as of a date certain to such actions in the State; 
     and
       (3) containing no other provision.

     SEC. 8. EFFECTIVE DATE.

       (a) In General.--This Act shall take effect 90 days after 
     the date of enactment of this Act.
       (b) Application.--This Act applies to any claim for harm 
     caused by an act or omission of a small business, if the 
     claim is filed on or after the effective date of this Act, 
     without regard to whether the harm that is the subject of the 
     claim or the conduct that caused the harm occurred before 
     such effective date.
                                  ____


     Section-by-Section Analysis--The Small Business Lawsuit Abuse 
                         Protection Act of 1997


                         section 1. short title

       This section provides that the act may be cited as the 
     ``Small Business Lawsuit Abuse Protection Act of 1997.''


                          section 2. findings

       This section sets out congressional findings concerning the 
     litigation excesses facing small businesses, and the need for 
     litigation reforms to provide certain protections to small 
     businesses from abusive litigation.


                         section 3. definitions

       Various terms used in the bill are defined in the section. 
     Significantly, for purposes of the legislation, a small 
     business is defined as any business or organization with 
     fewer than 25 full time employees.


     section 4. limitation on punitive damages for small businesses

       The bill provides that punitive damages may, to the extent 
     permitted by applicable State law, be awarded against a 
     defendant that is a small business only if the claimant 
     establishes by clear and convincing evidence that conduct 
     carried out by that defendant with a conscious, flagrant 
     indifference to the rights or safety of others was the 
     proximate cause of the harm that is the subject of the 
     action.
       The bill also limits the amount of punitive damages that 
     may be awarded against a small business. In any civil action 
     against a small business, punitive damages may not exceed the 
     lesser of two times the amount awarded to the claimant for 
     economic and noneconomic losses, or $250,000.


  section 5. limitation on several liability for noneconomic loss for 
                            small businesses

       This section provides that, in any civil action against a 
     small business, for each defendant that is a small business, 
     the liability of that defendant for noneconomic loss will be 
     in proportion to that defendant's responsibility for causing 
     the harm. Those defendants would continue, however, to be 
     held

[[Page S5349]]

     jointly and severally liable for economic loss. In addition, 
     any other defendants in the action that are not small 
     businesses would continue to be held jointly and severally 
     liable for both economic and noneconomic loss.


      section 6. preemption and election of state nonapplicability

       The bill preempts State laws to the extent that any such 
     laws are inconsistent with it, but it does not preempt any 
     State law that provides additional protections from liability 
     to small businesses. The bill also includes an opt-out 
     provision for the States. A State may opt out of the 
     provisions of the bill for any action in State court against 
     a small business in which all parties are citizens of the 
     State. In order to opt out, the State would have to enact a 
     statute citing the authority in this section, declaring the 
     election of the State to opt out, and containing no other 
     provisions.


           section 7. exceptions to limitations on liability

       The limitations on liability included in the bill would not 
     apply to any misconduct that constitutes a crime of violence, 
     act of international terrorism, hate crime, sexual offense, 
     or civil rights law violation, or which occurred while the 
     defendant was under the influence of intoxicating alcohol or 
     any drug.


                       section 8. effective date

       The bill would take effect 90 days after the date of 
     enactment, and would apply to claims filed on or after the 
     effective date.
                                  ____

                                            National Federation of


                                         Independent Business,

                                     Washington, DC, June 4, 1997.
     Hon. Spencer Abraham,
     U.S. Senate,
     Washington, DC
       Dear Senator Abraham: On behalf of the 600,000 small 
     business owners of the National Federation of Independent 
     Business (NFIB), I am writing to commend you for your efforts 
     to put an end to abusive litigation and restore common sense 
     to our civil justice system.
       Legal reform is a small business issue and was listed as to 
     top priority at the 1995 White House Conference on Small 
     Business. The frequency and cost of litigation have been 
     exploding at an alarming rate. Our civil justice system is 
     becoming increasingly inaccessible, unaffordable and 
     intimidating, not to mention unfair. It is now so strained 
     that it threatens not only the fair judicial process but also 
     has become a huge disincentive to business start-ups. The 
     cost and availability of liability insurance was listed as a 
     top concern to small business owners in a survey conducted 
     recently by the NFIB Education Foundation.
       Small business owners now see the legal system as a ``no 
     win'' situation. If sued--even if completely innocent--it 
     means either a costly, protracted trial or being forced into 
     an expensive settlement to avoid a trial. Thousands of small 
     business owners across the country are having their business, 
     their employees, and their future put at risk by a legal 
     system that is out of control.
       Small business owners support any measures that inject more 
     fairness into our civil justice system and allow for the 
     affordable pursuit--or defense--of legitimate cases. Your 
     legislation, the Small Business Lawsuit Abuse Protection Act 
     of 1997, is an important vehicle for those goals. With our 
     courts facing an extraordinary backlog with delays up to 
     several years in some jurisdictions, your bill will 
     discourage frivolous or malicious cases, and help streamline 
     and balance the system.
       Thank you for your continued support of small business.
           Sincerely,

                                                   Dan Danner,

                                           Vice President, Federal
     Governmental Relations.
                                  ____



                              National Restaurant Association,

                                     Washington, DC, June 4, 1997.
     Hon. Spence Abraham,
     U.S. Senate,
     Washington, DC.
       Dear Senator Abraham: The National Restaurant Association--
     the leading representative for the nation's restaurant 
     industry which employs more than nine million Americans--
     strongly applauds your effort to protect small businesses 
     from Litigation excesses.
       Many small businesses, particularly restaurants, have 
     become vulnerable to excessive litigation in recent years. 
     Indeed, our members are all too familiar with the rising 
     costs of liability insurance and with the reality that a 
     single frivolous lawsuit can be enough to drive a restaurant 
     out of business. We strongly support the Small Business 
     Lawsuit Abuse Protection Act of 1997 and believe it will go a 
     long way toward curbing lawsuit abuse.
       Because of the fear of unlimited punitive damages when 
     faced with a claim, many small business owners settle out of 
     court for significant award amounts, even if the plaintiff's 
     claim is frivolous and unwarranted. Plaintiffs' attorneys 
     take advantage of a small business owner's fear, pursuing 
     claims against businesses that they know will have 
     ``settlement value.'' The Small Business Lawsuit Abuse 
     Protection Act limits the amount of punitive damages that may 
     be awarded against a small business. In any civil action 
     against a small business, punitive damages may not exceed the 
     lesser of two times the amount awarded to the claimant for 
     economic and noneconomic losses, or $250,000. Putting a cap 
     on the amount of punitive damages would help to reduce 
     frivolous suits and would enable businesses to obtain more 
     equitable settlements and avoid costly and unnecessary legal 
     fees.
       In addition to limiting punitive damages, we are pleased 
     that your legislation includes a provision to limit several 
     liability for noneconomic damages. Under joint and several 
     liability, small business owners are often dragged into 
     lawsuits with which they had little, or nothing, to do. The 
     Abraham Small Business Lawsuit Abuse Protection Act takes an 
     important first step by limiting the liability for 
     noneconomic loss to the proportion of the small business' 
     responsibility. The limitation on several liability would 
     apply in any civil action against a small business.
       Senator Abraham, we appreciate your continued commitment to 
     small business and to legal reform. We look forward to 
     working with you to pass the Small Business Lawsuit Abuse 
     Protection Act.
       Sincerely,
     Elaine Z. Graham,
       Senior Vice President, Government Relations and Membership.
     Christina M. Howard,
       Senior Legislative Representative.

  Mr. McCONNELL. Mr. President, I rise today to join my esteemed 
colleague from Michigan in the introduction of the Small Business 
Lawsuit Abuse Protection Act of 1997.
  Over the past 30 years, the American civil justice system has become 
inefficient, unpredictable, and costly. Consequently, I have spent a 
great deal of my time in the U.S. Senate working to reform the legal 
system. I was particularly pleased to help lead in the efforts to pass 
the Volunteer Protection Act, which offers much-needed litigation 
protection for our country's battalion of volunteers. America's 
litigation crisis, however, goes well beyond our volunteers.
  Lawsuits and the mere threat of lawsuits impede our country's 
invention, innovation, and the competitive position our Nation has 
enjoyed in the world marketplace. The litigation craze has several 
perverse effects. For example, it discourages the production of more 
and better products, while encouraging the production of more and more 
attorneys. In the 1950's, there was one lawyer for every 695 Americans. 
Today, in contrast, there is one lawyer for every 290 people. In fact, 
we have more lawyers per capita than any other western democracy.
  Mr. President, don't get me wrong--there is nothing inherently wrong 
with being a lawyer. I am proud to be a graduate of the University of 
Kentucky College of Law. My point, however, is simple: government and 
society should promote a world where it is more desirable to create 
goods and services than it is to create lawsuits.
  The chilling effects of our country's litigation epidemic are felt 
throughout our national economy--especially by our small businesses. We 
must act to remove the litigation harness from the backs of our small 
businesses.
  The Small Business Lawsuit Abuse Protection Act is a narrowly crafted 
bill which seeks to restore some rationality, certainty, and civility 
to the legal system. Specifically, this bill would offer limited relief 
to businesses or organizations that have fewer than 25 full-time 
employees.
  First, the bill seeks to provide some reasonable limits on punitive 
damages, which typically serve as a windfall to plaintiffs. The bill 
provides that punitive damages may be awarded against a small business 
only if the claimant establishes by clear and convincing evidence that 
the business engaged in wanton or willful conduct. The bill would also 
limit the amount of punitive damages that may be awarded against a 
small business to, the lesser of: First, $250,000, or second, two times 
the amount awarded to the claimant for economic and noneconomic losses. 
Third, the bill provides that a business' responsibility for 
noneconomic losses would be in proportion to the business' 
responsibility for causing the harm. Any other defendants in the action 
who are not small businesses would continue to be held jointly and 
severally liable.
  Now, let me explain what this bill does not do. It does not close the 
courthouse door to plaintiffs who sue small businesses. For example, 
this bill does not limit a plaintiff's ability to sue a small business 
for an act of negligence, or any other act, for that matter. The

[[Page S5350]]

bill also does not abolish joint and several liability for economic 
losses.
  Mr. President, this is a sensible, narrowly tailored piece of 
legislation that is greatly needed to free up the enterprising spirit 
of our small businesses. I look forward to Senate's consideration of 
this important legislation.
  Mr. COVERDELL. Mr. President, I rise today to join my good friend, 
Senator Abraham, in introducing the Small Business Lawsuit Abuse 
Protection Act. As a member of the Senate's Small Business Committee, I 
have focused on helping small businesses succeed in an increasingly 
competitive environment.
  Small businesses are vulnerable to abusive lawsuits. Take for example 
the case of Dixie Flag Manufacturing, a small business in Texas that 
manufactures American flags. The company was named in an injury lawsuit 
claiming it manufactured an unreasonably dangerous product--a flag--
that failed to carry proper instructions or warning labels. Ironically, 
Dixie Flag Manufacturing did not even make the flag involved in the 
injury prompting the lawsuit. In fact, its only connection to the 
incident was that it happened to be in the business of manufacturing 
American flags. Nevertheless, this mall family-owned business was 
forced to settle out of court in order to avoid large legal fees.
  The cost of obtaining product liability insurance has skyrocketed 
over the last 20 years, and small businesses have been 
disproportionately affected. A recent Gallup survey found that the fear 
of lawsuits drove 20 percent of small businesses not to hire more 
employees, expand the business, introduce a new product, or improve an 
existing one.
  I recently authored the Volunteer Protection Act to shield volunteers 
from unreasonable and costly lawsuits, and it received overwhelming 
support in Congress because it takes real action to promote 
voluntarism. Frivolous and absurd lawsuits are having a chilling effect 
on the volunteer community. Consequently, the Volunteer Protection Act 
deserves the President's unqualified support.
  The Gallup study demonstrates that the threat of frivolous lawsuits 
is having a similar chilling effect on small business. Simply put, the 
Small Business Lawsuit Abuse Protection Act, which has been modeled 
after the Volunteer Protection Act, would provide needed protections 
for small businesses from abusive and frivolous lawsuits.
  Let me take this opportunity to briefly describe how the Small 
Business Lawsuit Abuse Protection Act would protect small businesses, 
specifically those with fewer than 25 full-time employees.
  First, it would require that clear and convincing evidence of gross 
negligence must be present before punitive damages could be awarded 
against a small business. Second, it would place sensible limits on 
punitive damages, which could potentially bankrupt a small business. 
Third, it would provide for proportionate liability for small business.
  It is important to note that this legislation would give States the 
flexibility to impose conditions and to make exceptions to the granting 
of liability protection. In addition, it would allow States to opt for 
cases where all parties are citizens of that State.
  Finally, it is important to note that the bill clearly states which 
actions would not entitle a small business to protection. Any 
misconduct constituting a crime of violence, an act of international 
terrorism, a hate crime, a sexual offense, or a civil rights violation 
or misconduct occurring while under the influence of alcohol or drugs 
would not be covered.
  Mr. President, this is Small Business Week. Accordingly, all citizens 
should take a moment during this year's Small Business Week to 
recognize our economy's dependence on small business and realize the 
importance of nurturing their development. For Georgia, as is the case 
for the whole Nation, small businesses are the jobs provider and the 
backbone of our economy. The Small Business Administration reports that 
nearly 98 percent of the firms in Georgia that provide employment are 
small businesses. Moreover, it is estimated there are an additional 
213,000 self-employed entrepreneurs in my State.
  What better time to highlight the importance of providing small 
business much-needed relief from abusive lawsuits than during Small 
Business Week? I urge my colleagues to join us in supporting the Small 
Businesses Lawsuit Abuse Protection Act and in protecting small 
businesses from abusive litigation.
                                 ______
                                 
      By Mr. CAMPBELL (for himself, Mr. Hatch, and Mr. Craig):
  S. 837. A bill to exempt qualified current and former law enforcement 
officers from State laws prohibiting the carrying of concealed firearms 
and to allow States to enter into compacts to recognize other States' 
concealed weapons permits; to the Committee on the Judiciary.


                 concealed weapons permits legislation

  Mr. CAMPBELL. Mr. President, today I am pleased to be joined by the 
chairman of the Judiciary Committee, Senator Hatch and Senator Craig as 
original cosponsors of this legislation.

  This bill would both authorize States to recognize each other's 
concealed weapons laws and would exempt qualified current and former 
law enforcement officers from State laws prohibiting the carrying of 
concealed firearms. This legislation is designed to support the rights 
of States and to facilitate the right of law-abiding citizens as well 
as law enforcement officers to protect themselves, their families, and 
their property.
  The language of this bill is similar to a provision in S. 3, the 
Omnibus Crime Control Act of 1997, introduced earlier this year by the 
chairman of the Senate Judiciary Committee, Senator Hatch. In light of 
the importance of this provision to law-abiding gunowners and law 
enforcement officers, I am introducing this freestanding bill today for 
the Senate's consideration and prompt action.
  This bill allows States to enter into agreements known as compacts to 
recognize the concealed weapons laws of those States included in the 
compacts. This is not a Federal mandate; it is strictly voluntary for 
those States interested in this approach. States would also be allowed 
to include provisions which best meet their needs, such as special 
provisions for law enforcement personnel.
  This legislation would allow anyone possessing a valid permit to 
carry a concealed firearm in their respective State to also carry one 
in another State, provided that the States have entered into a compact 
agreement which recognizes the host State's right-to-carry laws. This 
is needed if you want to protect the security individuals enjoy in 
their own State when they travel or simply cross State lines to avoid a 
crazy quilt of differing laws.
  I use my own experience in Colorado as a former deputy sheriff and as 
a person who just lives 9 miles from the New Mexico border and within 
an hour's drive of both Arizona and Utah as a person who is caught in 
this kind of crazy quilt. I have always been a law-abiding citizen. I 
have a permit to carry a gun in Colorado, but if I go south just 5 
minutes into New Mexico, I have to comply with a different standard, 
and this bill would correct this different standard.
  Currently, a Federal standard governs the conduct of nonresidents in 
those States that do not have a right-to-carry statute. Many of us in 
this body have always strived to protect the interests of States and 
communities by allowing them to make important decisions on how their 
affairs should be conducted. We are taking to the floor almost every 
day to talk about mandating certain things to the States. This bill 
would allow States to decide for themselves.
  Specifically, it allows that the law of each State govern conduct 
within that State where the State has a right-to-carry statute, and 
States determine through a compact agreement which out-of-State right-
to-carry statute will be recognized.
  To date, 31 States have passed legislation making it legal to carry 
concealed weapons. These State laws enable citizens of those States to 
exercise their right to protect themselves, their families, and their 
property.
  Applicants, of course, must be law-abiding citizens and pass their 
State's firearm training requirements. In my State of Colorado, the 
State legislature has passed a bill which puts into place statewide 
uniform standards for concealed weapons permits.
  The second major provision of this bill would allow qualified current 
and

[[Page S5351]]

former law enforcement officers who are carrying appropriate written 
identification of that status to be exempt from State laws that 
prohibit the carrying of concealed weapons. This provision sets forth a 
checklist of stringent criteria that law enforcement officers must meet 
in order to qualify for this exemption status. Exempting qualified 
current and former law enforcement officers from State laws prohibiting 
the carrying of concealed weapons, I believe, would add additional 
forces to our law enforcement community in our unwavering fight against 
crime.
  I share the view of the Judiciary Committee chairman, Senator Hatch, 
as reflected in his legislation, that the need to establish greater 
national uniformity concerning the entitlement of active and retired 
law enforcement officers to carry weapons across State lines is 
paramount. That is why I have included this provision in this bill. To 
our friends who do not believe in the right to bear arms, I recommend 
reading this morning's Washington Post. I ask unanimous consent that 
this article be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, June 5, 1997]

            Seven Slain in District in 36 Hours of Violence

                (By Brian Mooar and Avis Thomas-Lester)

       Two men were fatally shot yesterday in separate incidents 
     in Southeast Washington in a deadly 36-hour period in which 
     seven people were killed in the city, police said.
       At least four other people were wounded by gunfire.
       the unusual flurry of violence stretched the resources of 
     the D.C. police homicide branch, sending investigators from 
     one end of Washington to the other as reports came in about 
     shootings.
       ``Everybody has their hands full, running here and running 
     there,'' Sgt. Marvin Lyons, a homicide squad supervisor, said 
     last night.
       ``My detectives have been working around the clock and on 
     the multitude of different cases, and then this latest group 
     of homicides happens,'' said Capt. Alan Dreher, head of the 
     homicide unit for the last two years. ``I don't know if it's 
     a record, but it is certainly the highest number of homicides 
     I've seen in a 24- or 36-hour period since I've been 
     commander of homicide.''
       The latest shooting occurred about 11 p.m. in the 
     Washington Highlands neighborhood in far Southeast 
     Washington. Police said that a woman and two men were shot 
     and wounded by gunfire in the 4200 block of Sixth Street SE.
       That scene was not far from a shooting about eight hours 
     earlier that left one man dead near Sixth and Chesapeake 
     Streets SE.
       Another man was killed about 1:30 p.m. yesterday near the 
     Kentucky Courts apartment complex in the 200 block of 
     Kentucky Avenue SE.
       The names of those shot, including a man wounded on 50th 
     Street NE about 9 p.m., had not been released last night.
       While keeping up with the two fatal shootings yesterday, 
     homicide detectives were investigating Tuesday's fatal 
     shootings of three young men in Northeast Washington and the 
     discovery of two bodies in Northwest.
       Officers on patrol in the 5800 block of Blaine Street NE 
     about 4 p.m. Tuesday saw what appeared to be two men sitting 
     in a car in an alley. But when the officers checked on them, 
     officials said, they discovered that both men had been shot 
     several times.
       They were identified as Norman Isaac, 18, of the 100 block 
     of 59th Street NE, and William Alonzo Powell III, 23, of the 
     100 block of 58th Place NE, police said.
       Later Tuesday, Bernard Campbell Allen, 17, was shot 
     multiple times about 11 p.m. at 16th and E streets NE. Allen, 
     of the 9300 block of Edmonston Road in Greenbelt, was taken 
     to D.C. General Hospital, where he was pronounced dead a few 
     hours later, police said.
       About 9 a.m. Tuesday, police found the body of an 
     unidentified woman who had been stabbed to death and left in 
     an alley in Columbia Heights. Later in the day, the body of 
     an unidentified man was found in the trunk of a car in the 
     1400 block of Chapin Street NW.

  Mr. CAMPBELL. This appeared this morning, and is a story about seven 
people slain in violence in the last 36 hours in Washington, DC, four 
or more wounded in just that same 36-hour period. And I would point out 
that this is a city that has the tightest gun control laws in the 
Nation, so tight in fact that not a Senator or Congressman, not a 
Supreme Court Justice, for that matter, can carry a concealed weapon. 
It seems like only the bad guys can carry them in this town.
  I do ask unanimous consent that Senator Hatch be added as an original 
cosponsor to this bill and it be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 837

       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 ``Law Enforcement Protection 
     Act of 1997''.

     SEC. 2. EXEMPTION OF QUALIFIED CURRENT AND FORMER LAW 
                   ENFORCEMENT OFFICERS FROM STATE LAWS 
                   PROHIBITING THE CARRYING OF CONCEALED FIREARMS.

       (a) In General.--Chapter 44 of title 18, United States 
     Code, is amended by inserting after section 926A the 
     following:

     ``Sec. 926B. Carrying of concealed firearms by qualified 
       current and former law enforcement officers

       ``(a) In General.--Notwithstanding any provision of the law 
     of any State or any political subdivision of a State, an 
     individual may carry a concealed firearm if that individual 
     is--
       ``(1) a qualified law enforcement officer or a qualified 
     former law enforcement officer; and
       ``(2) carrying appropriate written identification.
       ``(b) Effect on Other Laws.--
       ``(1) Common carriers.--Nothing in this section shall be 
     construed to exempt from section 46505(B)(1) of title 49--
       ``(A) a qualified law enforcement officer who does not meet 
     the requirements of section 46505(D) of title 49; or
       ``(B) a qualified former law enforcement officer.
       ``(2) Federal laws.--Nothing in this section shall be 
     construed to supersede or limit any Federal law or regulation 
     prohibiting or restricting the possession of a firearm on any 
     Federal property, installation, building, base, or park.
       ``(3) State laws.--Nothing in this section shall be 
     construed to supersede or limit the laws of any State that--
       ``(A) grant rights to carry a concealed firearm that are 
     broader than the rights granted under this section;
       ``(B) permit private persons or entities to prohibit or 
     restrict the possession of concealed firearms on their 
     property; or
       ``(C) prohibit or restrict the possession of firearms on 
     any State or local government property, installation, 
     building, base, or park.
       ``(4) Definitions.--In this section:
       ``(A) Appropriate written identification.--The term 
     `appropriate written identification' means, with respect to 
     an individual, a document that--
       ``(i) was issued to the individual by the public agency 
     with which the individual serves or served as a qualified law 
     enforcement officer; and
       ``(ii) identifies the holder of the document as a current 
     or former officer, agent, or employee of the agency.
       ``(B) Qualified law enforcement officer.--The term 
     `qualified law enforcement officer' means an individual who--
       ``(i) is presently authorized by law to engage in or 
     supervise the prevention, detection, or investigation of any 
     violation of criminal law;
       ``(ii) is authorized by the agency to carry a firearm in 
     the course of duty;
       ``(iii) meets any requirements established by the agency 
     with respect to firearms; and
       ``(iv) is not the subject of a disciplinary action by the 
     agency that prevents the carrying of a firearm.
       ``(C) Qualified former law enforcement officer.--The term 
     `qualified former law enforcement officer' means, an 
     individual who is--
       ``(i) retired from service with a public agency, other than 
     for reasons of mental disability;
       ``(ii) immediately before such retirement, was a qualified 
     law enforcement officer with that public agency;
       ``(iii) has a nonforfeitable right to benefits under the 
     retirement plan of the agency;
       ``(iv) was not separated from service with a public agency 
     due to a disciplinary action by the agency that prevented the 
     carrying of a firearm;
       ``(v) meets the requirements established by the State in 
     which the individual resides with respect to--

       ``(I) training in the use of firearms; and
       ``(II) carrying a concealed weapon; and

       ``(vi) is not prohibited by Federal law from receiving a 
     firearm.
       ``(D) Firearm.--The term `firearm' means, any firearm that 
     has, or of which any component has, traveled in interstate or 
     foreign commerce.''.
       (b) Clerical Amendment.--The chapter analysis for chapter 
     44 of title 18, United States Code, is amended by inserting 
     after the item relating to section 926A the following:

``926B. Carrying of concealed firearms by qualified current and former 
              law enforcement officers.''.

     SEC. 3. AUTHORIZATION TO ENTER INTO INTERSTATE COMPACTS.

       (a) In General.--The consent of Congress is given to any 2 
     or more States--
       (1) to enter into compacts or agreements for cooperative 
     effort in enabling individuals to carry concealed weapons as 
     dictated by laws of the State within which the owner of the 
     weapon resides and is authorized to carry a concealed weapon; 
     and
       (2) to establish agencies or guidelines as they may 
     determine to be appropriate for making effective such 
     agreements and compacts.

[[Page S5352]]

       (b) Reservation of Rights.--The right to alter, amend, or 
     repeal this section is hereby expressly reserved by Congress.
                                 ______
                                 
      By Mr. BRYAN (for himself, Mr. Bond, and Ms. Moseley-Braun):
  S. 838. A bill to amend the Securities Exchange Act of 1934 to 
eliminate legal impediments to quotation in decimals for securities 
transactions in order to protect investors and to promote efficiency, 
competition, and capital formation; to the Committee on Banking, 
Housing, and Urban Affairs.


               the common cents stock pricing act of 1997

  Mr. BRYAN. Mr. President, today Senator Bond, Senator Moseley-Braun, 
and I are introducing legislation to require stocks to be traded in a 
much more consumer-friendly fashion with the added benefit of saving 
investors billions of dollars.
  Mr. President, I send that legislation to the desk for its 
introduction.
  Let me just say parenthetically this is not the first time that I 
have had the privilege of working with the senior Senator from Missouri 
on legislation that affects vital consumer interests. He and I had the 
opportunity to work over several previous Congresses and secured in the 
last Congress significant changes to Federal law that protect consumers 
in terms of correcting information on their consumer histories, the 
largest single complaint before the Federal Trade Commission, and 
through his leadership and support and sustained efforts we were able 
to accomplish that. So I look forward to working with him on the piece 
of legislation that we introduce today, with the only caveat that I 
hope my distinguished colleague and I might be more helpful in getting 
this passed in a sooner period of time than we did on our previous 
enterprise which took three successive Congresses to work through.
  This legislation would bring to an end an antiquated pricing system 
currently used by Wall Street to buy and sell stocks that dates back to 
colonial times when the New York Stock Exchange was founded in the 18th 
century and the dollar was denominated in pieces of eight. While every 
other pricing system in our country has moved to dollars and cents, 
Wall Street continues to use this outdated eighths pricing system.
  As one article pointed out, and I quote, ``Imagine going to the 
grocery store and seeing bacon selling for $3\3/8\ and chicken potpies 
for $1\5/8\.'' Mr. President, not only has every other pricing system 
in America moved to dollars and cents, but all other major stock 
exchanges in the world--all--have abandoned the antiquated eighths 
system and now trade in decimals.
  The bill that we are introducing today is a companion piece of 
legislation to H.R. 1053 sponsored in the House of Representatives by 
Congressmen Oxley, Markey and Bliley. This legislation would direct the 
Securities and Exchange Commission to, within 1 year after the 
enactment of the legislation, adopt a rule to transition the stock and 
option markets away from their current trading practice in eighths to 
trading in dollars and cents.
  Currently, the New York Stock Exchange has a rule which mandates a 
minimum quote of an eighth for a share of stock trading in excess of 
$1. This rule is sanctioned by the Securities and Exchange Commission. 
Otherwise, it would be a blatant example of price-fixing. This 
legislation would require the SEC to revise this sanction to better 
represent the interests of consumers and investors throughout the 
country.
  I must say, Mr. President, I have been encouraged by recent newspaper 
reports which suggest that the New York Stock Exchange plans to move to 
one-sixteenth of a dollar and in 2 years to switch to decimals. If 
those reports are in fact confirmed--and I am informed that there is a 
meeting today in which formal action will be taken to that effect--then 
the members of the New York Stock Exchange are to be commended for 
moving in the right direction. I would note, however, that there are 
other stock exchanges in the United States which have not yet indicated 
that is their course of action, and so this legislation will be 
necessary to ensure that all take that step.
  There are currently 60 million Americans who participate directly in 
the stock markets who would benefit from change. Large pension funds 
and small investors alike would benefit. According to SEC Commissioner 
Steven Wallman, investors would end up saving between $5 billion to $10 
billion each year if stocks were traded in increments of dollars and 
cents rather than in the current practice of trading in eighths. It is 
not uncommon for a 500-million share day to occur on a given day, so a 
small change in the spread would mean enormous savings for investors.
  Many of us are reluctant to have Government intervene in the 
marketplace. Private sector determinations ought to be the rule, not 
the exception, here in America. In point of fact, we do not have a free 
market at work here. In fact, we have a classic example of price 
collusion. Wall Street dictates that this antiquated system be used and 
that all dealers must adhere to it. In essence, we are not interfering 
with the free market system; we are stepping in to help the stock 
market act more like a free market.
  We are not trying to dictate the spreads that could be charged in the 
buying and selling of stocks or the profits that Wall Street can make. 
In my judgment, that would be appropriate. If this legislation is 
enacted, however, stocks would be traded in dollars and cents and then 
the free market can more accurately determine what the prices and 
spreads should be. This is the essence of a free market. This is the 
essence of free enterprise. It seems appropriate as we move into the 
21st century. It is time the United States joined the rest of the world 
in using a more rational, understandable system of stock transactions.
  Mr. BOND. Mr. President, I am pleased to join Senator Bryan in 
introducing the Common Cents Stock Pricing Act of 1997. I thank Senator 
Bryan for his leadership in this measure. As he indicated in his 
comments, we worked together through three sessions of Congress to pass 
the Fair Credit Reporting Act. Numerous members of staff came and went 
while we were trying to get this commonsense consumer measure passed, 
and I only hope, as he indicated, that we will not have a similar 6-
year battle on this one, because I think the bill is very simple, very 
straightforward, and reflects common sense. It calls for the markets to 
get on in the business of trading in plain numbers, dollars and cents, 
instead of fractions.
  The Common Cents Stock Pricing Act will make stock prices easier to 
understand for the average small investor. It will also force stock 
dealers to compete in pennies, which should result in lower transaction 
costs and investor savings.
  Our Nation's stock markets use pricing methodologies which date back 
to the 18th century, when colonies used Spanish dollars as their 
currency. Traders would chisel these ancient coins into ``pieces of 
eight'' or ``bits'' and use them to purchase commodities. When 
organized stock trading began in New York in 1792, stock prices were 
quoted in bits, or eighths.
  Mr. President, 200 years later, the time has come to move beyond this 
pricing system. We don't use Spanish coins today, we don't use bits, 
and we don't need confusing price systems.
  The pricing system based on ancient coins is not only out of date, 
but it is difficult for the average investor to understand. At least 
one newspaper has recognized this fact. The San Francisco Chronical 
recently began printing its tables in dollars and cents, instead of 
fractions. Others, including the Boston Globe and USA Today have called 
on the stock exchanges to move to a penny pricing system.
  Small investors also stand to benefit financially from the move to 
pricing by the penny rather than by the bit. SEC Commissioner Steve 
Wallman estimates investors lose a minimum of $1.5 billion a year under 
the current system. Other experts put the figure in the $4 to $9 
billion range.
  Let me just explain why small investors lose in the current 
environment. Stock exchange rules effectively limit the minimum spread 
between a stock's buy-and-sell price to one-eighth of a dollar, or 12.5 
cents. This means that floor traders earn at least 12.5 cents from 
investors on every trade. Large investor institutions can get better 
deals on their trades by negotiating prices on block trades, but the 
average small investor has to pay the full fare.
  Penny stock pricing is also in step with the rest of the world. The 
U.S. is

[[Page S5353]]

the only major market that trades in eighths; every other country uses 
decimal pricing. If we are going to maintain our role as the dominant 
player in world markets, the U.S. must keep pace and move to a system 
of decimal pricing.
  The bill we are introducing today is straightforward. It simply calls 
on the Securities and Exchange Commission to promulgate a rule, within 
1 year after the enactment date of the legislation, to transition the 
stock and option markets away from fractionalized trading, bits 
trading, into dollars and cents pricing.
  I think the bill is an appropriate way for the Government to regulate 
financial markets. The Common Cents Stock Pricing Act does not 
micromanage the markets by dictating what the spread will be. The 
competition and the markets will determine the spread. The 
implementation of the SEC will allow competitive forces to decide what 
the spread will be.
  Let me close by saying I also noted the New York Stock Exchange 
announcement has been made that it will begin trading in sixteenths and 
eventually in decimals. I commend Senator Bryan and the sponsors of the 
companion House legislation, because their bill was cited as one of the 
reasons that the New York Stock Exchange was moving forward. I plan to 
review the language to ensure that their efforts clearly commit them to 
move to decimals, and that other exchanges will move to decimals. We 
need to do so in a reasonable timeframe and not wait until the 
forecasted computer crisis of the year 2000, when all of the computers 
go back to 1900.
  Big investors get good deals every day in negotiating stock trade 
prices. I think it is time for the average investor to get a good deal 
too. I encourage my colleagues to join me in making sure average 
investors are treated equitably. I thank my colleague from Nevada for 
his work on this issue, and I encourage and invite other Members of the 
Senate to join us in supporting this bill.
                                 ______
                                 
      By Mr. BINGAMAN (for himself and Mrs. Murray):
  S. 839. A bill to improve teacher mastery and use of educational 
technology; to the Committee on Labor and Human Resources.


                    the technology for teachers act

  Mr. BINGAMAN. Mr. President, I rise today, with the support of 
Senator Murray from the State of Washington, to introduce legislation 
that will increase the effectiveness of our efforts to improve 
education in the country. I send to the desk the legislation and ask 
that it be referred to the appropriate committee.
  The PRESIDING OFFICER. The bill will be received and appropriately 
referred.
  Mr. BINGAMAN. Mr. President, the bill is entitled the Technology for 
Teachers Act. Its purpose is to increase the ability of millions of new 
and current teachers to use technology in the classroom.
  Every school day in my home State of New Mexico and across the 
country, computers are being purchased, are being unpacked and are 
being delivered to classrooms in the hope that the teachers there will 
do wonderful things with those computers to assist the educational 
process. Sometimes that happens, but most of the time, the computer 
that is delivered and unpacked is just one more challenge to that 
teacher, one more demand on that teacher's time and one more drain on 
the energy of that teacher, because no one has given the teacher the 
training necessary to be able to do wonderful things with the computer.
  Most of the teachers in our public schools today started teaching 
before the era of personal computers really began and was established.
  The problem begins with low standards for the preparation of teachers 
to use this new technology and for the licensing of new teachers. This 
is reflected in a chart I have, Mr. President, that I would like to 
call attention to. This chart demonstrates the following. On the left-
hand side, we have the States that now require one course in education 
technology. You can see that the red area indicates that 32 States now 
require a course in education technology. Eighteen of our States 
require no instruction in education technology today.
  But the more problematic part of this chart is the right-hand side, 
where we try to depict the new teachers who feel prepared to use 
technology in the classroom.
  You can see that the green area indicates that 90 percent of our new 
teachers do not feel prepared to use technology in the classroom. That 
means 90 percent have not had adequate training, including the 90 
percent who have had that one course that is required in those 32 
States. So there is a serious problem.
  We also have a disturbing imbalance between the high investment we 
are making in equipment on the one hand and our inadequate investment 
in teachers on the other. Let me show a couple of other charts to make 
that point.
  This chart tries to make the distinction between the high 
availability of computers in our schools versus the low amount of 
teacher training to use them. Ninety-eight percent of our schools today 
are equipped with some computers. So, clearly, that is a major step 
forward from where we were, for example, 5 or 10 years ago. But if you 
look at the teachers who took more than 1 day of training in a single 
school year on how to use those computers, it is 15 percent of our 
teachers. Clearly, that imbalance exists.
  We are investing in the hardware; we are not investing in training 
the teachers to use that hardware effectively.
  Let me show one other chart to make the same point. This is 
connections to the Internet. This shows a 1997 estimate of the percent 
of schools that are connected to the Internet. About 65 percent of our 
schools have at least some connection to the Internet. When you look, 
though, down at the classroom level, you see that only 14 percent of 
our classrooms actually have a connection to the Internet.
  Only 13 percent of schools require some kind of advanced training for 
teachers so that they would know how to take advantage of that hookup 
to the Internet. And teachers who are actually using the Internet to 
help with their instruction is only 20 percent. So, again, we have a 
major imbalance between the investment in the equipment on the one 
hand, and the inadequate investment in training our teachers on the 
other. The experts say that 30 percent of the total investment we make 
in education technology should be used to train teachers, but right now 
we spend only 9 percent on teacher training. In my own State of New 
Mexico, only 4 percent of the $33 million spent on education technology 
goes for training teachers. That's less than half the national average 
and less than one seventh what we should be spending on teacher 
training.

  I am not saying that the Federal Government has not invested in 
teacher training as a part of school reform. There is a lot of money 
which is available for this, but also for a great many other needs. 
Clearly, this chart shows that. When we talk about general reform of 
education, there are four large programs that the Federal Government 
has. Of course, Title I is by far the largest, Title VI, Goals 2000, 
the Eisenhower Professional Development Program--all of those programs 
have funds that arguably can be used for training of teachers in this 
respect but, in fact, there are other great demands on those funds.
  When you look at technology for education, we now have the Technology 
Literacy Program that is funded at $257 million. The request from the 
President and the agreement in this year's Budget Resolution is to 
substantially increase that in the coming years. But when you look at 
technology training for teachers, there is absolutely nothing planned 
for that or required to be spent on that. This legislation tries to 
correct that deficiency.
  There are no Federal programs today devoted exclusively to technology 
training for teachers--either technology training for new teachers that 
are being trained, or technology training for current teachers in the 
work force.
  Let me briefly describe what our bill would do, Mr. President. This 
bill has two parts. One would improve the technology training that 2 
million new teachers will get while they are in college during the next 
decade to try to ensure that as they begin their teaching careers, they 
have had this instruction.
  The other part involves the technology training that millions of our

[[Page S5354]]

current teachers will need throughout their teaching careers.
  For both parts, our legislation provides that the Department of 
Education would make competitive grants to the States, to the States' 
departments of education that are responsible for the licensing of 
teachers and for maintaining high teaching standards. Those States' 
departments would then set up competitive grant programs, one to go to 
colleges of education for innovative programs to train new teachers to 
use technology; the other set of grants would go to local school 
districts for innovative professional development of current teachers.
  The bill would require that the States' departments of education, the 
colleges of education, the local school districts, and the education 
technology private sector all work together to create these innovative 
teacher training programs. This bill would be a major step forward in 
providing the necessary training to our teachers so that they can 
benefit from new technologies and integrate those new technologies into 
their instruction.
  There are some very good examples, happening in a few places, of what 
should be happening all over the country. For example, the University 
of Missouri has a program that issues a laptop computer to incoming 
freshmen in their College of Education. It has built telecommunications 
links to K-through-12 schools throughout the State of Missouri.
  This bill would also support some innovative programs similar to the 
program we have in New Mexico called the Regional Education Technology 
Assistance Program; it trains five teachers from each of the school 
districts in my State. In fact, we have only reached out now and gotten 
the involvement of 52 of our 89 school districts. But the idea here is 
to get a cadre of teachers who are comfortable with the use of 
technology who can then work in their school district to train other 
teachers so that they, too, can be comfortable with the use of that 
technology and not have the technology just be a frill which is put 
over in the corner of their classroom for people to use when they don't 
have other more important activities to pursue.
  Mr. President, I think this legislation is particularly important 
because it tries to deal with the very real resource constraints that 
some of our school districts face. In my home State, we have a school 
district in Cuba, NM, where they have had to give up their music 
instruction, they have had to give up their home economics program, in 
order to acquire technology to try to enrich their curriculum. This 
would provide some additional sources of funds for them so that they 
could get that technology, they could get the training for the use of 
that technology. That is the great need that we have at this particular 
time.
  I hope very much that we can get a hearing on this bill this summer, 
move ahead with it, and enact this legislation before the conclusion of 
this session of the Congress. I think this is a step forward.
  We have seen significant progress over the last few years in Federal 
support for technology and the use of technology in education. The one 
great deficiency today is that we do not put enough into training 
teachers so that that technology can be used effectively. This 
legislation will help to correct that problem.
  I thank Senator Murray for cosponsoring the legislation. I hope other 
colleagues will do so as well.
                                 ______
                                 
      By Mr. GRAHAM:
  S. 840. A bill to amend the Internal Revenue Code of 1986 to provide 
an exemption from tax gain on sale of a principal residence; to the 
Committee on Finance.


           the principal residence tax exclusion act of 1997

  Mr. GRAHAM. Mr. President, today I introduce the Principal Residence 
Tax Exclusion Act of 1997. Earlier this year, Representatives Rob 
Portman and Ben Cardin introduced similar legislation, styled H.R. 
1391, in the House of Representatives. In addition, both President 
Clinton and former Senator Dole have expressed strong support for a 
capital gains exclusion for our Nation's homeowners.
  This is a proposal that enjoys widespread bipartisan support. Now is 
the time to make good on our promises to help our Nation's families.
  As everyone knows, moving is a stressful and complicated process. 
Besides worrying about whether to take advantage of a job opportunity 
in another State or to move closer to family members or to accept some 
other reason for relocation, such as a change of residence at 
retirement, people should not have added to all of those complex 
decisions the worry about paying taxes on the sale of their permanent 
residence.
  This act will get the tax code out of the family's decisionmaking 
process. It will allow the family to make decisions based on the 
family's specific circumstances, not based on constraints imposed by 
the tax law.
  What is the current law? Under the current law, capital gains from 
the sale of principal residences are subject to taxation. However, two 
provisions exclude many homeowners from the effect of that taxation.
  First, under the so-called rollover provision, taxpayers can roll 
over gains from the sale of a principal residence into a new residence 
and defer any capital gains tax under certain conditions. One of those 
is that the purchase price of the new residence must exceed the 
adjusted sales price of the previous principal residence. The new 
residence must be purchased within 2 years of the date of sale of the 
first home.
  There is a second provision which results in many homeowners not 
paying a capital gains tax on a principal residence. And that is the 
age 55 exclusion, a taxpayer is eligible for a one-time permanent 
exclusion of up to $125,000 on any accumulated gain from the sale of 
their principal residence. In addition to meeting the age 55 
requirement to qualify for this exclusion, the taxpayer must have owned 
the residence and used it as their principal residence for at least 3 
years during the 5 years prior to the sale.
  A taxpayer is eligible for the exclusion only if neither the taxpayer 
nor the taxpayer's spouse has previously benefited from this exclusion. 
Consequently, Mr. President, to avoid the tax, most people wait until 
they are eligible for the one-time exclusion or they make what may be 
uneconomic decisions regarding the sale of their home.
  Mr. President, this is not right. People should be able to move when 
they want to, not when the tax code makes it financially possible. They 
should be able to buy a smaller home, if that is what they desire, 
without having to pay a tax on the difference between their profit on 
the sale of the first home and the price of the new home.
  Mr. President, this is an issue of removing governmental intrusion 
from family matters. This is an issue of allowing Americans to be free 
from unnecessarily burdensome requirements. This is an issue of 
permitting people to make decisions that will ultimately have a 
positive impact on the American economy.
  The Principal Residence Tax Exclusion Act would go a long way toward 
resolving each of these issues. I hope that my colleagues will join me 
in supporting this proposal.
  Under this act, the Principal Residence Tax Exclusion Act, taxpayers 
of any age--I underscore ``any age''--could exclude the gain on the 
sale of a principal residence of up to $500,000 for a married couple 
filing a joint return, and up to $250,000 for a single taxpayer.
  To be eligible, the taxpayer must have owned and used the home as the 
principal residence for at least 2 of the last 5 years prior to the 
sale. The exclusion will generally be available once every 2 years.
  This legislation would have a far-reaching impact on the families of 
our Nation. Under the current law, approximately 150,000 families 
annually have taxable gain on the sale of their homes. This number 
would be even higher. However, concern about the tax causes most people 
to wait until they are eligible for the one-time exclusion or to buy 
increasingly more expensive homes over time regardless of whether such 
purchases are economically wise or otherwise meet the family's needs.
  Under the new proposal, the Department of the Treasury estimates that 
only about 10,000 transactions annually would be subject to taxation. 
So nearly all families would be relieved of the burdensome 
recordkeeping requirements and constraints on decisionmaking which are 
part of the current law.

[[Page S5355]]

  Mr. President, I would like to bring to your attention one such 
family, a family who I believe represents the concerns of many American 
families. Rudy and Lynn Saumell of Valrico, FL, retired and moved to 
Florida several years ago after working for a combined total of 60 
years in the Connecticut school system. Lynn taught remedial math in 
the elementary school for 25 years. Rudy taught for 15 years before 
serving as an assistant principal for 20 more years. The Saumells lived 
in their Connecticut home with their two daughters for 23 years. When 
the Saumells retired 5 years ago, their girls had long since left home; 
the family's needs had changed.
  Lynn and Rudy decided to move to Florida to be near some of their 
relatives and to enjoy the warm climate and a hospitable neighborhood. 
They no longer needed such a large home. They were moving to a lower 
cost area. But the Saumells were concerned about being taxed on the 
sale of their Connecticut home. So, upon their accountant's advice, 
they bought a more expensive home than they needed and used both the 
one-time exclusion and the rollover provision to avoid paying tax on 
their previous residence's sale.
  In order to qualify under current law, the Saumells had to keep 
extensive records of all of the improvements they made to their 
previous residence. For over two decades, they complied with the law to 
the best of their abilities despite the difficulties they encountered 
in doing so.
  I commend the Saumells for their diligence. I agree with them that 
these requirements seem unnecessarily burdensome and nearly impossible 
to fulfill without error, omission, or honest misunderstanding.
  The act I propose would eliminate the need to keep these detailed 
records for 99 percent-plus of all Americans. After spending 5 years in 
their new home, the Saumells still want to move to a smaller home in a 
retirement community. They are paying more than they would like in 
property taxes. Their heat, water, and electric bills would be greatly 
reduced. Instead, Rudy and Lynn would rather spend the money they have 
saved for traveling and helping their daughters buy homes for their new 
families. Lynn and Rudy do not need such a big home for just the two of 
them.
  But the Saumells are stuck between a rock and a hard place. Under the 
current law, if they keep their house they will not be able to spend 
their savings as they would like. But if they sell their home and buy a 
less expensive one, they cannot use the over-55 exemption again since 
it is only available once in a lifetime and the rollover provision 
would not apply since they are not moving to a more expensive home.
  Thus their savings would be eaten up by a large capital gains tax, 
defeating the purpose of selling their current residence. So they are 
locked in the dilemma: Do we stay in a home that is larger than we 
need, more expensive than we can afford, or do we sell the home and 
suffer a substantial capital gains tax?
  Mr. President, why should the Saumells have to base their housing 
decisions on the Tax Code rather than their family requirements? Why 
should they be prevented from spending their savings on what they deem 
to be important?
  Like many Americans who are affected by the capital gains tax on home 
sales, Rudy and Lynn have spent their entire lives working and saving 
for their retirement and to assist their daughters in starting their 
new families' lives. It is unfair to deny them the freedom to spend 
these savings as they wish. So I offer this legislation to allow the 
Saumells and all of our Nation's families more freedom in their 
decisionmaking, to be able to decide where to live based on their 
families' circumstances, not on the Tax Code.
  Rudy now volunteers with a local television station to help people 
recover money that has been wrongfully withheld from them. Isn't it 
time that we remove the Tax Code restraints on Rudy and help him get 
back the free use of his own money?
  Mr. President, we have the means, the opportunity, and the support to 
help our Nation's families in a very significant way. Passing this 
legislation is more than providing relief to our Nation's homeowners. 
It is the right thing to do.
  Mr. President, I ask unanimous consent that a letter from the ERC, 
the Employee Relocation Council, be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                           The Employee Relocation


                                                      Council,

                                     Washington, DC, June 4, 1997.
     Hon. Bob Graham,
     U.S. Senate, Washington, DC.
       Dear Senator Graham: The Employee Relocation Council 
     (``ERC'') strongly supports your efforts to introduce 
     legislation that would provide a $500,000 exclusion of gain 
     on the sale of a principal residence and we urge that this 
     proposal be included as part of the tax package to be 
     assembled by Congress in the coming weeks. Reducing the tax 
     cost of relocations and improving the economics of home 
     purchase decisions would be beneficial not only to individual 
     taxpayers, but to companies and the economy as well.
       Currently, taxpayers can rollover gains from their 
     principal residence into a new residence and defer any 
     capital gains tax to the extent that the purchase price is 
     equal to or greater than the adjusted sales price of the old 
     residence. Additionally, a one time $125,000 exclusion 
     ($62,500 for separated individuals) is provided at age 55. 
     These tax rules are extremely complex; encourage relocating 
     employees to purchase increasingly expensive homes regardless 
     of their economic situation and can prevent companies from 
     relocating those employees because of increased relocation 
     costs (attached is an analysis of the benefits to employers 
     and employees that would result from enactment of this 
     proposal).
       ERC is an association whose members are concerned with 
     employee transfers, the sale and purchase of real estate 
     related to the movement of household goods and other aspects 
     of relocation. ERC's members include some sixty percent (60%) 
     of Fortune 1000 corporations as well as real estate brokers, 
     appraisers, van lines, relocation management companies and 
     other industry professionals. ERC supports initiatives that 
     case the constraints and reduce the costs of moving employees 
     and that allow companies and individuals to relocate based on 
     sound economic decisions. ERC believes that one of the keys 
     to success in today's international marketplace is workforce 
     mobility, which enhances the ability of companies to compete 
     internationally and is reflected in improved national 
     productivity and efficiency. The complexity and costs imposed 
     by the current tax rules act as a detriment and forces 
     employers and employees to make decisions based on tax law 
     and not economic soundness. Accordingly, ERC endorses your 
     efforts to enact legislation that would provide for a 
     $500,000 exclusion of gain on the sale of a principal 
     residence.
           Sincerely,
     H. Cris Collie,
       Executive Vice President.
                                 ______
                                 
      By Mr. BURNS (for himself and Mr. Baucus):
  S. 841. A bill to authorize construction of the Fort Peck Reservation 
Rural Water System in the State of Montana, and for other purposes; to 
the Committee on Energy and Natural Resources.


        The Fort Peck Reservation Rural Water System Act of 1997

  Mr. BURNS. Madam President, today I introduce a bill that will ensure 
the Assiniboine and Sioux people of the Fort Peck Reservation in 
Montana a safe and reliable water supply system. The Fort Peck 
Reservation is located in northeastern Montana. It is one of the 
largest reservations in the United States, and has a population of more 
than 10,000. The Fort Peck Reservation faces problems similar to all 
reservations in the country, that of remote rural areas. This 
reservation also suffers from a very high unemployment rate, 75 
percent. Added to all this, the populations on the reservation suffer 
from high incidents of heart disease, high blood pressure, and 
diabetes. A safe and reliable source of water is needed to both improve 
the health status of the residents and to encourage economic 
development and thereby self-sufficiency for this area.
  This legislation would authorize a reservation-wide municipal, rural, 
and industrial water system for the Fort Peck Reservation. It would 
provide a much needed boost to the future of the region and for 
economic development, and ultimately economic self-sufficiency for the 
entire area. My bill has the support of the residents of the 
reservation and the endorsement of the tribal council of the 
Assiniboine and Sioux Tribes.
  The residents of the Fort Peck Reservation are now plagued with major 
drinking water problems. In one of the communities, the sulfate levels 
in the water are four times the standard for safe drinking water. In 
four of the communities the iron levels are five times

[[Page S5356]]

the standard. Sadly, some families were forced to abandon their homes 
as a result of substandard water quality. Basically, the present water 
supply system is inadequate and unreliable to supply a safe water 
supply to those people that live on the reservation.
  Several of the local water systems have had occurrences of biological 
contamination in recent years. As a result, the Indian Health Service 
has been forced to issue several health alerts for drinking water. In 
many cases, residents of reservation communities are forced to purchase 
bottled water. Not a big deal to those who can afford it, but difficult 
to a population that has the unemployment rate found on the 
Reservation. All this, despite the fact that within spitting distance 
is one of the largest man-made reservoirs in the United States, built 
on the Missouri River.
  Agriculture continues to maintain the No. 1 position in terms of 
economic impact in Montana. In a rural area like the Fort Peck 
Reservation agriculture plays the key role in the economy, more so than 
in many areas of the State. The water system authorized by the 
legislation will not only provide a good source of drinking water, but 
also a water supply necessary to protect and preserve the livestock 
operations on the reservation. A major constraint on the growth of the 
livestock industry around Fort Peck has been the lack of an 
adequate watering site for cattle. This water supply system would 
provide the necessary water taps to fill watering tanks for livestock, 
which in normal times would boost the local economy of the region and 
the State. An additional benefit of this system would be more effective 
use of water for both water and soil conservation and rangeland 
management.

  The future water needs of the reservation are expanding. Data shows 
that the reservation population is growing, as many tribal members are 
returning to the reservation. It is clear that the people that live on 
the reservation, both tribal and nontribal members, are in desperate 
need of a safe and reliable source of drinking water.
  The solutions to this need for an adequate and safe water supply is a 
reservation wide water pipeline that will deliver a safe and reliable 
source of water to the residents. In addition this water project will 
be constructed in size to allow communities off the reservation the 
future ability to tap into the system. A similar system for water 
distribution is currently in use on a reservation in South Dakota.
  The surrounding communities have also agreed with the importance of 
this system. Last year when I introduced this bill, there were no 
additional communities signed on to the system. Today, the surrounding 
communities have signed on and look at this system as a means of 
supplying clean, safe drinking water to their residents.
  The people of the Fort Peck Reservation, and the State of Montana are 
only asking for one basic life necessity. Good, clean, safe drinking 
water. This is something that the more developed regions of the Nation 
take for granted, but in rural America we still seek to develop.
  I realize the importance of getting this bill introduced and placed 
before the proper committee. This action will allow us to move forward 
and provide a basic necessity to the people of this region in Montana. 
Good, clean, safe drinking water.
  Mr. BAUCUS. Mr. President, I am pleased to join Senator Burns today 
in introducing legislation that authorizes the construction of a 
municipal, rural, and industrial water system for the Assiniboine and 
Sioux Tribes of the Fort Peck Reservation.
  The reservation has long been plagued by major drinking water 
problems including both inadequate supplies and unacceptable water 
quality. Ground water, the primary source of drinking water for many 
reservation residents, often exceeds the standards for total dissolved 
solids, iron, sulfates, nitrates, and in some cases for selenium, 
manganese and fluorine.
  Bacterial contamination of domestic water supplies has also been a 
recurring problem. On several occasions the Indian Health Service and 
Tribal Health Office have had to issue public health alerts regarding 
drinking water. In short, the very health of residents of the Fort Peck 
Reservation depends on construction of this pipeline.
  A safe and adequate supply of water is a necessity if the Fort Peck 
Nation is to realize its dream of economic development and full 
employment. The reservation economy is based on ranching and farming 
but expansion of agricultural operations is severely limited by the 
lack of adequate stockwater supplies. Additionally more effective 
distribution of water would result in more effective soil conservation 
and improvement of the native rangeland.
  The Bureau of Reclamation has determined that a regional MR&I water 
supply system using water from the Missouri River is a feasible 
alternative for addressing the serious water problems facing Fort Peck. 
This legislation will make that alternative a reality for the people of 
the Fort Peck Reservation.
  I urge my colleagues to join me in supporting authorization of this 
critical project.
                                 ______
                                 
      By Mr. INHOFE (for himself, Mr. Breaux, Mr. Craig, and Mr. 
        Hutchinson):
  S. 842. A bill to provide for the immediate application of certain 
orders relating to the amendment, modification, suspension, or 
revocation of certificates under chapter 447 of title 49, United States 
Code; to the Committee on Commerce, Science, and Transportation.


                revocation of certifications legislation

  Mr. INHOFE. Mr. President, I have been working with representatives 
of the aviation industry on legislation that will address a problem 
with the Federal Aviation Administration. Let me, first of all, say 
that back in real life I have been a professional pilot for some 40 
years. I am a little bothered, too, at some of the things taking place 
in the aviation industry. I have seen great injustice done many, many 
times, having to do with the emergency revocation powers of the FAA. In 
a revocation action, brought on an emergency basis, the certificate 
holder loses use of his certificate immediately, without an 
intermediary review by an impartial third party. The result is that the 
certificate holder is grounded and, in most cases, is out of work until 
the issue is adjudicated. I believe the FAA unfairly uses this 
necessary power to prematurely revoke certificates when the 
circumstances do not support such drastic action. A more reasonable 
approach, Mr. President, when safety is not an issue, would be to 
adjudicate the revocation on a nonemergency basis, allowing the 
certificate holder to continue use of his certificate.
  Please don't misunderstand me. In no way do I want to suggest that 
the FAA should not have emergency revocation powers. I believe it is 
critical to safety that the FAA can ground unsafe airmen and other 
certificate holders. However, I also believe that the FAA must be 
judicious in its use of this extraordinary power. A review of recent 
emergency cases clearly demonstrates a pattern by which the FAA uses 
their emergency powers as standard procedure rather than an 
extraordinary measure.
  Perhaps the most visible case is that of Bob Hoover, who happens to 
probably be the best pilot in America today. He is up in age. I have 
watched him and have been in a plane with him. He can set a glass of 
water on the panel of an airplane and do a barrel roll without spilling 
any of the water. He is highly regarded as an aerobatic pilot. In 1992, 
his medical certificate was revoked based on alleged questions 
regarding his cognitive abilities. After getting a clean bill of health 
from four separate sets of doctors--just one of the many tests cost Bob 
$1,700--and over the continuing objections of the Federal air surgeon, 
who never even examined Bob Hoover personally, his medical certificate 
was reinstated only after then-Administrator David Henson intervened. 
And I want to take this opportunity to tell David Henson what a great 
job he did for aviation, and for one person.
  Unfortunately, Bob Hoover is not out of the woods yet.
  His current medical certificate expires on September 30, 1997. Unlike 
most airmen who can renew their medical certificate with a routine 
application and exam, Bob has to furnish the FAA with a report of a 
neurological evaluation every 12 months.
  It is a very expensive and unnecessary process.

[[Page S5357]]

  Mr. President, Bob Hoover's experience is just one of many. In a way, 
his wasn't as bad, because some of them do this--like professional 
airline pilots--for a living.
  I have several other examples of pilots who have had their licenses 
revoked on an emergency basis. Pilots such as Ted Stewart who has been 
an American Airlines pilot for more than 12 years and is presently a 
Boeing 767 captain. Until January 1995, Mr. Stewart had no complaints 
registered against him or his flying. In January 1995 the FAA suspended 
Mr. Stewart's examining authority as part of a larger FAA effort to 
respond to a problem of falsified ratings. The full NTSB board 
exonerated Mr. Stewart in July 1995. In June 1996, he received a second 
revocation. One of the charges in this second revocation involved 
falsification of records for a flight instructor certificate with 
multiengined rating and his air transport pilot [ATP] certificate 
dating back to 1979.
  Like most, I have questioned how an alleged 17\1/2\-year-old 
violation could constitute an emergency; especially, since he has not 
been cited for any cause in the intervening years. Nonetheless, the FAA 
vigorously pursued this action. On August 30, 1996, the NTSB issued its 
decision in this second revocation and found for Mr. Stewart. A couple 
of comments in the Stewart decision bear closer examination. First, the 
board notes that:

       The administrator's loss in the earlier case appears to 
     have prompted further investigation of respondent . . .

  I find this rather troubling that an impartial third party appears to 
be suggesting that the FAA has a vendetta against Ted Stewart. This is 
further emphasized with a footnote in which the Board notes:

       [We,] of course, [are] not authorized to review the 
     Administrator's exercise of his power to take emergency 
     certificate action . . . We are constrained to register in 
     this matter, however, our opinion that where, as here, no 
     legitimate reason is cited or appears for not consolidating 
     all alleged violations into one proceeding, subjecting an 
     airman in the space of a year to two emergency revocations, 
     and thus to the financial and other burdens associated with 
     an additional 60-day grounding without prior notice and 
     hearing, constitutes an abusive and unprincipled discharge of 
     an extraordinary power.

  Joining with me today is John Breaux of Louisiana. John has a 
constituent, Frank Anders who has taken the lead gathering other 
examples of FAA abuses with regard to their emergency revocation 
authority. One in particular is Raymond A. Williamson who was a pilot 
for Coca-Cola Bottling Co. Like Ted Stewart, he was accused of being 
part of a ring of pilots who falsified type records for vintage 
aircraft.
  As in all of the cases received by my office, Mr. Williamson biggest 
concern is that the FAA investigation and subsequent revocation came 
out of the blue. In November 1994, he was notified by his employer--
Coca-Cola--that FAA inspectors had accused him of giving illegal check 
rides in company owned aircraft. He was fired. In June 1995, he 
received an emergency order of revocation. In over 30 years as an 
active pilot, he had never had an accident, incident, or violation. Nor 
had he ever been counseled by the FAA for any action or irregularities 
as a pilot, flight instructor or FAA designated pilot examiner.
  In May 1996, FAA proposed to return all his certificates and ratings, 
except his flight instructor certificate. As in the Ted Stewart case, 
it would appear that FAA found no real reason pursue an emergency 
revocation.
  Mr. President, I obviously cannot read the collective minds of the 
NTSB board, but I believe a reasonable person would conclude that in 
the Ted Stewart case the Board, believes as I do, that there is an 
abuse of emergency revocation powers by the FAA.
  This is borne out further by the fact that since 1989, emergency 
cases as a total of all enforcement actions heard by the NTSB has more 
than doubled. In 1989 the NTSB heard 1,107 enforcement cases. Of those, 
66 were emergency revocation cases or 5.96 percent. In 1995, the NTSB 
heard 509 total enforcement cases, of those 160 were emergency 
revocation cases or 31.43 percent. I believe it is clear that the FAA 
has begun to use an exceptional power as a standard practice.
  In response, I and Senators Craig, Hutchinson, and Breaux are 
introducing legislation that would establish a procedure by which the 
FAA must show just cause for bringing an emergency revocation action 
against a certificate holder. Many within the aviation community have 
referred to this needed legislation as the Hoover bill.
  Not surprisingly, Mr. President, the FAA opposes this language. They 
also opposed changes to the civil penalties program where they served 
as the judge, jury, and executioner in civil penalty actions against 
airmen. Fortunately, we were able to change that so that airmen can now 
appeal a civil penalty case to the NTSB. This has worked very well 
because the NTSB has a clear understanding of the issues.

  Our proposal allows an airman within 48 hours of receiving an 
emergency revocation order to request a hearing before the NTSB on the 
emergency nature of the revocation. NTSB then has 48 hours to hear the 
arguments. Within 5 days of the initial request, NTSB must decide if a 
true emergency exists. During this time, the emergency revocation 
remains in effect.
  That means that the pilot does not have his certificate and cannot 
fly an airplane. In many cases, this is a means of a living. But that 
is for 7 days.
  In other words, the certificate holder loses use of his certificate 
for a maximum of 7 days. However, should the NTSB decide an emergency 
does not exist, then the certificate would be returned and the 
certificate holder could continue to use it while the FAA pursued their 
revocation case against him in an expedited appeal process as provided 
for by the bill. If the NTSB decides that an emergency does exist, then 
the emergency revocation remains in effect and the certificate holder 
cannot use his certificate while the case is adjudicated.
  This bill is supported by: the Air Line Pilots Association, 
International; the Air Transport Association; the Allied Pilots 
Association, Aircraft Owners and Pilots Association; the Experimental 
Aircraft Association; National Air Carrier Association; National Air 
Transportation Association; National Business Aircraft Association; the 
NTSB Bar Association; and the Regional Airline Association.
  Mr. President, I ask unanimous consent that a letter dated March 11, 
1997, to me from the above mentioned organizations be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                   March 11, 1997.
     Hon. James M. Inhofe,
     U.S. Senator,
     Washington, DC.
       Dear Senator Inhofe: The undersigned associations and 
     organizations endorse and support your proposed legislation, 
     the FAA Emergency Revocation Act of 1997, to reform the 
     Federal Aviation Administration enforcement process in an 
     important respect.
       It has become apparent to us in recent years that the FAA 
     has significantly increased its use of its emergency 
     authority to immediately suspend or revoke airmen, air 
     carrier, and air agency certificates, thereby avoiding the 
     automatic stay of such action provided by law pending appeal 
     to the National Transportation Safety Board. This legislation 
     will accord due process to certificate holders by providing a 
     more adequate forum for promptly adjudicating the 
     appropriateness of the FAA's use of this authority. The 
     forum, the same one which will adjudicate the merits of the 
     FAA action, will also adjudicate, on a more timely basis, 
     whether aviation safety requires the immediate effectiveness 
     of a certificate action. The effect will be that in an 
     appropriate case, a certificate holder will be able to 
     exercise the privileges of its certificate while an FAA 
     certificate action is on appeal, all without compromise of 
     aviation safety.
       We thank you for introducing this legislation, and we look 
     forward to working with you toward its passage.
           Sincerely,
         Air Line Pilots Association, International; Allied Pilots 
           Association; Experimental Aircraft Association; 
           National Air Transportation Association; NTSB Bar 
           Association; Air Transport Association; AOPA 
           Legislative Action; National Air Carrier Association; 
           National Business Aircraft Association; Regional 
           Airline Association.

  Mr. INHOFE. Mr. President, in closing, this bill will provide due 
process to certificate holders where now none exists, without 
compromising aviation safety. This is a reasonable and prudent response 
to an increasing problem for certificate holders. I hope our colleagues 
will support our efforts in this regard.
                                 ______
                                 
      By Mr. HATCH (for himself, Mr. Baucus, and Mr. Mack):

[[Page S5358]]

  S. 843. A bill to amend the Internal Revenue Code of 1986 to simplify 
certain rules relating to the taxation of United States business 
operating abroad, and for other purposes; to the Committee on Finance.


     INTERNATIONAL TAX SIMPLIFICATION FOR AMERICAN COMPETITIVENESS 
                              LEGISLATION

  Mr. HATCH. Mr. President, I rise today to introduce a bill that would 
provide much-needed tax relief for American-owned companies that are 
attempting to compete in the world marketplace. I am joined by Senator 
Baucus in introducing the International Tax Simplification for American 
Competitiveness Act.
  Mr. President, our country's economy has entered into an environment 
like no other in our history. The success of the American economy is 
becoming more and more intertwined with the success of our businesses 
in the global marketplace. As the economic boundaries from country to 
country merge closer together, and competition begins to arise from 
previously lesser-developed nations, it is imperative that American 
owned businesses be able to compete from the most advantageous position 
possible.
  There are already barriers the U.S. economy must overcome to remain 
competitive that Congress cannot hurdle by itself. I know that we have 
international trade negotiators working hard to eliminate those 
obstacles, such as barriers to foreign markets, but we can do more than 
just open barriers. We can reform our Tax Code in such a way that would 
ensure continued success by American-owned companies in today's highly 
competitive international market. There is no need to further impede 
the economy by saddling it with an outdated and extremely complex Tax 
Code.
  If we pass on this opportunity, Mr. President, we run the risk of 
jeopardizing the international competitiveness of the U.S. economy, as 
American companies are lured to other countries with simple, more 
favorable tax treatment.
  The business world is changing at a more rapid pace than any other 
time in history. Tax laws, unfortunately, have failed to keep pace with 
the rapid changes in the world economy. The last time the international 
provisions of the Internal Revenue Code were substantially debated and 
revised was in 1986. Since that time, existing economies have changed, 
and new economies have been created, all while our tax policy regarding 
this changing market has remained the same. And in several cases, our 
foreign competitors operate under simpler, fairer, and more logical tax 
regimes. The continued use of a confusing, archaic tax code results in 
a mismatch with commercial reality and creates a structural bias 
against the international activities of U.S. companies. We cannot, and 
should not, continue to impede the progress of our economy.
  Mr. President, the bill that I am introducing today seeks to simplify 
and correct various areas in the Internal Revenue Code that are 
unnecessarily restraining American businesses competing in today's 
global market. Some of these provisions are similar to those contained 
in the President's recently released simplification package. Some 
changes come in areas that are in dire need of repair, and others are 
changes that take into consideration international business operations 
that exist today, but were either nonexistent, or limited to domestic 
soil in 1986, when the tax reform laws were put into place.
  An important correction to current rules relates to Foreign Sales 
Corporation [FSC] treatment for software. When the current FSC rules 
were implemented 11 years ago, the level of software exports was 
nowhere near the level it is today. Because the Tax Code was not 
modified with the evolution of the high-technology business world, 
American software exports are currently discriminated against. This 
proposal would clarify that computer software qualifies as export 
property eligible for FSC benefits. These benefits are currently 
available for films, records, and tapes, but not software.
  The United States is currently the global leader in software 
production and development and employs nearly 400,000 people in high-
paying software development and servicing jobs. The industry has 
experienced a great deal of growth in the past decade, primarily due to 
increased exports. If the FSC benefits to software continue to be 
denied, we are creating another obstacle to the competitiveness of 
American manufactured software, ultimately harming the U.S. economy, 
and putting American jobs at risk.
  Another important change included in the bill would repeal the 10/50 
tax credit rules. Currently, the code requires U.S. companies to 
calculate separate foreign tax credit limitations for each of its 
foreign joint venture businesses in which the U.S. owner owns at least 
10 percent but no more than 50 percent. In addition to creating 
administrative headaches for American owned companies that may have 
hundreds of such foreign joint venture operations, these rules impede 
the ability of U.S. companies to compete in foreign markets.
  It is necessary for businesses in the United States to operate in 
joint ventures worldwide, particularly in emerging, previously closed 
markets such as the former Soviet Union and the People's Republic of 
China. Many times, the joint ventures are needed to assist the United 
States investor to overcome significant local country and political 
obstacles involved with taking a controlling interest in foreign 
companies. This applies particularly to regulated businesses, such as 
telecommunications companies. While this type of joint venture is 
necessary for companies to enter and compete in foreign markets, the 
current tax law in our country discourages such operations.
  The bill would permit U.S. owners to compute foreign tax credits with 
respect to dividends from such entities based on the underlying 
character of the income of these entities, or the so-called look-
through treatment, provided that the necessary information is 
available. Moreover, the bill includes a provision that would eliminate 
the overlap in the rules between passive foreign investment companies 
[PFIC] and controlled foreign companies [CFC]. PFIC rules were never 
intended to apply to CFC's. In the Tax Act of 1993, changes were made 
that created unnecessary duplication in PFIC and CFC rules. Currently, 
there are several CFC's that are caught under both sets of rules. This 
proposal would eliminate these duplications. If a PFIC is also a CFC, 
the proposal generally would treat the foreign corporation as a non-
PFIC with respect to certain 10-percent U.S. shareholders of the CFC.
  Mr. President, I ask that my colleagues take a close look at this 
bill. This is not partisan legislation. It is an attempt to give fair 
tax treatment to American companies who operate abroad, and that, I 
think, is an objective we all support. The bill is truly a technical 
correction and simplification, designed to correct the inequities in 
our Tax Code, and to help place U.S. companies on a level playing field 
with their competitors in the foreign market. If we do not step up and 
make these corrections, American companies will lose ground to their 
foreign counterparts, eventually losing their power to operate 
successfully at home and harm our Nation's economic potential. American 
workers are the most creative, competitive, and hard-working in the 
world. It is our duty, Mr. President, to release them from any 
unnecessary constraints at home. Their hard work and perseverance will 
enable us to maintain and strengthen our lead in the global 
marketplace, resulting in more quality, high-paying jobs on American 
soil, and an even stronger national economy.
  I ask unanimous consent that a section-by-section summary be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

The International Tax Simplification for American Competitiveness Act--
                         Summary of Provisions


       title i--treatment of passive foreign investment companies

       Section 101. PFIC/CFC overlap: The overlap between the PFIC 
     and CFC rules would be eliminated. In the case of a PFIC that 
     is also a CFC, the proposal generally would treat the foreign 
     corporation as a non-PFIC with respect to certain 10-percent 
     U.S. shareholders of the CFC. The change generally would be 
     effective for taxable years of U.S. persons beginning after 
     December 31, 1997, and to taxable years of foreign 
     corporations ending with or within such taxable years of U.S. 
     persons, subject to certain holding period requirements.
       Section 102. PFIC mark-to-market election: A shareholder of 
     a PFIC would be allowed to make a mark-to-market election for 
     PFIC

[[Page S5359]]

     stock that is regularly traded on a qualifying national 
     securities exchange or is otherwise treated as marketable. A 
     similar election generally would be available for regulated 
     investment companies. The provision would be effective for 
     taxable years of U.S. persons beginning after December 31, 
     1997, and to taxable years of foreign corporations ending 
     with or within such taxable years of U.S. persons.
       Section 103. Clarification of passive income definition: 
     The definition of passive income would be amended for 
     purposes of PFIC provisions by clarifying that the exceptions 
     from the definition of foreign personal holding company 
     income under section 954(c)(3) (regarding certain income 
     received from related persons) do not apply in determining 
     passive income for purposes of the PFIC definition. The 
     change would be effective for taxable years of U.S. persons 
     beginning after December 31, 1997, and to taxable years of 
     foreign corporations ending with or within such taxable years 
     of U.S. persons.
       Section 104. Effective date of new PFIC provisions: The 
     changes made by the new PFIC provisions (sections 101-103, 
     above) would apply to taxable years of U.S. persons beginning 
     after December 31, 1997, and to taxable yeas of foreign 
     corporations ending with or within such taxable years of U.S. 
     persons.


         title ii--treatment of controlled foreign corporations

       Section 201. Extension of divided treatment to dispositions 
     of lower-tier CFCs: Section 1248 dividend treatment would be 
     extended to the sale of a CFC by a CFC where such dividend 
     treatment is provided under current law upon the sale of a 
     CFC by a U.S. shareholder. In addition, a provision added to 
     section 904(d)(2)(E) by the 1988 Act (TAMRA) would be 
     repealed. That provision requires the recipient of a CFC 
     distribution to have been a U.S. shareholder in the CFC 
     when the related earnings were generated to avoid 
     subjecting the distributions to the separate foreign tax 
     credit basket applicable to section 902 corporations. The 
     changes would be effective for gains recognized on 
     transactions or distributions occurring after the date of 
     enactment.
       Section 202. Miscellaneous modifications to subpart F: The 
     following changes would be made to subpart F:
       Subpart F inclusions in year of acquisition: The subpart F 
     inclusions of an acquirer of CFC stock would be reduced in 
     the year of acquisition by a portion of the dividend deemed 
     recognized by the transferor under section 1248. The 
     provision would apply to dispositions after the date of 
     enactment.
       Adjustments to basis of stock: The income inclusion to a 
     U.S. shareholder resulting from an upper-tier CFC's sale of 
     stock in a lower-tier CFC that earns subpart F income would 
     be adjusted, under regulations, to account for previous 
     inclusions by adjusting the basis of the stock. The provision 
     would apply for purposes of determining inclusions for 
     taxable years of U.S. shareholders beginning after December 
     31, 1997.
       Certain distributions of previously taxed income: The IRS 
     would be authorized to issue regulations to prevent multiple 
     inclusions in income or to provide appropriate basis 
     adjustments in the case of cross-chain section 304 dividends 
     out of the earnings of CFCs that were previously included in 
     the income of a U.S. shareholder under subpart F, or in other 
     circumstances in which there would otherwise be a multiple 
     inclusion or a failure to adjust basis. The provision would 
     be effective on the date of enactment.
       U.S. income earned by a CFC: A treaty exemption or 
     reduction of the branch profits tax that would be imposed 
     under section 884 with respect to a CFC would not affect the 
     general statutory exemption from subpart F income that is 
     granted for U.S. source effectively connected income. The 
     provision would apply to taxable years beginning after 
     December 31, 1986.
       Section 203. Indirect foreign tax credit allowed for lower 
     tiers: The availability of indirect foreign tax credits would 
     be extended to certain taxes paid or accrued by certain 
     fourth-, fifth-, and sixth-tier foreign corporations. The 
     provision generally would be effective for taxes of a CFC 
     with respect to its taxable years beginning after December 
     31, 1997.
       Section 204. Exemption for active financing income: Income 
     earned in the active conduct of a banking, financing, or 
     similar business by a CFC would not be treated as foreign 
     personal holding company income if (1) a significant 
     portion of the CFC's income for that business is derived 
     from transactions with unrelated customers in the 
     jurisdiction in which the CFC is organized and the CFC is 
     predominantly engaged in the active conduct of such 
     business, or (2) the CFC's income is derived in the active 
     conduct of a securities or banking business within the 
     meaning of the PFIC rules. In addition, the bill would 
     exclude from subpart F income a qualifying insurance CFC's 
     income from the investment of its assets, subject to 
     certain limitations. The provision would apply to taxable 
     years of foreign corporations beginning after December 31, 
     1997, and to taxable years of U.S. shareholders with or 
     within which such taxable years of foreign corporations 
     end.
       Section 205. Provide look-through treatment for 10/50 
     companies: Current law requires U.S. companies operating 
     joint ventures in foreign countries to calculate separate 
     foreign tax credit basket limitations for income earned from 
     each joint venture in which the U.S. owner owns at least 10 
     percent but no more than 50 percent. The proposal would 
     permit U.S. owners to compute foreign tax credits with 
     respect to dividends from such entities based on the 
     underlying character of the income of these entities (i.e., 
     ``look-through'' treatment), provided that the necessary 
     information is available. Dividends from entities for which 
     the necessary information is unavailable would be aggregated 
     in a single foreign tax credit basket. The provision would 
     apply to dividends paid out of earnings and profits 
     accumulated during taxable years of foreign corporations 
     beginning after December 31, 1997.
       Section 206. Study of treating European Union as a single 
     country: The Treasury Department would be directed to conduct 
     a study on the feasibility of treating all members of the 
     European Union as a single country for purposes of applying 
     the same country exceptions under subpart F. This study would 
     include consideration of methods of ensuring that taxpayers 
     are subject to a substantial effective rate of foreign tax if 
     such treatment is adopted. A report would be required within 
     six months.
       Section 207. Expand subpart F de minimis rule: The subpart 
     F de minimis rule under current law excludes all gross income 
     from foreign base company income or insurance income if the 
     sum of the gross foreign base company income and the gross 
     insurance income of the CFC for the taxable year is less than 
     the lesser of five percent of gross income or $1 million. The 
     proposal would expand this rule to the lesser of 10 percent 
     of gross income or $2 million. The provision would apply to 
     taxable years beginning after December 31, 1997.
       Section 208. Use U.S. GAAP for determining subpart F 
     earnings and profits: Taxpayers would be allowed to use U.S. 
     generally accepted accounting principles to determine subpart 
     F earnings and profits. The provision would apply to 
     distributions during, and the determination of the inclusion 
     under section 951 with respect to, taxable years of foreign 
     corporations beginning after December 31, 1997.
       Section 209. Clarify treatment of pipeline transportation 
     income: The proposal would exclude income from the pipeline 
     transportation of oil or gas within a foreign country from 
     the statutory definition of ``foreign base company oil 
     related income.'' The provision would apply to taxable years 
     beginning after December 31, 1997.
       Section 210. Expand deduction for dividends from foreign 
     corporations with U.S. income: Under the proposal, the 
     constructive ownership rules of section 318 would apply in 
     determining whether the 80-percent ownership threshold of 
     section 245(a)(5) is satisfied, and the term ``dividend'' 
     would include subpart F inclusions. The provision would apply 
     to taxable years beginning after December 31, 1997.


                      title iii--other provisions

       Section 301. Translation, redetermination of foreign taxes: 
     Current law requires U.S. taxpayers making foreign tax 
     payments to translate each payment made during the year into 
     U.S. dollars at the exchange rate on the day of payment. The 
     proposal would simplify this rule by generally permitting 
     accrual-basis taxpayers to translate foreign taxes at the 
     average exchange rate for the taxable year to which such 
     taxes relate. In addition, it generally would provide for any 
     subsequent adjustments to or refunds of accrued foreign taxes 
     to be taken into account for the taxable year to which they 
     relate. The provision would apply to taxes paid or accrued in 
     taxable years beginning after December 31, 1997, and to taxes 
     that relate to taxable years beginning after December 31, 
     1997.
       Section 302. Election to use simplified foreign tax credit 
     calculation under AMT: Taxpayers would be permitted to elect 
     (with certain limitations) to use, as their alternative 
     minimum tax (AMT) foreign tax credit limitation fraction, the 
     ratio of foreign source regular taxable income to entire AMT 
     income. This would eliminate the need to calculate a separate 
     AMT foreign tax credit limitation. The election would apply 
     to all subsequent taxable years and could be revoked only 
     with IRS consent. The provision would apply to taxable years 
     beginning after December 31, 1997.
       Section 303. Outbound transfers: The excise tax under 
     section 1491 on certain outbound transfers would be repealed 
     and, in its place, full recognition of gain would be required 
     on a covered transfer of property by a U.S. person to a 
     foreign corporation, foreign partnership, or foreign estate 
     or trust. The provision would apply to transfers after 
     December 31, 1997.
       Section 304. Inbound transfers: Regulatory authority 
     generally would be provided to require income recognition, to 
     the extent necessary to prevent U.S. federal income 
     tax avoidance, in the case of certain otherwise tax-free 
     corporate organizations, reorganizations, and liquidations 
     in which the status of a foreign corporation as a 
     corporation is a condition for nonrecognition by a party 
     to the transaction. The provision would apply to transfers 
     after December 31, 1997.
       Section 305. Increase in reporting threshold: The ownership 
     threshold triggering the requirement to file information 
     returns regarding the organization or reorganization of 
     foreign corporations and the acquisition of their stock would 
     be increased from 5 percent to 10 percent, effective January 
     1, 1998.
       Section 306. Exempt foreign corporations from uniform 
     capitalization rules: Under the proposal, the uniform 
     capitalization rules would apply to foreign taxpayers only 
     for the purposes of subpart F or the taxation of income 
     effectively connected with the conduct of a U.S. trade or 
     business. The provision would

[[Page S5360]]

     apply to taxable years beginning after December 31, 1996. 
     Section 481 would not apply to any change in a method of 
     accounting by reason of the provision.
       Section 307. Extend FTC carryforward: The proposal would 
     extend the carryforward period for excess foreign income 
     taxes and extraction taxes form five years to 10 years. The 
     provision would apply to excess foreign taxes for taxable 
     years beginning after December 31, 1997.
       Section 308. Domestic loss recapture: The proposal would 
     make symmetrical the overall foreign loss provisions by 
     recharacterizing overall domestic losses recaptured in 
     subsequent years as foreign source income. The provision 
     would apply to losses for taxable years beginning after 
     December 31, 1997.
       Section 309. FSC rules for computer software and military 
     property: The proposal would clarify that computer software, 
     whether or not patented, qualifies as export property 
     eligible for FSC benefits. The provision would apply to 
     sales, exchanges, or other dispositions after the date of 
     enactment. Also, the proposal would remove the 50-percent 
     limitation on foreign trading gross receipts attributable to 
     military property. This amendment would apply to taxable 
     years beginning after December 31, 1997.
       Section 310. Special rules for financial services income: 
     The foreign tax credit limitation provisions generally would 
     be amended to exclude from high withholding tax interest any 
     interest on a security held by a dealer in connection with 
     its activities as such. The foreign tax credit limitation for 
     financial services income would be amended to include the 
     entire gross income of any person for which financial 
     services income exceeds 80 percent of gross income. In 
     addition,the section 904(g) source rules for U.S.-owned 
     foreign property would be amended to exclude income derived 
     by a securities dealer on securities. The proposals generally 
     would apply to taxable years beginning after December 31, 
     1997. In the case of deemed paid credits, the proposal would 
     apply to taxable years of foreign corporations beginning 
     after December 31, 1997 and to taxable years of U.S. 
     shareholders in such corporations with or within which 
     such taxable years of foreign corporations end.
       Section 311. Exclusion of certain dealers' assets from 
     section 956 definition of U.S. property: The provision would 
     exclude from the definition of ``United States property'' 
     under section 956 certain assets acquired by a dealer in 
     securities or commodities in the ordinary course of its trade 
     or business. Excluded assets would include certain assets 
     posted as collateral or margin, certain obligations of U.S. 
     persons acquired in connection with a sale and repurchase 
     agreement, and certain securities acquired and held by a CFC 
     primarily for sale to customers. The provision would be 
     effective for taxable years of foreign corporations beginning 
     after December 31, 1997, and to taxable years of U.S. 
     shareholders with or within which such taxable years of 
     foreign corporations end.
       Section 312. Foreign investment in mutual funds: The 
     proposal generally would exempt from U.S. taxation certain 
     dividends received by nonresident aliens or foreign 
     corporations from regulated investment companies (RICs) to 
     the extent the dividends are attributable to interest or 
     short-term capital gains. Also, for U.S. estate tax purposes, 
     the proposal would treat stock in certain RICs as property 
     without the United States. Finally, the proposal would expand 
     the special rules for REITs under section 897(h) to cover 
     domestically controlled RICs as well. The first provision 
     would apply to dividends with respect to taxable years of 
     RICs beginning after the date of enactment; the other 
     provisions generally would take effect on the date of 
     enactment.
       Section 313. Exclude preliminary agreements from definition 
     of intangible property: The proposal would exclude from the 
     section 936(h)(3)(B) definition of intangible property any 
     ``preliminary agreement'' that is not legally enforceable. 
     This provision would apply to agreements entered into after 
     the date of enactment.
       Section 314. Study of affiliated group interest allocation: 
     The Treasury Department would be directed to conduct a study 
     of the rules under section 864(e) for allocating interest 
     expense of members of an affiliated group. This study would 
     include an analysis of the effect of such rules, including 
     the effects such rules have on different industries. A report 
     would be required within six months.

  Mr. BAUCUS. Mr. President, I am very pleased today to join my 
colleague, Senator Hatch, to introduce a bill to help American-owned 
companies compete in the world marketplace by simplifying our overly 
complicated international tax rules.
  America's economic success depends more than ever before on our 
ability to succeed in the international economy. When I came to the 
Senate, imports and exports together made up about 12 percent of our 
economy. Today it is 30 percent and growing every day. So more jobs 
than ever depend on exports and overseas operations.
  I have worked through the Trade Subcommittee to lower foreign trade 
barriers and encourage agreements to keep trade free and fair. I have 
sought to open foreign markets for Montana products like beef to wheat. 
And this work pays off.
  According to a report prepared by the accounting firm Price 
Waterhouse last month, exports of goods alone in the United States in 
1996 supported almost 7 million direct and indirect jobs and account 
for over 11 percent of our Gross Domestic Product. In Montana, these 
exports totaled almost one-half billion dollars and supported 58,000 
jobs in 1996.
  But while our trade policies have been successful in many areas, our 
Tax Code has failed to keep up. Its international provisions are 
outdated, unclear, complex, and duplicative. And the result is fewer 
jobs and less prosperity here at home.
  So Senator Hatch and I have joined in an effort to simplify our Code, 
remove duplicative or outmoded provisions, and provide incentives for 
trade whenever possible.
  This bill does not by any means cure all of the problems in the 
international tax arena. But it is a good starting point which 
simplifies existing law, reduces the cost of compliance, and begins to 
make rules more rational and more mindful of the competitiveness of 
U.S. businesses. The major provisions include:

       Putting U.S. companies entering into joint ventures in 
     foreign markets on an equal footing with their foreign 
     competitors by eliminating the so-called 10-50 foreign tax 
     credit basket rules.
       Rationalizing the anti-deferral rules by eliminating 
     provisions that duplicate other clauses of the Internal 
     Revenue Code. This is essential if U.S. financial services 
     companies are to keep their leading edge in foreign markets.
       Guaranteeing that the export tax incentive provided by the 
     foreign sales corporation rules would apply to U.S. software 
     sold overseas, and to approved sales of U.S.-made military 
     goods overseas.
       Putting mutual funds on the same footing as individual 
     companies in their ability to attract foreign investors, 
     increasing their investment capital.
       And making it easier for utilities to bid for construction 
     projects overseas.

  These things will make us more efficient and more competitive. It 
will allow companies to put less effort into accounting and filling out 
tax forms, and more into producing, competing, and creating jobs. And 
that is what we need, today, and even more so tomorrow.
  We live in a global economy, Mr. President, and we must help American 
companies compete in this economy if we hope to continue an expansion 
in which a quarter of our growth already comes from exports. The 
International Tax Simplification for American Competitiveness Act is a 
major step in that direction.
  I look forward to working with Senator Hatch and my other colleagues 
on the Finance Committee to have its provisions incorporated into the 
reconciliation bill we will soon be considering.
                                 ______
                                 
      By Mr. LUGAR (for himself, Mr. Harkin, Mr. McConnell, Mr. 
        Santorum, Mr. Roberts, Mr. Cochran, Mr. Craig, Mr. Grassley, 
        Mr. Daschle, Mr. Leahy, Mr. Kerrey, Mr. Baucus, Ms. Landrieu, 
        Mr. Johnson, and Mr. Conrad):
  S. 845. A bill to transfer to the Secretary of Agriculture the 
authority to conduct the census of agriculture, and for other purposes; 
to the Committee on Governmental Affairs.


                 the census of agriculture act of 1997

  Mr. LUGAR. Mr. President, today I rise to introduce legislation that 
will transfer the census of agriculture from the Department of Commerce 
to the Department of Agriculture [USDA]. I am pleased that the 
distinguished ranking member of the Agriculture Committee, Senator 
Harkin, as well as Senators McConnell, Santorum, Daschle, Roberts, 
Leahy, Kerrey, Baucus, Landrieu, Cochran, Conrad, Johnson, Craig, and 
Grassley have joined me as cosponsors of this bill.

  In recent years the census of agriculture has been conducted every 5 
years. Agricultural producers nationwide are asked questions regarding 
their production and sales. The census of agriculture is the only 
source of consistent, county level statistics on agricultural 
operations throughout the United States. It also provides national and 
State data. The census of agriculture is useful in monitoring the 
current status of, as well as documenting changes in, the agricultural 
industry. The number of farms, a major piece of data resulting from the 
census, is taken into account in the allocation of funding for several 
USDA programs.

[[Page S5361]]

  Last year Congress provided funds to USDA to allow USDA, in 
cooperation with the Department of Commerce, to conduct the next census 
without any substantive changes in scope, coverage, or timing. This 
transfer of funding necessitates the transfer of the authority.
  Transferring the authority for the census of agriculture to the USDA 
makes common sense. This move would integrate the agricultural 
statistics programs of the two Departments and eliminate duplication. 
USDA states that cost savings will result with one agency given primary 
authority over the content of the census as well as dissemination of 
its results.
  The issue of moving the census surfaced during final conference 
committee deliberations on the 1996 Federal Agricultural Improvement 
and Reform Act. Given the time constraints of that conference, a 
provision to transfer the census of agriculture to USDA was not 
included in the bill. Subsequent legislation was passed by the House, 
but did not receive approval from the Senate before the end of the 
session.
  Last year, the Department of Commerce expressed some interest in 
changing the definition of a farm, which is now defined as sales of 
$1,000 or more per year. While USDA has stated there will be no 
substantive changes with how the upcoming census is carried out, it is 
more logical to provide the authority to set the definition to the 
Department whose programs would be most affected by a change.
  Many agricultural associations and organizations, including the 
American Farm Bureau Federation, support the transfer of the census of 
agriculture to USDA. Last month, USDA proposed legislation which is 
virtually identical to this bill.
  I ask my colleagues for their support of this legislation. I ask 
unanimous consent that the bill and a section-by-section analysis of 
the bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 845

       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 ``Census of Agriculture Act of 
     1997''.

     SEC. 2. TRANSFER TO THE SECRETARY OF AGRICULTURE OF THE 
                   AUTHORITY TO CONDUCT THE CENSUS OF AGRICULTURE.

       (a) In General.--Section 526 of the Revised Statutes (7 
     U.S.C. 2204) is amended by adding at the end the following:
       ``(c) Census of Agriculture.--
       ``(1) In general.--In 1998 and every 5th year thereafter, 
     the Secretary of Agriculture shall take a census of 
     agriculture.
       ``(2) Methods.--In connection with the census, the 
     Secretary may conduct any survey or other data collection, 
     and employ any sampling or other statistical method, that the 
     Secretary determines is appropriate.
       ``(3) Year of data.--The data collected in each census 
     taken under this subsection shall relate to the year 
     immediately preceding the year in which the census is taken.
       ``(4) Enforcement.--
       ``(A) Fraud.--A person over 18 years of age who willfully 
     gives an answer that is false to a question submitted to the 
     person in connection with a census under this subsection 
     shall be fined not more than $500.
       ``(B) Refusal or neglect to answer questions.--A person 
     over 18 years of age who refuses or neglects to answer a 
     question submitted to the person in connection with a census 
     under this subsection shall be fined not more than $100.
       ``(C) Social security number.--The failure or refusal of a 
     person to disclose the person's social security number in 
     response to a request made in connection with any census or 
     other activity under this subsection shall not be a violation 
     under this paragraph.
       ``(D) Religious information.--Notwithstanding any other 
     provision of this subsection, no person shall be compelled to 
     disclose information relative to the religious beliefs of the 
     person or to membership of the person in a religious body.
       ``(5) Geographic coverage.--A census under this subsection 
     shall include--
       ``(A) each of the several States of the United States;
       ``(B) as determined by the Secretary, the District of 
     Columbia, the Commonwealth of Puerto Rico, the Commonwealth 
     of the Northern Mariana Islands, the United States Virgin 
     Islands, and Guam; and
       ``(C) with the concurrence of the Secretary and the 
     Secretary of State, any other possession or area over which 
     the United States exercises jurisdiction, control, or 
     sovereignty.
       ``(6) Cooperation with the secretary of commerce.--
       ``(A) Information provided to the secretary of 
     agriculture.--The Secretary of Commerce may, on a written 
     request by the Secretary of Agriculture, provide to the 
     Secretary of Agriculture any information collected under 
     title 13, United States Code, that the Secretary of 
     Agriculture considers necessary for the taking of a census or 
     survey under this subsection.
       ``(B) Information provided to the secretary of commerce.--
     The Secretary of Agriculture may, on a written request by the 
     Secretary of Commerce, provide to the Secretary of Commerce 
     any information collected in a census taken under this 
     subsection that the Secretary of Commerce considers necessary 
     for the taking of a census or survey under title 13, United 
     States Code.
       ``(C) Confidentiality.--
       ``(i) In general.--Information obtained under this 
     paragraph may not be used for any purpose other than the 
     statistical purposes for which the information is supplied.
       ``(ii) Census information.--For purposes of sections 9 and 
     214 of title 13, United States Code, any information provided 
     under subparagraph (B) shall be considered information 
     furnished under the provisions of title 13, United States 
     Code.
       ``(7) Regulations.--A regulation necessary to carry out 
     this subsection may be promulgated by--
       ``(A) the Secretary of Agriculture, to the extent that a 
     matter under the jurisdiction of the Secretary is involved; 
     and
       ``(B) the Secretary of Commerce, to the extent that a 
     matter under the jurisdiction of the Secretary of Commerce is 
     involved.''.
       (b) Conforming Amendments.--
       (1)(A) Subchapter II of chapter 5 of title 13, United 
     States Code, is amended by striking the subchapter heading 
     and inserting the following:

       ``SUBCHAPTER II--POPULATION, HOUSING, AND UNEMPLOYMENT''.

       (B) Section 142 of title 13, United States Code, is 
     repealed.
       (C) The analysis of chapter 5 of title 13, United States 
     Code, is amended--
       (i) by striking the item relating to the heading for 
     subchapter II and inserting the following:

       ``SUBCHAPTER II--POPULATION, HOUSING, AND UNEMPLOYMENT'';

       (ii) by striking the item relating to section 142; and
       (iii) by inserting after the item relating to section 161 
     the following:

``163. Authority of other agencies.''.

       (2) Section 343(a)(11)(F) of the Consolidated Farm and 
     Rural Development Act (7 U.S.C. 1991(a)(11)(F)) is amended by 
     striking ``taken under section 142 of title 13, United States 
     Code''.

     SEC. 3. CONFIDENTIALITY OF INFORMATION.

       (a) Information Provided to the Secretary of Agriculture.--
       (1) Authority to provide information.--Section 9(a) of 
     title 13, United States Code, is amended by inserting after 
     ``chapter 10 of this title'' the following: ``or section 
     526(c)(6) of the Revised Statutes (7 U.S.C. 2204(c)(6))''.
       (2) Confidentiality of information.--Section 1770(d) of the 
     Food Security Act of 1985 (7 U.S.C. 2276(d)) is amended by 
     striking paragraph (5) and inserting the following:
       ``(5) subsections (a) and (c) of section 526 of the Revised 
     Statutes (7 U.S.C. 2204);''.
       (b) Information Provided to the Secretary of Commerce.--
     Section 1770 of the Food Security Act of 1985 (7 U.S.C. 2276) 
     is amended by adding at the end the following:
       ``(e) Information Provided to the Secretary of Commerce.--
     This section shall not prohibit the release of information 
     under section 526(c)(6) of the Revised Statutes (7 U.S.C. 
     2204(c)(6)).''.
                                  ____


              Ag Census Bill--Section-by-Section Analysis

       Section 1. Short Title. Section 1 would provide that the 
     act may be cited as the ``Census of Agriculture Act of 
     1997.''
       Section 2. Transfer to the Secretary of Agriculture of the 
     Authority To Conduct the Census of Agriculture. Section 2(a) 
     would amend section 526 of the Revised Statutes (7 U.S.C. 
     2204) to require the Secretary of Agriculture to take a 
     census of agriculture in 1998 and every 5th year thereafter. 
     The data collected in each census would relate to the year 
     preceding the year that the census was taken. Any person who 
     refuses to answer or provides false answers to questions in 
     connection with the census would be subject to penalties, 
     except if the refusal is to disclose the person's social 
     security number.
       Section 2(a) also would authorize the Secretaries of 
     Agriculture and Commerce to share information necessary for 
     taking a census. Upon written request by the Secretary of 
     Agriculture, the Secretary of Commerce would be authorized to 
     furnish certain information to be used for statistical 
     purposes. Upon written request by the Secretary of Commerce, 
     the Secretary of Agriculture would be authorized to furnish 
     census information to be used for statistical purposes.
       Section 2(b) would repeal section 142 of title 13, United 
     States Code. Section 142 of title 13, United States Code, 
     requires the Secretary of Commerce to take the census of 
     agriculture. This repeal is a confirming amendment necessary 
     to effectuate the transfer of the authority to conduct the 
     census of agriculture from the Secretary of Commerce to the 
     Secretary of Agriculture. Section 2(b) also would make a 
     conforming amendment to the Consolidated Farm and Rural 
     Development Act to refer to the census of agriculture as 
     under section 526(c) of the Revised Statutes.
       Section 3. Confidentiality of Information. Section 3 would 
     make amendments to ensure

[[Page S5362]]

     the confidentiality of information furnished for the census 
     of agriculture.
                                 ______
                                 
      By Mr. AKAKA:
  S. 846. A bill to amend the Federal Power Act to remove the 
jurisdiction of the Federal Energy Regulatory Commission to license 
projects on fresh waters in the State of Hawaii; to the Committee on 
Energy and Natural Resources.


              the federal power act amendment act of 1997

  Mr. AKAKA. Madam President, the State of Hawaii, its delegation in 
Congress, and conservation organizations throughout the State are 
deeply concerned about Federal efforts to regulate hydroelectric 
projects on State waters. Across the United States, the question of who 
should have authority for hydropower regulation--the State or the 
Federal Government--is very contentious. But in the case of the fresh 
water streams of Hawaii, the answer is clear. The State of Hawaii, not 
the Federal Energy Regulatory Commission, should have the authority for 
hydropower regulation in Hawaii, if the Commission finds it has no 
mandatory jurisdiction under the Federal Power Act.
  Those who care for Hawaii's rivers and streams recognize that 
unnecessary Federal intervention may have serious repercussions for our 
fresh water resources and the ecosystems that depend upon them.
  The State of Hawaii has demonstrated its commitment to protect stream 
resources by instituting a new water code, adopting instream flow 
standards, launching a comprehensive Hawaii stream assessment, and 
organizing a steam protection and management task force.
  The Federal interest in protecting the vast interconnected river 
system of North America is misplaced in our isolated mid-Pacific 
locale. The issues of interstate commerce, protecting military ports, 
or long interstate rivers are not applicable.
  Therefore, I am introducing legislation to terminate FERC's voluntary 
jurisdiction over hydropower projects on the fresh waters of the State 
of Hawaii. This legislation is nearly identical to one passed by the 
Senate during the 103d Congress. In 104th Congress, the Senate Energy 
and Natural Resources Committee again approved the bill. I will 
continue to fight for the passage of this legislation in the 105th 
Congress.
                                 ______
                                 
      By Mr. COATS (for himself, Mr. Lieberman, Mr. Brownback, Mr. 
        Ashcroft, Mr. Coverdell, and Mr. Gregg):
  S. 847. A bill to provide scholarship assistance for District of 
Columbia elementary and secondary school students; to the Committee on 
Governmental Affairs.


  THE DISTRICT OF COLUMBIA STUDENT OPPORTUNITY SCHOLARSHIP ACT OF 1997

  Mr. COATS. Mr. President, today is a very important day for students 
in the District of Columbia. Today, I join Senator Lieberman, Senator 
Brownback, Senator Ashcroft, and Senator Gregg in introducing the 
District of Columbia Student Opportunity Scholarship Act of 1997, also 
known as the DC SOS Act. The DC SOS Act provides immediate relief to 
thousands of the District's neediest students who are consigned to 
failing, violent public schools. This bill is a direct response to the 
needs of thousands of families in our Capital City who have, for too 
long, been expected to accept under-performing and often violent 
schools for their children. The DC SOS Act provides real educational 
opportunities to almost 4,000 District students.
  Many of you may remember that a very similar initiative was 
introduced by former Representative Gunderson, and included in the 1996 
D.C. appropriations bill. At that time, a majority of the Senate, 56 
Senators in all, were supportive of the idea to provide scholarships to 
poor students in the District of Columbia. Tragically, that program, 
which would have benefited 5,000 of our Nation's most needy students, 
was blocked by the threat of a filibuster.
  During the 1996 D.C. Appropriations debate, many of those who opposed 
providing scholarships for poor District students argued that the 
initiative was opposed by the residents of the District. That argument 
cannot be used this time. A recent bipartisan survey conducted in the 
District of Columbia found that fully 64 percent of Washingtonians 
would send their children to private school if they had the option and 
if money were not an issue; 61 percent of single parents think that 
creating a school choice program for the District is an excellent or 
good use of taxpayer dollars. And those most likely to opt out of the 
public system are residents of the wards 7 and 8, the areas with the 
most troubled public schools. Clearly, the residents of the District 
are ready for a change.
  But these surveys should not surprise us. The D.C. schools have not 
improved since the defeat of the D.C. scholarship program in 1996. 
Rather, the schools got so bad that the D.C. Control Board fired 
Superintendent Franklin Smith, stripped control of the school from the 
D.C. Board of Education, and installed a new Chief Executive and 
Superintendent, retired Army Gen. Julius W. Becton, Jr. Perhaps General 
Becton can turn the D.C. school system around. But I am not willing to 
tell a family who fears for the safety of their child that they should 
wait and given General Becton 5 or 10 years to test his approaches, 
especially because changes have been promised by five new 
superintendents in the last 15 years.
  In February of this year, the Washington Post ran a five-part series 
on the D.C. school system, chronicling its complete breakdown. A school 
system where jobs for bureaucrats are more important than providing 
textbooks. A school system that employs almost nine times more central 
office administrators than the national average, despite a decreasing 
student population, and a shortage of qualified teachers and 
principals.
  Many of the district's 152 schools are in a state of terrible 
disrepair. Students and teachers contend with leaking roofs, bitterly 
cold classrooms, and thousands of fire code violations. Yet, in 1996, 
the D.C. Board of Education allocated $1.4 million for its own use, an 
amount far greater than that spent by neighboring counties, and 
$200,000 more than is spent by the Chicago school system, which is five 
times larger.
  Unfortunately, these problems of infrastructure are minor concerns 
compared to violence and basic educational failure. Violence in the 
schools is at an alltime high--both student on student, and student on 
teacher--even as the violent crime rate in the country as a whole 
drops. And stories of academic mediocrity have become so common that 
they have lost their power to shock. Why is there no public outcry that 
the D.C. school district, which spends the most per pupil of any 
district in the country, has the Nation's lowest reported scores on the 
NAEP exams? Where is the outrage that only 35 percent of students are 
reading at grade level?
  Students are routinely promoted regardless of whether they have 
progressed in their studies and graduate from the school system with 
little to show for their 12 years of schooling. Eighty-five percent of 
D.C. public school graduates who enter the University of the District 
of Columbia need 2 years of remedial education before beginning their 
course work toward degrees. And more than half of all graduates who 
took the U.S. Armed Forces Qualification Test in 1994 failed. This last 
statistic is particularly troubling, because it blocks a traditional 
escape route from disadvantage.
  We are asking poor, inner-city children and their parents to tolerate 
circumstances that most middle-class and affluent Americans would not 
tolerate for one moment. Why should these families have to suffer 
violence and the lack of educational opportunities for another week, 
let alone the years that General Becton himself admits it will be 
before reform has any effect?
  But those of us concerned about this issue face an obstacle. No one 
seems outraged enough about the betrayal of these children by 
indifferent adults to make major changes. Not suburban whites, who are 
often satisfied with their schools. Not politicians, some of whom are 
either blindly obedient to teachers unions or may simply have different 
political constituencies than these kids and their parents.
  The DC SOS Act is an attempt to end this conspiracy of complacency. 
In introducing this bill today, I join with a coalition of members in 
both House of Congress who seek to provide scholarships for low-income 
students in the District of Columbia to enable them to attend the 
public or private school of

[[Page S5363]]

their choice or to receive tutoring assistance. This bill is the single 
most practical, immediate, effective way to help actual children, with 
flesh and blood and futures, rather than continuing to ignore this very 
serious situation.
  I find it inconceivable that anyone, in good conscience, could 
condemn the District's low income children to attend schools that not 
only fail to educate them, but cannot even assure their personal 
safety. Some of the public schools in this city have become wastelands 
of violence and despair. We cannot begin to imagine the fears of a 
mother who is forced, required, compelled to send her child through 
barbed wire and metal detectors into a combat zone, masquerading as an 
educational institution.
  The introduction, and ultimate passage of this bill, will signal a 
fundamental shift in priorities. It would indicate to parents in the 
District of Columbia and all across America that we care about their 
children more than we care about maintaining the status quo; that we 
understand the depth of the problem in our Nation's public schools and 
that we are finally willing to address it.
  Opponents of this bill should carefully consider what they would do 
if they had a child assigned to a school where physical attacks, 
robberies, and drug sales were rampant. Low-income parents, who face 
this circumstance every day, deserve a voice and a choice.
  I urge my colleagues to join me in supporting the D.C. Student 
Opportunity Scholarship Act of 1997. With this bill we signal our 
intention to provide a safe and effective school for every child in the 
District of Columbia.
  Mr. President, I ask unanimous consent that this act, the District of 
Columbia Student Opportunity Scholarship Act of 1997, be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 847

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

     SECTION 1. SHORT TITLE; FINDINGS; PRECEDENTS.

       (a) Short Title.--This Act may be cited as the ``District 
     of Columbia Student Opportunity Scholarship Act of 1997''.
       (b) Findings.--Congress makes the following findings:
       (1) Public education in the District of Columbia is in a 
     crisis, as evidenced by the following:
       (A) The District of Columbia schools have the lowest 
     average of any school system in the Nation on the National 
     Assessment of Education Progress.
       (B) 72 percent of fourth graders in the District of 
     Columbia tested below basic proficiency on the National 
     Assessment of Education Progress in 1994.
       (C) Since 1991, there has been a net decline in the reading 
     skills of District of Columbia students as measured in scores 
     on the standardized Comprehensive Test of Basic Skills.
       (D) At least 40 percent of District of Columbia students 
     drop out of or leave the school system before graduation.
       (E) The National Education Goals Panel reported in 1996 
     that both students and teachers in District of Columbia 
     schools are subjected to levels of violence that are twice 
     the national average.
       (F) Nearly two-thirds of District of Columbia teachers 
     reported that violent student behavior is a serious 
     impediment to teaching.
       (G) Many of the District of Columbia's 152 schools are in a 
     state of terrible disrepair, including leaking roofs, 
     bitterly cold classrooms, and numerous fire code violations.
       (2) Significant improvements in the education of 
     educationally deprived children in the District of Columbia 
     can be accomplished by--
       (A) increasing educational opportunities for the children 
     by expanding the range of educational choices that best meet 
     the needs of the children;
       (B) fostering diversity and competition among school 
     programs for the children;
       (C) providing the families of the children more of the 
     educational choices already available to affluent families; 
     and
       (D) enhancing the overall quality of education in the 
     District of Columbia by increasing parental involvement in 
     the direction of the education of the children.
       (3) The 350 private schools in the District of Columbia and 
     the surrounding area offer a more safe and stable learning 
     environment than many of the public schools.
       (4) Costs are often much lower in private schools than 
     corresponding costs in public schools.
       (5) Not all children are alike and therefore there is no 
     one school or program that fits the needs of all children.
       (6) The formation of sound values and moral character is 
     crucial to helping young people escape from lives of poverty, 
     family break-up, drug abuse, crime, and school failure.
       (7) In addition to offering knowledge and skills, education 
     should contribute positively to the formation of the internal 
     norms and values which are vital to a child's success in life 
     and to the well-being of society.
       (8) Schools should help to provide young people with a 
     sound moral foundation which is consistent with the values of 
     their parents. To find such a school, parents need a full 
     range of choice to determine where their children can best be 
     educated.
       (c) Precedents.--The United States Supreme Court has 
     determined that programs giving parents choice and increased 
     input in their children's education, including the choice of 
     a religious education, do not violate the Constitution. The 
     Supreme Court has held that as long as the beneficiary 
     decides where education funds will be spent on such 
     individual's behalf, public funds can be used for education 
     in a religious institution because the public entity has 
     neither advanced nor hindered a particular religion and 
     therefore has not violated the establishment clause of the 
     first amendment to the Constitution. Supreme Court precedents 
     include--
       (1) Wisconsin v. Yoder, 406 U.S. 205 (1972); Pierce v. 
     Society of Sisters, 268 U.S. 510 (1925); and Meyer v. 
     Nebraska, 262 U.S. 390 (1923) which held that parents have 
     the primary role in and are the primary decision makers in 
     all areas regarding the education and upbringing of their 
     children;
       (2) Mueller v. Allen, 463 U.S. 388 (1983) which declared a 
     Minnesota tax deduction program that provided State income 
     tax benefits for educational expenditures by parents, 
     including tuition in religiously affiliated schools, does not 
     violate the Constitution;
       (3) Witters v. Department of Services for the Blind, 474 
     U.S. 481 (1986) in which the Supreme Court ruled unanimously 
     that public funds for the vocational training of the blind 
     could be used at a Bible college for ministry training; and
       (4) Zobrest v. Catalina Foothills School District, 509 U.S. 
     1 (1993) which held that a deaf child could receive an 
     interpreter, paid for by the public, in a private religiously 
     affiliated school under the Individual with Disabilities 
     Education Act (20 U.S.C. 1400 et seq.). The case held that 
     providing an interpreter in a religiously affiliated school 
     did not violate the establishment clause of the first 
     amendment of the Constitution.

     SEC. 2. DEFINITIONS.

       As used in this Act--
       (1) the term ``Board'' means the Board of Directors of the 
     Corporation established under section 3(b)(1);
       (2) the term ``Corporation'' means the District of Columbia 
     Scholarship Corporation established under section 3(a);
       (3) the term ``eligible institution''--
       (A) in the case of an eligible institution serving a 
     student who receives a tuition scholarship under section 
     4(d)(1), means a public, private, or independent elementary 
     or secondary school; and
       (B) in the case of an eligible institution serving a 
     student who receives an enhanced achievement scholarship 
     under section 4(d)(2), means an elementary or secondary 
     school, or an entity that provides services to a student 
     enrolled in an elementary or secondary school to enhance such 
     student's achievement through activities described in section 
     4(d)(2); and
       (4) the term ``poverty line'' means the income official 
     poverty line (as defined by the Office of Management and 
     Budget, and revised annually in accordance with section 
     673(2) of the Community Services Block Grant Act (42 U.S.C. 
     9902(2)) applicable to a family of the size involved.

     SEC. 3. DISTRICT OF COLUMBIA SCHOLARSHIP CORPORATION.

       (a) General Requirements.--
       (1) In general.--There is authorized to be established a 
     private, nonprofit corporation, to be known as the ``District 
     of Columbia Scholarship Corporation'', which is neither an 
     agency nor establishment of the United States Government or 
     the District of Columbia Government.
       (2) Duties.--The Corporation shall have the responsibility 
     and authority to administer, publicize, and evaluate the 
     scholarship program in accordance with this Act, and to 
     determine student and school eligibility for participation in 
     such program.
       (3) Consultation.--The Corporation shall exercise its 
     authority--
       (A) in a manner consistent with maximizing educational 
     opportunities for the maximum number of interested families; 
     and
       (B) in consultation with the District of Columbia Board of 
     Education or entity exercising administrative jurisdiction 
     over the District of Columbia Public Schools, the 
     Superintendent of the District of Columbia Public Schools, 
     and other school scholarship programs in the District of 
     Columbia.
       (4) Application of provisions.--The Corporation shall be 
     subject to the provisions of this Act, and, to the extent 
     consistent with this Act, to the District of Columbia 
     Nonprofit Corporation Act (D.C. Code, sec. 29-501 et seq.).
       (5) Residence.--The Corporation shall have its place of 
     business in the District of Columbia and shall be considered, 
     for purposes of venue in civil actions, to be a resident of 
     the District of Columbia.
       (6) Fund.--There is established in the Treasury a fund that 
     shall be known as the District of Columbia Scholarship Fund, 
     to be administered by the Secretary of the Treasury.

[[Page S5364]]

       (7) Disbursement.--The Secretary of the Treasury shall make 
     available and disburse to the Corporation, before October 15 
     of each fiscal year or not later than 15 days after the date 
     of enactment of an Act making appropriations for the District 
     of Columbia for such year, whichever occurs later, such funds 
     as have been appropriated to the District of Columbia 
     Scholarship Fund for the fiscal year in which such 
     disbursement is made.
       (8) Availability.--Funds authorized to be appropriated 
     under this Act shall remain available until expended.
       (9) Uses.--Funds authorized to be appropriated under this 
     Act shall be used by the Corporation in a prudent and 
     financially responsible manner, solely for scholarships, 
     contracts, and administrative costs.
       (10) Authorization.--
       (A) In general.--There are authorized to be appropriated to 
     the District of Columbia Scholarship Fund--
       (i) $7,000,000 for fiscal year 1998;
       (ii) $8,000,000 for fiscal year 1999; and
       (iii) $10,000,000 for each of fiscal years 2000 through 
     2002.
       (B) Limitation.--Not more than $500,000 of the amount 
     appropriated to carry out this Act for any fiscal year may be 
     used by the Corporation for any purpose other than assistance 
     to students.
       (b) Organization and Management; Board of Directors.--
       (1) Board of directors; membership.--
       (A) In general.--The Corporation shall have a Board of 
     Directors (referred to in this Act as the ``Board''), 
     comprised of 7 members with 6 members of the Board appointed 
     by the President not later than 30 days after receipt of 
     nominations from the Speaker of the House of Representatives 
     and the majority leader of the Senate.
       (B) House nominations.--The President shall appoint 3 of 
     the members from a list of 9 individuals nominated by the 
     Speaker of the House of Representatives in consultation with 
     the minority leader of the House of Representatives.
       (C) Senate nominations.--The President shall appoint 3 
     members from a list of 9 individuals nominated by the 
     majority leader of the Senate in consultation with the 
     minority leader of the Senate.
       (D) Deadline.--The Speaker of the House of Representatives 
     and majority leader of the Senate shall submit their 
     nominations to the President not later than 30 days after the 
     date of the enactment of this Act.
       (E) Appointee of mayor.--The Mayor shall appoint 1 member 
     of the Board not later than 60 days after the date of the 
     enactment of this Act.
       (F) Possible interim members.--If the President does not 
     appoint the 6 members of the Board in the 30-day period 
     described in subparagraph (A), then the Speaker of the House 
     of Representatives and the Majority Leader of the Senate 
     shall each appoint 2 members of the Board, and the Minority 
     Leader of the House of Representatives and the Minority 
     Leader of the Senate shall each appoint 1 of the Board, from 
     among the individuals nominated pursuant to subparagraphs (A) 
     and (B), as the case may be. The appointees under the 
     preceding sentence together with the appointee of the Mayor, 
     shall serve as an interim Board with all the powers and other 
     duties of the Board described in this Act, until the 
     President makes the appointments as described in this 
     subsection.
       (2) Powers.--All powers of the Corporation shall vest in 
     and be exercised under the authority of the Board.
       (3) Elections.--Members of the Board annually shall elect 1 
     of the members of the Board to be chairperson of the Board.
       (4) Residency.--All members appointed to the Board shall be 
     residents of the District of Columbia at the time of 
     appointment and while serving on the Board.
       (5) Nonemployee.--No member of the Board may be an employee 
     of the United States Government or the District of Columbia 
     Government when appointed to or during tenure on the Board, 
     unless the individual is on a leave of absence from such a 
     position while serving on the Board.
       (6) Incorporation.--The members of the initial Board shall 
     serve as incorporators and shall take whatever steps are 
     necessary to establish the Corporation under the District of 
     Columbia Nonprofit Corporation Act (D.C. Code, sec. 29-501 et 
     seq.).
       (7) General term.--The term of office of each member of the 
     Board shall be 5 years, except that any member appointed to 
     fill a vacancy occurring prior to the expiration of the term 
     for which the predecessor was appointed shall be appointed 
     for the remainder of such term.
       (8) Consecutive term.--No member of the Board shall be 
     eligible to serve in excess of 2 consecutive terms of 5 years 
     each. A partial term shall be considered as 1 full term. Any 
     vacancy on the Board shall not affect the Board's power, but 
     shall be filled in a manner consistent with this Act.
       (9) No benefit.--No part of the income or assets of the 
     Corporation shall inure to the benefit of any Director, 
     officer, or employee of the Corporation, except as salary or 
     reasonable compensation for services.
       (10) Political activity.--The Corporation may not 
     contribute to or otherwise support any political party or 
     candidate for elective public office.
       (11) No officers or employees.--The members of the Board 
     shall not, by reason of such membership, be considered to be 
     officers or employees of the United States Government or of 
     the District of Columbia Government.
       (12) Stipends.--The members of the Board, while attending 
     meetings of the Board or while engaged in duties related to 
     such meetings or other activities of the Board pursuant to 
     this Act, shall be provided a stipend. Such stipend shall be 
     at the rate of $150 per day for which the member of the Board 
     is officially recorded as having worked, except that no 
     member may be paid a total stipend amount in any calendar 
     year in excess of $5,000.
       (c) Officers and Staff.--
       (1) Executive director.--The Corporation shall have an 
     Executive Director, and such other staff, as may be appointed 
     by the Board for terms and at rates of compensation, not to 
     exceed level EG-16 of the Educational Service of the District 
     of Columbia, to be fixed by the Board.
       (2) Staff.--With the approval of the Board, the Executive 
     Director may appoint and fix the salary of such additional 
     personnel as the Executive Director considers appropriate.
       (3) Annual rate.--No staff of the Corporation may be 
     compensated by the Corporation at an annual rate of pay 
     greater than the annual rate of pay of the Executive 
     Director.
       (4) Service.--All officers and employees of the Corporation 
     shall serve at the pleasure of the Board.
       (5) Qualification.--No political test or qualification may 
     be used in selecting, appointing, promoting, or taking other 
     personnel actions with respect to officers, agents, or 
     employees of the Corporation.
       (d) Powers of the Corporation.--
       (1) Generally.--The Corporation is authorized to obtain 
     grants from, and make contracts with, individuals and with 
     private, State, and Federal agencies, organizations, and 
     institutions.
       (2) Hiring authority.--The Corporation may hire, or accept 
     the voluntary services of, consultants, experts, advisory 
     boards, and panels to aid the Corporation in carrying out 
     this Act.
       (e) Financial Management and Records.--
       (1) Audits.--The financial statements of the Corporation 
     shall be--
       (A) maintained in accordance with generally accepted 
     accounting principles for nonprofit corporations; and
       (B) audited annually by independent certified public 
     accountants.
       (2) Report.--The report for each such audit shall be 
     included in the annual report to Congress required by section 
     13(c).

     SEC. 4. SCHOLARSHIPS AUTHORIZED.

       (a) Eligible Students.--The Corporation is authorized to 
     award tuition scholarships under subsection (d)(1) and 
     enhanced achievement scholarships under subsection (d)(2) to 
     students in kindergarten through grade 12--
       (1) who are residents of the District of Columbia; and
       (2) whose family income does not exceed 185 percent of the 
     poverty line.
       (b) Scholarship Priority.--
       (1) First.--The Corporation shall first award scholarships 
     to students described in subsection (a) who--
       (A) are enrolled in a District of Columbia public school or 
     preparing to enter a District of Columbia kindergarten, 
     except that this subparagraph shall apply only for academic 
     years 1997, 1998, and 1999; or
       (B) have received a scholarship from the Corporation in the 
     year preceding the year for which the scholarship is awarded.
       (2) Second.--If funds remain for a fiscal year for awarding 
     scholarships after awarding scholarships under paragraph (1), 
     the Corporation shall award scholarships to students 
     described in subsection (a) who are not described in 
     paragraph (1).
       (c) Special Rule.--The Corporation shall attempt to ensure 
     an equitable distribution of scholarship funds to students at 
     diverse academic achievement levels.
       (d) Use of Scholarship.--
       (1) Tuition scholarships.--A tuition scholarship may be 
     used for the payment of the cost of the tuition and mandatory 
     fees at a public, private, or independent school located 
     within the geographic boundaries of the District of Columbia 
     or the cost of the tuition and mandatory fees at a public, 
     private, or independent school located within Montgomery 
     County, Maryland; Prince Georges County, Maryland; Arlington 
     County, Virginia; Alexandria City, Virginia; Falls Church 
     City, Virginia; or Fairfax County, Virginia.
       (2) Enhanced achievement scholarship.--An enhanced 
     achievement scholarship may be used only for the payment of 
     the costs of tuition and mandatory fees for, or 
     transportation to attend, a program of instruction provided 
     by an eligible institution which enhances student achievement 
     of the core curriculum and is operated outside of regular 
     school hours to supplement the regular school program.
       (e) Not School Aid.--A scholarship under this Act shall be 
     considered assistance to the student and shall not be 
     considered assistance to an eligible institution.

     SEC. 5. SCHOLARSHIP PAYMENTS AND AMOUNTS.

       (a) Awards.--From the funds made available under this Act, 
     the Corporation shall award a scholarship to a student and 
     make payments in accordance with section 10 on behalf of such 
     student to a participating eligible institution chosen by the 
     parent of the student.
       (b) Notification.--Each eligible institution that desires 
     to receive payment under

[[Page S5365]]

     subsection (a) shall notify the Corporation not later than 10 
     days after--
       (1) the date that a student receiving a scholarship under 
     this Act is enrolled, of the name, address, and grade level 
     of such student;
       (2) the date of the withdrawal or expulsion of any student 
     receiving a scholarship under this Act, of the withdrawal or 
     expulsion; and
       (3) the date that a student receiving a scholarship under 
     this Act is refused admission, of the reasons for such a 
     refusal.
       (c) Tuition Scholarship.--
       (1) Equal to or below poverty line.--For a student whose 
     family income is equal to or below the poverty line, a 
     tuition scholarship may not exceed the lesser of--
       (A) the cost of tuition and mandatory fees for, and 
     transportation to attend, an eligible institution; or
       (B) $3,200 for fiscal year 1998, with such amount adjusted 
     in proportion to changes in the Consumer Price Index for all 
     urban consumers published by the Department of Labor for each 
     of fiscal years 1999 through 2002.
       (2) Above poverty line.--For a student whose family income 
     is greater than the poverty line, but not more than 185 
     percent of the poverty line, a tuition scholarship may not 
     exceed the lesser of--
       (A) 75 percent of the cost of tuition and mandatory fees 
     for, and transportation to attend, an eligible institution; 
     or
       (B) $2,400 for fiscal year 1998, with such amount adjusted 
     in proportion to changes in the Consumer Price Index for all 
     urban consumers published by the Department of Labor for each 
     of fiscal years 1999 through 2002.
       (d) Enhanced Achievement Scholarship.--An enhanced 
     achievement scholarship may not exceed the lesser of--
       (1) the costs of tuition and mandatory fees for, or 
     transportation to attend, a program of instruction at an 
     eligible institution; or
       (2) $500 for 1998, with such amount adjusted in proportion 
     to changes in the Consumer Price Index for all urban 
     consumers published by the Department of Labor for each of 
     fiscal years 1999 through 2002.

     SEC. 6. CERTIFICATION OF ELIGIBLE INSTITUTIONS.

       (a) Application.--An eligible institution that desires to 
     receive a payment on behalf of a student who receives a 
     scholarship under this Act shall file an application with the 
     Corporation for certification for participation in the 
     scholarship program under this Act. Each such application 
     shall--
       (1) demonstrate that the eligible institution has operated 
     with not less than 25 students during the 3 years preceding 
     the year for which the determination is made unless the 
     eligible institution is applying for certification as a new 
     eligible institution under subsection (c);
       (2) contain an assurance that the eligible institution will 
     comply with all applicable requirements of this Act;
       (3) contain an annual statement of the eligible 
     institution's budget; and
       (4) describe the eligible institution's proposed program, 
     including personnel qualifications and fees.
       (b) Certification.--
       (1) In general.--Except as provided in paragraph (3), not 
     later than 60 days after receipt of an application in 
     accordance with subsection (a), the Corporation shall certify 
     an eligible institution to participate in the scholarship 
     program under this Act.
       (2) Continuation.--An eligible institution's certification 
     to participate in the scholarship program shall continue 
     unless such eligible institution's certification is revoked 
     in accordance with subsection (d).
       (c) New Eligible Institution.--
       (1) In general.--An eligible institution that did not 
     operate with at least 25 students in the 3 years preceding 
     the year for which the determination is made may apply for a 
     1-year provisional certification to participate in the 
     scholarship program under this Act for a single year by 
     providing to the Corporation not later than July 1 of the 
     year preceding the year for which the determination is made--
       (A) a list of the eligible institution's board of 
     directors;
       (B) letters of support from not less than 10 members of the 
     community served by such eligible institution;
       (C) a business plan;
       (D) an intended course of study;
       (E) assurances that the eligible institution will begin 
     operations with not less than 25 students;
       (F) assurances that the eligible institution will comply 
     with all applicable requirements of this Act; and
       (G) a statement that satisfies the requirements of 
     paragraphs (2) and (4) of subsection (a).
       (2) Certification.--Not later than 60 days after the date 
     of receipt of an application described in paragraph (1), the 
     Corporation shall certify in writing the eligible 
     institution's provisional certification to participate in the 
     scholarship program under this Act unless the Corporation 
     determines that good cause exists to deny certification.
       (3) Renewal of provisional certification.--After receipt of 
     an application under paragraph (1) from an eligible 
     institution that includes a statement of the eligible 
     institution's budget completed not earlier than 12 months 
     before the date such application is filed, the Corporation 
     shall renew an eligible institution's provisional 
     certification for the second and third years of the school's 
     participation in the scholarship program under this Act 
     unless the Corporation finds--
       (A) good cause to deny the renewal, including a finding of 
     a pattern of violation of requirements described in section 
     7(a); or
       (B) consistent failure of 25 percent or more of the 
     students receiving scholarships under this Act and attending 
     such school to make appropriate progress (as determined by 
     the Corporation) in academic achievement.
       (4) Denial of certification.--If provisional certification 
     or renewal of provisional certification under this subsection 
     is denied, then the Corporation shall provide a written 
     explanation to the eligible institution of the reasons for 
     such denial.
       (d) Revocation of Eligibility.--
       (1) In general.--The Corporation, after notice and hearing, 
     may revoke an eligible institution's certification to 
     participate in the scholarship program under this Act for a 
     year succeeding the year for which the determination is made 
     for--
       (A) good cause, including a finding of a pattern of 
     violation of program requirements described in section 7(a); 
     or
       (B) consistent failure of 25 percent or more of the 
     students receiving scholarships under this Act and attending 
     such school to make appropriate progress (as determined by 
     the Corporation) in academic achievement.
       (2) Explanation.--If the certification of an eligible 
     institution is revoked, the Corporation shall provide a 
     written explanation of its decision to such eligible 
     institution and require a pro rata refund of the payments 
     received under this Act.

     SEC. 7. PARTICIPATION REQUIREMENTS FOR ELIGIBLE INSTITUTIONS.

       (a) Requirements.--Each eligible institution participating 
     in the scholarship program under this Act shall--
       (1) provide to the Corporation not later than June 30 of 
     each year the most recent annual statement of the eligible 
     institution's budget; and
       (2) charge a student that receives a scholarship under this 
     Act not more than the cost of tuition and mandatory fees for, 
     and transportation to attend, such eligible institution as 
     other students who are residents of the District of Columbia 
     and enrolled in such eligible institution.
       (b) Compliance.--The Corporation may require documentation 
     of compliance with the requirements of subsection (a), but 
     neither the Corporation nor any governmental entity may 
     impose additional requirements upon an eligible institution 
     as a condition of participation in the scholarship program 
     under this Act.

     SEC. 8. CIVIL RIGHTS.

       (a) In General.--An eligible institution participating in 
     the scholarship program under this Act shall comply with 
     title IV of the Civil Rights Act of 1964 and not discriminate 
     on the basis of race, color, or national origin.
       (b) Revocation.--Notwithstanding section 7(b), if the 
     Secretary of Education determines that an eligible 
     institution participating in the scholarship program under 
     this Act is in violation of any of the laws listed in 
     subsection (a), then the Corporation shall revoke such 
     eligible institution's certification to participate in the 
     program.

     SEC. 9. CHILDREN WITH DISABILITIES.

       Nothing in this Act shall affect the rights of students, or 
     the obligations of the District of Columbia public schools, 
     under the Individuals with Disabilities Education Act (20 
     U.S.C. 1400 et seq.).

     SEC. 10. SCHOLARSHIP PAYMENTS.

       (a) In General.--
       (1) Proportional payment.--The Corporation shall make 
     scholarship payments to participating eligible institutions 
     for an academic year in 2 installments. The Corporation shall 
     make the first payment not later than October 15 of the 
     academic year in an amount equal to one-half the total amount 
     of the scholarship assistance awarded to students enrolled at 
     such institution for the academic year. The Corporation shall 
     make the second payment not later than January 15 of the 
     academic year in an amount equal to one-half of such total 
     amount.
       (2) Pro rata amounts for student withdrawal.--
       (A) Before payment.--If a student receiving a scholarship 
     withdraws or is expelled from an eligible institution before 
     a scholarship payment is made, the eligible institution shall 
     receive a pro rata payment based on the amount of the 
     scholarship and the number of days the student was enrolled 
     in the eligible institution.
       (B) After payment.--If a student receiving a scholarship 
     withdraws or is expelled after a scholarship payment is made, 
     the eligible institution shall refund to the Corporation on a 
     pro rata basis the proportion of any scholarship payment 
     received for the remaining days of the school year. Such 
     refund shall occur not later than 30 days after the date of 
     the withdrawal or expulsion of the student.
       (b) Fund Transfers.--The Corporation shall make scholarship 
     payments to participating eligible institutions by electronic 
     funds transfer. If such an arrangement is not available, then 
     the eligible institution shall submit an alternative payment 
     proposal to the Corporation for approval.

      SEC. 11. APPLICATION SCHEDULE AND PROCEDURES.

       The Corporation shall implement a schedule and procedures 
     for processing applications for awarding student scholarships 
     under this Act that includes a list of certified eligible 
     institutions, distribution of information to parents and the 
     general public

[[Page S5366]]

     (including through a newspaper of general circulation), and 
     deadlines for steps in the scholarship application and award 
     process.

      SEC. 12. REPORTING REQUIREMENTS.

       (a) In General.--An eligible institution participating in 
     the scholarship program under this Act shall report not later 
     than July 30 of each year in a manner prescribed by the 
     Corporation, the following data:
       (1) Student achievement in the eligible institution's 
     programs.
       (2) Grade advancement for scholarship students.
       (3) Disciplinary actions taken with respect to scholarship 
     students.
       (4) Graduation, college admission test scores, and college 
     admission rates, if applicable for scholarship students.
       (5) Types and amounts of parental involvement required for 
     all families of scholarship students.
       (6) Student attendance for scholarship and nonscholarship 
     students.
       (7) General information on curriculum, programs, 
     facilities, credentials of personnel, and disciplinary rules 
     at the eligible institution.
       (8) Number of scholarship students enrolled.
       (9) Such other information as may be required by the 
     Corporation for program appraisal.
       (b) Confidentiality.--No personal identifiers may be used 
     in such report, except that the Corporation may request such 
     personal identifiers solely for the purpose of verification.

      SEC. 13. PROGRAM APPRAISAL.

       (a) Study.--Not later than 4 years after the date of 
     enactment of this Act, the Comptroller General shall enter 
     into a contract, with an evaluating agency that has 
     demonstrated experience in conducting evaluations, for an 
     independent evaluation of the scholarship program under this 
     Act, including--
       (1) a comparison of test scores between scholarship 
     students and District of Columbia public school students of 
     similar backgrounds, taking into account the students' 
     academic achievement at the time of the award of their 
     scholarships and the students' family income level;
       (2) a comparison of graduation rates between scholarship 
     students and District of Columbia public school students of 
     similar backgrounds, taking into account the students' 
     academic achievement at the time of the award of their 
     scholarships and the students' family income level;
       (3) the satisfaction of parents of scholarship students 
     with the scholarship program; and
       (4) the impact of the scholarship program on the District 
     of Columbia public schools, including changes in the public 
     school enrollment, and any improvement in the academic 
     performance of the public schools.
       (b) Public Review of Data.--All data gathered in the course 
     of the study described in subsection (a) shall be made 
     available to the public upon request except that no personal 
     identifiers shall be made public.
       (c) Report to Congress.--Not later than September 1 of each 
     year, the Corporation shall submit a progress report on the 
     scholarship program to the appropriate committees of 
     Congress. Such report shall include a review of how 
     scholarship funds were expended, including the initial 
     academic achievement levels of students who have participated 
     in the scholarship program.
       (d) Authorization.--There are authorized to be appropriated 
     for the study described in subsection (a), $250,000, which 
     shall remain available until expended.

      SEC. 14. JUDICIAL REVIEW.

       (a) In General.--The United States District Court for the 
     District of Columbia shall have jurisdiction in any action 
     challenging the scholarship program under this Act and shall 
     provide expedited review.
       (b) Appeal to Supreme Court.--Notwithstanding any other 
     provision of law, any order of the United States District 
     Court for the District of Columbia which is issued pursuant 
     to an action brought under subsection (a) shall be reviewable 
     by appeal directly to the Supreme Court of the United States.

  Mr. LIEBERMAN. Mr. President, I rise today to join my colleagues 
Senators Coats and Brownback in introducing the District of Columbia 
Student Opportunity Scholarship Act of 1997, also known as the DCSOS 
Act.
  This legislation is quite similar to the provision that passed the 
House last year as part of the D.C. appropriations bill but failed to 
make it through conference. It would create a modest tuition 
scholarship fund that would enable 2,000 low-income students in the 
District to attend the public, private, or parochial school of their 
choice. It would also provide direct aid to an additional 2,000 public 
school students who want to improve their academic skills through 
after-school tutoring.
  But the circumstances surrounding this proposal have changed 
dramatically since it was considered last year, and I think it's 
important to make our colleagues aware of what's happened over the 
course of the last several months as they consider the bill we're 
introducing today.
  Most immediately, the deeply troubled D.C. school system has now hit 
rock-bottom. Last fall, the District Control Board officially declared 
the schools in crisis, stripped the elected school board of its 
authority, and authorized an emergency board of trustees to take over 
the city's public schools.
  In taking these drastic steps, the Control Board issued a report 
documenting the utter dysfunction of this school system--test scores 
ranking among the worst in the Nation, students and teachers subjected 
to violence at twice the national average, gross mismanagement of 
budget and personnel, buildings literally falling apart, and a tragic 
misplacement of priorities that puts job preservation ahead of the job 
of educating the city's children.
  But perhaps the most damning indictment of the D.C. schools came in a 
single sentence included in the report: the longer students stay in the 
District's public school system, the Control Board concluded, the less 
likely they are to succeed educationally. I would urge my colleagues to 
think about the import of that statement. Instead of helping these 
children learn more with each passing year, the D.C. schools in many 
cases have actually become hazardous to the academic health of its 
students.
  This conclusion should not be all that surprising when you take a 
closer look at the environment in which these kids are trying to learn. 
For instance, in April we saw a shocking breakdown of discipline at the 
Winston Education Center. Several fourth-graders slipped unnoticed into 
a sideroom right outside an ongoing class and engaged in oral sex, with 
two of the children's parents claiming their children were sexually 
assaulted. When the principal learned of the incident, his first 
reaction was to judge the sexual activity consensual. And earlier this 
month, Washington Post columnist Colbert King reported that a fifth-
grade class at the Harrison Elementary School had gone without a 
teacher for the past 4 months. This outrageous situation may well have 
continued had King not exposed it and put pressure on the 
administration to correct it.
  To force children to attend these schools, where the breakdown is so 
complete a class can go four months without a teacher, is simply 
unconscionable. But that is exactly what is happening in the District 
of Columbia, where thousands of students are trapped in decrepit, 
dangerous, and disenfranchising schools simply because they cannot 
afford any alternative.
  That is why we believe there is an urgent need to pass the DCSOS Act. 
That acronym is not an accident, for this program would provide at 
least 2,000 of the most disadvantaged families in the District with an 
educational lifeline, a chance to seek out a school that they believe 
will offer their child a brighter future. It would give these families 
the same option that thousands of other families have already exercised 
by pulling their children from the D.C. public schools or moving out of 
town altogether.
  Some defenders of the status quo have tried for some time to get us 
to believe that the residents of this city don't want that kind of 
choice. But a poll that was released this week should shatter that 
misguided myth once and for all. This survey found that nearly two-
thirds of public school parents would send their kids to private 
schools if money weren't an issue. The poll also shows that there is a 
strong base of support for the scholarship program we're proposing 
right out of the gate, before we've done anything to educate the public 
about it. And most important, it shows that the families we're trying 
to help would welcome this assistance, with 62 percent of low-income 
parents saying that the kind of choice we're offering would improve the 
quality of education for District children.

  Some of the opponents of this legislation will continue to argue that 
this program, like other attempts to expand opportunities for poor 
families, will harm or actually ruin the public schools. To suggest 
that this modest program could make a school system already in crisis 
any worse defies common sense. In truth, this is a case of the only 
thing we have to fear is fear itself--that is, the fear of moving 
beyond the status quo. Knowing that the D.C. schools have hit rock 
bottom, we shouldn't be closing off any options,

[[Page S5367]]

which is exactly what influential columnist William Raspberry wrote 
last week when he endorsed giving choice a chance in the District.
  We need to get past the red herring argument that we must choose 
between choice and the public schools. Simply put, supporting this 
scholarship program is not the same as abandoning the public school 
system. This is not an either-or equation. And to help prove that to 
the citizens of the District, we have gone out of the way in this 
legislation to make sure that the funding for these scholarships does 
not come at the expense of the city's public schools. This is new money 
and that point should not be overlooked.
  Mr. President, the truth is that we fervently hope that the Board of 
Trustees and CEO Gen. Julius Becton can rescue this system and make the 
fundamental reforms necessary to give these students the education they 
deserve, and we will do what we can to support their efforts. Senator 
Brownback and I, as chairman and ranking member of the Senate's D.C. 
Oversight Subcommittee, made that very pledge to General Becton at a 
hearing we held in April.
  But this mission is at a minimum going to take several years, which 
begs the question, what happens to those many students who have no 
choice but to attend schools that most parents who could afford it have 
long since abandoned?
  We believe that we have a moral obligation to offer those children a 
way out. That is why many of us view this question not just as a matter 
of education, but a question of fairness. This is all about our values, 
specifically the value we place on giving every child--no matter their 
income, where they live or how they live--the opportunity to fulfill 
their God-given promise.
  No one is claiming that this scholarship program is a magic bullet. 
But we strongly believe it will give at least 2,000 disadvantaged 
students a shot at a better life. We also believe that by providing 
some competition to the public schools, this program will accelerate 
the pace of reform within the D.C. school system. Across the country, 
the growing numbers of charter schools and private scholarship programs 
are forcing public school systems to confront their failures and 
building pressure on them to take radical actions to improve the 
quality of their educational programs. This is starting to happen 
already in the District, and we are optimistic that this legislation 
will intensify that movement here.
  If nothing else, this legislation will create a program that will 
help us test what impact choice has on improving the educational 
opportunities of poor families in urban areas, and thereby help us make 
informed decisions in the future about whether to expand this kind of 
initiative to other cities. There have been some promising signs coming 
out of the choice programs in Milwaukee and Cleveland, but the reality 
is we don't know with much certainty whether expanding choice will 
produce noticeable results. This legislation could establish a national 
experiment, and provide us with some real answers to the critical 
questions we've been wrestling with. It's for that very reason we call 
for a thorough evaluation of the D.C. scholarship program in our 
legislation.
  The bottom line, Mr. President, is that it is time to give choice a 
chance in the District. We cannot in conscience continue to ignore the 
plight of these children any longer. They deserve an opportunity to 
break out of the nightmarish cycle of poverty, dependency, and violence 
and to live the American dream. This bipartisan legislation will begin 
to restore hope to some of these families, and I would strongly urge my 
colleagues to support it.
  Mr. BROWNBACK. Mr. President, one of my highest priorities as the 
chairman of the Senate Subcommittee on Oversight of Government 
Management, Restructuring, and the District of Columbia, is to make 
sure the children in the Nation's capital are receiving the quality 
education they deserve. The District's public schools, unfortunately, 
have failed too many students in providing the education they deserve. 
The District of Columbia Student Opportunity Scholarship Act of 1997 
would change this by giving low-income students the chance to get the 
education they need.
  Our subcommittee held a hearing a few weeks ago to explore options to 
improve public education in the District. Mr. President, I know there 
are schools which are working and where students are thriving in their 
learning environment. I had the privilege to visit Stuart-Hobson Middle 
School. I was impressed by the success of the program at Stuart-Hobson 
and how the students took pride in their education. This school, 
however, is one of a few exceptions in the District Public School 
System.
  The facts about the District public schools speak for themselves: 
only 22 percent of fourth grade students are at or above basic reading 
achievement levels; students on average consistently score below the 
national average of the Comprehensive Test of Basic Skills; students 
consistently score below the national Scholastic Aptitude Test [SAT]. 
We cannot continue to trap these students in an educational system that 
is failing them.
  Gen. Julius Becton, chief executive officer and Superintendent of the 
District of Columbia Public Schools, and the District of Columbia 
Emergency Transitional School Board of Trustees have said that they 
will make significant improvements by the year 2000, and I recognize 
and respect the work that lies ahead of them. But, Mr. President, the 
year 2000 is 3 school years away. In 3 school years, a child progresses 
through grades one through three in which they learn to read, write, 
add, subtract, etc. In 3 school years, a high school student gains the 
skills and preparation they need for college or for a job. These 3 
school years are too valuable to trap these students in the public 
school system that has not delivered.
  Mr. President, I am pleased to join my colleagues Senator Coats and 
Senator Lieberman in introducing this legislation that focuses on the 
individual student in the District of Columbia Public Schools. By 
providing up to $3,200 in individual scholarships to low-income 
families who will choose the school for their children, this bill would 
give these students the chance to make sure the next 3 school years do 
not go to waste. Improving the chances for these children to get the 
education they need is one of the most fundamental elements to restore 
the Nation's capital into the shining city the United States deserves.
                                 ______
                                 
      By Mr. MURKOWSKI (for himself and Mr. Baucus):
  S. 848. A bill to direct the Secretary of Health and Human Services, 
through the Health Care Financing Administration, to expand and 
strengthen the demonstration project known as the Medicare Telemedicine 
Demonstration Program; to the Committee on Finance.


            THE RURAL TELEMEDICINE DEMONSTRATION ACT OF 1997

  Mr. MURKOWSKI. Mr. President, I rise today to introduce, along with 
my colleague, Senator Baucus of Montana, the Rural Telemedicine 
Demonstration Act of 1997.
  The vast potential of telemedicine technology is clearly under-
utilized. I believe that the answer to growing concerns regarding 
access and affordability of quality health care services in rural 
America is telemedicine. Let me describe just a few of the difficulties 
of rural health care in my home State of Alaska and explain why 
telemedicine is our long-awaited answer.
  Alaska encompasses 586,412 square miles. It is one-fifth the size of 
the contiguous United States; 120 times larger than the State of Rhode 
Island; and larger than the three largest States in the union combined. 
If a map of Alaska were superimposed on a map of the lower 48 States, 
Alaska would touch South Carolina, Mexico, California, and the United 
States-Canadian border. In short, Alaska has 1 million acres of land 
for every day of the year.
  Geography is another defining characteristic of Alaska. My State has 
a climate characterized by significant season fluctuations in 
temperature and precipitation and a topography characterized by 
mountains, wetlands, forests, and rugged coastlines.
  Communities and villages are scattered throughout the vast regions of 
Alaska. And though Alaska contains 586,412 square miles, it only has 
12,200 miles of roads. Vast areas are completely unconnected by roads, 
with access only available by airplane, boat, snowmachine, or dogsled.

[[Page S5368]]

  Meeting the health care needs of these communities and villages is a 
daunting task. Residents have difficulty due to geography, lack of 
providers and poverty. Although excellent medical facilities and 
tertiary care centers are available in Anchorage, direct connection to 
these facilities from most of the State is not possible other than by 
air transportation. Consequently, geographically, 74 percent of the 
State is in medically underserved areas.
  Telemedicine is the cost-effective and practical answer to the Alaska 
dilemma. Currently, there is an exciting project underway known as the 
Alaska Telemedicine project. This consortium of Alaskan health care 
providers and telecommunication carriers has been diligently working to 
unite health care in Alaska. This project has successfully united the 
Native health corporations, military medical facilities, and public and 
private hospitals of Alaska.
  The fragmented nature of health care delivery in Alaska and Alaska 
satellite-based narrow-band telecommunications infrastructure, along 
with the geography and climate of Alaska, make Alaska an ideal place 
for the Alaska Telemedicine project to flourish.
  In 1995, the Health Care Financing Administration [HCFA], pursuant to 
a mandate in 42 U.S.C. 1395(b)(1) which directs HCFA to establish 
demonstration projects that explore innovative methodologies of 
Medicare cost-savings, developed a telemedicine Medicare reimbursement 
project for rural America. Five demonstration sites were established in 
four States: Iowa, West Virginia, North Carolina, and Georgia. The 
purpose of these programs was to investigate Medicare reimbursement for 
telemedicine in rural locations.
  Unfortunately, the HCFA study of rural telemedicine contains a 
glaring omission: The study does not include any sites in rural Western 
locations. The omission of the rural West, which contains extremely 
remote and frontier locations will result in a deficient and likely 
inaccurate study for rural telemedicine.
  Our legislation will expand the HCFA project to better represent 
rural America. A site in Alaska and in Montana will be included. 
Montana, like Alaska, experiences significant difficulties in providing 
health care services in rural areas. Montana's five independent 
telemedicine projects that have formed a united alliance will also be 
included in the HCFA project.
  Mr. President, the goal of telemedicine Medicare reimbursement is to 
ensure that the elderly of America who reside in inaccessible rural 
areas will be allowed to have access to quality health care in the most 
cost-effective manner--via telecommunication networks. Establishing 
Medicare reimbursement stabilizes telemedicine technology, and will 
likely lead to widespread coverage of telehealth services by private 
insurers.
  Senator Baucus and my bill, will merely expand the current 
demonstration project conducted by HCFA. By this expansion, the HCFA 
study will better represent rural telemedicine in the Nation. I ask 
that my colleagues support the Rural Telemedicine Demonstration Act of 
1997.
  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. 848

       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 ``Rural Telemedicine 
     Demonstration Act of 1997''.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Access to health care providers is critically important 
     to improving the health of individuals residing in rural 
     areas.
       (2) Individuals residing in the rural areas of the Western 
     United States are severely underserved by both primary and 
     specialty health care providers.
       (3) Telecommunications technology has made it possible to 
     provide a wide range of vital health care services to 
     individuals residing in remote locations and over vast 
     distances at a fraction of the costs associated with the 
     provision of such services without such technology.
       (4) On February 17, 1997, the General Accounting Office 
     reported that Federal involvement in telehealth systems is 
     needed for the success of such systems.
       (5) In order for telehealth systems to continue to benefit 
     rural communities, the medicare program under title XVIII of 
     the Social Security Act (42 U.S.C. 1395 et seq.) must 
     eventually reimburse the provision of health care services to 
     remote locations via telecommunication.
       (6) The current Medicare telemedicine demonstration program 
     conducted by the Secretary of Health and Human Services, 
     through the Health Care Financing Administration, does not 
     include any sites in rural areas of the Western United 
     States. Without such sites, such demonstration program will 
     not provide accurate indicators of the success of 
     telemedicine.
       (7)(A) The fragmented nature of Alaska's transportation 
     infrastructure, as well as extremes in geography, climates, 
     and ethnography create severe problems for health care 
     providers to provide health care services to the individuals 
     residing in Alaska.
       (B) The Alaska Telemedicine Project is a statewide 
     telehealth project which overcomes infrastructure problems 
     within Alaska by uniting 40 public and private health care 
     providers across Alaska to provide health care services to 
     the residents of Alaska.
       (8)(A) Health care providers in Montana also experience 
     significant difficulties in providing health care services in 
     rural areas. Five independent telemedicine networks in 
     Montana have formed the Montana Healthcare Telecommunications 
     Alliance (MHTA), an association of telemedicine service 
     providers representing not-for-profit and public medical and 
     mental health facilities throughout the State.
       (B) The goal of the MHTA is to promote cost effective 
     statewide deployment of telemedicine services thereby 
     supporting public and private health care providers and 
     improving access to quality medical and mental health 
     services for all individuals residing in Montana.

     SEC. 3. EXPANSION OF DEMONSTRATION PROJECT.

       (a) In General.--The Secretary, through the Health Care 
     Financing Administration, shall expand the demonstration 
     project known as the Medicare telemedicine demonstration 
     program to include within such demonstration program the 
     Alaska Telemedicine Project (described in section 2(7)) and 
     the Montana Healthcare Telecommunications Alliance (described 
     in section 2(8)).
       (b) Report to Congress.--Not later than March 1 of each 
     year that the demonstration project described in subsection 
     (a) is being conducted, the Secretary, through the Health 
     Care Financing Administration, shall submit a report to 
     Congress that contains--
       (1) an evaluation of the effectiveness of such 
     demonstration project; and
       (2) any legislative recommendations determined appropriate 
     by the Secretary.
       (c) Authorization of Appropriations.--There is authorized 
     to be appropriated $2,000,000 to the Secretary of Health and 
     Human Services to carry out the purposes of the demonstration 
     project described in subsection (a).

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