[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).
____________________