Congressional Record, Volume 143 Issue 91 (Wednesday, June 25, 1997)

[Congressional Record Volume 143, Number 91 (Wednesday, June 25, 1997)]
[Senate]
[Pages S6359-S6372]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. KERRY (for himself, Mr. Bumpers, Mr. Harkin, Mr. Grassley,
Ms. Landrieu, Mr. Cleland, Mr. Lieberman, Mr. Wellstone, Mr.
Levin, Ms. Snowe, and Mr. Lautenberg):
S. 956. A bill to amend section 7(m) of the Small Business Act to
establish a Welfare-to-Work Microloan Pilot Program; to the Committee
on Small Business.

The Welfare-to-Work Microloan Pilot Program Act of 1997

Mr. KERRY. Mr. President, I send a bill to the desk and ask for its
appropriate referral.
Mr. President, I am pleased to introduce today the Welfare-to-Work
Microloan Pilot Program Act of 1997, and I do so with Senators Bumpers,
Harkin, Grassley, Landrieu, Cleland, Lieberman, Wellstone, Levin,
Snowe, and Lautenberg. I thank and congratulate all of them for their
commitment to this important program. This legislation will assure that
Americans who have had to rely on public assistance have the same
opportunities as other Americans to start and operate a small business.
Mr. President, America is the home of the entrepreneurial frontier.
Here, anyone can explore boundless opportunities to try new things, to
begin again, and to build new lives. Americans have inherited
characteristics from the frontiersmen--embracing risk, change, and
individualism--and applied it directly to starting and expanding
American small businesses. As the ranking member of the Small Business
Committee and a Senator from Massachusetts, I am honored to represent a
State that employs more and more people and continues to fuel the
national economy and job market. Massachusetts' 360,000 small firms are
employing over 50 percent of our workers. From 1991 to 1995, all
American businesses with fewer than 500 employees created 11 million
new jobs, while businesses with more than 500 employees cut three
million jobs overall.
I want to open the entrepreneurial frontier to all Americans who want
to leave the welfare system behind and build new lives for themselves
and their children.
The Welfare-to-Work Microloan Pilot Program is geared to assist
people in moving people from welfare into the work force, not just as
workers but as entrepreneurs. It is more than a jobs bill. It will not
only build businesses, but it will build communities. This bill builds
on the foundation of the SBA's remarkable Microloan Program which
allows businesses and startup companies to receive development
counseling and small loans of up to $25,000. The average microloan size
is only $10,800. Under the Welfare-to-Work Microloan Pilot Program
local organizations will serve welfare recipients by using SBA grants
for intensive business development assistance. In addition, the bill
will allow local organizations to help future business owners overcome
two of the greatest obstacles that they have, access to affordable
transportation and convenient child care.
Mr. President, I urge my colleagues to support this legislation--to
assure that the American dream can be realized by all Americans and
future generations. We must build a system now that will help our
children. One in five of America's children--14.3 million--live in
poverty. Two-thirds of welfare recipients are children. If we want to
lift them up and out of poverty, we must give them new opportunities to
explore and benefit from the resources of America's frontier. We must
act now to provide their parents and guardians with a map across the
entrepreneurial frontier.
Mr. President, the fact is that this type of program has already
worked, and I just want to share a couple of quick examples with you.
One of the people who has already received this type of grant under the
Microloan Pilot Project is Karla Brown, owner of Ashmont Flowers Plus
in Boston. In 1990, she found herself divorced with a young daughter, a
mountain of debt, bad credit and unemployed as a result of major
surgery. After being on disability for 3 years, she decided to start
her own business. In 1993, she started selling flowers at a subway
station. As the business grew, she leveraged the resources of local
organizations, developed a business plan, received an SBA funded
Microloan, and opened a store in Codman Square, a critical commercial
node in a low-income neighborhood in Boston. With a $19,000 loan from
the Jewish Vocational Service in Boston and a tremendous commitment to
become a successful entrepreneur, she is now the proud owner of a
business that has annual sales of $100,000 and employs two people part-
time. Karla Brown's big idea of a flower shop was one of many new
businesses applauded by an article entitled ``SBA Microloans Fuel Big
Ideas'' in a recent issue of the U.S. Chamber of Commerce's magazine.
Karla is joined by others on this entrepreneurial frontier. In 1995,
the Western Massachusetts Enterprise Fund made a loan of less than
$10,000 to a divorced, single mother who was receiving public
assistance. The woman believed in her own skills as a hairdresser and
her own personal efforts. With the help of her community organization,
she developed a marketing plan, targeted special underserved markets--
homebound elderly, group home residents' and disabled people--and, in
just 2 years, she is now busy with appointments all day long and has
never missed a loan payment. In fact, under the SBA's Microloan
Program, the Government has not lost one dime in the 6 years of
operation because loan repayment rates are so high. The reason this
program is so successful is because the SBA provides grants for
technical assistance for the loan recipients and helps to make certain
that these ventures are successful.

Another Massachusetts organization, Jobs for Fall River, Inc., saw
the potential in a 35-year-old woman who was relying on welfare while
caring for her elderly mother and her young son. She wanted to start a
business to design clothing. Her first attempt at the enterprise failed
because she was not able to afford the child care, transportation
costs, and operating costs for running the business without a loan.
However, after attending an 8-week intensive training session, she was
able, through the assistance of Jobs for Fall River and SBA-provided
funding, to develop a business plan and receive a loan in May of 1996.
We can open the entrepreneurial frontier for more Americans on public
assistance with the Welfare to Work Microloan Pilot Program--partnering
the resources of the SBA with local organizations like the Western
Massachusetts Enterprise Fund, Jobs for Fall River, and the Jewish
Vocation Services in Boston.
During a recent hearing before the Small Business Committee, an
inspiring witness from Iowa, Mr. John Else of the Institute of Social
and Economic Development, told of the successes his organization is
working with welfare recipients under the SBA Microloan Program.
Individuals in their program have a business success rate that is three
times higher than the average for new businesses. His testament,
combined with the requests of other local organizations for more
flexibility to help this community, convinced me that we need to expand
the success of this program.
Opening the frontier for more small businesses is critical to
achieving the aims of welfare reform. States are now facing tall goals
to reduce the welfare roles--their caseloads must be reduced by 25
percent this year under the new law. The growth in job creation is
directly parallel to the growth in small businesses. In America today,
there are over 22 million small businesses compared with only 14,000
big businesses. We see more women than ever exploring the
entrepreneurial frontier. Women-owned businesses represent one-third of
all U.S. companies, contribute more than $1.5 trillion in sales to the
U.S. economy, and employ more people than the Fortune 500. Women-owned
sole proprietorships have a start-up rate twice that of male-owned

[[Page S6360]]

businesses. It is important for us to help women move into
entrepreneurial roles because women comprise a large share of welfare
roles. I suggest that the program I am introducing today is an
excellent way to move people from welfare into the marketplace, not
just as workers and wage earners, but as business creators, as people
who will be able to provide jobs for other people as well as gain their
own self-sufficiency.
Because the record shows that during the 6 years of the Microloan
pilot project the Federal Government has not suffered one loss, we
ought to be prepared to replicate these results with programs that
create more jobs and enhance the economy. I hope my colleagues will
support this effort.
Mr. HARKIN. Mr. President, I rise to express support for the Welfare-
to-Work Microloan Pilot Program Act of 1997. The existing Small
Business Administration [SBA] Microloan Program has enjoyed great
success in moving people off welfare and helping them start their own
business. The welfare-to-work initiative will not only continue this
success, but it will also improve the services provided by the current
Microloan Program.
The existing Microloan Program has two components. First, it works to
provide short-term loans of up to $25,000 to small businesses. SBA
makes these loans through various nonprofit organizations that have
close ties to their communities. Second, the Microloan Program also
provides technical assistance to help clients learn important skills
such as accounting, marketing, and advertising.
It is important that we continue the Microloan Program, and we must
also look to implement other services that will make it more effective.
The welfare-to-work initiative does just that by establishing a 3-year
program that will continue and expand upon the existing program. Like
the current law, this bill will extend loans and technical assistance,
but it will also allow for more business planning and training
assistance prior to extending loans to welfare recipients. It will also
allow intermediaries to use supplemental grants to help borrowers with
transportation and child care expenses. Extending these services is
essential in order to allow welfare recipients who don't have the money
for transportation and child care to participate in the program.
An example of the Microloan Program's success is the Institute for
Social and Economic Development [ISED] in Iowa City, IA. ISED is
different from most development corporations in the Microloan Program
because it does not extend loans to its clients. Rather, it provides
technical assistance and will act as an intermediary to set up a loan
between their client and a bank. ISED's technical assistance program
provides structured training in which clients develop plans for a
profitable business. Due to this effort, ISED has enjoyed an extremely
high success rate, with 70 percent of its client's businesses still
operational. This statistic becomes even more impressive considering
that of all the small businesses started across the Nation in the last
8 years over 70 percent no longer exist.
We must recognize that the welfare-to-work initiative benefits both
welfare recipients and our taxpayers. The Microloan Program presents
welfare recipients with the preferable option of self-employment as a
means to move off welfare. At the same time, it saves the State money
and moves people from being welfare recipients to taxpayers. In Iowa,
nearly 400 welfare recipients have started and maintained their own
small business, and the total savings to the State have been $1 million
in welfare benefits alone.
The welfare-to-work initiative gives welfare recipients the
opportunity to be self-sufficient. It provides the entrepreneur with
the money to start a business, and the skills and services to maintain
it.
______

By Mr. BINGAMAN (for himself, Mr. Jeffords, Mr. Bond, Mr. Mack,
and Mr. D'Amato):
S. 957. A bill to establish a Pension ProSave system which improves
the retirement income security of millions of American workers by
encouraging employers to make pension contributions on behalf of
employees, by facilitating pension portability, by perserving and
increasing retirement savings, and by simplifying pension law; to the
Committee on Labor and Human Resources.

The Retirement Security for all Americans Pension Pro-Save Act

Mr. BINGAMAN. Mr. President, the problem of retirement security is an
ever mounting challenge to the future welfare of our Nation. More than
51 million Americans are not covered by any kind of pension plan. The
aging of the baby boom generation will dramatically increase the
retired population in proportion to the working population early in the
next century. By the year 2029, when the youngest baby boomers reach
age 65, more than 68 million persons will be older than 65--accounting
for more than 20 percent of the U.S. population, compared to just 12
percent today.
In my own State of New Mexico just 29 percent of our work force has
some kind of pension plan. As this chart shows, New Mexico has the
worst ranking in the nation in terms of workers covered by pensions.
Just a few states have private sector working populations with over 50
percent covered by pensions.
Our Nation is facing certain crisis if we fail to take steps to
correct this problem of people working until retirement--and finding
that their Social Security benefits fail to maintain adequate and
acceptable living standards. Despite the proliferation of retirement
products in various forms of IRA's and 401(K) plans, patterns clearly
show that those who earn enough to save probably do. Our problem is
that over the last 18 years, we have had no increase in the percentage
of our work force that is participating in a qualified pension program.
Those who are well off and can look forward to retirement security
cannot afford to just abandon those who are not. We have a market
failure that we must address, particularly as the Nation's traditional
safety net is being rolled back because of budget cuts on so many other
fronts. I am not opposed to improving and even expanding the pension
plans of those who have them now. My concerns, however, are focused on
the reality that we are improving existing pension plans, expanding IRA
opportunities and creating new forms of individual retirement accounts,
but we are still doing absolutely nothing to get a large portion of our
uncovered work force covered by some degree of retirement savings.
The costs of doing what we need to do will be large. But let's think
for a moment about the IRA provisions in the tax bill we are discussing
today. The IRA expansion provisions in the Senate version of the bill
cost approximately $3.3 billion during the first 5 years and $20.5
billion in the following 5 years. These costs may be appropriate and
necessary--but at the same time, we need to confront the revenue impact
of covering the parts of our society that currently have no retirement
savings at all. I think that it is poor public policy to expand only
one-half of the equation like we have been doing.
Mr. President, in order to ensure that this Congress does face the
issue of retirement security for all working Americans and not just the
fortunate minority who are saving, I am here to introduce the
``Retirement Security for All Americans Pension Pro-Save Act.''
The bill I am introducing outlines a concept for pension expansion
and portability that has been discussed in this Chamber several times
over the last several decades but which has not evolved until now as
legislation. The Pension ProSave System, a clearinghouse for individual
pension accounts, would improve the retirement income security of
millions of working Americans by encouraging employees to make
contributions on their behalf, by facilitating pension portability, by
preserving and significantly increasing retirement savings and by
simplifying pension law.

Mr. President, this plan is not aimed at the existing pension and
savings structures in this country. This proposal targets those who are
working their way towards retirement--and will have little or nothing
to supplement their Social Security benefits. Despite 18 years of
availability of simplified pension plans, pension coverage remains low
in the small business sector. Even when covered by a tax-advantaged
pension plan, workers do not always continue to save their pension
assets when they can receive them when

[[Page S6361]]

moving from one place of employment to another. Tax penalties
unfortunately have not been very successful in discouraging the
spending of these mid-career retirement savings disbursements. Of the
$47.9 billion in pre-retirement distributions made in 1990, less than
20% of recipients reported putting the entire distribution into another
tax-qualified retirement plan.
The Pension ProSave Clearinghouse is modeled after the highly
successful Teachers Insurance and Annuity Association-College
Retirement Equity Fund [TIAA-CREF], the largest private pension system
in the world with assets over $136 billion and about 1.7 million
participants at about 5,500 institutions. Not replacing existing
pension programs, Pension ProSave is designed to supplement these other
programs and will increase pension coverage to millions of Americans.
The benefits of Pension ProSave are first, that this plan would
provide an incentive and a simple, hassle free way for employers to
provide portable pension benefits to their workers. Employees could
also make matching contributions to their accounts on a 2:1 basis to a
maximum of $6,000. The employer's contributions also would not exceed
$6,000. Mr. President, I want to emphasize that these are the
employee's accounts--not the government's and not the employer's. These
accounts will remain with those workers the duration of their lives.
Second, Pension ProSave would stop the leakage of retirement savings
by furnishing employer's pension contributions into a privately
managed, pension portability clearinghouse. Worker's account balances
would be invested and managed by private sector firms in diversified
portfolios.
Let me explain how Pension ProSave would work. Any employer wishing
to take advantage of the Pension ProSave Program would furnish the
names of all employees, employed for at least 6 months and over 21
years of age, to the ProSave Portability Clearinghouse established in
this Act. The employer will indicate each employee's salary and the
uniform percentage of all salaries which the employer will contribute
to employee ProSave accounts. The employer will have the option of
changing its percentage contribution each year, as long as
that contribution equals at least 1 percent. This can help business
owners--who want to provide pension benefits to their employees--avoid
getting locked into a rate that remains fixed while the economic
performance of their small businesses may be volatile.

Once a ProSave account is established for an employee, the employer
will forward contributions to the account at the time of each paycheck
or at least prior to the end of that year.
With the agreement of the employee, an employer who has another
defined benefit or defined contribution plan for its employees and who
does not choose to establish ProSave accounts will still be able to use
the portability clearinghouse as a repository for retirement funds of
an employee who is leaving its employ. When a worker leaves one job
where retirement benefits have accrued, the employee may request the
employer to deposit the cash value of those retirement benefits--or any
portion of them--in the Pro Save account of the employee at the
portability clearinghouse.
Mr. President, the funds contributed by an employer to the retirement
security of his or her employees by way of a ProSave account will
remain there and be invested at the direction of the employee until
retirement. The portability clearinghouse will contract with investment
firms to manage funds through the clearinghouse. Investment options
would include a fixed income fund, an equity fund, a government
securities fund, small business capitalization fund, an international
fund, and an infrastructure fund. Accounts would be valued on a daily
basis, and participants could transfer funds among investment accounts
at intervals determined by an oversight board, perhaps at monthly or
quarterly intervals. Employers will have no responsibility for
administering a pension fund or managing funds for employees who have
left their employment. This should be very attractive to businesses
that do not desire to carry long-term responsibilities for workers who
have moved on.
While employer contributions are locked into the Pension ProSave
accounts until retirement, funds contributed by the employee are
available to be loaned for certain purposes and under terms established
by the Portability Clearinghouse Board.
At retirement, account balances would be paid out either in the form
of an annuity--with survivor benefits--or a lump sum retirement.
Spousal consent would be required.
Mr. President, I have no doubt that some who oppose this plan will
rattle the cages and make claims that this act is nothing but more big
Government, another bureaucratic institution that spreads the
Government further into our lives. These claims will be wrong--and will
only serve to help maintain an economic reality that permits those best
off in our society to save up to $30,000 a year on a tax-advantaged
basis. Others in simple 401(k) plans can save up to $9,500 a year. It
is unacceptable that workers who don't have an available pension plan--
can only save $2,000 a year in IRA accounts.
We have a responsibility not only to create a more equitable savings
structure for those Americans who have the desire and wherewithal to
save--but also to the many Americans who are low-income workers who
move from job to job eventually to retirement, finding then that
nothing has accrued to help them in their retirement years.
Government had a role in establishing IRA's and 401(k)'s. Now we must
do what we can to provide incentives to employers to provide modest
retirement security for more employees. This plan is an enabler--it
creates a structure, similar in many ways to the TIAA-CREF model
established at the beginning of this century by Andrew Carnegie to
provide pension portability for professors and university employees
moving between one higher education institution and another.
This is an issue in which the Government does have an important role
to play because the market has failed to provide the extension of
pension coverage to 51 million Americans. Pension ProSave promotes
savings, helps more people reach retirement with pensions, helps buffer
against the turbulence of the economy, and provides many employers with
a good vehicle for profit-sharing. All of these are benefits for our
Nation as a whole.
For the employer, Pension ProSave provides a hassle-free, no red-tape
way to make contributions to a pension--and frees employers from the
responsibility and requirement of administering a pension plan.
The plan also increases the amount of the tax-deferred savings
permitted for the employer and each employee. It gives the employer a
vehicle for profit-sharing, and the employer escapes any and all
responsibility for the employee's pension. Funds contributed to Pension
ProSave will be exempt from other savings limits under current law for
other pension products. This should provide a powerful incentive to
owners of small businesses who can save more themselves if they make
equivalent commitments to their employees.
For the employee, the benefits are most importantly that millions of
pension-uncovered workers in this country will get coverage. This plan
increases the amount of tax-deferred savings permitted to each
employee, provides immediate vesting, and removes the concern that
employees might have about the solvency of pension plans or their
previous employers. Among other benefits, Pension ProSave eliminates
political corruption in the administration of pension funds and
provides one account that can be permanently maintained and in which
funds can continually accrue no matter the number of job changes in a
worker's career.
By having national visibility, Pension ProSave would make the concept
of saving for retirement more attractive and appealing to employees.
This plan would increase employer pension contributions on behalf of
their workers without existing pension plans, rather than relying on
401(k) plans that are funded largely by employees' voluntary saving
decisions. Employers would be able to make voluntary, tax-deductible
contributions on behalf of their workers and would have flexibility in
the amount they contribute each year.
Vesting would be immediate. Plan sponsors would be relieved of the
expense and responsibility of providing financial education to their
employees

[[Page S6362]]

and the legal implications of providing investment options.
Mr. President, I think that one cause of the extraordinary economic
anxiety in our Nation is related to the eroding sense of financial
security at retirement. A recent study of workers' views of their
present and future economic circumstances found that most people
believe that despite the twists, turns, and pitfalls in our rapidly
changing economy, they can chart a successful course to retirement. But
their anxiety levels were extremely high when concerns about the
solvency of Social Security and about the great number of Americans
without pension benefits were mentioned.
Americans include retirement security in their personal strategies
for economic success. I believe that America is calling for a credible
proposal that will get more of our citizens covered by some kind of
pensions.
There is no doubt that the costs will be high and will impact the
Nation's short term tax revenue. However, it is also clear that
increasing retirement savings will help bolster national savings, which
will help spur more long-term investment and economic growth. The high
cost of this plan would be true of any plan that succeeds in
establishing more retirement security for our working population. We
seem to be willing to sustain high costs for expanding retirement
opportunities for some; I just think we need to make sure that we are
doing whatever we can to provide retirement savings coverage to the
rest of society.
These are costs that we must consider and should bear--for the long
term benefit of our Nation in whole. Establishing Pension Pro-Save
accounts is an investment that will help our Nation better able to cope
with the retirement savings crisis that we will certainly face in the
future.
Mr. JEFFORDS. Mr. President, I am pleased to be an original cosponsor
of the Pension ProSave Act with Senator Jeff Bingaman of New Mexico.
Senator Bingaman has done yeoman's work in drafting this bill. I hope
my colleagues will take time to read the bill and join us as
cosponsors.
As the average age of Americans is rising at a steady rate, we all
have become more aware of the importance of retirement programs and
retirement security. At the same time, only about half of all workers
are covered by a retirement program--and of those, many who are
covered, work for a Federal, State, or local government entity. An
incredible 87 percent of workers employed by small businesses, those
with fewer than 20 employees, have no private retirement or pension
coverage. Less than 40 percent of the 33 million Americans aged 65 and
older collect a pension, other than Social Security. These numbers are
cause for concern.
There are three sources for retirement security: Social Security,
personal savings and a pension. Our bill has been offered in an effort
to expand pension coverage, especially among small business
establishments where coverage and participation is least likely to
occur. The complexity and expense involved in setting up a pension plan
is daunting. It is outside the grasp of many small businesses. In
addition to administrative complexity and the cost of hiring an
actuary, accountant and a lawyer to set up a plan, a small business
often decides against plan sponsorship because of laws and regulations
that actually discriminate against them, such as the prohibition on
matching contributions for self-employed individuals, or limitations on
contributions for small plans that are even lower than those permitted
for the medium-sized or large pension plan.
Pension ProSave would permit the establishment of either a simplified
defined contribution or a defined benefit pension plan or both, with
greatly reduced recordkeeping, reporting and regulatory requirements.
The ProSave system encourages thrift, through its defined contribution
provisions, which are individual account plans and similar in concept
to an IRA or a 401(k) plan, and through its simplified defined benefit
plan provisions which are traditional pension plans promising a
specific benefit payment upon retirement.
In addition, one of the most appealing features of Pension ProSave is
the portability clearinghouse. The clearinghouse would make it easier
for workers with ProSave accounts to take their pensions with them as
they change jobs. True pension portability has been a most elusive
objective for policymakers and yet it is one of the most important
features that Americans want in pension programs.
A lack of portability also discourages long-term pension savings
because it can encourage leakage. Pension system leakage occurs when a
worker changes jobs and either cashes out a pension benefit or receives
a lump sum distribution from a retirement plan and spends the money,
rather than saving it. Taxing distributions has not stopped leakage
from the system. The more difficult it is for that worker to transfer
his account from one plan to another, the more likely it is that the
worker will just spend the money. The more complicated and punitive the
laws and regulations surrounding pension rollovers, the less likely a
worker is to bother to make one. He or she will simply pay the penalty
tax and spend the money.
Consequently, pension experts have spent a great deal of time and
effort trying to figure out ways to ease these pension rollovers and
overcome obstacles to portability so that people can save their all
retirement money in a single account.
Let me pause for a moment to say that while Pension ProSave's
portability feature is the result of many years of consultation and
careful drafting, we realize that it would be quite difficult to
justify a new government sponsored entity in these days of fiscal
stringency. Our experience with the Pension Benefit Guaranty Corp.
leads me to suggest that there could be a more efficient means of
making Pension ProSave accounts portable than by establishing a new
government sponsored entity to manage and invest them.
Individual retirement accounts (IRAs) are portable and yet can be
invested in banks, certificates of deposit, mutual funds, equities or
any number of other investment vehicles. Should we permit Pension
ProSave accounts to be managed and invested in the private sector and
if so, how should that be accomplished? By leveraging the power of the
private sector, savers have the potential for more investment choices,
and for higher rates of return on their investments. In addition, there
currently exists in the private sector, mutual fund/401(k)
clearinghouses which are used to track individual accounts and keep
records of investments and account balances. Are these models for the
Pension ProSave clearinghouse?
I look forward to hearing about these and other substantive and
drafting issues from experts who are concerned about increasing
retirement savings at the individual level and in increasing retirement
coverage among small businesses where it is needed the most. I am
especially interested in the concept of a simplified defined benefit
plan which is portable and hope that we can explore that issue when
hearings are held on this bill in the Labor and Human Resources
Committee. Pension ProSave Act is a good bill. I am proud to cosponsor
it and thank Senator Bingaman for his leadership in bringing us
together to introduce it.
______

By Mr. MOYNIHAN (for himself and Mr. D'Amato):
S. 958. A bill to provide for the redesignation of a portion of State
Route 17 in New York and Pennsylvania as Interstate Route 86; to the
Committee on Environment and Public Works.

The Redesignation of Route 17 as Interstate 86 Act of 1997

Mr. MOYNIHAN. Mr. President, I rise today with my distinguished
fellow Senator from New York to introduce legislation that will
redesignate sections of New York and Pennsylvania Route 17 as
Interstate 86. The southern tier of New York has waited over 40 years
for this historic legislation that will correct a mistake made in 1955
that has contributed to the economic decline of this once prosperous
region.
When the original plans were being developed for the New York
Interstate System, Route 17 was to be designated the main east-west
interstate route. The (Federal) Bureau of Public Roads thought
otherwise. They preferred the New York State Thruway which was already
under construction using state moneys. Albany did not object nor did
representatives of the region.
The error had no significance at the time, since no special funding
was

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available for interstates. The very next year, however, the Federal-Aid
Highway Act of 1956 was enacted, creating a Highway Trust Fund to be
funded through gasoline taxes. The Federal Government would now pay 90
percent of the cost of any interstate segment. The Southern Tier
Expressway--Route 17--was not eligible for those interstate funds.
In the 1950's the region was still bustling--IBM was in Binghamton,
half the television sets in the world were built in Elmira, Corning was
a high tech contender, and Jamestown was a major manufacturing center.
What begun as an Indian trail, became a great railroad, and a
strikingly creative industrial corridor, was allowed to languish.
It is time we do something about it.
This legislation we introduce today would finally ameliorate the
legacy of an opportunity missed long ago.
The bill would immediately designate 360 miles of Route 17 between
Erie, PA and Harriman, NY, that meet Federal interstate construction
standards as Interstate 86, creating connections to I-90, I-390, I-81,
I-84, and I-87. The remaining 30 miles of Route 17 would be designated
as a future part of the interstate system and will become I-86 as soon
as the State Department of Transportation upgrades them. I am confident
the NYDOT, working together with the Federal Highway Administration,
will soon have the rest of Route 17 up to interstate standards.
The southern tier region, along with the rest of Upstate New York,
has suffered enduring economic hardship and job losses, even as the
national economy has boomed. The bill I propose to redesignate Route 17
as I-86 would help enhance the visibility of this important region and
highlight its potential for business development and tourism.
I would also like to recognize the efforts of Samara Barend, a
southern tier native, who was so effective in mobilizing support for
this issue. I urge my colleagues to join with me in support of this
most important legislation.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 958

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

SECTION 1. FINDINGS.

Congress finds that--
(1) the designation of a portion of State Route 17 in New
York and Pennsylvania as an Interstate route would promote
the visibility of the region, the potential of the region for
business development and tourism, and the economic regrowth
of the region; and
(2) a major portion of State Route 17 is a logical addition
to the Interstate System and will provide an east-west
interstate highway that benefits a large region of New York
and Pennsylvania that has suffered competitively from the
lack of such a highway.

SEC. 2. DESIGNATION OF PORTION OF STATE ROUTE 17 IN NEW YORK
AND PENNSYLVANIA AS INTERSTATE ROUTE 86.

(a) In General.--Subject to subsection (b)(2), the portion
of State Route 17 located between the junction of State Route
17 and Interstate Route 87 in Harriman, New York, and the
junction of State Route 17 and Interstate Route 90 near Erie,
Pennsylvania, is designated as Interstate Route 86.
(b) Substandard Features.--
(1) Upgrading.--Each segment of State Route 17 described in
subject (a) that does not substantially meet the Interstate
System design standards under section 109(b) of title 23,
United States Code, in effect on the date of enactment of
this Act shall be upgraded in accordance with plans and
schedules developed by the applicable State.
(2) Designation.--Each segment of State Route 17 that on
the date of enactment of this Act is not at least 4 lanes
wide, separated by a median, and grade-separated shall--
(A) be designated as a future part of the Interstate
System; and
(B) become part of Interstate Route 86 at such time as the
Secretary of Transportation determines that the segment
substantially meets the Interstate System design standards
described in paragraph (1).
(c) Treatment of Route.--
(1) Mileage limitation.--The mileage of Interstate Route 86
designated under subsection (a) shall not be charged against
the limitation established by the first sentence of section
103(e)(1) of title 23, United States Code.
(2) Federal financing responsibility--
(A) In general.--Subject to subparagraph (B), the
designation of Interstate Route 86 under subsection (a) shall
not create increased Federal financial responsibility with
respect to the designated Route.
(B) Use of certain funds.--A State may use funds available
to the State under paragraphs (1) and (5)(B) of section
104(b) of title 23, United States Code, to eliminate
substandard features, and to resurface, restore,
rehabilitate, or reconstruct, any portion of the designated
Route.

By Mr. LAUTENBERG:
S. 959. A bill to amend chapter 44 of title 18, United States Code,
to prohibit the sale or transfer of a firearm to, or the possession if
a firearm by, any person who is introxicated; to the Committee on the
Judiciary.

THE NO GUNS FOR DRUNKS ACT OF 1997

Mr. LAUTENBERG. Mr. President, today I am introducing legislation to
prohibit firearm sales to, and possession by, individuals who are
obviously intoxicated.
Mr. President, a casual observer might think that this legislation is
not necessary. Most Americans probably think that it is already illegal
to sell a gun to a visibly intoxicated person. At the very least, the
average citizen likely believes that it is only common sense that a gun
dealer would never sell a gun to a drunk customer. Unfortunately,
neither assumption is correct. Some gun dealers do sell guns and
ammunition to visibly intoxicated persons. My bill will deter these
sales, and punishes those who persist in making such dangerous sales.
Federal and state laws currently prohibit the sale of alcohol to
obviously drunk individuals, to protect both the intoxicated individual
and others. Likewise, it is against the law for intoxicated persons to
operate a motor vehicle. Unbelievably, it is not against Federal law to
sell a firearm to a visibly intoxicated individual, or for an
intoxicated person to possess a firearm.
Worse still, Mr. President, some firearms dealers simply ignore
common sense and sell guns and ammunition to any customers if they are
clearly intoxicated. The absence of a legal prohibition on such sales
allows these gun dealers to escape liability for the absolutely tragic,
and foreseeable, consequences of such outrageous conduct.
For instance, Deborah Kitchen, a mother of five children, is now a
quadriplegic after being shot by her ex-boyfriend with a rifle he had
purchased from a Florida K mart. This man was so drunk when he
purchased the rifle that the store clerk had to fill out the Federal
firearm purchase form on his behalf. By his own admission, the ex-
boyfriend had consumed a fifth of whisky and a case of beer the day he
shot Ms. Kitchen. Nevertheless, the store sold him a .22 caliber bolt
action rifle and a box of bullets. He then used these to paralyze Ms.
Kitchen from the neck down.
Ms. Kitchen sued the K mart for it's outrageous conduct. A jury found
the store liable of common law negligence, and returned a verdict in
the amount of $12 million. A Florida appeals court overturned the
jury's verdict, citing the lack of statutory prohibition on the sale of
firearms to intoxicated persons.
Or, Mr. President, consider the case of Anthony Buczkowski, who
suffered severe injury after being shot by a drunken ammunition
purchaser. William McKay stumbled into a Michigan K mart store after a
day-long drinking spree. Although obviously drunk and an admitted
``mess'', he was still sold a box of shotgun shells. He later used this
ammunition to shoot Mr. Buczkowski. Although the trial court entered a
judgment against K mart for the damages suffered by Mr. Buczkowski, the
Michigan Supreme Court reversed, citing a lack of legal prohibition for
such sales.
Unfortunately, common sense and a sense of civic obligation have not
been sufficient enough to deter these sales. Perhaps the threat of
criminal and civil liability will do the job. Mr. President, it is my
fervent hope that this legislation, if enacted, will end any future
sales of guns and ammunition to intoxicated persons.
Mr. President, I do not claim that most licensed gun dealers do or
would sell guns or ammunition to intoxicated individuals. But the fact
is that these sales do occur--and when they happen, the consequences
can be devastating.
Mr. President, our country now understands that alcohol and
automobiles are a deadly mix. Common sense, and heartbreaking
experience, tells us that alcohol and guns also do not mix. It is time
that our laws reflect this common sense notion.
I urge my colleagues to support this bill, and ask unanimous consent
that a

[[Page S6364]]

copy of the legislation be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 959

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

SECTION 1. FIREARMS PROHIBITIONS RELATING TO INTOXICATED
PERSONS.

Section 922(d) of title 18, United States Code, is
amended--
(1) in subsection (d)--
(A) in paragraph (9), by striking the period at the end and
inserting ``; or''; and
(B) by adding at the end the following:
``(10) is intoxicated from the use of alcohol or a
controlled substance (as that term is defined in section 102
of the Controlled Substances Act (21 U.S.C. 802)).''; and
(2) in subsection (s)(3)(B)--
(A) in clause (vi), by striking ``and'' at the end;
(B) in clause (vii), by adding ``and'' at the end;
(C) by adding at the end the following:
``(viii) is not intoxicated from the use of alcohol or a
controlled substance (as that term is defined in section 102
of the Controlled Substances Act (21 U.S.C. 802));''.
______

By Mr. DODD (for himself and Mr. Lieberman):
S. 960. A bill to amend the Atomic Energy Act of 1954 to authorize
the Nuclear Regulatory Commission to direct that a portion of any civil
penalty assessed by used to assist local communities; to the Committee
on Environment and Public Works.

THE DISTRESSED COMMUNITIES SUPPORT ACT

Mr. DODD. Mr. President, I rise today to introduce legislation to
help communities that suffer when nuclear power plants operate in an
unsafe manner.
As most of my colleagues know, when the NRC discovers safety
violations at a nuclear power plant, it is authorized to fine that
facility for its transgressions, and these fines have been as high as
$1.25 million. Under current law these fines go directly into the
federal treasury, with no allowances being made for the communities
that are home to these deficient nuclear power plants. When a nuclear
facility is poorly operated, it often creates severe safety,
environmental, and economic concerns for surrounding communities.
Therefore, it is only fair that those communities should receive a
portion of any NRC fines to go toward addressing matters of local
concern. That is why I have introduced the Distressed Communities
Support Act.
This legislation is simple and straightforward--it would allow 50
percent of the fines levied by the NRC against nuclear facilities to be
funneled back to communities adversely affected by the plant's
mismanagement.
The Distressed Communities Support Act would be extremely helpful to
towns adjacent to nuclear plants which may be trying to develop special
health, safety, and environmental programs. More important, this bill
would help communities where the safety violations of the nuclear plant
require that the plant be permanently shut down and decommissioned.
It is a fact that nuclear plants around the country are aging, making
it increasingly difficult for many of them to meet safety standards and
remain operational. Therefore, it is important that communities
throughout the country have increased access to resources to deal with
problems caused by negligent nuclear plants. In my home state of
Connecticut, the time to help local communities is now.
The Connecticut Yankee nuclear plant in Haddam, Connecticut is in the
beginning stages of decommissioning. In light of numerous safety
violations, the Nuclear Regulatory Commission ordered the plant closed
until these safety concerns were addressed. Then, in December of 1996,
the owners of Connecticut Yankee decided to permanently close the
facility. This decision came despite the fact that the license for the
facility was set to expire in 2007. While the owners of Connecticut
Yankee had chosen to permanently close the plant, the NRC continued its
review of the safety violations, and fined Connecticut Yankee $650,000.
This early decommissioning of this plant will have a dramatic impact
on Haddam and other surrounding towns. Connecticut Yankee was the
area's largest employer and represented almost half of the tax base in
the town of Haddam--a town of just under 7,500 residents. It employed
more than 300 individuals. The sudden loss of tax revenue and jobs will
have a devastating impact on this area, and the town may well be forced
to raise local taxes and make cuts in town services, including the
public schools.
In addition to the economic impact is the serious health and
environmental impact of the way in which this facility was run. The
people of Haddam and surrounding towns are facing difficult days as
they contend with radioactive waste and related problems.
While local officials and residents are looking at innovative ways to
rebuild their town's tax base, Haddam needs and clearly deserves
financial assistance to get on the road to economic recovery. As we
look for ways to provide financial assistance for this community, it
only seems logical that some portion of the $650,000 in fines should go
toward helping these people.
It is even more fitting that a town like Haddam should receive some
federal assistance, because the federal government is partly
responsible for this town's problems. NRC Commissioner Shirley Jackson
has stated that the NRC failed to adequately regulate this plant to
ensure safety, and stricter monitoring could have prevented a number of
the problems that this plant has experienced. A recent GAO report
released by Senator Lieberman details the failings of the NRC in
overseeing CT Yankee and other plants.
In most every case where a nuclear power plant's negligence prompts a
fine by the NRC, the communities surrounding the plant will feel some
negative repercussions. Therefore, I believe that a portion of these
fines should be available to the affected communities.
While the Distressed Communities Support Act will not solve all of
the problems of towns like Haddam, Connecticut, it is a fair and simple
initiative that will provide relief to thousands of Americans.
I hope my colleagues will join me in supporting this bill.
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. 960

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

SECTION 1. USE OF PORTION OF CIVIL PENALTY ASSESSED BY THE
NUCLEAR REGULATORY COMMISSION TO ASSIST LOCAL
COMMUNITIES.

Section 234 of the Atomic Energy Act of 1954 (42 U.S.C.
2282) is amended by adding at the end the following:
``d. Use of Portion of Civil Penalty To Assist Local
Communities.--In imposing a civil penalty on a person, the
Commission may direct the person to pay 50 percent of the
amount of the civil penalty to local communities to protect
local communities from the adverse economic and other affects
of a violation of this Act or of decommissioning of a
facility under this Act.''.
______

By Mr. BOND:
S. 962. A bill to amend the Indian Gaming Regulatory Act with respect
to certain gaming practices on tribal lands held in trust by the
Secretary of the Interior, and for other purposes; to the Committee on
Indian Affairs.

the gambling clarification act of 1997

Mr. BOND. Mr. President, I rise to introduce legislation to reform
the Indian Gaming Regulatory Act. There is, as I speak, a tribe that is
attempting to move into the State of Missouri to build a large gambling
casino. I do not believe the tribe is entitled to build this casino
under the Indian gaming law, but while Secretary Babbitt has indicated
he would consider our views in making his decision, he may rule in
favor of the tribe and those who favor gambling. The only way to
reverse his decision would be for Congress to change the law and I plan
to start that process now.
As my colleagues know, Mr. President, the Indian Gaming Regulatory
Act became law in 1988 to address the rapid growth of gambling on
Indian tribal lands. The Supreme Court affirmed the sovereignty of
Indian tribes and upheld their right to conduct gambling on their
tribal lands, holding that such a right could only be abrogated by an
act of Congress. Recognizing that it is the policy of the majority of
the States to prohibit or drastically regulate gambling and recognizing
that many of the citizens of these States regard gambling as morally
repugnant, Congress passed the Indian Gambling Regulatory Act.

[[Page S6365]]

The intent of the Indian Gaming Regulatory Act is to balance tribal
sovereignty with a State's interest in regulating and controlling
gambling. The bill attempted to accomplish this by bringing parties to
a mutual table to work out an agreement for regulating gambling on
reservations consistent with State policy. But the spirit of the
legislation is one of containment, to limit gambling and control its
growth. IGRA pursues the objective by narrowly restricting the
circumstances by which gaming can be conducted on land acquired by
tribes after the date of passage of the statute, October 17, 1988.
However, like many pieces of regulation, unforeseen circumstances
arise, loopholes open and language proves to be too vague or obtusely
drafted. Such is the case with IGRA. My legislation does not attempt to
reopen or rewrite the bill, but it does attempt to address some of the
legislative voids that affect my State and others.
A first step for a tribe to conduct gaming on Indian land is to
petition the Secretary of the Interior to have land taken into trust,
this permits the tribe to benefit from the tax advantages afforded
Indian tribes. While such trust petitions are under review by the
Secretary, he is instructed to review the petition considering the best
interests of both the tribe and the surrounding community. Furthermore,
while such a petition is under review, elected officials have an
opportunity to confront the Secretary with any concerns regarding
gambling on that land or any objections that community members may hold
regarding gambling. The statute, however, does not require the tribe to
declare to the Secretary that land will be used for gambling.
Furthermore, there is nothing in the statute that would prohibit a
tribe from representing to the local community and the Secretary that
land will be used for an unobjectionable purpose, only to begin using
the land for gambling after it has been placed in trust.
My legislation will require a tribe that is planning to begin
conducting gambling on newly acquired tribal land to inform the
Secretary during the trust application process that the land in
question will in fact be used for gambling. Tribes with land held in
trust that have not made such a declaration to the Secretary will be
prohibited from using that land for gambling until such time as the
tribe applies with the Secretary to have that land held in trust for
the specific purpose of gambling. I believe this language will
encourage the tribes to be open and upfront regarding their gambling
plans for the trust land and is in the best interests of communities to
be affected by gambling and in the best interests of the tribal-
community relations. Communities that have serious concerns with the
introduction of gambling to their neighborhoods will be given
the opportunity to register their concerns with their elected officials
and with the Secretary of the Interior. Tribes will also be disinclined
to misrepresent their intentions or engage in any deceptive tactics to
acquire land to begin or expand their gambling operations, which will
go a long way to abating any suspicion between the tribes and the
surrounding communities.

This language also clarifies the language regarding tribes in the
State of Oklahoma, a State where there is no tribal reservations,
attempting to spread their gaming operations into a neighboring State.
I believe such a practice was not foreseen by the original statute and
is inconsistent with the spirit of that statute. Specifically, my
legislation will permit an Oklahoma tribe to expand their gaming
operations into a neighboring state, but only when the tribe is located
in that State and the gaming will be conducted within the boundaries of
a former reservation. My State is confronted with a situation where a
tribe has purchased land reaching across the State border into Missouri
and the tribe is attempting to use that recently purchased land to
claim residency in Missouri for the purpose of the statute. To me, that
is exploiting the loose drafting of a statutory language. I do not
believe the tribe is located in Missouri as contemplated by the statute
and, therefore, is not entitled to bring a casino into this Missouri
community over the overwhelming objections of Missourians. My bill will
make this section clear.
Finally, the Indian Gaming statute authorizes tribes to conduct
gaming on their reservations and other trust lands to the extent that
gaming is permitted in that State. Such language is consistent with
other Federal law by which tribes are subject to the criminal laws of
the State but they are not subject to the regulations of the State. The
Missouri constitution prohibits land-based gaming, gaming of this class
may only be conducted on floating facilities on the Missouri River or
Mississippi River. This prohibition was a popular referendum passed by
the people of the State and the State legislature endorsed the
objection to land-based gaming in a resolution. My legislation clearly
states the Missouri Constitution contains a prohibition on land-based
casinos and may not be interpreted in any way to permit class III land-
based gaming. I might add that where a State has spoken so clearly--and
the State constitution is certainly a clear statement of intent--I find
it absurd that outsiders can just come in and do what the local people
have said they oppose.
Mr. President, my proposals are not an exhaustive list, but the
statute has caused a situation in my State that this legislation will
address. I understand that the chairman of the Committee on Indian
Affairs will be pursuing a larger package of amendments to address the
problems in the gaming laws. I encourage him to do so, I look forward
to working with him and I encourage my colleagues to join us in this
effort. I want to conclude by reiterating that Federal Indian gambling
legislation is intended to control and contain Indian gambling.
Unfortunately the legislation is riddled with loopholes that out-of-
State gambling interests can exploit through tribes like the Eastern
Shawnee to operate gambling parlors. The people of southwest Missouri
do not want any kind of casino gambling and I am going to do everything
I can do legislatively and through the regulatory process to stop it.
I ask unanimous consent to include a copy of the bill and a brief
question and answer in the Record.
There being no objection, the items were ordered to be printed in the
Record, as follows:

S. 962

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 ``Gaming Clarification Act of
1997''.

SEC. 2. LAND BASED GAMING PROHIBITION OF THE CONSTITUTION OF
THE STATE OF MISSOURI.

Section 20(b) of the Indian Gaming Regulatory Act (25
U.S.C. 2719(b)) is amended by adding at the end the
following:
``(4) Section 39(e) of article III of the Constitution of
the State of Missouri, which authorizes the legislature of
the State to permit games of chance only upon the Missouri
River or the Mississippi River, conducted on excursion
gambling boats and floating facilities--
``(A) is a prohibitory measure; and
``(B) may not be construed to permit land-based class III
gaming of any kind for any purpose.''.

SEC. 3. APPLICABILITY OF RESTRICTIONS.

Section 20(b) of the Indian Gaming Regulatory Act (25
U.S.C. 2719(b)), as amended by section 2, is further amended
by adding at the end the following:
``(5) Notwithstanding any other provision of this
subsection, subsection (a) shall apply to any lands acquired
by the Secretary in trust for the benefit of an Indian tribe
after the date specified in that subsection, if, at the time
of the taking of those lands into trust, those lands are
located outside of the State in which the Indian tribe is
located.''.

SEC. 4. DECLARATION OF INTENT TO CONDUCT GAMING.

Section 20 of the Indian Gaming Regulatory Act (25 U.S.C.
4719) is amended by adding at the end the following:
``(e) Declaration of Intent to Conduct Gaming.--
(1) In general.--Except as provided in paragraph (2),
notwithstanding any other provision of law, including any
other provision of this Act, lands taken into trust for an
Indian tribe after the date of enactment of the Gaming
Clarification Act of 1997, shall not, for the purposes of
this Act, be considered to be Indian lands upon which class
II or class III gaming may be conducted in accordance with
this Act.
``(2) Exception.--With respect to trust lands described in
paragraph (1) of an Indian tribe, class II or class III
gaming may be conducted on those lands in accordance with
this Act if--
``(A) the Indian tribe submits an application to the
Secretary of the Interior that contains an explicit
declaration of the intent of the Indian tribe to conduct
gaming on those lands; and

[[Page S6366]]

``(B) the Secretary of the Interior, in accordance with
procedures established by the Secretary, including reviewing
the applicability of subsection (b)(4), approves the
declaration contained in the petition.''.
____

Questions and Answers About Senator Bond's Indian Gambling Legislation

Why is this legislation needed?
The people of Southwest Missouri and their elected
representatives have valiantly fought against the Eastern
Shawnee tribes proposed casino project in Seneca. In
addition, Creative Gaming International, the gambling company
that is working with the tribe to establish the casino, has
also purchased land near Branson where they intend to open
another casino. At this time the tribe's application to have
the Seneca land taken into federal trust is pending with the
Secretary of the Interior. While Senator Bond has repeatedly
asked Interior Secretary Babbitt to deny the tribe's
petition, the outcome is uncertain. Loopholes in the Indian
Gaming Regulatory Act (IGRA), the federal legislation that
regulates Indian gambling, need to be closed to prevent
tribes from locating in states where local citizens oppose
gambling.
Will this legislation interfere with the legal action that
the State has taken?
Senator Bond did not want to pursue any angle that would
interfere with any other efforts taken at the state level to
keep the casino out. The Attorney General of Missouri filed
suit on August 19, 1996, but filed a motion to dismiss the
case on November 18, 1996, which was granted on November 27,
1996. The fact that the case has been dropped means Bond's
legislation will not interfere with state efforts to stop the
casino.
Is this a fix for Missouri or a change in the gaming
statute affecting all tribes?
Both. As the situation in Missouri illustrates, the federal
statute intended to control the growth of this sort of
gambling is vague, poorly drafted and full of loopholes. The
Eastern Shawnee tribe is depending on this vague statute and
its loopholes to move into Missouri and open a casino,
activities that are directly contrary to the intent of the
statute. By focusing on several of the legal loopholes, I
believe we can solve the problem facing the State of Missouri
and other states whose citizens object to gambling
facilities.
Can this legislation pass?
Absolutely. The Senate Committee on Indian Affairs is
proceeding with legislation this session to correct many of
the defects with the laws governing Indian gambling. Bond has
met with the committee chairman, Sen. Ben Nighthorse
Campbell, and he is aware of the situation in Missouri. Sen.
Campbell has several concerns with the law that are similar
to Missouri's and has pledged his cooperation to correct this
problem.
Congress sometimes moves slowly; does Bond have an
alternative plan?
Through his membership on the Senate Appropriations
Committee, Bond is well-situated to add language to the
annual Department of Interior Appropriations bill which would
prevent the Secretary of the Interior from placing this land
into trust.
Hasn't the Eastern Shawnee tribe tried to assure local
citizens that they no longer intend to develop a casino site
on the Seneca land?
Talk is cheap. The tribe has not amended their petition
application with the Department of Interior to reflect the
fact that they no longer intend to open a casino. Also,
Creative Gaming International, the New Jersey company working
with the tribe, noted in a press release just last Friday
that they were continuing to pursue ``Native American gaming
in southwest Missouri.''
______

By Mr. CHAFEE (for himself, Mr. Graham, Mrs. Boxer, Mr. Bennett,
Mr. Hatch, and Mr. Moynihan):
S. 963. A bill to establish a transportation credit assistance pilot
program, and for other purposes; to the Committee on Environment and
Public Works.

the transportation infrastructure finance and innovation act of 1997

Mr. CHAFEE. Mr. President, today I am introducing the Transportation
Infrastructure Finance and Innovation Act of 1997,--or, TIFIA. The
purpose of the bill is to bridge the gap between the Nation's
substantial infrastructure needs and limited Federal funds. I am
pleased to report that Senators Graham of Florida, Boxer, Hatch,
Bennett, and Moynihan have joined me in cosponsoring this important
measure.
I think we can all agree that there is a clear shortfall of public
funding to meet the Nation's transportation needs. Our effort to
balance the Federal budget only makes the challenge of meeting these
critical needs all the more difficult.
The goals of our bill are to offer the sponsors of major
transportation projects a new tool to make the most of limited Federal
resources, stimulate additional investment in our Nation's
infrastructure, and encourage greater private sector participation in
meeting our transportation needs.
TIFIA establishes a new Federal credit program for surface
transportation. It will provide $800 million in credit assistance over
six years to public and private entities, with the purpose of
leveraging as much as $16 billion in Federal funds for major
transportation projects. In turn, this Federal investment could help
leverage total investment in infrastructure from other public and
private entities of $40 to $50 billion. Eligible forms of credit
assistance available through our proposal include loans, loan
guarantees, and lines of credit.

what kinds of projects would qualify for this assistance?

National significance. Projects participating in this program must be
determined by the Secretary of Transportation to be ``regionally or
nationally'' significant. Projects must enhance the national
transportation system, reduce traffic congestion, and protect the
environment.

Large projects. This program is targeted at large projects that are
difficult, if not impossible, to fund through traditional means such as
using a State's annual allocation in the Federal highway program.
Projects participating in the program must cost at least 100 million
dollars, or 50 percent of a State's most recent annual apportionment of
federal-aid highway funds, whichever is less.
Eligibility. The project must be a surface transportation facility
eligible for federal assistance--i.e., a highway, transit, passenger
rail, or intermodal facility.
State and local support. The project must be included in the State
transportation plan and be in the approved State Transportation
Improvement Program.
User charges. Projects must be self-financing through user fees or
other non-federal revenue sources.

why is this program needed in addition to state infrastructure banks?

The new credit assistance program will supplement existing Federal
programs, such as the State Infrastructure Banks or SIB's. Large
projects of national importance are simply too big to be financed by
SIB's. As start-up financial institutions, SIB's are limited in the
amount of assistance they can provide in the near term. The credit
assistance available through TIFIA will help fill this gap in the near
term.

will the federal government shoulder all of the risk for these
projects?

No, under TIFIA, the Federal Government will participate in the new
credit assistance program as a minor investor. Our bill limits Federal
participation to 33 percent of total project costs.
I want to emphasize that the new credit assistance program
established in TIFIA is a limited, six-year pilot program. The ultimate
objective of the program is to phase out Federal participation in these
large projects and allow private capital investment to take on this
function. It is time to try a new approach and see how it works.
The benefits of private sector involvement in this area are enormous.
Giving the private sector a larger role will reduce project costs and
advance construction schedules. It also will attract much needed
private capital, and more equitably distribute risks between public and
private sectors.
Now more than ever, we must preserve the strengths of the
transportation system we have in place. Yet, we also must anticipate
the future, addressing new problems with innovative solutions. This new
credit program is just the sort of creative mechanism we should be
advancing.
It is my hope that the new credit assistance program in the bill I
introduce today will be included as part of the reauthorization of the
Intermodal Surface Transportation Efficiency Act. As I have said
before, the ISTEA reauthorization process must reach out for ideas on
creative ways, like this one, to finance our infrastructure needs. The
combination of our nation's transportation infrastructure needs and the
significant fiscal constraints at all levels of government make this
effort imperative. This measure has the endorsement of the American
Road and Transportation Builders Association; PSA, the Bond Market
Trade Association; the Internationals Union of Operating Engineers; the
Building and Construction Trades Department; and Project America. I
urge my colleagues to give this sensible measure their support.

[[Page S6367]]

Mr. President, I ask unanimous consent that the text and description
of the bill be included in the Record.
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 ``Transportation
Infrastructure Finance and Innovation Act of 1997''.

SEC. 2. FINDINGS.

Congress finds that--
(1) a well-developed system of transportation
infrastructure is critical to the economic well-being,
health, and welfare of the people of the United States;
(2) traditional public funding techniques such as grant
programs are unable to keep pace with the infrastructure
investment needs of the United States because of budgetary
constraints at the Federal, State, and local levels of
government;
(3) major transportation infrastructure facilities that
address critical national needs, such as intermodal
facilities, border crossings, and multistate trade corridors,
are of a scale that exceeds the capacity of Federal and State
assistance programs in effect on the date of enactment of
this Act;
(4) new investment capital can be attracted to
infrastructure projects that are capable of generating their
own revenue streams through user charges or other dedicated
funding sources; and
(5) a Federal credit program for projects of national
significance can complement existing funding resources by
filling market gaps, thereby leveraging substantial private
co-investment.

SEC. 3. DEFINITIONS.

In this Act:
(1) Eligible project costs.--The term ``eligible project
costs'' means amounts substantially all of which are paid by,
or for the account of, an obligor in connection with a
project, including the cost of--
(A) development phase activities, including planning,
feasibility analysis, revenue forecasting, environmental
review, permitting, preliminary engineering and design work,
and other preconstruction activities;
(B) construction, reconstruction, rehabilitation,
replacement, and acquisition of real property (including land
related to the project and improvements to land),
environmental mitigation, construction contingencies, and
acquisition of equipment; and
(C) interest during construction, reasonably required
reserve funds, capital issuance expenses, and other carrying
costs during construction.
(2) Federal credit instrument.--The term ``Federal credit
instrument'' means a secured loan, loan guarantee, or line of
credit authorized to be made available under this Act with
respect to a project.
(3) Lender.--The term ``lender'' means any non-Federal
qualified institutional buyer (as defined in section
230.144A(a) of title 17, Code of Federal Regulations (or any
successor regulation), known as Rule 144A(a) of the
Securities and Exchange Commission and issued under the
Securities Act of 1933 (15 U.S.C. 77a et seq.)), including--
(A) a qualified retirement plan (as defined in section
4974(c) of the Internal Revenue Code of 1986) that is a
qualified institutional buyer; and
(B) a governmental plan (as defined in section 414(d) of
the Internal Revenue Code of 1986) that is a qualified
institutional buyer.
(4) Line of credit.--The term ``line of credit'' means an
agreement entered into by the Secretary with an obligor under
section 6 to provide a direct loan at a future date upon the
occurrence of certain events.
(5) Loan guarantee.--The term ``loan guarantee'' means any
guarantee or other pledge by the Secretary to pay all or part
of the principal of and interest on a loan or other debt
obligation issued by an obligor and funded by a lender.
(6) Local servicer.--The term ``local servicer'' means--
(A) a State infrastructure bank established under title 23,
United States Code; or
(B) a State or local government or any agency of a State or
local government that is responsible for servicing a Federal
credit instrument on behalf of the Secretary.
(7) Obligor.--The term ``obligor'' means a party primarily
liable for payment of the principal of or interest on a
Federal credit instrument, which party may be a corporation,
partnership, joint venture, trust, or governmental entity,
agency, or instrumentality.
(8) Project.--The term ``project'' means any surface
transportation facility eligible for Federal assistance under
title 23 or chapter 53 of title 49, United States Code.
(9) Project obligation.--The term ``project obligation''
means any note, bond, debenture, or other debt obligation
issued by an obligor in connection with the financing of a
project, other than a Federal credit instrument.
(10) Secured loan.--The term ``secured loan'' means a
direct loan or other debt obligation issued by an obligor and
funded by the Secretary in connection with the financing of a
project under section 5.
(11) State.--The term ``State'' has the meaning given the
term in section 101(a) of title 23, United States Code.
(12) Substantial completion.--The term ``substantial
completion'' means the opening of a project to vehicular or
passenger traffic.

SEC. 4. DETERMINATION OF ELIGIBILITY AND PROJECT SELECTION.

(a) Eligibility.--To be eligible to receive financial
assistance under this Act, a project shall meet the following
criteria:
(1) Inclusion in transportation plans and programs.--The
project--
(A) shall be included in the State transportation plan
required under section 135 of title 23, United States Code;
and
(B) at such time as an agreement to make available a
Federal credit instrument is entered into under this Act,
shall be included in the approved State transportation
improvement program required under section 134 of that title.
(2) Application.--A State, a local servicer identified
under section 7(a), or the entity undertaking the project
shall submit a project application to the Secretary.
(3) Eligible project costs.--
(A) In general.--Except as provided in subparagraph (B), to
be eligible for assistance under this Act, a project shall
have eligible project costs that are reasonably anticipated
to equal or exceed the lesser of--
(i) $100,000,000; or
(ii) 50 percent of the amount of Federal-aid highway funds
apportioned for the most recently-completed fiscal year under
title 23, United States Code, to the State in which the
project is located.
(B) Intelligent transportation system projects.--In the
case of a project involving the installation of an
intelligent transportation system, eligible project costs
shall be reasonably anticipated to equal or exceed
$30,000,000.
(4) Dedicated revenue sources.--Project financing shall be
repayable in whole or in part by user charges or other
dedicated revenue sources.
(5) Public sponsorship of private entities.--In the case of
a project that is undertaken by an entity that is not a State
or local government or an agency or instrumentality of a
State or local government, the project that the entity is
undertaking shall be publicly sponsored as provided in
paragraphs (1) and (2).
(b) Selection Among Eligible Projects.--
(1) Establishment.--The Secretary shall establish criteria
for selecting among projects that meet the eligibility
criteria specified in subsection (a).
(2) Included criteria.--The selection criteria shall
include the following:
(A) The extent to which the project is nationally or
regionally significant, in terms of generating economic
benefits, supporting international commerce, or otherwise
enhancing the national transportation system. Specific
factors determining national significance shall include the
extent to which the project--
(i) is part of the National Highway System and related
connectors as specified in section 103(b) of title 23, United
States Code;
(ii) promotes regional, interstate, or international
commerce;
(iii) enables United States manufacturers to deliver their
goods to domestic and foreign markets in a more timely, cost-
effective manner;
(iv) stimulates new economic activity and job creation;
(v) reduces traffic congestion, thereby increasing
workforce productivity; and
(vi) protects and enhances the environment, including by
enhancing air quality through the reduction of congestion and
decreased fuel and oil consumption.
(B) The creditworthiness of the project, including a
determination by the Secretary that any financing for the
project has appropriate security features, such as a rate
covenant, to ensure repayment. The Secretary shall require
each project applicant to provide a preliminary rating
opinion letter from a nationally recognized bond rating
agency.
(C) The extent to which assistance under this Act would
foster innovative public-private partnerships and attract
private debt or equity investment.
(D) The likelihood that assistance under this Act would
enable the project to proceed at an earlier date than the
project would otherwise be able to proceed.
(E) The extent to which the project uses new technologies,
including intelligent transportation systems, that enhance
the efficiency of the project.
(F) The amount of budget authority required to fund the
Federal credit instrument made available under this Act.
(c) Federal Requirements.--The following provisions of law
shall apply to funds made available under this Act and
projects assisted with the funds:
(1) Section 113 of title 23, United States Code.
(2) Title VI of the Civil Rights Act of 1964 (42 U.S.C.
2000d et seq.).
(3) The National Environmental Policy Act of 1969 (42
U.S.C. 4321 et seq.).
(4) The Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970 (42 U.S.C. 4601 et seq.).
(5) Section 5333 of title 49, United States Code.

SEC. 5. SECURED LOANS.

(a) In General.--
(1) Agreements.--Subject to paragraphs (2) and (3), the
Secretary may enter into agreements with 1 or more obligors
to make secured loans, the proceeds of which shall be used--
(A) to finance eligible project costs; or
(B) to refinance interim construction financing of eligible
project costs;
of any project selected under section 4.
(2) Limitation on refinancing of interim construction
financing.--A loan under

[[Page S6368]]

paragraph (1) shall not refinance interim construction
financing under paragraph (1)(B) later than 1 year after the
date of substantial completion of the project.
(3) Authorization period.--The Secretary may enter into a
loan agreement during any of fiscal years 1998 through 2003.
(b) Terms and Limitations.--
(1) In general.--A secured loan under this section with
respect to a project shall be on such terms and conditions
and contain such covenants, representations, warranties, and
requirements (including requirements for audits) as the
Secretary determines appropriate.
(2) Maximum amount.--The amount of the secured loan shall
not exceed 33 percent of the reasonably anticipated eligible
project costs.
(3) Payment.--The secured loan--
(A) shall be payable, in whole or in part, from revenues
generated by any rate covenant, coverage requirement, or
similar security feature supporting the project obligations
or from a dedicated revenue stream; and
(B) may have a lien on revenues described in subparagraph
(A) subject to any lien securing project obligations.
(4) Interest rate.--The interest rate on the secured loan
shall be equal to the yield on marketable United States
Treasury securities of a similar maturity to the maturity of
the secured loan on the date of execution of the loan
agreement.
(5) Maturity date.--The final maturity date of the secured
loan shall be not later than 35 years after the date of
substantial completion of the project.
(6) Nonsubordination.--The secured loan shall not be
subordinated to the claims of any holder of project
obligations in the event of bankruptcy, insolvency, or
liquidation of the obligor.
(7) Fees.--The Secretary may establish fees at a level
sufficient to cover the costs to the Federal Government of
making a secured loan under this section.
(c) Repayment.--
(1) Schedule.--The Secretary shall establish a repayment
schedule for each secured loan under this section based on
the projected cash flow from project revenues and other
repayment sources.
(2) Commencement.--Scheduled loan repayments of principal
or interest on a secured loan under this section shall
commence not later than 5 years after the date of substantial
completion of the project.
(3) Sources of repayment funds.--The sources of funds for
scheduled loan repayments under this section shall include
tolls, user fees, or other dedicated revenue sources.
(4) Deferred payments.--
(A) Authorization.--If, at any time during the 10 years
after the date of substantial completion of the project, the
project is unable to generate sufficient revenues to pay
scheduled principal and interest on the secured loan, the
Secretary may, pursuant to established criteria for the
project agreed to by the entity undertaking the project and
the Secretary, allow the obligor to add unpaid principal and
interest to the outstanding balance of the secured loan.
(B) Interest.--Any payment deferred under subparagraph (A)
shall--
(i) continue to accrue interest in accordance with
subsection (b)(4) until fully repaid; and
(ii) be scheduled to be amortized over the remaining term
of the loan beginning not later than 10 years after the date
of substantial completion of the project in accordance with
paragraph (1).
(5) Prepayment.--
(A) Use of excess revenues.--Any excess revenues that
remain after satisfying scheduled debt service requirements
on the project obligations and secured loan and all deposit
requirements under the terms of any trust agreement, bond
resolution, or similar agreement securing project obligations
may be applied annually to prepay the secured loan without
penalty.
(B) Use of proceeds of refinancing.--The secured loan may
be prepaid at any time without penalty from the proceeds of
refinancing from non-Federal funding sources.
(d) Sale of Secured Loans.--As soon as practicable after
substantial completion of a project, the Secretary shall sell
to another entity or reoffer into the capital markets a
secured loan for the project if the Secretary determines that
the sale or reoffering can be made on favorable terms.
(e) Loan Guarantees.--
(1) In general.--The Secretary may provide a loan guarantee
to a lender in lieu of making a secured loan if the Secretary
determines that the budgetary cost of the loan guarantee is
substantially the same as that of a secured loan.
(2) Terms.--The terms of a guaranteed loan shall be
consistent with the terms set forth in this section for a
secured loan, except that the rate on the guaranteed loan and
any prepayment features shall be negotiated between the
obligor and the lender, with the consent of the Secretary.

SEC. 6. LINES OF CREDIT.

(a) In General.--
(1) Agreements.--The Secretary may enter into agreements to
make available lines of credit to 1 or more obligors in the
form of direct loans to be made by the Secretary at future
dates on the occurrence of certain events for any project
selected under section 4.
(2) Use of proceeds.--The proceeds of a line of credit made
available under this section shall be available to pay debt
service on project obligations issued to finance eligible
project costs, extraordinary repair and replacement costs,
operation and maintenance expenses, and costs associated with
unexpected Federal or State environmental restrictions.
(b) Terms and Limitations.--
(1) In general.--A line of credit under this section with
respect to a project shall be on such terms and conditions
and contain such covenants, representations, warranties, and
requirements (including requirements for audits) as the
Secretary determines appropriate.
(2) Maximum amounts.--
(A) Total amount.--The total amount of the line of credit
shall not exceed 33 percent of the reasonably anticipated
eligible project costs.
(B) One-year draws.--The amount drawn in any 1 year shall
not exceed 20 percent of the total amount of the line of
credit.
(3) Draws.--Any draw on the line of credit shall represent
a direct loan and shall be made only if net revenues from the
project (including capitalized interest, any debt service
reserve fund, and any other available reserve) are
insufficient to pay debt service on project obligations.
(4) Interest rate.--The interest rate on a direct loan
resulting from a draw on the line of credit shall be equal to
the yield on 30-year marketable United States Treasury
securities as of the date on which the line of credit is
obligated.
(5) Security.--The line of credit--
(A) shall be made available only in connection with a
project obligation secured, in whole or in part, by a rate
covenant, coverage requirement, or similar security feature
or from a dedicated revenue stream; and
(B) may have a lien on revenues described in subparagraph
(A) subject to any lien securing project obligations.
(6) Period of availability.--The line of credit shall be
available during the period beginning on the date of
substantial completion of the project and ending not later
than 10 years after that date.
(7) Rights of third party creditors.--
(A) Against federal government.--A third party creditor of
the obligor shall not have any right against the Federal
Government with respect to any draw on the line of credit.
(B) Assignment.--An obligor may assign the line of credit
to 1 or more lenders or to a trustee on the lenders' behalf.
(8) Nonsubordination.--A direct loan under this section
shall not be subordinated to the claims of any holder of
project obligations in the event of bankruptcy, insolvency,
or liquidation of the obligor.
(9) Fees.--The Secretary may establish fees at a level
sufficient to cover the costs to the Federal Government of
providing a line of credit under this section.
(10) Relationship to other credit instruments.--A line of
credit under this section shall not be issued for a project
with respect to which another Federal credit instrument under
this Act is made available.
(c) Repayment.--
(1) Schedule.--The Secretary shall establish a repayment
schedule for each direct loan under this section based on the
projected cash flow from project revenues and other repayment
sources.
(2) Timing.--All scheduled repayments of principal or
interest on a direct loan under this section shall commence
not later than 5 years after substantial completion of the
project and be fully repaid, with interest, by the date that
is 20 years after the end of the period of availability
specified in subsection (b)(6).
(3) Sources of repayment funds.--The sources of funds for
scheduled loan repayments under this section shall include
tolls, user fees, or other dedicated revenue sources.

SEC. 7. PROJECT SERVICING.

(a) Requirement.--The State in which a project that
receives financial assistance under this Act is located may
identify a local servicer to assist the Secretary in
servicing the Federal credit instrument made available under
this Act.
(b) Agency; Fees.--If a State identifies a local servicer
under subsection (a), the local servicer--
(1) shall act as the agent for the Secretary; and
(2) may receive a servicing fee, subject to approval by the
Secretary.
(c) Liability.--A local servicer identified under
subsection (a) shall not be liable for the obligations of the
obligor to the Secretary or any lender.
(d) Assistance From Expert Firms.--The Secretary may retain
the services of expert firms in the field of municipal and
project finance to assist in the underwriting and servicing
of Federal credit instruments.

SEC. 8. OFFICE OF INFRASTRUCTURE FINANCE.

(a) Duties of the Secretary.--Section 301 of title 49,
United States Code, is amended--
(1) in paragraph (7), by striking ``and'' at the end;
(2) in paragraph (8), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(9) develop and coordinate Federal policy on financing
transportation infrastructure, including the provision of
direct Federal credit assistance and other techniques used to
leverage Federal transportation funds.''.
(b) Office of Infrastructure Finance.--
(1) In general.--Chapter 1 of title 49, United States Code,
is amended by adding at the end the following:

[[Page S6369]]

``Sec. 113. Office of Infrastructure Finance

``(a) Establishment.--The Secretary of Transportation shall
establish within the Office of the Secretary an Office of
Infrastructure Finance.
``(b) Director.--The Office shall be headed by a Director
who shall be appointed by the Secretary not later than 180
days after the date of enactment of this section.
``(c) Functions.--The Director shall be responsible for--
``(1) carrying out the responsibilities of the Secretary
described in section 301(9);
``(2) carrying out research on financing transportation
infrastructure, including educational programs and other
initiatives to support Federal, State, and local government
efforts; and
``(3) providing technical assistance to Federal, State, and
local government agencies and officials to facilitate the
development and use of alternative techniques for financing
transportation infrastructure.''.
(2) Conforming amendment.--The analysis for chapter 1 of
title 49, United States Code, is amended by adding at the end
the following:
``113. Office of Infrastructure Finance.''.

SEC. 9. STATE AND LOCAL PERMITS.

The provision of financial assistance under this Act with
respect to a project shall not--
(1) relieve any recipient of the assistance of any
obligation to obtain any required State or local permit or
approval with respect to the project;
(2) limit the right of any unit of State or local
government to approve or regulate any rate of return on
private equity invested in the project; or
(3) otherwise supersede any State or local law (including
any regulation) applicable to the construction or operation
of the project.

SEC. 10. REGULATIONS.

The Secretary may issue such regulations as the Secretary
determines appropriate to carry out this Act and the
amendments made by this Act.

SEC. 11. FUNDING.

(a) Authorization of Appropriations.--
(1) In general.--There shall be available from the Highway
Trust Fund (other than the Mass Transit Account) to carry out
this Act--
(A) $40,000,000 for fiscal year 1998;
(B) $60,000,000 for fiscal year 1999;
(C) $100,000,000 for fiscal year 2000;
(D) $150,000,000 for fiscal year 2001;
(E) $200,000,000 for fiscal year 2002; and
(F) $250,000,000 for fiscal year 2003.
(2) Availability.--Amounts made available under paragraph
(1) shall remain available until expended.
(b) Contract Authority.--Notwithstanding any other
provision of law, approval by the Secretary of a Federal
credit instrument that uses funds made available under this
Act shall be deemed to be acceptance by the United States of
a contractual obligation to fund the Federal credit
instrument.
(c) Limitations on Credit Amounts.--For each of fiscal
years 1998 through 2003, principal amounts of Federal credit
instruments made available under this Act shall be limited to
the amounts specified in the following table:
Maximum amount
Fiscal year: of credit:
1998....................................................$800,000,000
1999..................................................$1,200,000,000
2000..................................................$2,000,000,000
2001..................................................$3,000,000,000
2002..................................................$4,000,000,000
2003..................................................$5,000,000,000.

SEC. 12. REPORT TO CONGRESS.

Not later than 4 years after the date of enactment of this
Act, the Secretary shall submit to Congress a report
summarizing the financial performance of the projects that
are receiving, or have received, assistance under this Act,
including a recommendation as to whether the objectives of
this Act are best served--
(1) by continuing the program under the authority of the
Secretary;
(2) by establishing a Government corporation or Government-
sponsored enterprise to administer the program; or
(3) by phasing out the program and relying on the capital
markets to fund the types of infrastructure investments
assisted by this Act without Federal participation.
____

The Transportation Infrastructure Finance and Innovation Act of 1997

Sec. 1. Short Title; Table of Contents

This section identifies a new Federal credit assistance
program for surface transportation facilities as the
Transportation Infrastructure Finance and Innovation Act of
1997.

Sec. 2. Findings

This section recites Congressional findings that a
comprehensive surface transportation infrastructure system is
crucial to the economic health of the Nation. Traditional
methods of funding transportation projects, including Federal
grants, are insufficient to meet the Nation's infrastructure
investment needs. The funding gap is particularly acute for
large projects of National significance, due to their scale
and complexity. A new Federal credit program for
transportation will help address these projects' special
needs by supplementing existing Federal programs and
leveraging private debt and equity capital.
This bill is designed to provide an initial infusion of
Federal credit assistance over the next six years to
facilitate the development of large, capital-intensive
infrastructure facilities through public-private
partnerships, consisting of a State or local governmental
project sponsor and one of more private sector firms involved
in the design, construction or operation of the facility. The
Federal credit program is oriented to those projects which
have the potential to be self-supporting from user charges or
other non-Federal dedicated funding sources. The program is
structured to fill to specific market gaps through Federal
participation as a minority investor. The ultimate objective
is to phase out Federal participation and encourage private
capital investment to fulfill this function.
The program should result in additional surface
transportation facilities being developed more quickly and at
a lower cost than would be the case under conventional public
procurement, funding and ownership.

Sec. 3. Definitions

This section sets forth the definitions for terms used in
this title. The key terms are listed below:
A ``Project'' is defined as any surface transportation
facility eligible under the provisions of title 23 as well as
chapter 53 of title 49, United States Code. Permitted
projects would include free or tolled highways, bridges and
tunnels; mass transportation facilities and vehicles;
commuter and inter-city rail passenger facilities and
vehicles; intermodal passenger terminals; and intermodal
freight and port facilities (excluding privately-owned rail
rolling stock).
The term ``Eligible Project Costs'' is defined to include
those costs of a capital nature incurred by a sponsor in
connection with developing an infrastructure project. These
costs fall into three categories: (I) pre-construction costs
relating to planning, design, and securing
governmental permits and approvals; (ii) hard costs
relating to the design and construction (or
rehabilitation) of a project; and (iii) related soft costs
associated with the financing of the project, such as
interest during construction, reserve accounts, and
issuance expenses. It would not include operation or
maintenance costs.
An ``Obligor'' is defined as any entity (whether a State or
local governmental unit or agency, a private entity
authorized by such governmental unit to develop a project, or
a public-private partnership) that is a borrower involving a
secured loan, loan guarantee, or line of credit under this
title.
A ``Local Servicer'' is defined as a state infrastructure
bank or other designated State or local governmental agency
which may service the credit program on behalf of the
Department of Transportation within that State.
``Substantial Completion'' is defined as the date when a
project opens to vehicular, passenger, or freight traffic.
Other definitions specify types of lenders, project
obligations, and Federal credit instruments--including
secured loans, loan guarantees, and lines of credit.

Sec. 4. Determination of Eligibility and Project Selection

This section defines the threshold eligibility criteria for
a project to receive Federal credit assistance and outlines
the basis upon which the Secretary will select among
potential candidates. The Secretary's determination of a
project's eligibility will be based on both quantitative and
qualitative factors.
To ensure that the project enjoys both State and local
support the project must be included in the State's plan and
program and, if the project is in a metropolitan area, it
must satisfy all metropolitan planning requirements of 23
U.S.C. 134. The State or State-designated entity will be
responsible for forwarding the project application to the
Secretary.
In terms of size, the project must be reasonably
anticipated to cost at least $100 million or an amount equal
to 50 percent of a State's annual Federal-aid highway
apportionments, whichever is less. This two-fold test is
designed to allow small and rural States to accommodate
projects otherwise too large for their transportation
programs. Based on FY 1997 apportionments, eighteen States
could qualify projects costing less than $100 million, with
the minimum allocation equaling approximately $40 million.
An exception to this size threshold would be projects
involving the installation of intelligent transportation
systems, which would need to cost at least $30 million.
In addition, a project must be supported at least in part
by user charges, to encourage the development of new revenue
streams and the participation by the private sector.
Project applicants meeting the threshold eligibility
criteria then will be evaluated by the Secretary based on a
number of factors. Of prime importance, the project must be
deemed by the Secretary to be ``nationally or regionally
significant'' in terms of facilitating the movement of people
and goods in a more efficient and cost-effective manner,
resulting in significant economic benefits. Among the other
factors which the Secretary will take into account are: the
likelihood that the Federal assistance will enable the
project to proceed at an earlier date; the degree to which
the project leverages non-Federal resources, including
private sector capital; and its overall creditworthiness.
This section also provides that all requirements of the
National Environmental Policy Act of 1969 (42 U.S.C. 4321 et
seq.), title VI of the Civil Rights Act of 1964 (42 U.S.C.
2000d et seq.), the Uniform Relocation Assistance and

[[Page S6370]]

Real Property Acquisition Policies Act of 1970 (42 U.S.C.
4601 et seq.), and section 5333 of title 49 and section 113
of title 23, United States Code (relating to wage
protections), shall apply to funds made available under this
title and projects assisted with such funds.

Sec. 5. Secured Loans

This section establishes a temporary lending program
whereby the Secretary may make direct Federal loans in fiscal
years 1998 through 2003 to demonstrate to the capital markets
the viability of making transportation infrastructure
investments where returns depend on excess project cash
flows. It is intended to help the capital markets develop the
capability to replace the role of the Federal government by
the end of the authorization period in helping finance the
costs of large projects of national significance. The loans
are contemplated to be made up front as combined construction
and permanent financing, although the title allows the
Federal loan to be made up to a year after construction is
completed for those projects that have arranged interim
construction financing.
A secured loan could be in an amount up to 33 percent of
the reasonably anticipated cost of a project, and could have
a final maturity as long as 35 years after the date the
project opens (substantial completion). The interest rate
would be established at the time the loan agreement was
executed, and would equal the prevailing yield on comparable
term U.S. Treasury bonds. Loan repayments would be required
to start within five years after the date of substantial
completion and are payable from user fees or dedicated
revenue streams.
The terms and conditions of each loan would be negotiated
between the Secretary and the borrower, and would allow a
lien on project revenue subject to a lien securing other
project debt. In the event of default and bankruptcy,
insolvency or liquidation of the obligor, the loan is not
subordinated to the claims of any other lender. A key feature
would allow the Secretary, for a period up to 10 years
following project completion, to defer principal and interest
payments should project revenues prove insufficient. Any
deferred payments during this ``ramp-up'' period would accrue
with interest, and this amount will be amortized over the
remaining term of the loan. Such a flexible payment schedule
(allowing for deferrals during the project's ramp-up phase)
should assist the project in obtaining an ``investment
grade'' bond rating (that is, BBB or higher) on its
capital markets indebtedness. Excess revenues or proceeds
of refinancing from non-Federal funding sources could be
used to prepay the secured loans without penalty.
The Secretary is to determine whether a secured loan can be
sold to another entity or reoffered into the capital markets
on favorable terms as soon as possible after substantial
completion.
In lien of funding secured loans directly, the Secretary
may provide loan guarantees to lenders, provided the
budgetary cost based on credit-worthiness is similar. This
feature is designed to attract voluntary investment from
pension funds and other institutional investors. Guaranteed
loans would not be permitted to be issued on a tax-exempt
basis.

Sec. 6. Lines of Credit

This section authorizes the Secretary to enter into
agreements to make direct loans to projects at future dates
upon certain conditions occurring. Such agreement would be in
the form of a standby line of credit.
In contrast to a secured loan provided under section 5, the
line of credit would not be for the purpose of funding
construction costs as part of the project's initial
capitalization. Rather, the line of credit would be drawn
upon if needed to pay debt service and other project expenses
(such as extraordinary repair and replacement, or operation
and maintenance) during the critical ``ramp-up'' period after
the facility has opened. The line is designed to facilitate
project sponsors' access private capital by assisting them in
obtaining investment grade ratings on their debt.
It is intended that the financial institutions such as bond
insurers will develop the capability to replace this
temporary role of the Federal government in providing lines
of credit for large transportation infrastructure projects by
the end of the authorization period.
The secured loans and the line of credit are intended to
address projects with different financial needs based on
their pro-forma capital structures. The secured loans will be
most attractive to those projects that must demonstrate to
private lenders or capital markets debt investors that there
is adequate coverage ``going in'' based on maximum annual
debt service, and where the cost of the Federal loan compares
favorably with the cost of other borrowing alternatives. A
line of credit is more likely to be used by projects that are
able to issue capital markets debt on favorable terms with an
ascending debt service pattern, but need to demonstrate
access to contingent sources of capital to support such debt
service in the event revenues fail to grow as quickly as
annual payments of principal and interest.
This section sets forth various limitations on the
availability of draws on a line of credit. A draw on the line
will represent a direct loan. A line of credit could only be
drawn upon after the project had used up other available
revenues and reserves, and it could only be accessed for a
period of up to 10 years after a project had been
substantially completed.
The total amount of draws could not exceed 33 percent of
reasonably anticipated eligible project costs, as is the case
with secured loans. The borrower could draw down up to 20
percent of the line of credit each year (i.e., the entire
amount could be drawn down during the first five years of a
ten year credit line, if needed.)
Any draws would need to be fully repaid, with interest,
within 20 years of the end of the 10-year availability period
following substantial completion of the project. The interest
rate for any draw would be established at the time the line
of credit agreement was entered into, at a rate equal to the
then-prevailing yield on 30 year U.S. Treasury bonds. The
repayment of the draw would be secured in a manner similar to
the secured loan.
To avoid ``double-dipping,'' a borrower could not combine a
line of credit with a secured loan for any given project.

sec. 7. project servicing

The program will use State or local governmental agencies
to assist the Secretary in servicing each credit instrument.
The State may designate its State infrastructure bank or some
other public agency to serve as the local servicing agent for
the credit instrument.
The local servicing agent would function as a financing
conduit, much like a mortgage company, and with the
Secretary's approval it could charge a servicing fee. It
would not be financially liable in any way for the credit
provided; rather, it would assist in the disbursement and
collection of funds. It is required that the local servicing
agent set up a separate account from its other activities to
receive the Federal credit proceeds for disbursal to the
borrower, and to receive loan repayments for remittance to
the Secretary.

sec. 8. office of infrastructure finance

The Secretary will establish an Office of Infrastructure
Finance to manage the credit program and provide related
technical and educational assistance.
Program guidelines will be established by the Secretary in
order to ensure the program operates prudently and
efficiently, including requiring obligors to provide annual
audits.

sec. 9. state and local permits

This section states that this title in no way supersedes
any existing State or local laws, regulations, or project
approval requirements.

sec. 10. funding

This section provides contract authority to fund the
budgetary or subsidy costs of the Federal credit instruments
provided. (Subsidy costs, which are defined in and required
to be funded by budget authority under the Federal Credit
Reform Act of 1990, represent the present value of expected
cash flows for each credit instrument, taking into account
the default risk as well as any interest rate subsidy. Since
this title requires all secured loans to be made at rate
equal to the comparable term U.S. Treasury rate, there will
be no interest subsidy element.) The contract authority
would remain available until expended, and would be paid
out of the highway account of the Highway Trust Fund.
The section also establishes a limit each year on the
maximum amount of credit assistance that may be offered under
this title.

------------------------------------------------------------------------
Budget (contract) Nominal credit
Fiscal year authority limit
------------------------------------------------------------------------
1998.............................. $40,000,000 $800,000,000
1999.............................. $60,000,000 $1,200,000,000
2000.............................. $100,000,000 $2,000,000,000
2001.............................. $150,000,000 $3,000,000,000
2002.............................. $200,000,000 $4,000,000,000
2003.............................. $250,000,000 $5,000,000,000
------------------------------------------------------------------------

Sec. 110. Report to Congress

This section requires the Secretary to summarize the
activities and results of the assistance programs and
mechanisms provided under this title, including whether they
are succeeding in encourage the private capital markets to
invest in large transportation infrastructure projects. The
report shall be made within four years of enactment of the
title and include recommendations on whether the programs
should be continued or phased out by the end of the
authorization period as planned.

Mrs. BOXER. Mr. President, I would like to ask the distinguished
Senator from Rhode Island, Senator Chafee, who is the chairman of the
Senate Committee on Environment and Public Works, on which I am pleased
to serve,

[[Page S6371]]

a question about his proposed Transportation Finance and Innovation
Act.
Mr. CHAFEE. I will be pleased to yield to a question from my
California colleague.
Mrs. BOXER. I thank the Senator. I also want to thank the Chairman
for his support for a number of critical transportation projects in
California and in particular, the Alameda Transportation Corridor
project. As the Chairman knows, he supported my efforts to designate
the Corridor a High Priority Corridor in the National Highway System
Designation Act of 1995. That in turn led President Clinton to include
in his fiscal year 1997 budget request funding to support a $400
million direct Federal loan for the project, which was approved by
Congress last year.
As Senator Chafee, knows, California has major need for
transportation investment due in large part to the tremendous increase
in international trade flowing through the state. While this trade has
helped bring California out of the economic recession earlier this
decade, it has also placed tremendous strain on our infrastructure. No
where is this more apparent than at our border with Mexico.
Unfortunately, after the implementation of the North American Free
Trade Agreement, the Federal Government provided no special assistance
to the border States to deal with the expected doubling of commercial
truck traffic through these border trade corridors. As the Senator
knows from his recent tour of the area, narrow rural highways or city
streets are being expected to carry heavy, continuous commercial truck
traffic.
In response to this need, I introduced the Border Infrastructure,
Safety and Congestion Relief Act. A section of my bill would provide
Federal funds to state infrastructure banks or authorities to finance
border improvement projects. We know that some projects could be
financed more efficiently under partnerships with the private sector. I
understand Senator Chafee's bill on Transportation Finance and
Innovation would provide an infusion of Federal credit assistance over
the next six years to help construct large, high-cost infrastructure
facilities. My question for the Chairman is this, would border crossing
facilities and trade corridors be eligible for this type of Federal
financing under your bill?
Mr. CHAFEE. The Senator is correct. Through the efforts of Senator
Boxer, I have become aware of the need for border infrastructure
investment and of her own legislation which has been referred to our
committee. The Transportation Finance and Innovation Act embraces the
innovative finance objectives of the Boxer bill. Border crossing
facilities and multi-State trade corridors are clearly eligible and the
selection criteria specifically includes those projects which promote
international commerce. This bill will enable United States
manufacturers to deliver their goods to domestic and foreign markets in
a more timely, and cost-effective manner.
Mrs. BOXER. I thank the Chairman. I am proud to be an original
cosponsor of the Transportation Finance and Innovation Act. Several
projects in California could benefit potentially from this legislation,
not only in the border region but with the Alameda Corridor project in
Los Angeles and the Bay Area Rapid Transit extension to San Francisco
International Airport. I appreciate Senator Chafee's hard work and
vision to present new innovations and ideas on financing transportation
investments needed to keep our economy competitive in the world.
Mr. GRAHAM. Mr. President, I am pleased to join my colleague from
Rhode Island--the distinguished chairman of the Senate Environment and
Public Works Committee--in the introduction of an initiative to help
address our nation's infrastructure needs. Our initiative aims to
harness the resources and energies of the public and the private
sectors, and have them work in concert to ensure that a 21st century
America has a modern system of roads, highways, and other critical
public works assets. We are calling this new partnership the
Transportation Infrastructure Finance and Innovation Act of 1997--
TIFIA.
Mr. President, the numbers paint a stark and disturbing picture of
the state of our nation's infrastructure. A survey of our nation's
community water system estimated that a minimum of $138.4 billion are
needed over a 20 year period for the purposes of installing, upgrading,
or replacing water mains, pipes, and processing facilities. Houston
Mayor Bob Lanier, Chairman of the Rebuild America Coalition, reports
that ``57 percent of highway pavement in all but a handful of states is
in poor or mediocre condition; in some of the most populous regions,
the figure is as high as 70%.'' The U.S. Department of Transportation
estimates that our nation must invest an additional $33 billion in
surface transportation in order to stay ahead of future growth,
congestion, and development. We are also faced with 187,000
structurally deficient and functionally obsolete bridges. According to
the Federal Highway Administration, a minimum of $8.2 billion is
required to improve and correct bridge conditions.
In addition to these needs, we are faced with the important and
challenging task of balancing the federal budget in order to preserve
the health and prosperity of future generations of Americans. In order
to achieve this goal and still meet our nation's infrastructure needs,
our actions must be a combination of traditional as well as new and
innovative means of financing.
Specifically, I believe that we need to do the following: First, we
need to provide for a more efficient use of resources going to improve
and develop our nation's infrastructure. We need to better utilize
cost-saving tools and techniques so that we can stretch our nation's
public investment dollars as far as possible in this time of limited
federal funds. Second, we need to raise the level of traditional
resources so that states will have a larger pool of dollars, including
federal dollars, available for infrastructure development. Third, we
need to attract and facilitate new and innovative financing sources,
such as private investment. By fostering greater private-public
partnerships, we can provide additional funding resources for states
and communities. Finally, we need to develop and support innovative
construction and financing mechanisms, such as State Infrastructure
Banks (SIBs) and the legislation we are introducing today, TIFIA.
In the face of declining federal investment in infrastructure amidst
tight fiscal constraints, TIFIA enables communities and states to
utilize creative methods for addressing our nation's infrastructure
needs. TIFIA would provide $800 million in federal credit assistance
for major transportation infrastructure projects costing in excess of
$100 million. The legislation provides a model in which states could
use federal loans to develop large projects that have the potential to
be self-supporting.
Projects which would be candidates for receiving assistance under
this program include: The Western Extension of the George Bush Freeway
in Texas; the Broken Arrow Expressway in Oklahoma; the widening of US
Highway 219 in New York; the Interstate 15 rebuilding project in Utah;
the Border Infrastructure project in Southern California; and the
Florida High Speed Rail.
In my state of Florida, the state's Department of Transportation is
proposing the Florida High Speed Rail project, which would connect the
major metropolitan areas of Miami, Orlando, and Tampa, and be the first
true high speed rail line in our nation. Japan and nations in Europe
have already made major progress in high speed rail transportation--but
this progress has been contingent on support from their national
governments. TIFIA could provide important credit support for such
projects of national significance.
Creative financing for infrastructure development is crucial as we
enter the 21st century and are confronted with the extensive needs
which can only be addressed through new and visionary approaches. In
this Congress, we are scheduled to reauthorize both the Clean Water Act
and ISTEA, the Intermodal Surface Transportation Efficiency Act, which
governs our nation's highway system--two major infrastructure bills
which address pressing needs that affect the daily lives of citizens
nationwide.
As we focus on these two major bills, it is my hope that we will take
steps to improve the state of our nation's public works system in a
substantial and effective manner. TIFIA should be used as one model for
taking these steps using a creative private-public financing approach.
In fact, it is my hope

[[Page S6372]]

that this legislation will be incorporated into ISTEA.
We should create new partnerships which will help us to meet current
and future needs while acknowledging the limited resources available to
us in this fiscal environment. If we are to rebuild our nation's
infrastructure, and lay the groundwork for the next generation of
transportation infrastructure, we will need to develop innovative
financing programs such as TIFIA.
It is my hope that after we complete the Highway Program bill--with
the inclusion of TIFIA as an innovative financing title--we will
develop similar mechanisms for addressing the financing requirements of
other major public works needs such as clean water systems and perhaps
even school construction.
We should heed the wisdom found in the words of Daniel Burnham, a
prominent architect who served as chairman of a commission charged with
redeveloping the District of Columbia, ``Think no small ideas. Small
ideas have no magic to stir men's minds.'' Let us use this bill as the
starting point from which to make a serious and substantial dent in our
national development needs.
Mr. President, I thank the Chairman for his leadership in this area
and look forward to working closely with him as we work to pass this
bill and reauthorize the Highway Program.

ADDITIONAL COSPONSORS

S. 364

At the request of Mr. Lieberman, the name of the Senator from
Michigan [Mr. Abraham] was added as a cosponsor of S. 364, a bill to
provide legal standards and procedures for suppliers of raw materials
and component parts for medical devices.

S. 387

At the request of Mr. Hatch, the name of the Senator from Florida
[Mr. Graham] was added as a cosponsor of S. 387, a bill to amend the
Internal Revenue Code of 1986 to provide equity to exports of software.

S. 492

At the request of Mr. Sarbanes, the name of the Senator from Nevada
[Mr. Bryan] was added as a cosponsor of S. 492, a bill to amend certain
provisions of title 5, United States Code, in order to ensure equality
between Federal firefighters and other employees in the civil service
and other public sector firefighters, and for other purposes.

S. 496

At the request of Mr. Chafee, the name of the Senator from Illinois
[Mr. Durbin] was added as a cosponsor of S. 496, a bill to amend the
Internal Revenue Code of 1986 to provide a credit against income tax to
individuals who rehabilitate historic homes or who are the first
purchasers of rehabilitated historic homes for use as a principal
residence.

S. 507

At the request of Mr. Hatch, the name of the Senator from Vermont
[Mr. Leahy] was added as a cosponsor of S. 507, a bill to establish the
United States Patent and Trademark Organization as a Government
corporation, to amend the provisions of title 35, United States Code,
relating to procedures for patent applications, commercial use of
patents, reexamination reform, and for other purposes.

S. 551

At the request of Mr. Gregg, the names of the Senator from Ohio [Mr.
DeWine] and the Senator from Iowa [Mr. Grassley] were added as
cosponsors of S. 551, a bill to amend the Occupational Safety and
Health Act of 1970 to make modifications to certain provisions.

S. 682

At the request of Mr. Harkin, the name of the Senator from Nevada
[Mr. Reid] was added as a cosponsor of S. 682, a bill to amend title
32, United States Code, to make available not less than $200,000,000
each fiscal year for funding of activities under National Guard drug
interdiction and counterdrug activities plans.

S. 755

At the request of Mr. Campbell, the name of the Senator from Colorado
[Mr. Allard] was added as a cosponsor of S. 755, a bill to amend title
10, United States Code, to restore the provisions of chapter 76 of that
title (relating to missing persons] as in effect before the amendments
made by the National Defense Authorization Act for Fiscal Year 1997 and
to make other improvements to that chapter.

S. 872

At the request of Mr. Roberts, the name of the Senator from North
Dakota [Mr. Dorgan] was added as a cosponsor of S. 872, a bill to amend
the Internal Revenue Code of 1986 to provide for the nonrecognition of
gain for sale of stock to certain farmers' cooperatives, and for other
purposes.

Senate Joint Resolution 6

At the request of Mr. Kyl, the names of the Senator from New
Hampshire [Mr. Gregg], the Senator from Nebraska [Mr. Hagel], and the
Senator from Colorado [Mr. Campbell] were added as cosponsors of Senate
Joint Resolution 6, a joint resolution proposing an amendment to the
Constitution of the United States to protect the rights of crime
victims.

Senate Resolution 94

At the request of Mr. Warner, the names of the Senator from Montana
[Mr. Burns], the Senator from Rhode Island [Mr. Chafee], and the
Senator from Louisiana [Mr. Breaux] were added as cosponsors of Senate
Resolution 94, a resolution commending the American Medical Association
on its 150th anniversary, its 150 years of caring for the United
States, and its continuing effort to uphold the principles upon which
Nathan Davis, M.D. and his colleagues founded the American Medical
Association to ``promote the science and art of medicine and the
betterment of public health.''

Amendment No. 469

At the request of Mr. Specter the names of the Senator from
Pennsylvania [Mr. Santorum], the Senator from Maine [Ms. Snowe], the
Senator from Maine [Ms. Collins], and the Senator from Colorado [Mr.
Campbell] were added as cosponsors of amendment No. 469 proposed to S.
947, an original bill to provide for reconciliation pursuant to section
104(a) of the concurrent resolution on the budget for fiscal year 1998.

Amendment No. 471

At the request of Mr. Specter the name of the Senator from New York
[Mr. D'Amato] was added as a cosponsor of amendment No. 471 proposed to
S. 947, an original bill to provide for reconciliation pursuant to
section 104(a) of the concurrent resolution on the budget for fiscal
year 1998.

Amendment No. 492

At the request of Mr. Kennedy the name of the Senator from Iowa [Mr.
Harkin] was added as a cosponsor of amendment No. 492 proposed to S.
947, an original bill to provide for reconciliation pursuant to section
104(a) of the concurrent resolution on the budget for fiscal year 1998.

Amendment No. 498

At the request of Mr. Harkin the names of the Senator from Iowa [Mr.
Grassley], the Senator from Massachusetts [Mr. Kerry], the Senator from
Arkansas [Mr. Bumpers], and the Senator from Minnesota [Mr. Wellstone]
were added as cosponsors of amendment No. 498 proposed to S. 947, an
original bill to provide for reconciliation pursuant to section 104(a)
of the concurrent resolution on the budget for fiscal year 1998.
At the request of Mr. Domenici his name, and the name of the Senator
from Missouri [Mr. Bond] were added as cosponsors of amendment No. 498
proposed to S. 947, supra.

____________________