[Congressional Record Volume 143, Number 111 (Thursday, July 31, 1997)]
[Senate]
[Pages S8533-S8571]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. ALLARD:
  S. 1094. A bill to authorize the use of certain public housing 
operating funds to provide tenant-based assistance to public housing 
residents; to the Committee on Banking, Housing, and Urban Affairs.


          THE CRIME VICTIM HOUSING VOUCHERS BILL JULY 30, 1997

  Mr. ALLARD. Today, Mr. President, I would like to introduce a bill 
that would provide for more public housing vouchers. I have been 
working on this issue in the Housing Subcommittee, and it is my hope 
that a similar provision will be placed in the Public Housing bill.
  The original intent of the Federal housing assistance program was to 
provide temporary housing to poor individuals and families. Since their 
inception, federal housing programs have grown dramatically. Today they 
provide $25 billion per year in housing assistance.
  In my view, the voucher program is the best means for low-income 
families to find secure affordable rental housing. The voucher program 
first began in 1974 and has grown to serve over 1.5 million low-income 
families today. These families are empowered with the choice of where 
they want to live and are given the freedom to determine what 
surroundings they desire. Vouchers are the preferable means of 
providing affordable housing to low-income individuals.
  Vouchers enjoy wide support, including past Republican and Democratic 
administrations. In fact, the current Secretary of HUD, Secretary 
Andrew Cuomo supports an expanded voucher program.
  Vouchers are very popular, which is demonstrated by the 1.5 million 
families who are currently using vouchers or certificates. Vouchers 
empower individuals and promote competition within Public Housing 
Authorities and within the community, thereby lowering costs and 
improving conditions for the residents. Vouchers or other alternatives 
can be less expensive than the current public housing program; they can 
save the government money, and improve conditions for the tenants.
  Studies have indicated that project-based housing assistance costs 
more on average than the voucher housing program. In fact, the findings 
of the June 1995 GAO report indicated that housing vouchers cost 10 
percent less than project-based housing. This study clearly 
demonstrated that on a national average, the section 8 tenant-based 
housing program is cheaper than the public unit-based housing program. 
In fact, one can say that the savings from the movement to vouchers 
would amount to $640 million per year which could add additional 
housing assistance.
  Under this legislation, ten percent of the public housing operating 
funds that are distributed to each public housing authority would be 
made available for those who currently live in the public housing unit 
and wish to be given a voucher. Nothing would be required or mandated; 
it is simply a choice given to the resident. In fact, we make clear 
that any unexpended amounts set aside for vouchers would be used by the 
PHAs for normal operating funds.
  Quite frankly, I really don't know how anyone could oppose this 
provision unless they are just opposed to giving people a choice and an 
opportunity.
  The language that I have proposed also establishes a preference for 
crime victims. It states that a voucher will be made available to any 
resident of public housing who is the victim of a crime of violence 
that has been reported to law enforcement. People should have the 
option of vouchers when their housing is unsafe.
  My strong belief is that we should increase the pace at which we move 
ahead with the conversion of housing from the old central planning and 
concentrated public housing model, to one of choice and opportunities 
through the use of vouchers.
                                 ______
                                 
      By Mr. ROBERTS (for himself, Mr. Bingaman, Mr. Brownback, Mr. 
        Campbell, Mr. Domenici and Mr. Inouye):
  S. 1095. A bill to enhance the administrative authority of the 
respective presidents of Haskell Indian Nations University and the 
Southwestern Indian Polytechnic Institute, and for other purposes; to 
the Committee on Indian Affairs.

[[Page S8534]]

     THE HASKELL INDIAN NATIONS UNIVERSITY AND SOUTHWESTERN INDIAN 
        POLYTECHNIC INSTITUTE ADMINISTRATIVE SYSTEMS ACT OF 1997

  Mr. ROBERTS. Mr. President, I rise today to introduce the Haskell 
Indian Nations University and Southwestern Indian Polytechnic Institute 
Administrative Systems Act of 1997. I am pleased to have my colleagues, 
Senators Sam Brownback, Jeff Bingaman, Pete Domenici, and Daniel 
Inouye, and Indian Affairs Committee Chairman Senator Ben Nighthorse 
Campbell as cosponsors. This legislation will provide Haskell Indian 
Nations University and Southwestern Indian Polytechnic Institute the 
administrative authority and flexibility to complete their transitions 
from two year institutions to a 4-year university for Haskell, and a 
national community college for SIPI.
  Located in Lawrence, KS, Haskell is an educational institution rich 
in history and opportunity for American Indian and Alaskan Native 
communities. Founded in 1884 as the United States Indian Industrial 
Training School, Haskell has grown from a school providing agricultural 
education for grades one through five to a fully accredited four-year 
university. In October 1993, Haskell changed its name from Haskell 
Indian Junior College to Haskell Indian Nations University after 
receiving accreditation to offer a bachelor of science degree in 
elementary teacher education. Since its inception, Haskell has provided 
tuition-free education, culturally sensitive curricula, innovative 
services and a commitment to academic excellence to federally 
recognized tribal members. With as many as 175 tribes represented in 
the student body, Haskell offers Native American history, institutions, 
arts, literature, and language courses integrating the perspectives of 
various Native American cultures. Haskell continues development of 4-
year programs in other fields, striving to meet the challenge of 
enriching the lives of young native Americans and Alaska Natives.
  I support Haskell's vision to become a national center for Indian 
education, research, and cultural programs; increasing the knowledge 
and supporting the educational needs of American Indians and Alaskan 
Natives. This legislation, which allows the institution to remain 
within the Bureau of Indian Affairs and employees to continue 
participation in Federal retirement and health benefit programs, 
provides the Haskell president and Board of Regents authority over 
organizational structure, classification of positions, recruitment, 
procurement, and determination of all human resource policies and 
procedures. In short, this legislation completes Haskell's transition 
by giving the school the autonomy enjoyed by the tribally controlled 
community colleges and BIA elementary and secondary schools. As Haskell 
continues to change and meet the educational demands of native 
Americans and Alaskan Natives into the 21st Century, so too should the 
system by which Haskell is administered change and grow. The Haskell 
Indian Nations University and Southwestern Indian Polytechnic Institute 
Administrative Systems Act of 1997 complements the educational and 
administrative efforts of these schools, giving Haskell and SIPI the 
support and flexibility required to progress and develop into 
outstanding institutions of higher learning. My Kansas colleague, 
Representative Vincent Snowbarger, has introduced this bill in the 
House of Representatives.
  Mr. President, I ask unanimous consent that the text of this bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1095

       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 ``Haskell Indian Nations 
     University and Southwestern Indian Polytechnic Institute 
     Administrative Systems Act of 1997''.

     SEC. 2. FINDINGS.

       The Congress finds that--
       (1) the provision of culturally sensitive curricula for 
     higher education programs at Haskell Indian Nations 
     University and the Southwestern Indian Polytechnic Institute 
     is consistent with the commitment of the Federal Government 
     to the fulfillment of treaty obligations to Indian tribes 
     through the principle of self-determination and the use of 
     Federal resources; and
       (2) giving a greater degree of autonomy to those 
     institutions, while maintaining them as an integral part of 
     the Bureau of Indian Affairs, will facilitate--
       (A) the transition of Haskell Indian Nations University to 
     a 4-year university; and
       (B) the administration and improvement of the academic 
     program of the Southwestern Indian Polytechnic Institute.

     SEC. 3. DEFINITIONS.

       For purposes of this Act--
       (1) Haskell indian nations university.--The term ``Haskell 
     Indian Nations University'' means Haskell Indian Nations 
     University, located in Lawrence, Kansas.
       (2) Southwestern indian polytechnic institute.--The term 
     ``Southwestern Indian Polytechnic Institute'' means the 
     Southwestern Indian Polytechnic Institute, located in 
     Albuquerque, New Mexico.
       (3) Respective institutions, etc.--The terms ``respective 
     institutions'' and ``institutions to which this Act applies'' 
     mean Haskell Indian Nations University and the Southwestern 
     Indian Polytechnic Institute.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.

     SEC. 4. PERSONNEL MANAGEMENT.

       (a) Inapplicability of Certain Civil Service Laws.--
     Chapters 51, 53, and 63 of title 5, United States Code 
     (relating to classification, pay, and leave, respectively) 
     and the provisions of such title relating to the appointment, 
     performance evaluation, promotion, and removal of civil 
     service employees shall not apply to applicants for 
     employment with, employees of, or positions in or under 
     either of the institutions to which this Act applies.
       (b) Alternative Personnel Management Provisions.--
       (1) In general.--The president of each of the respective 
     institutions shall by regulation prescribe such personnel 
     management provisions as may be necessary, in the interest of 
     effective administration, to replace the provisions of law 
     that are inapplicable with respect to such institution by 
     reason of subsection (a).
       (2) Procedural requirements.--Regulations under this 
     subsection--
       (A) shall be prescribed in consultation with the board of 
     regents (or, if none, the governing body) of the institution 
     involved and other appropriate representative bodies;
       (B) shall be subject to the requirements of subsections (b) 
     through (e) of section 553 of title 5, United States Code; 
     and
       (C) shall not take effect except with the prior written 
     approval of the Secretary.
       (c) Specific Substantive Requirements.--Under the 
     regulations prescribed for an institution under this 
     section--
       (1) no rate of basic pay may, at any time, exceed--
       (A) in the case of an employee who would otherwise be 
     subject to the General Schedule, the maximum rate of basic 
     pay then currently payable for grade GS-15 of the General 
     Schedule (including any amount payable under section 5304 
     of title 5, United States Code, or other similar authority 
     for the locality involved); or
       (B) in the case of an employee who would otherwise be 
     subject to subchapter IV of chapter 53 of title 5, United 
     States Code (relating to prevailing rate systems), the 
     maximum rate of basic pay which (but for this section) would 
     then otherwise be currently payable under the wage schedule 
     covering such employee;
       (2) section 5307 of title 5, United States Code (relating 
     to limitation on certain payments) shall apply, subject to 
     such definitional and other modifications as may be necessary 
     in the context of the applicable alternative personnel 
     management provisions under this section;
       (3) procedures shall be established for the rapid and 
     equitable resolution of grievances;
       (4) no employee may be discharged without notice of the 
     reasons therefor and opportunity for a hearing under 
     procedures that comport with the requirements of due process, 
     except that this paragraph shall not apply in the case of an 
     employee serving a probationary or trial period under an 
     initial appointment; and
       (5) employees serving for a period specified in or 
     determinable under an employment agreement shall, except as 
     otherwise provided in the agreement, be notified at least 30 
     days before the end of such period as to whether their 
     employment agreement will be renewed.
       (d) Rule of Construction.--Nothing in this section shall be 
     considered to affect the applicability of--
       (1) any provision of law providing for--
       (A) equal employment opportunity;
       (B) Indian preference; or
       (C) veterans' preference;
       (2) any provision of chapter 23 of title 5, United States 
     Code, or any other provision of such title, relating to merit 
     system principles or prohibited personnel practices; or
       (3) chapter 71 of title 5, United States Code, relating to 
     labor-management and employee relations.
       (e) Labor-Management Provisions.--
       (1) Collective-bargaining agreements.--Any collective-
     bargaining agreement in effect on the day before the 
     applicable effective date under subsection (f)(1) shall 
     continue to be recognized by the institution involved until 
     altered or amended pursuant to law.
       (2) Exclusive representative.--Nothing in this Act shall 
     affect the right of any labor organization to be accorded (or 
     to continue to be accorded) recognition as the exclusive 
     representative of any unit of employees.

[[Page S8535]]

       (3) Other provisions.--Matters made subject to regulation 
     under this section shall not be subject to collective 
     bargaining.
       (f) Effective Date.--
       (1) Alternative personnel management provisions.--Any 
     alternative personnel management provisions under this 
     section shall take effect on such date as may be specified in 
     the regulations applicable with respect to the institution 
     involved, except that in no event shall the date specified be 
     later than 1 year after the date of the enactment of this 
     Act.
       (2) Provisions made inapplicable by this section.--
     Subsection (a) shall, with respect to an institution, take 
     effect as of the effective date specified with respect to 
     such institution under paragraph (1).
       (g) Applicability.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the alternative personnel management provisions 
     under this section shall apply with respect to all applicants 
     for employment with, all employees of, and all positions in 
     or under the institution involved.
       (2) Current employees not covered except pursuant to a 
     voluntary election.--
       (A) In general.--An employee serving with an institution on 
     the day before the applicable effective date under subsection 
     (f)(1) shall not be subject to such institution's alternative 
     personnel management provisions (and shall instead, for 
     purposes of such institution, be treated in the same way as 
     if this section had not been enacted, notwithstanding 
     subsection (a)) unless, before the end of the 5-year period 
     beginning on such effective date, such employee elects to be 
     covered by such provisions.
       (B) Procedures.--An election under this paragraph shall be 
     made in such form and in such manner as may be required under 
     the regulations, and shall be irrevocable.
       (3) Transition provisions.--
       (A) Provisions relating to annual and sick leave.--Any 
     individual who--
       (i) makes an election under paragraph (2), or
       (ii) on or after the applicable effective date under 
     subsection (f)(1), is transferred, promoted, or reappointed, 
     without a break in service of 3 days or longer, to a position 
     within an institution to which this Act applies from a 
     position with the Federal Government or the government of the 
     District of Columbia,
     shall be credited, for the purpose of the leave system 
     provided under regulations prescribed under this section, in 
     conformance with the requirements of section 6308 of title 5, 
     United States Code, with the annual and sick leave to such 
     individual's credit immediately before the effective date of 
     such election, transfer, promotion, or reappointment, as the 
     case may be.
       (B) Liquidation of remaining leave upon termination.--
       (i) Annual leave.--Upon termination of employment with an 
     institution to which this Act applies, any annual leave 
     remaining to the credit of an individual within the purview 
     of this section shall be liquidated in accordance with 
     section 5551(a) and section 6306 of title 5, United States 
     Code.
       (ii) Sick leave.--Upon termination of employment with an 
     institution to which this Act applies, any sick leave 
     remaining to the credit of an individual within the purview 
     of this section shall be creditable for civil service 
     retirement purposes in accordance with section 8339(m) of 
     title 5, United States Code, except that leave earned or 
     accrued under regulations prescribed under this section shall 
     not be so creditable.
       (C) Transfer of remaining leave upon transfer, promotion, 
     or reemployment.--In the case of an employee of an 
     institution to which this Act applies who is transferred, 
     promoted, or reappointed, without a break in service of 3 
     days or longer, to a position in the Federal Government (or 
     the government of the District of Columbia) under a different 
     leave system, any leave remaining to the credit of that 
     individual which was earned or credited under the regulations 
     prescribed under this section shall be transferred to such 
     individual's credit in the employing agency on an adjusted 
     basis in accordance with section 6308 of title 5, United 
     States Code.
       (4) Work-study.--Nothing in this section shall be 
     considered to apply with respect to a work-study student, as 
     defined by the president of the institution involved, in 
     writing.

     SEC. 5. DELEGATION OF PROCUREMENT AUTHORITY.

       The Secretary shall, to the maximum extent consistent with 
     applicable law and subject to the availability of 
     appropriations therefor, delegate to the president of each of 
     the respective institutions procurement and contracting 
     authority with respect to the conduct of the administrative 
     functions of such institution.

     SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to each of the 
     respective institutions for fiscal year 1998, and for each 
     fiscal year thereafter--
       (1) the amount of funds made available by appropriations as 
     operations funding for the administration of such institution 
     for fiscal year 1997; and
       (2) such additional sums as may be necessary for the 
     operation of such institution pursuant to this Act.

  Mr. BINGAMAN. Mr. President, I am pleased to join my colleague from 
the State of Kansas, Senator Roberts, in introducing a bill that will 
enable two Tribal Colleges to pursue their missions without the burden 
of unnecessary Federal regulations. Like Haskell Indian Nations 
University, the Southwestern Indian Polytechnic Institute of 
Albuquerque (SIPI) is one of about 30 Tribal Colleges that is supported 
by the Bureau of Indian Affairs. Many of the students at these colleges 
are the first in their families to attend college, and having a Tribal 
College near their home and in tune with their tradition is critical to 
their education and economic success. Both Haskell and SIPI have grown 
in academic stature in the past few decades. SIPI recently marked its 
25th anniversary and adopted a Master Plan that will guide the growth 
of its programs and facilities beyond the year 2000.
  A recent report by the Carnegie Foundation for the Advancement of 
Teaching entitled ``Native American Colleges: Progress and Prospects,'' 
documents the critical role that these colleges play in offering Native 
Americans access to higher education. This report also traces the 
history of the relationship between the Federal government and Tribal 
Colleges. Haskell and SIPI are the only Tribal Colleges that are 
administered by the Bureau of Indian Affairs, and as a result are bound 
by the personnel regulations that apply to Federal agencies. At one 
time, this policy made sense and allowed these two universities to 
establish an administrative infrastructure and academic programs. But 
as the Carnegie Foundation report points out, the relationship between 
the Federal government and Tribal Colleges should evolve as the 
institutions take on more self-determination. The time has come to 
enact legislation that reflects the growth of these institutions.
  The Federal personnel regulations imposed on SIPI and Haskell are 
inappropriate for institutions of higher education and are not 
recognized by accreditation organizations. This bill would allow 
Haskell and SIPI to establish independent authority over their 
personnel policies and practices. There is a world of difference 
between a Federal agency and a thriving institution of higher 
education, and these differences should be reflected in their personnel 
classification, pay systems, and policies for hiring and promotion. 
SIPI needs the authority to hire and promote faculty and staff on the 
basis of their intellect and the excellence of their teaching, 
research, and service to the institution.
  The U.S. military academies have encountered these same obstacles, 
and they have adopted alternative personnel regulations approved by the 
Office of Personnel Management. The personnel authority that would be 
established under this bill have been modeled after those in use by the 
U.S. Air Force Academy. OPM has been consulted and is in agreement with 
the contents of this bill.
  I agree with the Carnegie Foundation's report when it says: ``These 
institutions have taken on a breathtaking array of responsibilities. 
With each passing year, tribal colleges prove their worth to tribal 
communities, and to the nation. They can longer be dismissed as risky 
experiments, nor can their accomplishments be ignored. They are a 
permanent part of their reservations and this country.''
  I applaud Senator Roberts' efforts to develop and introduce this 
legislation. I look forward to working with him and with Senators 
Campbell and Inouye of the Committee on Indian Affairs to provide these 
two institutions with the flexibility they need to continue to 
flourish.
                                 ______
                                 
      By Mr. KERREY (for himself and Mr. Grassley):
  S. 1096. A bill to restructure the Internal Revenue Service, and for 
other purposes; to the Committee on Finance.


   the internal revenue service restructuring and reform act of 1997

  Mr. KERREY. Madam 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. 1096

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

[[Page S8536]]

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF 
                   CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Internal 
     Revenue Service Restructuring and Reform Act of 1997''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--

Sec. 1. Short title; amendment of 1986 Code.
Sec. 2. Congressional findings and declaration of purposes.

   TITLE I--EXECUTIVE BRANCH GOVERNANCE AND SENIOR MANAGEMENT OF THE 
                        INTERNAL REVENUE SERVICE

     Subtitle A--Executive Branch Governance and Senior Management

Sec. 101. Internal Revenue Service Oversight Board.
Sec. 102. Commissioner of Internal Revenue; Chief Counsel; other 
              officials.
Sec. 103. Other personnel.

                  Subtitle B--Personnel Flexibilities

Sec. 111. Personnel flexibilities.

                      TITLE II--ELECTRONIC FILING

Sec. 201. Electronic filing of tax and information returns.
Sec. 202. Extension of time to file for electronic filers.
Sec. 203. Paperless electronic filing.
Sec. 204. Regulation of preparers.
Sec. 205. Paperless payment.
Sec. 206. Return-free tax system.
Sec. 207. Access to account information.

               TITLE III--TAXPAYER PROTECTION AND RIGHTS

Sec. 301. Expansion of authority to issue taxpayer assistance orders.
Sec. 302. Expansion of authority to award costs and certain fees.
Sec. 303. Civil damages for negligence in collection actions.
Sec. 304. Disclosure of criteria for examination selection.
Sec. 305. Archival of records of Internal Revenue Service.
Sec. 306. Tax return information.
Sec. 307. Freedom of information.
Sec. 308. Offers-in-compromise.
Sec. 309. Elimination of interest differential on overpayments and 
              underpayments.
Sec. 310. Elimination of application of failure to pay penalty during 
              period of installment agreement.
Sec. 311. Safe harbor for qualification for installment agreements.
Sec. 312. Payment of taxes.
Sec. 313. Low income taxpayer clinics.
Sec. 314. Jurisdiction of the Tax Court.
Sec. 315. Cataloging complaints.
Sec. 316. Procedures involving taxpayer interviews.
Sec. 317. Explanation of joint and several liability.
Sec. 318. Procedures relating to extensions of statute of limitations 
              by agreement.
Sec. 319. Review of penalty administration.
Sec. 320. Study of treatment of all taxpayers as separate filing units.
Sec. 321. Study of burden of proof.

TITLE IV--CONGRESSIONAL ACCOUNTABILITY FOR THE INTERNAL REVENUE SERVICE

                         Subtitle A--Oversight

Sec. 401. Expansion of powers of the Joint Committee on Taxation.
Sec. 402. Coordinated oversight reports.

                           Subtitle B--Budget

Sec. 411. Budget discretion.
Sec. 412. Funding for century date change.
Sec. 413. Financial management advisory group.

                     Subtitle C--Tax Law Complexity

Sec. 421. Role of Internal Revenue Service.
Sec. 422. Tax complexity analysis.
Sec. 423. Simplified tax and wage reporting system.
Sec. 424. Compliance burden estimates.

     SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSES.

       (a) The Congress finds the following:
       (1) The structure of the Internal Revenue Service should be 
     strengthened to ensure focus and better target its budgeting, 
     staffing, and technology to serve the American taxpayer and 
     collect the Federal revenue.
       (2) The American public expects timely, accurate, and 
     respectful service from the Internal Revenue Service.
       (3) The job of the Internal Revenue Service is to operate 
     as an efficient financial management organization.
       (4) The bulk of the Federal revenue is generated through 
     voluntary compliance. Taxpayer service and education, as well 
     as targeted compliance and enforcement initiatives, increase 
     voluntary compliance.
       (5) While the Internal Revenue Service must maintain a 
     strong enforcement presence, its core and the core of the 
     Federal revenue stream lie in a revamped, modern, 
     technologically advanced organization that can track 
     finances, send out clear notices, and assist taxpayers 
     promptly and efficiently.
       (6) The Internal Revenue Service governance, management, 
     and oversight structures must: develop and maintain a shared 
     vision with continuity; set and maintain priorities and 
     strategic direction; impose accountability on senior 
     management; provide oversight through a credible board, 
     including members who bring private sector expertise to the 
     Internal Revenue Service; develop appropriate measures of 
     success; align budget and technology with priorities and 
     strategic direction; and coordinate oversight and identify 
     problems at an early stage.
       (7) The Internal Revenue Service must use information 
     technology as an enabler of its strategic objectives.
       (8) Electronic filing can increase cost savings and 
     compliance.
       (9) In order to ensure that fewer taxpayers are subject to 
     improper treatment by the Internal Revenue Service, Congress 
     and the agency need to focus on preventing problems before 
     they occur.
       (10) There currently is no mechanism in place to ensure 
     that Members of Congress have a complete understanding of how 
     tax legislation will affect taxpayers and the Internal 
     Revenue Service and to create incentives to simplify the tax 
     law, and to ensure that Congress hears directly from the 
     Internal Revenue Service during the legislative process.
       (b) The purposes of this Act are as follows:
       (1) To restructure the Internal Revenue Service, 
     transforming it into a world class service organization.
       (2) To establish taxpayer satisfaction as the goal of the 
     Internal Revenue Service, such that the Internal Revenue 
     Service should only initiate contact with a taxpayer if the 
     agency is prepared to devote the resources necessary for a 
     proper and timely resolution of the matter.
       (3) To provide for direct accountability to the President 
     for tax administration, an Internal Revenue Service Oversight 
     Board, a strengthened Commissioner of Internal Revenue, and 
     coordinated congressional oversight to ensure that there are 
     clear lines of accountability and that the leadership of the 
     Internal Revenue Service has the continuity and expertise to 
     guide the agency.
       (4) To enable the Internal Revenue Service to recruit and 
     train a first-class workforce that will be rewarded for 
     performance and held accountable for working with taxpayers 
     to solve problems.
       (5) To establish paperless filing as the preferred and most 
     convenient means of filing tax returns for the vast majority 
     of taxpayers within 10 years of enactment of this Act.
       (6) To provide additional taxpayer protections and rights 
     and to ensure that taxpayers receive fair, impartial, timely, 
     and courteous treatment from the Internal Revenue Service.
       (7) To establish the resolution of the century date change 
     problem as the highest technology priority of the Internal 
     Revenue Service.
       (8) To establish procedures to minimize complexity in the 
     tax law and simplify tax administration, and provide Congress 
     with an independent view of tax administration from the 
     Internal Revenue Service.
   TITLE I--EXECUTIVE BRANCH GOVERNANCE AND SENIOR MANAGEMENT OF THE 
                        INTERNAL REVENUE SERVICE
     Subtitle A--Executive Branch Governance and Senior Management

     SEC. 101. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.

       (a) In General.--Section 7802 (relating to the Commissioner 
     of Internal Revenue) is amended to read as follows:

     ``SEC. 7802. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.

       ``(a) Establishment.--There is established within the 
     Department of the Treasury the Internal Revenue Service 
     Oversight Board (in this subchapter referred to as the 
     `Board').
       ``(b) Membership.--
       ``(1) Composition.--The Board shall be composed of 9 
     members, of whom--
       ``(A) 7 shall be individuals who are not full-time Federal 
     officers or employees, who are appointed by the President, by 
     and with the advice and consent of the Senate, and who shall 
     be considered special government employees pursuant to 
     paragraph (2),
       ``(B) 1 shall be the Secretary of the Treasury or, if the 
     Secretary so designates, the Deputy Secretary of the 
     Treasury, and
       ``(C) 1 shall be a representative of an organization that 
     represents a substantial number of Internal Revenue Service 
     employees who is appointed by the President, by and with the 
     advice and consent of the Senate.
       ``(2) Special government employees.--
       ``(A) Qualifications.--Members of the Board described in 
     paragraph (1)(A) shall be appointed solely on the basis of 
     their professional experience and expertise in the following 
     areas:
       ``(i) Management of large service organizations.
       ``(ii) Customer service.
       ``(iii) Compliance.
       ``(iv) Information technology.
       ``(v) Organization development.
       ``(vi) The needs and concerns of taxpayers.

     In the aggregate, the members of the Board described in 
     paragraph (1)(A) should collectively bring to bear expertise 
     in these enumerated areas.
       ``(B) Terms.--Each member who is described in paragraph 
     (1)(A) shall be appointed for a term of 5 years, except that 
     of the members first appointed--
       ``(i) 1 member shall be appointed for a term of 1 year,
       ``(ii) 1 member shall be appointed for a term of 2 years,
       ``(iii) 2 members shall be appointed for a term of 3 years, 
     and
       ``(iv) 1 member shall be appointed for a term of 4 years.

[[Page S8537]]

       ``(C) Reappointment.--An individual who is described in 
     paragraph (1)(A) may be appointed to no more than two 5-year 
     terms on the Board.
       ``(D) Special government employees.--During such periods as 
     they are performing services for the Board, members who are 
     not Federal officers or employees shall be treated as special 
     government employees (as defined in section 202 of title 18, 
     United States Code).
       ``(E) Claims.--
       ``(i) In general.--Members of the Board who are described 
     in paragraph (1)(A) shall have no personal liability under 
     Federal law with respect to any claim arising out of or 
     resulting from an act or omission by such member within the 
     scope of service as a member. The preceding sentence shall 
     not be construed to limit personal liability for criminal 
     acts or omissions, willful or malicious conduct, acts or 
     omissions for private gain, or any other act or omission 
     outside the scope of the service of such member on the Board.
       ``(ii) Effect on other law.--This subparagraph shall not be 
     construed--

       ``(I) to affect any other immunities and protections that 
     may be available to such member under applicable law with 
     respect to such transactions,
       ``(II) to affect any other right or remedy against the 
     United States under applicable law, or
       ``(III) to limit or alter in any way the immunities that 
     are available under applicable law for Federal officers and 
     employees not described in this subparagraph.

       ``(3) Vacancy.--Any vacancy on the Board--
       ``(A) shall not affect the powers of the Board, and
       ``(B) shall be filled in the same manner as the original 
     appointment.
       ``(4) Removal.--
       ``(A) In general.--A member of the Board may be removed at 
     the will of the President.
       ``(B) Secretary or delegate.--An individual described in 
     subsection (b)(1)(B) shall be removed upon termination of 
     employment.
       ``(C) Representative of internal revenue service 
     employees.--A member who is from an organization that 
     represents a substantial number of Internal Revenue Service 
     employees shall be removed upon termination of employment, 
     membership, or other affiliation with such organization.
       ``(c) General Responsibilities.--
       ``(1) In general.--The Board shall oversee the Internal 
     Revenue Service in the administration, management, conduct, 
     direction, and supervision of the execution and application 
     of the internal revenue laws or related statutes and tax 
     conventions to which the United States is a party.
       ``(2) Exceptions.--The Board shall have no responsibilities 
     or authority with respect to--
       ``(A) the development and formulation of Federal tax policy 
     relating to existing or proposed internal revenue laws, 
     related statutes, and tax conventions,
       ``(B) specific law enforcement activities of the Internal 
     Revenue Service, including compliance activities such as 
     criminal investigations, examinations, and collection 
     activities, or
       ``(C) specific activities of the Internal Revenue Service 
     delegated to employees of the Internal Revenue Service 
     pursuant to delegation orders in effect as of the date of the 
     enactment of this subsection, including delegation order 106 
     relating to procurement authority, except to the extent that 
     such delegation orders are modified subsequently by the 
     Secretary.
       ``(3) Restriction on disclosure of return information to 
     board members.--No return, return information, or taxpayer 
     return information (as defined in section 6103(b)) may be 
     disclosed to any member of the Board described in subsection 
     (b)(1)(A) or (C). Any request for information not permitted 
     to be disclosed under the preceding sentence, and any contact 
     relating to a specific taxpayer, made by a member of the 
     Board to an officer or employee of the Internal Revenue 
     Service shall be reported by such officer or employee to the 
     Secretary and the Joint Committee on Taxation.
       ``(d) Specific Responsibilities.--The Board shall have the 
     following specific responsibilities:
       ``(1) Strategic plans.--To review and approve strategic 
     plans of the Internal Revenue Service, including the 
     establishment of--
       ``(A) mission and objectives, and standards of performance 
     relative to either, and
       ``(B) annual and long-range strategic plans.
       ``(2) Operational plans.--To review the operational 
     functions of the Internal Revenue Service, including--
       ``(A) plans for modernization of the tax system,
       ``(B) plans for outsourcing or managed competition, and
       ``(C) plans for training and education.
       ``(3) Management.--To provide for--
       ``(A) the selection and appointment, evaluation, and 
     removal of the Commissioner of Internal Revenue,
       ``(B) the review of the Commissioner's selection, 
     evaluation, and compensation of senior managers, and
       ``(C) the review of the Commissioner's plans for 
     reorganization of the Internal Revenue Service.
       ``(4) Budget.--To--
       ``(A) review and approve the budget request of the Internal 
     Revenue Service prepared by the Commissioner,
       ``(B) submit such budget request to the Secretary of the 
     Treasury,
       ``(C) ensure that the budget request supports the annual 
     and long-range strategic plans, and
       ``(D) ensure appropriate financial audits of the Internal 
     Revenue Service.

     The Secretary shall submit the budget request referred to in 
     subparagraph (B) for any fiscal year to the President who 
     shall submit such request, without revision, to Congress 
     together with the President's annual budget request for the 
     Internal Revenue Service for such fiscal year.
       ``(e) Board Personnel Matters.--
       ``(1) Compensation of members.--
       ``(A) In general.--Each member of the Board who is 
     described in subsection (b)(1)(A) shall be compensated at a 
     rate of $30,000 per year. All other members of the Board 
     shall serve without compensation for such service.
       ``(B) Chairperson.--In lieu of the amount specified in 
     subparagraph (A), the Chairperson of the Board shall be 
     compensated at a rate of $50,000 per year if such Chairperson 
     is described in subsection (b)(1)(A).
       ``(2) Travel expenses.--The members of the Board shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Board.
       ``(3) Staff.--On the request of the Chairperson of the 
     Board, the Commissioner shall detail to the Board such 
     personnel as may be necessary to enable the Board to perform 
     its duties. Such detail shall be without interruption or loss 
     of civil service status or privilege.
       ``(4) Procurement of temporary and intermittent services.--
     The Chairperson of the Board may procure temporary and 
     intermittent services under section 3109(b) of title 5, 
     United States Code.
       ``(f) Administrative Matters.--
       ``(1) Chair.--The members of the Board shall elect a 
     chairperson for a 2-year term.
       ``(2) Committees.--The Board may establish such committees 
     as the Board determines appropriate.
       ``(3) Meetings.--The Board shall meet at least once each 
     month and at such other times as the Board determines 
     appropriate.
       ``(4) Reports.--The Board shall each year report to the 
     President and the Congress with respect to the conduct of its 
     responsibilities under this title.''.
       (b) Conforming Amendments.--
       (1) Section 4946(c) (relating to definitions and special 
     rules for chapter 42) is amended--
       (A) by striking ``or'' at the end of paragraph (5),
       (B) by striking the period at the end of paragraph (6) and 
     inserting ``, or'', and
       (C) by adding at the end the following new paragraph:
       ``(7) a member of the Internal Revenue Service Oversight 
     Board.''.
       (2) The table of sections for subchapter A of chapter 80 is 
     amended by striking the item relating to section 7802 and 
     inserting the following new item:

``Sec. 7802. Internal Revenue Service Oversight Board.''

       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 102. COMMISSIONER OF INTERNAL REVENUE; CHIEF COUNSEL; 
                   OTHER OFFICIALS.

       (a) In General.--Section 7803 (relating to other personnel) 
     is amended to read as follows:

     ``SEC. 7803. COMMISSIONER OF INTERNAL REVENUE; CHIEF COUNSEL; 
                   OTHER OFFICIALS.

       ``(a) Commissioner of Internal Revenue.--
       ``(1) Appointment.--There shall be in the Department of the 
     Treasury a Commissioner of Internal Revenue who shall be 
     appointed by the Internal Revenue Service Oversight Board to 
     a 5-year term and compensated without regard to chapters 33, 
     51, and 53 of title 5, United States Code. The appointment 
     shall be made on the basis of demonstrated ability in 
     management and without regard to political affiliation or 
     activity. The Board may reappoint the Commissioner to 
     subsequent terms so long as performance is satisfactory or 
     better.
       ``(2) Duties.--The Commissioner shall--
       ``(A) administer, manage, conduct, direct, and supervise 
     the execution and application of the internal revenue laws or 
     related statutes and tax conventions to which the United 
     States is a party; and
       ``(B) when a vacancy occurs, recommend a candidate for 
     appointment as Chief Counsel for the Internal Revenue Service 
     to the President, and may recommend the removal of such Chief 
     Counsel to the President.
       ``(3) Consultation with board.--The Commissioner shall 
     consult with the Board on all matters set forth in paragraphs 
     (2) and (3) (other than subparagraph (A)) of section 
     7802(d)(2).
       ``(4) Pay.--The Commissioner is authorized to be paid at an 
     annual rate of basic pay not to exceed the maximum rate of 
     basic pay of level II of the Executive Schedule under section 
     5311 of title 5, United States Code, including any applicable 
     locality-based comparability payment that may be authorized 
     under section 5304 of such title 5.
       ``(b) Chief Counsel for the Internal Revenue Service.--
       ``(1) Appointment.--There shall be in the Department of the 
     Treasury a Chief Counsel

[[Page S8538]]

     for the Internal Revenue Service who shall be appointed by 
     the President, by and with the advice and consent of the 
     Senate.
       ``(2) Duties.--The Chief Counsel shall be the chief law 
     officer for the Internal Revenue Service and shall perform 
     such duties as may be prescribed by the Secretary of the 
     Treasury. To the extent that the Chief Counsel performs 
     duties relating to the development of rules and regulations 
     promulgated under this title, final decision making authority 
     shall remain with the Secretary.
       ``(3) Pay.--The Chief Counsel is authorized to be paid at 
     an annual rate of basic pay not to exceed the maximum rate of 
     basic pay of level III of the Executive Schedule under 
     section 5311 of title 5, United States Code, including any 
     applicable locality-based comparability payment that may be 
     authorized under section 5304 of such title 5.
       ``(c) Assistant Commissioner for Employee Plans and Exempt 
     Organizations.--
       ``(1) Establishment of office.--There is established within 
     the Internal Revenue Service an office to be known as the 
     `Office of Employee Plans and Exempt Organizations' to be 
     under the supervision and direction of an Assistant 
     Commissioner of Internal Revenue. As head of the Office, the 
     Assistant Commissioner shall be responsible for carrying out 
     such functions as the Secretary may prescribe with respect to 
     organizations exempt from tax under section 501(a) and with 
     respect to plans to which part I of subchapter D of chapter 1 
     applies (and with respect to organizations designed to be 
     exempt under such section and plans designed to be plans to 
     which such part applies) and other nonqualified deferred 
     compensation arrangements. The Assistant Commissioner shall 
     report annually to the Commissioner with respect to the 
     Assistant Commissioner's responsibilities under this section.
       ``(2) Authorization of appropriations.--There is authorized 
     to be apxpropriated to the Internal Revenue Service solely to 
     carry out the functions of the Office an amount equal to the 
     sum of--
       ``(A) so much of the collection from taxes under section 
     4940 (relating to excise tax based on investment income) as 
     would have been collected if the rate of tax under such 
     section was 2 percent during the second preceding fiscal 
     year, and
       ``(B) the greater of--
       ``(i) an amount equal to the amount described in 
     subparagraph (A), or
       ``(ii) $30,000,000.
       ``(3) User fees.--All user fees collected by the Office 
     shall be dedicated to carry out the functions of the Office.
       ``(d) Office of Taxpayer Advocate.--
       ``(1) In general.--
       ``(A) There is established in the Internal Revenue Service 
     an office to be known as the `Office of the Taxpayer 
     Advocate'. Such office shall be under the supervision and 
     direction of an official to be known as the `Taxpayer 
     Advocate' who shall be appointed by and report directly to 
     the Commissioner of Internal Revenue, with the approval of 
     the Internal Revenue Service Oversight Board. The Taxpayer 
     Advocate shall be entitled to compensation at the same rate 
     as the highest level official reporting directly to the 
     Commissioner of Internal Revenue.
       ``(B) As a qualification for appointment as the Taxpayer 
     Advocate, an individual must have substantial experience 
     representing taxpayers before the Internal Revenue Service or 
     with taxpayer rights issues.
       ``(C) An individual who, before being appointed as the 
     Taxpayer Advocate, was an officer or employee of the Internal 
     Revenue Service may be so appointed only if such individual 
     agrees not to accept any employment with the Internal Revenue 
     Service for at least 5 years after ceasing to be the Taxpayer 
     Advocate.
       ``(2) Functions of office.--
       ``(A) In general.--It shall be the function of the Office 
     of Taxpayer Advocate to--
       ``(i) assist taxpayers in resolving problems with the 
     Internal Revenue Service,
       ``(ii) identify areas in which taxpayers have problems in 
     dealings with the Internal Revenue Service,
       ``(iii) to the extent possible, propose changes in the 
     administrative practices of the Internal Revenue Service to 
     mitigate problems identified under clause (ii), and
       ``(iv) identify potential legislative changes which may be 
     appropriate to mitigate such problems.
       ``(B) Annual reports.--
       ``(i) Objectives.--Not later than June 30 of each calendar 
     year after 1995, the Taxpayer Advocate shall report to the 
     Committee on Ways and Means of the House of Representatives 
     and the Committee on Finance of the Senate on the objectives 
     of the Taxpayer Advocate for the fiscal year beginning in 
     such calendar year. Any such report shall contain full and 
     substantive analysis, in addition to statistical information.
       ``(ii) Activities.--Not later than December 31 of each 
     calendar year after 1995, the Taxpayer Advocate shall report 
     to the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate on 
     the activities of the Taxpayer Advocate during the fiscal 
     year ending during such calendar year. Any such report shall 
     contain full and substantive analysis, in addition to 
     statistical information, and shall--

       ``(I) identify the initiatives the Taxpayer Advocate has 
     taken on improving taxpayer services and Internal Revenue 
     Service responsiveness,
       ``(II) contain recommendations received from individuals 
     with the authority to issue Taxpayer Assistance Orders under 
     section 7811,
       ``(III) contain a summary of at least 20 of the most 
     serious problems encountered by taxpayers, including a 
     description of the nature of such problems,
       ``(IV) contain an inventory of the items described in 
     subclauses (I), (II), and (III) for which action has been 
     taken and the result of such action,
       ``(V) contain an inventory of the items described in 
     subclauses (I), (II), and (III) for which action remains to 
     be completed and the period during which each item has 
     remained on such inventory,
       ``(VI) contain an inventory of the items described in 
     subclauses (I), (II), and (III) for which no action has been 
     taken, the period during which each item has remained on such 
     inventory, the reasons for the inaction, and identify any 
     Internal Revenue Service official who is responsible for such 
     inaction,
       ``(VII) identify any Taxpayer Assistance Order which was 
     not honored by the Internal Revenue Service in a timely 
     manner, as specified under section 7811(b),
       ``(VIII) contain recommendations for such administrative 
     and legislative action as may be appropriate to resolve 
     problems encountered by taxpayers,
       ``(IX) describe the extent to which regional problem 
     resolution officers participate in the selection and 
     evaluation of local problem resolution officers,
       ``(X) identify areas of the tax law that impose significant 
     compliance burdens on taxpayers or the Internal Revenue 
     Service, including specific recommendations for remedying 
     these problems,
       ``(XI) in conjunction with the National Director of 
     Appeals, identify the 10 most litigated issues for each 
     category of taxpayers (e.g., individuals, self-employed 
     individuals, and small businesses), including recommendations 
     for mitigating such disputes, and
       ``(XII) include such other information as the Taxpayer 
     Advocate may deem advisable.

       ``(iii) Report to be submitted directly.--Each report 
     required under this subparagraph shall be provided directly 
     to the Committees described in clauses (i) and (ii) without 
     any prior review or comment from the Commissioner, the 
     Internal Revenue Service Oversight Board, the Secretary of 
     the Treasury, any other officer or employee of the Department 
     of the Treasury, or the Office of Management and Budget.
       ``(C) Other responsibilities.--The Taxpayer Advocate 
     shall--
       ``(i) monitor the coverage and geographic allocation of 
     problem resolution officers,
       ``(ii) develop guidance to be distributed to all Internal 
     Revenue Service officers and employees outlining the criteria 
     for referral of taxpayer inquiries to problem resolution 
     officers,
       ``(iii) ensure that the local telephone numbers for the 
     problem resolution officer in each internal revenue district 
     is published and available to taxpayers, and
       ``(iv) in conjunction with the Commissioner, develop career 
     paths for problem resolution officers choosing to make a 
     career in the Office of the Taxpayer Advocate.
       ``(3) Responsibilities of commissioner.--The Commissioner 
     shall establish procedures requiring a formal response to all 
     recommendations submitted to the Commissioner by the Taxpayer 
     Advocate within 3 months after submission to the 
     Commissioner.''.
       (b) Amendment of President's Authority To Appoint Chief 
     Counsel for Internal Revenue Service.--
       (1) Paragraph (2) of section 7801(b) (relating to the 
     office of General Counsel for the Department) is amended to 
     read as follows:
       ``(2) Assistant general counsels.--The Secretary of the 
     Treasury may appoint, without regard to the provisions of the 
     civil service laws, and fix the duties of not to exceed five 
     assistant General Counsels.''.
       (2)(A) Subsection (f)(2) of section 301 of title 31, United 
     States Code, is amended by striking ``an Assistant General 
     Counsel who shall be the'' and inserting ``a''.
       (B) Section 301 of such title 31 is amended by adding at 
     the end the following new subsection:
       ``(h) Cross Reference.--For provisions relating to the 
     appointment of officers and employees of the Internal Revenue 
     Service, see subchapter A of chapter 80 of the Internal 
     Revenue Code of 1986.''.
       (c) Conforming Amendments.--
       (1) The table of sections for subchapter A of chapter 80 is 
     amended by striking the item relating to section 7803 and 
     inserting the following new item:

``Sec. 7803. Commissioner of Internal Revenue; Chief Counsel; other 
              officials.''

       (2) Subsection (b) of section 5109 of title 5, United 
     States Code, is amended by striking ``7802(b)'' and inserting 
     ``7803(c)''.
       (d) Effective date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 103. OTHER PERSONNEL.

       (a) In General.--Section 7804 (relating to the effect of 
     reorganization plans) is amended to read as follows:

     ``SEC. 7804. OTHER PERSONNEL.

       ``(a) Appointment and Supervision.--The Commissioner of 
     Internal Revenue is authorized to employ such number of 
     persons as the Commissioner deems proper for the 
     administration and enforcement of the internal revenue laws, 
     and the Commissioner shall issue

[[Page S8539]]

     all necessary directions, instructions, orders, and rules 
     applicable to such persons.
       ``(b) Posts of Duty of Employees in Field Service or 
     Traveling.--
       ``(1) Designation of post of duty.--The Commissioner shall 
     determine and designate the posts of duty of all such persons 
     engaged in field work or traveling on official business 
     outside of the District of Columbia.
       ``(2) Detail of personnel from field service.--The 
     Commissioner may order any such person engaged in field work 
     to duty in the District of Columbia, for such periods as the 
     Commissioner may prescribe, and to any designated post of 
     duty outside the District of Columbia upon the completion of 
     such duty.
       ``(c) Delinquent Internal Revenue Officers and Employees.--
     If any officer or employee of the Treasury Department acting 
     in connection with the internal revenue laws fails to account 
     for and pay over any amount of money or property collected or 
     received by him in connection with the internal revenue laws, 
     the Secretary shall issue notice and demand to such officer 
     or employee for payment of the amount which he failed to 
     account for and pay over, and, upon failure to pay the amount 
     demanded within the time specified in such notice, the amount 
     so demanded shall be deemed imposed upon such officer or 
     employee and assessed upon the date of such notice and 
     demand, and the provisions of chapter 64 and all other 
     provisions of law relating to the collection of assessed 
     taxes shall be applicable in respect of such amount.''.
       (b) Conforming Amendments.--
       (1) Subsection (b) of section 6344 is amended by striking 
     ``section 7803(d)'' and inserting ``section 7804(c)''.
       (2) The table of sections for subchapter A of chapter 80 is 
     amended by striking the item relating to section 7804 and 
     inserting the following new item:

``Sec. 7804. Other personnel.''

       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.
                  Subtitle B--Personnel Flexibilities

     SEC. 111. PERSONNEL FLEXIBILITIES.

       (a) In General.--Part III of title 5, United States Code, 
     is amended by adding at the end the following new subpart:

                       ``Subpart I--Miscellaneous

``CHAPTER 93--PERSONNEL FLEXIBILITIES RELATING TO THE INTERNAL REVENUE 
                                SERVICE

``Sec.
``9301. General requirements.
``9302. Flexibilities relating to performance management.
``9303. Classification and pay flexibilities.
``9304. Staffing flexibilities.
``9305. Flexibilities relating to demonstration projects.

     ``Sec. 9301. General requirements

       ``(a) Conformance With Merit System Principles, Etc.--Any 
     flexibilities under this chapter shall be exercised in a 
     manner consistent with--
       ``(1) chapter 23, relating to merit system principles and 
     prohibited personnel practices; and
       ``(2) provisions of this title (outside of this subpart) 
     relating to preference eligibles.
       ``(b) Requirement Relating to Units Represented by Labor 
     Organizations.--
       ``(1) Written agreement required.--Employees within a unit 
     with respect to which a labor organization is accorded 
     exclusive recognition under chapter 71 shall not be subject 
     to the exercise of any flexibility under section 9302, 9303, 
     9304, or 9305, unless there is a written agreement between 
     the Internal Revenue Service and the organization permitting 
     such exercise.
       ``(2) Definition of a written agreement.--In order to 
     satisfy paragraph (1), a written agreement--
       ``(A) need not be a collective bargaining agreement within 
     the meaning of section 7103(8); and
       ``(B) may not be an agreement imposed by the Federal 
     Service Impasses Panel under section 7119.
       ``(c) Flexibilities for Which OPM Approval Is Required.--
       ``(1) In general.--Except as provided in paragraph (2), 
     flexibilities under this chapter may be exercised by the 
     Internal Revenue Service without prior approval of the Office 
     of Personnel Management.
       ``(2) Exceptions.--The flexibilities under subsections (c) 
     through (e) of section 9303 may be exercised by the Internal 
     Revenue Service only after a specific plan describing how 
     those flexibilities are to be exercised has been submitted to 
     and approved, in writing, by the Director of the Office of 
     Personnel Management.

     ``Sec. 9302. Flexibilities relating to performance management

       ``(a) In General.--The Commissioner of Internal Revenue 
     shall, within 180 days after the date of the enactment of 
     this chapter, establish a performance management system 
     which--
       ``(1) subject to section 9301(b), shall cover all employees 
     of the Internal Revenue Service other than--
       ``(A) the members of the Internal Revenue Service Oversight 
     Board;
       ``(B) the Commissioner of Internal Revenue; and
       ``(C) the Chief Counsel for the Internal Revenue Service;
       ``(2) shall maintain individual accountability by--
       ``(A) establishing retention standards which--
       ``(i) shall permit the accurate evaluation of each 
     employee's performance on the basis of criteria relating to 
     the duties and responsibilities of the position held by such 
     employee; and
       ``(ii) shall be communicated to an employee before the 
     start of any period with respect to which the performance of 
     such employee is to be evaluated using such standards;
       ``(B) providing for periodic performance evaluations to 
     determine whether retention standards are being met; and
       ``(C) with respect to any employee whose performance does 
     not meet retention standards, using the results of such 
     employee's performance evaluation as a basis for--
       ``(i) denying increases in basic pay, promotions, and 
     credit for performance under section 3502; and
       ``(ii) the taking of other appropriate action, such as a 
     reassignment or an action under chapter 43; and
       ``(3) shall provide for--
       ``(A) establishing goals or objectives for individual, 
     group, or organizational performance (or any combination 
     thereof), consistent with Internal Revenue Service 
     performance planning procedures, including those established 
     under the Government Performance and Results Act of 1993, the 
     Information Technology Management Reform Act of 1996, Revenue 
     Procedure 64-22 (as in effect on July 30, 1997), and taxpayer 
     service surveys, and communicating such goals or objectives 
     to employees;
       ``(B) using such goals and objectives to make performance 
     distinctions among employees or groups of employees; and
       ``(C) using assessments under this paragraph, in 
     combination with performance evaluations under paragraph (2), 
     as a basis for granting employee awards, adjusting an 
     employee's rate of basic pay, and taking such other personnel 
     action as may be appropriate.

     For purposes of this title, performance of an employee during 
     any period in which such employee is subject to retention 
     standards under paragraph (2) shall be considered to be 
     `unacceptable' if the performance of such employee during 
     such period fails to meet any of those standards.
       ``(b) Awards.--
       ``(1) For superior accomplishments.--In the case of an 
     employee of the Internal Revenue Service, section 4502(b) 
     shall be applied by substituting `with the approval of the 
     Commissioner of Internal Revenue' for `with the approval of 
     the Office'.
       ``(2) For employees who report directly to the 
     commissioner.--
       ``(A) In general.--In the case of an employee of the 
     Internal Revenue Service who reports directly to the 
     Commissioner of Internal Revenue, a cash award in an amount 
     up to 50 percent of such employee's annual rate of basic pay 
     may be made if the Commissioner finds such an award to be 
     warranted based on such employee's performance.
       ``(B) Nature of an award.--A cash award under this 
     paragraph shall not be considered to be part of basic pay.
       ``(C) Tax enforcement results.--A cash award under this 
     paragraph may not be based solely on tax enforcement results.
       ``(D) Eligible employees.--Whether or not an employee is an 
     employee who reports directly to the Commissioner of Internal 
     Revenue shall, for purposes of this paragraph, be determined 
     under regulations which the Commissioner shall prescribe.
       ``(E) Limitation on compensation.--For purposes of applying 
     section 5307 to an employee in connection with any calendar 
     year to which an award made under this paragraph to such 
     employee is attributable, subsection (a)(1) of such section 
     shall be applied by substituting `to equal or exceed the 
     annual rate of compensation for the President for such 
     calendar year' for `to exceed the annual rate of basic pay 
     payable for level I of the Executive Schedule, as of the end 
     of such calendar year'.
       ``(3) Based on savings.--
       ``(A) In general.--The Commissioner of Internal Revenue may 
     authorize the payment of cash awards to employees based on 
     documented financial savings achieved by a group or 
     organization which such employees comprise, if such payments 
     are made pursuant to a plan which--
       ``(i) specifies minimum levels of service and quality to be 
     maintained while achieving such financial savings; and
       ``(ii) is in conformance with criteria prescribed by the 
     Office of Personnel Management.
       ``(B) Funding.--A cash award under this paragraph may be 
     paid from the fund or appropriation available to the activity 
     primarily benefiting or the various activities benefiting.
       ``(C) Tax enforcement results.--A cash award under this 
     paragraph may not be based solely on tax enforcement results.
       ``(c) Other Provisions.--
       ``(1) Notice provisions.--In applying sections 
     4303(b)(1)(A) and 7513(b)(1) to employees of the Internal 
     Revenue Service, `15 days' shall be substituted for `30 
     days'.
       ``(2) Appeals.--Notwithstanding the second sentence of 
     section 5335(c), an employee of the Internal Revenue Service 
     shall not have a right to appeal the denial of a periodic 
     step increase under section 5335 to the Merit Systems 
     Protection Board.

[[Page S8540]]

     ``Sec. 9303. Classification and pay flexibilities

       ``(a) Broad-Banded Systems.--
       ``(1) Definitions.--For purposes of this subsection--
       ``(A) the term `broad-banded system' means a system under 
     which positions are classified and pay for service in any 
     such position is fixed through the use of pay bands, rather 
     than under--
       ``(i) chapter 51 and subchapter III of chapter 53; or
       ``(ii) subchapter IV of chapter 53; and
       ``(B) the term `pay band' means, with respect to positions 
     in 1 or more occupational series, a pay range--
       ``(i) consisting of--

       ``(I) 2 or more consecutive grades of the General Schedule; 
     or
       ``(II) 2 or more consecutive pay ranges of such other pay 
     or wage schedule as would otherwise apply (but for this 
     section); and

       ``(ii) the minimum rate for which is the minimum rate for 
     the lower (or lowest) grade or range in the pay band and the 
     maximum rate for which is the maximum rate for the higher (or 
     highest) grade or range in the pay band, including any 
     locality-based and other similar comparability payments.
       ``(2) Authority.--The Commissioner of Internal Revenue may, 
     subject to criteria to be prescribed by the Office of 
     Personnel Management, establish one or more broad-banded 
     systems covering all or any portion of its workforce which 
     would otherwise be subject to the provisions of law cited in 
     clause (i) or (ii) of subsection (a)(1)(A), except for any 
     position classified by statute.
       ``(3) Criteria.--The criteria to be prescribed by the 
     Office shall, at a minimum--
       ``(A) ensure that the structure of any broad-banded system 
     maintains the principle of equal pay for substantially equal 
     work;
       ``(B) establish the minimum (but not less than 2) and 
     maximum number of grades or pay ranges that may be combined 
     into pay bands;
       ``(C) establish requirements for adjusting the pay of an 
     employee within a pay band;
       ``(D) establish requirements for setting the pay of a 
     supervisory employee whose position is in a pay band or who 
     supervises employees whose positions are in pay bands; and
       ``(E) establish requirements and methodologies for setting 
     the pay of an employee upon conversion to a broad-banded 
     system, initial appointment, change of position or type of 
     appointment (including promotion, demotion, transfer, 
     reassignment, reinstatement, placement in another pay band, 
     or movement to a different geographic location), and movement 
     between a broad-banded system and another pay system.
       ``(4) Information.--The Commissioner of Internal Revenue 
     shall submit to the Office such information relating to its 
     broad-banded systems as the Office may require.
       ``(5) Review and revocation authority.--The Office may, 
     with respect to any broad-banded system under this 
     subsection, and in accordance with regulations which it shall 
     prescribe, exercise with respect to any broad-banded system 
     under this subsection authorities similar to those available 
     to it under sections 5110 and 5111 with respect to 
     classifications under chapter 51.
       ``(b) Single Pay-Band System.--
       ``(1) In general.--The Commissioner of Internal Revenue 
     may, with respect to employees who remain subject to chapter 
     51 and subchapter III of chapter 53 (or subchapter IV of 
     chapter 53), fix rates of pay under a single pay-band system.
       ``(2) Definition.--For purposes of this subsection, the 
     term `single pay-band system' means, for pay-setting 
     purposes, a system similar to the pay-setting aspects of a 
     broad-banded system under subsection (a), but consisting of 
     only a single grade or pay range, under which pay may be 
     fixed at any rate not less than the minimum and not more than 
     the maximum rate which (but for this section) would otherwise 
     apply with respect to the grade or pay range involved, 
     including any locality-based and other similar comparability 
     payments.
       ``(3) Special rules.--
       ``(A) Promotion or transfer.--An employee under this 
     subsection who is promoted or transferred to a position in a 
     higher grade shall be entitled to basic pay at a rate 
     determined under criteria prescribed by the Office of 
     Personnel Management based on section 5334(b).
       ``(B) Performance increases.--In lieu of periodic step-
     increases under section 5335, an employees under this 
     subsection who meets retention standards under section 
     9302(a)(2)(A) shall be entitled to performance increases 
     under criteria prescribed by the Office. An increase under 
     this subparagraph shall be equal to one-ninth of the 
     difference between the minimum and maximum rates of pay for 
     the applicable grade or pay range
       ``(C) Increases for exceptional performance.--In lieu of 
     additional step-increases under section 5336, an employee 
     under this subsection who has demonstrated exceptional 
     performance shall be eligible for a pay increase under this 
     subparagraph under criteria prescribed by the Office. An 
     increase under this subparagraph may not exceed the amount of 
     an increase under subparagraph (B).
       ``(c) Alternative Classification Systems.--
       ``(1) In general.--Subject to section 9301(c), the 
     Commissioner of Internal Revenue may establish 1 or more 
     alternative classification systems that include any positions 
     or groups of positions that the Commissioner determines, for 
     reasons of effective administration--
       ``(A) should not be classified under chapter 51 or paid 
     under the General Schedule;
       ``(B) should not be classified or paid under subchapter IV 
     of chapter 53; or
       ``(C) should not be paid under section 5376.
       ``(2) Limitations.--An alternative classification system 
     under this subsection may not--
       ``(A) with respect to any position that (but for this 
     section) would otherwise be subject to the provisions of law 
     cited in subparagraph (A) or (B) of paragraph (1), establish 
     a rate of basic pay in excess of the maximum rate for grade 
     GS-15 of the General Schedule, including any locality-based 
     and other similar comparability payments; and
       ``(B) with respect to any position that (but for this 
     section) would otherwise be subject to the provision of law 
     cited in paragraph (1)(C), establish a rate of basic pay in 
     excess of the annual rate of basic pay of the Commissioner of 
     Internal Revenue.
       ``(d) Grade and Pay Retention.--Subject to section 9301(c), 
     the Commissioner of Internal Revenue may, with respect to 
     employees who are covered by a broad-banded system under 
     subsection (a) or an alternative classification system under 
     subsection (c), provide for variations from the provisions of 
     subchapter VI of chapter 53.
       ``(e) Recruitment and Retention Bonuses; Retention 
     Allowances.--Subject to section 9301(c), the Commissioner of 
     Internal Revenue may, with respect to its employees, provide 
     for variations from the provisions of sections 5753 and 5754.

     ``Sec. 9304. Staffing flexibilities

       ``(a) In General.--
       ``(1) Permanent appointment in the competitive service.--
     Except as otherwise provided by this subsection, an employee 
     of the Internal Revenue Service may be selected for a 
     permanent appointment in the competitive service in the 
     Internal Revenue Service through internal competitive 
     promotion procedures when the following conditions are met:
       ``(A) The employee has completed 2 years of current 
     continuous service in the competitive service under a term 
     appointment or any combination of term appointments.
       ``(B) Such term appointment or appointments were made under 
     competitive procedures prescribed for permanent appointments.
       ``(C) The employee's performance under such term 
     appointment or appointments met established retention 
     standards.
       ``(D) The vacancy announcement for the term appointment 
     from which the conversion is made stated that there was a 
     potential for subsequent conversion to a permanent 
     appointment.
       ``(2) Condition.--An appointment under this subsection may 
     be made only to a position the duties and responsibilities of 
     which are similar to those of the position held by the 
     employee at the time of conversion (referred to in paragraph 
     (1)(D)).
       ``(b) Rating Systems.--
       ``(1) In general.--Notwithstanding subchapter I of chapter 
     33, the Commissioner of Internal Revenue may establish 
     category rating systems for evaluating job applicants for 
     positions in the competitive service, under which qualified 
     candidates are divided into 2 or more quality categories on 
     the basis of relative degrees of merit, rather than assigned 
     individual numerical ratings. Each applicant who meets the 
     minimum qualification requirements for the position to be 
     filled shall be assigned to an appropriate category based on 
     an evaluation of the applicant's knowledge, skills, and 
     abilities relative to those needed for successful performance 
     in the job to be filled.
       ``(2) Treatment of preference eligibles.--Within each 
     quality category established under paragraph (1), preference 
     eligibles shall be listed ahead of individuals who are not 
     preference eligibles. For other than scientific and 
     professional positions at or higher than GS-9 (or 
     equivalent), preference eligibles who have a compensable 
     service-connected disability of 10 percent or more, and who 
     meet the minimum qualification standards, shall be listed in 
     the highest quality category.
       ``(3) Selection process.--An appointing authority may 
     select any applicant from the highest quality category or, if 
     fewer than 3 candidates have been assigned to the highest 
     quality category, from a merged category consisting of the 
     highest and second highest quality categories. 
     Notwithstanding the preceding sentence, the appointing 
     authority may not pass over a preference eligible in the same 
     or a higher category from which selection is made, unless the 
     requirements of section 3317(b) or 3318(b), as applicable, 
     are satisfied, except that in no event may certification of a 
     preference eligible under this subsection be discontinued by 
     the Internal Revenue Service under section 3317(b) before the 
     end of the 6-month period beginning on the date of such 
     employee's first certification.
       ``(c) Maximum Period for Which Employee May Be Detailed.--
     The 120-day limitation under section 3341(b)(1) for details 
     and renewals of details shall not apply with respect to the 
     Internal Revenue Service.
       ``(d) Involuntary Reassignments and Removals of Career 
     Appointees in the Senior Executive Service.--Neither section 
     3395(e)(1) nor section 3592(b)(1) shall apply with respect to 
     the Internal Revenue Service.

[[Page S8541]]

       ``(e) Probationary Periods.--Notwithstanding any other 
     provision of law or regulation, the Commissioner of Internal 
     Revenue may establish a period of probation under section 
     3321 of up to 3 years for any position if, as determined by 
     the Commissioner, a shorter period would be insufficient for 
     the incumbent to demonstrate complete proficiency in such 
     position.
       ``(f) Provisions That Remain Applicable.--No provision of 
     this section exempts the Internal Revenue Service from--
       ``(1) any employment priorities established under direction 
     of the President for the placement of surplus or displaced 
     employees; or
       ``(2) its obligations under any court order or decree 
     relating to the employment practices of the Internal Revenue 
     Service.

     ``Sec. 9305. Flexibilities relating to demonstration projects

       ``(a) In General.--For purposes of applying section 4703 
     with respect to the Internal Revenue Service--
       ``(1) paragraph (1) of subsection (b) of such section shall 
     be deemed to read as follows:
       `` `(1) develop a plan for such project which describes its 
     purpose, the employees to be covered, the project itself, its 
     anticipated outcomes, and the method of evaluating the 
     project;';
       ``(2) paragraph (3) of subsection (b) of such section shall 
     be disregarded;
       ``(3) paragraph (4) of subsection (b) of such section shall 
     be applied by substituting `30 days' for `180 days';
       ``(4) paragraph (6) of subsection (b) of such section shall 
     be deemed to read as follows:
       `` `(6) provide each House of the Congress with the final 
     version of the plan.';
       ``(5) paragraph (1) of subsection (c) of such section shall 
     be deemed to read as follows:
       `` `(1) subchapter V of chapter 63 or subpart G of part 
     III;'; and
       ``(6) subsection (d)(1) of such section shall be 
     disregarded.
       ``(b) Numerical Limitation.--For purposes of applying the 
     numerical limitation under subsection (d)(2) of section 4703, 
     a demonstration project shall not be counted if or to the 
     extent that it involves the Internal Revenue Service.''
       (b) Clerical Amendment.--The analysis for part III of title 
     5, United States Code, is amended by adding at the end the 
     following:

                       ``Subpart I--Miscellaneous

``93. Personnel Flexibilities Relating to the Internal Revenue 
  Service.......................................................9301''.

       (c) Effective Date.--This section shall take effect on the 
     date of the enactment of this Act.
                      TITLE II--ELECTRONIC FILING

     SEC. 201. ELECTRONIC FILING OF TAX AND INFORMATION RETURNS.

       (a) In General.--It is the policy of the Congress that 
     paperless filing should be the preferred and most convenient 
     means of filing tax and information returns, and that by the 
     year 2007, no more than 20 percent of all tax returns should 
     be filed on paper.
       (b) Strategic Plan.--
       (1) In general.--Not later than 180 days after the date of 
     the enactment of this Act, the Secretary of the Treasury or 
     the Secretary's delegate (hereafter in this section referred 
     to as the ``Secretary'') shall implement a plan to eliminate 
     barriers, provide incentives, and use competitive market 
     forces to increase electronic filing gradually over the next 
     10 years while maintaining processing times for paper returns 
     at 40 days.
       (2) Electronic commerce advisory group.--To ensure that the 
     Secretary receives input from the private sector in the 
     development and implementation of the plan required by 
     paragraph (1), the Secretary shall convene an electronic 
     commerce advisory group to include representatives from the 
     tax practitioner, preparer, and computerized tax processor 
     communities and other representatives from the electronic 
     filing industry.
       (c) Incentives.--
       (1) In general.--Not later than 180 days after the date of 
     the enactment of this Act, the Secretary shall implement 
     procedures to provide for the payment of incentives to 
     transmitters of qualified electronically filed returns, based 
     on the fair market value of costs to transmit returns 
     electronically.
       (2) Qualified electronically filed returns.--For purposes 
     of this section, the term ``qualified electronically filed 
     return'' means a return that--
       (A) is transmitted electronically to the Internal Revenue 
     Service,
       (B) for which the taxpayer was not charged for the cost of 
     such transmission, and
       (C) in the case of returns transmitted after December 31, 
     2004, was prepared by a paid preparer who does not submit any 
     return after such date to the Internal Revenue Service on 
     paper.
       (d) Annual Reports.--Not later than June 30 of each 
     calendar year after 1997, the Chairperson of the Internal 
     Revenue Service Oversight Board, the Secretary, and the 
     Chairperson of the electronic commerce advisory group 
     established under subsection (b)(2) shall report to the 
     Committees on Ways and Means, Appropriations, and Government 
     Reform and Oversight of the House of Representatives, the 
     Committees on Finance, Appropriations, and Government Affairs 
     of the Senate, and the Joint Committee on Taxation, on--
       (1) the progress of the Internal Revenue Service in meeting 
     the policy set forth in subsection (a);
       (2) the status of the plan required by subsection (b); and
       (3) the necessity of action by the Congress to assist the 
     Internal Revenue Service to satisfy the policy set forth in 
     subsection (a).

     SEC. 202. EXTENSION OF TIME TO FILE FOR ELECTRONIC FILERS.

       (a) In General.--Subsection (a) of section 6072 (relating 
     to the time for filing income tax returns) is amended--
       (1) by striking ``(a) General Rule.--In the case of'' and 
     inserting the following:
       ``(a) General Rules.--
       ``(1) Paper returns.--Except as provided in paragraph (2), 
     in the case of'',
       (2) by moving the text 2 ems to the right, and
       (3) by adding at the end the following new paragraph:
       ``(2) Electronically filed returns.--In the case of returns 
     filed electronically, returns made on the basis of the 
     calendar year shall be filed on or before the 15th day of May 
     following the close of the calendar year and returns made on 
     the basis of a fiscal year shall be filed on or before the 
     15th day of the fifth month following the close of the fiscal 
     year.''
       (b) Returns of Corporations.--Subsection (b) of section 
     6072 (relating to the time for filing income tax returns) is 
     amended--
       (1) by moving the text 2 ems to the right, and
       (2) by adding at the end the following new paragraph:
       ``(2) Electronically filed returns.--In the case of returns 
     filed electronically, returns made on the basis of the 
     calendar year shall be filed on or before the 15th day of 
     April following the close of the calendar year and returns 
     made on the basis of a fiscal year shall be filed on or 
     before the 15th day of the 4th month following the close of 
     the fiscal year.''
       (c) Information Returns.--Part V of chapter 61 (relating to 
     information and returns) is amended by adding the following 
     new section:

     ``SEC. 6073. TIME FOR FILING CERTAIN INFORMATION RETURNS.

       ``(a) Electronically Filed Returns.--In the case of returns 
     made under subparts B and C of part III of this chapter that 
     are filed electronically, such returns shall be filed on or 
     before March 31 of the year following the calendar year to 
     which such returns relate.
       ``(b) Notice to Recipients.--Notwithstanding subsection 
     (a), receipts for employees required under section 6051 and 
     any statements otherwise required to be furnished to persons 
     with respect to whom information is required, shall be 
     furnished to such persons on or before January 31 of the 
     calendar year in which the return under subsection (a) is 
     required to be filed.
       ``(c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed after December 
     31, 1999.''
       (d) Returns of Partnerships.--Part V of chapter 61 
     (relating to information and returns) is amended by adding 
     the following new section:

     ``SEC. 6074. TIME FOR FILING PARTNERSHIP RETURNS.

       ``(a) In General.--Except as provided in subsection (b), 
     returns made under section 6031 shall be filed on or before 
     the 15th day of the 3d month following the close of the 
     taxable year of the partnership, except that the return of a 
     partnership consisting entirely of nonresident aliens shall 
     be filed on or before the 15th day of the 6th month following 
     the close of the taxable year of the partnership.
       ``(b) Electronically Filed Returns.--In the case of returns 
     filed electronically, returns shall be filed on or before the 
     15th day of the 4th month following the close of the taxable 
     year of the partnership.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to returns for taxable years beginning after 
     December 31, 1998.

     SEC. 203. PAPERLESS ELECTRONIC FILING.

       (a) In General.--Section 6061 (relating to signing of 
     returns and other documents) is amended--
       (1) by striking ``Except as otherwise provided by'' and 
     inserting the following:
       ``(a) General Rule.--Except as otherwise provided by 
     subsection (b) and'', and
       (2) by adding at the end the following new subsection:
       ``(b) Electronic Signatures.--The Secretary shall develop 
     procedures for the acceptance of signatures in digital or 
     other electronic form. Until such time as such procedures are 
     in place, the Secretary shall accept electronically filed 
     returns and other documents on which the required 
     signature(s) appears in typewritten form, but filers of such 
     documents shall be required to retain a signed paper original 
     of all such filings, to be made available to the Secretary 
     for inspection, until the expiration of the applicable period 
     of limitations set forth in chapter 66.''.
       (b) Deadline for Establishing Procedures.--Not later than 
     December 31, 1998, the Secretary of the Treasury or the 
     Secretary's delegate shall establish procedures to accept, in 
     electronic form, any other information, statements, 
     elections, or schedules, from taxpayers filing returns 
     electronically, so that such taxpayers will not be required 
     to file any paper.
       (c) Procedures for Communications Between IRS and Preparer 
     of Electronically-Filed Returns.--Such Secretary shall 
     establish procedures for taxpayers to authorize, on 
     electronically filed returns, the preparer of such returns to 
     communicate with

[[Page S8542]]

     the Internal Revenue Service on matters included on such 
     returns.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 204. REGULATION OF PREPARERS.

       (a) In General.--Subsection (a) of section 330 of title 31, 
     United States Code, is amended--
       (1) by striking ``Treasury; and'' in paragraph (1) and 
     inserting ``Treasury and all other persons engaged in the 
     business of preparing returns or otherwise accepting 
     compensation for advising in the preparation of returns,'',
       (2) by striking the period at the end of paragraph (2) and 
     inserting ``, and'', and
       (3) by adding at the end the following:
       ``(3) establish uniform procedures for regulating preparers 
     of paper and electronic tax and information returns.

     No demonstration shall be required under paragraph (2) for 
     persons solely engaged in the business of preparing returns 
     or otherwise accepting compensation for advising in the 
     preparation of returns.''
       (b) Director of Practice.--Such section 330 is amended by 
     adding at the end the following new subsection:
       ``(d) Director of Practice.--There is established within 
     the Department of the Treasury an office to be known as the 
     `Office of the Director of Practice' to be under the 
     supervision and direction of an official to be known as the 
     `Director of Practice'. The Director of Practice shall be 
     responsible for regulation of all practice before the 
     Department of the Treasury.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 205. PAPERLESS PAYMENT.

       (a) In General.--Section 6311 (relating to payment by check 
     or money order) is amended to read as follows:

     ``SEC. 6311. PAYMENT OF TAX BY COMMERCIALLY ACCEPTABLE MEANS.

       ``(a) Authority To Receive.--It shall be lawful for the 
     Secretary to receive for internal revenue taxes (or in 
     payment of internal revenue stamps) any commercially 
     acceptable means that the Secretary deems appropriate to the 
     extent and under the conditions provided in regulations 
     prescribed by the Secretary.
       ``(b) Ultimate Liability.--If a check, money order, or 
     other method of payment, including payment by credit card, 
     debit card, charge card, or electronic funds transfer so 
     received is not duly paid, or is paid and subsequently 
     charged back to the Secretary, the person by whom such check, 
     money order, or other method of payment has been tendered 
     shall remain liable for the payment of the tax or for the 
     stamps, and for all legal penalties and additions, to the 
     same extent as if such check, money order, or other method of 
     payment had not been tendered.
       ``(c) Liability of Banks and Others.--If any certified, 
     treasurer's, or cashier's check (or other guaranteed draft), 
     or any money order, or any means of payment that has been 
     guaranteed by a financial institution (such as a credit card, 
     debit card, charge card, or electronic funds transfer 
     transaction which has been guaranteed expressly by a 
     financial institution) so received is not duly paid, the 
     United States shall, in addition to its right to exact 
     payment from the party originally indebted therefor, have a 
     lien for--
       ``(1) the amount of such check (or draft) upon all assets 
     of the financial institution on which drawn,
       ``(2) the amount of such money order upon all the assets of 
     the issuer therefor,
       ``(3) the guaranteed amount of any other transaction upon 
     all the assets of the institution making such guarantee,
     and such amount shall be paid out of such assets in 
     preference to any other claims whatsoever against such 
     financial institution, issuer, or guaranteeing institution, 
     except the necessary costs and expenses of administration and 
     the reimbursement of the United States for the amount 
     expended in the redemption of the circulating notes of such 
     financial institution.
       ``(d) Payment by Other Means.--
       ``(1) Authority to prescribe regulations.--The Secretary 
     shall prescribe such regulations as the Secretary deems 
     necessary to receive payment by commercially acceptable 
     means, including regulations that--
       ``(A) specify which methods of payment by commercially 
     acceptable means will be acceptable;
       ``(B) specify when payment by such means will be considered 
     received;
       ``(C) identify types of nontax matters related to payment 
     by such means that are to be resolved by persons ultimately 
     liable for payment and financial intermediaries, without the 
     involvement of the Secretary; and
       ``(D) ensure that tax matters will be resolved by the 
     Secretary, without the involvement of financial 
     intermediaries.
       ``(2) Authority to enter into contracts.--Notwithstanding 
     section 3718(f) of title 31, United States Code, the 
     Secretary is authorized to enter into contracts to obtain 
     services relating to receiving payment by other means when 
     cost beneficial to the Government.
       ``(3) Special provisions for use of credit cards.--If use 
     of credit cards is accepted as a method of payment of taxes 
     pursuant to subsection (a)--
       ``(A) a payment of internal revenue taxes (or a payment for 
     internal revenue stamps) by a person by use of a credit card 
     shall not be subject to section 161 of the Truth-in-Lending 
     Act (15 U.S.C 1666), or to any similar provisions of State 
     law, if the error alleged by the person is an error relating 
     to the underlying tax liability, rather than an error 
     relating to the credit card account such as a computational 
     error or numerical transposition in the credit card 
     transaction or an issue as to whether the person authorized 
     payment by use of the credit card;
       ``(B) a payment of internal revenue taxes (or a payment for 
     internal revenue stamps) shall not be subject to section 170 
     of the Truth in Lending Act (15 U.S.C 1666i), or to any 
     similar provisions of State law;
       ``(C) a payment of internal revenue taxes (or a payment for 
     internal revenue stamps) by a person by use of a debit card 
     shall not be subject to section 908 of the Electronic Fund 
     Transfer Act (15 U.S.C 1693f), or to any similar provisions 
     of State law, if the error alleged by the person is an error 
     relating to the underlying tax liability, rather than an 
     error relating to the debit card account such as a 
     computational error or numerical transposition in the debit 
     card transaction or an issue as to whether the person 
     authorized payment by use of the debit card;
       ``(D) the term `creditor' under section 103(f) of the Truth 
     in Lending Act (15 U.S.C 1602(f)) shall not include the 
     Secretary with respect to credit card transactions in payment 
     of internal revenue taxes (or payment for internal revenue 
     stamps); and
       ``(E) notwithstanding any other provision of law to the 
     contrary, in the case of payment made by credit card or debit 
     card transaction in an amount owed to a person as a result of 
     the correction of an error under section 161 of the Truth in 
     Lending Act (15 U.S.C 1666) or section 908 of the Electronic 
     Fund Transfer Act (15 U.S.C 1693(f)), the Secretary is 
     authorized to provide such amount to such person as a credit 
     to that person's credit card or debit card account through 
     the applicable credit card or debit card system.
       ``(e) Confidentiality of Information.--
       ``(1) In general.--Except as otherwise authorized by this 
     subsection, no person may use or disclose any information 
     relating to credit or debit card transactions obtained 
     pursuant to section 6103(k)(8) other than for purposes 
     directly related to the processing of such transactions, or 
     the billing or collection of amounts charged or debited 
     pursuant thereto.
       ``(2) Exceptions.--
       ``(A) Debit or credit card issuers or others acting on 
     behalf of such issuers may also use and disclose such 
     information for purposes directly related to servicing an 
     issuer's accounts.
       ``(B) Debit or credit card issuers or others directly 
     involved in the processing of credit or debit card 
     transactions or the billing or collection of amounts charged 
     or debited thereto may also use and disclose such information 
     for purposes directly related to--
       ``(i) statistical risk and profitability assessment,
       ``(ii) transferring receivables, accounts, or interest 
     therein,
       ``(iii) auditing the account information,
       ``(iv) complying with Federal, State, or local law, and
       ``(v) properly authorized civil, criminal, or regulatory 
     investigation by Federal, State, or local authorities.
       ``(3) Procedures.--Use and disclosure of information under 
     this paragraph shall be made only to the extent authorized by 
     written procedures promulgated by the Secretary.
       ``(4) Cross reference.--

  ``For provision providing for civil damages for violation of 
paragraph (1), see section 7431.''

       (b) Separate Appropriation Required for Payment of Credit 
     Card Fees.--No amount may be paid by the United States to a 
     credit card issuer for the right to receive payments of 
     internal revenue taxes by credit card without a separate 
     appropriation therefor.
       (c) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 64 is amended by striking the item 
     relating to section 6311 and inserting the following:

``Sec. 6311. Payment of tax by commercially acceptable means.''

       (d) Amendments to Section 6103 and 7431 With Respect to 
     Disclosure Authorization.--
       (1) Subsection (k) of section 6103 (relating to 
     confidentiality and disclosure of returns and return 
     information) is amended by adding at the end the following 
     new paragraph--
       ``(8) Disclosure of information to administer section 
     6311.--The Secretary may disclose returns or return 
     information to financial institutions and others to the 
     extent the Secretary deems necessary for the administration 
     of section 6311. Disclosures of information for purposes 
     other than to accept payments by check or money orders shall 
     be made only to the extent authorized by written procedures 
     promulgated by the Secretary.''.
       (2) Section 7431 (relating to civil damages for 
     unauthorized disclosure of returns and return information) is 
     amended by adding at the end the following new subsection:
       ``(g) Special Rule for Information Obtained Under Section 
     6103(k)(8).--For purposes of this section, any reference to 
     section 6103 shall be treated as including a reference to 
     section 6311(e).''.
       (3) Section 6103(p)(3)(A) is amended by striking ``or (6)'' 
     and inserting ``(6), or (8)''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on the

[[Page S8543]]

     day which is 9 months after the date of the enactment of this 
     Act.

     SEC. 206. RETURN-FREE TAX SYSTEM.

       (a) In General.--The Secretary of the Treasury or the 
     Secretary's delegate shall develop procedures for the 
     implementation of a return-free tax system under which 
     individuals would be permitted to comply with the Internal 
     Revenue Code of 1986 without making the return required under 
     section 6012 of such Code for taxable years beginning after 
     2007.
       (b) Report.--Not later than June 30 of each calendar year 
     after 1999, such Secretary shall report to the Committee on 
     Ways and Means of the House of Representatives, the Committee 
     on Finance of the Senate, and the Joint Committee on Taxation 
     on--
       (1) the procedures developed pursuant to subsection (a),
       (2) the number and classes of taxpayers that would be 
     permitted to use the procedures developed pursuant to 
     subsection (a),
       (3) the changes to the Internal Revenue Code of 1986 that 
     could enhance the use of such a system, and
       (4) what additional resources the Internal Revenue Service 
     would need to implement such a system.

     SEC. 207. ACCESS TO ACCOUNT INFORMATION.

       Not later than December 31, 2006, the Secretary of the 
     Treasury or the Secretary's delegate shall develop procedures 
     under which a taxpayer filing returns electronically would be 
     able to review the taxpayer's account electronically, 
     including all necessary safeguards to ensure the privacy of 
     such account information.
               TITLE III--TAXPAYER PROTECTION AND RIGHTS

     SEC. 301. EXPANSION OF AUTHORITY TO ISSUE TAXPAYER ASSISTANCE 
                   ORDERS.

       (a) In General.--Section 7811(a) (relating to taxpayer 
     assistance orders) is amended--
       (1) by striking ``Upon application'' and inserting the 
     following:
       ``(1) In general.--Upon application'',
       (2) by moving the text 2 ems to the right, and
       (3) by adding at the end the following new paragraph:
       ``(2) Determination of hardship.--For purposes of 
     determining whether a taxpayer is suffering or about to 
     suffer a significant hardship, the Taxpayer Advocate should 
     consider--
       ``(A) whether the Internal Revenue Service employee to 
     which such order would issue is following applicable 
     published administrative guidance, including the Internal 
     Revenue Manual,
       ``(B) whether there is an immediate threat of adverse 
     action,
       ``(C) whether there has been a delay of more than 30 days 
     in resolving taxpayer account problems, and
       ``(D) the prospect that the taxpayer will have to pay 
     significant professional fees for representation.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 302. EXPANSION OF AUTHORITY TO AWARD COSTS AND CERTAIN 
                   FEES.

       (a) Authority to Award Higher Attorney's Fees Based on 
     Complexity of Issues.--Clause (iii) of section 7430(c)(1)(B) 
     (relating to the award of costs and certain fees) is amended 
     by inserting ``, or the difficulty of the issues presented in 
     the case or the local availability of tax expertise,'' before 
     ``justifies a higher rate''.
       (b) Award of Administrative Costs Incurred After 30-Day 
     Letter.--
       (1) Paragraph (2) of section 7430(c) is amended by striking 
     the last sentence and insert the following:

     ``Such term shall only include costs incurred on or after 
     whichever of the following is the earliest: (i) the date of 
     the receipt by the taxpayer of the notice of the decision of 
     the Internal Revenue Service Office of Appeals, (ii) the date 
     of the notice of deficiency, or (iii) the date on which the 
     1st letter of proposed deficiency which allows the taxpayer 
     an opportunity for administrative review in the Internal 
     Revenue Service Office of Appeals is sent.''
       (2) Subparagraph (B) of section 7430(c)(7) is amended by 
     striking ``or'' and the end of clause (i), by striking the 
     period at the end of clause (ii) and inserting ``, or'', and 
     by adding at the end the following new clause:
       ``(iii) the date on which the 1st letter of proposed 
     deficiency which allows the taxpayer an opportunity for 
     administrative review in the Internal Revenue Service Office 
     of Appeals is sent.''
       (c) Award of Fees for Certain Additional Services.--
     Paragraph (3) of section 7430(c) is amended by adding at the 
     end the following new sentence: ``Such term also includes 
     such amounts as the court calculates, based on hours worked 
     and costs expended, for services of an individual (whether or 
     not an attorney) who is authorized to practice before the Tax 
     Court or before the Internal Revenue Service and who 
     represents the taxpayer for no more than a nominal fee.''
       (d) Determination of Prevailing Party.--Paragraph (4) of 
     section 7430(c) is amended--
       (A) by inserting at the end of subparagraph (A) the 
     following new flush sentence:
     ``For purposes of this section, such section 2412(d)(2)(B) 
     shall be applied by substituting `$5,000,000' for the amount 
     otherwise applicable to individuals, and `$35,000,000' for 
     the amount otherwise applicable to businesses.'', and
       (B) by adding at the end the following new subparagraph:
       ``(D) Safe Harbor.--The position of the United States was 
     not substantially justified if the United States has not 
     prevailed on the same issue in at least 3 United States 
     Courts of Appeal.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to proceedings beginning after the date of the 
     enactment of this Act.

     SEC. 303. CIVIL DAMAGES FOR NEGLIGENCE IN COLLECTION ACTIONS.

       (a) In General.--Section 7433 (relating to civil damages 
     for certain unauthorized collection actions) is amended--
       (1) in subsection (a), by inserting ``, or by reason of 
     negligence,'' after ``recklessly or intentionally'', and
       (2) in subsection (b)--
       (A) in the matter preceding paragraph (1), by inserting 
     ``($100,000, in the case of negligence)'' after 
     ``$1,000,000'', and
       (B) in paragraph (1), by inserting ``or negligent'' after 
     ``reckless or intentional''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to actions of officers or employees of the 
     Internal Revenue Service after the date of the enactment of 
     this Act.

     SEC. 304. DISCLOSURE OF CRITERIA FOR EXAMINATION SELECTION.

       (a) In General.--The Secretary of the Treasury or the 
     Secretary's delegate shall, as soon as practicable, but not 
     later than 180 days after the date of the enactment of this 
     Act, incorporate into the statement required by section 6227 
     of the Omnibus Taxpayer Bill of Rights (Internal Revenue 
     Service Publication No. 1) a statement which sets forth in 
     simple and nontechnical terms the criteria and procedures for 
     selecting taxpayers for examination. Such statement shall not 
     include any information the disclosure of which would be 
     detrimental to law enforcement, but shall specify the general 
     procedures used by the Internal Revenue Service, including 
     the extent to which taxpayers are selected for examination on 
     the basis of information available in the media or on the 
     basis of information provided to the Internal Revenue Service 
     by informants.
       (b) Transmission to Committees of Congress.--Such Secretary 
     shall transmit drafts of the statement required under 
     subsection (a) (or proposed revisions to any such statement) 
     to the Committee on Ways and Means of the House of 
     Representatives, the Committee on Finance of the Senate, and 
     the Joint Committee on Taxation on the same day.

     SEC. 305. ARCHIVAL OF RECORDS OF INTERNAL REVENUE SERVICE.

       (a) In General.--Subsection (l) of section 6103 (relating 
     to confidentiality and disclosure of returns and return 
     information) is amended by adding at the end the following 
     new paragraph:
       ``(16) Disclosure to national archives and records 
     administration.--The Secretary shall, upon written request 
     from the Archivist of the United States, disclose to the 
     Archivist all records of the Internal Revenue Service for 
     purposes of scheduling such records for destruction or for 
     retention in the National Archives. Any such information that 
     is retained in the National Archives shall not be disclosed 
     without the express written approval of the Secretary.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to requests made by the Archivist after the date 
     of the enactment of this Act.

     SEC. 306. TAX RETURN INFORMATION.

       The Joint Committee on Taxation shall convene a study of 
     the scope and use of provisions regarding taxpayer 
     confidentiality, and shall report the findings of such study, 
     together with such recommendations as it deems appropriate, 
     to the Congress no later than one year after the date of the 
     enactment of this Act. Such study shall be led by a panel of 
     experts, to be appointed by the Joint Committee on Taxation, 
     which shall examine the present protections for taxpayer 
     privacy, the need for third parties to use tax return 
     information, and the ability to achieve greater levels of 
     voluntary compliance by allowing the public to know who is 
     legally required to do so, but does not file tax returns.

     SEC. 307. FREEDOM OF INFORMATION.

       (a) In General.--The Secretary of the Treasury or the 
     Secretary's delegate shall, as soon as practicable, but not 
     later than 180 days after the date of the enactment of this 
     Act, develop procedures under which expedited access will be 
     granted to requests under section 551 of title 5, United 
     States Code, when--
       (1) there exists widespread and exceptional media interest 
     in the requested information, and
       (2) expedited processing is warranted because the 
     information sought involves possible questions about the 
     government's integrity which affect public confidence.

     In addition, such procedures shall require the Internal 
     Revenue Service to provide an explanation to the person 
     making the request if the request is not satisfied within 30 
     days, including a summary of actions taken to date and the 
     expected completion date. Finally, to the extent that any 
     such request is not satisfied in full within 60 days, such 
     person may seek a determination of whether such request 
     should be granted by the appropriate Federal district court.
       (b) Transmission to Committees of Congress.--Such Secretary 
     shall transmit drafts of the procedures required under 
     subsection (a) (or proposed revisions to any such procedures) 
     to the Committee on Ways and Means

[[Page S8544]]

     of the House of Representatives, the Committee on Finance of 
     the Senate, and the Joint Committee on Taxation on the same 
     day.

     SEC. 308. OFFERS-IN-COMPROMISE.

       (a) In General.--Section 7122 (relating to offers-in-
     compromise) is amended by adding at the end the following new 
     subsection:
       ``(c) Allowances.--The Secretary shall develop and publish 
     schedules of national and local allowances to ensure that 
     taxpayers entering into a compromise have an adequate means 
     to provide for basic living expenses.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 309. ELIMINATION OF INTEREST DIFFERENTIAL ON 
                   OVERPAYMENTS AND UNDERPAYMENTS.

       (a) In General.--Subsection (a) of section 6621 (relating 
     to the determination of rate of interest) is amended to read 
     as follows:
       ``(a) General Rule.--
       ``(1) Rate.--The rate established under this section shall 
     be the sum of--
       ``(A) the Federal short-term rate determined under 
     subsection (b), plus
       ``(B) the number of percentage points specified by the 
     Secretary.
       ``(2) Determination of percentage points.--The number of 
     percentage points specified by the Secretary for purposes of 
     paragraph (1)(B) shall be the number which the Secretary 
     estimates will result in the same net revenue to the Treasury 
     as would have resulted without regard to the amendments made 
     by section 309 of the Internal Revenue Service Restructuring 
     and Reform Act of 1997.''
       (b) Conforming Amendments.--
       (1) Section 6621 is amended by striking subsection (c).
       (2) The following provisions are each amended by striking 
     ``overpayment rate'' and inserting ``rate'': Sections 
     42(j)(2)(B), 167(g)(2)(C), 460(b)(2)(C), 6343(c), 
     6427(i)(3)(B), 6611(a), and 7426(g).
       (3) The following provisions are each amended by striking 
     ``underpayment rate'' and inserting ``rate'': Sections 
     42(k)(4)(A)(ii), 148(f)(4)(C)(x)(II), 148(f)(7)(C)(ii), 
     453A(c)(2)(B), 644(a)(2)(B), 852(e)(3)(A), 4497(c)(2), 
     6332(d)(1), 6601(a), 6602, 6654(a)(1), 6655(a)(1), and 
     6655(h)(1).
       (c) Effective Date.--The amendments made by this section 
     shall apply for purposes of determining interests for periods 
     after the date of the enactment of this Act.

     SEC. 310. ELIMINATION OF APPLICATION OF FAILURE TO PAY 
                   PENALTY DURING PERIOD OF INSTALLMENT AGREEMENT.

       (a) In General.--Subsection (c) of section 6651 (relating 
     to the penalty for failure to file tax return or to pay tax) 
     is amended by adding at the end the following new paragraph:
       ``(3) Tolling during period of installment agreement.--If 
     the amount required to be paid is the subject of an agreement 
     for payment of tax liability in installments made pursuant to 
     section 6159, the additions imposed under subsection (a) 
     shall not apply so long as such agreement remains in 
     effect.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to agreements entered into after the date of the 
     enactment of this Act.

     SEC. 311. SAFE HARBOR FOR QUALIFICATION FOR INSTALLMENT 
                   AGREEMENTS.

       (a) In General.--Subsection (a) of section 6159 (relating 
     to agreements for payment of tax liability in installments) 
     is amended--
       (1) by striking ``The Secretary is'' and inserting the 
     following:
       ``(1) In general.--The Secretary is'',
       (2) by moving the test 2 ems to the right, and
       (3) by adding at the end the following new paragraph:
       ``(2) Safe harbor.--The Secretary shall enter into an 
     agreement to accept the payment of a tax liability in 
     installments if--
       ``(A) the amount of such liability does not exceed $10,000,
       ``(B) the taxpayer has not failed to file any tax return or 
     pay any tax required to be shown thereon during the 
     immediately preceding 5 years, and
       ``(C) the taxpayer has not entered into any prior 
     installment agreement under this paragraph.''
       (b) Effective date.--The amendments made by this section 
     shall apply to agreements entered into after the date of the 
     enactment of this Act.

     SEC. 312. PAYMENT OF TAXES.

       (a) In General.--The Secretary of the Treasury or his 
     delegate shall establish such rules, regulations, and 
     procedures as are necessary to require payment of taxes by 
     check or money order to be made payable to the Treasurer, 
     United States of America.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 313. LOW INCOME TAXPAYER CLINICS.

       (a) In General.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end thereof the 
     following new section:

     ``SEC. 7525. LOW INCOME TAXPAYER CLINICS.

       ``(a) In General.--The Secretary shall make grants to 
     provide matching funds for the development, expansion, or 
     continuation of qualified low income taxpayer clinics.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Qualified low income taxpayer clinic.--
       ``(A) In general.--The term `qualified low income taxpayer 
     clinic' means a clinic that--
       ``(i) represents low income taxpayers in controversies with 
     the Internal Revenue Service,
       ``(ii) operates programs to inform individuals for whom 
     English is a second language about their rights and 
     responsibilities under this title, and
       ``(iii) does not charge more than a nominal fee for its 
     services, except for reimbursement of actual costs incurred.
       ``(B) Representation of low income taxpayers.--A clinic 
     meets the requirements of subparagraph (A)(i) if--
       ``(i) at least 90 percent of the taxpayers represented by 
     the clinic have income which does not exceed 250 percent of 
     the poverty level, as determined in accordance with criteria 
     established by the Director of the Office of Management and 
     Budget, and
       ``(ii) the amount in controversy for any taxable year 
     generally does not exceed the amount specified in section 
     7463.
       ``(2) Clinic.--The term `clinic' includes--
       ``(A) a clinical program at an accredited law school in 
     which students represent low income taxpayers in 
     controversies arising under this title, and
       ``(B) an organization exempt from tax under section 501(c) 
     which satisfies the requirements of paragraph (1) through 
     representation of taxpayers or referral of taxpayers to 
     qualified representatives.
       ``(3) Qualified representative.--The term `qualified 
     representative' means any individual (whether or not an 
     attorney) who is authorized to practice before the Internal 
     Revenue Service or the applicable court.
       ``(c) Special Rules and Limitations.--
       ``(1) Aggregate limitation.--Unless otherwise provided by 
     specific appropriation, the Secretary shall not allocate more 
     than $3,000,000 per year (exclusive of costs of administering 
     the program) to grants under this section.
       ``(2) Limitation on individual grants.--A grant under this 
     section shall not exceed $100,000 per year.
       ``(3) Multi-year grants.--Upon application of a qualified 
     low income taxpayer clinic, the Secretary is authorized to 
     award a multi-year grant not to exceed 3 years.
       ``(4) Criteria for awards.--In determining whether to make 
     a grant under this section, the Secretary shall consider--
       ``(A) the numbers of taxpayers who will be served by the 
     clinic, including the number of taxpayers in the geographical 
     area for whom English is a second language,
       ``(B) the existence of other low income taxpayer clinics 
     serving the same population,
       ``(C) the quality of the program offered by the low income 
     taxpayer clinic, including the qualifications of its 
     administrators and qualified representatives, and its track 
     record, if any, in providing service to low income taxpayers, 
     and
       ``(D) alternative funding sources available to the clinic, 
     including amounts received from other grants and 
     contributions, and the endowment and resources of the 
     educational institution sponsoring the clinic.
       ``(5) Requirement of matching funds.--A low income taxpayer 
     clinic must provide matching funds on a dollar for dollar 
     basis for all grants provided under this section. Matching 
     funds may include--
       ``(A) the salary (including fringe benefits) of a faculty 
     member at an educational institution who is teaching in the 
     clinic;
       ``(B) the salaries of administrative personnel employed in 
     the clinic; and
       ``(C) the cost of equipment used in the clinic.

     Indirect expenses, including general overhead of the 
     educational institution sponsoring the clinic, shall not be 
     counted as matching funds.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     77 is amended by adding at the end the following new section:

``Sec. 7525. Low income taxpayer clinics.''

       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 314. JURISDICTION OF THE TAX COURT.

       (a) Interest Determinations.--Subsection (c) of section 
     7481 (relating to the date when Tax Court decisions become 
     final) is amended--
       (1) by inserting ``or underpayment'' after ``overpayment'' 
     each place it appears, and
       (2) by striking ``petition'' in paragraph (3) and inserting 
     ``motion''.
       (b) Extension of Time for Payment of Estate Tax.--Section 
     6166 (relating to the extension of time for payment of estate 
     tax) is amended--
       (1) by redesignating subsection (k) as subsection (l), and
       (2) by inserting after subsection (j) the following new 
     subsection:
       ``(k) Judicial Review.--The Tax Court shall have 
     jurisdiction to review disputes regarding initial or 
     continuing eligibility for extensions of time for payment 
     under this section, including disputes regarding the proper 
     amount of installment payments required herein.''
       (c) Small Case Calendar.--
       (1) Subsection (a) of section 7463 (relating to disputes 
     involving $10,000 or less) is amended by striking ``$10,000'' 
     each place it appears and inserting ``$25,000''.
       (2) The section heading for section 7463 is amended by 
     striking ``$10,000'' and inserting ``$25,000''.

[[Page S8545]]

       (3) The item relating to section 7463 in the table of 
     sections for part II of subchapter C of chapter 76 is amended 
     by striking ``$10,000'' and inserting ``$25,000''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to proceedings commencing after the date of the 
     enactment of this Act.

     SEC. 315. CATALOGING COMPLAINTS.

       (a) In General.--The Commissioner of Internal Revenue 
     shall, as soon as practicable, but not later than 180 days 
     after the date of the enactment of this Act, develop 
     procedures to catalog and review taxpayer complaints of 
     misconduct by Internal Revenue Service employees. Such 
     procedures should include guidelines for internal review and 
     discipline of employees, as warranted by the scope of such 
     complaints.
       (b) Hotline.-- The Commissioner of Internal Revenue shall, 
     as soon as practicable, but not later than 180 days after the 
     date of the enactment of this Act, establish a toll-free 
     telephone number for taxpayers to register complaints of 
     misconduct by Internal Revenue Service employees, and shall 
     publish such number in Publication 1.

     SEC. 316. PROCEDURES INVOLVING TAXPAYER INTERVIEWS.

       (a) In General.--Paragraph (1) of section 7521(b) (relating 
     to procedures involving taxpayer interviews) is amended to 
     read as follows:
       ``(1) Explanations of processes.--An officer or employee of 
     the Internal Revenue Service shall--
       ``(A) before or at an initial interview, provide to the 
     taxpayer--
       ``(i) in the case of an in-person interview with the 
     taxpayer relating to the determination of any tax, an 
     explanation of the audit process and the taxpayer's rights 
     under such process, or
       ``(ii) in the case of an in-person interview with the 
     taxpayer relating to the collection of any tax, an 
     explanation of the collection process and the taxpayer's 
     rights under such process, and
       ``(B) before an in-person initial interview with the 
     taxpayer relating to the determination of any tax--
       ``(i) inquire whether the taxpayer is represented by an 
     individual described in subsection (c),
       ``(ii) explain that the taxpayer has the right to have the 
     interview take place in a reasonable place and that such 
     place does not have to be the taxpayer's home,
       ``(iii) explain the reasons for the selection of the 
     taxpayer's return for examination, and
       ``(iv) provide the taxpayer with a written explanation of 
     the applicable burdens of proof on taxpayers and the Internal 
     Revenue Service.

     If the taxpayer is represented by an individual described in 
     subsection (c), the interview may not proceed without the 
     presence of such individual unless the taxpayer consents.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to interviews and examinations taking place after 
     the date of the enactment of this Act.

     SEC. 317. EXPLANATION OF JOINT AND SEVERAL LIABILITY.

       (a) In General.--The Secretary of the Treasury or the 
     Secretary's delegate shall, as soon as practicable, but not 
     later than 180 days after the date of the enactment of this 
     Act, establish procedures to clearly alert taxpayers of their 
     joint and several liabilities on all tax forms, publications, 
     and instructions. Such procedures shall include explanations 
     of the possible consequences of joint and several liability.
       (b) Transmission to Committees of Congress.--Such Secretary 
     shall transmit drafts of the procedures required under 
     subsection (a) (or proposed revisions to any such procedures) 
     to the Committee on Ways and Means of the House of 
     Representatives, the Committee on Finance of the Senate, and 
     the Joint Committee on Taxation on the same day.

     SEC. 318. PROCEDURES RELATING TO EXTENSIONS OF STATUTE OF 
                   LIMITATIONS BY AGREEMENT.

       (a) In General.--Paragraph (4) of section 6501(c) (relating 
     to the period for limitations on assessment and collection) 
     is amended--
       (1) by striking ``Where'' and inserting the following:
       ``(A) In general.--Where'',
       (2) by moving the text 2 ems to the right, and
       (3) by adding at the end the following new subparagraph:
       ``(B) Notice to taxpayer of right to refuse or limit 
     extension.--The Secretary shall notify the taxpayer of the 
     taxpayer's right to refuse to extend the period of 
     limitations, or to limit such extension to particular issues, 
     on each occasion when the taxpayer is requested to provide 
     such consent.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to requests to extend the period of limitations 
     made after the date of the enactment of this Act.

     SEC. 319. REVIEW OF PENALTY ADMINISTRATION.

       The Taxpayer Advocate shall prepare a study and provide an 
     independent report to the Committee on Ways and Means of the 
     House of Representatives, the Committee on Finance of the 
     Senate, and the Joint Committee on Taxation, no later than 
     July 30, 1998, reviewing the administration and 
     implementation by the Internal Revenue Service of the penalty 
     reform recommendations made in the Omnibus Budget 
     Reconciliation Act of 1989, including legislative and 
     administrative recommendations to simplify penalty 
     administration and reduce taxpayer burden.

     SEC. 320. STUDY OF TREATMENT OF ALL TAXPAYERS AS SEPARATE 
                   FILING UNITS.

       The Secretary of the Treasury or his delegate and the 
     Comptroller General of the United States shall each conduct 
     separate studies on the feasibility of treating each 
     individual separately for purposes of the Internal Revenue 
     Code of 1986, including recommendations for eliminating the 
     marriage penalty, addressing community property issues, and 
     reducing burden for divorced and separated taxpayers. The 
     reports of each study shall be delivered to the Committee on 
     Ways and Means of the House of Representatives, the Committee 
     on Finance of the Senate, and the Joint Committee on Taxation 
     no later than 180 days after the date of the enactment of 
     this Act.

     SEC. 321. STUDY OF BURDEN OF PROOF.

       The Comptroller General of the United States shall prepare 
     a report on the burdens of proof for taxpayers and the 
     Internal Revenue Service for controversies arising under the 
     Internal Revenue Code of 1986, which shall be delivered to 
     the Committee on Ways and Means of the House of 
     Representatives, the Committee on Finance of the Senate, and 
     the Joint Committee on Taxation no later than 180 days after 
     the date of the enactment of this Act. Such report shall 
     highlight the differences between these burdens and the 
     burdens imposed in other disputes with the Federal 
     Government, and should comment on the impact of changing 
     these burdens on tax administration and taxpayer rights.
TITLE IV--CONGRESSIONAL ACCOUNTABILITY FOR THE INTERNAL REVENUE SERVICE
                         Subtitle A--Oversight

     SEC. 401. EXPANSION OF POWERS OF THE JOINT COMMITTEE ON 
                   TAXATION.

       (a) In General.--Section 8021 (relating to the powers of 
     the Joint Committee on Taxation) is amended by adding at the 
     end the following new subsections:
       ``(e) Consultant Services.--The Joint Committee is 
     authorized to procure the services of experts and consultants 
     in accordance with section 3109(b) of title 5, United States 
     Code.
       ``(f) Investigations.--The Joint Committee shall review all 
     requests (other than requests by a Committee or Subcommittee) 
     for investigations of the Internal Revenue Service by the 
     General Accounting Office, and approve such requests when 
     appropriate, with a view towards eliminating overlapping 
     investigations, ensuring that the General Accounting Office 
     has the capacity to handle the investigation, and ensuring 
     that investigations focus on areas of primary importance to 
     tax administration.
       ``(g) Relating to Joint Hearings.--
       ``(1) In general.--The Chief of Staff, and such other staff 
     as are appointed pursuant to section 8004, shall provide such 
     assistance as is required for joint hearings described in 
     paragraph (2).
       ``(2) Joint hearings.--On or before April 1 of each 
     calendar year after 1997, there shall be a joint hearing of 
     two members of the majority and one member of the minority 
     from each of the Committees on Finance, Appropriations, and 
     Government Affairs of the Senate, and the Committees on Ways 
     and Means, Appropriations, and Government Reform and 
     Oversight of the House of Representatives, to review the 
     strategic plans and budget for the Internal Revenue Service. 
     After the conclusion of the annual filing season, there shall 
     be a second annual joint hearing to review other matters 
     outlined in section 8022(3)(C).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 402. COORDINATED OVERSIGHT REPORTS.

       (a) In General.--Paragraph (3) of section 8022 (relating to 
     the duties of the Joint Committee on Taxation) is amended to 
     read as follows:
       ``(3) Reports.--
       ``(A) To report, from time to time, to the Committee on 
     Finance and the Committee on Ways and Means, and, in its 
     discretion, to the Senate or House of Representatives, or 
     both, the results of its investigations, together with such 
     recommendations as it may deem advisable.
       ``(B) To report, annually, to the Committee on Finance and 
     the Committee on Ways and Means on the overall state of the 
     Federal tax system, together with recommendations with 
     respect to possible simplification proposals and other 
     matters relating to the administration of the Federal tax 
     system as it may deem advisable.
       ``(C) To report, annually, to the Committees on Finance, 
     Appropriations, and Government Affairs of the Senate, and to 
     the Committees on Ways and Means, Appropriations, and 
     Government Reform and Oversight of the House of 
     Representatives, with respect to--
       ``(i) strategic and business plans for the Internal Revenue 
     Service;
       ``(ii) progress of the Internal Revenue Service in meeting 
     its objectives;
       ``(iii) the budget for the Internal Revenue Service and 
     whether it supports its objectives;

[[Page S8546]]

       ``(iv) progress of the Internal Revenue Service in 
     improving taxpayer service and compliance;
       ``(v) progress of the Internal Revenue Service on 
     technology modernization; and
       ``(vi) the annual filing season.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.
                           Subtitle B--Budget

     SEC. 411. BUDGET DISCRETION.

       (a) In General.--
       (1) Adjustments.--For purposes of the Congressional Budget 
     Act of 1974 and the Balanced Budget and Emergency Deficit 
     Control Act of 1985--
       (A) the discretionary spending limits under section 
     601(a)(2) of the Congressional Budget Act of 1974 (and those 
     limits as cumulatively adjusted) for the current fiscal year 
     and each outyear;
       (B) the allocations to the Committees on Appropriations 
     under sections 302(a) and 602(a) of the Congressional Budget 
     Act of 1974; and
       (C) the levels for major functional category 800 (General 
     Government) and the appropriate budgetary aggregates in the 
     most recently agreed to concurrent resolution on the budget,

     shall be adjusted to reflect the amounts of additional new 
     budget authority or additional outlays reported by the 
     Committee on Appropriations in appropriations legislation (or 
     by the committee of conference on such legislation) for the 
     Internal Revenue Service.
       (2) Limitation.--Any adjustments made pursuant to paragraph 
     (1) may be made for new initiatives on an annual basis only 
     for--
       (A) improvements in taxpayer services, including building 
     an integrated database of taxpayer information accessible to 
     front-line Internal Revenue Service personnel; or
       (B) other improvements that the Director of the 
     Congressional Budget Office certifies to the Chairpersons of 
     the Committees on Budget of the Senate and the House of 
     Representatives that such budget authority will not increase 
     the Federal budget deficit,
     except that funding for ongoing programs shall be provided 
     through the normal appropriations process.
       (b) Revised Limits, Allocations, Levels, and Aggregates.--
     Upon the reporting of legislation pursuant to subsection (a), 
     and again upon the submission of a conference report on such 
     legislation in either House (if a conference report is 
     submitted), the Chairpersons of the Committees on the Budget 
     of the Senate and the House of Representatives shall file 
     with their respective Houses appropriately revised--
       (1) discretionary spending limits under section 601(a)(2) 
     of the Congressional Budget Act of 1974 (and those limits as 
     cumulatively adjusted) for the current fiscal year and each 
     outyear;
       (2) allocations to the Committee on Appropriations under 
     sections 302(a) and 602(a) of that Act; and
       (3) levels for major functional category 800 (General 
     Government) and the appropriate budgetary aggregates in the 
     most recently agreed to concurrent resolution on the budget, 
     to carry out this subsection.

     These revised discretionary spending limits, allocations, 
     functional levels, and aggregates shall be considered for 
     purposes of congressional enforcement of that Act as the 
     discretionary spending limits, allocations, functional 
     levels, and aggregates.
       (c) Reporting Revised Allocations.--The Committees on 
     Appropriations of the Senate and the House of Representatives 
     may report appropriately revised allocations pursuant to 
     sections 302(b) and 602(b) of the Congressional Budget Act of 
     1974 to carry out this section.
       (d) Contingencies.--This section shall not apply to any 
     additional new budget authority or additional outlays unless 
     the Director of the Congressional Budget Office certifies to 
     the Chairpersons of the Committees on Appropriation of the 
     Senate and the House of Representatives that the Director or 
     any other outside authority has verified that--
       (1) the Internal Revenue Service has provided them with 
     reasonably accurate cost and revenue information;
       (2) the Internal Revenue Service has implemented adequate 
     quality service measures consistent with taxpayer rights;
       (3) the Internal Revenue Service has obtained a clean 
     opinion on its financial audit of appropriated accounts; and
       (4) the Internal Revenue Service has made significant 
     progress towards receiving a clean opinion on its financial 
     audit of custodial accounts.

     SEC. 412. FUNDING FOR CENTURY DATE CHANGE.

       It is the sense of Congress that funding for the Internal 
     Revenue Service efforts to resolve the century date change 
     computing problems should be funded fully to provide for 
     certain resolution of such problems.

     SEC. 413. FINANCIAL MANAGEMENT ADVISORY GROUP.

       The Commissioner shall convene a financial management 
     advisory group consisting of individuals with expertise in 
     governmental accounting and auditing from both the private 
     sector and the Government to advise the Commissioner on 
     financial management issues, including--
       (1) the continued partnership between the Internal Revenue 
     Service and the General Accounting Office;
       (2) the financial accounting aspects of the Internal 
     Revenue Service's system modernization;
       (3) the necessity and utility of year-round auditing; and
       (4) the Commissioner's plans for improving its financial 
     management system.
                     Subtitle C--Tax Law Complexity

     SEC. 421. ROLE OF THE INTERNAL REVENUE SERVICE.

       It is the sense of Congress that the Internal Revenue 
     Service should provide the Congress with an independent view 
     of tax administration, and that during the legislative 
     process, the tax writing committees of the Congress should 
     hear from front-line technical experts at the Internal 
     Revenue Service with respect to the administrability of 
     pending amendments to the Internal Revenue Code of 1986.

     SEC. 422. TAX COMPLEXITY ANALYSIS.

       (a) In General.--Chapter 92 (relating to powers and duties 
     of the Joint Committee on Taxation) is amended by adding at 
     the end the following new section:

     ``SEC. 8024. TAX COMPLEXITY ANALYSIS.

       ``(a) In General.--
       ``(1) Reported bills and resolutions.--When a committee of 
     the Senate or House of Representatives reports a bill or 
     joint resolution that includes any provision amending the 
     Internal Revenue Code of 1986, the report for such bill or 
     joint resolution shall contain a Tax Complexity Analysis 
     prepared by the Joint Committee on Taxation for each 
     provision therein.
       ``(2) Amended bills and joint resolutions; conference 
     reports.--If a bill or joint resolution is passed in an 
     amended form (including if passed by one House as an 
     amendment in the nature of a substitute for the text of a 
     bill or joint resolution from the other House) or is reported 
     by a committee of conference in amended form, and the amended 
     form contains an amendment to the Internal Revenue Code of 
     1986 not previously considered by either House, then the 
     committee of conference shall ensure that the Joint Committee 
     on Taxation prepares a Tax Complexity Analysis for each 
     provision therein.
       ``(b) Content of Complexity Analysis.--Each Tax Complexity 
     Analysis must address--
       ``(1) whether the provision is new, modifies or replaces 
     existing law, and whether hearings were held to discuss the 
     proposal and whether the Internal Revenue Service provided 
     input as to its administrability;
       ``(2) when the provision becomes effective, and 
     corresponding compliance requirements on taxpayers (e.g., 
     effective on date of enactment, phased in, or retroactive);
       ``(3) whether new Internal Revenue Service forms or 
     worksheets are needed, whether existing forms or worksheets 
     must be modified, and whether the effective date allows 
     sufficient time for the Internal Revenue Service to prepare 
     such forms and educate taxpayers;
       ``(4) necessity of additional interpretive guidance (e.g., 
     regulations, rulings, and notices);
       ``(5) the extent to which the proposal relies on concepts 
     contained in existing law, including definitions;
       ``(6) effect on existing record keeping requirements and 
     the activities of taxpayers, complexity of calculations and 
     likely behavioral responses, and standard business practices 
     and resource requirements;
       ``(7) number, type, and sophistication of affected 
     taxpayers; and
       ``(8) whether the proposal requires the Internal Revenue 
     Service to assume responsibilities not directly related to 
     raising revenue which could be handled through another 
     Federal agency.
       ``(c) Legislation Subject to Point of Order.--
       ``(1) In general.--It shall not be in order in the Senate 
     or the House of Representatives to consider any bill, joint 
     resolution, amendment, motion, or conference report that is 
     not accompanied by a Tax Complexity Analysis for each 
     provision therein.
       ``(2) In the senate.--Upon a point of order being made by 
     any Senator against any provision under this section, and the 
     point of order being sustained by the Chair, such specific 
     provision shall be deemed stricken from the bill, resolution, 
     amendment, amendment in disagreement, or conference report, 
     and may not be offered as an amendment from the floor.
       ``(3) In the house of representatives.--
       ``(A) It shall not be in order in the House of 
     Representatives to consider a rule or order that waives the 
     application of paragraph (1).
       ``(B) In order to be cognizable by the Chair, a point of 
     order under this section must specify the precise language on 
     which it is premised.
       ``(C) As disposition of points of order under this section, 
     the Chair shall put the question of consideration with 
     respect to the proposition that is the subject of the points 
     of order.
       ``(D) A question of consideration under this section shall 
     be debatable for 10 minutes by each Member initiating a point 
     of order and for 10 minutes by an opponent on each point of 
     order, but shall otherwise by decided without intervening 
     motion except one that the House adjourn or that the 
     Committee of the Whole rise, as the case may be.
       ``(E) The disposition of the question of consideration 
     under this subsection with respect to a bill or joint 
     resolution shall be considered also to determine the question 
     of consideration under this subsection with respect to an 
     amendment made in order as original text.

[[Page S8547]]

       ``(d) Responsibilities of the Commissioner.--The 
     Commissioner shall provide the Joint Committee on Taxation 
     with such information as is necessary to prepare a Tax 
     Complexity Analysis on each instance in which such an 
     analysis is required.''
       (b) Clerical Amendment.--The table of sections for chapter 
     92 is amended by adding at the end the following new item:

``Sec. 8024. Tax complexity analysis.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to legislation considered on or after the earlier 
     of January 1, 1998, or the 90th day after the date of the 
     enactment of an additional appropriation to carry out section 
     8024 of the Internal Revenue Code of 1986, as added by this 
     section.

     SEC. 423. SIMPLIFIED TAX AND WAGE REPORTING SYSTEM.

       (a) Policy.--It is the policy of the Congress that 
     employers should have a single point of filing tax and wage 
     reporting information.
       (b) Electronic Filing of Information Returns.--The Social 
     Security Administration shall establish procedures no later 
     than December 31, 1998, to accept electronic submissions of 
     tax and wage reporting information from employers, and to 
     forward such information to the Internal Revenue Service, and 
     to the tax administrators of the States, upon request and 
     reimbursement of expenses. For purposes of this paragraph, 
     recipients of tax and wage reporting information from the 
     Social Security Administration shall reimburse the Social 
     Security Administration for its incremental expenses 
     associated with accepting and furnishing such information.

     SEC. 424. COMPLIANCE BURDEN ESTIMATES.

       The Joint Committee on Taxation shall prepare a study of 
     the feasibility of developing a baseline estimate of 
     taxpayers' compliance burdens against which future 
     legislative proposals could be measured.
                                 ______
                                 
      By Mr. MOYNIHAN (for himself and Mr. D'Amato):
  S. 1097. A bill to reduce acid deposition under the Clean Air Act, 
and for other purposes; to the Committee on Environment and Public 
Works.


                THE ACID DEPOSITION CONTROL ACT OF 1997.

  Mr. MOYNIHAN. Mr. President, I rise today to introduce the Acid 
Deposition Control Act of 1997, a bill to combat acid rain and help 
restore health to the Nation's sensitive ecosystems--such as the 
Adirondack Park in my home State of New York. My friend and colleague, 
Senator D'Amato is cosponsor of this measure.
  Mr. President, in the 1960's, fishermen in the Adirondacks began to 
complain about more than the big ones that got away. Fish, once 
abundant, were not simply becoming harder to catch. They had 
disappeared. Initially, pollution seemed an unlikely cause. The lakes 
lie in a park protected by the New York State Constitution from most 
disturbances by human activities. Most of the lakes are virtually 
inaccessible, except to fishermen--and the winds that blow in from 
industrial pockets across the Midwest.
  Before long, pioneering scientists such as Cornell University's 
Eugene Likens and Carl Schofield and Syracuse University's Charles 
Driscoll established a link between increased deposition of acidic 
compounds in rainfall and the absence or deformity of fish in lakes 
with clear water and low pH.
  This was precisely the phenomenon first documented by Robert Angus 
Smith in Manchester, England, in 1852. More recently, acid rain had 
been of concern in Scandinavia. Acids lofted into the atmosphere from 
tall smokestacks in the industrial basin of the Ruhr River, falling on 
watersheds that were, in many places, little more than bare rock. 
Closer to the source, acid rain was blamed for Waldsterben, the death 
of Germany's prized Black Forest.
  We have learned a great deal since then. In June 1980, Congress 
passed the Energy Security Act, Public Law 96-264. Title VII consisted 
of a bill I introduced in 1979, the Acid Precipitation Act of 1980. It 
established the National Acid Precipitation Assessment Program 
[NAPAP]--an interagency research program to foster the development of 
science-based Federal policy regarding acid rain. This program resulted 
in the establishment of long-term acid deposition monitoring programs, 
a network of permanent forest plots and lake sampling regimes, over 
1,500 peer reviewed publications, and perhaps more important the 
issuance of 71 doctoral degrees in acid deposition research during the 
1980's compared to only 2 in the decade before.
  By the end of this massive study, scientists worldwide gathered in 
South Carolina to discuss what they had learned. They learned that at 
least 800 lakes and 2,200 streams in the eastern United States had been 
made acidic by acid rain; they predicted that an additional 10 percent 
would become acidic over the next decade without additional 
legislation. And they confirmed--as had been expected--that sulfur 
dioxide emissions were found to be a significant factor in acidifying 
ecosystems. Sulfur dioxide had contributed to forest decline in high 
elevation areas, corrosion of stone and metal structures, and reduced 
visibility.
  In 1990, Congress enacted acid rain controls to reduce sulfur dioxide 
emissions by 10 million tons below 1985 levels, utilizing a unique, 
market-based approach to ensure the most cost-effective pollution 
reduction possible. At the time, the measure was expected to have some 
noticeable--but not overwhelming--beneficial effects.
  We were right. Visibility has increased. Acidification of lake waters 
and deterioration of materials has been reduced. The incidence of 
respiratory disease has decreased. The market-based emissions trading 
approach has proved a tremendous success, fostering reductions nearly 
40 percent beyond that which the act required, at costs amounting to a 
mere fraction of industry and government predictions. Equally 
important, our knowledge increased.
  In recent years, scientists have identified another important 
precursor of acid rain: nitrogen oxides. Studies on the combined effect 
of sulfur dioxide and nitrogen oxide strongly suggest that the Clean 
Air Act will not be adequate to prevent long-term deterioration of 
national treasures such as the Adirondack Mountains and the Chesapeake 
Bay. According to a 1995 Environmental Protection Agency [EPA] study, 
even with the reductions required by the Clean Air Act, up to 45 
percent of the lakes in the Adirondacks will become too acidic to 
support most aquatic life by the year 2040. Lakes too acidic to support 
life. Now there is a powerful image.
  The bill I introduce today requires an additional 50-percent 
reduction of sulfur dioxide and a 75-percent reduction in the level of 
nitrogen oxides emitted from electric utilities. This legislation 
blends the best judgment of top scientists with the successful, market-
based approach of the existing program.
  The legislation calls for a nitrogen oxide cap and trade program 
similar to the sulfur dioxide program presently administered by EPA's 
Acid Rain Division. Under the program, EPA officials would divide a 
fixed--capped--number of nitrogen oxide emission allowances among the 
48 contiguous States each year, basing each State's share of allowances 
on the State's share of the power generated within the 48 States.
  Each State, in turn, would divide the allowances among the utilities 
within the State, in whatever manner the State sees fit. Each allowance 
represents a limited right to emit 1 ton of NOX pollution. 
Each utility must conduct an accounting procedure to ensure that they 
hold enough allowances to cover their emissions tonnage. A utility with 
more allowances than emissions may sell their additional allowances or 
save them for use in a future year. Likewise, a utility with fewer 
allowances than emissions would purchase excess allowances from another 
source.
  If for any reason a State does not wish to administer the allocation 
of allowances to its utilities, the EPA Administrator will distribute 
the allowances automatically, giving each utility a share of the 
State's allowances equal to that utility's share of the State's power 
generation.
  In addition to contributing to acid deposition, NOX 
pollution contributes to ozone pollution, a respiratory and pulmonary 
irritant which can cause significant adverse health effects. Because 
heat and sunlight are necessary components in the creation of ozone 
pollution, ozone is most prevalent in warm summer months. Therefore, in 
an effort to reduce ozone pollution, the legislation would take 
additional measures to reduce summertime NOX emissions. 
During the months of May, June, July, August, and September, an 
electric utility would be forced to surrender two allowances per ton of 
NOX emitted.
  The NOX trading program would commence operation on 
January 1, 2000, beginning with an annual cap of 5.4 million allowances 
and cutting back to 3.0 million allowances beginning in 2003. EPA 
modeling suggests that, due to

[[Page S8548]]

the two-for-one ozone season emissions provision, the actual emissions 
will likely drop to approximately 2.3 million tons per year after 
2003--a reduction of approximately 70 percent from 1995 levels.
  Mr. President, there were days when dark plumes of smoke coming out 
of factory smokestacks were signs of prosperity. There was nothing Jim 
Farley liked to do better than put up a new Post Office and hire an 
artist to paint on its walls prosperity returning. Black columns of 
smoke reaching up to the sky--strong colors for what we hoped would be 
a strong economy.
  Lord Kelvin used to point out that one can't solve a problem that one 
cannot measure. We have spent decades measuring, and now it is time to 
update our policy response in order to solve the problem. It is time to 
adjust to the consequences of what we have learned. Mr. President, I 
urge my colleagues to support the Acid Deposition Control Act of 1997.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1097

       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 ``Acid Deposition Control 
     Act''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) reductions of atmospheric nitrogen oxide and sulfur 
     dioxide from utility plants, in addition to the reductions 
     required under the Clean Air Act (42 U.S.C. 7401 et seq.), 
     are needed to reduce acid deposition and its serious adverse 
     effects on public health, natural resources, building 
     structures, sensitive ecosystems, and visibility;
       (2) nitrogen oxide and sulfur dioxide contribute to the 
     development of fine particulates, suspected of causing human 
     mortality and morbidity to a significant extent;
       (3) regional nitrogen oxide reductions of 50 percent in the 
     Eastern United States, in addition to the reductions required 
     under the Clean Air Act, may be necessary to protect 
     sensitive watersheds from the effects of nitrogen deposition;
       (4) without reductions in nitrogen oxide and sulfur 
     dioxide, the number of acidic lakes in the Adirondacks in the 
     State of New York is expected to increase by up to 40 percent 
     by 2040; and
       (5) nitrogen oxide is highly mobile and can lead to ozone 
     formation hundreds of miles from the emitting source.
       (b) Purposes.--The purposes of this Act are--
       (1) to recognize the current scientific understanding that 
     emissions of nitrogen oxide and sulfur dioxide, and the acid 
     deposition resulting from emissions of nitrogen oxide and 
     sulfur dioxide, present a substantial human health and 
     environmental risk;
       (2) to require reductions in nitrogen oxide and sulfur 
     dioxide emissions;
       (3) to support the efforts of the Ozone Transport 
     Assessment Group to reduce ozone pollution;
       (4) to reduce utility emissions of nitrogen oxide by 70 
     percent from 1990 levels; and
       (5) to reduce utility emissions of sulfur dioxide by 50 
     percent after the implementation of phase II sulfur dioxide 
     requirements under section 405 of the Clean Air Act (42 
     U.S.C. 7651d).

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Environmental Protection Agency.
       (2) Affected facility.--The term ``affected facility'' 
     means a facility with 1 or more combustion units that serve 
     at least 1 electricity generator with a capacity equal to or 
     greater than 25 megawatts.
       (3) NOx allowance.--The term ``NOx 
     allowance'' means a limited authorization to emit, in 
     accordance with this Act--
       (A) 1 ton of nitrogen oxide during each of the months of 
     October, November, December, January, February, March, and 
     April of any year; and
       (B) \1/2\ ton of nitrogen oxide during each of the months 
     of May, June, July, August, and September of any year.
       (4) MMBTU.--The term ``mmBtu'' means 1 million British 
     thermal units.
       (5) Program.--The term ``Program'' means the Nitrogen Oxide 
     Allowance Program established under section 4.
       (6) State.--The term ``State'' means the 48 contiguous 
     States and the District of Columbia.

     SEC. 4. NITROGEN OXIDE ALLOWANCE PROGRAM.

       (a) In General.--
       (1) Establishment.--Not later than 18 months after the date 
     of enactment of this Act, the Administrator shall establish a 
     program to be known as the ``Nitrogen Oxide Allowance 
     Program''.
       (2) Scope.--The Program shall be conducted in the 48 
     contiguous States and the District of Columbia.
       (3) NOx allowances.--The Administrator shall 
     allocate under paragraph (4)--
       (A) for each of calendar years 2000 through 2002, 5,400,000 
     NOx allowances; and
       (B) for calendar year 2003 and each calendar year 
     thereafter, 3,000,000 NOx allowances.
       (4) Allocation.--
       (A) Definition of total electric power.--For purposes of 
     this paragraph, the term ``total electric power'' means all 
     electric power generated by utility and nonutility generators 
     for distribution, including electricity generated from solar 
     wind, hydro power, nuclear power, and the combustion of 
     fossil fuel.
       (B) Allocation of allowances.--The Administrator shall 
     allocate annual NOx allowances to each of the 
     States in proportion to the State's share of the total 
     electric power generated in the 48 contiguous States and the 
     District of Columbia.
       (C) Publication.--The Administrator shall publish in the 
     Federal Register a list of each State's NOx 
     allowance allocation--
       (i) by December 1, 1998, for calendar years 2000 and 2002;
       (ii) by December 1, 2000, for calendar years 2003 through 
     2010; and
       (iii) by December 1 of each calendar year after 2000, for 
     the calendar year 5 years previous.
       (5) Intrastate distribution.--
       (A) In general.--A State may submit a report to the 
     Administrator detailing the distribution of NOx 
     allowances of the State to affected facilities in the State--
       (i) not later than September 30, 1999, for calendar years 
     2000 through 2002;
       (ii) not later than September 30, 2001, for calendar years 
     2003 through 2010; and
       (iii) not later than September 30 of each calendar year 
     after 2011, for the calendar year 5 years previous.
       (B) Action by the administrator.--If a State submits a 
     report under subparagraph (A) not later than September 30 of 
     the calendar year specified in subparagraph (A), the 
     Administrator shall distribute the NOx allowances 
     to affected facilities in the State as detailed in the 
     report.
       (C) Late submission of report.--A report submitted by a 
     State after September 30 of the specified year shall have no 
     force or effect.
       (D) Distribution in absence of a report.--
       (i) In general.--Subject to subsection (e), if a State does 
     not submit a report under subparagraph (A) not later than 
     September 30 of the calendar year specified in subparagraph 
     (A), the Administrator shall, not later than November 30 of 
     that calendar year, distribute the NOx allowances 
     for the calendar years specified in subparagraph (A) to each 
     affected facility in the State in proportion to the affected 
     facility's share of the total net electric power generated in 
     the State.
       (ii) Determination of facility's share.--In determining an 
     affected facility's share of total net electric power 
     generated in a State, the Administrator shall consider the 
     net electric power generated by the facility and the State to 
     be--

       (I) for calendar years 2000 through 2002, the average 
     annual amount of net electric power generated, by the 
     facility and the State, respectively, in calendar years 1995 
     through 1997;
       (II) for calendar years 2003 through 2010, the average 
     annual amount of net electric power generated, by the 
     facility and the State, respectively, in calendar years 1997 
     through 1999; and
       (III) for calendar year 2011 and each calendar year 
     thereafter, the amount of net electric power generated, by 
     the facility and the State, respectively, in the calendar 
     year 5 years previous to the year for which the determination 
     is made.

       (E) Judicial review.--A distribution of NOx 
     allowances by the Administrator under subparagraph (D) shall 
     not be subject to judicial review.
       (b) NOx Allowance Transfer System.--
       (1) In general.--Not later than 18 months after the date of 
     enactment of this Act, the Administrator shall promulgate 
     NOx allowance system regulations under which a 
     NOx allowance allocated under this Act may be 
     transferred among affected facilities and any other person.
       (2) Establishment.--The regulations shall establish the 
     NOx allowance system under this section, including 
     requirements for the allocation, transfer, and use of 
     NOx allowances under this Act.
       (3) Use of nox allowances.--The regulations 
     shall--
       (A) prohibit the use (but not the transfer in accordance 
     with paragraph (5)) of any NOx allowance before 
     the calendar year for which the NOx allowance is 
     allocated; and
       (B) provide that the unused NOx allowances shall 
     be carried forward and added to NOx allowances 
     allocated for subsequent years.
       (4) Certification of transfer.--A transfer of a 
     NOx allowance shall not be effective until a 
     written certification of the transfer, signed by a 
     responsible official of the person making the transfer, is 
     received and recorded by the Administrator.
       (c) NOx Allowance Tracking System.--Not later 
     than 18 months after the date of enactment of this Act, the 
     Administrator shall promulgate regulations for issuing, 
     recording, and tracking the use and transfer of 
     NOx allowances that shall specify all necessary 
     procedures and requirements for an orderly and competitive 
     functioning of the NOx allowance system.
       (d) Permit Requirements.--A NOx allowance 
     allocation or transfer shall, on recordation by the 
     Administrator, be considered to

[[Page S8549]]

     be a part of each affected facility's operating permit 
     requirements, without the requirement for any further permit 
     review and revision.
       (e) New Source Reserve.--
       (1) In general.--For a State for which the Administrator 
     distributes NOx allowances under subsection 
     (a)(5)(D), the Administrator shall place 10 percent of the 
     total annual NOx allowances of the State in a new 
     source reserve to be distributed by the Administrator--
       (A) for calendar years 2000 through 2003, to sources that 
     commence operation after 1995;
       (B) for calendar years 2004 through 2009, to sources that 
     commence operation after 1997; and
       (C) for calendar year 2010 and each calendar year 
     thereafter, to sources that commence operation after the 
     calendar year that is 5 years previous to the year for which 
     the distribution is made.
       (2) Share.--For a State for which the Administrator 
     distributes NOx allowances under subsection 
     (a)(5)(D), the Administrator shall distribute to each new 
     source a number of NOx allowances sufficient to 
     allow emissions by the source at a rate equal to the lesser 
     of the new source performance standard or the permitted level 
     for the full nameplate capacity of the source, adjusted pro 
     rata for the number of months of the year during which the 
     source operates.
       (3) Unused nox allowances.--
       (A) In general.--During the period of calendar years 2000 
     through 2005, the Administrator shall conduct auctions at 
     which a NOx allowance remaining in the new source 
     reserve that has not been distributed under paragraph (2) 
     shall be offered for sale.
       (B) Open auctions.--An auction under subparagraph (A) shall 
     be open to any person.
       (C) Conduct of auction.--
       (i) Method of bidding.--A person wishing to bid for a 
     NOx allowance at an auction under subparagraph (A) 
     shall submit (by a date set by the Administrator) to the 
     Administrator (on a sealed bid schedule provided by the 
     Administrator) an offer to purchase a specified number of 
     NOx allowances at a specified price.
       (ii) Sale based on bid price.--A NOx allowance 
     auctioned under subparagraph (A) shall be sold on the basis 
     of bid price, starting with the highest priced bid and 
     continuing until all NOx allowances for sale at 
     the auction have been sold.
       (iii) No minimum price.--A minimum price shall not be set 
     for the purchase of a NOx allowance auctioned 
     under subparagraph (A).
       (iv) Regulations.--The Administrator, in consultation with 
     the Secretary of the Treasury, shall promulgate regulations 
     to carry out this paragraph.
       (D) Use of nox allowances.--A NOx 
     allowance purchased at an auction under subparagraph (A) may 
     be used for any purpose and at any time after the auction 
     that is permitted for use of a NOx allowance under 
     this Act.
       (E) Proceeds of auction.--The proceeds from an auction 
     under this paragraph shall be distributed to the owner of an 
     affected source in proportion to the number of allowances 
     that the owner would have received but for this subsection.
       (f) Nature of NOx Allowances.--
       (1) Not a property right.--A NOx allowance shall 
     not be considered to be a property right.
       (2) Limitation of nox allowances.--
     Notwithstanding any other provision of law, the Administrator 
     may terminate or limit a NOx allowance.
       (g) Prohibitions.--
       (1) In general.--After January 1, 2000, it shall be 
     unlawful--
       (i) for the owner or operator of an affected facility to 
     operate the affected facility in such a manner that the 
     affected facility emits nitrogen oxides in excess of the 
     amount permitted by the quantity of NOx allowances 
     held by the designated representative of the affected 
     facility; or
       (ii) for any person to hold, use, or transfer a 
     NOx allowance allocated under this Act, except as 
     provided under this Act.
       (2) Other emission limitations.--Section 407 of the Clean 
     Air Act (42 U.S.C. 7651f) is repealed.
       (3) Time of use.--A NOx allowance may not be 
     used before the calendar year for which the NOx 
     allowance is allocated.
       (4) Permitting, monitoring, and enforcement.--Nothing in 
     this section affects--
       (A) the permitting, monitoring, and enforcement obligations 
     of the Administrator under the Clean Air Act (42 U.S.C. 7401 
     et seq.); or
       (B) the requirements and liabilities of an affected 
     facility under the Clean Air Act (42 U.S.C. 7401 et seq.).
       (h) Savings Provisions.--Nothing in this section--
       (1) affects the application of, or compliance with, the 
     Clean Air Act (42 U.S.C. 7401 et seq.) for an affected 
     facility, including the provisions related to applicable 
     national ambient air quality standards and State 
     implementation plans;
       (2) requires a change in, affects, or limits any State law 
     regulating electric utility rates or charges, including 
     prudency review under State law;
       (3) affects the application of the Federal Power Act (16 
     U.S.C. 791a et seq.) or the authority of the Federal Energy 
     Regulatory Commission under that Act; or
       (4) interferes with or impairs any program for competitive 
     bidding for power supply in a State in which the Program is 
     established.

     SEC. 5. INDUSTRIAL SOURCE MONITORING.

       Section 412(a) of the Clean Air Act (42 U.S.C. 7651k(a)) is 
     amended in the first sentence by inserting ``, or of any 
     industrial facility with a capacity of 100 or more mmBtu's 
     per hour,'' after ``The owner and operator of any source 
     subject to this title''.

     SEC. 6. EXCESS EMISSIONS PENALTY.

       (a) In General.--
       (1) Liability.--The owner or operator of an affected 
     facility that emits nitrogen oxides in any calendar year in 
     excess of the NOx allowances the owner or operator 
     holds for use for the facility for that year shall be liable 
     for the payment of an excess emissions penalty.
       (2) Calculation.--The excess emissions penalty shall be 
     calculated by multiplying $6,000 by the quantity that is 
     equal to--
       (A) the quantity of NOx allowances that would 
     authorize the nitrogen oxides emitted by the facility for the 
     calendar year; minus
       (B) the quantity of NOx allowances that the 
     owner or operator holds for use for the facility for that 
     year.
       (3) Overlapping penalties.--A penalty under this section 
     shall not diminish the liability of the owner or operator of 
     an affected facility for any fine, penalty, or assessment 
     against the owner or operator for the same violation under 
     any other provision of law.
       (b) Excess Emissions Offset.--
       (1) In general.--The owner or operator of an affected 
     facility that emits nitrogen oxide during a calendar year in 
     excess of the NOx allowances held for the facility 
     for the calendar year shall offset in the following calendar 
     year a quantity of NOx allowances equal to the 
     number of NOx allowances that would authorize the 
     excess nitrogen oxides emitted.
       (2) Proposed plan.--Not later than 60 days after the end of 
     the year in which excess emissions occur, the owner or 
     operator of an affected facility shall submit to the 
     Administrator and the State in which the affected facility is 
     located a proposed plan to achieve the offset required under 
     paragraph (1).
       (3) Condition of permit.--On approval of the proposed plan 
     by the Administrator, as submitted, modified, or conditioned 
     by the Administrator, the plan shall be considered a 
     condition of the operating permit for the affected facility 
     without further review or revision of the permit.
       (c) Penalty Adjustment.--The Administrator shall annually 
     adjust the penalty specified in subsection (a) to reflect 
     changes in the Consumer Price Index for all urban consumers 
     published by the Bureau of Labor Statistics.

     SEC. 7. SULFUR DIOXIDE ALLOWANCE PROGRAM REVISIONS.

       Section 402(3) of the Clean Air Act (as added by section 
     401 of Public Law 101-549 (104 Stat. 2584)) (42 U.S.C. 
     7651a(3)) is amended by inserting before the period at the 
     end the following: ``for allowances allocated for calendar 
     years 1995 through 2002, and \1/2\ ton of sulfur dioxide for 
     allowances allocated for calendar year 2003 and each calendar 
     year thereafter.''.

     SEC. 8. REGIONAL ECOSYSTEMS.

       (a) Report.--
       (1) In general.--Not later than December 31, 2002, the 
     Administrator shall submit to Congress a report identifying 
     objectives for scientifically credible environmental 
     indicators, as determined by the Administrator, that are 
     sufficient to protect sensitive ecosystems of the Adirondack 
     Mountains, Mid-Appalachian Mountains, and Southern Blue Ridge 
     Mountains and water bodies of the Great Lakes, Lake 
     Champlain, Long Island Sound, and the Chesapeake Bay.
       (2) Acid neutralizing capacity.--The report under paragraph 
     (1) shall--
       (A) include acid neutralizing capacity as an indicator; and
       (B) identify as an objective under paragraph (1) the 
     objective to increase the proportion of water bodies in 
     sensitive receptor areas with an acid neutralizing capacity 
     greater than zero from the proportion identified in surveys 
     begun in 1984.
       (3) Updated report.--Not later than December 31, 2006, the 
     Administrator shall submit to Congress a report updating the 
     report under paragraph (1) and assessing the status and 
     trends of various environmental indicators for the regional 
     ecosystems referred to in paragraph (1).
       (4) Reports under the national acid precipitation 
     assessment program.--The reports under this subsection shall 
     satisfy the report requirements set forth in section 
     103(j)(3)(E) of the Clean Air Act (42 U.S.C. 7403(j)(3)(E)) 
     for the years 2002 and 2006.
       (b) Regulations.--
       (1) Determination.--Not later than December 31, 2006, the 
     Administrator shall determine whether emissions reductions 
     under section 4 are sufficient to ensure achievement of the 
     objectives identified in subsection (a)(1).
       (2) Promulgation.--If the Administrator determines under 
     paragraph (1) that emissions reductions under section 4 are 
     not sufficient to ensure achievement of the objectives 
     identified in subsection (a)(1), the Administrator shall 
     promulgate, not later than 2 years after making the finding, 
     such regulations, including modification of nitrogen oxide 
     and sulfur dioxide allowance allocations or any such measure, 
     as the Administrator determines are necessary to protect the 
     sensitive ecosystems described in subsection (a)(1).

     SEC. 9. GENERAL COMPLIANCE WITH OTHER PROVISIONS.

       Except as expressly provided in this Act, compliance with 
     this Act shall not exempt or

[[Page S8550]]

     exclude the owner or operator of an affected facility from 
     compliance with any other law.

     SEC. 10. MERCURY EMISSION STUDY AND CONTROL.

       (a) Study and Report.--The Administrator shall--
       (1) study the practicality of monitoring mercury emissions 
     from all combustion units that have a capacity equal to or 
     greater than 250 mmBtu's per hour; and
       (2) not later than 2 years after the date of enactment of 
     this Act, submit to Congress a report on the results of the 
     study.
       (b) Regulations Concerning Monitoring.--Not later than 1 
     year after the date of submission of the report under 
     subsection (a), the Administrator shall promulgate 
     regulations requiring the reporting of mercury emissions from 
     units that have a capacity equal to or greater than 250 
     mmBtu's per hour.
       (c) Emission Controls.--
       (1) In general.--Not later than 1 year after the 
     commencement of monitoring activities under subsection (b), 
     the Administrator shall promulgate regulations controlling 
     electric utility and industrial source emissions of mercury.
       (2) Factors.--The regulations shall take into account 
     technological feasibility, cost, and the projected levels of 
     mercury emissions that will result from implementation of 
     this Act.

     SEC. 11. DEPOSITION RESEARCH BY THE ENVIRONMENTAL PROTECTION 
                   AGENCY.

       (a) In General.--The Administrator shall establish a 
     competitive grant program to fund research related to the 
     effects of nitrogen deposition on sensitive watersheds and 
     coastal estuaries in the Eastern United States.
       (b) Chemistry of Lakes and Streams.--Not later than 
     September 30, 1999, and September 30, 2006, the Administrator 
     shall submit to the Committee on Environment and Public Works 
     of the Senate and the Committee on Resources of the House of 
     Representatives a report on the health and chemistry of lakes 
     and streams of the Adirondacks that were subjects of the 
     report transmitted under section 404 of Public Law 101-549 
     (commonly known as the ``Clean Air Act Amendments of 1990'') 
     (104 Stat. 2632).
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated--
       (1) to carry out subsection (a), $1,000,000 for each of 
     fiscal years 1998 through 2003; and
       (2) to carry out subsection (b), $1,000,000 for each of 
     fiscal years 1998, 1999, 2005, and 2006.

  Mr. D'AMATO. Mr. President, I rise today to join my friend and 
distinguished colleague, Senator Moynihan, in introducing legislation 
that we believe will curb the devastating effects of acid rain in New 
York State and throughout the entire Nation. Our bill seeks to place 
controls on the emission of the pollutants that cause acid rain and 
acid deposition--Sulfur Dioxide (SO2) and Nitrogen Oxide 
(NOx)--beyond those levels enacted in the 1990 Clean Air 
Act. In this way, we will ensure that those entities that are primarily 
responsible for the pollution that affects down-wind States such as New 
York are held to the same strict accountability.
  New Yorkers know all too well that pollution transported from up-wind 
sources has had a devastating impact on the Adirondacks as well as 
other regions within the State. The prevalence of acid deposition has 
reached the point where the Environmental Protection Agency [EPA] 
estimates that without further controls of nitrogen oxides, the number 
of acidic lakes in the Adirondacks could increase to 43 percent by the 
year 2040. Such an increase will see approximately 1,300 lakes out of 
the 3,000 in the Adirondacks become chronically acidic. Clearly, we 
must take action to prevent this from becoming a reality.
  Under the 1990 Clean Air Act, a cap on SO2 emissions was 
enacted. It was designed to reduce the overall level of this pollutant 
by 50 percent by the year 2000. To provide an incentive to decrease 
emissions even more, a system of trading allowances for SO2 
was established. An ``allowance'' allows a utility to emit 1 ton of 
SO2 pollution. These trading allowances enable utilities 
that have reached their allowable emission caps for SO2 to 
buy another utility's excess capability. This ability to ``trade'' tons 
of SO2 has been popular with utilities and has actually 
brought significant reductions in the amount of SO2 emitted 
in a cost-effective manner. The legislation that we are introducing 
today builds on that success by instituting a NOx cap and 
trade program that we believe will have a positive impact on the 
environment.
  Under the bill, the Environmental Protection Agency [EPA] would be 
required to allocate a capped number of NOx emission 
allowances nationwide--excluding Alaska and Hawaii. The EPA would base 
each State's allotment on the percentage share of power each State 
generates within the 48 contiguous States. So, if a particular State 
generates 5 percent of the power in the Continental United States, then 
that State would be entitled to 5 percent of the total emissions pool.
  Once a State had received its emission allowances, the State would be 
able to divide those allowances within the State in any manner it 
chooses. Utilities would be required to ensure that they have enough 
tons at their disposal to cover their total emission tonnage. If a 
State had additional tons, they would be able to sell allowances or 
``bank'' them for use at a future time. A utility without enough 
allowances would have to buy them on the open market, an option 
currently in practice with SO2. Utilities that do not abide 
by these restrictions on capping and trading NOx allowances 
would be fined $6,000 per ton emitted over the established limit for 
that plant. States that are unwilling or unable to determine the 
allocation of allowances to utilities within their State would have 
that capability default to the EPA.
  The NOx trading program would go into effect in the year 
2000 with an annual cap of 5.4 million allowances nationwide decreasing 
to 3 million allowances in 2003. Currently, utilities emit 
approximately 6.5 million tons of nitrogen oxides (NOx).
  The bill would also create further protections against harmful 
pollution during the summer months when ozone levels are at their 
highest. When NOx combines with heat, sunlight and volatile 
organic compounds [VOC's], the end product is ozone. Thus, ideal 
conditions for high levels of ground-level ozone occur mainly in the 
summer months. To combat this, the legislation calls for utilities to 
give up two allowances for each ton of NOx emitted during 
the months of May, June, July, August and September instead of the one 
allowance per ton that would apply for the remaining 7 months of the 
year. This would effectively drop the total emission of NOx 
to 2.3 million tons after the year 2003 and would create approximately 
a 70 percent reduction in NOx emissions from the 1990 level.
  In addition, the bill calls for further reductions in SO2 
in the year 2003, when utilities will be required to use two allowances 
per ton of SO2 emitted instead of one. This would cut these 
emissions in half. The bill also requires the EPA to conduct a study on 
the effects that mercury, a toxic metal, may have on the environment 
and how to measure this mercury with an eye towards possible monitoring 
and control of mercury emissions in the future.
  Finally, the bill contains a provision for specific research on the 
effect of acid deposition on the sensitive ecosystems of the 
Adirondacks, the Southern Blue Ridge Mountains, the Mid-Appalachian 
Mountains and water bodies of the Great Lakes, Lake Champlain, Long 
Island Sound and the Chesapeake Bay. If proven by research that a 
particular region is still threatened, then the Administrator may take 
further steps to promote environmental recovery of that region.
  We in New York continue to see the effects that acid rain and acid 
deposition have on our environment. Lakes, streams and trees in the 
Adirondacks are still dying due to the continued emission and transport 
of these pollutants. Other states and other regions throughout our 
nation have similar problems. If we are to pass along a healthy 
environment to our children and grandchildren, we must be willing to 
enact the controls that will preserve that legacy. The legislation that 
Senator Moynihan and I have proposed is strong medicine, but it will 
enable us to sustain our heritage for generations to come.
                                 ______
                                 
      By Mr. DURBIN:
  S. 1098. A bill to provide for the debarment or suspension from 
Federal procurement and nonprocurement activities of persons that 
violate certain labor and safety laws; to the Committee on Governmental 
Affairs.


          THE FEDERAL PROCUREMENT AND ASSISTANCE INTEGRITY ACT

  Mr. DURBIN. Mr. President, I am pleased today to introduce 
legislation to improve the efficiency and protect the integrity of 
Federal procurement and assistance programs, by ensuring that the 
Federal Government does business with responsible contractors and 
participants.
  The United States General Accounting Office [GAO] has found that 
billions

[[Page S8551]]

of dollars in Federal procurement contracts and assistance are going to 
individuals and corporations which are violating our nation's labor and 
employment laws. In 1995, the GAO reported that more than $23 billion 
in Federal contracts were awarded in fiscal year 1993 to contractors 
who violated labor laws. That is 13 percent of the $182 billion in 
Federal contracts awarded that year. Part of the reason for this, the 
GAO found, is that the National Labor Relations Board, which enforces 
our nation's labor laws, does not know whether violators of the law are 
receiving Federal contracts. And the General Services Administration, 
which oversees Federal procurement, does not know the labor relations 
records of Federal contractors.
  Last year, the GAO reported that $38 billion in Federal contracts in 
fiscal year 1994 were awarded to contractors who had violated workplace 
health and safety laws. That is 22 percent of the $176 billion in 
Federal contracts of $25,000 or more which were awarded that year. The 
GAO found that 35 people died and 55 more people were hospitalized in 
fiscal year 1994 as a result of injuries at the workplaces of federal 
contractors who violated health and safety laws. These contractors were 
assessed a total of $10.9 million in penalties in fiscal year 1994--
while being awarded $38 billion in Federal contracts.
  The GAO concluded that, although federal agencies have the authority 
to deny contracts and federal assistance to companies that violate 
Federal laws, this authority is rarely used in the case of safety and 
health violations. The GAO found that federal agencies do not normally 
collect or receive information about which contractors are violating 
health and safety laws--even when contractors have been assessed large 
penalties for egregious or repeat violations.
  The Federal Government should not ignore the health and safety 
records of companies that apply for federal contracts and assistance. A 
report published this week in the Archives of Internal Medicine 
concludes that job-related injuries and illnesses in the United States 
are more common than previously thought, costing the nation more than 
AIDS, Alzheimer's, cancer or heart disease. The report, which analyzed 
national estimates of job-related illnesses and injuries in 1992, 
states that more than 13 million Americans were injured from job-
related causes in just one year--more than four times the number of 
people who live in the City of Chicago. The report concluded that the 
cost to our country from workplace injuries and illnesses was $171 
billion in 1992.
  The Federal Government has a responsibility to taxpayers, working 
Americans and law-abiding businesses, to ensure that federal tax 
dollars do not go to individuals and corporations that violate safety 
and health, labor and veterans' employment preference laws. About 26 
million Americans are employed by federal contractors and 
subcontractors. They deserve to know that their Government is not 
rewarding employers who violate the laws that protect American workers 
and veterans.
  The legislation I am introducing today will improve the enforcement 
of our nation's health and safety, labor and veterans' employment laws, 
and provide an incentive to contractors to comply with the law. This 
legislation will allow the Secretary of Labor to debar or suspend a 
person from receiving Federal contracts or assistance for violating the 
National Labor Relations Act, the Fair Labor Standards Act, the 
Occupational Safety and Health Act or the disabled and Vietnam-era 
veterans hiring preference law. It will require the Secretary of Labor 
and the National Labor Relations Board to develop procedures to 
determine whether a violation of law is serious enough to warrant 
debarment or suspension. And, as recommended by the GAO, this 
legislation will require ongoing exchanges of information among Federal 
agencies to improve their ability to enforce our nation's laws. This 
legislation is identical to a bill introduced in the House of 
Representatives by Congressman Lane Evans of Illinois, and it is 
similar to legislation introduced in previous years by former Senator 
Paul Simon.
  Mr. President, it is important to note that the vast majority of 
Federal contractors obey the law. This legislation is only directed at 
those who are violating the law. It will deny Federal contracts and 
assistance to individuals and companies that violate the law and ensure 
that Federal contracts are awarded to companies that respect the law.
  I urge my colleagues to join me in supporting this legislation, and 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. 1098

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Federal Procurement and 
     Assistance Integrity Act''.

     SEC. 2. PURPOSE.

       The purpose of this Act is to improve the efficiency and 
     effectiveness and protect the integrity of the Federal 
     procurement and assistance systems by ensuring that the 
     Federal Government does business with responsible contractors 
     and participants.

     SEC. 3. DEBARMENT AND SUSPENSION FOR VIOLATORS OF CERTAIN 
                   LABOR AND SAFETY LAWS.

       (a) Debarment and Suspension.--The Secretary of Labor may 
     debar or suspend a person from procurement activities or 
     nonprocurement activities upon a finding, in accordance with 
     procedures developed under this section, that the person 
     violated any of the following laws:
       (1) The National Labor Relations Act (29 U.S.C. 151 et 
     seq.).
       (2) The Fair Labor Standards Act of 1938 (29 U.S.C. 201 et 
     seq.).
       (3) The Occupational Safety and Health Act (29 U.S.C. 651 
     et seq.).
       (4) Section 4212(a) of title 38, United States Code.
       (b) Procedures.--The Secretary of Labor and the National 
     Labor Relations Board shall jointly develop procedures to 
     determine whether a violation of a law listed in subsection 
     (a) is serious enough to warrant debarment or suspension 
     under that subsection. The procedures shall provide for an 
     assessment of the nature and extent of compliance with such 
     laws, including whether there are or were single or multiple 
     violations of those laws or other labor or safety laws and 
     whether the violations occur or have occurred at one 
     facility, several facilities, or throughout the company 
     concerned. In developing the procedures, the Secretary and 
     the Board shall consult with departments and agencies of 
     the Federal Government and provide, to the extent 
     feasible, for ongoing exchanges of information between the 
     departments and agencies and the Department of Labor and 
     the Board in order to accurately carry out such 
     assessments.
       (c) Definitions.--In this section:
       (1) Debar.--The term ``debar'' means to exclude, pursuant 
     to established administrative procedures, from Federal 
     Government contracting and subcontracting, or from 
     participation in nonprocurement activities, for a specified 
     period of time commensurate with the seriousness of the 
     failure or offense or the inadequacy of performance.
       (2) Nonprocurement activities.--The term ``nonprocurement 
     activities'' means all programs and activities involving 
     Federal financial and nonfinancial assistance and benefits, 
     as covered by Executive Order No. 12549 and the Office of 
     Management and Budget guidelines implementing that order.
       (3) Procurement activities.--The term ``procurement 
     activities'' means all acquisition programs and activities of 
     the Federal Government, as defined in the Federal Acquisition 
     Regulation.
       (4) Suspend.--The term ``suspend'' means to disqualify, 
     pursuant to established administrative procedures, from 
     Federal Government contracting and subcontracting, or from 
     participation in nonprocurement activities, for a temporary 
     period of time because an entity or individual is suspected 
     of engaging in criminal, fraudulent, or seriously improper 
     conduct.
       (d) Effective Date.--This Act shall take effect on October 
     1, 1997.
       (e) Regulations.--The Federal Acquisition Regulation and 
     the regulations issued pursuant to Executive Order No. 12549 
     shall be revised to include provisions to carry out this Act.
       (f) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary of Labor and the 
     National Labor Relations Board shall jointly submit to 
     Congress a report on the implementation of this Act.
                                 ______
                                 
      By Mr. DASCHLE (for himself and Mr. JOHNSON):
  S. 1099. A bill to authorize the Secretary of the Army to acquire 
such land in the vicinity of Pierre, South Dakota, as the Secretary 
determines is adversely affected by the full wintertime Oahe Powerplant 
release; to the Committee on Environment and Public Works.


    RELOCATION OF RESIDENTS IN PIERRE AND FT. PIERRE, SOUTH DAKOTA, 
                              LEGISLATION

  Mr. DASCHLE. Mr. President, today I am introducing legislation to 
provide the Corps of Engineers with the authority to buy-out and 
relocate people living in the southeast Pierre and Ft.

[[Page S8552]]

Pierre areas that are being flooded by the federal Pick-Sloan project. 
This is a chronic problem that is getting worse every year as sediment 
builds up at the delta of the Bad and Missouri Rivers.
  In the Pierre and Ft. Pierre area, high water levels, exacerbated by 
sediment buildup and ice, regularly leads to the flooding of homes in 
the wintertime. The situation has become intolerable, and it is not 
fair for the residents of this area to continue to suffer as the result 
of the operation of this federal project. Moreover, the flooding 
problem hinders the ability of the Western Area Power Administration to 
generate hydroelectric power from the Oahe dam, resulting in the loss 
of millions of dollars in revenues to the federal government each year.
  To address this problem, I added a provision to the 1996 Water 
Resources Development Act to require the Corps of Engineers to develop 
a plan to remove the sediment blocking the channel and to reduce the 
erosion that is leading to this persistent buildup of sediment at the 
delta. Hopefully, this effort will lead to the development of a means 
of moving some of the sediment and of a plan to better prevent erosion 
in the Bad River watershed. One local resident, Mike Harrison, has 
developed a plan to help clear the channel of sediment which holds 
promise and which the Corps will evaluate with funds appropriated for 
fiscal year 1998.
  Even if that effort is successful, however, and we are able to 
relieve some of the pressure on the channel, sediment from the Bad 
River will continue to build up at that location. In short, while we 
may be able to increase the capacity of the channel to transport water 
and thus allow for greater hydroelectric power generation in the 
wintertime, it is difficult to envision a time when we will be able to 
permanently alleviate the risk of flooding to the homeowners in the 
area.
  Therefore, I am introducing this legislation to authorize the Corps 
to relocate the affected homeowners and ensure that they never again 
have to face the prospects of enduring flooded homes during our cold 
South Dakota winters. It is my strong hope Congress will recognize the 
severity of this problem and move swiftly to enact and implement this 
legislation. 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. 1099

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

     SECTION 1. ACQUISITION OF LAND NEAR PIERRE, SOUTH DAKOTA.

       To provide full operational capability to carry out the 
     authorized purposes of the Missouri River Main Stem dams that 
     are part of the Pick-Sloan Missouri River Basin Program 
     authorized by section 9 of the Act entitled ``An Act 
     authorizing the construction of certain public works on 
     rivers and harbors for flood control, and for other 
     purposes'', approved December 22, 1944, the Secretary of the 
     Army, acting through the Chief of Engineers, may acquire, 
     from willing sellers, such land in the vicinity of Pierre, 
     South Dakota, as the Secretary determines is adversely 
     affected by the full wintertime Oahe Powerplant release.
                                 ______
                                 
      By Mr. AKAKA (for himself, Ms. Collins, Mr. Hutchinson, Ms. 
        Landrieu, Mr. Bumpers, Mr. Ford, Mr. Bingaman, and Mr. 
        Hollings):
  S. 1100. A bill to amend the Covenant To Establish a Commonwealth of 
the Northern Mariana Islands in Political Union With the United States 
of America, the legislation approving such covenant, and for other 
purposes; to the Committee on Energy and Natural Resources.


          the commonwealth of the northern mariana reform act

  Mr. AKAKA. Mr. President, today I am introducing the Commonwealth of 
the Northern Mariana Islands Reform Act, a bipartisan initiative to 
curb immigration, wage, and apparel labeling abuses in the CNMI. 
Senators Collins, Hutchinson of Arkansas, Landrieu, Bumpers, Ford, 
Bingaman, and Hollings are cosponsors of this legislation.
  The Commonwealth of the Northern Mariana Islands is located 3,900 
miles west of Hawaii. Following World War II, the United States 
administered the islands under a U.N. Trusteeship.
  In 1975, the people of the CNMI voted for political union with the 
United States. Today the CNMI is a U.S. territory.
  A 1976 covenant enacted by Congress gave U.S. citizenship to 
residents of the CNMI. The covenant exempted the Commonwealth from U.S. 
immigration and minimum wage laws, however. This omission has led to a 
number of abuses in the CNMI that my bill would rectify.


                     immigration abuse in the cnmi

  I am sure many Senators will find it hard to believe that the 
Immigration and Nationality Act does not apply to all territories in 
the U.S. As surprising as it may be, the CNMI is exempt from U.S. 
immigration law.
  Let me explain the origins of this unique situation. At the time that 
the covenant establishing the CNMI was negotiated, the Northern 
Marianas leadership expressed concern that immigrants from neighboring 
Asian countries might settle in the CNMI and thereby alter the 
Commonwealth's culture. The island government requested that it be 
given exclusive authority over immigration so that it could limit the 
entry of aliens and preserve local culture and customs. Congress agreed 
to the request, but specifically reserved the right to extend Federal 
immigration law to the CNMI if the situation warranted.
  After 20 years, CNMI immigration policy is a proven failure. In 1980, 
the Commonwealth's population was 16,780. Of these, 12 percent were 
alien residents. Today, CNMI's population is 59,000, more than half of 
whom are aliens.
  Rather than preventing an influx of immigrants, the CNMI has 
established an aggressive policy of recruiting low-wage, foreign guest 
workers to operate an ever-expanding garment and tourism industry. 
According to the CNMI representative in Washington, local immigration 
policy has ``no limit. It is wide open, unrestricted.''
  The U.S. Immigration and Naturalization Service reports that CNMI 
authorities have no reliable records of aliens who have entered the 
CNMI, how long they remain, and when, if ever, they depart. Ninety-one 
percent of the private sector work force are alien guest workers. These 
workers have overwhelmed the CNMI, driving up unemployment in the 
Commonwealth to 14 percent. There is no justification for an 
immigration policy that admits foreign workers in such overwhelming 
numbers that it leads to double-digit unemployment.
  The application of U.S. immigration law to the CNMI is long overdue. 
The CNMI has exploited its immigration exemption to the point where 
alien workers constitute a majority of the CNMI population. The 
Commonwealth's exemption from the Immigration and Nationality Act has 
been so abused that protecting the island culture ceases to be an 
issue.
  Despite a 3-year effort by the U.S. Departments of Justice, Labor, 
and Interior, and an appropriation of $10 million by Congress, there 
had been little or no improvement in CNMI immigration policy. In fact, 
the Commonwealth's immigration policy has grown worse. Between January 
1995 and May 1996, 23 new garment companies received operating 
licenses, prompting the CNMI Government to enact legislation to double 
the number of foreign workers permitted in the island's garment 
industry.


                         ``made in usa'' abuse

  The U.S. apparel industry would be shocked to learn that in 1996, 
$555 million of textile products labeled ``Made in USA'' were cut and 
sewn in the CNMI by workers who enjoy none of the protections typically 
associated with the ``Made in USA'' label. Even more frightening is the 
fact that the CNMI textile industry is growing at a rate of 30 percent 
annually. Textile manufacturers across the United States who pay their 
employees the Federal minimum wage are undercut by CNMI competitors who 
label their garments ``Made in USA'' but employ foreign laborers to sew 
foreign fabric, pay them $3.05 an hour and subject them to feudal 
working conditions.
  The evidence that garments sewn in the CNMI directly and unfairly 
compete with U.S. apparel manufacturers is very strong. According to 
the Commerce Department, 85 percent of CNMI apparel is classified as 
import sensitive. This classification means that the CNMI garments 
compete with segments of the U.S. apparel industry that are 
experiencing significant decline due to heavy import penetration.

[[Page S8553]]

  Apparel manufacturers in the CNMI enjoy benefits that far exceed 
those enjoyed by foreign or domestic manufacturers. CNMI garment 
factories are not subject to the U.S. minimum wage and pay no duty on 
fabrics they import. Furthermore, quotas do not apply to either fabric 
imported into the Commonwealth, or to finished garments cut and sewn in 
the CNMI using foreign labor. Yet these products are labeled ``Made in 
the USA'' and compete unfairly with apparel employment elsewhere in the 
United States.
  The July 1997 report on labor, immigration, and law enforcement in 
the CNMI confirms my analysis of the Commonwealth's garment industry. 
Page 13 of the report contains the following finding:

       The duty and quota-free preferences afforded to products of 
     the CNMI, coupled with local control of immigration and 
     minimum wage, have led to a rapidly growing garment 
     manufacturing industry. Apparel manufacturers operating in 
     the CNMI, who mainly employ workers from the People's 
     Republic of China, label their products ``Made in the USA,'' 
     and use Chinese fabric not subject to United States duty or 
     quota. By using the CNMI as an apparel manufacturing base, 
     these manufacturers avoid duties and are not subject to 
     United States quotas on finished products. These imports 
     adversely affect the United States apparel industry's 
     employment and profits.

  In some cases, these garment factories are transplanted to the CNMI 
from the People's Republic of China. They are owned or managed by 
Chinese nationals, and staffed by bonded and indentured Chinese 
laborers. Despite promises of the American dream if they work in the 
CNMI, laborers must sign contracts with government officials in the 
People's Republic of China that waive rights guaranteed to U.S. 
workers, forbid participation in religious and political activities 
while in the U.S., prohibit workers from marrying, and subject 
employees to penalties in China for violations of their labor 
contracts.
  In factories with close ties to China, compliance with labor 
contracts is directly monitored by representatives of the Chinese 
government. These working conditions hardly justify granting ``Made in 
the USA'' status to CNMI garments.


          cnmi denies employment opportunities to u.s. workers

  The 1976 covenant exempts the CNMI from the Federal minimum wage. 
This exemption was granted with the understanding that as its economy 
grew and prospered, the CNMI would raise its minimum wage to the 
Federal level. Foreign workers typically enter the CNMI under 1-year 
work permits and are paid a minimum of wage of $3.05.
  According to the July 1997 report by the Department of the Interior, 
the lower minimum wage, combined with unlimited access to foreign 
labor, creates an incentive for employers to hire foreign labor for all 
jobs, including skilled and entry level jobs at or near the minimum 
wage. Employment statistics clearly support the Interior Department 
analysis.
  Ninety-one percent of the private sector work force are alien guest 
workers. U.S. citizens who can find work, and there are many who 
cannot, are typically employed by the government in jobs that pay more 
than the minimum wage. Due to its irresponsible immigration policy, 
foreign workers have overwhelmed the CNMI to the point where 
unemployment among U.S. citizens living in the Commonwealth is 14 
percent. The CNMI preference for foreign laborers deprives U.S. 
citizens of private sector opportunities and leaves them with the 
limited options of government work, unemployment and welfare, or 
relocation to Guam or the mainland.
  The minimum wage is sometimes a lightning-rod issue for Republicans. 
However, in a labor market where there is an unlimited supply of guest 
workers, the low CNMI minimum wage means that low-wage alien laborers 
are displacing U.S. workers. Any policy that favors foreign workers 
over the interests of employed and unemployed U.S. citizens is 
indefensible.


                        labor abuse in the cnmi

  CNMI immigration and wage abuses have caused a number of collateral 
problems. Pervasive labor abuses in the Commonwealth have provoked 
international outrage. In 1995, the Philippine government imposed a 
moratorium on immigration of Filipino workers in the CNMI. The 
Philippine Government's extraordinary action to protect its citizens 
from employment in the CNMI was the first such decision by a foreign 
government in U.S. history. Although the Philippine Government has 
since lifted the moratorium, recurring abuses prompted Philippine 
officials to announce that the moratorium may soon be reimposed.
  While the U.S. minimum wage does not apply, CNMI must adhere to all 
other Federal labor laws. The U.S. Department of Labor has uncovered a 
systematic pattern of labor abuses in the CNMI. These abuses are a 
direct consequence of the Commonwealth's unrestricted immigration 
policy. Examples include involuntary servitude and peonage, illegal 
withholding of wages, nonpayment of overtime wages, illegal deductions 
from paychecks to cover employer expenses, kickbacks of wages to 
employers, and employee lock-downs in work sites and living barracks.


                     human rights and sexual abuse

  The Commonwealth's immigration policy results in serious problems in 
other areas. The Justice Department has documented numerous cases of 
women and girls being recruited from the Philippines, China, and other 
Asian countries expressly for criminal sexual activity. These abuses 
are a direct consequence of the Commonwealth's unrestricted immigration 
policy.
  Typically, these women are told they will work in the CNMI as 
waitresses, but are forced into nude dancing and prostitution upon 
their arrival. The Justice Department described this situation as the 
``systematic trafficking of women and minors for prostitution,'' which 
may also involve illegal smuggling, organized crime, immigration 
document fraud, and pornography. Cases of sexual servitude have also 
been identified.
  The U.S. Justice Department also found cases of female guest workers 
and aliens living in the CNMI being forced into prostitution through 
intimidation or threats of physical harm. In some instances, women who 
resist are kidnapped, raped, and tortured.
  To correct these abuses in the CNMI, my bill makes three changes in 
Federal law. First, it extends the Immigration and Nationality Act to 
the Commonwealth so that the CNMI will end its dependence on foreign 
labor.
  Second, it would limit use of the ``Made in USA'' label to apparel 
manufactured with a minimum percentage of U.S. citizen labor. In 1999, 
the minimum percentage of U.S. citizen labor must be 20 percent. In 
2000, the minimum percentage must be 35 percent and thereafter the 
minimum percentage rises to 50 percent.
  Finally, my bill would make the U.S. minimum wage applicable to the 
CNMI so that the CNMI garment industry competes fairly with industry on 
the U.S. mainland.
  Despite efforts to portray itself as an economic miracle, there is a 
dark side to the CNMI economy. Citizens and foreign laborers pay a very 
high price for the Commonwealth's economic success, and enjoy few 
benefits of that success. The time for patience has ended. The time has 
come to force changes that the Commonwealth has been unwilling to 
enact.
  I ask unanimous consent that a copy of my bill be printed in the 
Record.
  I also ask unanimous consent that the following additional documents 
be printed in the Record: the executive summary of the Clinton 
administration's July 1997 report on labor, immigration, and law 
enforcement in the Commonwealth of the Northern Mariana Islands, the 
Library of Congress translation of a Chinese shadow contract, the memo 
from the State Department confirming that an agency of the Chinese 
Government is a party to the shadow contract, and a June 20, 1997, 
Washington Times article and a June 6, 1997, Honolulu Star-Bulletin 
article on the CNMI.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1100

       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 ``Commonwealth of the Northern 
     Mariana Islands Reform Act''.

     SEC. 2. FINDINGS.

       The Congress finds that--
       (1) the Covenant to Establish a Commonwealth of the 
     Northern Mariana Islands in

[[Page S8554]]

     Political Union with the United States of America was 
     approved by Congress pursuant to Public Law 94-241, 90 Stat. 
     263;
       (2) at the time that the Covenant was being negotiated, 
     representatives of the government of the Northern Mariana 
     Islands expressed concern that United States immigration laws 
     would allow unrestricted immigration into their small island 
     community;
       (3) in response to these concerns, section 503(a) of the 
     Covenant provided that the Immigration and Naturalization Act 
     did not immediately apply to the Commonwealth of the Northern 
     Mariana Islands;
       (4) Congress expressly reserved the right to extend the 
     Immigration and Naturalization Act to the Commonwealth of the 
     Northern Mariana Islands at a future date;
       (5) following the enactment of the Covenant, the 
     Commonwealth of the Northern Mariana Islands instituted a 
     largely unrestricted immigration policy, causing the 
     Commonwealth's population to increase from 16,780 in 1980 to 
     a population of over 58,800 in 1995, with foreign workers 
     outnumbering United States citizens;
       (6) as a result of these immigration policies, 91 percent 
     of the private sector work force in the Commonwealth is 
     comprised of foreign workers;
       (7) the Commonwealth of the Northern Mariana Islands has 
     used its immigration policy to recruit a large, low-cost 
     foreign work force of desperately poor individuals with no 
     meaningful opportunity to demand safe living and working 
     conditions or fair wages and benefits;
       (8) notwithstanding an unemployment rate of 14 percent 
     among United States citizens, the Commonwealth has recruited 
     increasing numbers of foreign workers;
       (9) even though the Commonwealth alleges that unfilled job 
     openings justify recruitment of an increasing number of 
     foreign workers, the Commonwealth's own statistics indicate 
     an unemployment rate of 4.5 percent foreign workers;
       (10) the U.S. Immigration and Naturalization Service 
     reported that the Commonwealth of the Northern Mariana 
     Islands has no reliable records of aliens who have entered 
     the Commonwealth, how long they remain, and when, if ever, 
     they depart;
       (11) at the time that the Covenant was being negotiated, 
     representatives of the government of the Northern Mariana 
     Islands expressed concern that the minimum wage provisions of 
     the Fair Labor Standards Act would disrupt the Commonwealth's 
     struggling local economy;
       (12) in response to these concerns, section 503(c) of the 
     Covenant provided that the minimum wage provisions of the 
     Fair Labor Standards Act did not immediately apply to the 
     Commonwealth;
       (13) Congress expressly reserved the right to extend the 
     minimum wage provisions of the Fair Labor Standards Act to 
     the Commonwealth of the Northern Mariana Islands at a future 
     date;
       (14) the economy of the Commonwealth of the Northern 
     Mariana Islands has grown significantly and, in 1996, annual 
     gross business revenues rose to $1,500,000,000, a 6-fold 
     increase during the past decade;
       (15) the current minimum wage in the Commonwealth of the 
     Northern Mariana Islands is only $3.05 per hour for garment 
     and construction industry workers and $3.05 per hour for 
     those working in other industries;
       (16) the U.S. Department of Labor has uncovered a 
     systematic pattern of labor abuses in the Commonwealth of the 
     Northern Mariana Islands, including--
       (a) involuntary servitude and peonage,
       (b) illegal withholding of wages earned,
       (c) non-payment of overtime wages,
       (d) illegal deductions from paychecks,
       (e) kickbacks of wages paid to employees,
       (f) employee lock-downs in work sites and living barracks, 
     and
       (g) unsafe and unhealthy working and living environments;
       (17) despite an expectation that they will enjoy the 
     American dream in the Commonwealth of the Northern Mariana 
     Islands, foreign workers have been required to sign contracts 
     with government representatives in the Peoples Republic of 
     China which--
       (a) waive rights guaranteed to U.S. workers,
       (b) forbid participation in religious and political 
     activities while in the United States,
       (c) prohibit workers from dating or marrying in the United 
     States,
       (d) subject employees to civil and labor penalties if 
     returned to China, and
       (e) permit Chinese government recruiters to charge a fee of 
     25 percent of an employee's net pay for a period of two 
     years;
       (18) the U.S. Department of Justice has determined that the 
     immigration and labor situation in the Commonwealth of the 
     Northern Mariana Islands has created a major organized crime 
     problem in the Commonwealth which involves--
       (a) Immigration document fraud,
       (b) Public corruption,
       (c) Racketeering,
       (d) Drug trafficking,
       (e) Prostitution,
       (f) Pornography,
       (g) Extortion,
       (h) Gambling,
       (i) Smuggling, and
       (j) Other forms of violent crime;
       (19) the U.S. Department of Justice is investigating 
     numerous cases in the Commonwealth of the Northern Mariana 
     Islands of women being recruited from the Philippines, China, 
     and other Asian countries expressly for criminal sexual 
     activity, and has also described this situation as the 
     ``systematic trafficking of women and minors for 
     prostitution;''
       (20) the Commonwealth of the Northern Mariana Islands is 
     exempt from Federal immigration law, the Federal minimum wage 
     law, and Federal tariffs and taxes, yet its products are sold 
     as ``Made in USA'' although 95 percent of the workers in the 
     garment manufacturing industry are not U.S. citizens;
       (21) garments made in the Commonwealth of the Northern 
     Mariana Islands carrying the ``Made in USA'' label compete 
     directly with garments made on the United States mainland by 
     workers and businesses that are subject to Federal 
     immigration law, the Federal minimum wage law, and Federal 
     taxes;
       (22) in 1996, garment manufacturers in the Commonwealth 
     shipped garments to the Continental United States with a 
     wholesale value of $555 million, a 30 percent increase over 
     the previous year;
       (23) Congress appropriated $10 million to fund a 3-year 
     initiative by the U.S. Departments of Justice, Labor, and 
     Interior to assist the Commonwealth in its efforts to improve 
     its labor and immigration policies;
       (24) despite this appropriation there has been little or no 
     improvement in the immigration and labor policies of the 
     Commonwealth of the Northern Mariana Islands;
       (25) the government of the Commonwealth of the Northern 
     Mariana Islands has been ineffective in stemming the flow of 
     immigration onto United States soil, raising the wage and 
     living standards for workers, and aggressively 
     prosecuting labor and human rights abuses;
       (26) despite efforts by the Reagan, Bush, and Clinton 
     administrations to persuade the government of the 
     Commonwealth of the Northern Mariana Islands to correct 
     problems in the Commonwealth, the situation has only 
     deteriorated; and
       (27) the continuing concern about labor abuses, the 
     Commonwealth's immigration policy, and the employment of 
     foreign workers in a manner that unfairly competes with other 
     U.S. manufacturing prompted President Clinton on May 30, 1997 
     to notify the Governor of the Commonwealth of the Northern 
     Mariana Islands that Federal immigration and minimum wage 
     laws should be applied to the Commonwealth.

     SEC. 3. APPLICATION OF IMMIGRATION LAW.

       (a) Article V, Section 506 of the Covenant to Establish a 
     Commonwealth of the Northern Mariana Islands in Political 
     Union with the United States of America (approved by Public 
     Law 94-241, 90 Stat. 263) is amended by adding at the end 
     thereof the following:
       ``(e)(1) For purposes of entry into the Northern Mariana 
     Islands by any individual (but not for purposes of entry by 
     an individual into the United States from the Northern 
     Mariana Islands), the Immigration and Nationality Act shall 
     apply as if the Northern Mariana Islands were a State (as 
     defined in section 101(a)(36) of the Immigration and 
     Nationality Act).
       ``(2) Notwithstanding paragraph (1), with respect to an 
     individual seeking entry into the Northern Mariana Islands 
     for purposes of employment in the textile, hotel, tourist, or 
     construction industry (including employment as a contractor), 
     the Federal statutes and regulations governing admission to 
     Guam of individuals described in section 101(a)(15)(H)(ii)(b) 
     of the Immigration and Nationality Act shall apply. For 
     purposes of this paragraph--
       ``(A) references in such statutes and regulations to United 
     States resident workers shall be deemed to be references to 
     United States citizens, national or resident workers; and
       ``(B) references in such statutes and regulations to Guam 
     shall be deemed to be references to the Northern Mariana 
     Islands.
       ``(3) When deploying personnel to enforce the provisions of 
     this section, the Attorney General shall coordinate with, and 
     act in conjunction with, State and local law enforcement 
     agencies to ensure that such deployment does not degrade or 
     compromise the law enforcement capabilities and functions 
     currently performed by immigration officers.
       ``(4) The Attorney General shall prescribe and implement a 
     transition period for the amendments made to section 506(a) 
     of the Covenant. The transition period shall not exceed 4 
     years from the effective date of this subsection. Not later 
     than 2 years after the date of enactment of the Commonwealth 
     of the Northern Mariana Islands Reform Act, the Attorney 
     General shall submit a report on the status of implementing 
     this section.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect 180 days after the date of enactment of 
     this Act except that the amendment designated as ``(e)(2)'' 
     shall take effect on the date of enactment of this Act.

     SEC. 4. LABELING REQUIREMENTS FOR TEXTILE FIBER PRODUCTS.

       (a) Public Law 94-241 is amended by adding at the end the 
     following:

     ``SEC. 6. LABELING OF TEXTILE FIBER PRODUCTS.

       ``(a) No textile fiber product that is made or assembled in 
     the Commonwealth of the Northern Mariana Islands shall have a 
     stamp, tag, label, or other means of identification or 
     substitute therefore on or affixed to the product stating 
     `Made in USA' or otherwise stating or implying that the 
     product was made or assembled in the United States unless the 
     product is made or assembled using direct labor that meets 
     the required percentage of qualified manhours.

[[Page S8555]]

       ``(b) A textile fiber product that does not meet the 
     requirements of subsection (a) shall be deemed to be 
     misbranded for purposes of the Textile Fiber Products 
     Identification Act (Public Law 85-897, 72 Stat. 1717).
       ``(c) In this section:
       ``(1) Direct labor.--The term `direct labor' includes any 
     work provided to prepare, assemble, process, package, or 
     transport a textile fiber product, but does not include 
     supervisory, management, security, or administrative work.
       ``(2) Freely associated states.--The term `Freely 
     Associated States'  means the Republic of Palau, the Republic 
     of the Marshall Islands, and the Federated States of 
     Micronesia.
       ``(3) Qualified manhours.--The term `qualified manhours 
     means the manhours of direct labor performed by persons who 
     are citizens or nationals of the United States or citizen of 
     the Freely Associated States.
       ``(4) Required percentage.--The term `required percentage' 
     means--
       ``(A) 20 percent, for the period beginning January 1, 1998, 
     through December 31, 1998;
       ``(B) 35 percent, for the period beginning January 1, 1999, 
     through December 31, 1999; and
       ``(C) 50 percent, for the period beginning January 1, 2000, 
     and thereafter.
       ``(b) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.''.

     SEC. 5. MINIMUM WAGE REQUIREMENTS.

       (a) Section 503 of Article V of the Covenant to Establish a 
     Commonwealth of the Northern Mariana Islands in Political 
     Union with the United States of America, approved by Public 
     Law 94-241 is amended by deleting ``States; and (c) the 
     minimum wage provisions of Section 6, Act of June 25, 1938, 
     52 Stat. 1062, as amended,'' and inserting in lieu thereof 
     ``States.''.
       (b) Public Law 94-241, 90 Stat. 263, is amended by adding 
     at the end thereof the following:

     ``SEC. 7. MINIMUM WAGES IN THE COMMONWEALTH OF THE NORTHERN 
                   MARIANA ISLANDS.

       ``(a) The minimum wage provisions of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall apply to 
     the Commonwealth of the Northern Mariana Islands, except 
     that--
       ``(1) during the period beginning 30 days after the date of 
     enactment of this Act and ending on December 31, 1997, the 
     minimum wage rate applicable to the Commonwealth of the 
     Northern Mariana Islands shall be $3.05 an hour for an 
     employee; and
       ``(2) beginning on January 1, 1998, and each calendar year 
     thereafter, the minimum wage rate applicable to the 
     Commonwealth of the Northern Mariana Islands for an employee 
     for each such calendar year shall be the minimum wage rate 
     applicable to the Commonwealth of the Northern Mariana 
     Islands for the preceding calendar year increased by 30 cents 
     or the amount necessary to increase the minimum wage rate to 
     the rate described in section 6(a)(1) of the Fair Labor 
     Standards Act of 1938, whichever is less; and
       ``(3) after the calendar year in which the minimum wage 
     rate applicable to the Commonwealth of the Northern Mariana 
     Islands has been increased under subparagraph (A) to the 
     minimum wage rate described in section 6(a)(1) of the Fair 
     Labor Standards Act of 1938, the minimum wage rate applicable 
     to the Commonwealth of the Northern Mariana Islands for an 
     employee for any succeeding calendar year shall be the rate 
     described in such section.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect 30 days after the date of enactment of this 
     Act.

     SEC. 6. REPORT.

       Not later than 1 year after the date of enactment of this 
     Act, the Secretary of the Interior, in consultation with 
     other Federal agencies, shall conduct a study of the extent 
     of human rights violations and labor rights violations in the 
     Commonwealth of the Northern Mariana Islands, including the 
     use of forced or indentured labor, and any efforts being 
     taken by the Government of the United States or the 
     Commonwealth of the Northern Mariana Islands to address or 
     prohibit such violations. The Secretary of the Interior shall 
     include the results of such study in the annual report, 
     entitled ``Federal-CNMI Initiative on Labor, Immigration, and 
     Law Enforcement,'' transmitted to Congress.

     SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated such sums as may be 
     necessary to carry out the provisions of this Act.
                                                                    ____


 Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement In 
      the Commonwealth of the Northern Mariana Islands, July 1997


                           executive summary

       The United States took the Northern Mariana Islands from 
     Japan in 1944 and administered the islands under a United 
     Nations trusteeship agreement until 1986. At that time, the 
     Covenant to Establish a Commonwealth of the Northern Mariana 
     Islands in Political Union with the United States of America 
     (Covenant) came into full effect, and the residents were 
     granted United States citizenship. In developing their 
     Covenant agreement with the United States, the Northern 
     Marianas negotiators expressed concern that the Federal 
     Immigration and Nationality Act (INA) would permit excessive 
     immigration to the islands from neighboring Asian countries 
     that would permanently overwhelm the local culture and 
     community. Federal negotiators and the Congress, therefore, 
     agreed to not immediately extend Federal immigration control. 
     Ironically, CNMI policies have resulted in aliens becoming a 
     majority of the island's population. These policies include 
     use of low-wage temporary alien workers for permanent jobs 
     and the aggressive promotion of garment manufacturing. Wages 
     lower than the Federal minimum wage are possible because the 
     Federal minimum wage was not extended to the Northern Mariana 
     Islands. The garment industry takes advantage of the 
     immigration and minimum wage exemption privileges, as well as 
     privileged exceptions to the Federal trade laws, to ship 
     products partially manufactured in the islands into the 
     United States market even though the islands are outside the 
     customs territory of the United States.
       Federal officials have expressed concern about the CNMI 
     alien labor system since at least 1984, when the Interior 
     Department's Assistant Secretary for Territorial and 
     International Affairs first officially suggested the 
     extension of Federal immigration authority as provided in 
     section 503 of the Covenant. Despite repeated expressions of 
     Federal concern with CNMI policies, the CNMI imported 
     increasing numbers of temporary alien workers and promoted 
     the garment industry's expansion. The Congress, in 1994, 
     directed the establishment of a joint program with the CNMI 
     to respond to the widening range of labor, immigration, and 
     law enforcement problems. After three years under this 
     Federal-CNMI Initiative on Labor, Immigration, and Law 
     Enforcement (Initiative), agencies report that these negative 
     trends not only persist, but in a number of instances, are 
     worsening:
       United States citizens--mostly indigenous people--are now a 
     minority of the population. The CNMI population has grown by 
     250 percent since the 1980 census. Temporary alien workers 
     now comprise 69 percent of the labor force. The children of 
     alien mothers not born in the CNMI, the United States or the 
     freely associated states account for 16 percent of United 
     States citizens in the CNMI.
       The Immigration and Naturalization Service finds that the 
     CNMI immigration system is ineffective, resulting in a large 
     CNMI illegal immigrant population and the smuggling of 
     illegals into the United States immigration zone. Estimates 
     of illegal aliens in the CNMI range from 4.2 percent to 25.5 
     percent of United States citizen population in the CNMI. The 
     Department of Justice finds that the foreign criminal 
     presence is increasing.
       Alien workers account for over 90 percent of the CNMI's 
     private sector workforce, while unemployment among locally-
     born United States citizens is at 14.2 percent.
       Worker complaints over wages due and working conditions 
     continue undiminished, with the governments of the 
     Philippines and China expressing concern about the treatment 
     of their citizens. Allegations persist regarding the CHMI's 
     inability to protect workers against crimes such as 
     illegal recruitment, battery, rape, child labor, and 
     forced prostitution.
       Some workers labor under ``shadow'' or secondary contracts 
     signed in their home country that subvert their rights under 
     the Constitution of the United States, such as their right to 
     engage in political and religious activities while on United 
     States soil.
       CNMI alien labor policies are having a profound negative 
     effect on public services and infrastructure such as 
     education, health care, public safety, water, sewer, and 
     solid waste disposal.
       Apparel manufacturers operating in the CNMI, who mainly 
     employ workers from the People's Republic of China, label 
     their products ``Made in USA'', and use Chinese fabric not 
     subject to United States duty or quota. By using the CNMI as 
     an apparel manufacturing base, these manufacturers avoid 
     duties and are not subject to United States quotas on 
     finished products. These imports adversely affect the United 
     States apparel industry's employment and profits.
       The CNMI is a producer of several sensitive apparel 
     products where United States producers' share of the market 
     is 50 percent or less. Imports of these sensitive apparel 
     products from the CNMI, at an average landed value of $462.7 
     million in 1996, represented 5.7 percent of total United 
     States imports of these products. In recent years, total 
     garment shipments from the CNMI to the United States have 
     increased by 30 percent a year, with an acceleration to 45 
     percent in the first four months of 1997 over the same months 
     in 1996. The average landed value of CNMI garment shipments 
     to the United States is now at a rate of $625 million 
     annually.
       Federal agencies have worked closely with the CNMI leaders 
     to correct these problems under the Initiative. Work 
     continues with many conscientious CNMI officials. The 
     Administration, however, finds that the government of the 
     CNMI is unwilling to alter its basic immigration, minimum 
     wage, and garment manufacturing policies; and that there are 
     fundamental weaknesses in law enforcement.
       The Administration, therefore, believes that a Federal 
     policy framework addressing immigration, minimum wage, and 
     the duty-free shipment of products is needed to properly 
     address these problems and to promote CNMI economic 
     development consistent with our country's policies and 
     values.
       Accordingly, the Administration recommends that the 
     Congress extend Federal

[[Page S8556]]

     immigration and minimum wage policies as provided in section 
     503 of the Covenant. In addition, the Administration 
     recommends that the Congress close the loophole being 
     exploited by the CNMI garment industry by requiring 
     certification that at least 50 percent United States labor 
     (and freely associated state citizen labor) is employed in 
     order for products to carry the ``Made in USA'' label and 
     receive duty-free access to the United States market. 
     Finally, in order to minimize adverse economic consequences, 
     the Administration plans to work with CNMI representatives, 
     and proposes that these measures be phased in by the Congress 
     in a reasonable and appropriate manner.
                                                                    ____


      Department of State, Office of Chinese and Mongolian affairs

     Date: July 22, 1997.
     To: Patrick McGary, Office of Senator Akaka.
     From: Cari Enav.
     RE: Hiuzhou Corporation of the Overseas Labor Service.
       Message: According to the Huizhou Foreign Affairs Office, 
     the Huizhou Corporation of the Overseas Labor Services is 
     state-owned enterprise. It is under the municipal labor 
     bureau.
                                                                    ____

                                   Congressional Research Service,


                                          Library of Congress,

                                                   Washington, DC.

                        Overseas Labor Contract

       Party A: Hui Zhou Company of the Overseas Labor Services, 
     Guangdong Province.
       Part B: Name redacted.
       Party B, of his own free will, accepts the invitation of 
     Party A to engage in carpentry work on Saiban Island 
     [transliteration] for a term of two years. Party A and Party 
     B both agree to abide by the following terms and conditions:
       1. From the date of the signing of this contract by Party A 
     and Party B, Party B agrees to obey the leadership of and 
     accept arrangements made by Party A, and comply with rules 
     and regulations made by Party A. During the period when Party 
     B is sent to work overseas, Party B must strictly observe 
     decrees, laws and regulations of the local government; may 
     not participate locally in any political or religious 
     activities; and, among other things, may not engage in 
     smuggling, prostitution, theft, gambling, drugs, fighting, 
     excessive drinking, or watching pornographic videos. While 
     working overseas, Party B may not date or get married. Any 
     violation of the aforesaid may entail investigation into 
     financial and legal liabilities, including deduction and/or 
     withholding of salary and/or bonus as well as payment for 
     round trip expenses, or punishment in accordance with the 
     relevant criminal laws, depending on the seriousness of 
     circumstances.
       2. While fulfilling his contractual obligations, Party B 
     shall accept reasonable work arrangements made by the 
     employer; work diligently; may not be, for any reason, slack 
     at work; may not, without permission, request the employer to 
     change the type of work or increase the salary; may not look 
     for other employment locally; and may not go on strike. An 
     individual who has violated the aforesaid agreement shall be 
     subject to action by Party A, and employment may be 
     terminated immediately; such individual will bear 
     responsibility for round trip expenses, and will be liable 
     for all financial losses thus incurred, in accordance with 
     the seriousness of the impact on foreign affairs.
       3. Party B shall provide labor services for the term of the 
     contract, and may not suspend service unilaterally, or 
     request an early return to China. Party B shall [illegible] 
     to overcome family difficulties, if any, and may not use such 
     difficulties as an excuse to suspend service or return to 
     China early. If it becomes impossible for Party B to work due 
     to the employer's failure to arrange appropriate work or for 
     any other reason caused by the employer, Party B can 
     accurately report the situation to Party A. Party A shall 
     have the responsibility to negotiate with and make 
     representations to the employer, according to contractual 
     terms and conditions, and Party B shall abide by the decision 
     made through consultations and negotiations between Party A 
     and the employer.
       Upon expiration of the contract, the term of the service 
     may be extended appropriately based on the work requirements, 
     and Party B shall, in principle, comply with the decision 
     made by Party A.
       4. Upon completion of the service, Party B may not 
     [illegible] stay overseas, and shall return to China strictly 
     according to the route provided. Party B may not carry 
     contraband on entry or exit at customs, or sell foreign 
     currency or duty-free goods for profit.
       5. While providing labor service oveseas, Party B shall 
     receive a monthly salary of ____, of which ____ will be 
     remitted to China, together with the domestic management fee, 
     and converted into RMB based on the prevailing market 
     quotation for his or her family. Payment for overtime and 
     bonuses shall, in principle, be made by the employer directly 
     to Party B.
       6. While working overseas, Party B may not borrow money 
     from or lend money to the employer or any other party.
       7. Party B agrees to pay a deposit in the amount of RMB 
     3,000. When Party B returns his or her passport, Party A 
     shall return to Party B the entire amount of the deposit. 
     Party B agrees to pay a fee in the amount of RMB 400 for the 
     handling of necessary dcuments. If, for some reason, Party B 
     is unable to work overseas after Party A has completed the 
     necessary procedures required for Party B to work overseas, 
     the deposit and handling fee will not be returned to Party B. 
     If Party B is unable to work overseas for reasons caused by 
     Party A, the deposit and 50% of the handling fee shall be 
     refunded.
       8. If Party B has the need [illegible] economic [illegible] 
     while working overseas, such compensation shall also be 
     deducted from the deposit.
       9. If a situation arises where Party B is required to make 
     compensation, but is unable to make the payment while he or 
     she is working overseas, the guarantor agrees to make the 
     payment for financial compensation on behalf of Party B, 
     while Party B accepts full financial responsibilities.
       10. During the period of Party B's labor services, the 
     employer shall be responsible for all expenses for 
     transportation to and from work, return airfare to China, 
     room and board, medical insurance, life insurance and 
     applicable taxes imposed by the local country. Party A shall 
     urge the employer to provide various benefits that Party B 
     shall be entitled to while working overseas, as provided in 
     the labor service contract.
       11. This contract has three copies, one each for Party A, 
     Party B and the guarantor. All three copies have equal legal 
     effect. This contract shall take effect from the date of 
     signing. Party A shall formally notify Party B, upon his or 
     her return to China of the termination of the employment 
     relationship, and this contact shall automatically become 
     invalid.
                                                                    ____


               [From the Washington Times, June 20, 1997]

                 Northern Marianas Hit as Rights Abuser


                Natives take advantage of guest workers

                            (By Henry Hurt)

       Wendy Doromal was asleep in her home on the island of Rota 
     when the telephone rang at 5:30 a.m. A housekeeper named 
     Thelma Landeza, the caller said, had been raped by her 
     employer, a politically well-connected businessman. Afraid to 
     go to the local authorities, Mrs. Landeza had walked for 
     hours to the refuge of an underground network on Rota.
       Mrs. Doromal, then 40, quickly dressed and set out to help. 
     Such missions were in stark contrast to what the art teacher 
     from Vernon, Conn., expected when she first came to the U.S.-
     owned Northern Mariana Islands, a scattering of volcanic 
     specks in the western Pacific Ocean.
       Mrs. Doromal and her family loved Rota's sandy beaches and 
     clear, blue ocean. But drastic changes were taking place in 
     this paradise--changes that have deeply stained America's 
     reputation as the champion of human rights all over the 
     world.
       Lured by fee-driven recruiters, thousands of poor Asian 
     ``guest workers'' were entering the Northern Marianas. 
     Virtually every native household had at least one Philippine 
     maid.
       Mrs. Doromal soon discovered serious cases of workers being 
     cheated out of wages and physically abused. The transgressors 
     were the native population--an elite minority who maintained 
     effective control of every government function. Although the 
     newcomers outnumbered the natives, they had no voice or vote. 
     And so Wendy Doromal, less than 5 feet tall but forceful and 
     articulate, gradually became their advocate.
       ``When I saw Thelma that morning,'' Mrs. Doromal recalls, 
     ``the fear shot from her face into my heart. She'd been 
     beaten and she was crying and trembling.''
       Mrs. Landeza's tale was harrowing. At 38 and widowed, the 
     small, sweet-faced woman had sought work in the Northern 
     Marianas to send money to her five children in the 
     Philippines. ``It was supposed to be like going to America,'' 
     she said.
       But that's not the way it turned out for Mrs. Landeza or 
     thousands of other men and women like her. From 1990 to 1993, 
     she says, she was paid the domestic wage of 69 cents an hour 
     for 12-hour days; she also was ``rented out'' to another 
     party for an additional six hours a day, for which she never 
     saw a cent. Mrs. Landeza was supposed to have Sundays off but 
     says she did not.
       Like many other workers, Mrs. Landeza was afraid to 
     complain to local labor officials. She says her boss, Rafael 
     Quitugua, flaunted his connections with those very people. 
     She couldn't risk being returned jobless to the Philippines.
       Then, according to Mrs. Landeza, on the night of Oct. 16, 
     1993, Mr. Quitugua ordered her to clean up a bar he owned. 
     Driving her back home, the man reached for Mrs. Landeza and 
     said, ``I like you very much.'' He veered down a path toward 
     an isolated beach.


                            no action taken

       ``I screamed and fought him and begged him to take me 
     home,'' she said. ``But he beat me and finally raped me. He 
     said, `If you ever tell what happened, I'll kill you.' ''
       Mrs. Doromal didn't want this to become another 
     unprosecuted case because of ``insufficient evidence.'' So 
     she and Mrs. Landeza took the first morning flight to the 
     island of Saipan, the Northern Marianas' seat of government.
       There, Dr. David McGarey of the Commonwealth Health Center 
     noted abrasions on Mrs. Landeza's body. He diagnosed 
     ``apparent rape'' and collected specimens for a rape evidence 
     kit that he turned over to authorities.
       Mrs. Doromal also summoned Renato Villapando, principal 
     officer of the Philippine consulate. To assure immediate 
     attention, he wrote a detailed account of Mrs.

[[Page S8557]]

     Landeza's story that he sent to the attorney general of the 
     Northern Marianas.
       Weeks passed, however, and then months. No charges were 
     brought. Mr. Quitugua, meanwhile, maintained his innocence.
       American interest in the Northern Marianas was born in the 
     blood of 5,289 troops who died there in 1944 wresting the 
     islands from the Japanese. The territories languished for 
     decades until 1976, when the U.S. Congress created the 
     Commonwealth of the Northern Mariana Islands (CNMI).
       A decade later, its residents became American citizens. 
     Under the agreement, Congress allowed the CNMI to set its own 
     immigration policies, and the U.S. minimum wage would not 
     apply to its workers.
       The result was rapid economic growth as entrepreneurs 
     flocked to Saipan to open factories and develop tourism. The 
     most common products were garments carrying the coveted 
     ``Made in U.S.A.'' label that entered the U.S. mainland duty-
     free. From all over Asia, especially the Philippines, 
     destitute workers arrived to work in these factories and in 
     the islands' booming hotels, restaurants and bars.
       Their wages, though higher than in their native countries, 
     were quite low--and remain so today. The biggest winners are 
     the natives. The law grants a legal monopoly of all land in 
     the Northern Marianas to these Pacific islanders, who can 
     lease their property to factory and hotel operators at 
     handsome prices.
       Today only about 38 percent of the CNMI population of 
     59,000 is of native descent.
       ``They are an exclusive minority with the power to dominate 
     and exploit others,'' said Mikel W. Schwab, assistant U.S. 
     attorney and chief of the civil division that oversees the 
     CNMI. ``What's missing is equal protection under the law.''
       Responsibility for human rights abuses lies ultimately with 
     the U.S. Congress, which oversees CNMI wage and immigration 
     policies. Legislation addressing these issues is now being 
     considered.
       The case of Thelma Landeza was one of more than 500 
     complaints that reached Mrs. Doromal starting in 1989.
       While more than half the cases involved wage disputes, 
     others included workers tortured, forced into prostitution 
     and held in sexual servitude.
       ``In my own experience as a civil prosecutor,'' said Mr. 
     Schwab, ``I have witnessed a level of human exploitation that 
     makes Doromal's cases ring with credibility.''
       But his civil division had no primary authority to 
     investigate or prosecute rapes and assaults that occurred in 
     jurisdictions under the control of the CNMI attorney 
     general's office.
       Mrs. Doromal and her husband, Boboy, provided food and 
     shelter for workers and helped them file complaints. Most 
     important, they stood beside them in the face of predictable 
     wrath from their employers and government officials.


                            hollow promises

       As Mrs. Doromal continued her fearless campaign, CNMI 
     authorities sought to discredit her. She was accused of 
     everything from fabricating stories to harboring illegal 
     workers. By the summer of 1994, however, her files had become 
     the basis for a government task force investigation.
       Growing publicity about worker abuses set off local rage 
     against Mrs. Doromal and her family. Anonymous phone calls 
     threatened death. The tires of the family car were slashed. 
     Her family was ostracized, and this pressure forced Mrs. 
     Doromal to resign from her teaching position.
       On Aug. 29, 1994, the Doromals fled to Saipan. There, CNMI 
     Gov. Froilan C. Tenorio met with Mrs. Doromal and assured her 
     that the worst labor abusers would be prosecuted.
       In September, Mr. Tenorio sat before a U.S. Senate 
     subcommittee in Washington. With great humility he conceded 
     that many of the charges reported in the press--which were 
     first raised by Mrs. Doromal--were accurate:
       ``I am saddened and ashamed. Workers have been cheated and 
     forced to live in subhuman conditions, locked in during 
     nonwork hours, and been beaten and raped. Our administration 
     will do everything in our power to end labor abuse''.


                           blaming the victim

       A few days after meeting with Mr. Tenorio, Mrs. Doromal 
     received a call from Rota's underground network. A hysterical 
     young woman named Teresa--not her real name--was claiming 
     that for several weeks she had been locked up by her employer 
     and repeatedly raped.
       Mrs Doromal arranged for Teresa to be brought to a Saipan 
     hospital. ``She kept going into corners and rocking back and 
     forth, crying,'' Mrs. Doromal said.
       Teresa, 24, was an animated woman who had studied hotel and 
     restaurant management in the Philippines. But employment 
     there was scarce. A job on Rota with an establishment 
     described by the recruiter as an ``upscale restaurant'' 
     seemed the surest route to good money. The establishment, 
     however, was little more than a brothel.
       In desperation, Teresa accepted the friendly overtures of a 
     politically well-connected many who got her out of the club. 
     Teresa says she went to work for him--only to be locked in a 
     remote farmhouse where she was tied up, beaten and raped 
     daily until she escaped after three weeks.
       Under the glare of publicity stirred up by Mrs. Doromal, 
     the CNMI attorney general's office investigated Teresa's 
     case. Four months later, it concluded that the evidence was 
     insufficient to go to trial. The case was dropped.
       Two weeks after Teresa's case was dropped, Mr. Tenorio was 
     back in Washington to inform Congress that his administration 
     was making substantial progress in cleaning up human rights 
     violations. Employers who abuse contract workers, he said, 
     ``are being investigated, prosecuted and convicted.''
       To Mrs. Doromal, such words meant that nothing had changed. 
     But with no regular job, her family couldn't stay in the 
     Northern Marianas; they returned to the U.S. mainland in May 
     1995.
       In December 1995, nearly a year after Mr. Tenorio last told 
     Congress he was cleaning up human right violations, Maria--
     not her real name--a tiny Philippine woman with a childlike 
     face, stood frozen on the stage of a Rota nightclub tears in 
     her eyes. It was Maria's first night of work, and she had 
     been promised she would never be asked to dance nude. But now 
     amid catcalls, her boss was demanding that she strip.
       He threatened her until she gave in. But that wasn't 
     enough; soon he demanded that she have sex with him and ``go 
     out with customers.'' Maria refused. She was forced from her 
     job and returned to the Philippines, where she told her story 
     to Reader's Digest.
       Despite such reports, CNMI acting Attorney General Robert 
     B. Dunlap II claims conditions are much improved.
       ``We sent two investigators to Rota,'' he said. ``They 
     stayed a week trying to attract a prostitute--and never found 
     one.''
       Mr. Tenorio, up for re-election in November, maintains he 
     is doing all he can to make a good situation for contract 
     workers even better. Meanwhile, he is conducting a $1 million 
     public relations campaign to shore up the CNMI's image, 
     bringing dozens of congressmen and staffers to tour the 
     Northern Marianas.
       ``The thinking is `Don't fix the problem, fix the image,' 
     '' said Eric Grigoire, a New Jersey native who is the human 
     rights advocate for the Catholic Church in the Northern 
     Marianas. He is still summoned to Rota regularly by Mrs. 
     Doromal's original underground network.
       What of Thelma Landeza? In February 1995--more than 16 
     months after she reported being kidnapped, raped and beaten--
     her boss, Rafael Quitugua, was charged with the crime, He 
     pleaded not guilty. In December 1995 the charge was dropped.
                                                                    ____


                 [From the Star-Bulletin, June 6, 1997]

           Exploited in Saipan Sex Bar, Teen Finds Haven Here


 Isle Filipino Coalition for Solidarity is a Godsend for Abused Workers

                          (By Susan Kreifels)

       Katrina turns 16 Monday, finally getting a taste of 
     sweetness in her otherwise bitter dose of life.
       Hawaii's Filipino Coalition for Solidarity has provided the 
     teenage girl haven since March from her grim life in Saipan, 
     where she said she had been sexually exploited in a barroom 
     since she was 14.
       The civil rights advocacy group hopes to find a way to keep 
     her in the United States, far from threats from her former 
     employers, who now face a federal lawsuit on Saipan for 
     alleged violations of child labor and wage laws.
       Katrina is the young girl's stage name. Her real name is 
     being withheld to protect her identity in the eighth-grade 
     classroom she now attends on Oahu.
       Born in Manila to a poor squatter family, she ran away when 
     she was 13, ending up in the arms of unscrupulous recruiters.
       Although she admits she lied that she was 19 in the 
     beginning, Katrina said she later told the recruiters her 
     real age.
       But, according to the girl, the recruiters arranged a 
     passport that claimed she was born in 1974 instead of 1981.
       Katrina ended up in Saipan, where her recruiter-boss 
     promised to make her a ``starlet.'' But for the then 14-year-
     old, it was a horror role in which customers abused her naked 
     body and had live sex with her and other bar girls on stage.
       Performances, she said, were videotaped. If she didn't do 
     what she was told, her bosses threatened to ship her back to 
     the Philippines at her own expense.
       ``I was scared. I don't have any money. What happens to me? 
     Maybe I will die.''
       Katrina describes her life as one much older than her 
     years.
       She and other Filipino women who worked in the Saipan bar 
     stayed in barracks, virtual prisoners who couldn't go out. 
     ``They treated us like animals.''
       She sent most of her salary home to her mother.
       ``In school, I was very religious. I feel there is no God 
     anymore. I prayed but no response,'' she said.
       She drank alcohol every night because ``it's easier to do 
     anything if you're drunk. You can't really feel anything.
       ``I try to put it behind me. Sometimes I think, how did I 
     do that? Animal people only do that. I get depressed.''
       Last October she went to government labor officials on 
     Saipan and filed a complaint, which led to the U.S. 
     Department of Labor lawsuit. Her former employers tried to 
     bribe her to give up her complaint, ``but I wanted to see 
     justice.''
       And, she says with some disbelief, ``after all I 
     experienced, suddenly I'm here.''


                       Coalition monitors Saipan

       Nic Musico of the Filipino Coalition for Solidarity said 
     the Hawaii group has been

[[Page S8558]]

     monitoring abuse of Filipino workers in the Commonwealth of 
     Northern Mariana Islands, a U.S. territory 3,900 miles west 
     of Hawaii, for the last four years. The group has given haven 
     to other Filipino workers.
       The commonwealth, which doesn't fall under U.S. wage or 
     immigration laws, offers low minimum wages ($2.95) and tax 
     incentives that have fueled Saipan's $500 million-a-year 
     garment industry. More than 30,000 imported laborers from the 
     Philippines, China and other Asian countries work the mills 
     on this small island of 25,000 citizens. The government says 
     without the foreign workers, its garment and tourism industry 
     would collapse.
       There were more than 500 labor complaints filed last year, 
     according to the commonwealth government. Some are passed 
     along to the U.S. Department of Labor to pursue. In 1994, the 
     department successfully sued a Japanese company that owned 
     several bars employing underage girls.
       The lawsuit involving Katrina and her co-workers, filed in 
     the U.S. District Court in Saipan, is not expected to go to 
     trial until late this year. Defendants Eugene R. Zamora, Sr., 
     and Marylou ``Malou'' Zamora, whom Katrina said brought her 
     to Saipan from the Philippines, are believed to have returned 
     to their home country. Defendant Francisco Matsunaga, the 
     Zamoras' partner at the Club Kalesa, where Katrina worked, 
     died last November.
       Michael Bayer, wage and hour investigator on Saipan for the 
     U.S. Department of Labor, said the foreign workers are tied 
     to one-year contracts they know don't have to be renewed.
       ``The more abused, poor, desperate they are in their home 
     country, the more willing they are to put up with someplace 
     else,'' said Bayer, emphasizing he was giving a personal 
     opinion rather than an official one. ``They have no voice. 
     There are no unions. The only outlet is to file a 
     complaint.''


                         clinton sends warning

       There are moves in Congress to force the commonwealth to 
     comply with U.S. wage and immigration laws. Last week 
     President Clinton sent commonwealth Gov. Froilan C. Tenorio a 
     letter warning that his administration would work with 
     Congress to extend U.S. laws there:
       ``The minimum wage is plainly inadequate; there have been 
     persistent incidents of improper treatment of alien workers 
     and inadequate enforcement of their rights; and manufacturers 
     using foreign workers unfairly compete with other production 
     under the U.S. flag,'' Clinton's letter said. He said he 
     would work with Congress to amend the 1976 covenant that 
     created a political union with the islands and made their 
     residents U.S. citizens but allowed the commonwealth to 
     control its immigration and minimum wage.
       Dave Ecret, acting public information officer for Tenorlo's 
     office, said the commonwealth has made ``tremendous 
     improvements'' in the labor situation and believes Clinton 
     has been misinformed of the current situation.
       Some Republicans in Congress agree. Rep. Dick Armey, House 
     majority leader, and Rep. Tom DeLay, House majority whip, 
     assured Tenorio this week in a letter that any legislation 
     that would ``harm the economic, social or political well 
     being of the CNMI is counter to the principles of the 
     Republican Party, and this Congress has no intention of 
     voting on such legislation.'' The two commended the islands 
     for their commitment to ending labor problems.


                          Akaka backs Clinton

       Hawaii's Sen. Daniel Akaka, a Democrat, said yesterday at 
     he supported Clinton's letter and would work to bring changes 
     in the commonwealth, where ``horror stories of labor abuses 
     continue to abound, while CNMI (commonwealth) officials 
     launch a public relations campaign touting the territory as 
     an economic model for the rest of the nation.''
       Ecret said the government has forced companies to clean up 
     workers' barracks and doubled the commonwealth government's 
     immigration and labor staffs to more quickly resolve abuse 
     cases.
       Ecret also said businesses must pay room and board in 
     addition to minimum wages, raising the cost of labor of 
     Saipan. He said any changes in labor and immigration laws on 
     Saipan would be ``devastating'' to the economy.
       While politicians debate the bigger issues, members of the 
     Filipino Coalition for Solidarity are working to protect the 
     people caught up in them, like Katrina. Musico said his group 
     has solicited people to adopt Katrina, but time is running 
     out--an adoption application must be filed before she turns 
     16. Musico is more optimistic that she will be granted 
     special asylum.
       For now, Katrina has been given permission to stay in the 
     United States until November.
                                 ______
                                 
      By Mr. CRAIG (for himself, Mr. Murkowski, Mr. Reid, Mr. Bryan, 
        Mr. Bennett, Mr. Burns, Mr. Hatch, Mr. Thomas, Mr. Campbell, 
        Mr. Stevens, and Mr. Kempthorne):
  S. 1102. A bill to amend the general mining laws to provide a 
reasonable royalty from mineral activities on Federal lands, to specify 
reclamation requirements for mineral activities on Federal lands, to 
create a State program for the reclamation of abandoned hard rock 
mining sites on Federal lands, and for other purposes; to the Committee 
on Energy and Natural Resources.


                   the mining law reform act of 1997

  Mr. CRAIG. Mr. President, in the last Congress, Members in the Senate 
and our colleagues in the other Chamber worked hard to reform the laws 
under which the U.S. mining industry operate on the vast Federal lands 
of the west. Members on both sides of the aisle, from all regions of 
the country, acknowledged that the Mining Law of 1872 needed change. 
This body and the other body passed legislation to reform the mining 
law only to have our efforts vetoed by the President. I believe it is 
time to make another effort to pass mining reform legislation and to 
engage the Clinton administration in meaningful discussion that can 
bring to a close the long and fruitless debate we have so far had on 
this issue.
  Today, I am introducing, a bipartisan bill in conjunction with 
Chairman Murkowski, Senator Reid, and Senator Bryan and five other of 
our colleagues to legislatively solve the problems that we see with the 
mining law. The Mining Law Reform Act of 1997, is a bill which will 
ensure continued mineral production in the United States. It provides 
for a fair economic return from minerals extracted on public lands, and 
will link mining practices on federal lands to State and Federal 
environmental laws and land-use plans. This bill provides a balanced 
and equitable solution to concerns raised over the existing mining law.
  Mining in the United States is an important part of our nation's 
economy. It serves the national interest by maintaining a steady and 
reliable supply of the materials that drive our industries. Revenue 
from mining fuels local economies by providing family income and 
preserving community tax bases. Mining has become an American success 
story. Fifteen years ago, U.S. manufacturers were forced to rely on 
foreign producers for 75 percent of the gold they needed. Today, the 
U.S. is more than self-sufficient. The combined direct and indirect 
impact on the economy of our nation by the mining industry in 1995 was 
almost $524 billion. This is nine times the value of the actual 
minerals that were mined. Obviously we are talking about a very 
significant portion of our economy and one that we can not cavalierly 
assign to the economic antique shed. This information is from a recent 
report by the Western Economic Analysis Center. I ask unanimous consent 
that the summary of this report be made a part of the Record.
  Mining, however, is a business associated with enormous up-front 
costs and marginal profits. Excessive royalties discourage, and in 
other countries have discouraged, mineral exploration. Too large a 
royalty would undermine the competitiveness of the mining industry. The 
end result of excessive government involvement would be the movement of 
mining operations overseas and the loss of American jobs. The 
legislation I am introducing today will keep U.S. mines competitive and 
prevent the movement of U.S. jobs to other countries.
  The General Mining Law is the cornerstone of U.S. mining practices. 
It establishes a useful relationship between industry and government to 
promote the extraction of minerals from mineral rich Federal lands. 
Although the cornerstone of this laws was originally enacted in 1872, 
it remains to function effectively today. The law has been amended and 
revised many times since its original passage. The legislation I am 
introducing today preserves the solid foundation provided by this law 
and makes some important revisions that address the concerns that have 
been paramount in this debate that I have been involved in for nearly a 
decade.

  Specifically, the Mining Law Reform Act of 1997 will insure revenue 
to the Federal Government by imposing fair and equitable fees and a net 
royalty. It requires payment of fair market value for lands to be 
mined. It assures lands will return to the public sector if they are 
not developed for mineral production, as is intended in this 
legislation. Furthermore, to prevent mining interests from using 
patented land for purposes other than mining, the bill limits occupancy 
to that which is only necessary to carry out mining activities.
  To ensure mining activities do not unnecessarily degrade Federal 
lands,

[[Page S8559]]

the Mining Law Reform Act mandates compliance with all Federal, State 
and local environmental laws with regard to land use and reclamation. 
To enforce these provisions, the bill includes civil penalties and the 
authority for compliance orders.
  Finally, this bill creates a program to address the environmental 
problems associated with abandoned mines. Working directly with the 
States, the Mining Law Reform Act directs fees and royalty receipts to 
the abandoned mine cleanup programs. It is time we have a workable 
mechanism to clean up these relics of the past.
  The legislation we are proposing today is in the best interest of the 
American people because it provides revenue from public resources, 
assures mines will be developed in an environmentally sensitive manner 
and that abandoned mines from earlier eras will be reclaimed. It is 
fair to mining interests because it imposes reasonable fees and 
royalties, and it is good for the environment because it assures that 
sound land use and reclamation practices are followed. I ask my 
colleagues to join me in support of this legislation and look forward 
to hearings and Senate legislative action.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                    Mining and the American Economy


                     Everything Begins With Mining

                 (Prepared by George F. Leaming, Ph.D.)


          Combined Direct and Indirect Impacts of Mining, 1995


                                          Values in millions of dollars
California..................................................$52,475.866
New York.....................................................31,005.248
Texas........................................................28,971.894
Pennsylvania.................................................28,643.365
Michigan.....................................................26,229.092
Ohio.........................................................24,964.148
Illinois.....................................................23,932.294
Florida......................................................19,703.096
Kentucky.....................................................16,331.941
West Virginia................................................15,277.424
Indiana......................................................14,232.916
New Jersey...................................................14,104.661
Arizona......................................................13,715.868
North Carolina...............................................13,090.456
Minnesota....................................................12,970.055
Massachusetts................................................12,794.139
Virginia.....................................................11,498.840
Georgia......................................................11,202.431
Alabama......................................................11,027.917
Missouri.....................................................10,162.067
All Other States............................................131,270.339
                                                       ________________
                                                       
  Total impact..............................................523,604.058


                                summary

       The American mining industry had a combined direct and 
     indirect impact on the economy of the United States in 1995 
     of almost $524 billion. That $523.6 billion total economic 
     benefit was nearly nine times the value of the solid minerals 
     that were mined in the United States that year.
       Nearly five million Americans had jobs in 1995 as a result 
     of the combined direct and indirect contributions of the 
     mining industry to personal, business, and government income 
     throughout the nation. The total number of jobs created both 
     directly and indirectly in the nation's economy by the 
     domestic mining industry was more than 15 times the number of 
     workers directly involved in mining.
       The nation's business firms realized the greatest benefits 
     from the mining industry's monetary contributions to the 
     American economy in 1995. The nearly $296 billion in sales 
     revenues obtained by domestic business firms directly and 
     indirectly as a result of the income stream created by mining 
     comprised 56% of the industry's total impact on the nation's 
     economy.
       Individual Americans and their families also received a 
     significant amount of personal income as a result of mining's 
     direct and indirect monetary contributions to the national 
     economy in 1995. The nearly $144 billion received by 
     residents of the United States in 1995 as a direct or 
     indirect result of the income streams created by the mining 
     industry amounted to more than three percent of all earnings 
     received by the country's workers. It was more than the 
     personal income earned by all of the residents of Georgia and 
     Mississippi combined in 1995, and it was almost as much as 
     the personal income received by the residents of Arkansas, 
     Louisiana, and the District of Columbia from all sources. 
     That $143.7 billion total of personal income from mining was 
     enough to pay the wages of nearly five million American 
     workers, only 6% of whom were actually employed in mining.
       The federal government also shared in the economic benefit 
     generated by the mining industry in 1995. Almost $57 billion 
     in revenues received by the federal government in 1995 were 
     generated either directly or indirectly from the income 
     streams created by mining in the United States. That amounted 
     to nearly 11% of mining's total contribution to the nation's 
     economy.
       State and local governments likewise shared in the 
     contributions to the national economy made by the domestic 
     mining industry. More than $27 billion of the revenues 
     received by state and local governments throughout the 
     country in 1995 were provided either directly or indirectly 
     from the income streams that were created by mining. That was 
     equivalent to about 4% of all state and local taxes levied in 
     1995. It represented about 5% of the entire monetary 
     contribution of the nation's mining industry to the national 
     economy. It gave government at all levels (federal, state, 
     and local) a 16% share of mining's total contribution to the 
     nation's economy.
       Among the 50 states, California received the greatest 
     economic benefit from the mining industry. The state ranked 
     first in combined direct and indirect economic benefit 
     from the mining of solid minerals, even though it ranked 
     only fifth in the value of such minerals produced. The 
     Californai economy gained more than $52 billion and 
     469,000 jobs in 1995 as a result of the combined direct 
     and indirect impacts of mining in the United States. The 
     gain came partly as a result of the state's role as a 
     minerals producer and also as a manufacturing, trade, 
     service, and financial center for much of the western 
     United States as well as its role as a major beneficiary 
     of the redistribution effects of the federal tax system.


  Table 1--Combined Direct and Indirect Contributions of the American 
 Mining Industry to the Economies of the Individual United States, 1995


        State                                             Combined gain
Alabama.................................................$11,027,917,000
Alaska....................................................1,342,592,000
Arizona..................................................13,715,868,000
Arkansas..................................................3,790,429,000
California...............................................52,475,866,000
Colorado..................................................7,634,613,000
Connecticut...............................................6,922,838,000
Delaware..................................................1,566,762,000
Dist. of Columbia.........................................1,941,284,000
Florida..................................................19,703,096,000
Georgia..................................................11,202,431,000
Hawaii....................................................1,605,841,000
Idaho.....................................................1,898,296,000
Illinois.................................................23,932,294,000
Indiana..................................................14,232,916,000
Iowa......................................................5,032,141,000
Kansas....................................................4,052,691,000
Kentucky.................................................16,331,942,000
Louisiana.................................................5,547,709,000
Maine.....................................................1,740,423,000
Maryland..................................................7,465,306,000
Massachusetts............................................12,794,139,000
Michigan.................................................26,229,092,000
Minnesota................................................12,970,055,000
Mississippi...............................................3,267,550,000
Missouri.................................................10,162,067,000
Montana...................................................2,214,078,000
Nebraska..................................................2,196,212,000
Nevada....................................................7,067,021,000
New Hampshire.............................................1,977,094,000
New Jersey...............................................14,104,661,000
New Mexico................................................3,408,964,000
New York.................................................31,005,248,000
North Carolina...........................................13,090,456,000
North Dakota..............................................1,014,968,000
Ohio.....................................................24,964,149,000
Oklahoma..................................................4,882,853,000
Oregon....................................................5,108,336,000
Pennsylvania.............................................28,643,365,000
Rhode Island..............................................1,612,602,000
South Carolina............................................5,821,461,000
South Dakota..............................................1,494,319,000
Tennessee.................................................9,460,228,000
Texas....................................................28,971,894,000
Utah......................................................6,906,968,000
Vermont...................................................1,018,057,000
Virginia.................................................11,498,840,000
Washigton.................................................9,604,834,000
West Virginia............................................15,277,424,000
Wisconsin.................................................9,706,482,000
Wyoming...................................................3,967,386,000
                                                       ________________
                                                       
  Total.................................................523,604,058,000

Source: Western Economic Analysis Center.

       New York received the second greatest gain from the 
     nation's mining industry in 1995, with a total boost to its 
     economy of more than $31 billion and more than 227,000 jobs. 
     The impact on New York was partly the result of the state's 
     direct role as a minerals producer but more a result of its 
     role as a major trade, manufacturing, and financial center 
     and as a major beneficiary of the income redistribution 
     effect of federal spending.
       Texas was not far behind New York in total economic gain 
     from mining in 1995. The state has the nation's eighth 
     largest mining industry, directly providing more than 16,000 
     jobs. In 1995, the Texas economy gained almost $29 billion 
     and more than 308,000 jobs as a direct and indirect result of 
     mining in the United States.
       Pennsylvania was very close behind Texas in total economic 
     benefit from the mining industry in 1995. The state has a 
     major mining industry of its own, ranking sixth in value of 
     mine output in 1995, but its bigger gain came as a result of 
     its position as a manufacturing center for the nation, 
     selling products and services to mining and other enterprises 
     in other states. In 1995, the Pennsylvania economy gained 
     almost $29 billion and 246,000 jobs as a direct and indirect 
     result of mining in the United States.
       Among the top 20 states that gained the most personal, 
     business, and government income directly and indirectly from 
     mining in 1995, 12 of them, including California, New York, 
     Pennsylvania, Michigan, Ohio, Illinois,

[[Page S8560]]

     Indiana, New Jersey, Massachusetts, North Carolina, Virginia 
     and Georgia, although they had significant mining industries 
     of their own, actually received more business income from 
     mining in other states. Their biggest gains come from selling 
     products and services to mining enterprises in other states 
     and through the disbursement of government revenues collected 
     from firms that had mining operations in other states.
       Among the 20 states that gained the most economically from 
     mining in 1995, only two (California and Arizona) were in the 
     public land areas of the West traditionally thought of as 
     being the center of American mining. Six (Ohio, Illinois, 
     Indiana, Michigan, Minnesota, and Missouri) were in the 
     Midwest, while eight (Kentucky, West Virginia, Texas, 
     Florida, North Carolina, Georgia, Virginia, and Alabama) were 
     in the South and another four (New York, Pennsylvania, New 
     Jersey, and Massachusetts) were in the Northeast.
       More than 90% of the total impact of mining on the economy 
     of the United States in 1995 was in the form of indirect 
     personal, business, and government income generated by the 
     circulation and recirculation through the nation's economy of 
     the mining industry's direct payments to persons, other 
     businesses, and governments. Those direct payments, while 
     making up only 9% of the total impact, were themselves 
     substantial, particularly in those states where mining 
     activity took place and in states where manufacturers and 
     other businesses produced products and services for use in 
     mining.
       Direct payments by mining firms to individuals, other 
     businesses, and governments in the United States in 1995 
     totalled more than $48 billion. Of that total, the industry 
     paid over $14.5 billion (30%) as personal income 
     to employees, former employees, and stockholders. More 
     than 85% of that amount went to pay the wages and salaries 
     of current employees, while nearly all of the remaining 
     15% went to pay pensions to former employees and dividends 
     to investors.


 Table 2--Direct Contributions of the American Mining Industry to the 
           Economies of the Individual United States in 1995


        State                                       Total direct impact
Alabama..................................................$1,342,230,000
Alaska......................................................213,388,000
Arizona...................................................2,299,706,000
Arkansas....................................................334,147,000
California................................................2,876,115,000
Colorado....................................................801,267,000
Connecticut.................................................328,546,000
Delaware....................................................100,729,000
Dist. of Columbia............................................17,968,000
Florida...................................................1,326,928,000
Georgia.....................................................829,196,000
Hawaii.......................................................80,974,000
Idaho.......................................................280,470,000
Illinois..................................................1,719,495,000
Indiana...................................................1,103,017,000
Iowa........................................................433,192,000
Kansas......................................................348,926,000
Kentucky..................................................2,662,452,000
Louisiana...................................................356,075,000
Maine.......................................................102,133,000
Maryland....................................................369,080,000
Massachusetts...............................................581,349,000
Michigan..................................................1,644,407,000
Minnesota.................................................1,301,183,000
Mississippi.................................................200,552,000
Missouri....................................................868,251,000
Montana.....................................................458,813,000
Nebraska....................................................164,594,000
Nevada....................................................1,728,137,000
New Hampshire................................................99,845,000
New Jersey..................................................623,148,000
New Mexico..................................................638,176,000
New York..................................................1,314,774,000
North Carolina..............................................876,359,000
North Dakota................................................150,558,000
Ohio......................................................1,650,231,000
Oklahoma....................................................391,423,000
Oregon......................................................387,101,000
Pennsylvania..............................................2,300,648,000
Rhode Island.................................................68,760,000
South Carolina..............................................423,942,000
South Dakota................................................251,085,000
Tennessee...................................................608,122,000
Texas.....................................................2,544,266,000
Utah......................................................1,100,239,000
Vermont......................................................72,397,000
Virginia..................................................1,019,016,000
Washington..................................................719,353,000
West Virginia.............................................2,815,983,000
Wisconsin...................................................608,016,000
Wyoming...................................................1,361,726,000
Wyoming...................................................1,361,726,000
                                                       ________________
                                                       
  Total..................................................44,898,488,000

Totals do not include contributions to federal government revenues.

Source of data: Western Economic Analysis Center.

       The biggest share (56%) of the mining industry's direct 
     contributions to the national economy in 1995, however, went 
     to other businesses to pay for the products and services used 
     in the search for and production of minerals. Those direct 
     payments to suppliers of materials, equipment, energy, and 
     services used in mining amounted to over $27 billion. They 
     were made to suppliers located in every state of the Union 
     and the District of Columbia.
       The nation's mining industry also made significant payments 
     directly to state and local governments, largely in the 
     states in which they conducted mining or processing 
     operations. The amount of such direct payments by mining 
     firms to state and local governments in 1995 approached $3.4 
     billion.
       The federal government got even more. Direct payments by 
     mining firms to the United States Government in payroll 
     taxes, income taxes, and other taxes and fees surpassed $3.5 
     billion in 1995. That represented more than 7% of the 
     industry's total direct contribution to the American economy 
     last year.
       The direct contributions of the mining industry to the 
     economies of the various states in 1995 tended to be the 
     greatest in those states in which the most mining activity 
     was conducted and which had the most suppliers providing 
     goods and services to mining firms in other states. Thus, 
     California, with major metal mining, construction minerals, 
     and industrial minerals mining industries, as well as large 
     manufacturing, trade, services, and financial sectors serving 
     mining firms in other states, led the list with a direct 
     impact from mining of almost $2.9 billion. West Virginia, 
     with the country's biggest coal mining industry (in terms of 
     value), was second with a direct impact in 1995 of more than 
     $2.8 billion.
       Kentucky, with the nation's second largest coal mining 
     industry, as third in impact with a direct impact on its 
     economy of nearly $2.7 billion. Texas, with major metals, 
     construction minerals, industrial minerals, and coal mining 
     output, was fourth in direct impact with over $2.5 billion. 
     Pennsylvania, the nation's fifth most important source of 
     mined coal and third biggest producer of construction 
     minerals, was fifth in direct impact with more than $2.3 
     billion.
       Arizona, with the nation's largest copper mining industry 
     was sixth, receiving a direct impact of nearly $2.3 billion, 
     while Nevada, with the nation's largest gold mining industry, 
     was seventh with a direct economic gain of more than $1.7 
     billion. Illinois was eighth, also with an impact of over 
     $1.7 billion.


  Table 3--Total Employment Supported Directly and Indirectly by the 
     American Mining Industry in the Individual United States, 1995


        State                                                Total jobs
Alabama.........................................................107,400
Alaska...........................................................12,000
Arizona.........................................................137,300
Arkansas.........................................................44,400
California......................................................469,200
Colorado.........................................................77,300
Connecticut......................................................54,400
Delaware.........................................................14,400
Dist. of Columbia.................................................9,400
Florida.........................................................212,600
Georgia.........................................................121,300
Hawaii...........................................................18,300
Idaho............................................................23,600
Illinois........................................................209,400
Indiana.........................................................133,700
Iowa.............................................................57,200
Kansas...........................................................48,200
Kentucky........................................................150,300
Louisiana........................................................62,300
Maine............................................................19,800
Maryland.........................................................79,300
Massachusetts...................................................103,900
Michigan........................................................203,300
Minnesota.......................................................113,300
Mississippi......................................................41,500
Missouri........................................................103,200
Montana..........................................................24,900
Nebraska.........................................................30,000
Nevada...........................................................63,000
New Hampshire....................................................20,300
New Jersey......................................................115,500
New Mexico.......................................................44,000
New York........................................................227,500
North Carolina..................................................140,400
North Dakota.....................................................13,300
Ohio............................................................220,700
Oklahoma.........................................................52,700
Oregon...........................................................53,500
Pennsylvania....................................................246,000
Rhode Island.....................................................15,900
South Carolina...................................................65,900
South Dakota.....................................................19,800
Tennessee........................................................98,300
Texas...........................................................308,000
Utah.............................................................66,200
Vermont..........................................................11,100
Virginia........................................................124,800
Washington.......................................................92,300
West Virginia...................................................132,700
Wisconsin........................................................98,800
Wyoming..........................................................41,400
                                                             __________
                                                             
  Total.......................................................4,954,000

Source of data: Western Economic Analysis Center.
                                                                    ____



the impact of the mining industries on the economy of the united states

       In 1995, the mining industries had a combined direct and 
     indirect impact on the economy of the United States of 
     $523.604 billion including combined direct and indirect 
     contributions of $143,742 billion in personal income (equal 
     to 5 million jobs), $295.712 billion in business income, 
     $56.992 billion in federal government revenues, and $27.158 
     billion in state and local government revenues.
       As a result of the circulation (and multiplication) of the 
     mining industry's total direct impact of $48.429 billion that 
     included direct payments of $3.373 billion to state and local 
     governments, $3.530 billion to the federal government, 
     $27.023 billion to other American businesses, and $14.503 
     billion in personal income for Americans, including wages and 
     salaries for the industry's 320,400 employees, who labored to 
     produce minerals with a total value of $60.055 billion.

  Mr. MURKOWSKI. Mr. President, I stand today to add my strong support 
for the introduction of this comprehensive package of reforms intended 
to bring this Nation's mining law into the 21st century.

[[Page S8561]]

  There are few issues before the Senate that are more complex and 
contentious than mining law reform. Make no mistake, it is an issue 
within which major ideologies compete. The outcome of these debates 
will define for years to come the role public lands play in the 
Nation's ability to maintain a viable strategic mining capability.
  Across the Nation--from the White House, and from within this very 
chamber we have been regaled with stirring speeches on the short 
comings of the 1872 mining law: the unfairness it imposes on the 
American people. Unfortunately this rhetoric has served only to inflame 
passions and polarize the American public on this complex issue.
  It will come as no surprise why, under these circumstances, mining 
law reform has been such a difficult undertaking within the Congress. 
There is one additional circumstance which serves to frustrate 
legitimate efforts to bring mining reform negotiations to a successful 
culmination. Legitimate reformers within the administration and the 
Congress have been joined by those who see mining reform as the perfect 
vehicle for ending mining on public lands. With these forces there is 
no appeasement. As reform proposals move toward addressing legitimate 
concerns, the goal line is moved. As you can imagine, this causes a 
great deal of frustration among those of us engaged in serious reform 
efforts.
  Be that as it may, the only unforgivable action this Senator could 
take would be to abandoned the effort. In the great debate before us I 
would ask you to look carefully at the issues--if you seek reform which 
brings a fair return to the public treasury, that protects the 
environment, and preserves the Nation's ability to produce strategic 
minerals--then you will find a great deal to support in the legislation 
we lay before you today.
  I also take a great deal of pride in the fact that this legislation 
does not forget about the Nation's smallest mining operations. It will 
allow them to stay in business and to continue to compete on an even 
playing field with the larger, better financed operations. And for 
those of you who might wonder why small miners are important; you need 
only remember that the great majority of large mining operations across 
the country started out as a nothing more than a crazy idea inside the 
head of a prospector simply too stubborn to give up on their dream.
  On the other hand, if it is your intention to use mining reform as a 
vehicle to end mining on public lands or punish mining companies for 
making a profit, then you will find little in my legislation to aid in 
your cause.
  There is one resounding note of agreement across the Nation relating 
to mining reform--it is time to bring this piece of historic 
legislation into the 21st century.
  However, in our zeal to bring about this necessary modernization, we 
must not forget what we are tinkering with. Bad decisions clouded with 
emotionally charged rhetoric can have devastating effects on a $5 
billion industry. An industry whose products form the muscle and sinew 
of the Nation's entire industrial output. We are taking into our hands 
the well-being of 50,000 American miners, their families, and their 
communities. We will be reaching out and directly affecting the future 
well-being of thousands who derive their primary source of income 
manufacturing the goods and services which support this critical 
industry. We owe it to that industry, those people, their communities, 
and the entire American public to make good decisions. There is simply 
too much at stake to let our collective emotions get in the way of good 
decision making.
  The Nation's first comprehensive mining laws were negotiated under 
torchlite miner's courts, over copious amounts of whiskey, and down the 
barrels of cocked six shooters. These laws literally emerged out of the 
muck and grime of the gold fields of California, the silver fields of 
Nevada, and countless other mining camps scattered across the American 
West. The initial law was designed to give every miner the opportunity 
to compete on an even playing field without fear of having his hard 
earned gain taken away during the dark of night. The law was also 
intended to give a young nation a self sufficiency in its mineral 
needs. The industrial revolution was upon us, and our mills and 
factories were hungry for the raw mineral feed stocks necessary to keep 
pace with the growing demand for industrial products.
  And Mr. President I am here to tell you that we were successful. Due 
in no small part to the mining industry of this Nation and all the hard 
working miners, the United States moved to the pre-eminent position 
that enabled us to win two world wars and set a standard of living that 
is still the envy of the world.
  This package of mining reforms contained in this legislation honors 
the past, recognizes the present, and sets the stage for a bright 
future.
  This legislation honors the past by refusing to abandon the basic 
tenets of the Nation's mining law. A system that allows for the 
location, development and production of mineral resources off the 
public lands. Resources necessary to keep this country's mills and 
factories working at full capacity.
  We recognize the present through the creation of fair reforms which 
recognize that over one hundred years have passed since the general 
mining laws went onto the books. During that time many changes have 
occurred in this country and the mining industry.
  We set the stage for the future by placing instruments within the 
legislation that directs the reclamation of old abandoned mine sites 
and preventing abuses in the exercise of the rights authorized within 
the law.
  Mr. President, we recognize that the time has come to reform the 
general mining laws. But it must be reform that fixes the things which 
are wrong without destroying this important industry and the lives and 
communities dependent on it.
  The legislation we offer today does that but in such a way that 
corrects the problems with the law without killing the mining industry.
  The legislation advances reforms in 4 general areas; royalty, 
patents, operations, and reclamation.
  No area within the 1872 mining laws has been so greatly criticized as 
the failure on the part of that legislation to require royalty to be 
paid for minerals extracted from public land.
  The legislation that we introduce today corrects this. It requires 
that 5 percent of the profit made from a mining operation on federal 
lands be paid to the federal government.
  This legislation seeks a percentage of the profit, not the value of 
the mineral in place. We do this for very specific reasons. Failure to 
do so will cause the shutdown of many operations and prevent the 
opening of new mines. It will cause other operators to cast low ore 
concentrates onto the spoil pile as they seek out only the very highest 
grade ores.
  Yes, highly profitable mines do exist and I am sure you are going to 
hear a lot about them from our opponents. But I can also assure you 
that there is an equal number that operate on the margin. Mines are 
like people, no two are alike. Through legislation we seek to create a 
one-size-fits-all royalty. If that royalty is designed to address 
highly profitable mines, many marginal mines will go under. That is why 
we designed our royalty to take a percentage of the profits. If the 
mine makes money, the public gets a share. This approach recognizes 
that the public benefits from a strong mining industry beyond the 
royalty it might collect. A continuous and competitive supply of metals 
to the Nation's mills and factories, high paying mining jobs, and 
healthy, viable communities also contribute to the common good.
  I fail to see how the public good is served through the creation of a 
royalty system so intrusive that it must be paid for through the loss 
of jobs, the health of local communities, and the abandonment of lower 
grade mineral resources. For those of you who would dismiss these 
predictions need only look north of our borders to British Columbia to 
see living proof of this prediction. In 1974 they put a royalty on 
minerals before cost of production was factored in.
  Five thousand miners lost their jobs, mining diminished to the point 
where only one new mine went into operation in 1976. The industry was 
devastated. The royalty was removed in 1978. Years later the industry 
still has not completely recovered.
  Those who forget history are doomed to repeat it--let us not forget 
the experience of our neighbors to the north.
  Patenting or the right to take title to lands containing minerals 
upon

[[Page S8562]]

demonstration that the parcel can support a profitable operation is 
another area targeted for intense criticisms by opponents to existing 
mining law.
  There is no doubt that there have been serious abuses of this 
provision of the 1872 mining law. Unscrupulous individuals have located 
mineral operations for the soul purpose of gaining title and turning 
the land into a lodge, resort or ski area. These practices are wrong 
and should be corrected. But it should not be done in a way that 
punishes the great majority of miners who patent lands for the sole 
purpose of mining. Punishing everyone to get at the few is absolutely 
wrong and down right un-American.
  The legislation we introduce today cures the problem without 
punishing the innocent. We would continue to issue patents to operators 
who are engaged in legitimate mining operations. However, we also 
include provisions allowing the Secretary to step in and reclaim lands 
should it be determined that they are no longer being used for mining.
  This approach protects the legitimate miner while insuring that 
unscrupulous operators can no longer turn mining operations into other 
activities.
  Much criticism has been levied in the past at the 1872 mining laws 
for what has been called the encouragement of speculative activities on 
mineralized lands. Because no controls were in place, any person could 
go out and stake lands purely for speculative purposes. This kept 
legitimate miners from accessing lands for development and burdened the 
bureaucracy with mining claims that had no real mineral potential.
  The legislation we introduce today addresses this practice. It 
requires that a $25 filing fee be paid at the time the claim is filed, 
and makes permanent the $100 per year per claim maintenance fee. These 
fees will discourage speculative claim staking while allowing miners 
intent on mining access to lands.
  The 1872 mining law did not address environmental protection. Our 
revisions weave a tight environmental safety net to protect the federal 
lands. We include a permit process which requires secretarial approval 
for all but the most minimal mineral related activities; furthermore, 
we require that lands disturbed by mining be reclaimed to prevent undue 
and unnecessary environmental degradation. To correct situations where 
mine operations are abandoned, this legislation requires all operations 
be fully bonded to pay for reclamation. We do this in ways that allow 
individual miners the opportunity to choose the bonding tool that best 
suits their individual needs while not losing sight of the overall 
reclamation goal.
  While bonding assures that no further reclamation responsibilities 
will fall to the public, what about sites which have been abandoned in 
the past? I won't be breaking any secrets by telling you that 
discretionary funding for new projects around here is about as scarce 
as virtue at a lawyers convention. There is simply too much need with 
not enough dollars to go around. Does this mean that reclamation is not 
important? Not at all--- there is no question that the reclamation of 
these abandoned sites needs to occur. The only question is where the 
dollars are going to come from and what other priority must fall to the 
side.
  This legislation addresses this issue through the establishment of a 
mine reclamation fund. This fund is capitalized by the funds collected 
by this legislation. Filing fees, maintenance fees, and royalty 
collected all goes into the fund to pay for the reclamation work. This 
fund dovetails with other reclamation funds and fills the gaps. It is 
not duplicative.
  The Nation's small miners will find that there are exemptions from 
the payment of fees for the first 25 claims, royalty relief for yearly 
profits of less than $50,000, authorizations to use state reclamation 
bonding pools, and the ability to maintain exclusive long term land use 
tenure.
  For those who seek meaningful reform to the nation's general mining 
laws, this legislation does the job. It fixes past abuses without 
punishing the innocent. It establishes a partnership with miners to 
share in the profits of mining without putting people out of work. It 
works with existing environmental legislation to assure that mining 
operations are carried out with the least possible disturbance. It 
makes sure that the public does not have to pay for the inappropriate 
actions of the few while allowing the many to pursue their activities 
in a ways that do not jeopardize their financial well being. And, it 
sets up a process to pay for existing mine reclamation needs without 
taking money away from ongoing federal programs.
  This is good legislation, it fixes existing problems without creating 
new ones. It establishes partnerships between the Federal and State 
governments and treats the mining community with respect and dignity 
without turning a blind eye to past indiscretion.
  I recognize that we have an up-hill battle. Mining reform has been 
shrouded for far too long in a smokey veil of rhetoric and 
sensationalism. The complexity of the issue is such that before we can 
show any meaningful progress we must separate the voices of those who 
seek meaningful reform from those who are using the debates to prevent 
mining on public lands. I believe this legislation will do that--it 
provides a platform for reasonable discussion and negotiation without 
threatening to end mining on public land.
  What we propose may not be poetic, but it does have a rock solid 
substance; it does not lend itself to catchy media blurbs, but it is 
genuine reform; it does not offer quick fixes; but it does make changes 
that are needed without punishing the innocent. It may not be pretty 
and it certainly is not easy to understand but I can promise you one 
thing--it will work.
  Both sides of the mining reform debate have come a long way toward 
achieving meaningful compromise. I am certain that the legislative 
vehicle we launch today will carry us that last mile and finally bring 
us the reform that is needed.
  Mr. BENNETT. Mr. President, I am pleased to join my colleagues in 
introducing the Mining Law Reform Act of 1997 today. The merits of this 
legislation have already been outlined by others, so I will not go into 
details. I believe that we have come a long way toward reaching a 
compromise and I congratulate the chairman for his willingness and his 
efforts to reach the middle ground.
  Mr. President, in this time of economic prosperity, I find it 
worrisome that we must constantly remind the American people that our 
Nation's economic prosperity is largely dependent upon our ability to 
create wealth. The ability to create wealth depends upon ability to 
take a raw material that has little or no economic worth and turn it 
into something of value. The economic prosperity which we have 
experienced in this decade is due, in part, to the increased ability of 
our Nation's mining industry to create wealth out of our raw materials.
  In my own State, there are some groups which argue that the mining 
industry is no longer needed, that it is a relic of the past. I hear 
from these same groups how tourism will be the savior of Utah's rural 
communities and if the people of rural Utah would only accept this, 
then everything will work out just fine. The economy will be strong, 
the environment will be protected and everyone will have a high 
standard of living.
  Mr. President, I do not want to diminish in any way the important 
contribution that tourism provides to the economy of my State. Utahns 
encourage people to come and enjoy our ski slopes, our canyons, and our 
national parks. But much of the tourism industry is seasonal in nature. 
In some small communities in southern Utah, it takes two and one-half 
incomes to generate the average income. It is not uncommon to strike up 
a conversation with a waitress in the local cafe, and learn that her 
husband works two jobs to make ends meet. As one County Commissioner 
summarized recently, ``If tourism was really the answer, making beds, 
frying hamburgers, and pumping gas would have made us rich a long, long 
time ago.''
  In 1995, the values of minerals mined in Utah exceeded $2.4 billion. 
Utah's direct economic gain from mining exceeded $1.1 billion, 
including $358 million in personal income gains. The average mining job 
in Utah pays about $36,000 a year. With this in mind, imagine the 
tremendous positive impact

[[Page S8563]]

that a few dozen mining jobs have in these communities. These jobs 
impact the local auto dealer, the real estate agent, the contractor, 
and the hardware store owner.
  Mr. President, responsible and reasonable mining law reform should be 
enacted. But as we undertake these efforts, we must also recognize the 
important contribution of the mining industry to our Nation's economy. 
It makes no sense to enact mining law reform in the name of 
environmental protection or budgetary concerns, if these reforms in 
turn force industry offshore where environmental restrictions are not a 
consideration and some other country's government receives tax 
revenues. I urge my colleagues to keep this in mind.
  I congratulate the chairman for his efforts and I look forward to 
working closely with him to enact this legislation.


                   the mining law reform act of 1997

  Mr. BRYAN. Mr. President, I am pleased to join many of my colleagues 
from the West today in introducing the Mining Law Reform Act of 1997.
  The mining industry has always played an important role in our 
national economy, and particularly in the economies of many western 
States. From the discovery of the Comstock Lode in the 19th century, to 
the silver boom of the Goldfield-Tonopah area in the early 20th 
century, to the record levels of gold and silver production in the last 
decade, the mineral industry has historically played a vital role in 
Nevada's economy. For the fifth year in a row, Nevada's mines have 
collectively topped the 6 million ounce mark in gold production. In 
1996, there was a total of 7.08 million ounces of gold produced in 
Nevada. The State's rich landscape has made Nevada the largest gold 
producer in the nation with 66.5 percent of all production. In 
addition, it now accounts for 10 percent of all the gold in the world.
  The most recent information from the State of Nevada indicates that 
direct mining employment in Nevada exceeds 13,000 jobs. The average 
annual pay for these jobs, the highest of any sector in the state, is 
about $46,000, compared to the average salary in Nevada of about 
$26,000 per year. In addition to the direct employment in mining, there 
are an estimated 36,000 jobs in the state related to providing goods 
and services needed by the industry.
  I would also like to note that Nevada mining companies must pay taxes 
like any other business, and they also pay an additional Nevada tax 
called the ``Net Proceeds of Mines Tax.'' The total Net Proceeds tax 
paid to the State in 1995 was approximately $33 million. With the 
addition of sales and property tax, the industry paid approximately 
$141 million in State and local taxes in 1995. In addition, the Nevada 
mining industry paid approximately $95 million in Federal taxes in 
1995.
  The figures and statistics I have just mentioned are significant not 
only to emphasize the importance of the mining industry to the State of 
Nevada, but also to provide a context for the criticism often leveled 
against the industry that they enjoy a free ride for mining activities 
on Federal land. The bottom line is that the mining industry pays taxes 
just like any other business, and in Nevada they pay an additional tax 
targeted specifically to their industry.
  The issue of reclamation is also central to the mining law reform 
debate. I should note that Nevada has one of the toughest, if not the 
toughest, State reclamation programs in the country. Nevada mining 
companies are subject to a myriad of Federal and State environmental 
laws and regulations, including the Clean Water Act, Clean Air Act, and 
Endangered Species Act. Mining companies must secure literally dozens 
of environmental permits prior to commencing mining activities, 
including a reclamation permit, which must be obtained before a mineral 
exploration project or mining operation can be conducted. Companies 
must also file a surety or bond with the State or the Federal land 
manager in an amount sufficient to ensure reclamation of the entire 
site prior to receiving a reclamation permit.
  It is in the context of promoting the economic viability of the 
mining industry and of encouraging strong environmental reclamation 
efforts administered by the States that I view the debate over the 
reform of the Mining Law of 1872. As I have stated many times over the 
years, I feel that certain aspects of the 1872 mining law are in need 
of reform. Specifically, I feel strongly that the patenting provision 
of the current law should be changed to provide for the payment of fair 
market value for the surface estate--our legislation does that. All 
patents should also include a reverter clause, which would ensure that 
patented public lands would revert to Federal ownership if no longer 
used for mining purposes--our legislation does that. I believe that 
mining laws reform legislation should ensure that any land used for 
mining purposes must be reclaimed pursuant to applicable Federal and 
State statutes--our legislation does that. And finally, I believe that 
mining law reform legislation should impose a reasonable royalty on 
mineral production from Federal land--our legislation does that.
  The Mining Law Reform Act of 1997 addresses each of the concerns I 
have just outlined. It is my hope that this legislation will serve as 
the starting point for the debate over mining law reform this year.
  The time has never been more critical for Congress to enact 
comprehensive mining law reform. The aura of uncertainty that the 
industry has been forced to operate under for the last decade is 
causing many companies to look overseas for their future operations. 
The number of United States and Canadian mining companies exploring or 
operating in Latin America continues to grow dramatically. We must 
enact mining reform this Congress if we hope to secure the economic 
benefits we derive as a Nation from a healthy mining industry.
                                 ______
                                 
      By Mr. MOYNIHAN (for himself, Mr. Reid, Mrs. Boxer, Ms. Mikulski, 
        and Mr. Robb):
  S. 1103. A bill to amend title 23, United States Code, to authorize 
Federal participation in financing of projects to demonstrate the 
feasibility of deployment of magnetic levitation transportation 
technology, and for other purposes; to the Committee on Commerce, 
Science, and Transportation.


 the magnetic levitation (maglev) transportation technology deployment 
                              act of 1997

  Mr. MOYNIHAN. Mr. President, I rise with a distinguished group of my 
colleagues to introduce the Magnetic Levitation Transportation 
Technology Deployment Act of 1997.
  Maglev is the first new transportation technology envisioned since 
the development of aviation in the early 1900's, and its adoption 
represents an opportunity for dramatic national gains in transportation 
efficiency and economic growth. This legislation proposes to 
demonstrate the feasibility of Maglev by authorizing limited Federal 
participation in financing one or more Maglev projects in the United 
States.
  Maglev is an advanced technology in which magnetic forces lift, 
propel, and guide a vehicle over a guideway. Utilizing state-of-the-art 
electric power and control systems, this configuration eliminates the 
need for wheels and many other mechanical parts, thereby minimizing 
friction and permitting cruising speeds of 300 miles per hour or more--
three times the speed of conventional American train technology. 
Because of its high speeds and relatively modest right-of-way 
requirements, Maglev offers significant advantages over auto, rail, and 
aviation modes in 40- to 600-mile travel markets. Maglev is also a very 
safe technology since properly designed Maglev is virtually impossible 
to derail.
  While Maglev was invented by a young American nuclear engineer in the 
1960's, the Germans have developed the technology and have already 
built a demonstration Maglev test facility. They are now proceeding 
with a public/private project to construct a 181-mile Maglev system to 
connect Berlin to Hamburg. The German system, which is expected to be 
operational by 2005, will provide 1-hour service between the two 
cities. Not far behind Germany, Japan has its own Maglev system under 
test. Meanwhile, our Federal Government has done relatively little to 
develop this extraordinary technology.
  In the last few years, however, the Federal Rail Administration has 
identified the feasibility of deployment of Maglev systems in several 
major U.S. transportation corridors. Also, several public/private 
partnerships in the United States have begun to develop

[[Page S8564]]

Maglev projects in a number of States, including California, Florida, 
Maryland, and Nevada. However, as with our European and Asian 
competitors, developing these Maglev projects will require Federal 
support to supplement the private and other public funding sources. Our 
bill would establish a competition for Federal funds, based on economic 
and financial criteria, among the various public/private Maglev project 
partnerships.
  Because Maglev is a proven technology that offers significant 
benefits for both passengers and freight, it is in the National 
interest to demonstrate these benefits by proceeding to construct and 
put into service, at an early date, a project in the United States. 
This legislation will encourage such a project at minimum public cost.
  I ask unanimous consent that the section-by-section analysis and the 
text of the Magnetic Levitation (Maglev) Transportation Technology 
Deployment Act of 1997 be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1103

       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 ``Magnetic Levitation (MAGLEV) 
     Transportation Technology Deployment Act of 1997''.

     SEC. 2. FINDINGS AND POLICY.

       (a) Findings.--Congress finds that--
       (1)(A) new transportation technologies are needed to 
     develop new modes of transportation that are environmentally 
     sound and energy efficient;
       (B) very high- and super-speed magnetic levitation 
     (referred to in this section as ``MAGLEV'') is the technology 
     that appears to best meet the needs of the traveling public 
     and high-value freight shippers in the 40- to 600-mile 
     distance corridors;
       (C) MAGLEV is energy efficient, consuming less energy per 
     passenger mile at any given speed than other forms of 
     transportation and reducing dependence on imported oil;
       (D) since properly designed MAGLEV is virtually impossible 
     to derail, MAGLEV is safe and will prevent accidents and loss 
     of life, and will significantly reduce costs attributable to 
     accidents occurring on highways, freight rail lines, 
     intercity rail passenger service lines, commuter rail lines, 
     and short haul airline routes of the United States;
       (E) MAGLEV is virtually unaffected by weather conditions, 
     which annually result in delays in other transportation modes 
     employed by freight and passenger carriers; and
       (F) MAGLEV makes extensive use of existing highway rights-
     of-way and consumes less land for its guideway infrastructure 
     than a comparable roadway;
       (2) the commercial feasibility study of high-speed ground 
     transportation conducted under section 1036 of the Intermodal 
     Surface Transportation Efficiency Act of 1991 (Public Law 
     102-240; 105 Stat. 1978)--
       (A) demonstrates that MAGLEV systems have the potential for 
     a public and private partnership under which the private 
     sector could operate a system without operating subsidies and 
     the total benefits of the system would exceed the total 
     costs; and
       (B) demonstrates that adding links or corridors to the 
     basic MAGLEV system would enhance the basic system, leading 
     to establishment of high-volume high-speed ground 
     transportation networks; and
       (3) the study required by section 359(d) of the National 
     Highway System Designation Act of 1995 (Public Law 104-59; 
     109 Stat. 627) further demonstrates the potential for MAGLEV 
     systems.
       (b) Policy.--It is the policy of the United States to 
     establish a MAGLEV transportation technology system operating 
     along Federal-aid highway and other rights-of-way as part of 
     a national transportation system of the United States.

     SEC. 3. MAGNETIC LEVITATION TRANSPORTATION TECHNOLOGY 
                   DEPLOYMENT PROGRAM.

       (a) In General.--Chapter 3 of title 23, United States Code, 
     is amended by inserting after section 321 the following:

     ``Sec. 322. Magnetic levitation transportation technology 
       deployment program

       ``(a) Definitions.--In this section:
       ``(1) Eligible project costs.--The term `eligible project 
     costs' means the capital cost of the fixed guideway 
     infrastructure of a MAGLEV project, including land, piers, 
     guideways, propulsion equipment and other components attached 
     to guideways, power distribution facilities (including 
     substations), control and communications facilities, access 
     roads, and storage, repair, and maintenance facilities, but 
     not including costs incurred for a new station.
       ``(2) Full project costs.--The term `full project costs' 
     means the total capital costs of a MAGLEV project, including 
     eligible project costs and the costs of stations, vehicles, 
     and equipment.
       ``(3) MAGLEV.--The term `MAGLEV' means transportation 
     systems employing magnetic levitation that would be capable 
     of safe use by the public at a speed in excess of 240 miles 
     per hour.
       ``(4) Partnership potential.--The term `partnership 
     potential' has the meaning given the term in the commercial 
     feasibility study of high-speed ground transportation 
     conducted under section 1036 of the Intermodal Surface 
     Transportation Efficiency Act of 1991 (Public Law 102-240; 
     105 Stat. 1978).
       ``(5) Recognized pilot project.--The term `recognized pilot 
     project' means a project identified in the report transmitted 
     by the Secretary to Congress on the near-term applications of 
     magnetic levitation ground transportation technology in the 
     United States as required by section 359(d) of the National 
     Highway System Designation Act of 1995 (Public Law 104-59; 
     109 Stat. 627).
       ``(b) High-Speed Ground Transportation Office.--
       ``(1) In general.--Not later than 90 days after the date of 
     enactment of the Magnetic Levitation (MAGLEV) Transportation 
     Technology Deployment Act of 1997, the Secretary shall 
     establish a High-Speed Ground Transportation Office in the 
     Federal Railroad Administration to--
       ``(A) coordinate and administer all high-speed rail and 
     MAGLEV programs authorized by this section and any other 
     provision of this title or title 49; and
       ``(B) make available financial assistance to provide the 
     Federal share of full project costs of eligible projects 
     selected under this section and otherwise carry out this 
     section.
       ``(2) Federal share.--The Federal share of full project 
     costs under paragraph (1)(B) shall be not more than \2/3\.
       ``(3) Use of assistance.--Financial assistance provided 
     under paragraph (1)(B) shall be used only to pay eligible 
     project costs of projects selected under this section.
       ``(c) Solicitation of Applications for Assistance.--Not 
     later than 90 days after the establishment of the High-Speed 
     Ground Transportation Office, the Secretary shall solicit 
     applications from States, or authorities designated by 1 or 
     more States, for financial assistance authorized by 
     subsection (b)(1)(B) for planning, design, and construction 
     of eligible MAGLEV projects.
       ``(d) Project Eligibility.--To be eligible to receive 
     financial assistance under subsection (b)(1)(B), a project 
     shall--
       ``(1) involve a segment or segments of a high-speed ground 
     transportation corridor that--
       ``(A) exhibits partnership potential; or
       ``(B) is a portion of a recognized pilot project;
       ``(2) require an amount of Federal funds for project 
     financing that will not exceed--
       ``(A) the amounts made available under subsection 
     (j)(1)(A); and
       ``(B) the amounts made available by States under subsection 
     (j)(4);
       ``(3) result in an operating transportation facility that 
     provides a revenue producing service;
       ``(4) be undertaken through a public and private 
     partnership, with at least \1/3\ of full project costs paid 
     using non-Federal funds;
       ``(5) to the maximum extent practicable (as determined by 
     the Secretary), satisfy applicable Statewide and metropolitan 
     planning requirements;
       ``(6) be approved by the Secretary based on an application 
     submitted to the Secretary by a State or authority designated 
     by 1 or more States;
       ``(7) to the extent non-United States MAGLEV technology is 
     used within the United States, be carried out as a technology 
     transfer project; and
       ``(8) be carried out using materials at least 70 percent of 
     which are manufactured in the United States.
       ``(e) Project Selection Criteria.--Prior to soliciting 
     applications, the Secretary shall establish criteria for 
     selecting which eligible projects under subsection (d) will 
     receive financial assistance under subsection (b)(1)(B). The 
     criteria shall include the extent to which--
       ``(1) a project is nationally significant, including the 
     extent to which the project will demonstrate the feasibility 
     of deployment of MAGLEV technology throughout the United 
     States;
       ``(2) timely implementation of the project will reduce 
     congestion in other modes of transportation and reduce the 
     need for additional highway or airport construction;
       ``(3) States, regions, and localities financially 
     contribute to the project;
       ``(4) implementation of the project will create new jobs in 
     traditional and emerging industries;
       ``(5) the project will augment MAGLEV networks identified 
     as having partnership potential;
       ``(6) financial assistance would foster public and private 
     partnerships for infrastructure development and attract 
     private debt or equity investment;
       ``(7) financial assistance would foster the timely 
     implementation of a project; and
       ``(8) life-cycle costs in design and engineering are 
     considered and enhanced.
       ``(f) Project Selection.--Not later than 90 days after a 
     deadline established by the Secretary for the receipt of 
     applications, the Secretary shall evaluate the eligible 
     projects in accordance with the selection criteria and select 
     1 or more eligible projects for financial assistance.
       ``(g) Joint Ventures.--A project undertaken by a joint 
     venture of United States and non-United States persons 
     (including a project involving the deployment of non-United 
     States MAGLEV technology in the United States) shall be 
     eligible for financial

[[Page S8565]]

     assistance under this section if the project is eligible 
     under subsection (d) and selected under subsection (f).
       ``(h) Research Grants and Contracts.--The Secretary shall 
     conduct research that shall include providing grants to, and 
     entering into contracts with, colleges, universities, 
     research institutes, Federal laboratories, and private 
     entities for research related to--
       ``(1) the quantification of benefits derived from the 
     implementation of MAGLEV technology;
       ``(2) MAGLEV safety;
       ``(3) the development of domestic MAGLEV technologies, 
     including electromagnetic and superconducting technology; and
       ``(4) the development of technologies associated with 
     MAGLEV infrastructure.
       ``(i) Report.--Not later than 180 days after the date of 
     enactment of the Magnetic Levitation (MAGLEV) Transportation 
     Technology Deployment Act of 1997, the Secretary shall submit 
     a report to the Committee on Environment and Public Works of 
     the Senate and the Committee on Transportation and 
     Infrastructure of the House of Representatives on progress in 
     implementing this section that includes a report on--
       ``(1) the establishment of the High-Speed Ground 
     Transportation Office under subsection (b);
       ``(2) applications for assistance under this section; and
       ``(3) the establishment of public and private partnerships 
     to carry out this section.
       ``(j) Authorization of Appropriations.--
       ``(1) In general.--There are authorized to be appropriated 
     from the Highway Trust Fund (other than the Mass Transit 
     Account) to--
       ``(A) carry out this section (other than subsection (h)), 
     $10,000,000 for fiscal year 1998, $20,000,000 for fiscal year 
     1999, $200,000,000 for each of fiscal years 2000 and 2001, 
     and $250,000,000 for each of fiscal years 2002 and 2003; and
       ``(B) provide research grants and contracts under 
     subsection (h), $10,000,000 for each of fiscal years 1998 
     through 2003.
       ``(2) Availability of funds.--Funds made available under 
     paragraph (1) shall remain available until expended.
       ``(3) Contract authority.--Approval by the Secretary of an 
     eligible project selected under this section shall be 
     considered to be a contractual obligation of the United 
     States for payment of the Federal share of the full project 
     costs of the project.
       ``(4) Other federal funds.--Notwithstanding any other 
     provision of law, funds made available to a State to carry 
     out the surface transportation program under section 133 and 
     the congestion mitigation and air quality improvement program 
     under section 149 may be used by the State to pay a portion 
     of the full project costs of an eligible project selected 
     under this section, without requirement for non-Federal 
     funds.
       ``(5) Other assistance.--Notwithstanding any other 
     provision of law, an eligible project selected under this 
     section shall be eligible for the loans, loan guarantees, 
     lines of credit, development cost and political risk 
     insurance, credit enhancement, and risk insurance that are 
     authorized for a highway project under this title.
       ``(6) Tax-exempt bond financing.--For the purpose of 
     obtaining tax-exempt bond financing under the Internal 
     Revenue Code of 1986, a MAGLEV facility shall be considered 
     to be a high-speed intercity rail facility with an average 
     speed greater than 150 miles per hour under section 
     142(a)(11) of that Code.''.
       (b) Conforming Amendment.--The analysis for chapter 3 of 
     title 23, United States Code, is amended by inserting after 
     the item relating to section 321 the following:

``322. Magnetic levitation transportation technology deployment 
              program.''.

              
                                                                    ____
 Magnetic Levitation (MAGLEV) Transportation Technology Deployment Act 
                  of 1997--Section-by-Section Analysis

     Sec. 1 Short Title
       This section designates this bill as the ``Magnetic 
     Levitation (MAGLEV) Transportation Technology Deployment Act 
     of 1997.''
     Sec. 2 Findings and Policy
       Sub-section (a) makes several findings concerning the need 
     for a new mode of transportation that is environmentally 
     sound and energy efficient and describes how magnetic 
     levitation can meet that need with a demonstrated safe and 
     cost-effective technology.
       Based upon the above findings, sub-section (b) declares 
     that it is the policy of the United States to establish a 
     MAGLEV transportation technology system as part of our 
     national transportation system.
     Sec. 3 Magnetic Levitation Transportation Technology 
         Deployment Program
       Sub-section (a) amends Chapter 3 of Title 23, U.S.C. to add 
     a new ``Section 322. Magnetic Levitation transportation 
     technology deployment program.''
       Sub-section (a) of the new Section 322 provides definitions 
     for several terms subsequently used in the legislative 
     language.
       Paragraph (b)(1) of the new Section 322 requires The 
     Secretary of Transportation to establish a High-Speed Ground 
     Transportation Office in the Federal Railroad Administration 
     to coordinate and administer all high-speed rail and MAGLEV 
     programs and make available Federal funds authorized by this 
     section for selected MAGLEV projects.
       Paragraph (b)(2) specifies that the Federal share of costs 
     of selected projects shall not exceed \2/3\ of the full 
     project costs which include: guideway, stations, vehicles and 
     appurtenant facilities and equipment.
       Paragraph (b)(3) specifies that the Federal funds 
     authorized by this legislation may only be used to pay the 
     capital costs of the fixed guideway infrastructure of a 
     MAGLEV project.
       Sub-section (c) requires the Secretary to solicit 
     applications from states or authorities designated by one or 
     more states for financial assistance in the planning, design 
     and construction of an eligible MAGLEV project.
       Sub-section (d) defines project eligibility, and requires 
     eligible projects to, among other requirements:
       Involve a segment or segments of a longer high speed ground 
     transportation corridor that exhibits partnership potential 
     (i.e. can be shown that once built, can be operated by 
     private enterprise as a self sustaining entity.) or is a 
     portion of a recognized pilot project identified in a report 
     to Congress mandated by Section 359(d) of the National 
     Highway System Designation Act of 1995;
       Not require more Federal assistance than the amount 
     authorized by this legislation plus any additional amounts of 
     Federal-aid highway apportionment which are made available by 
     the states; and
       Results in an operating transportation facility that 
     provides revenue producing service.
       Sub-section (e) requires the Secretary to establish 
     criteria for selection of eligible projects and provides a 
     list of criteria to be included.
       Sub-section (f) requires the Secretary to establish a 
     deadline for receipt of applications and provides 90 days for 
     the Secretary to evaluate the applications and select one or 
     more projects for financial assistance.
       Sub-section (g) allows joint ventures composed of U.S. and 
     non-U.S. persons to be eligible for financial assistance.
       Sub-section (h) requires the Secretary to carry out 
     additional research and provides authority to enter into 
     research contracts with a variety of public and private 
     businesses, institutions and laboratories.
       Sub-section (i) requires a report to the Senate Committee 
     on Environment and Public Works and the House Committee on 
     Transportation and Infrastructure within 180 days on the 
     progress made in implementing the legislation.
       Paragraph (j)(1) authorizes $930,000,000 from the Highway 
     Trust Fund (other than the Mass Transit Account) over six 
     years to provide the Federal share of the cost of design and 
     construction of one or more MAGLEV projects selected by the 
     Secretary. It also provides $10,000,000 annually for 
     authorized research activities.
       Paragraph (j)(2) and (3) keep the authorized amounts 
     available until expended and provide contract authority.
       Paragraph (j)(4) permits any state to use a portion of 
     Federal highway funds apportioned to the state for the 
     Surface Transportation Program (STP) and the Congestion 
     Mitigation Air Quality Program (CMAQ) to pay a portion of the 
     full project costs.
       Paragraph (j)(5) makes selected projects eligible for any 
     innovative financing techniques provided for Federal-aid 
     highway projects under title 23, U.S.C.
       Paragraph (j)(6) of the new Section 322 makes selected 
     MAGLEV projects eligible for tax-exempt bond financing.
                                 ______
                                 
      By Mr. HOLLINGS (for himself and Ms. Snowe):
  S. 1104. A bill to direct the Secretary of the Interior to make 
corrections in maps relating to the Coastal Barrier Resources System; 
to the Committee on Environment and Public Works.


      CORRECTING THE COASTAL BARRIER RESOURCES SYSTEM legislation

  Mr. HOLLINGS. Mr. President, I rise today to introduce a bill aimed 
at correcting a mistake in the Coastal Barrier Resource System. Without 
this correction, a portion of Colleton County, SC, will remain in the 
Coastal Barrier Resources System even though the county never had an 
opportunity to voice their objection to their inclusion.
  In 1980 Congress directed the Secretary of the Interior to study and 
propose a Coastal Barrier Resources System. The aim was to create a 
system made up of relatively undeveloped low-lying coastal lands which, 
because of their susceptibility to flooding, would not be eligible for 
Federal flood insurance. Practically speaking, to be included in the 
CBRS means you face serious obstacles when selling or developing your 
property.
  Soon after the passage of the 1980 act, the Department of the 
Interior created a study group charged which promulgating an inventory 
of coastal properties--properties to be included in the CBRS. By the 
end of 1988, the study group had completed its work and the Department 
of the Interior submitted the CBRS proposal to Congress.
  This proposed inventory was the culmination of 8 years work and 
included suggestions made during two public comment periods. The first 
public comments were made following the release of an initial draft 
inventory in 1985. Additional comments were made following the release 
of a second draft in

[[Page S8566]]

the spring of 1987. The Department of the Interior received numerous 
comments on these draft inventories and incorporated many in their 
final report to Congress. This final report was the basis for the 
Coastal Barrier Resources System adopted in 1990.
  I recite this history because without an understanding of it, Mr. 
President, one can't understand the intent of my legislation.
  While the Department of the Interior was drafting this proposed 
system, a strip of coastal South Carolina was being annexed by Colleton 
County from Charleston County. Unfortunately, this annexation occurred 
in 1987 in the midst of the 1987 CBRA comment period. Unfortunately, 
the notice of this second draft inventory was not received by Colleton 
County. The county never received any notice. It appears the draft 
inventory was provided to Charleston County, not Colleton County. In 
fact, the maps currently on file at the Department of the Interior, 
still, incorrectly show this tract in Charleston County--not Colleton 
County. Thus, the citizens of Colleton County, never having had an 
opportunity to comment on these proposed changes, now find this tract 
included in the CBRS.
  I proposed legislation in 1995 to correct this mistake, but it was 
never reported out of committee. It failed to win the Environment and 
Public Works Committee's support because the Fish and Wildlife Service, 
at the time, felt that the area in question had been mapped properly.
  Mr. President, since the end of the 104th Congress, I have been 
working with the Fish and Wildlife Service to address this problem. 
They have now reevaluated this area and have come to the conclusion, 
``that the unprecedented procedural circumstances in this situation 
raise concerns of equity and fairness that warrant remapping.'' Mr. 
President, I ask unanimous consent to include in the Record a letter 
from John Rogers, Acting Director of the U.S. Fish and Wildlife 
Service, dated May 1, 1997, that says just that.
  In short, this bill corrects a mistake made 10 years ago. It rights a 
wrong. It does not drastically redraft the Coastal Barrier Resources 
System nor does it withdraw any lands which were included in the 1982 
draft. It is narrowly drafted to address Colleton County's unique 
situation. My staff, working with the Fish and Wildlife Service, has 
not identified another area in the system which is similarly situated. 
That is, there are no other areas which changed jurisdictions at the 
time the Coastal Barrier Resources System boundaries were being 
developed and which never received notice of these changes, thus this 
bill would not prove a precedent for those seeking wholesale changes in 
the Coastal Barrier Resources System.
  In conclusion, the bill simply returns a small portion of Edisto 
Island, SC to its 1982 status. I urge my colleagues to support this 
bill.
  Ms. SNOWE. Mr. President, I am pleased to join the ranking member of 
the Commerce Committee, Senator Hollings, in the introduction of the 
Oceans Act of 1997. This bill will establish a commission like the 
Stratton Commission of 1966 to review the many ocean and coastal issues 
facing the United States, and to develop a comprehensive, coordinated, 
national ocean, and coastal policy.
  Prior to introduction, I raised a few concerns with Senator Hollings 
on some provisions of the draft bill. Basically, I had recommended some 
language that made it clear that as we develop a new ocean and coastal 
policy for the Nation, we keep in mind the facts that our fiscal 
resources are limited, and that our Federal investments in ocean and 
coastal resources must be spent efficiently and wisely. I also raised 
some concerns about the fact that the original draft had the President 
appointing all of the members of this important commission.
  Mr. President, Senator Hollings has graciously agreed to make some 
changes to the bill pursuant to my recommendations. For instance, the 
bill now authorizes the Congress to appoint more than half of the 
Commission members, and the Commission is directed to identify 
opportunities to reform Federal ocean programs to improve efficiency 
and effectiveness. I commend Senator Hollings for his willingness to 
work with me and other Republican Senators before introduction of the 
bill. After introduction, I look forward to working with the 
distinguished Senator from South Carolina, a Senator who worked on the 
original Stratton Commission bill 30 years ago and who is a true 
champion of ocean protection, in the Oceans and Fisheries Subcommittee 
on any further refinements along these lines that might be 
constructive.
  Again, I thank Senator Hollings and commend him upon introduction of 
this bill.
                                 ______
                                 
      By Mr. COCHRAN (for himself and Mr. Conrad):
  S. 1105. A bill to amend the Internal Revenue Code of 1986 to provide 
a sound budgetary mechanism for financing health and death benefits of 
retired coal miners while ensuring the long-term fiscal health and 
solvency of such benefits, and for other purposes; to the Committee on 
Finance.


                 the comprehensive coal act reform act

  Mr. COCHRAN. Mr. President, today I am introducing legislation which 
will correct the abuses of Federal tax policy associated with the 
Reachback Tax provisions of the Coal Industry Health Benefit Act of 
1992 (the Coal Act), while guaranteeing the solvency of the Combined 
Benefit Fund established by that Act.
  The legislation will also guarantee retiree health care benefits to 
approximately 75,000 retired unionized bituminous coal miners, their 
spouses or widows, and dependents. These coal mine retirees have 
received uninterrupted health care benefits which are among the best 
available to any group of retirees.
  The Coal Act also bestowed a windfall on one class of companies at 
the expense of another class, by shifting 62 percent of the cost of 
these retiree health benefits from the companies which had contracted 
to pay for them. Those costs are now shouldered by Federal transfers 
and private employers, who had no contractual obligation for retiree 
health care.
  Since its passage as part of the National Energy Policy Act, the Coal 
Act has been the subject of debate in both houses of Congress and tens 
of millions of dollars has been spent on litigation filed in the 
Federal courts by companies subjected to its retroactive taxation. 
Every case has been lost, however, as the courts have ruled that 
Congress has the power to tax and that it is up to Congress to make or 
change tax law.
  Mr. President, this confiscatory measure is called the Reachback Tax, 
because it reached back, over the decades and branded for taxation 
hundreds of companies, or their former owners. Many of those companies 
had been out of the unionized coal business for decades. Many 
identified by the Social Security Administration as liable for 
Reachback Taxes, are nothing more than skeletons of business entities 
holding the dwindling assets of former small enterprises.
  Some reachback companies were taxed because they, or a related party, 
had signed a UMWA multi-employer contract sometime between 1950 and 
1988. When the contracts expired, however, each of the reachback 
companies had fulfilled its obligations to the union and the union 
members. There were no continuing ties between the reachback companies 
and former employees, and certainly no promises of lifetime benefits to 
those former employees, much less their dependents. Furthermore, the 
union had no claims pending against these companies for retiree health 
care.
  Mr. President, the Reachback Tax, passed without benefit of hearings 
or debate, has brought economic disaster to hundreds of innocent 
American companies, and hardship for tens of thousands of their 
workers. It has caused a favored class of companies to receive what 
they admit is a $130 million annual savings in retiree health benefit 
costs, and transferred that burden to companies--small and large in 
more than 30 States.
  The payment of this Federal tax is an unfair burden on all of the 
reachback companies. For every beneficiary assigned, the reachback 
companies have a liability of approximately $2,400 per year, stretching 
to the year 2043. No reachback company was prepared to absorb such an 
expense, nor should it have been. Obviously, jobs have been lost and 
job-creating projects have been delayed or canceled, and new

[[Page S8567]]

products and the opening of new markets have been sidetracked because 
of the Reachback Tax.
  When the 102d Congress passed the Reachback Tax in the fall of 1992, 
it handed the UMWA Combined Fund Trustees the statutory responsibility 
to collect every cent of every premium due from every reachback 
company. It also conferred on the Department of Treasury and the 
Internal Revenue Service the statutory responsibility to impose $100 
per day, per beneficiary penalties on every reachback company which 
does not pay those premiums. Furthermore, the Department of Treasury's 
Office of Tax Policy reports non-paying reachback companies are liable 
for billions of dollars in penalties.
  Mr. President, billions of dollars are due the United States 
Treasury, yet the Treasury and IRS have not moved to collect these 
penalties. And, despite this financial threat, some 60 percent of all 
the reachback companies have ignored their statements, unwilling or 
unable to comply with a Federal law they view as unjust.
  Mr. President, the Reachback Tax was promoted during the conference 
on the Energy Act as an emergency effort to avoid an advertised deficit 
in the UMWA health benefits fund, and as necessary to save the retirees 
from an imminent suspension of health care benefits. However, the 
deficit never materialized. Instead, the General Accounting Office, the 
private firms Towers Perrin, Deloitte & Touche, and the UMWA Combined 
Benefit Fund trustees have confirmed a huge surplus in the fund.
  The legislation I am introducing today will statutorily guarantee 
that those surpluses continue through the life of the fund, as several 
new and permanent cost containment measures by the fund managers have 
dramatically lowered its expenses below original projections. 
Furthermore, the number of beneficiaries in the closed pool continues 
to decline because of mortality.
  Statutory relief is the only relief available to these reachback 
companies. It is needed immediately. I urge Senators to join in support 
of this legislation to mitigate an unintended impact of well-intended 
legislation.
  Mr. CONRAD. Mr. President, I am pleased to join Senator Cochran in 
sponsoring this reachback tax relief bill to alleviate the inequitable 
hardships the Coal Industry Retiree Health Benefits Act of 1992 imposed 
on certain companies.
  First, it is important to note that the Coal Act of 1992 assured coal 
miners and their dependents that their health benefits were permanently 
secured. And, it provided a statutory foundation to implement that 
commitment. This legislation continues that commitment and maintains 
the legal foundation to carry it out.
  However, the funding mechanism of the Act has produced severe 
financial hardship for many companies subject to it. Our legislation 
reforms the Coal Act to eliminate this very serious and growing 
problem. In order to fund the 1992 Coal Act, reachback companies, many 
long removed from deep coal mining, were subjected to a burdensome tax 
that in many cases threatens their existence. Many companies are no 
longer in the coal business, and long ago withdrew from the Bituminous 
Coal Operators Association [BCOA] having met their legal obligations to 
fund retiree health benefits. It is the BCOA that negotiated a series 
of collective bargaining agreements with their employees and at the 
urging of the BCOA, the final contract contribution formula did not 
fully fund the benefits. The solution to this funding shortfall came 
down to asking others to help pay, even those who had long ago left the 
coal business.
  We have now reached a point where reform is essential. As much as $16 
billion in penalties have accumulated against companies for delinquent 
premiums. Some of the reachback companies are trying to pay by 
depleting their assets and thereby jeopardizing their ability to 
survive economically. Other companies simply cannot afford to pay. The 
Combined Benefit Fund trustees are currently suing delinquent companies 
to collect all unpaid premiums. These liabilities threaten the 
existence of many small companies and the jobs of the people employed 
by them. It is increasingly clear that this is a symptom of the serious 
shortcomings in the original legislation. These reachback companies 
deserve fairer treatment than the Coal Act now provides. Just as 
important, coal miners and their dependents deserve a Coal Act that 
will work in the long-run.
  To make matters worse, a recent federal court decision has had the 
adverse effect of reducing the Combined Fund revenues by ten percent 
and thus threatening the solvency of the Fund. If the decision is left 
standing, a shortfall is projected by the year 2002. We must act now to 
preserve the solvency of the miners' fund as well as provide the 
urgently needed reachback relief. This legislation reverses the court's 
decision and increases BCOA premiums, to preserve the long term 
solvency of the Fund and provide a modest level of reachback relief. 
Following are key reform elements in our legislation:
  (1) Eliminates premiums for certain reachback companies and 
significantly reduces premiums for other reachbacks;
  (2) Creates a cap on all small company premiums;
  (3) Creates relief for companies who paid withdrawal fees; and
  (4) Strengthens the fiscal integrity of the miners' fund by 
overturning the court decision and increasing BCOA premiums.
  The passage of the Coal Act in 1992 has saved the coal producing 
members of the BCOA more than $130 million per year over their prior 
annual benefit payment liabilities. The BCOA companies' $130 million 
annual windfall will need to be reduced in order to provide fiscal 
relief to the many reachback companies. When this comprehensive bill 
becomes law, BCOA companies will still benefit from about $100 million 
in annual savings.
  Mr. President, the problems being caused by the Reachback Tax are 
severe and require a remedy. Congress should act now to reform the Coal 
Act in order to provide equitable relief for all reachback companies as 
well as to permanently secure the miners' benefits. We should pass the 
Comprehensive Coal Act Reform proposal now.
                                 ______
                                 
      By Mr. COATS:
  S. 1106. A bill to provide for the establishment of demonstration 
projects designed to determine the social, civic, psychological, and 
economic effects of providing to individuals and families with limited 
means an opportunity to accumulate assets, and to determine the extent 
to which an asset-based policy may be used to enable individuals and 
families with limited means to achieve economic self-sufficiency; to 
the Committee on Finance.


                     THE ASSETS OF INDEPENDENCE ACT

  Mr. COATS. Mr. President, I am pleased to introduce for Independence 
Act, bipartisan legislation designed to help poor and working-poor 
Americans build the productive assets they need to get out of poverty 
and invest in their future.
  Just as people can't borrow their way out of debt, they can't spend 
their way out of poverty. To move forward, America's struggling 
families need assets. For assets are ``hope in concrete form.'' While 
our Nation has wisely recognized this fact for our middle- and upper-
income families by subsidizing, through the Tax Code, the acquisition 
of homes and retirement accounts, we have not extended these very 
sensible policies to our lower-income citizens. In fact, they are often 
penalized if they try to save.
  My legislation will change that, and set them on a path to economic 
independence. And, by increasing our national savings rate, it will 
help set America on a path to greater productivity and prosperity. I 
truly believe that IDA's can be to the 21st century what the Homestead 
Act was to the 19th and what the GI Bill was to the 20th--an investment 
in the common genius of the American people. The truth, Mr. President, 
is that we have spent billions on the poor, but we have rarely invested 
in them. And I say emphatically that IDA's are not a give-away--they 
are an investment.
  The Assets for Independence Act authorizes the Department of Health 
and Human Services to establish community-based Individual Development 
Account [IDA] programs throughout the country. IDA's are matched 
savings accounts that can be used by low-income people to acquire a 
first home, a small business or post-secondary education or training. 
To help the poor save and to encourage work, their earned income would 
be matched by federal,

[[Page S8568]]

non-federal, and private dollars. All payments would go directly to the 
third-party vendors (for example, directly to the mortgage company for 
people using their IDA to buy their first home) and, like IRA's, there 
would be harsh penalties for misuse. Community-based non-profit 
organizations would have to compete and raise money to be an IDA 
demonstration site. The legislation authorizes $25 million a year for 4 
years for the demonstration.
  Mr. President, IDA's are not new to America. In fact, they're 
spreading rapidly; in part as a result of legislation I proposed, and 
the Congress passed, last year in connection with the welfare reform 
bill.
  Over 40 private, community-based IDA's programs are operating around 
the country. I am pleased to say that one of the oldest and most 
successful IDA programs in the country, at Eastside Community 
Investments, is located in Indianapolis.
  Fourteen States have already included IDA's in their State welfare 
reform plans, as permitted by the passage of last year's legislation.
  Twenty States have sponsored their own IDA programs, some through 
refundable tax credits, others through direct appropriation. For 
example, Pennsylvania has allocated $1.25 million for IDA's through a 
``Family Savings Accounts'' program for low-income families.
  Over 200 community-based groups in 43 States signified their 
intention to develop IDA's in response to a large, privately-funded IDA 
demonstration, slated to begin later this summer.
  When I talk about IDA's, people often say to me that the poor cannot 
save. Well they're wrong. The poor can and do save. As of 1995, some 
171,000 low-income families saved more than $250 million through 
community development credit unions in many of America's poorest 
neighborhoods. Also, I believe that the savings rate of the poor will 
rise tremendously once we start supporting saving, both institutionally 
and culturally. And finally, I doubt that all this IDA activity in the 
country would be going on--all the millions of dollars being committed 
by major foundations, corporations, and States to IDA's--if there 
wasn't a core belief in the ability and willingness of the poor to save 
for long-term, productive assets.
  In closing, Mr. President, I would strongly encourage my colleagues 
to cosponsor this legislation. Just as the private sector and several 
State have invested in America's poor through IDA's, we--the Federal 
Government should invest too. Our commitment to IDA's could leverage 
millions more in private and State contributions--and thereby help move 
millions of hardworking low-income families from poverty to economic 
independence.
  I ask unanimous consent that the text of the bill as introduced be 
printed in the Record at this point.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1106

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Assets for 
     Independence Act''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purposes.
Sec. 4. Definitions.
Sec. 5. Applications.
Sec. 6. Demonstration authority; annual grants.
Sec. 7. Reserve fund.
Sec. 8. Eligibility for participation.
Sec. 9. Selection of individuals to participate.
Sec. 10. Deposits by qualified entities.
Sec. 11. Local control over demonstration projects.
Sec. 12. Annual progress reports.
Sec. 13. Sanctions.
Sec. 14. Evaluations.
Sec. 15. Authorizations of appropriations.
Sec. 16. Funds in individual development accounts of demonstration 
              project participants disregarded for purposes of all 
              means-tested Federal programs.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Economic well-being does not come solely from income, 
     spending, and consumption, but also requires savings, 
     investment, and accumulation of assets because assets can 
     improve economic independence and stability, connect 
     individuals with a viable and hopeful future, stimulate 
     development of human and other capital, and enhance the 
     welfare of offspring.
       (2) Fully \1/2\ of all Americans have either no, 
     negligible, or negative assets available for investment, just 
     as the price of entry to the economic mainstream, the cost of 
     a house, an adequate education, and starting a business, is 
     increasing. Further, the household savings rate of the United 
     States lags far behind other industrial nations presenting a 
     barrier to economic growth.
       (3) In the current tight fiscal environment, the United 
     States should invest existing resources in high-yield 
     initiatives. There is reason to believe that the financial 
     returns, including increased income, tax revenue, and 
     decreased welfare cash assistance, resulting from individual 
     development accounts will far exceed the cost of investment 
     in those accounts.
       (4) Traditional public assistance programs concentrating on 
     income and consumption have rarely been successful in 
     promoting and supporting the transition to increased economic 
     self-sufficiency. Income-based domestic policy should be 
     complemented with asset-based policy because, while income-
     based policies ensure that consumption needs (including food, 
     child care, rent, clothing, and health care) are met, asset-
     based policies provide the means to achieve greater 
     independence and economic well-being.

     SEC. 3. PURPOSES.

       The purposes of this Act are to provide for the 
     establishment of demonstration projects designed to 
     determine--
       (1) the social, civic, psychological, and economic effects 
     of providing to individuals and families with limited means 
     an incentive to accumulate assets by saving a portion of 
     their earned income;
       (2) the extent to which an asset-based policy that promotes 
     saving for education, homeownership, and microenterprise 
     development may be used to enable individuals and families 
     with limited means to increase their economic self-
     sufficiency; and
       (3) the extent to which an asset-based policy stabilizes 
     and improves families and the community in which they live.

     SEC. 4. DEFINITIONS.

       In this Act:
       (1) Applicable period.--The term ``applicable period'' 
     means, with respect to amounts to be paid from a grant made 
     for a project year, the calendar year immediately preceding 
     the calendar year in which the grant is made.
       (2) Eligible individual.--The term ``eligible individual'' 
     means an individual who is selected to participate by a 
     qualified entity under section 9 of this Act.
       (3) Household.--The term ``household'' means all 
     individuals who share use of a dwelling unit as primary 
     quarters for living and eating separate from other 
     individuals.
       (4) Individual development account.--
       (A) In general.--The term ``individual development 
     account'' means a trust created or organized in the United 
     States exclusively for the purpose of paying the qualified 
     expenses of an eligible individual, but only if the written 
     governing instrument creating the trust meets the following 
     requirements:
       (i) No contribution will be accepted unless it is in cash 
     or by check.
       (ii) The trustee is a federally insured financial 
     institution.
       (iii) The assets of the trust will be invested in 
     accordance with the direction of the eligible individual 
     after consultation with the qualified entity providing 
     deposits for the individual under section 10 of this Act.
       (iv) The assets of the trust will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       (v) Except as provided in clause (vi), any amount in the 
     trust which is attributable to a deposit provided under 
     section 10 of this Act may be paid or distributed out of the 
     trust only for the purpose of paying the qualified expenses 
     of the eligible individual.
       (vi) Any balance in the trust on the day after the date on 
     which the individual for whose benefit the trust is 
     established dies shall be distributed within 30 days of that 
     date as directed by that individual to another individual 
     development account established for the benefit of an 
     eligible individual.
       (B) Custodial accounts.--For purposes of subparagraph (A), 
     a custodial account shall be treated as a trust if the assets 
     of the custodial account are held by a bank (as defined in 
     section 408(n) of the Internal Revenue Code of 1986) or 
     another person who demonstrates, to the satisfaction of the 
     Secretary, that the manner in which such person will 
     administer the custodial account will be consistent with the 
     requirements of this Act, and if the custodial account would, 
     except for the fact that it is not a trust, constitute an 
     individual development account described in subparagraph (A). 
     For purposes of this Act, in the case of a custodial account 
     treated as a trust by reason of the preceding sentence, the 
     custodian of that custodial account shall be treated as the 
     trustee thereof.
       (5) Non-federal public sector funds.--The term ``non-
     Federal public sector funds'' includes any non-Federal funds 
     disbursed from a source pursuant to a program operated under 
     the temporary assistance for needy families program under 
     part A of title IV of the Social Security Act (42 U.S.C. 601 
     et seq.).
       (6) Project year.--The term ``project year'' means, with 
     respect to a demonstration project, any of the 4 consecutive 
     12-

[[Page S8569]]

     month periods beginning on the date the project is originally 
     authorized to be conducted.
       (7) Qualified entity.--
       (A) In general.--The term ``qualified entity'' means--
       (i) one or more not-for-profit organizations described in 
     section 501(c)(3) of the Internal Revenue Code of 1986 and 
     exempt from taxation under section 501(a) of such Code; or
       (ii) a State or local government agency submitting an 
     application under section 5 jointly with an organization 
     described in clause (i).
       (B) Rule of construction.--Nothing in this paragraph shall 
     be construed as preventing an organization described in 
     subparagraph (A)(i) from collaborating with a financial 
     institution or for-profit community development corporation 
     to carry out the purposes of this Act.
       (8) Qualified expenses.--The term ``qualified expenses'' 
     means 1 or more of the following, as provided by the 
     qualified entity:
       (A) Postsecondary educational expenses.--Postsecondary 
     educational expenses paid from an individual development 
     account directly to an eligible educational institution. In 
     this subparagraph:
       (i) Post-secondary educational expenses.--The term ``post-
     secondary educational expenses'' means the following:

       (I) Tuition and fees.--Tuition and fees required for the 
     enrollment or attendance of a student at an eligible 
     educational institution.
       (II) Fees, books, supplies, and equipment.--Fees, books, 
     supplies, and equipment required for courses of instruction 
     at an eligible educational institution.

       (ii) Eligible educational institution.--The term ``eligible 
     educational institution'' means the following:

       (I) Institution of higher education.--An institution 
     described in section 481(a)(1) or 1201(a) of the Higher 
     Education Act of 1965 (20 U.S.C. 1088(a)(1) or 1141(a)), as 
     such sections are in effect on the date of enactment of this 
     Act.
       (II) Postsecondary vocational education school.--An area 
     vocational education school (as defined in subparagraph (C) 
     or (D) of section 521(4) of the Carl D. Perkins Vocational 
     and Applied Technology Education Act (20 U.S.C. 2471(4))) 
     which is in any State (as defined in section 521(33) of such 
     Act), as such sections are in effect on the date of enactment 
     of this Act.

       (B) First-home purchase.--Qualified acquisition costs with 
     respect to a qualified principal residence for a qualified 
     first-time homebuyer, if paid from an individual development 
     account directly to the persons to whom the amounts are due. 
     In this subparagraph:
       (i) Qualified acquisition costs.--The term ``qualified 
     acquisition costs'' means the costs of acquiring, 
     constructing, or reconstructing a residence. The term 
     includes any usual or reasonable settlement, financing, or 
     other closing costs.
       (ii) Qualified principal residence.--The term ``qualified 
     principal residence'' means a principal residence (within the 
     meaning of section 1034 of the Internal Revenue Code of 
     1986), the qualified acquisition costs of which do not exceed 
     100 percent of the average area purchase price applicable to 
     such residence (determined in accordance with paragraphs (2) 
     and (3) of section 143(e) of such Code).
       (iii) Qualified first-time homebuyer.--

       (I) In general.--The term ``qualified first-time 
     homebuyer'' means an individual participating in the project 
     (and, if married, the individual's spouse) who has no present 
     ownership interest in a principal residence during the 3-year 
     period ending on the date of acquisition of the principal 
     residence to which this subparagraph applies.
       (II) Date of acquisition.--The term ``date of acquisition'' 
     means the date on which a binding contract to acquire, 
     construct, or reconstruct the principal residence to which 
     this subparagraph applies is entered into.

       (C) Business capitalization.--Amounts paid from an 
     individual development account directly to a business 
     capitalization account which is established in a federally 
     insured financial institution and is restricted to use solely 
     for qualified business capitalization expenses. In this 
     subparagraph:
       (i) Qualified business capitalization expenses.--The term 
     ``qualified business capitalization expenses'' means 
     qualified expenditures for the capitalization of a qualified 
     business pursuant to a qualified plan.
       (ii) Qualified expenditures.--The term ``qualified 
     expenditures'' means expenditures included in a qualified 
     plan, including capital, plant, equipment, working capital, 
     and inventory expenses.
       (iii) Qualified business.--The term ``qualified business'' 
     means any business that does not contravene any law or public 
     policy (as determined by the Secretary).
       (iv) Qualified plan.--The term ``qualified plan'' means a 
     business plan, or a plan to use a business asset purchased, 
     which--

       (I) is approved by a financial institution, a 
     microenterprise development organization, or a nonprofit loan 
     fund having demonstrated fiduciary integrity;
       (II) includes a description of services or goods to be 
     sold, a marketing plan, and projected financial statements; 
     and
       (III) may require the eligible individual to obtain the 
     assistance of an experienced entrepreneurial adviser.

       (D) Transfers to idas of family members.--Amounts paid from 
     an individual development account directly into another such 
     account established for the benefit of an eligible individual 
     who is--
       (i) the individual's spouse; or
       (ii) any dependent of the individual with respect to whom 
     the individual is allowed a deduction under section 151 of 
     the Internal Revenue Code of 1986.
       (9) Qualified savings of the individual for the period.--
     The term ``qualified savings of the individual for the 
     period'' means the aggregate of the amounts contributed by 
     the individual to the individual development account of the 
     individual during the period.
       (10) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.

     SEC. 5. APPLICATIONS.

       (a) Submission.--Not later than 6 months after the date of 
     enactment of this Act, a qualified entity may submit to the 
     Secretary an application to conduct a demonstration project 
     under this Act.
       (b) Criteria.--In considering whether to approve an 
     application to conduct a demonstration project under this 
     Act, the Secretary shall assess the following:
       (1) Sufficiency of project.--The degree to which the 
     project described in the application appears likely to aid 
     project participants in achieving economic self-sufficiency 
     through activities requiring qualified expenses. In making 
     such assessment, the Secretary shall consider the overall 
     quality of project activities in making any particular kind 
     or combination of qualified expenses to be an essential 
     feature of any project.
       (2) Administrative ability.--The experience and ability of 
     the applicant to responsibly administer the project.
       (3) Ability to assist participants.--The experience and 
     ability of the applicant in recruiting, educating, and 
     assisting project participants to increase their economic 
     independence and general well-being through the development 
     of assets.
       (4) Commitment of non-federal funds.--The aggregate amount 
     of direct funds from non-Federal public sector and from 
     private sources that are formally committed to the project as 
     matching contributions.
       (5) Adequacy of plan for providing information for 
     evaluation.--The adequacy of the plan for providing 
     information relevant to an evaluation of the project.
       (6) Other factors.--Such other factors relevant to the 
     purposes of this Act as the Secretary may specify.
       (c) Preferences.--In considering an application to conduct 
     a demonstration project under this Act, the Secretary shall 
     give preference to an application that--
       (1) demonstrates the willingness and ability to select 
     individuals described in section 8 who are predominantly from 
     households in which a child (or children) is living with the 
     child's biological or adoptive mother or father, or with the 
     child's legal guardian;
       (2) provides a commitment of non-Federal funds with a 
     proportionately greater amount of such funds committed by 
     private sector sources; and
       (3) targets such individuals residing within 1 or more 
     relatively well-defined neighborhoods or communities 
     (including rural communities) that experience low rates of 
     income or employment.
       (d) Approval.--Not later than 9 months after the date of 
     enactment of this Act, the Secretary shall, on a competitive 
     basis, approve such applications to conduct demonstration 
     projects under this Act as the Secretary deems appropriate, 
     taking into account the assessments required by subsections 
     (b) and (c). The Secretary is encouraged to ensure that the 
     applications that are approved involve a range of communities 
     (both rural and urban) and diverse populations.
       (e) Contracts With Nonprofit Entities.--The Secretary may 
     contract with an entity described in section 501(c)(3) of the 
     Internal Revenue Code of 1986 and exempt from taxation under 
     section 501(a) of such Code to conduct any responsibility of 
     the Secretary under this section or section 12 if--
       (1) such entity demonstrates the ability to conduct such 
     responsibility; and
       (2) the Secretary can demonstrate that such responsibility 
     would not be conducted by the Secretary at a lower cost.

     SEC. 6. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

       (a) Demonstration Authority.--If the Secretary approves an 
     application to conduct a demonstration project under this 
     Act, the Secretary shall, not later than 10 months after the 
     date of enactment of this Act, authorize the applicant to 
     conduct the project for 4 project years in accordance with 
     the approved application and the requirements of this Act.
       (b) Grant Authority.--For each project year of a 
     demonstration project conducted under this Act, the Secretary 
     shall make a grant to the qualified entity authorized to 
     conduct the project on the first day of the project year in 
     an amount not to exceed the lesser of--
       (1) the aggregate amount of funds committed as matching 
     contributions by non-Federal public or private sector 
     sources; or
       (2) $1,000,000.

     SEC. 7. RESERVE FUND.

       (a) Establishment.--A qualified entity under this Act, 
     other than a State or local government agency, shall 
     establish a Reserve Fund which shall be maintained in 
     accordance with this section.
       (b) Amounts in Reserve Fund.--
       (1) In general.--As soon after receipt as is practicable, a 
     qualified entity shall deposit

[[Page S8570]]

     in the Reserve Fund established under subsection (a)--
       (A) all funds provided to the qualified entity by any 
     public or private source in connection with the demonstration 
     project; and
       (B) the proceeds from any investment made under subsection 
     (c)(2).
       (2) Uniform accounting regulations.--The Secretary shall 
     prescribe regulations with respect to accounting for amounts 
     in the Reserve Fund established under subsection (a).
       (c) Use of Amounts in the Reserve Fund.--
       (1) In general.--A qualified entity shall use the amounts 
     in the Reserve Fund established under subsection (a) to--
       (A) assist participants in the demonstration project in 
     obtaining the skills (including economic literacy, budgeting, 
     credit, and counseling) and information necessary to achieve 
     economic self-sufficiency through activities requiring 
     qualified expenses;
       (B) provide deposits in accordance with section 10 for 
     individuals selected by the qualified entity to participate 
     in the demonstration project;
       (C) administer the demonstration project; and
       (D) provide the research organization evaluating the 
     demonstration project under section 14 with such information 
     with respect to the demonstration project as may be required 
     for the evaluation.
       (2) Authority to invest funds.--
       (A) Guidelines.--The Secretary shall establish guidelines 
     for investing amounts in the Reserve Fund established under 
     subsection (a) in a manner that provides an appropriate 
     balance between return, liquidity, and risk.
       (B) Investment.--A qualified entity shall invest the 
     amounts in its Reserve Fund that are not immediately needed 
     to carry out the provisions of paragraph (1), in accordance 
     with the guidelines established under subparagraph (A).
       (3) Limitation on uses.--Not more than 7.5 percent of the 
     amounts provided to a qualified entity under section 6(b) 
     shall be used by the qualified entity for the purposes 
     described in subparagraphs (A), (C), and (D) of paragraph 
     (1), except that if 2 or more qualified entities are jointly 
     administering a project, no qualified entity shall use more 
     than its proportional share for such purposes.
       (d) Unused Federal Grant Funds Transferred to the Secretary 
     When Project Terminates.--Notwithstanding subsection (c), 
     upon the termination of any demonstration project authorized 
     under this section, the qualified entity conducting the 
     project shall transfer to the Secretary an amount equal to--
       (1) the amounts in its Reserve Fund at time of the 
     termination; multiplied by
       (2) a percentage equal to--
       (A) the aggregate amount of grants made to the qualified 
     entity under section 6(b); divided by
       (B) the aggregate amount of all funds provided to the 
     qualified entity by all sources to conduct the project.

     SEC. 8. ELIGIBILITY FOR PARTICIPATION.

       (a) In General.--Any individual who is a member of a 
     household that is eligible for assistance under the State 
     temporary assistance for needy families program established 
     under part A of title IV of the Social Security Act (42 
     U.S.C. 601 et seq.), or that meets the following requirements 
     shall be eligible to participate in a demonstration project 
     conducted under this Act:
       (1) Income test.--The adjusted gross income of the 
     household does not exceed the income limits established under 
     section 32(b)(2) of the Internal Revenue Code of 1986.
       (2) Net worth test.--
       (A) In general.--The net worth of the household, as of the 
     end of the calendar year preceding the determination of 
     eligibility, does not exceed $10,000.
       (B) Determination of net worth.--For purposes of 
     subparagraph (A), the net worth of a household is the amount 
     equal to--
       (i) the aggregate market value of all assets that are owned 
     in whole or in part by any member of the household; minus
       (ii) the obligations or debts of any member of the 
     household.
       (C) Exclusions.--For purposes of determining the net worth 
     of a household, a household's assets shall not be considered 
     to include the primary dwelling unit and 1 motor vehicle 
     owned by the household.
       (b) Individuals Unable to Complete the Project.--The 
     Secretary shall establish such regulations as are necessary, 
     including prohibiting future eligibility to participate in 
     any other demonstration project conducted under this Act, to 
     ensure compliance with this Act if an individual 
     participating in the demonstration project moves from the 
     community in which the project is conducted or is otherwise 
     unable to continue participating in that project.

     SEC. 9. SELECTION OF INDIVIDUALS TO PARTICIPATE.

       From among the individuals eligible to participate in a 
     demonstration project conducted under this Act, each 
     qualified entity shall select the individuals--
       (1) that the qualified entity deems to be best suited to 
     participate; and
       (2) to whom the qualified entity will provide deposits in 
     accordance with section 10.

     SEC. 10. DEPOSITS BY QUALIFIED ENTITIES.

       (a) In General.--Not less than once every 3 months during 
     each project year, each qualified entity under this Act shall 
     deposit in the individual development account of each 
     individual participating in the project, or into a parallel 
     account maintained by the qualified entity--
       (1) from the non-Federal funds described in section 
     5(b)(4), a matching contribution of not less than $0.50 and 
     not more than $4 for every $1 of earned income (as defined in 
     section 911(d)(2) of the Internal Revenue Code of 1986) 
     deposited in the account by a project participant during that 
     period;
       (2) from the grant made under section 6(b), an amount equal 
     to the matching contribution made under paragraph (1); and
       (3) any interest that has accrued on amounts deposited 
     under paragraph (1) or (2) on behalf of that individual into 
     the individual development account of the individual or into 
     a parallel account maintained by the qualified entity.
       (b) Limitation on Deposits for an Individual.--Not more 
     than $2,000 from a grant made under section 6(b) shall be 
     provided to any 1 individual over the course of the 
     demonstration project.
       (c) Limitation on Deposits for a Household.--Not more than 
     $4,000 from a grant made under section 6(b) shall be provided 
     to any 1 household over the course of the demonstration 
     project.
       (d) Withdrawal of Funds.--The Secretary shall establish 
     such guidelines as may be necessary to ensure that funds held 
     in an individual development account are not withdrawn, 
     except for 1 or more qualified expenses. Such guidelines 
     shall include a requirement that a responsible official of 
     the qualified entity conducting a project approve such 
     withdrawal in writing.

     SEC. 11. LOCAL CONTROL OVER DEMONSTRATION PROJECTS.

       A qualified entity under this Act, other than a State or 
     local government agency, shall, subject to the provisions of 
     section 13, have sole authority over the administration of 
     the project. The Secretary may prescribe only such 
     regulations or guidelines with respect to demonstration 
     projects conducted under this Act as are necessary to ensure 
     compliance with the approved applications and the 
     requirements of this Act.

     SEC. 12. ANNUAL PROGRESS REPORTS.

       (a) In General.--Each qualified entity under this Act shall 
     prepare an annual report on the progress of the demonstration 
     project. Each report shall specify for the period covered by 
     the report the following information:
       (1) The number of individuals making a deposit into an 
     individual development account.
       (2) The amounts in the Reserve Fund established with 
     respect to the project.
       (3) The amounts deposited in the individual development 
     accounts.
       (4) The amounts withdrawn from the individual development 
     accounts and the purposes for which such amounts were 
     withdrawn.
       (5) The balances remaining in the individual development 
     accounts.
       (6) Such other information as the Secretary may require to 
     evaluate the demonstration project.
       (b) Submission of Reports.--The qualified entity shall 
     submit each report required to be prepared under subsection 
     (a) to--
       (1) the Secretary; and
       (2) the Treasurer (or equivalent official) of the State in 
     which the project is conducted, if the State or a local 
     government committed funds to the demonstration project.
       (c) Timing.--The first report required by subsection (a) 
     shall be submitted not later than 60 days after the end of 
     the calendar year in which the Secretary authorized the 
     qualified entity to conduct the demonstration project, and 
     subsequent reports shall be submitted every 12 months 
     thereafter, until the conclusion of the project.

     SEC. 13. SANCTIONS.

       (a) Authority to Terminate Demonstration Project.--If the 
     Secretary determines that a qualified entity under this Act 
     is not operating the demonstration project in accordance with 
     the entity's application or the requirements of this Act (and 
     has not implemented any corrective recommendations directed 
     by the Secretary), the Secretary shall terminate such 
     entity's authority to conduct the demonstration project.
       (b) Actions Required Upon Termination.--If the Secretary 
     terminates the authority to conduct a demonstration project, 
     the Secretary--
       (1) shall suspend the demonstration project;
       (2) shall take control of the Reserve Fund established 
     pursuant to section 7;
       (3) shall make every effort to identify another qualified 
     entity (or entities) willing and able to conduct the project 
     in accordance with the approved application (or, as modified, 
     if necessary to incorporate the recommendations) and the 
     requirements of this Act;
       (4) shall, if the Secretary identifies an entity (or 
     entities) described in paragraph (3)--
       (A) authorize the entity (or entities) to conduct the 
     project in accordance with the approved application (or, as 
     modified, if necessary, to incorporate the recommendations) 
     and the requirements of this Act;
       (B) transfer to the entity (or entities) control over the 
     Reserve Fund established pursuant to section 7; and
       (C) consider, for purposes of this Act--
       (i) such other entity (or entities) to be the qualified 
     entity (or entities) originally authorized to conduct the 
     demonstration project; and

[[Page S8571]]

       (ii) the date of such authorization to be the date of the 
     original authorization; and
       (5) if, by the end of the 1-year period beginning on the 
     date of the termination, the Secretary has not found a 
     qualified entity (or entities) described in paragraph (3), 
     shall--
       (A) terminate the project; and
       (B) from the amount remaining in the Reserve Fund 
     established as part of the project, remit to each source that 
     provided funds under section 5(b)(4) to the entity originally 
     authorized to conduct the project, an amount that bears the 
     same ratio to the amount so remaining as the amount provided 
     by the source under section 5(b)(4) bears to the amount 
     provided by all such sources under that section.

     SEC. 14. EVALUATIONS.

       (a) In General.--Not later than 10 months after the date of 
     enactment of this Act, the Secretary shall enter into a 
     contract with an independent research organization to 
     evaluate, individually and as a group, all qualified entities 
     and sources participating in the demonstration projects 
     conducted under this Act.
       (b) Factors to Evaluate.--In evaluating any demonstration 
     project conducted under this Act, the research organization 
     shall address the following factors:
       (1) The savings account characteristics (such as threshold 
     amounts and match rates) required to stimulate participation 
     in the demonstration project, and how such characteristics 
     vary among different populations or communities.
       (2) What service configurations of the qualified entity 
     (such as peer support, structured planning exercises, 
     mentoring, and case management) increase the rate and 
     consistency of participation in the demonstration project and 
     how such configurations vary among different populations or 
     communities.
       (3) The economic, civic, psychological, and social effects 
     of asset accumulation, and how such effects vary among 
     different populations or communities.
       (4) The effects of individual development accounts on 
     savings rates, homeownership, level of education attained, 
     and self-employment, and how such effects vary among 
     different populations or communities.
       (5) The potential financial returns to the Federal 
     Government and to other public sector and private sector 
     investors in individual development accounts over a 5-year 
     and 10-year period of time.
       (6) The lessons to be learned from the demonstration 
     projects conducted under this Act and if a permanent program 
     of individual development accounts should be established.
       (7) Such other factors as may be prescribed by the 
     Secretary.
       (c) Methodological Requirements.--In evaluating any 
     demonstration project conducted under this Act, the research 
     organization shall--
       (1) to the extent possible, use control groups to compare 
     participants with nonparticipants;
       (2) before, during, and after the project, obtain such 
     quantitative data as are necessary to evaluate the project 
     thoroughly; and
       (3) develop a qualitative assessment, derived from sources 
     such as in-depth interviews, of how asset accumulation 
     affects individuals and families.
       (d) Reports By the Secretary.--
       (1) Interim reports.--Not later than 90 days after the end 
     of the calendar year in which the Secretary first authorizes 
     a qualified entity to conduct a demonstration project under 
     this Act, and every 12 months thereafter until all 
     demonstration projects conducted under this Act are 
     completed, the Secretary shall submit to Congress an interim 
     report setting forth the results of the reports submitted 
     pursuant to section 12(b).
       (2) Final reports.--Not later than 12 months after the 
     conclusion of all demonstration projects conducted under this 
     Act, the Secretary shall submit to Congress a final report 
     setting forth the results and findings of all reports and 
     evaluations conducted pursuant to this Act.
       (e) Evaluation Expenses.--The Secretary shall expend such 
     sums as may be necessary to carry out the purposes of this 
     section.

     SEC. 15. AUTHORIZATIONS OF APPROPRIATIONS.

       There is authorized to be appropriated to carry out this 
     Act, $25,000,000 for each of fiscal years 1998, 1999, 2000, 
     and 2001, to remain available until expended.

     SEC. 16. FUNDS IN INDIVIDUAL DEVELOPMENT ACCOUNTS OF 
                   DEMONSTRATION PROJECT PARTICIPANTS DISREGARDED 
                   FOR PURPOSES OF ALL MEANS-TESTED FEDERAL 
                   PROGRAMS.

       Notwithstanding any other provision of law that requires 
     consideration of 1 or more financial circumstances of an 
     individual, for the purpose of determining eligibility to 
     receive, or the amount of, any assistance or benefit 
     authorized by such law to be provided to or for the benefit 
     of such individual, funds (including interest accruing) in an 
     individual development account (as defined in section 4(4)) 
     shall be disregarded for such purpose with respect to any 
     period during which the individual participates in a 
     demonstration project conducted under this Act (or would be 
     participating in such a project but for the suspension of the 
     project).
                                 ______
                                 
      By Mr. COVERDELL:
  S. 1107. A bill to protect consumers by eliminating the double 
postage rule under which the Postal Service requires competitors of the 
Postal Service to charge above market prices; to the Committee on 
Governmental Affairs.

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