Congressional Record, Volume 143 Issue 114 (Wednesday, September 3, 1997)

[Congressional Record Volume 143, Number 114 (Wednesday, September 3, 1997)]
[Senate]
[Pages S8723-S8732]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. MOYNIHAN (for himself, Mr. D'Amato and Mr. Graham):
S. 1142. A bill to repeal the provision in the Taxpayer Relief Act of
1997 relating to the termination of certain exceptions from rules
relating to exempt organizations which provide commercial-type
insurance; to the Committee on Finance.

LEGISLATION REPEALING CERTAIN PROVISION OF THE TAXPAYER RELIEF ACT

Mr. MOYNIHAN. Mr. President, I rise today to introduce legislation
that would repeal an irrational provision of the Taxpayer Relief Act of
1997. I refer to section 1042 of that act, which took away the tax
exempt status of TIAA-CREF, the Teacher's Insurance Annuity Association
College Retirement Equities Fund. The legislation I am introducing
today, with Senators D'Amato

[[Page S8724]]

and Graham of Florida as original cosponsors, would simply strike
section 1042 and restore the tax exemption that TIAA-CREF has been
afforded since its establishment by Andrew Carnegie in 1918. Repeal of
section 1042 would also serve to restore the tax exemption for Mutual
of America, which has served as a pension administrator for social
welfare organizations for over 50 years and was similarly tax-exempt
until August 5, 1997, when the President signed the tax bill.
TIAA-CREF is a 2-million member retirement system that serves 6,100
American colleges, universities, teaching hospitals, museums,
libraries, and other nonprofit educational and research institutions.
TIAA was incorporated under the laws of the State of New York in 1937
to ``forward the cause of education and promote the welfare of the
teaching profession.'' Let me repeat--to ``forward the cause of
education and promote the welfare of the teaching profession.'' The law
further states that the purpose of TIAA--this is the New York Statute--
is ``to aid and strengthen non-proprietary and non-profit-making
colleges, universities, and other institutions engaged primarily in
research.'' And it has done just that, in an exemplary manner. It has
long been recognized as a model of such programs.
Mr. President, by charter and New York law, TIAA-CREF's pension
assets are exclusively and irrevocably dedicated to providing
retirement benefits to covered employees. Its funds are essentially
equivalent to a multiple employer pension trust for colleges and
universities. Like other pension trusts, TIAA-CREF should not be taxed.
As a somewhat unanticipated result of TIAA-CREF's creation, it
brought to American higher education portability of pensions. You did
not have to start out in one institution and after a certain point stay
there the rest of your life because you had to have some retirement
benefit. This is of great value to our educational system for the
simple reason that it enables a young person at, say, a 2-year college
or a local college, who shows great promise, does good work, to end up
at Chicago or Stanford or Duke, because they can move. This is part of
the agility of American higher education. There is no reason to tax
this. Earlier in the summer, the Finance Committee had said don't tax
it, and the full Senate agreed. But somehow or other, the conference
agreement provided otherwise. This was a mistake, and it wants to be
corrected.
The repeal of TIAA-CREF's 79-year-old tax exemption will cost the
average retiree who receives a $12,000 annual pension about $600 in
income, unless we act. Librarians are not highly paid. A $12,000
pension would be quite normal. A $600 reduction would be 5 percent
right away. Future retirees currently accumulating benefits are likely
to face reductions of 10 to 15 percent.
Why make the lives of librarians and assistant professors and
teachers in community colleges harder? We have an opportunity to undo
this before the law takes effect in 1998. Why don't we? The Finance
Committee said no to it. During the conference deliberations on the tax
bill, nearly half the Members of the Senate, and dozens of Members of
the House, signed letters asking the conferees to stand against
repealing this tax exemption.
Now it is September. Members of Congress have had a month-long
opportunity to visit with and hear from the academic community. I am
hopeful we can act on this legislation and restore TIAA-CREF and Mutual
of America to their appropriate status as tax-exempt organizations
before Congress adjourns for the year.
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. 1142

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

SECTION. 1. REPEAL OF PROVISION RELATING TO THE TERMINATION
OF CERTAIN EXCEPTIONS.

(a) In General.--Section 1042 of the Taxpayer Relief Act of
1997 (Public Law 105-34) is repealed.
(b) Effective Date.--The repeal made by subsection (a)
shall take effect as if included in the enactment of the
Taxpayer Relief Act of 1997 (Public Law 105-34).
______

By Mr. ALLARD: (for himself and Mr. Campbell):

S. 1143. A bill to prohibit commercial air tours over the Rocky
Mountain National Park; to the Committee on Commerce, Science, and
Transportation.

ROCKY MOUNTAIN NATIONAL PARK LEGISLATION

Mr. ALLARD. Mr. President, I am here today to introduce legislation
banning commercial tour overflights at Rocky Mountain National Park.
Tour overflight disturbances are a growing problem at a number of
parks. This is an issue that other Members of Congress have addressed
in the past, and it will continue to be contentious as long as the
natural calm treasured by park visitors is threatened.
I commend the Members of Congress who have been involved in creating
legislation to control national park overflights in general or in a
particular park. Details of problems are park specific, which is why I
am addressing the issue of overflights at Rocky Mountain National Park
in Colorado. I hope that introduction of this legislation also serves
to help Congress and the administration stay focused on creating a
policy to address tour overflights at all national parks.
The National Park Service is directed by law to protect the natural
quiet in our National Parks. The 1916 National Park Service Organic Act
states that the Park Service shall conserve scenery and wildlife and
leave the areas unimpaired for future generations. Two other public
laws explicitly state the need to preserve national parks in their
natural state, most recently the National Parks Overflights Act of 1987
that notes the adverse impact that overflights have on the natural
quiet and experience. The law also insists that parks should be
essentially free from aircraft sound intrusions. In 1996, President
Clinton announced his commitment to the peace of our national parks by
ordering that agencies protect them against noise intrusions from park
overflights.
Furthermore, surveys have indicated that more than 90 percent of park
visitors feel that tranquility is very important, but it is not only
the quiet atmosphere that overflights threaten; overflights also have
the potential to adversely impact wildlife and other natural resources.
In particular, I am concerned about proposals for helicopter
sightseeing at Rocky Mountain National Park that could seriously
detract from the enjoyment of other park visitors and also could have a
negative impact on the resources and values of the park itself. I value
the wildlife and solitude at Rocky Mountain National Park, and I
understand fully the concern that commercial tour overflights will
impair visitor enjoyment.
Rocky Mountain National Park is a relatively small park in the
Rockies, about 70 miles from Denver. The park receives nearly 3 million
visitors each year, almost as many as Yellowstone National Park, which
is eight times its size. The park is easily accessible, yet continues
to provide quiet, solitude, and remoteness to visitors, especially in
the back country.
Several problems are specific to this mountainous park. The elevation
of the Park does not allow a large minimum altitude, therefore,
according to the National Park Service, natural quiet is unlikely if
overflights are permitted at all. In addition, the terrain, consisting
of many 13,000 foot peaks and narrow valleys, coupled with
unpredictable weather, presents serious safety concerns. Also, the
unique terrain of Rocky Mountain National Park would cause air traffic
to cumulate over the popular, lower portions of the park as pilots are
forced to navigate around the dangerous peaks and high winds.
Not only would the overflights be concentrated directly over the most
popular portions of the park, but more powerful, and louder,
helicopters must be used to achieve the necessary lift at a high
altitude.
In August the members of the Clinton administration's appointed task
force on commercial tour overflights toured Rocky Mountain National
Park. One of the participants, a spokesman for the National Air
Transportation Association observed the altitude of the park and
extreme weather conditions and stated, ``I don't know that there's
anything here that being in a helicopter would make that much

[[Page S8725]]

more interesting than what can be seen from the road.''
These distinctive qualities lead to the conclusion that the best
solution to overflight disturbance is a ban on commercial tour flights
at Rocky Mountain National Park. It is important for me to affirm that
this legislation would only ban commercial tour overflights. It is not
intended to have any adverse effect on emergency, military and
administrative flights or on commercial high-level airlines or private
planes.
A commercial tour overflight ban has widespread support throughout my
State. State and local officials in areas adjacent to the park,
including Larimer County, Grand County, and the city of Estes Park have
indicated their concerns with flights over the park, and they support a
ban. In the last session of Congress the entire Colorado delegation
went on record in support of an overflight ban. The Governor of
Colorado has also expressed a fear shared by many that such
disturbances could cause a loss of tourism.
Rocky Mountain National Park has been fortunate enough to be free
from overflights to this point, partially because local towns have
discouraged companies that might provide such services. In addition,
there are no existing private property rights that are infringed upon
by the implementation of a permanent commercial tour overflight ban.
At the beginning of this year the FAA issued a temporary ban on
sightseeing flights over Rocky Mountain National Park. However, I
remain concerned as we await final ruling by the FAA on park
overflights and consider the possibility that such low-flying aircraft
could be permitted in the park.
In 1995, one of our top Denver newspapers editorialized that the FAA
should make Rocky Mountain National Park off-limits to low-flying
aircraft use, the sooner the better. Now, 2 years later, it is time to
take action on imposing a permanent ban on scenic overflights.
______

By Mr. MOYNIHAN (for himself and Mr. D'Amato):
S. 1144. A bill disapproving the cancellation transmitted by the
President on August 11, 1997, regarding Public Law 105-33; to the
Committee on Finance.

DISAPPROVAL LEGISLATION

Mr. MOYNIHAN. Mr. President, on this the first full day of Senate
business since our adjournment for the August recess, I come to the
floor with my colleague and friend from New York, Senator D'Amato, to
address an issue of importance to New York, and of surpassing
significance to our constitutional form of government. On August 11,
for the first time in our history, President Clinton exercised his new
authority under the Line Item Veto Act. In doing so he repealed, a
provision of Federal law intended to relieve New York of up to $2.6
billion in disputed Medicaid claims. The provision had been included at
Senator D'Amato's behest, and with my full support, in the Balanced
Budget Act of 1997, one of the two major reconciliation bills signed
into law on August 5 in a ceremony at the White House.
Senator D'Amato and I rise today to state for the record our firm
opposition to the President's repeal of the New York Medicaid
provision, and to introduce a ``disapproval bill'' to reverse the
President's action. I will also speak to the underlying question of the
constitutionality of the Line Item Veto Act.
Each year, for 21 years now, I have issued a report on the balance of
payments, as we put it, between New York State and the Federal
Government. The twenty-first edition, now prepared in collaboration
with the Taubman Center on State and Local Government at the John F.
Kennedy School of Government will be published toward the end of this
month. Let me report for purposes of this comment, however, that it
will show that New York has the third highest poverty rate in the
Nation and the fourth highest Cost of Living Index--as computed by the
Friar-Leonard State Cost of Living Index. This has resulted in an
extraordinarily high level of Medicaid costs for the State and
especially for the city of New York.
This level of payments might have been sustainable with a more
equitable Federal-State matching formula. If, for example, the Federal
Government paid 73 percent as it does in Arkansas. But we were capped
at 50 percent. As my colleague from New York knows, the current
Federal-State Medicaid matching formula was taken directly from the
Hill-Burton Hospital Survey and Construction Act of 1946, under which
the matching rate is based on the square of the ratio of State per
capita income and national per capita income. In a commencement address
at Kingsborough Community College in New York 20 years ago, I
suggested, only half jokingly, why not square root? If you are going to
have algebra in Federal statutes, why not turn it our way? Given New
York's 50-percent match rate, however, something had to be done.
And so, like a number of other States, New York began to impose
provider taxes on hospitals, nursing homes, home health agencies, and
so forth, as a way of generating revenues to finance specific health
care programs. As part of the costs incurred by providers, these taxes
were reimbursable, withal at the 50-percent level, by the Federal
Government. The taxes all went into additional health care, and no one
could claim fraud. However, in recent years some States got too
creative in imposing and seeking Federal matching funds for their
provider taxes, in some instances using the Federal money for purposes
unrelated to health care. This led Congress in 1991 to enact
legislation to prevent States from gaming the system. Since New York
was confident its taxes were in compliance with the 1991 law, the State
continued its practice, all the while seeking a waiver from the Federal
health care bureaucracy.
And so, when the time came to draft the 1997 reconciliation bill,
Senator D'Amato, a member of the Committee on Finance, asked that a
provision be included that would simply preclude any Federal claims
regarding the use of these taxes from 1991 to 1996. I fully supported
this measure. The issue had been debated during our markup in the
Finance Committee, and the provision was included in the final bill,
which was passed by a large 73 to 27 majority. The conference report
was adopted by an even larger majority, 85 to 15.
As ranking member of the committee, I was on this floor with our
esteemed chairman, Senator Roth, for several days and in meetings with
House conferees and administration officials for an eternity, or so it
seemed. Morning, noon, night; mostly night. Let the Record reflect that
at no point in the course of those deliberations did the subject of the
Medicaid waiver come up. No Member of the House challenged it; no
representative of the administration said a word to me. In fact, the
only administration objection that I know of was buried deep in the 21-
page letter of administration views sent by OMB Director Raines on July
7, which said, in pertinent part:

[T]he Senate bill would deem provider taxes as approved for
one State. We have serious concerns about these provisions
and would like to work with the Conferees to address the
underlying problems.

This was not the clearest possible statement. What, for example, does
``deem'' mean? Further, the term ``serious concerns'' is used any
number of times in the administration's views, yet in none of those
other instances did a line item veto result. ``Serious concerns.'' I
ask my friend from New York, does that sound like a veto threat to him?
In 20 years in the Senate, this Senator has heard many veto threats
made, but never one like that. Yet this is evidently how we should
expect things to work in the era of the line item veto.
This leads to my second, larger, point. I am one of those--and I am
not alone--who hold that the line-item veto is unconstitutional in that
it violates the presentment clause of article I, section 7, which
states:

Every bill which shall have passed the House of
Representatives and the Senate shall, before it becomes a
law, be presented to the President of the United States; if
he approve, he shall sign it, but if not, he shall return it.

When the Line Item Veto Act was first debated in the Senate in the
spring of 1995, I argued--along with our revered colleague from West
Virginia, Senator Robert C. Byrd, and others-- that the presentment
clause means exactly what it says. But I'm afraid not many people were
listening.

[[Page S8726]]

Recall that the line item veto was part of item one in the Contract
With America, which was then only a few months old. But we said:
``Don't do this! It violates the principle of the separation of powers
as we have understood it since George Washington was President.'' For
it was President Washington who wrote ``From the nature of the
Constitution, I must approve all the parts of a bill or reject it in
toto.''
In lengthy statements here on the floor, Senators Byrd, Levin,
Hatfield, and I--among others--argued as emphatically as we could. We
cited the relevant case law--INS versus Chadha, Bowsher versus Synar;
we quoted prominent constitutional scholars--Laurence H. Tribe, Michael
J. Gerhardt. Yet in the end we were in a regrettably small minority.
The Line Item Veto Act passed the Senate on March 23, 1995, by a vote
of 69 to 29. When the conference report came back in March of 1996--a
full year later--it passed by a vote of 69-31. Of the 31 Senators
opposed, four of us felt the principle at stake was so consequential
that it demanded immediate scrutiny by the courts. For which the Line
Item Veto Act had explicitly provided: Section 3 of the act provides
for ``expedited review'' of the statute's constitutionality by the U.S.
District Court for the District of Columbia, with direct appeal to the
U.S. Supreme Court. The act further stated that ``any Member of
Congress or any individual adversely affected'' could bring an action
``on the ground that any provision of this part violates the
Constitution.''
Accordingly, on January 2 of this year, the first business day after
the Line Item Veto Act took effect, I joined with Senator Byrd, Senator
Carl Levin of Michigan, former Senator Mark O. Hatfield of Oregon, and
Representatives Henry A. Waxman of California and David E. Skaggs of
Colorado, as plaintiffs in a lawsuit challenging the constitutionality
of the measure. We were represented on a pro bono basis by a team of
distinguished and learned counsel, including Louis R. Cohen; Charles J.
Cooper; Lloyd N. Cutler; Michael Davidson; and Alan B. Morrison. Oral
argument was heard on March 21 by Judge Thomas Penfield Jackson of the
U.S. District Court for the District of Columbia. And less than 3 weeks
later, on April 10, Judge Jackson held for us and declared the bill
unconstitutional. He wrote in his opinion:

. . . the Act effectively permits the President to repeal
duly enacted provisions of federal law. This he cannot do. .
. . The duty of the President with respect to such laws is to
``take care that [they] be faithfully executed.'' U.S. Const.
art. II, sec. 3. Canceling, i.e., repealing, parts of a law
cannot be considered its faithful execution.

On June 26, however, the Supreme Court vacated the district court's
judgment, holding in a 7-2 decision that as Members of Congress, we did
not have ``standing'' to sue, as we could not demonstrate any personal,
or ``judicially cognizable,'' injury. We do not agree; in our view, the
measure shifts the balance of power between the Congress and President
in direct contravention of article I, something that can only be done
by constitutional amendment. But, of course, the Court left it for
others to sue.
Now we can. As a consequence of the President's decision to use the
line-item veto on a measure designed to help New York, surely there
will now be a lawsuit that will persuade the Supreme Court to strike
down the measure as unconstitutional. All manner of New Yorkers
presumably have standing; they have suffered injury. The Court was
explicit that in such a case, the act was open to constitutional
challenge. Let the Governor sue. The Comptroller. The Speaker. Mayors.
Hospital administrators. Nurses unions. I shall be honored to join in.
Expedited judicial review will again be provided pursuant to section 3
of the Line Item Veto Act; the action will again begin in the district
court in Washington, with direct appeal to the Supreme Court. This time
round, I trust the Court will declare the statute unconstitutional. As
Justice John Paul Stevens wrote in his dissent to the Court's June 26
decision:

If the [Act] were valid, it would deny every Senator and
every Representative any opportunity to vote for or against
the truncated measure that survives the exercise of the
President's cancellation authority. Because the opportunity
to cast such votes is a right guaranteed by the text of the
Constitution, I think it clear that the persons who are
deprived of that right by the Act have standing to challenge
its constitutionality. . . [T]he same reason that the
respondents have standing provides a sufficient basis for
concluding that the statute is unconstitutional.

Once the constitutional issue is disposed of, and even if it is not,
and very possibly before it is, I know my colleague from New York will
join me in saying that the issue of the equity of the Medicaid matching
formula must be addressed. It is too extreme an example of
discrimination to go on for another half century. Three years ago,
President Clinton said as much. On a visit to New York City in May
1994, he spoke at a breakfast of the Association for a Better New York.
Inviting questions, the President was asked by State Comptroller H.
Carl McCall whether anything would be done to relieve the State of the
``crushing burden'' imposed by Medicaid. The President replied:

There's no question that the formula should be changed, and
that states like New York with high per capita incomes but
huge numbers of poor people are not treated fairly under a
formula that only deals with per capita income.

There was no reference to this in the President's recent veto message
of the New York provision. Rather, the contrary:

No other state in the nation would be given this provision,
and it is unfair to the rest of our nation's taxpayers to ask
them to subsidize it.

This was not entirely accurate, although there is no reason to suppose
the President was aware of this. In the absurdly dense 1,600-page bill
Congress had sent him, there was a small provision, adopted in the
Finance Committee, which raises the Medicaid matching level for Alaska
from the bottom rate of 50 percent to the national average of 59.6
percent. The Senators from Alaska made the simple case that the cost of
living in Alaska is well above the national average. This is reflected
in higher incomes, which the Medicaid formula wrongly interprets as
greater wealth. They asked for nothing more than the national average.
The District of Columbia got an increased match rate as well. Hawaii
asked also, but the bill had been closed by then. Senator D'Amato and I
say it is time to open the issue up.
The case for legislative remedy is surely overwhelming. And we intend
to use the new attention that has been drawn to this issue by the
President's veto to press that case at every opportunity.
Mr. D'AMATO. Mr. President, may I suggest the absence of a quorum so
I will have an opportunity to concur with my colleague, the
distinguished senior Senator from New York? Let me say, No. 1, that I
totally support his presentation as it related to the manner in which
this veto took place. It is something that none of us were apprised of
or aware of; that there had been extended negotiations with his
administration during this process. It came as a total surprise. But I
would like to take one moment and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MOYNIHAN. Mr. President, I send, for myself and Mr. D'Amato, a
bill to the desk and ask that it be appropriately referred.
The PRESIDING OFFICER. The bill will be appropriately referred to the
appropriate committee.
Mr. D'AMATO addressed the Chair.
The PRESIDING OFFICER. The Senator from New York is recognized.
Mr. D'AMATO. Mr. President, I rise this morning, along with Senator
Moynihan, to introduce legislation to ``disapprove'' President
Clinton's line-item veto that cancels a Medicaid provision in the
Balanced Budget Act of 1997 which provides health care to the poorest
of the poor in New York. Let me say that that is the legislation which
has just been sent to the desk. That is legislation to disapprove this
veto. Let me also say that I must speak out not about the authority of
the line-item veto, which I support, but about its use in this
particular case.

[[Page S8727]]

Mr. President, I have to tell you--and I listened intently to Senator
Moynihan making his presentation with respect to the manner in which
the entire budget negotiations and the process was conducted. The fact
of the matter is that the administration and the President agreed
during the budget negotiations to accept the provisions that were
included in this bill.
The fact of the matter is, I believe it was June 25 when these
provisions were adopted by the full Senate. Mr. President, there was no
secret. The administration knew. The administration had ample time all
during that process to say ``no'', this is unacceptable.
I have to tell you, I am shocked and outraged that the administration
has singled out New York for this particular provision by stating that
this is an ``item that would have given preferential treatment to only
New York.''
Mr. President, that is blatantly, patently false. It is a total
misstatement.
I hope that the President will have an opportunity to examine this
because I believe that his advisers have given him very poor advice.
I can't believe, knowing the President's commitment to attempt to
deal with the problem of the uninsured, particularly the children--he
had full knowledge of the manner and the totality of dealing with the
shortcomings because we are attempting to reduce the burdens, we are
attempting to get our Medicaid and Medicare costs under control. In
this bill, notwithstanding that the administration claimed and advised
the President and his people that this was a special provision just for
New York, there are instance after instance, in case after case after
case, where other States received similar treatment, as they can and
should have in order to push the tremendous cuts --15 percent-plus in
some cases. There were going to be 25 percent cuts that hospitals
dealing with a disproportionate share of this Nation's poor would
otherwise have had to make. That is DSH payments.
Let's understand what we are talking about. The average person--what
are you talking about? What is this DSH? How do you take care, in large
metropolitan areas in the North, the South, the East, and the West of
our country, of those who do not have medical insurance? What do those
hospitals do? Close their doors? Go bankrupt? Who is to pay for them?
So there was a conscious effort by the committee to see to it that
States with these disproportionate problems in terms of dealing with
the uninsured, with those who had just Medicaid and Medicaid alone, who
cannot sustain the operations of our medical centers, to give relief.
Indeed, Mr. President, I believe if one were to add up the totality of
the money provided, it would be in the area of $700 to $800 million
that was given in relief to pushing the cuts that these States and
these institutions would otherwise absorb.
Let me give you just some of the States. Alabama, Connecticut,
Florida, Louisiana, Maine, Missouri, New Hampshire, New Jersey, South
Carolina, Texas, Vermont.
Mr. President, to suggest that New York was the only one, indeed, New
York could have been included. And if draftsmanship had been used, if
we had known that we would have been singled out in this manner, I tell
you we could have included the provision within the budget in such a
way that all of these States including New York would have had to be
vetoed then.
Are we saying it is the poor of New York who should be disadvantaged?
We don't begrudge help to those States that are needing it. This is not
an attempt to game the system. And let me talk about that.
There came a point in time when the Federal Government became aware
that some States were gaming the system. In other words, certain States
were guilty of scamming. That was wrong, and both Senator Moynihan and
I provided the support, and it passed unanimously, that we put a stop
to that. But let's understand that is not what New York was doing.
For example, for those who were gaming the system, a provider would
pay a $5,000 provider tax to the State. The State would then draw a
matching $5,000 from the Federal Government and then reimburse the
provider. It was a scam. It was simply a bookkeeping entry to get the
Federal Government to pick up an expense that the State never really
incurred and the provider did not incur.
That is wrong. That is not our system. New York was not then and is
not now involved in that scam. This wasn't an attempt to bill poor
people for services and build roads or not use those moneys. That has
never been the allegation. And, indeed, as a matter of fact, New York
has had a long history of requiring insurers to pay assessments on
hospital services. Thereby, that assessment over and above that
particular service would go to help the poorest of the poor. And,
indeed, we now have a program by utilizing these provider taxes that
provides insurance for those families who could not purchase it for
their youngsters. We provide up to 140,000 youngsters, children up to
the age of 19, with insurance. It comes from this provider tax.
Let me say that these assessments provide $1.1 billion a year in
gross provider tax collections and are used for dealing with uninsured
children, the poorest of the poor. The Balanced Budget Act contained
language which specifically determined that New York provider taxes
meet the legitimate requirements. That is what we did.
Now, Mr. President, we have attempted for more than 2 years to get a
resolve of this matter from HCFA. Nothing. Nothing. No response. Delay,
delay, delay, delay. You can't do that to a community. You are not
doing it just to a State government. That impacts on the lives of
hundreds and hundreds of thousands of people. Is that fair?
And so, Mr. President, I find it incomprehensible and absolutely a
tragedy that the President would have received this kind of advice.
People, I believe, did not tell the President the entire story. I
cannot believe that he really would want to veto a provision, the
dollars of which are used to take care of the truly needy. I hope that
between the time this legislation that we have introduced comes to a
vote, we can get a resolve of this matter, not to deal with it in a
confrontational, adversarial way, but in a way that makes sense, in a
way that is fair, that is fair intellectually, that is fair morally,
that is fair ethically.
And I want to make it clear that I concede nothing. If we have to
fight, why then we will, because this is a battle not about a State
being treated fairly or unfairly but about its people and their needs.
This is a battle that says that a State does have a right to raise
revenues in a particular manner and to utilize them for the purpose
which I have attempted to outline.
I want to commend my colleague, who, as the ranking member of Finance
and, indeed, the senior member on Budget, was there every moment of the
negotiations, and never once were we told this is a special treatment.
Mr. MOYNIHAN. Never.
Mr. D'AMATO. Never once. And so for it to be sprung on us --I was out
of the country--I said, when asked, that I was shocked, truly shocked.
Again, I think the President is a big enough person to look at this in
a way, or to say to those in charge at HCFA, come on, let's resolve
this. Let's see to it that New York's problem, which is one of seeing
to the needs of the uninsured--and, by the way, we have plans in
speaking to the administration--and Senator Moynihan and I have been
conferring with the health department people. They believe that this
program can be and will be in the fullness of time--it is a program to
provide insurance where families pay a very modest amount, in some
cases $25 a month, and some none depending upon their income--that it
can be expanded to take care of up to 500,000 young people, youngsters,
children who otherwise would not be insured.
Mr. President, we are not going to give up the battle. It is a battle
that we are committed to winning on behalf of the poor, on behalf of
the needy, on behalf of the uninsured, on behalf of the many working
families that do not have full coverage. And I am proud and privileged
to join the senior Senator from New York, Senator Moynihan, in an
attempt to get justice for these children and for those in need.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New York is recognized.
Mr. MOYNIHAN. May I just congratulate my colleague and friend for the
tone of his statement, its tenor. He is not seeking confrontation with
the administration. He is seeking insurance for the poorest of poor
children in

[[Page S8728]]

our State. I was able to say earlier that in the annual balance of
payments study that we have been putting out for 2 years, New York has
the third highest poverty rate in the Nation and the fourth highest
cost of living. These children are at stake.
The Senator has made the point, and I congratulate the Senator for
it, in that mode and making clear because the record is there that this
issue was never raised prior to the veto. It was a decision made after
the bill was signed, I think. I don't know. And I think that some
reassessment of the process, the procedure might bring change in
judgment.
Again, I thank my friend, and I am telling him how pleased and
honored I am to be associated with him in this matter.
______

By Mr. GRAMS:
S. 1145. A bill to amend the Social Security Act to provide
simplified and accurate information on the Social Security trust funds,
and personal earnings and benefit estimates to eligible individuals; to
the Committee on Finance.

THE SOCIAL SECURITY INFORMATION ACT

Mr. GRAMS. Madam President, I rise today to introduce legislation to
require the Social Security Administration to provide key information
to the American people for retirement planning.

In that regard, I plan to send my bill to the desk in just a moment.
But to explain that, every working American has a significant part of
each paycheck designated to the Social Security Program, but few know
how much they've contributed over their lifetime, the real value of
their Social Security investment, or how much they'll need for a secure
retirement.
As average life-expectancy increases and the oldest baby boomers
approach retirement, the answers to those three questions become
critically important, for there's growing concern over the future of
Social Security and how individuals should prepare themselves for
retirement.
Over the next 33 years, the number of retirees and their dependents
who are eligible for Social Security benefits will increase by more
than 100 percent; from 30 million in 1997 to more than 60 million in
2030, while the number of workers 20 to 64 years old will increase by
only 20 percent.
By 2030, the ratio of workers per retiree will be the smallest ever,
straining the entire Social Security system to the breaking point. Most
of these older Americans will rely on Social Security benefits as their
major source of retirement income.
For many families, Social Security is the largest and most important
financial investment they'll make, consuming up to one-eighth of their
total lifetime income. Yet, the Federal Government remains
unaccountable for the dollars working Americans have invested in the
program.
Current laws do not require the Social Security Administration,
[SSA], the agency managing the Social Security trust funds, to send
clear and complete account statements to individual taxpayers.
Therefore, Americans don't receive adequate information about the
retirement benefits they can expect to receive, the rate of return from
their Social Security investment, or the future financial status of the
Social Security trust funds--information, by the way, private
investment agencies are required to provide to their investors.
As a result, the vast majority of today's baby boomers won't be
financially secure at retirement.
My legislation would help to correct this problem and bring Social
Security closer to meeting the disclosure requirements expected of
private investment firms. This legislation will help ensure that
working Americans receive the information they need to plan for a
secure retirement.
In 1989, Congress passed the personal earnings and benefits estimate
statements, it is commonly known as PEBES. That legislation requires
the SSA to send to eligible individuals statements on their yearly
earnings and estimated benefits.
A recent study by the General Accounting Office, the accounting arm
of Congress, suggests that while the PEBES is useful, it is extremely
difficult for average Americans to understand and, in fact, could be
misleading. Therefore it isn't as effective as it could be or should
be.
Moreover, the current PEBES statement does not include the
information an individual needs to most effectively plan for
retirement.
My proposal would require Washington to provide key information on
the real value, or the yield, of a worker's investment in the Social
Security Program by counting employers' contributions as workers'
earnings to calculate the rate of return. Washington currently excludes
this type of contribution from a worker's earnings statement.
The employer's share of Social Security is a labor cost that's
ultimately borne by the employee; it is only fair that it be counted as
a worker's contribution.
To ensure that the information is easy to understand, my legislation
would also direct the SSA to provide benefit estimates in real rather
than current dollars. To show the impact of inflation on Social
Security benefits, consider the case of a typical individual retiring
in 2043. That American is 25 years old today, retiring in the year
2043.
The current benefit estimate found in PEBES will tell this worker
that he or she can expect to receive $98,989--nearly $100,000 annually
in Social Security benefits. That sounds pretty good, doesn't it? But
most workers will never consider the effects of inflation on this
number. They'd never guess that an income of $98,989 in 2043 will
actually be the equivalent of only $14,180 today because of inflation.
If the PEBES includes such misleading information, it is likely that
more working Americans will misunderstand and, therefore, overestimate
the value of the benefits they will receive from Social Security. Only
after it is too late will they find themselves financially unprepared
for retirement.
Not only would my legislation direct the SSA to include all of the
most important information found in PEBES on a single, easy-to-read
form, but the SSA would also be required to provide the current and
projected balance in the Social Security trust funds, and let
individuals decide on their future by providing them honest information
today.
With this information, Americans will be able to quickly and easily
determine what the PEBES report is about and find the information
essential to successful retirement planning.
Working American need to know up front what they can and cannot
expect out of the Social Security system compared against what they are
paying into it.
Giving individuals an honest accounting of that information serves
the fundamental objectives of the Social Security Program by enabling
workers to judge to what degree they should supplement their
contributions with other forms of retirement savings such as pension
plans and personal savings and investments.
While much more needs to be accomplished to preserve and strengthen
the Social Security safety net for today and tomorrow, the approach
I've outlined would be an important first step in that attempt.
______

By Mr. ASHCROFT:
S. 1146. A bill to amend title 17, United States code, to provide
limitations on copyright liability relating to material on-line, and
for other purposes; to the Committee on the Judiciary.

the digital copyright clarification and technology education act of
1997

Mr. ASHCROFT. Mr. President, I speak today on an issue of great
importance to copyright law and to the continued growth of electronic
commerce on the Internet. In December 1996, two treaties were adopted
by the diplomatic conference of the World Intellectual Property
Organization [WIPO] to update international copyright law. These
treaties would extend international copyright law into the digital
environment, including the Internet. However, these treaties do not
provide a comprehensive response to the many copyright issues raised by
the flourishing of the Internet and the promise of digital technology.
We must endeavor to keep the scales of copyright law balanced,
providing important protections to creators of content, while ensuring
their widespread distribution. To begin the discussion I am introducing
today the Digital Copyright Clarification and Technology Education Act
of 1997.
Any discussion of this issue, even in the most simple terms, raises
many

[[Page S8729]]

important issues. We must foster the growth of the Internet, which
provides such great opportunity to our country because it is the most
participatory form of mass communication ever developed. It draws
people together from all corners of the globe to share and communicate
on an unprecedented level, and brings all levels of government closer
to the public. The Internet also holds great promise for education.
Students--rural, suburban, and urban--are increasingly able to access a
wealth of information right at their computer that was previously
beyond their reach.
In addition, the Internet offers significant commercial
possibilities. Small businesses can reach out across the globe and
conquer the distances between them and potential customers. Individuals
can view merchandise and make purchases without leaving home.
Hopefully, soon a system will develop to allow individuals to contract
electronically with traditional force of law for contracts on paper.
However, this potential will never be realized without a system that
fairly protects the interests of those who own copyrighted material;
those who deliver that material via the Internet; and individual users.
The implications here are far-reaching, with impacts that touch
individual users, companies, libraries, universities, teachers and
students.
The legislation I am introducing today would accomplish several
goals. First, the legislation would clarify the extent of liability for
entities who transfer information via the Internet without control of
the content. Second, the bill would provide for a rapid response to
copyright infringement with the cooperation of the copyright owner and
the on-line service to take down the infringing material, helping to
curtail piracy. Third, the Act will provide for the use of digital
technology in education, research, and library archives, including
updating the fair use doctrine for electronic media. Fourth, the
legislation provides a standard for liability based on individual
conduct, not a standard that constrains the development of new
technology.
We must confirm that the entities who facilitate the operation of the
global information infrastructure not be unfairly liable for literally
billions of transmissions that individual users send via the Internet
or post on the World Wide Web every week. We cannot make the Internet
too costly to operate. Liability for infringement of copyright should
reflect the degree of control that any party had in the determination
of the content of the offending message. Those providing the
infrastructure that makes the Internet possible should not be held
liable for the content of messages to which they have no access. Often,
the copyright holders will be best situated to make a determination of
whether their copyrighted material is being infringed.

In addition, two very real considerations in the final outcome are
the capabilities and limits of current technology. It is not possible
to monitor every communication on the Internet, not even to look at
every homepage on the World Wide Web, even if it were desirable. In
January 1997, one estimate put the number of Internet hosts at more
than 16 million. Each could host multiple homepages, and those
individual sites could be composed of multiple individual pages. One
individual host, GeoCities, boasts of more than half a million
homesteaders, with 5,000 new residents arriving daily. As of May 1997
there were more than 40 million people on the Web, a breathtaking
increase from the 1 million in December 1994. To state the facts of the
exploding traffic growth in a different way, one major infrastructure
provider, of which there are many, reports traffic of 250 terabytes a
month--a terabyte is a thousand billion bytes--which translates into
almost six billion bytes a minute--for one carrier. More importantly,
any wholesale reading of messages would constitute the largest full
scale attack on our individual privacy ever undertaken. We are
confident that those delivering the mail do not read our sealed letters
and we should have that same confidence in our e-mail and other
electronic communications. It would be impossible for any carrier to
review all of the material; and we cannot create a legal obligation
that is technologically impossible to satisfy. Clearly, the potential
for copyright infringement is real--as real as the impossibility of
requiring a service provider to monitor every communication, including
e-mail, homepages, and chat rooms.
Another important issue is the right of reproduction as specifically
related to ephemeral copying. As a message is sent through cyberspace
copies of the message are reproduced, in a sense. This is a reality of
computer technology. For the most part an entire copy never exists
anywhere, except at the points of distribution and receipt. The
Internet was designed to send packets, pieces of a message expressed in
digital form, a full message is not sent from one point to another. In
the process of delivering the message multiple copies of each packet
are sent so if a path is blocked path or data lost, the end message can
be totally reassembled. Additionally, a full copy may be assembled on
the recipient's server, where the message would reside until the
recipient pulls down the file, or a copy may be made on a user's hard
drive during the simple act of reading a document on-line. Obviously,
to make this sort of copy illegal would be a move that flies in the
face of the operations of the Internet and would destroy the World Wide
Web. We need to make clear the status of these temporary and necessary
copies within communications networks.
The passage of appropriate copyright legislation goes beyond the
implications of liability and technical operations. The outcome of this
debate will affect educators and students across the country. One
important aspect for education is to guarantee that computers can be
used in distance learning, in a way that television and video recorders
have been used for years. The copyright laws have long recognized the
need to ensure that the copyright laws do not stand in the way of the
opportunities that the technology promises to provide students in rural
areas. Unfortunately, the current law reflects the technology that was
current when it was passed, largely video. We need to update these laws
to reflect the enormous potential of the digital era. Part of the work
in this area may include defining the classroom to reflect that in many
instances the classroom is no longer a physical space.
In addition, the fair use doctrine in the Copyright Act should be
amended to make clear that fair use applies regardless of the manner in
which the material is distributed. A sound fair use doctrine is
critical to continued interoperability of various systems, which in
effect allows the Internet to exist and grow. Fair use encourages
others to build freely on the ideas and information in a work while
guaranteeing the author's right to their original expression.
Currently, fair use may be made of a work for teaching, commentary,
research, scholarship, criticism, and even news reporting. We should
not tolerate discriminatory treatment based on a means of distribution
or an alternative technology. Fair use in one medium should be fair use
in another.

Finally, we must facilitate the preservation of copyrighted materials
by libraries, archives, and universities. These institutions should be
able to preserve their works, many of which represent the cultural
heritage of the United States, in the best means possible, including
digitally. To require that these institutions purchase new copies of
existing works, but in digital format, could cost untold billions of
dollars. Many works could never be made available digitally as they are
no longer available in a format available for purchase.
Mr. President, we have made an effort to provide access to technology
to all students in the last couple of years. In 1996, Congress
appropriated $200 million to provide teachers with the training and
support needed for access to technology, and to ensure that effective
software and on-line resources would be available for use with the
curriculum. The fiscal year 1998 budget request from the administration
for this program is $425 million, with the House Appropriations
Committee approving $460 million. Approving nearly $700 million over 2
years to guarantee that education can be delivered in a digital format,
while impeding or denying delivery of digital material by neglecting
our copyright law makes no sense. A decision has been made that
students must prepare to operate in an on-line world. We must unlock
the teaching

[[Page S8730]]

potential of the Internet and we must now guarantee that the
appropriate material is made available, so that our students can
receive a full education while taking advantage of the tremendous
strides made in technology.
The Missouri State Librarian recently wrote to me that Missouri's
strong distance education programs could flourish or wither, depending
on the outcome of this debate. I suspect this is the case in all States
with strong distance learning programs to serve rural areas. These
programs allow residents in even the most remote areas to have the same
access to education as those who live near schools, colleges, or
universities. These programs cannot operate as effectively without the
assurance that educators can use materials over computer networks.
Equally important, Mr. President, we must begin a process
internationally that is structured to balance the rights of copyright
owners with the needs and technological limitations of those who enable
the distribution of the electronic information, and with the rights and
needs of individual end users. The current treaties and statements are
not sufficient, and include some language that could create legal
uncertainty. The loose language could lead to law that ignores
technical realities, blindly shifts liability and ignores serious
issues. The language must be clarified through the enactment of
legislation in conjunction with the Senate's ratification of the
treaties.
Moreover, some of the proposed treaty implementation language
attempts to attack copyright violations from the position of the
technology that may be used, rather than placing the blame on those who
are infringing the copyright. We cannot legislate technology. Just as
we have seen the legislated 56-bit encryption become obsolete so too
will any technology frozen in place by legislation. We must end
policies of the Government that hinder technology, but, more
importantly we must not initiate new policies that express an inherent
fear of new technology.

We must recognize other realities. Scores of software programs are
illegally copied on-line, and intellectual piracy is an issue. However,
some of this problem relates to the failure of the law, particularly
copyright law, to keep up with the swift advance of technology. In a
digital environment, hundreds of copies can be made and distributed in
the blink of an eye. These copies are reproductions; they are perfect
recreations of the original. The speed with which copies can be made
makes the traditional ways of enforcing the copyright laws--a court
order--obsolete. Copyright laws must evolve to embrace the new medium
of digital storage and transmission. Those who provide the content for
the Internet need some assurance that their valuable work will not
become worthless because piracy. The approach in the Digital Copyright
Clarification and Technology Education Act of 1997 requires that
service providers cooperate with content providers by taking action
after they are notified that illegal material is posted, or being
transmitted on their systems. The benefits to copyright holders are
notable. A copyright owner will be able to stop the illegal
distribution of the material quickly without having to use the courts
as a first measure. This approach solves the largest problem for on-
line piracy, by providing a quick response to illegal activity which
will preserve the value of the material.
Mr. President, one of the many important values held in this country
is the freedom of expression. The United States must continue to be a
leader in the preservation of freedom of expression around the world.
Many countries are looking to the United States to be a leader on these
important issues. We have the opportunity to send a strong message
internationally that copyright law must be revised to fit the realities
of a digital environment, and that by doing so we can encourage the
growth and evolution of the Internet, while protecting all parties
involved, with zero tolerance for illegality.
I look forward to working with all interested parties, service
providers, educators, entertainers, authors and others as this issue
develops. I welcome the involvement of Senators who may have an
interest in this legislation and the opportunity to work together to
develop sound policy.
Mr. President, the administration took a lead role in the copyright
debate that took place in an international forum. We must continue this
leadership in the Senate, in order to secure the U.S. role not only as
a leader in the manufacture of technology and development of content,
but also as a leader in fashioning a fair and just approach to the use
of digital technology and information.
Mr. president, I ask unanimous consent that the text of the bill be
printed in the Record.

S. 1146

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 ``Digital Copyright
Clarification and Technology Education Act of 1997''.

TITLE I--DIGITAL COPYRIGHT CLARIFICATION

SEC. 101. PURPOSES.

The purposes of this Act are--
(1) to clarify the application of copyright law in the
unique environment of Internet and on-line communication;
(2) to foster the continued growth and development of the
Internet as a means of communication and commerce, including
the lawful distribution of intellectual property;
(3) to protect the rights of copyright owners in the
digital environment;
(4) to clarify that providing network services and
facilities with respect to the transmission of electronic
communications of another person does not result in liability
under the Copyright Act;
(5) to clarify that Internet and on-line service providers
are not liable for third-party copyright infringements unless
they have received notice in compliance with this Act of the
infringing material and have a reasonable opportunity to
limit the third-party infringement; and
(6) to create incentive for the rapid elimination of
infringing material residing on an electronic communications
system or network without litigation.

SEC. 102. CLARIFICATION OF LIABILITY.

(a) In General.--Chapter 5 of title 17, United States Code,
is amended by adding after section 511 the following new
section:

``Sec. 512. Liability relating to material on the Internet
and on-line

``(a) Material Being Transmitted Through an Electronic
Communications System or Network.--
``(1) Network service with respect to the transmission of
electronic communications.--A person shall not be liable for
direct, vicarious or contributory infringement of copyright
arising out of providing electronic communications network
services or facilities with respect to a copyright
infringement by a user. A person shall be considered to
provide `network services and facilities' when such person
transmits, routes or provides connections for material on
behalf of a user over an electronic communications system or
network controlled or operated by or for the person,
including intermediate and transient storage, the processing
of information, and the provision of facilities therefor,
if--
``(A) the provision of services is for the purpose of
managing, controlling or operating a communications system or
network, supplying local access, local exchange, telephone
toll, trunk line, private line, or backbone services,
including network components or functions necessary to the
transmission of material contained in electronic
communications carried over those services; or
``(B) the transmission of material over the system or
network on behalf of a user does not involve the generation
or material alteration of content by the person.
``(2) Private and real-time communication services.--A
person shall not be liable for direct, vicarious or
contributory infringement of copyright arising from supplying
to another--
``(A) a private electronic communication, including voice
messaging or electronic mail services, or any other
communication for which such person lacks either the
technical ability or authority under law to access or
disclose such communication to any third party in the normal
course of business; or
``(B) real-time communication formats, including chat
rooms, streamed data, or other virtually simultaneous
transmissions.
``(3) Information location tools.--No person shall be
liable for direct, vicarious or contributory infringement of
copyright arising out of supplying a user of network services
or facilities with--
``(A) a site-linking aid or directory, including a
hyperlink or index;
``(B) a navigational aid, including a search engine or
browser; or
``(C) the tools for the creation of a site-linking aid.
``(b) Material Residing on a System or Network.--
``(1) Cooperative procedure for expeditious response to
claims of infringement.--A person shall not be liable for
direct, vicarious or contributory infringement of copyright
arising out of the violation of any of the exclusive rights
of the copyright owner by another with respect to material
residing on a system or network used in conjunction with
electronic communications that is controlled or operated by
or for the

[[Page S8731]]

person, unless upon receiving notice complying with paragraph
(b)(3), the person fails expeditiously to remove, disable, or
block access to the material to the extent technologically
feasible and economically reasonable for a period of ten
days, or until receiving a court order concerning the
material, whichever is less.
``(2) Paragraph (b)(1) shall apply where such person--
``(A) did not initiate the placement of the material on the
system or network;
``(B) did not determine the content of the material placed
on the system or network; and
``(C) did not contract for placement of the specific
material on the system or network by another person in order
to provide that content as part of the person's service
offering.
``(3) A person shall not be deemed to have notice that
material residing on a system or network used in conjunction
with electronic communications is infringing unless the
person--
``(A) is in receipt of a notification that the particular
material is infringing. Such notification shall:
``(i) pertain only to allegedly infringing material that
resides on a system or network controlled or operated by or
for the person;
``(ii) be submitted in accordance with directions displayed
on the person's system or network indicating a single place
or person to which such notifications shall be submitted;
``(iii) be signed, physically or electronically, by an
owner of an exclusive right that is allegedly infringed, or
by a person authorized to act on such owner's behalf;
``(iv) provide an address, telephone number, and electronic
mail address, if available, at which the complaining party
may be contacted in a timely manner;
``(v) describe the material claimed to be infringing,
including information reasonably sufficient to permit the
person expeditiously to identify and locate the material;
``(vi) provide reasonable proof of a certificate of
copyright registration for the material in question, a filed
application for such registration, or a court order
establishing that use of the material in the manner
complained of is not authorized by the copyright owner or the
law;
``(vii) contain a sworn statement that the information in
the notice is accurate, that the complaining party is an
owner of the exclusive right that is claimed to be infringed
or otherwise has the authority to enforce the owner's rights
under this title, and that the complaining party has a good
faith belief that the use complained of is an infringement;
``(viii) be accompanied by any payment that the Register of
Copyrights determines is necessary to deter frivolous and de
minimis notices; and
``(B) A person who is an employee or agent of a nonprofit
educational institution, library or archives, acting within
the scope of his employment, or such an educational
institution, library or archives itself, shall not be deemed
to have notice under subparagraph (A) if that person
reasonably believed (i) that the allegedly infringing use was
a fair use under Sec. 10 or (ii) was otherwise lawful; and
``(C) The Register of Copyrights may, by regulation,
establish guidelines identifying additional information to be
included in the notice and shall issue a standard notice form
in both electronic and hard copy formats, which complies with
this paragraph, but failure of a party to provide any such
additional information, or failure to use any issued form,
shall not invalidate the notice.
``(4) Misrepresentations and redress for wrongful
notifications.--Any person who materially misrepresents that
material on-line is infringing in a notice described in
paragraph (b)(3)(A), shall be liable in a civil action that
may be brought in an appropriate United States district court
or State court for statutory damages of not less than $1,000,
and any actual damages, including costs and attorneys' fees,
incurred by--
``(A) the actual copyright owner or the alleged infringer
arising out of the disabling or blocking of access to or
removal of such material; or
``(B) any person who relies upon such misrepresentation in
removing, disabling, or blocking access to the material
claimed to be infringing in such notice.
``(5) Limitation on liability based upon removing,
disabling, or blocking access to infringing material.--A
person shall not be liable for any claim based on that
person's removing, disabling, or blocking access for a period
of ten days, or until the person receives a court order
concerning the material, whichever is less, to material
residing on a system or network used in conjunction with
electronic communications that is controlled or operated by
or for that person in response to notice pursuant to
paragraph (b)(3)(A) that the material is infringing, whether
or not the material is infringing.
``(6) Other defenses not affected.--A person's removing,
disabling, or blocking access to material residing on a
system or network used in conjunction with electronic
communications that is controlled or operated by or for that
person, pursuant to paragraph (1), or the failure to do so,
shall not adversely bear upon the consideration by a court of
any other issue pertaining to liability or remedy, including
any other limitation on liability established in paragraph
(a), any other applicable defense, any claim that the service
provider's alleged conduct is not infringing, or whether or
not such conduct is willful or innocent.''
(b) Conforming Amendment.--The table of sections for
chapter 5 of title 17, United States Code, is amended by
adding at the end of the following:

``512. Liability relating to material on the Internet and on-line.''

TITLE II--TECHNOLOGY FOR TEACHERS AND LIBRARIANS

SEC. 201. SHORT TITLE.

This title may be cited as the ``Technology for Educators
and Children (TECH) Act.

SEC. 202. FAIR USE.

(a) Transmissions.--The first sentence of section 107 of
title 17, United States Code, is amended by inserting after
``or by any other means specified in that section,'' the
following: ``and by analog or digital transmission,''; and
(b) Determination.--Section 107 of title 17, United States
Code, is amended by adding at the end thereof the following:
``In making a determination concerning fair use, no
independent weight shall be afforded to--
``(1) the means by which the work has been performed,
displayed or distributed under the authority of the copyright
owner; or
``(2) the application of an effective technological measure
(as defined under section 1201(c)) to the work.''.

SEC. 203. LIBRARY EXEMPTIONS.

Section 108 of title 17, United States Code, is amended--
(1) by striking ``Notwithstanding'' at the beginning of
subsection (a) and inserting: ``Except as otherwise provided
and notwithstanding'';
(2) by inserting after ``copyright'' in subsection (a)(3):
``if such notice appears on the copy or phonorecord that is
reproduced under the provisions of this section'';
(3) in subsection (b) by--
(A) deleting ``a copy or phonorecord'' and inserting in
lieu thereof: ``three copies or phonorecords''; and
(B) deleting ``in facsimile form''; and
(4) in subsection (c) by--
(A) deleting ``a copy or phonorecord'' and inserting in
lieu thereof: ``three copies or phonorecords'';
(B) deleting ``in facsimile form''; and
(C) inserting ``or if the existing format in which the work
is stored has become obsolete,'' after ``stolen,''.

SEC. 204. DISTANCE EDUCATION.

(a) Title Change.--The title of section 110 of title 17,
United States Code, is amended to read as follows:

``Sec. 110. Limitations on exclusive rights: Exemption of
certain activities''.

(b) Performance, Display and Distribution of a Work.--
Section 110(2) of title 17, United States Code, is amended to
read as follows:
``(2) performance, display or distribution of a work, by or
in the course of an analog or digital transmission, if--
``(A) the performance, display or distribution is a regular
part of the systematic instructional activities of a
governmental body or a nonprofit educational institution;
``(B) the performance, display or distribution is directly
related and of material assistance to the teaching content of
the transmission; and
``(C) the work is provided for reception by--
``(i) students officially enrolled in the course in
connection with which it is provided; or
``(ii) officers or employees of governmental bodies as part
of their official duties or employment.''
(c) Ephemeral Recordings of Works.--Section 112(b) of title
17, United States Code, is amended by deleting ``transmit a
performance or display of'' and inserting in lieu thereof:
``perform, display or distribute''.

SEC. 205. LIMITATIONS ON EXCLUSIVE RIGHTS.

(a) Title.--The title of section 117 of title 17, United
States Code, is amended to read as follows:

``Sec. Limitations on exclusive rights: Computer programs and
digital copies'';

(b) Digital Copies.--Section 117 of title 17, United States
Code, is amended by inserting ``(a)'' before
``Notwithstanding'' and inserting the following as a new
subsection (b):
``(b) Notwithstanding the provisions of section 106, it is
not an infringement to make a copy of a work in a digital
format if such copying--
``(1) is incidental to the operation of a device in the
course of the use of a work otherwise lawful under this
title; and
``(2) does not conflict with the normal exploitation of the
work and does not unreasonably prejudice the legitimate
interest of the author.''.

TITLE III--WIPO TREATY IMPLEMENTATION

SEC. 301. WIPO IMPLEMENTATION.

Title 17 of the United States Code is amended by adding the
following sections:

``Sec. 1201. Circumvention of certain technological measures

``(a) Circumvention Conduct.--No person, for the purpose of
facilitating or engaging in an act of infringement, shall
engage in conduct so as knowingly to remove, deactivate or
otherwise circumvent the application of operation of any
effective technological measure used by a copyright owner to
preclude or limit reproduction of a work or a portion
thereof. As used in this subsection, the term `conduct' does
not include manufacturing, importing or distributing a device
or a computer program.

[[Page S8732]]

``(b) Conduct Governed by Separate Chapter.--
Notwithstanding subsection (a), this section shall not apply
with respect to conduct or the offer or performance of a
service governed by a separate chapter of this title.
``(c) Definition of Effective Technological Measure.--As
used in this section, the term `effective technological
measure' means information included with or an attribute
applied to a transmission or a copy of a work in a digital
format, or a portion thereof, so as to protect the rights of
a copyright owner of such work or portion thereof under
chapter one of this title and which--
``(1) encrypts or scrambles the work or a portion thereof
in the absence of access information supplied by the
copyright owner; or
``(2) includes attributes regarding access to or recording
of the work that cannot be removed without degrading the work
or a portion thereof.

``Sec. 1202. Integrity of copyright management information

``(a) False Copyright Management Information.--No person
shall knowingly provide copyright management information that
is false, or knowingly publicly distribute or import for
distribution copyright management information that is false,
with intent to induce, facilitate, or conceal infringement.
``(b) Removal or Alteration of Copyright Management
Information.--No person shall, without authority of the
copyright owner or other lawful authority, knowingly and with
intent to mislead or to induce or facilitate infringement--
``(1) remove or alter any copyright management information;
``(2) publicly distribute or import for distribution a copy
or phonorecord containing copyright management information
that has been altered without authority of the copyright
owner or other lawful authority; or
``(3) publicly distribute or import for distribution a copy
or phonorecord from which copyright management information
has been removed without authority of the copyright owner or
other lawful authority: Provided, That the conduct governed
by this subsection does not include the manufacturing,
importing or distributing of a device.
``(c) Definition of Copyright Management Information.--As
used in this chapter, the term `copyright management
information' means the following information in electronic
form as carried in or as data accompanying a copy or
phonorecord of a work, including in digital form:
``(1) The title and other information identifying the work,
including the information set forth in a notice of copyright.
``(2) The name and other identifying information of the
author of the work.
``(3) The name and other identifying information of the
copyright owner of the work, including the information set
forth in a notice of copyright.
``(4) Terms and conditions for uses of the work.
``(5) Identifying numbers or symbols referring to such
information or links to such information.
``(6) Such other identifying information concerning the
work as the Register of Copyrights may prescribe by
regulations: Provided, That the term `copyright management
information' does not include the information described in
section 1002, section 1201(c), or a chapter of this title
other than chapters one through nine of this. Provided
further, That, in order to assure privacy protection, the
term `copyright management information' does not include
any personally identifiable information relating to the
user of a work, including but not limited to the name,
account, address or other contact information of or
pertaining to the user.

``Sec. 1203. Civil remedies

``(a) Civil Actions.--Any person aggrieved by a violation
of section 1201(a) or 1202 may bring a civil action in an
appropriate United States district court against any person
for such violation.
``(b) Powers of the Court.--In an action brought under
subsection (a), the court--
``(1) may grant a temporary and a permanent injunction on
such terms as it deems reasonable to prevent or restrain a
violation;
``(2) may grant such other equitable relief as it deems
appropriate;
``(3) may award damages pursuant to subsection (c);
``(4) may allow the recovery of costs by or against any
party other than the United States or an officer thereof; and
``(5) may award a reasonable attorney's fee to the
prevailing party.
``(c) Award of damages.--
``(1) In general.--If the court finds that a violation of
section 1201(a) or 1202 has occurred, the complaining party
may elect either actual damages as computed under paragraph
(2) or statutory damages as computed under paragraph (3).
``(2) Actual Damages.--The court may award to the
complaining party the actual damages suffered by him or her
as a result of the violation, and any profits of the violator
that are attributable to the violation and are not taken into
account in computing the actual damages, if the complaining
party elects such damages instead of statutory damages at any
time before final judgment is entered.
``(3) Statutory Damages.--(A) The court may award to the
complaining party statutory damages for each violation of
section 1201(a) of not less than $250 or more than $2,500, as
the court considers just, if the complaining party elects
such damages instead of actual damages at any time before
final judgment is entered.
``(B) The court may award to the complaining party
statutory damages for each violation of section 1202 of not
less than $500 or more than $20,000, as the court considers
just, if the complaining party elects such damages instead of
actual damages at any time before final judgment is entered.
``(4) Repeated Violations.--In any case in which the court
finds that a person has violated section 1201(a) or 1202
within three years after a final judgment against that person
for another such violation was entered, the court may
increase the award of damages to not more than double the
amount that would otherwise be awarded under paragraph (2) or
(3), as the court considers just.
``(5) Innocent Violation.--The court may reduce or remit
altogether the total award of damages that otherwise would be
awarded under paragraph (2) or (3) in any case in which the
violator sustains the burden of proving, and the court finds,
that the violator was not aware and had no reason to believe
that its acts constituted a violation of section 1201(a) or
1202.''.

SEC. 302. CONFORMING AMENDMENTS.

(a) Table of Sections.--The table of sections for chapter 1
of title 17, United States Code, is amended by--
(1) Revising the item relating to section 110 to read as
follows:

``110. Limitations on exclusive rights: Exemption of certain
activities''; and

(2) Revising the item relating to section 117 to read as
follows:

``117. Limitations on exclusive rights: Computer programs and digital
copies''.

(b) Table of Chapters.--The table of chapters for title 17,
United States Code, is amended by adding at the end the
following:

``12. Copyright Protection and Management Systems...........1201''.....

SEC. 303. EFFECTIVE DATES.

(a) In General.--Sections one through seven and section
9(a) of this Act, and the amendments made by sections one
through seven and section 9(a) of this Act, shall take effect
on the date of enactment of this Act.
(b) WIPO Treaties.--Section 8 and section 9(b) of this Act,
and the amendments made by section 8 and section 9(b) of this
Act, shall take effect on the date on which both the World
Intellectual Property Organization Copyright Treaty and the
World Intellectual Property Organization Performances and
Phonograms Treaty have entered into force with respect to the
United States.

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